AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 10, 1999.
REGISTRATION NO. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
INTERSIL HOLDING CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
DELAWARE 3674 59-3590018
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (IRS EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
</TABLE>
------------------------
2401 PALM BAY ROAD NE
PALM BAY, FLORIDA 32905
(321) 724-7000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
GREGORY L. WILLIAMS
CHIEF EXECUTIVE OFFICER
2401 PALM BAY ROAD NE
PALM BAY, FLORIDA 32905
(321) 724-7000
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
------------------------
With a Copy to:
CHRISTOPHER G. KARRAS, ESQ.
DECHERT PRICE & RHOADS
4000 BELL ATLANTIC TOWER
1717 ARCH STREET
PHILADELPHIA, PENNSYLVANIA 19103
(215) 994-4000
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of
this Registration Statement.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. /x/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration number of the earlier effective
registration statement for the same offering. / /
If this form is filed to register additional securities for an offering
pursuant to Rule 462(c) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. / /
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /.
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- - -------------------------------------------------------------------------------------------------------------------------
TITLE OF EACH CLASS OF AMOUNT TO BE PROPOSED MAXIMUM PROPOSED MAXIMUM
SECURITIES TO BE REGISTERED REGISTERED OFFERING PRICE PER UNIT(1) AGGREGATE OFFERING PRICE(1)
<S> <C> <C> <C>
- - -------------------------------------------------------------------------------------------------------------------------
Warrants to purchase shares of Class A Common
Share........................................ 200,000 $0.05 $10,000
- - -------------------------------------------------------------------------------------------------------------------------
Class A Common Stock, par value $.01 per
share(2)..................................... 5,555,560 $0.001 $5,555.56
- - -------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- - -----------------------------------------------------------------
TITLE OF EACH CLASS OF AMOUNT OF
SECURITIES TO BE REGISTERED REGISTRATION FEE
<S> <C>
- - -----------------------------------------------------------------
Warrants to purchase shares of Class A Common
Stock........................................ $3.00
- - -----------------------------------------------------------------
Class A Common Stock, par value $.01 per
share(2)..................................... $ 2.00
- - -----------------------------------------------------------------
</TABLE>
(1) Estimated solely for purposes of calculating the registration fee in
accordance with Rule 457(i) of the Securities Act, based on the book value
of the Warrants registered hereunder and the amount payable on exercise of
such Warrants.
(2) The shares of Class A Common Stock are issuable upon exercise of the
Warrants registered hereunder. This Registration Statement also covers such
shares as may be issuable pursuant to anti-dilution adjustments.
------------------------
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until this Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
================================================================================
<PAGE>
The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is[nb]effective. This prospectus is not an
offer to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
SUBJECT TO COMPLETION, DATED NOVEMBER 10, 1999
PROSPECTUS
[INTERSIL LOGO]
200,000 WARRANTS TO PURCHASE 5,555,560 SHARES OF CLASS A COMMON STOCK
OF
INTERSIL HOLDING CORPORATION
------------------------
The warrants were originally issued and sold on August 13, 1999 to Credit
Suisse First Boston Corporation, J.P. Morgan Securities, Inc. and Salomon Smith
Barney Inc. pursuant to a private placement by Intersil Holding Corporation and
Intersil Corporation of 200,000 units, each unit consisting of one 13 1/4%
Senior Subordinated Note due 2010 of Intersil Corporation with a principal
amount of $1,000 and one warrant to purchase 27.7778 shares of Class A Common
Stock, par value $.01, of Intersil Holding Corporation at an exercise price of
$0.001. Credit Suisse First Boston Corporation, J.P. Morgan Securities, Inc. and
Salomon Smith Barney Inc. placed the units with qualified institutional buyers
pursuant to Rule 144A under the Securities Act of 1933. In connection with the
sale of the units, we entered into a Warrant Agreement with the United States
Trust Company of New York, as Warrant Agent. Pursuant to the Warrant Agreement,
we agreed, among other things, to register the resale of the warrants under the
Securities Act and the issuance of shares of Class A Common Stock upon exercise
of the Warrants.
Each warrant, when exercised, will entitle the holder thereof to purchase
27.7778 shares of Class A Common Stock from us at a price of $0.001 per share.
The exercise price and number of shares of Class A Common Stock issuable upon
exercise of the warrants are both subject to adjustment in certain cases. The
warrants will initially entitle the holders thereof to acquire, in the
aggregate, 5,555,560 shares of Class A Common Stock.
The warrants are exercisable on or after August 14, 2000, and will expire
on August 15, 2009.
The holders of unexercised warrants are not entitled, by virtue of being
such holders, to receive dividends, to vote, to consent, to exercise any
preemptive rights or to receive notice as our stockholders in respect of any
stockholders meetings for the election of our directors or any other purpose, or
to exercise any rights whatsoever as our stockholders. See 'Description of
Warrants.'
------------------------
See 'Risk Factors' beginning on page 8 for a discussion of risks that
should be considered by holders of the warrants and the Class A Common Stock
issuable upon exercise of the warrants.
------------------------
Neither the Securities and Exchange Commission nor any State Securities
Commission has approved or disapproved of these Securities or passed upon
the adequacy or accuracy of this prospectus. Any representation to
the contrary is a criminal offense.
The date of this prospectus is , .
<PAGE>
------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
INDUSTRY DATA.................................. i
SUMMARY........................................ 1
RISK FACTORS................................... 8
FORWARD-LOOKING STATEMENTS..................... 17
USE OF PROCEEDS................................ 17
CAPITALIZATION................................. 18
UNAUDITED PRO FORMA COMBINED CONDENSED
FINANCIAL STATEMENTS......................... 19
SELECTED HISTORICAL FINANCIAL DATA AND OTHER
DATA......................................... 23
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF
OPERATIONS................................... 24
INDUSTRY OVERVIEW.............................. 32
BUSINESS....................................... 34
THE TRANSACTIONS............................... 43
<CAPTION>
Page
----
<S> <C>
MANAGEMENT..................................... 46
CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS................................. 50
OWNERSHIP OF CAPITAL STOCK..................... 53
DESCRIPTION OF CAPITAL STOCK................... 54
DESCRIPTION OF CERTAIN INDEBTEDNESS............ 57
DESCRIPTION OF THE WARRANTS.................... 61
UNITED STATES FEDERAL
INCOME TAX CONSIDERATIONS.................... 65
PLAN OF DISTRIBUTION........................... 69
LEGAL MATTERS.................................. 70
EXPERTS........................................ 70
WHERE YOU CAN FIND MORE
INFORMATION.................................. 70
INDEX TO FINANCIAL STATEMENTS.................. F-1
</TABLE>
-----------------------
You should rely only on the information contained in this document or to
which we have referred you in this prospectus. We have not authorized anyone to
provide you with information that is different. This prospectus may only be used
where it is legal to sell these securities. The information in this prospectus
may only be accurate on the date of this document.
INDUSTRY DATA
In this prospectus, we rely on and refer to information regarding the
semiconductor market and its segments and competitors from Dataquest,
International Data Corporation, Semiconductor Industry Association, Worldwide
Semiconductor Test Services, Venture Development Corporation, Intex Management
Services, market research reports, analyst reports and other publicly available
sources. Although we believe that this information is reliable, we cannot
guarantee the accuracy and completeness of the information and have not
independently verified it.
i
<PAGE>
SUMMARY
This summary may not contain all of the information that may be important
to you. You should read this entire prospectus, including the financial data and
related notes, before making an investment decision. As used in this prospectus,
the terms 'we' and 'Intersil Holding' refer to Intersil Holding Corporation and
its subsidiaries including the selected portions of the semiconductor business
of Harris Corporation, referred to as 'Harris,' we acquired in the transactions
on August 13, 1999 unless the context requires otherwise. Intersil Holding's
subsidiary, Intersil Corporation, is referred to as 'Intersil.'
THE OFFERING
On August 13, 1999, we issued and sold 200,000 units, each unit consisting
of $1,000 principal amount of 13 1/4% Senior Subordinated Notes of Intersil and
Warrants to purchase 27.7778 shares of Class A Common Stock of Intersil Holding.
In connection with that sale, we entered into a Warrant Agreement with the
United States Trust Company of New York, as Warrant Agent. Pursuant to the
Warrant Agreement, we agreed, among other things, to register the resale of the
Warrants under the Securities Act and the issuance of the Class A Common Stock
upon exercise of the Warrants.
WHO WE ARE
We are a leading systems oriented designer and manufacturer of analog
integrated circuits, which we refer to as integrated circuits or semiconductors,
and discrete semiconductors for the communications and power management end-user
markets. Additionally, we are the industry leader in providing wireless local
area networking semiconductor sets, which we refer to as our PRISM(Registered)
chip set. Our analog products include communications analog and mixed-signal
semiconductors that are used in wireless and wired data and voice communications
products, power integrated circuits that perform multiple power management
tasks, industry standard signal processing products that convert analog signals
into digital format and digital signals into analog format and space and defense
products which are used in military applications and commercial satellites. Our
discrete semiconductors perform single power management functions such as
switching electricity on or off and are used in computing, industrial and
automotive markets. The fastest growing product that we sell is our wireless
local area network PRISM(Registered) chip sets, which have applications in
wireless computer networking for the business or home and in transmitting data
from home data gateways to multiple end-user applications.
Our business strategy is to utilize our core strengths to focus on high
growth, higher margin end-markets through partnerships with industry leaders
among our blue chip customer base to quickly take our engineering and design
capabilities to commercial levels. To achieve these goals, we develop systems
level solutions that enhance the value of our products as they are designed and
incorporated into our customers' products and we leverage our high quality of
customer service as a means of differentiation from our competitors.
We currently sell to many industry leaders in our targeted markets
including Asustek, Bosch, Cisco, Compaq, Emerson, Dell, Intel, Nokia, Siemens,
Sony and 3Com. We have been doing business with many of these industry leaders
for over ten years. We are also one of the leading analog and discrete power
semiconductor suppliers to some of the world's largest semiconductor
distributors, such as Avnet and Arrow Electronics, which allows us to expand our
global reach to include the middle market and emerging technology companies. Our
products are sold worldwide with about 53.5%, 24.6% and 21.9% of our revenues
for fiscal year 1999 being derived from North America, Europe and Asia/Pacific,
respectively. We service our customers through a dedicated sales force, about
half of whom are domiciled outside North America. We own fabrication facilities,
which we refer to as fabs, in Florida, Ohio and Pennsylvania, including our
state-of-the-art 8-inch wafer fab in Mountaintop, Pennsylvania. We also have
assembly and test facilities in Malaysia and Florida. For fiscal year 1999 and
the quarter ended combined October 1, 1999, our revenue was $532.7 million and
$133.9 million, respectively. In addition, our sales backlog was $180.8 million
at October 1, 1999.
World Semiconductor Trade Statistics, or WSTS, has forecasted strong growth
of approximately 15.5% for the semiconductor industry over the next three years.
We sell our semiconductors into high-growth segments of the market including the
communications analog & mixed-signal market, which is forecasted by the
Semiconductor Industry Association, or SIA, to grow 18.4% in calendar year 2000
from calendar year 1999, the power management market which is forecasted by WSTS
to grow at 20.2% in calendar year 2000 from calendar year 1999 and the wireless
LAN market which is forecasted by Intex Management Services to grow 39.0% in
calendar year 2000 from calendar year 1999. We believe that future demand for
our semiconductors will be driven by the increasing demand for Internet use and
for greater portability of electronics, including consumer electronics,
computers and cellular telephones and the growth of the emerging wireless data
communications markets.
<PAGE>
INTERSIL CORPORATION
Intersil is our wholly-owned subsidiary. Our assets are Intersil's stock
and certain intangible assets.
THE TRANSACTIONS
Pursuant to the Master Transaction Agreement dated June 2, 1999, among
Intersil, us and Harris, the following transactions occurred August 13, 1999:
o Harris transferred to us selected portions of its semiconductor business
in exchange for (a) $520.0 million in cash and (b) our subordinated
promissory note in the principal amount of $90.0 million, referred to as
the 11.13% Seller Holding PIK Note due 2010, which permits us to pay
interest in the form of additional notes, which we call pay-in-kind, or
PIK, notes;
o Harris paid about $9.0 million in cash to us to purchase shares of our
12% Series A Cumulative Compounding Preferred Stock and common stock;
o we sold to Sterling Holding Company, LLC and to senior management, other
key employees and certain other investors shares of our 12% Series A
Cumulative Compounding Preferred Stock and common stock for a total of
about $81.0 million in cash;
o we contributed cash in the amount of $90.0 million to Intersil's capital
as well as certain assets with a fair market value of about $90.0
million;
o Citicorp Mezzanine Partners, L.P. contributed $30.0 million in cash to us
in exchange for our subordinated promissory note, referred to as the
13.5% Subordinated Holding PIK Note due 2010, and warrants to purchase
5,555,560 shares of our Class A Common Stock;
o we contributed cash in the amount of $30.0 million received from Citicorp
Mezzanine Partners, L.P. to Intersil's capital; and
o Intersil borrowed $220.0 million under its new senior credit facilities
and received the gross proceeds of $200.0 million from the sale of
200,000 units, each unit consisting of $1,000 principal amount of old
notes of Intersil and one warrant to purchase 27.7778 shares of Class A
Common Stock of Intersil Holding.
See 'The Transactions.' For information regarding the subordinated promissory
notes, see 'Description of Certain Indebtedness--13.5% Subordinated Holding PIK
Note due 2010' and '--11.13% Seller Holding PIK Note due 2010.' For information
regarding Intersil's senior credit facilities, see 'Description of Certain
Indebtedness--Senior Credit Facilities.'
2
<PAGE>
THE OFFERING
<TABLE>
<S> <C>
WARRANTS:
Issuer.................................... Intersil Holding Corporation.
Warrants Offered.......................... 200,000 Warrants which, when exercised, will entitle the holders
thereof to acquire an aggregate of 5,555,560 shares of Class A Common
Stock.
Exercise Price............................ $0.001 per share of Class A Common Stock.
Exercise.................................. The Warrants are exercisable beginning on August 13, 2000 and any
time thereafter on or prior to August 15, 2009.
Expiration................................ August 15, 2009.
Voting Rights............................. Warrant holders have no voting rights.
Anti-Dilution............................. The exercise price and number of shares of Class A Common Stock
issued upon exercise of the Warrants are both subject to adjustment
in certain cases. See 'Description of the Warrants--Adjustments.'
Warrant Shares............................ The Warrants entitle the holders thereof to acquire shares of Class A
Common Stock of Intersil Holding. The shares of Class A Common Stock
for which the Warrants are exercisable or which are issued upon
exercise of the Warrants are collectively referred to as 'Warrant
Shares.'
</TABLE>
RISK FACTORS
Investing in the Warrants or Warrant Shares involves substantial risks. See
the 'Risk Factors' section of this prospectus for a description of certain of
the risks you should carefully consider before investing in the Warrants or
Warrant Shares.
3
<PAGE>
SUMMARY HISTORICAL, PRO FORMA AND OTHER DATA
The following summary historical financial data for the fiscal years ended
June 27, 1997, July 3, 1998 and July 2, 1999 for Intersil Holding were derived
from our audited consolidated financial statements included elsewhere in this
prospectus, except for revenue categorized by product line (Analog & Mixed-
Signal, Discrete Power and Wireless), which were derived from our books and
records. The balance sheet data as of October 1, 1999 have been derived from our
unaudited consolidated financial statements included elsewhere in this
prospectus, and include, in the opinion of management, all adjustments necessary
to present fairly the balance sheet data at such time. The summary pro forma
financial information for the fiscal year 1999, quarter ended October 2, 1998
and combined quarter ended October 1, 1999 were derived from our pro forma
unaudited consolidated financial statements included elsewhere in this
prospectus.
During the period covered by our consolidated financial statements, our
activities were conducted as part of Harris' overall operations. As such, our
consolidated financial statements contain various allocations for costs and
expenses attributable to services provided by Harris. Therefore, the
Consolidated Statement of Operations may not be indicative of the results of
operations that would have resulted if we had operated on a stand-alone basis.
Since the information in the tables below is a summary, you should read the
following tables in conjunction with other information contained under the
captions 'Unaudited Pro Forma Combined Condensed Financial Statements,'
'Capitalization,' 'Selected Historical Financial Data,' 'Forward Looking
Statements,' 'Risk Factors--Risks Related to Use of Estimates in Pro Forma
Information and Adjusted EBITDA,' 'Management's Discussion and Analysis of
Financial Condition and Results of Operations,' and with our financial
statements and related notes and other financial information contained elsewhere
in this prospectus.
4
<PAGE>
<TABLE>
<CAPTION>
PRO FORMA (1)
----------------------------------
QUARTER ENDED
HISTORICAL ------------------------
--------------------------- COMBINED
FISCAL FISCAL FISCAL FISCAL OCTOBER 2, OCTOBER 1,
1997 1998 1999 1999 1998 1999
------- ------ ------ ------ ---------- ----------
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenue:
Analog & Mixed-Signal........................... $ 384.4 $390.4 $352.8 $352.8 $ 79.8 $ 82.8
Discrete Power.................................. 154.5 176.4 161.6 161.6 38.5 44.9
Wireless........................................ 6.4 10.0 18.3 18.3 4.2 6.2
------- ------ ------ ------ ------ ------
Total revenue..................................... $ 545.3 $576.8 $532.7 $532.7 $122.5 $133.9
------- ------ ------ ------ ------ ------
------- ------ ------ ------ ------ ------
Gross profit(2)................................... $ 199.3 $207.5 $182.9 $192.9 $ 44.5 $ 48.9
Research and development.......................... 75.2 75.1 67.0 67.0 14.8 16.9
Selling, general and administrative............... 99.3 98.2 84.0 87.5 22.0 21.8
Harris corporate expense allocation............... 10.0 10.0 9.3 -- -- --
Intangible amortization........................... 2.3 2.3 2.4 12.9 3.2 2.9
In-process research and development............... -- -- -- -- -- 20.8
------- ------ ------ ------ ------ ------
Operating income (loss)........................... 12.5 21.9 20.2 25.5 4.5 (13.5)
Interest, net..................................... (0.6) (0.9) (1.2) 61.4 15.4 15.8
------- ------ ------ ------ ------ ------
Income (loss) before income taxes................. 13.1 22.8 21.4 (35.9) (10.9) (29.3)
Income taxes (benefit)............................ 1.9 9.9 (6.0) (28.3) (6.7) (2.3)
------- ------ ------ ------ ------ ------
Net income (loss)................................. 11.2 12.9 27.4 (7.6) (4.2) (27.0)
Preferred dividends............................... -- -- -- (10.2) (2.6) (2.6)
------- ------ ------ ------ ------ ------
Net income (loss) to common shareholders.......... $ 11.2 $ 12.9 $ 27.4 $(17.8) $ (6.8) $(29.6)
------- ------ ------ ------ ------ ------
------- ------ ------ ------ ------ ------
LOSS PER COMMON SHARE:
Basic and diluted............................................................. $(0.18) $(0.07) $(0.30)
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING (IN MILLIONS):
Basic and diluted............................................................. 100.0 100.0 100.0
SUPPLEMENTAL DATA:
Depreciation...................................... $ 50.2 $ 65.0 $ 78.2 $ 68.2 $ 16.5 $ 16.3
Capital expenditures.............................. $ 173.3 $ 90.2 $ 38.6 $ 38.6 $ 13.1 $ 4.3
Total cash interest expense(4).................................................. $ 47.0 $ 11.7 $ 12.0
Adjusted EBITDA(3).............................................................. $129.3 $ 29.6 $ 26.5
Cash flows provided from (used in)
Operating activities............................ $ 54.6 $ 48.3 $111.2
Investing activities............................ $(173.3) $(90.2) $(39.9)
Financing activities............................ $ 1.4 $ 2.7 $ 0.5
Ratio of Adjusted EBITDA to total cash interest expense......................... 2.8x 2.5x 2.2x
Ratio of total debt to Adjusted EBITDA(5)....................................... 4.3x 4.6x 5.3x
Ratio of earnings to fixed charges(6)............. 7.0x 11.9x 10.7x -- -- --
Ratio of earnings to fixed charges and preferred
stock dividends(7).............................. 7.0x 11.9x 10.7x -- -- --
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
AS OF
OCTOBER 1, 1999
---------------
(IN MILLIONS)
<S> <C>
BALANCE SHEET DATA:
Cash.............................................................................................. $ 33.8
Total assets...................................................................................... 736.7
Long-term debt, including current portion......................................................... 545.8
Preferred stock................................................................................... 86.4
Total shareholders' equity (deficit).............................................................. (15.4)
</TABLE>
- - ------------------
(1) The pro forma information presented is a summary only and should be read in
conjunction with 'Unaudited Pro Forma Combined Condensed Financial
Statements and Unaudited Supplemental Data' included elsewhere in the
prospectus.
(2) Gross profit includes foreign exchange losses with respect to the Malaysian
Ringgit as detailed in footnote (3) below.
(3) Adjusted EBITDA, for the pro forma periods presented, represents income
(loss) before income taxes, depreciation, amortization, interest expense and
the following adjustments in the chart below:
<TABLE>
<CAPTION>
PRO FORMA
----------------------------------
QUARTER ENDED
------------------------
COMBINED
FISCAL OCTOBER 2 OCTOBER 1,
1999 1998 1999
------ ---------- ----------
(IN MILLIONS)
<S> <C> <C> <C>
In-process research and development.......................... $ -- $ -- $ 20.8
Foreign exchange losses...................................... 11.4 2.6 --
Cost savings................................................. 11.3 2.8 --
------ ------ ------
$ 22.7 $ 5.4 $ 20.8
------ ------ ------
------ ------ ------
</TABLE>
Foreign exchange losses--foreign exchange losses with respect to the
Malaysian Ringgit represent losses under contracts entered into by Harris and
subsequently terminated. See 'Market Risk Management' on page 31 of
'Management's Discussion and Analysis of Financial Condition and Results of
Operations'.
Cost savings--reflects management's estimate of the effect for a full year of
the cost savings related to the closure in January 1999 of one of our
facilities ($3.3 million) and additional cost savings which management
believes can be achieved as a result of initiatives that were begun during
the first quarter of fiscal year 2000 ($8.0 million). These estimated
additional cost savings are expected to result from (i) the decrease in
royalty payments as we accelerate the use of a new fabrication process that
does not rely on third party patents, (ii) the outsourcing of information
technology support services currently provided by Harris, (iii) the
outsourcing of specialized semiconductor packaging in Malaysia and the
related reduction in our workforce and (iv) the downsizing of our European
administrative headquarters. While we consider the numerical specificity of
the foregoing preliminary estimates and the anticipated cost savings to be
reasonable, these estimates and savings are based upon a number of
assumptions and estimates that are subject to inherent uncertainty. The
actual cost savings could vary from these estimates.
(4) Total cash interest expense represents the pro forma interest expense less
interest on the 11.13% Seller Holding PIK Note, the 13.5% Subordinated
Holding PIK Note and amortization of deferred debt issuance costs and
accretion of original issue discount as a result of a required allocation of
value to the Warrants under generally accepted accounting principles.
(5) The ratio of total debt to adjusted EBITDA for the pro forma quarters ended
October 2, 1998 and October 1, 1999 is calculated by annualizing adjusted
EBITDA for the respective period.
(Footnotes continued on next page)
6
<PAGE>
(Footnotes continued from previous page)
(6) Earnings consist of income before income taxes plus fixed charges. Fixed
charges consist of interest expense on debt and amortization of defined debt
issuance costs and the portion (about one-third) of rental expense that we
believe is representative of the interest component of rental expense. Pro
forma fixed charges exceeded pro forma earnings by $35.9 million, $10.9
million and $29.3 million for the pro forma periods fiscal 1999, quarter
ended October 2, 1998 and quarter ended combined October 1, 1999,
respectively.
(7) Earnings as defined above, fixed charges as defined above plus preferred
stock dividends, whether paid or accreted. Pro forma fixed charges and
preferred stock dividends exceeded pro forma earnings by $46.1 million,
$13.5 million and $31.9 million for the pro forma periods fiscal 1999,
quarter ended October 2, 1998 and quarter ended combined October 1, 1999,
respectively.
7
<PAGE>
RISK FACTORS
You should carefully consider the risks described below before making an
investment decision. The risks described below are not the only ones facing our
company. Additional risks not presently known to us or that we currently deem
immaterial may also impair our business operations.
SUBSTANTIAL LEVERAGE--OUR SUBSTANTIAL INDEBTEDNESS COULD ADVERSELY AFFECT OUR
FINANCIAL HEALTH WHICH COULD REDUCE THE VALUE OF THE WARRANTS AND CLASS A COMMON
STOCK.
We have a significant amount of indebtedness. The following chart sets
forth certain important credit information as of the date, or at the beginning
of the periods, specified below:
<TABLE>
<CAPTION>
INTERSIL
HOLDING
AT OCTOBER 1,
1999
-----------------
(IN MILLIONS
EXCEPT RATIO)
<S> <C>
Total indebtedness.................................................................... $ 545.8
Shareholders' deficit................................................................. (15.4)
Debt to equity (deficit) ratio........................................................ (35.4)x
</TABLE>
<TABLE>
<CAPTION>
PRO FORMA
-----------------------------
COMBINED
13 WEEKS ENDED
FISCAL YEAR OCTOBER 1,
1999 1999
----------- --------------
(IN MILLIONS)
<S> <C> <C>
Deficiency of earnings available to cover fixed charges................... $35.9 $ 29.3
</TABLE>
Pro forma interest expense for the year ended July 2, 1999 and the combined 13
weeks ended October 1, 1999, would have been $62.7 million and $15.9 million,
respectively.
Our substantial indebtedness could have important consequences to you. For
example, it could:
o require us to dedicate a substantial portion of our cash flow from
operations to payments on our indebtedness, thereby reducing the
availability of our cash flow to fund working capital, capital
expenditures, research and development efforts and other general
corporate purposes;
o increase the amount of interest expense which we have to pay, because
certain of our borrowings are at variable rates of interest, which, if
interest rates increase, could result in higher interest expense;
o increase our vulnerability to adverse general economic or industry
conditions;
o limit our flexibility in planning for, or reacting to, changes in our
business or the industry in which we operate;
o restrict us from making strategic acquisitions, introducing new
technologies or exploiting business opportunities;
o prevent us from raising the funds necessary to repurchase all notes
tendered to us upon the occurrence of certain changes of control in our
ownership, which would constitute a default under the indenture governing
our Notes;
o place us at a competitive disadvantage compared to our competitors that
have less debt; and
o limit, along with the financial and other restrictive covenants in our
indebtedness, among other things, our ability to borrow additional funds,
dispose of assets or pay cash dividends. Failing to comply with those
covenants could result in an event of default which, if not cured or
waived, could have a material adverse effect on us.
See 'Description of Certain Indebtedness--Notes,' 'Capitalization,'
'Unaudited Pro Forma Consolidated Condensed Financial Statements and Unaudited
Other Data' and 'Description of Certain Indebtedness.'
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ADDITIONAL BORROWINGS AVAILABLE--DESPITE CURRENTLY EXPECTED LEVELS OF
INDEBTEDNESS, WE AND OUR SUBSIDIARIES WILL BE ABLE TO INCUR SUBSTANTIALLY MORE
DEBT. THIS COULD FURTHER EXACERBATE THE RISKS DESCRIBED ABOVE.
We and our subsidiaries may be able to incur substantial additional
indebtedness in the future. Although the indenture governing the notes contains
restrictions on the incurrence of additional Indebtedness (as defined), such
restrictions are subject to a number of qualifications and exceptions; and under
certain circumstances Indebtedness incurred in compliance with such restrictions
could be substantial. Also, such restrictions do not prevent us from incurring
obligations that do not constitute Indebtedness. As of October 1, 1999,
Intersil's senior credit facilities provide for additional borrowing of up to
about $55.0 million. To the extent new debt is added to our and our
subsidiaries' currently anticipated debt levels, the substantial leverage risks
described above would increase.
See 'Pro Forma Capitalization,' 'Selected Historical Consolidated Financial
Data,' 'Description of Certain Indebtedness--Notes' and 'Description of Certain
Indebtedness.'
ABILITY TO SERVICE DEBT--TO SERVE OUR INDEBTEDNESS, WE WILL REQUIRE A
SIGNIFICANT AMOUNT OF CASH. OUR ABILITY TO GENERATE CASH DEPENDS ON MANY FACTORS
BEYOND OUR CONTROL. IF WE CANNOT OBTAIN THE REQUIRED CASH, THE VALUE OF THE
WARRANTS AND THE CLASS A COMMON STOCK MAY DECLINE.
Our ability to make payments on our indebtedness, and to fund planned
capital expenditures and research and development efforts will depend on our
ability to generate cash in the future. This, to a certain extent, is subject to
general economic, financial, competitive, legislative, regulatory and other
factors that are beyond our control.
Our historical financial results have been, and our future financial
results are anticipated to be, subject to substantial fluctuations. We cannot
assure you that our business will generate sufficient cash flow from operations,
that currently anticipated cost savings and operating improvements will be
realized on schedule or that future borrowings will be available to us in an
amount sufficient to enable us to pay our indebtedness, or to fund our other
liquidity needs. If we are unable to pay our debts, we will be required to
pursue one or more alternative strategies, such as selling assets, refinancing
or restructuring our indebtedness or selling equity capital. However, we cannot
assure you that any alternative strategies will be feasible at the time or prove
adequate. Also, certain alternative strategies will require the consent of our
senior secured lenders before we engage in any such strategy.
See '--Cyclical Industry' and 'Management's Discussion and Analysis of
Financial Condition and Results of Operations.'
RESTRICTIONS AND COVENANTS IN OUR DEBT INSTRUMENTS--RESTRICTIONS IMPOSED BY OUR
SENIOR CREDIT FACILITIES AND THE INDENTURE GOVERNING THE NOTES LIMIT INTERSIL'S
ABILITY TO TAKE CERTAIN ACTIONS.
We cannot assure you that the operating and financial restrictions and
covenants in our debt instruments, including the senior credit facilities and
the notes, will not adversely affect our ability to finance our future
operations or capital needs or engage in other business activities that may be
in our interest.
Intersil's senior credit facilities require it to maintain certain
financial ratios which become more restrictive over time. Intersil's ability to
comply with such ratios may be affected by events beyond our control. A breach
of any of these covenants or Intersil's inability to comply with the required
financial ratios could result in a default under Intersil's senior credit
facilities. In the event of any such default, the lenders under Intersil's
senior credit facilities could elect to declare all borrowings outstanding,
together with accrued interest and other fees, to be due and payable, to require
us to apply all of Intersil's available cash to repay such borrowings or to
prevent Intersil from making debt service payments on the notes, any of which
would be an event of default under the notes.
See 'Description of Certain Indebtedness.'
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HOLDING COMPANY STRUCTURE
We are a holding company whose only material asset is the capital stock of
Intersil. We conduct no business (other than in connection with our ownership of
the capital stock of Intersil and the performance of our obligations with
respect to the PIK Notes and certain other administrative obligations), and
depend on distributions from Intersil to meet our obligations. Because of our
and Intersil's substantial leverage and our dependence upon the operating
performance of Intersil to generate distributions to us, there can be no
assurance that any such distributions will be adequate to fund our obligations
when due. In addition, the senior credit facilities, the PIK Notes, the notes
and applicable Federal and state law impose restrictions on the payment of
dividends and the making of loans by Intersil to us. As a result of the
foregoing restrictions, we may be required to:
o refinance the Indebtedness,
o seek additional debt or equity financing,
o cause Intersil to refinance all or a portion of its indebtedness with
indebtedness containing covenants allowing us to gain access to
Intersil's cash flow or assets,
o cause Intersil to obtain modifications of the covenants restricting our
access to cash flow or assets of Intersil contained in Intersil's
financing documents (including, without limitation, the senior credit
facilities and the notes),
o merge Intersil with us, which merger would be subject to compliance with
applicable debt covenants and the consents of certain lenders or
o pursue a combination of the foregoing actions.
The measures we may undertake to gain access to sufficient cash flow to
meet our future debt service requirements will depend on general economic and
financial market conditions, as well as our financial condition and the
financial condition of Intersil and other relevant factors existing at the time.
No assurance can be given that any of the foregoing measures can be
accomplished, and the failure to do so could have a material adverse effect on
the value of the Warrants and Warrant Shares.
CYCLICAL INDUSTRY--DOWNTURNS IN THE BUSINESS CYCLE COULD ADVERSELY AFFECT OUR
BUSINESS.
The semiconductor industry is highly cyclical. In 1998, the semiconductor
industry experienced a downturn. In 1999, the market for semiconductors began to
improve from 1998 levels based upon, among other things, the recovering Japanese
and Asian economy and increased demand in communications end markets. WSTS
forecasts semiconductor market size for fiscal year 1999 to be $145.2 billion
dollars or an increase of 15.6% from calendar year 1998. Our markets may
experience other, possibly more severe and prolonged, downturns in the future.
We may also experience significant changes in our operating profit margins as a
result of variations in sales, changes in product mix, price competition for
orders and costs associated with the introduction of new products.
The markets for our products depend on continued demand for personal
computer, industrial, telecommunications, consumer electronics and automotive
goods. There can be no assurance that these end-user markets will not experience
changes in demand that will adversely affect our prospects.
NEW PRODUCT DEVELOPMENT AND TECHNOLOGICAL CHANGE--OUR INABILITY TO INTRODUCE NEW
PRODUCTS COULD ADVERSELY AFFECT US; NEW TECHNOLOGIES COULD ALSO REDUCE THE
DEMAND FOR OUR PRODUCTS.
Rapidly changing technology and industry standards, along with frequent new
product introductions, characterize the semiconductor industry. Our success in
these markets depends on our ability to design, develop, manufacture, assemble,
test, market and support new products and enhancements on a timely and
cost-effective basis. There can be no assurance that we will successfully
identify new product opportunities and develop and bring new products to market
in a timely and cost-effective manner or that products or technologies developed
by others will not render our products or technologies obsolete or
noncompetitive. A fundamental shift in technology in our product markets could
have a material adverse effect on us.
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COMPETITION--OUR BUSINESS IS VERY COMPETITIVE AND INCREASED COMPETITION COULD
ADVERSELY AFFECT US.
The semiconductor industry, and the semiconductor product markets
specifically, are highly competitive. Competition is based on price, product
performance, quality, reliability and customer service. The gross profit margins
realizable in our markets can differ across regions, depending on the economic
strength of end-product markets in those regions. Even in strong markets, price
pressures may emerge as competitors attempt to gain more share by lowering
prices. Competition in the various markets in which we participate comes from
companies of various sizes, many of which are larger and have greater financial
and other resources than we have and thus can better withstand adverse economic
or market conditions. In addition, companies not currently in direct competition
with us may introduce competing products in the future.
RISKS RELATED TO USE OF ESTIMATES IN ADJUSTED EBITDA--IF ACTUAL RESULTS DIFFER
FROM THE ESTIMATES UNDERLYING SOME OF THE PRO FORMA INFORMATION AND ADJUSTED
EBITDA, OUR RESULTS MAY BE LESS FAVORABLE THAN ANTICIPATED.
Prior to the consummation of the transactions contemplated by the Master
Transaction Agreement, the semiconductor business was conducted as a part of
Harris. For each fiscal year since 1997, the semiconductor business had incurred
about $10.0 million in costs for general and administrative activities as
allocated by Harris. We will begin to provide many of these services on a
stand-alone basis. However, to provide certain of these services for a
transition period following the closing of the transactions contemplated by the
Master Transaction Agreement, we entered into a Transition Services Agreement
with Harris pursuant to which we obtain many of these services substantially
comparable to those previously provided. See 'The Transactions--Transition
Services Agreement.' The pro forma financial information contained herein
assumes that we would have incurred annual expenses of $3.0 million to obtain
these services, either from Harris, under the Transition Services Agreement, or
otherwise. Charges under the Transition Services Agreement may exceed historical
charges or upon termination of the agreement we might not be able to obtain
similar facilities and services on comparable terms. If our actual expenses
exceed the estimates, our operating results will be less favorable than those
set forth in the pro forma financial statements.
The Adjusted EBITDA information contained in this prospectus is based on
anticipated cost savings that our management believes are reasonable, including
cost savings resulting from a plant closure in January 1999 and certain other
cost savings anticipated in connection with other initiatives. We cannot assure
you that the anticipated cost savings will be achieved. If our actual savings
are less than our estimates or adversely affect our revenues or operations, our
results and Adjusted EBITDA will be less than we anticipate and less than the
amounts set forth in this prospectus.
FLUCTUATION OF OPERATING RESULTS--OUR OPERATING RESULTS MAY BE ADVERSELY
AFFECTED BY FORCES BEYOND OUR CONTROL.
Intense competition and a general slowdown in the semiconductor industry
worldwide have resulted in decreases in the average selling prices of many of
our products. We expect that average selling prices for our products will
continue to decline in the future. A decline in average selling prices for our
products, if not offset by reductions in the costs of providing these products,
would decrease our gross profits and could have a material adverse effect on our
business, financial condition and results of operation.
CURRENCY EXCHANGE RATE FLUCTUATIONS--FLUCTUATIONS IN THE EXCHANGE RATE OF THE
U.S. DOLLAR AND OTHER FOREIGN CURRENCIES COULD HAVE A MATERIAL ADVERSE EFFECT ON
OUR FINANCIAL PERFORMANCE AND RESULTS OF OPERATIONS.
While we and our subsidiaries transact business primarily in U.S. dollars
and most of our revenues are denominated in U.S. dollars, a portion of our costs
and revenues are denominated in other currencies, such as the Euro, the
Malaysian Ringgit and the Japanese Yen. As a result, changes in the exchange
rates of these currencies or any other applicable currencies to the U.S. dollar
will affect our costs of goods sold and operating margins and could result in
exchange losses. The impact of future exchange rate fluctuations on our results
of operations cannot be accurately predicted. From time to time, we have engaged
in, and may continue to engage in, exchange rate hedging activities in an effort
to mitigate the impact of exchange rate
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fluctuations. However, any hedging technique that we may implement may not be
effective or may result in foreign exchange hedging losses. In the past, we have
incurred such losses, including $13.3 million during fiscal year 1998 and $11.4
million during fiscal year 1999.
RISK ASSOCIATED WITH THE CONVERSION BY CERTAIN EU MEMBER STATES TO THE
'EURO'--THE CONVERSION TO THE EURO MAY ADVERSELY AFFECT US.
We may be exposed to some risks as a result of the conversion by some
European Union member states of their respective currencies to the 'Euro' as
their legal currency on January 1, 1999. The conversion rates between such
member states' currencies and the Euro have been fixed by the Council of the
European Union. Risks related to the conversion to the Euro could include, among
other things:
o effects on pricing due to increased cross-border price transparency;
o costs of modifying information systems, including both software and
hardware;
o costs of relying on third parties whose systems also require
modification;
o changes in the conduct of business and in the principal markets for our
products and services; and
o changes in the currency exchange rate risk.
See 'Management's Discussion and Analysis of Financial Condition and
Results of Operations-- Liquidity and Capital Resources.'
RISKS ASSOCIATED WITH INTERNATIONAL OPERATIONS--OUR INTERNATIONAL OPERATIONS
SUBJECT US TO RISKS INHERENT IN DOING BUSINESS ON AN INTERNATIONAL LEVEL.
We cannot be certain to what extent our future operations and earnings may
be adversely affected by the risks related to or any other problems arising from
operating in international markets. We will have significant operations in Kuala
Lumpur, Malaysia. The following are certain risks inherent in doing business on
an international level:
o changes in import duties;
o trade restrictions;
o transportation delays;
o work stoppages;
o economic and political instability;
o foreign currency fluctuations; and
o unexpected changes in the laws and policies of the United States and of
the countries in which we manufacture and sell our products.
DEPENDENCE ON SOURCES OF SUPPLY--THE LOSS OF SOURCES OF SUPPLY COULD ADVERSELY
AFFECT US.
Our results of operations could be adversely affected if we were unable to
obtain adequate supplies of raw materials in a timely manner or if the costs of
raw materials increased significantly. Our manufacturing operations depend upon
obtaining adequate supplies of raw materials on a timely basis. We purchase raw
materials, such as silicon wafers, lead frames, mold compound, ceramic packages
and chemicals and gases, from a number of suppliers on a just-in-time basis.
From time to time, suppliers may extend lead times, limit supplies or increase
prices due to capacity constraints or other factors.
MANUFACTURING RISKS--WE MAY NOT BE ABLE TO MAINTAIN MANUFACTURING EFFICIENCY OR
AVOID MANUFACTURING DIFFICULTIES.
Our manufacturing processes are highly complex, require advanced and costly
equipment and are continuously being modified in an effort to improve yields and
product performance. Impurities or other
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difficulties in the manufacturing process can lower yields. Our manufacturing
efficiency will be an important factor in our future profitability, and we
cannot assure you that we will be able to maintain our manufacturing efficiency
or increase manufacturing efficiency to the same extent as our competitors.
In addition, as is common in the semiconductor industry, we have from time
to time experienced difficulty in beginning production at new facilities or in
effecting transitions to new manufacturing processes. As a consequence, we have
suffered delays in product deliveries or reduced yields. We may experience
manufacturing problems in achieving acceptable yields or experience product
delivery delays in the future as a result of, among other things, capacity
constraints, construction delays, upgrading or expanding existing facilities or
changing our process technologies, any of which could result in a loss of future
revenues. Our operating results could also be adversely affected by the increase
in fixed costs and operating expenses related to increases in production
capacity if revenues do not increase proportionately.
DEPENDENCE ON KEY PERSONNEL--OUR SUCCESS WILL CONTINUE TO DEPEND TO A
SIGNIFICANT EXTENT ON OUR EXECUTIVES AND OTHER KEY PERSONNEL.
Our success depends to a significant degree upon the continued
contributions of key management, engineering, sales and marketing, finance and
manufacturing personnel, many of whom would be difficult to replace. The loss of
the services of certain of these executives could have an adverse effect on us.
There can be no assurance that we will continue to be able to attract and retain
the highly skilled personnel that we require to grow and operate profitably.
See 'Management.'
CONTROLLING SHAREHOLDERS--A LIMITED NUMBER OF PERSONS INDIRECTLY CONTROL OUR
COMPANY.
Sterling and certain key employees of our company own about 90% of our
outstanding voting stock. By virtue of such stock ownership, they have the power
to direct our affairs and will be able to determine the outcome of all matters
required to be submitted to shareholders for approval, including the election of
a majority of our directors and amendment of our Certificate of Incorporation.
Sterling also has a significant equity investment in Fairchild Semiconductor,
one of our competitors. See 'Business--Competition.' We cannot assure you that
these persons will not exercise their control over us in a manner adverse to
your interests.
See 'Ownership of Capital Stock.'
DEPENDENCE ON INTELLECTUAL PROPERTY--WE USE A SIGNIFICANT AMOUNT OF INTELLECTUAL
PROPERTY IN OUR BUSINESS. IF WE ARE UNABLE TO PROTECT THIS INTELLECTUAL
PROPERTY, OUR BUSINESS MAY BE ADVERSELY AFFECTED.
Our future success and competitive position depend in part upon our ability
to obtain and maintain proprietary technology used in our principal products. We
rely on intellectual property rights, including, but not limited to, rights
existing under patent, trade secret, trademark, maskwork and copyright law, to
protect such technology. Some of our technology is not covered by any patent or
patent application, and there is risk that:
o some of the approximately 1,400 patents that we own and other numerous
patents that we license from Harris may be invalidated, circumvented,
challenged or licensed to others;
o the license rights granted by Harris, or the patents that we own, will
not provide competitive advantages to us; or
o some of our pending or future patent applications will not be issued
within the scope of the claims sought by us, if at all.
Further, others may develop technologies that are similar or superior to our
technology, duplicate our technology or design around our patents. In addition,
effective patent, trademark, copyright, maskwork and trade secret protection may
be unavailable, limited or not applied for in certain foreign countries.
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Under our intellectual property agreement with Harris, Harris has limited,
royalty-free, worldwide, nonexclusive license rights (without right to
sublicense) to some of our technology. Under our patent assignment and services
agreements with Harris, Harris retained the ownership and rights to certain
patents for a period of three years after which time the patents will be
assigned to us, provided the patents are not the subject of litigation at that
time, and with the proviso that any binding obligations on third parties to make
royalty or other payments respecting the patents will be retained by Harris.
Furthermore, the license agreements under which third parties are licensed to
our intellectual property (or intellectual property that is assigned to us) and
under which Harris was cross-licensed to the third party's intellectual
property, may not be assignable to us. For this situation, Harris agreed to
partially indemnify us for limited periods in limited situations against claims
that may be made that our activities infringe the intellectual property rights
of others. The extent and duration of this indemnification may be insufficient
to shield us from the need to make monetary payments to third parties or to
facilitate the continued manufacture, use or sale of some affected products.
Vigorous protection and pursuit of intellectual property rights or
positions characterize the semiconductor industry. Such vigor and pursuit have
resulted in significant and often protracted and expensive litigation.
Currently, no material intellectual property litigation is pending against us.
However, we may from time to time be notified of claims that we may be
infringing third party patents or other intellectual property rights. For
example, a countersuit has been brought against Harris by one of its competitors
alleging infringement of certain of the competitor's patents and we have been
joined as a party. Our liability from this litigation, if any, that arises out
of the conduct of the semiconductor business prior to closing is covered by
Harris' agreement to provide limited indemnities. We do not believe that the
litigation will have a material adverse effect on our business, financial
condition or results of operations. It is possible, however, that the litigation
will be resolved in a manner that is materially adverse to us. If necessary or
desirable, we may, from time to time, seek licenses to patents or other
intellectual property rights. However, we cannot be certain that we will obtain
such licenses or that the terms of any offered licenses will be acceptable to
us, and any such acquisition or license could require expenditure of substantial
time and other resources. Furthermore, some licenses or other rights to
intellectual property of third parties that we use, such as software, may not be
freely assignable by Harris to us. Our failure to obtain a license from a third
party for technology we use could cause us to incur substantial liabilities and
to suspend the manufacture or shipment of products or our use of processes
requiring the technology. Litigation could result in significant expense to us,
adversely affecting sales of the challenged product or technology and diverting
the efforts of our technical and management personnel, whether or not such
litigation is determined in our favor. In the event of an adverse outcome in any
such litigation, we may be required to:
o pay substantial damages and incur significant attorneys' fees;
o cease the manufacture, use, sale or importation of infringing products;
o expend significant resources to develop or acquire non-infringing
technology;
o discontinue the use of some processes; or
o obtain licenses to intellectual property covering the infringing
technology.
We also seek to protect our proprietary technology, including technology
that may not be patented or patentable, in part by confidentiality agreements
and, if applicable, inventors' rights agreements with our collaborators,
advisors, employees and consultants. There can be no assurance that these
agreements will not be breached, that we will have adequate remedies for any
breach or that such persons or institutions will not assert rights to
intellectual property arising out of such research.
Some of our current licenses to use others' technology will expire during
the next several years, unless extended. In particular, we currently have access
to a portfolio of patents under a cross-license agreement that expires in the
year 2000. We will then need to negotiate renewals of these agreements or obtain
the technology from alternative sources. There is no guarantee that we will be
able to obtain such renewals on substantially similar terms as those that
currently exist.
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RISKS RELATING TO FUTURE ACQUISITIONS--WE MAY NOT BE ABLE TO CONSUMMATE FUTURE
ACQUISITIONS, AND CERTAIN CONSEQUENCES OF THOSE ACQUISITIONS WHICH WE DO
COMPLETE MAY ADVERSELY AFFECT US.
We plan to pursue acquisitions of related businesses. We might not be able
to identify acquisitions, or, if we complete any acquisition, we may not realize
any of the benefits anticipated from such acquisitions. Financing for
acquisitions may not be available; and, depending on the terms of such
acquisitions, such financing could be restricted by the terms of our senior
credit facilities and the indenture governing the Notes. The process of
integrating acquired operations into our existing operations may result in
unforeseen operating difficulties and may require significant financial
resources that would otherwise be available for the ongoing development or
expansion of our existing operations. Possible future acquisitions could result
in the incurrence of additional debt, contingent liabilities and amortization
expenses related to goodwill and other intangible assets, all of which could
materially adversely affect our financial condition and operating results.
ENVIRONMENTAL LIABILITIES AND OTHER GOVERNMENTAL REGULATIONS--REGULATORY MATTERS
COULD FORCE US TO INCUR SIGNIFICANT CAPITAL AND OPERATIONAL COSTS.
We are subject to various environmental laws and regulations relating to
the management, disposal and, under some circumstances, remediation of hazardous
materials and wastes and the discharge of pollutants into the air and water. We
are also subject to laws and regulations relating to workplace safety and worker
health which, among other things, regulate employee exposure to hazardous
substances. Under the Master Transaction Agreement, Harris agreed to indemnify
us for substantially all environmental liabilities related to events or
activities occurring prior to the closing of the transactions contemplated by
the Master Transaction Agreement. The nature of our ongoing operations exposes
us to the risk of liabilities or claims with respect to environmental matters,
including those relating to the on- and off-site disposal and release of
hazardous materials, and there can be no assurance that material costs will not
be incurred in connection with such liabilities or claims.
Based on our experience, we believe that the future cost of compliance with
existing environmental and health and safety laws and regulations (and liability
for known environmental conditions even without the Harris indemnity) will not
have a material adverse effect on our business, financial condition or results
of operations. However, we cannot predict:
o what environmental or health and safety legislation or regulations will
be enacted in the future;
o how existing or future laws or regulations will be enforced, administered
or interpreted; or
o the amount of future expenditures which may be required to comply with
these environmental or health and safety laws or regulations or to
respond to future cleanup matters or other environmental claims.
See 'Business--Environmental Matters.'
ABSENCE OF PUBLIC MARKET FOR THE WARRANTS AND THE WARRANT SHARES
The Warrants are eligible for trading in THE PORTAL Market. Intersil
Holding does not intend to apply for listing or quotation of the Warrants or the
Common Stock underlying the Warrants on any securities exchange or stock market.
There can be no assurance regarding the future development of a market for the
Warrants or Warrant Shares, the ability of the holders of the Warrants or
Warrant Shares to sell such securities, or the price at which such holders may
be able to sell such securities. If such a market were to develop, the Warrants
and Warrant Shares could trade at prices that may be higher or lower than the
price paid by selling holders. Future trading prices of the Warrants and the
Warrant Shares will depend on many factors, including, among other things,
prevailing interest rates, our operating results and the market for similar
securities. The Initial Purchasers have advised Intersil Holding that they
intend to make a market in the Warrants, subject to the limits imposed by the
Securities Act and the Exchange Act and subject to any limits imposed during the
pendency of any registration statement or shelf registration statement filed
under the Securities Act; however, the Initial Purchasers are not obligated to
do so, and may discontinue such market-marking at any time without notice.
Therefore, no assurance can be given as to the liquidity of any
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trading market for the Warrants and the Warrant Shares or that an active market
for the Warrants and the Warrant Shares will develop.
DISTRIBUTIONS PAID ON THE CLASS A COMMON STOCK MAY NOT CONSTITUTE 'DIVIDENDS'
FOR U.S. FEDERAL INCOME TAX PURPOSES.
Although we do not expect to make any distributions on the Class A Common
Stock for the foreseeable future, if we did so, we might not have sufficient
current and/or accumulated earnings and profits (as calculated for U.S. Federal
tax purposes) for such distribution to constitute a dividend. Any such
distribution will be taxable as a dividend only to the extent of our current
and/or accumulated earnings and profits. To the extent the amount of the
distribution exceeds our current and/or accumulated earnings and profits:
o the distribution will be treated as a return of capital (on a
dollar-for-dollar basis) to the extent of your tax basis in the Class A
Common Stock,
o any excess will be treated as capital gain, and
o corporate holders would not be allowed to take the dividends-received
deduction with respect to any portion of the distribution that does not
consititute a dividend (i.e., the amount by which the distribution
exceeds our current and/or accumulated earnings and profits).
You should refer to the section of this prospectus titled 'Certain United
States Federal Income Tax Considerations' for additional information concerning
U.S. Federal income tax issues applicable to this offering. In addition, we
recommend that you contact your tax advisor to discuss and consider all tax
issues that might be relevant to your particular situation.
YEAR 2000 COMPLIANCE--WE COULD BE ADVERSELY AFFECTED IF YEAR 2000 PROBLEMS ARE
SIGNIFICANT.
Our inability to remedy our own Year 2000 problems or the failure of third
parties to do so may cause business interruptions or shutdown, financial loss,
regulatory actions, reputational harm and legal liability. We cannot assure you
that our Year 2000 program or the programs of third parties who do business with
us will be effective, that our estimate about the timing and cost of completing
our program will be accurate or that all remediation will be complete by the
year 2000.
We are dependent on business systems (which include our information
technology systems and non-information technology devices with embedded
microprocessors) in operating our business. We also depend on the proper
functioning of business systems of third parties, such as our vendors and
customers. We are currently identifying, testing and correcting Year 2000
problems in systems throughout our operations, including those systems embedded
in our machinery and equipment. We are also reviewing the Year 2000 readiness
and compliance of our principal customers and suppliers of products and
services, in order to identify and assess any negative impacts that
non-compliance could have on us. The failure of our business systems or the
business systems of third parties to interpret properly the upcoming calendar
year 2000 could have a material adverse effect on our financial condition,
results of operations, cash flow and business.
See 'Management's Discussion and Analysis of Financial Condition and
Results of Operations.'
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FORWARD-LOOKING STATEMENTS
This prospectus includes forward-looking statements. These statements
relate to analyses and other information which are based on forecasts of future
results and estimates of amounts not yet determinable. These statements also
relate to our future prospects, developments and business strategies.
These forward-looking statements are identified by their use of terms and
phrases such as 'anticipate,' 'believe,' 'could,' 'estimate,' 'expect,'
'intend,' 'may,' 'plan,' 'predict,' 'project,' 'will' and similar terms and
phrases, including references to assumptions. These statements are contained in
sections entitled 'Summary,' 'Risk Factors,' 'Management's Discussion and
Analysis of Financial Condition and Results of Operations,' 'Business' and other
sections of this prospectus.
These forward-looking statements involve known and unknown risks,
uncertainties and other factors that may cause actual results to be materially
different. These factors include, but are not limited to, the following: changes
in general economic and business conditions; changes in current pricing levels;
changes in political, social and economic conditions and local regulations;
changes in technology and the development of new technology; foreign currency
fluctuations; reductions in sales to any significant customers; changes in sales
mix; industry capacity; competition; disruptions of established supply channels;
manufacturing capacity constraints; the availability, terms and deployment of
capital; and our ability to accurately estimate the cost of systems preparation
and successfully implement for Year 2000 compliance. Our risks are more
specifically described in the 'Risk Factors' section of this prospectus. If one
or more of these risks or uncertainties materialize, or if underlying
assumptions prove incorrect, our actual results may vary materially from those
expected, estimated or projected.
We do not undertake to update our forward-looking statements or risk
factors to reflect future events or circumstances.
USE OF PROCEEDS
We will not receive any proceeds from the registration or subsequent sale
of the Warrants or the Warrant Shares. Intersil used the gross proceeds from the
sale of the 200,000 units, each consisting of $1,000 principal amount of 13 1/4%
Senior Subordinated Notes of Intersil and one Warrant, together with the $220.0
million from borrowing by Intersil under the senior credit facilities, and a
$120.0 million cash equity contribution by us to Intersil as follows: (i)
approximately $520.0 million to pay for the purchase price of the semiconductor
business and (ii) $20.0 million to pay fees and expenses relating to the
acquisition, the financing in connection with the acquisition and the
application of the proceeds of the financing.
17
<PAGE>
CAPITALIZATION
The following table sets forth the capitalization of Intersil and Intersil
Holding (on a consolidated basis) as of October 1, 1999. This table should be
read in conjunction with 'Unaudited Pro Forma Combined Condensed Financial
Statements,' 'Management's Discussion and Analysis of Financial Condition and
Results of Operations' and our Consolidated Financial Statements included
elsewhere in this prospectus.
<TABLE>
<CAPTION>
OCTOBER 1, 1999 OCTOBER 1, 1999
---------------- ----------------
INTERSIL INTERSIL HOLDING
CORPORATION CONSOLIDATED
---------------- ----------------
(IN MILLIONS)
<S> <C> <C>
Long-term Debt, including Current Portion:
Senior Credit Facilities:
Revolving Credit Facility(1)...................................... $ 15.0 $ 15.0
Tranche B Senior Term Facility(2)................................. 205.0 205.0
13 1/4% Senior Subordinated Notes(3)................................ 199.7 199.7
13.5% Subordinated Holding PIK Note(4).............................. -- 30.2
11.13% Seller Holding PIK Note(5)................................... -- 91.4
Other............................................................. 4.5 4.5
------ ------
Total long-term debt......................................... 424.2 545.8
------ ------
Preferred Stock(6).................................................... -- 86.4
Shareholders' Equity(6):
Common stock........................................................ -- 1.0
Additional paid-in capital(3)(7).................................... 212.2 3.2
Retained deficit.................................................... (20.1) (20.1)
Accumulated other comprehensive income.............................. .4 .4
------ ------
Total shareholders' equity................................... 192.5 (15.5)
------ ------
Total capitalization.................................... $616.7 $616.7
------ ------
------ ------
</TABLE>
- - ------------------
(1) Represents the drawn portion of $70.0 million available under the Revolving
Credit Facility.
(2) The Tranche B Senior Term Facility will mature in 2005 and will require 1%
of the original principal amount to be repaid in each of the first five
years.
(3) The notes were issued as part of the units, which consist of $200.0 million
principal amount of 13 1/4% Senior Subordinated Notes due 2009 and Warrants
to purchase 5,555,560 shares of Class A Common Stock of Intersil Holding.
Reflects the gross proceeds from the units offering of $200.0 million net of
$0.3 million ascribed to the Warrants. The $0.3 million associated with the
sale of the Warrants is reflected as an increase to additional paid-in
capital of Intersil. The value ascribed to the Warrants does not reflect
their market value.
(4) Citicorp Mezzanine Partners, L.P. contributed $30.0 million in cash to
Intersil Holding in exchange for the 13.5% Subordinated Holding PIK Note due
2010 and warrants to purchase 5,555,560 shares of Class A Common Stock of
Intersil Holding. Reflects the gross proceeds of $30.0 million net of $0.3
million ascribed to the warrants. The $0.3 million associated with the sale
of the Warrants is reflected as an increase to additional paid-in capital of
Intersil Holding. The 13.5% Subordinated Holding PIK Note due 2010 is an
obligation of Intersil Holding only and is not reflected on the historical
or the pro forma financial statements of Intersil.
(5) The 11.13% Seller Holding PIK Note issued to Harris will mature in 2010 and
does not require payment of cash interest until then. The 11.13% Seller
Holding PIK Note is an obligation of Intersil Holding only and is not
reflected in the historical or pro forma financial statements of Intersil,
and the proceeds have been contributed to Intersil's capital.
(6) Sterling Holding Company, LLC and senior management, other key employees and
certain other investors purchased shares of 12% Series A Cumulative
Compounding Preferred Stock and common stock of Intersil Holding, for a
total of about $76.5 million in cash and Harris purchased shares of 12%
Series A Cumulative Compounding Preferred Stock and common stock of Intersil
Holding for about $8.5 million in cash. The total cash Preferred Stock
investment was $85.0 million, and the total cash common stock investment was
$5.0 million. See 'Ownership of Capital Stock.' Intersil has 1,000 shares
authorized and 1,000 shares issued and outstanding of its $.01 par value
common stock.
(7) Intersil Holding Consolidated Shareholder's Equity is adjusted to eliminate
the investment in Intersil of $210.0 million.
18
<PAGE>
UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
The following unaudited pro forma financial statements for Intersil Holding
are based on or derived from our historical predecessor Consolidated Financial
Statements included elsewhere in this prospectus. The acquisition of the
semiconductor business was consummated on August 13, 1999.
The Unaudited Pro Forma Combined Statements of Operations of Intersil
Corporation and Intersil Holding give effect to the transactions as if they had
occurred as of July 4, 1998. The transactions and the related adjustments are
described in the accompanying notes. The pro forma financial statements do not
purport to represent what Intersil's or Intersil Holding's results of operations
or financial position would actually have been had the transactions in fact
occurred on the dates specified nor do they purport to project the results of
operations or financial position for any future period or at any future date.
The acquisition of the semiconductor business has been accounted for using
the purchase method of accounting. After the acquisition of the semiconductor
business, the total purchase cost of the acquisition was allocated to the
tangible and intangible assets and liabilities of the semiconductor business
based upon their respective fair values. The pro forma adjustments are based
upon preliminary estimates and certain assumptions that our management believes
are reasonable in the circumstances. In the opinion of our management, all
adjustments that are necessary to present fairly the pro forma data have been
made. After definitive valuations have been made, the final allocation of the
purchase price could differ from the preliminary estimates used herein which
would result in changes to the pro forma financial statements; however, any
changes are not expected to be material. The purchase price of the acquisition
of the semiconductor business is subject to a post-closing adjustment, which has
not been finalized.
The Pro Forma Combined Condensed Financial Statements should be read in
conjunction with our Consolidated Financial Statements and notes thereto as of
October 1, 1999 and July 2, 1999 and for the fiscal year ended July 2, 1999 the
6 weeks ended August 13, 1999, and the unaudited 13 weeks ended October 2, 1998
and the unaudited 7 weeks ended October 1, 1999, included elsewhere in this
Registration Statement, 'Forward Looking Statements,' 'Management's Discussion
and Analysis of Financial Condition and Results of Operations' and 'Risk
Factors--Risks Related to Use of Estimates in Pro Forma Information and Adjusted
EBITDA.'
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
FISCAL YEAR ENDED JULY 2, 1999
------------------------------------------------------------------------
INTERSIL CORPORATION INTERSIL HOLDING
----------------------------------------- ---------------------------
HISTORICAL CONSOLIDATED
(PREDECESSOR) ADJUSTMENTS PRO FORMA ADJUSTMENTS PRO FORMA
------------- ----------- --------- ----------- ------------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C>
Sales:
Product sales............................ $ 532.7 $ -- $ 532.7 $ -- $532.7
Costs and Expenses:
Cost of product sales.................... 349.8 (10.0)(a) 339.8 339.8
Research and development................. 67.0 67.0 67.0
Marketing................................ 66.9 66.9 66.9
Administrative and general............... 17.1 3.0(b) 20.6 20.6
0.5(c)
Harris corporate expense allocation...... 9.3 (9.3)(b)
Intangible amortization.................. 2.4 10.5(e) 12.9 12.9
------- ------- ------- ------- ------
Operating income............................. 20.2 5.3 25.5 -- 25.5
Interest, net............................ (1.2) 48.5(d) 47.3 14.1(g) 61.4
------- ------- ------- ------- ------
Income (loss) before income taxes............ 21.4 (43.2) (21.8) (14.1) (35.9)
Income taxes (benefit)....................... (6.0) (16.8)(f) (22.8) (5.5)(f) (28.3)
------- ------- ------- ------- ------
Net income (loss)............................ 27.4 (26.4) 1.0 (8.6) (7.6)
Preferred dividends.......................... -- -- -- (10.2)(h) (10.2)
------- ------- ------- ------- ------
Net income (loss) to common shareholders..... $ 27.4 $ (26.4) $ 1.0 $ (18.8) $(17.8)
------- ------- ------- ------- ------
------- ------- ------- ------- ------
</TABLE>
See Accompanying Notes to Unaudited Pro Forma Combined Condensed Statement of
Operations.
19
<PAGE>
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
13 WEEKS ENDED OCTOBER 2, 1998
------------------------------------------------------------------------
INTERSIL CORPORATION INTERSIL HOLDING
----------------------------------------- ---------------------------
HISTORICAL CONSOLIDATED
(PREDECESSOR) ADJUSTMENTS PRO FORMA ADJUSTMENTS PRO FORMA
------------- ----------- --------- ----------- ------------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C>
Sales:
Product sales............................ $ 122.5 $ 122.5 $122.5
Costs and Expenses:
Cost of product sales.................... 80.5 (2.5)(a) 78.0 78.0
Research and development................. 14.8 14.8 14.8
Marketing................................ 16.0 16.0 16.0
Administrative and general............... 5.2 0.8 (b) 6.0 6.0
Harris corporate expense allocation...... 2.1 (2.1)(b)
Intangible amortization.................. 0.6 2.6 (e) 3.2 3.2
------- ------- ------- ------
Operating income............................. 3.3 1.2 4.5 4.5
Interest, net............................ (0.2) 12.1 (d) 11.9 3.5 (g) 15.4
------- ------- ------- ------- ------
Income (loss) before income taxes............ 3.5 (10.9) (7.4) (3.5) (10.9)
Income taxes (benefit)....................... (1.0) (4.3)(f) (5.3) (1.4)(f) (6.7)
------- ------- ------- ------- ------
Net income (loss)............................ 4.5 (6.6) (2.1) (2.1) (4.2)
Preferred dividends.......................... -- -- -- (2.6)(h) (2.6)
------- ------- ------- ------- ------
Net income (loss) to common
shareholders............................... $ 4.5 $ (6.6) $ (2.1) $ (4.7) $ (6.8)
------- ------- ------- ------- ------
------- ------- ------- ------- ------
</TABLE>
See Accompanying Notes to Unaudited Pro Forma Combined Condensed Statement of
Operations.
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
13 WEEKS ENDED OCTOBER 1, 1999
------------------------------------------------------------------------------------
6 WEEKS ENDED AUGUST 13, 1999
------------------------------------------------------- 7 WEEKS ENDED
PRO FORMA OCTOBER 1, 1999
INTERSIL ADJUSTMENTS ------------------------- INTERSIL
CORPORATION ---------------------- INTERSIL INTERSIL HOLDING
HISTORICAL INTERSIL INTERSIL CONSOLIDATED CORPORATION HOLDING CONSOLIDATED
(PREDECESSOR) CORPORATION HOLDING PRO FORMA HISTORICAL HISTORICAL PRO FORMA
------------- ----------- ------- ------------ ----------- ---------- ------------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C>
Sales:
Product sales............... $57.3 $ -- $ -- $ 57.3 $ 76.6 $ -- $133.9
Costs and Expenses:
Cost of product sales....... 39.6 (1.2)(a) 38.4 46.6 -- 85.0
Research and development.... 8.5 8.5 8.4 -- 16.9
Marketing................... 8.2 8.2 8.4 -- 16.6
Administrative and general.. 2.7 0.3 (b) 3.0 2.2 -- 5.2
Harris corporate expense
allocation............... 1.2 (1.2)(b) -- -- -- --
Intangible amortization..... 0.3 1.2 (e) 1.5 1.4 -- 2.9
In-process R&D charge....... -- -- 20.8 -- 20.8
----- ----- ----- ------ ------- ------ ------
Operating income (loss)......... (3.2) 0.9 -- (2.3) (11.2) -- (13.5)
Interest, net............... (0.1) 5.6 (d) 1.6 (g) 7.1 6.8 1.9 15.8
----- ----- ----- ------ ------- ------ ------
Income (loss) before income
taxes......................... (3.1) (4.7) (1.6) (9.4) (18.0) (1.9) (29.3)
Income taxes (benefit).......... (0.1) (1.8)(f) (0.6)(f) (2.5) 0.2 -- (2.3)
----- ----- ----- ------ ------- ------ ------
Net income (loss)............... (3.0) (2.9) (1.0) (6.9) (18.2) (1.9) (27.0)
Preferred dividends............. -- -- (1.2)(h) (1.2) -- (1.4) (2.6)
----- ----- ----- ------ ------- ------ ------
Net income (loss) to common
shareholders.................. $(3.0) $(2.9) $(2.2) $ (8.1) $ (18.2) $ (3.3) $(29.6)
----- ----- ----- ------ ------- ------ ------
----- ----- ----- ------ ------- ------ ------
</TABLE>
See Accompanying Notes to Unaudited Pro Forma Combined Condensed Statement of
Operations.
20
<PAGE>
NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENTS OF OPERATIONS
The unaudited pro forma consolidated statements of operations give effect
to the following adjustments:
(a) The total purchase price of $630.0 million was allocated to the assets and
liabilities of the semiconductor business based upon their approximate fair
value. The preliminary fair value of the net assets acquired exceeded the
purchase price resulting in negative goodwill. This negative goodwill was
allocated to property and equipment and identified intangible assets based
on their relative fair value as follows:
<TABLE>
<CAPTION>
ALLOCATION
FAIR VALUE OF OF EXCESS ADJUSTED
ASSETS ACQUIRED FAIR VALUE FAIR VALUE
--------------- ---------- ----------
<S> <C> <C> <C>
Net current assets........................................... $ 160.9 -- $160.9
Other amounts................................................ 9.0 -- 9.0
Property & equipment......................................... 486.0 $ (137.5) 348.5
Developed technology......................................... 80.0 (22.6) 57.4
Customer base................................................ 33.0 (9.3) 23.7
In-process research and development.......................... 29.0 (8.2) 20.8
Assembled workforce.......................................... 13.5 (3.8) 9.7
------- -------- ------
811.4 $ 181.4 $630.0
-------- ------
-------- ------
Purchase price............................................... 630.0
-------
Excess fair value............................................ $ 181.4
-------
-------
</TABLE>
As a result of the allocation of negative goodwill to property, plant and
equipment, the net book carrying value at August 13, of $403.7 million was
reduced by $55.2 million to the fair value of $348.5 million. Therefore, for
pro forma purposes, depreciation expense was reduced by $10.0 million, $2.5
million and $1.2 million for the fiscal year ended July 2, 1999, the 13
weeks ended October 2, 1998 and the 6 weeks ended August 13, 1999,
respectively.
(b) Historically, Harris allocated corporate headquarters expenses to the
semiconductor business based on the semiconductor business' net sales as a
percentage of Harris' net sales. This pro forma adjustment represents the
elimination of this allocation and our estimate of the cost of replacing
these services as a stand-alone company, calculated as follows:
<TABLE>
<CAPTION>
FISCAL YEAR ENDED 13 WEEKS ENDED 6 WEEKS ENDED
JULY 2, 1999 OCTOBER 2, 1998 AUGUST 13, 1999
----------------- --------------- ---------------
(IN MILLIONS)
<S> <C> <C> <C>
Harris corporate expenses allocation.............. $ 9.3 $ 2.1 $ 1.2
----- ----- -----
Company's anticipated expenses:
Finance, legal and professional................ 2.0 0.5 0.20
Human resources/benefits....................... 0.5 0.2 0.05
Other.......................................... 0.5 0.1 0.05
----- ----- -----
Total anticipated expenses................ 3.0 0.8 0.3
----- ----- -----
Net reduction..................................... $ 6.3 $ 1.3 $ 0.9
----- ----- -----
----- ----- -----
</TABLE>
(c) Represents compensation expense associated with a sign-on bonus granted to
certain senior managers.
(d) Represents interest expense associated with the indebtedness incurred in
connection with the acquisition of the semiconductor business, calculated
as follows:
<TABLE>
<CAPTION>
FISCAL YEAR ENDED 13 WEEKS ENDED 6 WEEKS ENDED
JULY 2, 1999 OCTOBER 2, 1998 AUGUST 13, 1999
----------------- --------------- ---------------
(IN MILLIONS)
<S> <C> <C> <C>
Interest on Notes (13.25% on $200.0 million)...... $26.5 $ 6.6 $ 3.1
Estimated interest on Senior Term Facility (9.30%
on $205.0 million)............................. 19.1 4.8 2.2
Estimated interest on Revolving Credit Facility
(8.55% on $15.0 million)....................... 1.3 0.3 0.1
----- ----- -----
Total cash interest expense............... 46.9 11.7 5.4
Deferred financing fees........................... 1.6 0.4 0.2
----- ----- -----
Total interest expense.................... $48.5 $12.1 $ 5.6
----- ----- -----
----- ----- -----
</TABLE>
21
<PAGE>
Financing fees are composed of $6.0 million on the notes (amortized over 10
years) and $6.2 million on the Senior Term Facility and Revolving Credit
Facility (amortized over 6 years).
(e) Represents the adjustment to reflect additional amortization expense for
the identified intangible assets. The preliminary appraisal of the acquired
business, after adjustment for negative goodwill, included $111.6 million
of identified intangible assets including, $57.4 million of developed
technology, $23.7 million to customer base, $9.7 million to assembled
workforce and $20.8 million of purchased in-process research and
development. The purchased in-process research and development related to
various products under development that had not yet reached technological
feasibility and had no future alternative uses. Pursuant to Regulation S-X,
the in-process research and development has been written off against
retained earnings and has not been reflected in the pro forma consolidated
statement of operations for the unaudited pro forma combined statement of
operations for the fiscal year ended July 2, 1999. The remaining identified
intangibles are being amortized over the following lives:
<TABLE>
<CAPTION>
IDENTIFIED FISCAL YEAR ENDED 13 WEEKS ENDED 6 WEEKS ENDED
INTANGIBLE AMOUNT LIFE JULY 2, 1999 OCTOBER 2, 1998 AUGUST 13, 1999
- - -------------------- ------ -------- ----------------- --------------- ---------------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C>
Developed
technology........ $57.4 11 years $ 5.2 $ 1.3 $ 0.6
Customer base....... 23.7 7 years 3.4 0.8 0.4
Assembled
workforce......... 9.7 5 years 1.9 0.5 0.2
----- ----- -----
$10.5 $ 2.6 $ 1.2
----- ----- -----
----- ----- -----
</TABLE>
The purchase price is subject to a post closing adjustment based on the
level of working capital on the closing date.
(f) Represents the adjustment of the pro forma income tax provision related to
the pro forma pretax adjustments for Intersil and Intersil Holding computed
on a stand-alone basis at an effective tax rate of 39% for domestic
adjustments.
(g) Represents interest expense associated with Intersil Holding's indebtedness
incurred in connection with the acquisition of the semiconductor business,
calculated as follows:
<TABLE>
<CAPTION>
FISCAL YEAR ENDED 13 WEEKS ENDED 6 WEEKS ENDED
JULY 2, 1999 OCTOBER 2, 1998 AUGUST 13, 1999
----------------- --------------- ---------------
(IN MILLIONS)
<S> <C> <C> <C>
Interest on Subordinated Holding PIK Note
(13.50% on $30.0 million)...................... $ 4.1 $ 1.0 $ 0.5
Interest on Seller Holding PIK Note
(11.13% on $90.0 million)...................... 10.0 2.5 1.1
----- ----- -----
$14.1 $ 3.5 $ 1.6
----- ----- -----
----- ----- -----
</TABLE>
(h) Represents the adjustment for the accretion of the 12% cumulative dividends
on the 85,000 shares of 12% Series A Cumulative Compounding Preferred
Stock, with a stated value of $1,000 per share.
22
<PAGE>
SELECTED HISTORICAL FINANCIAL DATA AND OTHER DATA
The following table sets forth selected historical financial data and
supplemental data for Intersil Holding and its predecessor. The historical
financial data as of and for fiscal years 1997, 1998, 1999 and the 6 weeks ended
August 13, 1999 are derived directly from our predecessor's audited Consolidated
Financial Statements included elsewhere in this prospectus, except for revenue
categorized by business unit, which is derived from our predecessor's books and
records. The historical financial data as of and for fiscal years ended 1995 and
1996, which are not included in this prospectus, and the 13 weeks ended October
2, 1998 included elsewhere in this prospectus, are derived directly from our
predecessor's unaudited Consolidated Financial Statements. The historical
financial data as of and for the 7 weeks ended October 1, 1999 are derived
directly from our unaudited Consolidated Financial Statements included elsewhere
in this prospectus. Such unaudited Consolidated Financial Statements include all
adjustments necessary for the fair presentation of the financial condition and
the results of operations for such periods and as of such dates. This
information should be read in conjunction with the Consolidated Financial
Statements included elsewhere in this prospectus and 'Management's Discussion
and Analysis of Financial Condition and Results of Operations.'
<TABLE>
<CAPTION>
PREDECESSOR PREDECESSOR
---------------------------------------------- ---------------------------------
FISCAL YEARS 13 WEEKS ENDED 6 WEEKS ENDED
---------------------------------------------- --------------- ---------------
1995 1996 1997 1998 1999 OCTOBER 2, 1998 AUGUST 13, 1999
------ ------ ------ ------ ------ --------------- ---------------
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenue:
Analog & Mixed-Signal................... $379.2 $393.6 $384.4 $390.4 $352.8 $ 79.8 $ 36.3
Discrete Power.......................... 128.2 176.6 154.5 176.4 161.6 38.5 18.0
Wireless................................ 0.0 0.0 6.4 10.0 18.3 4.2 3.0
------ ------ ------ ------ ------ ------ ------
Total revenue............................... $507.4 $570.2 $545.3 $576.8 $532.7 $122.5 $ 57.3
------ ------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------ ------
Gross profit................................ $178.5 $227.1 $199.3 $207.5 $182.9 $ 42.0 $ 17.7
Research and development.................... 50.6 69.4 75.2 75.1 67.0 14.8 8.5
Selling, general and administrative......... 94.6 103.6 99.3 98.2 84.0 21.2 10.9
Harris corporate expense allocation......... 9.1 10.3 10.0 10.0 9.3 2.1 1.2
Intangible amortization..................... 2.3 2.3 2.3 2.3 2.4 0.6 0.3
In-process R&D charge....................... -- -- -- -- -- -- --
------ ------ ------ ------ ------ ------ ------
Operating income (loss)..................... 21.9 41.5 12.5 21.9 20.2 3.3 (3.2)
Interest, net............................... 0.6 (1.0) (0.6) (0.9) (1.2) (0.2) (0.1)
------ ------ ------ ------ ------ ------ ------
Income (loss) before income taxes........... 21.3 42.5 13.1 22.8 21.4 3.5 (3.1)
Income taxes (benefit)...................... (4.3) 2.6 1.9 9.9 (6.0) (1.0) (0.1)
------ ------ ------ ------ ------ ------ ------
Net income (loss)........................... 25.6 39.9 11.2 12.9 27.4 4.5 (3.0)
Preferred dividends......................... -- -- -- -- -- -- --
------ ------ ------ ------ ------ ------ ------
Net income (loss) to common shareholders.... $ 25.6 $ 39.9 $ 11.2 $ 12.9 $ 27.4 $ 4.5 $ (3.0)
------ ------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------ ------
LOSS PER SHARE:
Basic and diluted...........................
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
(IN MILLIONS):
Basic and diluted...........................
SUPPLEMENTAL DATA:
Depreciation................................ $ 44.5 $ 47.6 $ 50.2 $ 65.0 $ 78.2 $ 19.0 $ 8.7
Capital expenditures........................ $ 80.4 $141.8 $173.3 $ 90.2 $ 38.6 $ 13.1 $ 1.9
Total interest expense...................... $ -- $ -- $ -- $ -- $ 0.1 $ -- $ --
Ratio of earnings to fixed
charges(1)................................ 9.5x 21.2x 7.0x 11.9x 10.7x 8.0x (3)
Ratio of earnings to fixed charges and
preferred stock dividends(2).............. 9.5x 21.2x 7.0x 11.9x 10.7x 8.0x (4)
BALANCE SHEET DATA (END OF PERIOD):
Cash........................................ $ -- $ -- $ -- $ -- $ -- $ -- $ 1.4
Total assets................................ 546.2 647.0 773.3 810.3 761.2 801.0 736.1
Long-term debt, including current portion... -- -- 1.4 4.1 4.6 4.0 4.5
Preferred Stock............................. -- -- -- -- -- -- --
Total shareholders' equity (deficit)........ 456.2 520.9 646.2 699.1 658.9 705.7 657.3
<CAPTION>
SUCCESSOR
---------------
7 WEEKS ENDED
---------------
OCTOBER 1, 1999
---------------
<S> <C>
STATEMENT OF OPERATIONS DATA:
Revenue:
Analog & Mixed-Signal................... $ 46.5
Discrete Power.......................... 26.9
Wireless................................ 3.2
-------
Total revenue............................... $ 76.6
-------
-------
Gross profit................................ $ 30.0
Research and development.................... 8.4
Selling, general and administrative......... 10.6
Harris corporate expense allocation......... --
Intangible amortization..................... 1.4
In-process R&D charge....................... 20.8
-------
Operating income (loss)..................... (11.2)
Interest, net............................... 8.7
-------
Income (loss) before income taxes........... (19.9)
Income taxes (benefit)...................... 0.2
-------
Net income (loss)........................... (20.1)
Preferred dividends......................... (1.4)
-------
Net income (loss) to common shareholders.... $ (21.5)
-------
-------
LOSS PER SHARE:
Basic and diluted........................... $ (0.22)
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
(IN MILLIONS):
Basic and diluted........................... 100.0
SUPPLEMENTAL DATA:
Depreciation................................ $ 8.7
Capital expenditures........................ $ 3.4
Total interest expense...................... $ 8.7
Ratio of earnings to fixed
charges(1)................................ (3)
Ratio of earnings to fixed charges and
preferred stock dividends(2).............. (4)
BALANCE SHEET DATA (END OF PERIOD):
Cash........................................ $ 33.8
Total assets................................ 736.7
Long-term debt, including current portion... 545.8
Preferred Stock............................. 86.4
Total shareholders' equity (deficit)........ (15.4)
</TABLE>
- - ------------------
(1) Earnings consist of income before income taxes plus fixed charges. Fixed
charges consist of interest expense on debt and amortization of deferred
debt issuance costs and the portion (about one-third) of rental expense that
we believe is representative of the interest component of rental expense.
(2) Earnings as defined above, fixed charges as defined above plus preferred
stock dividends, whether paid or accreted.
(3) The deficiency of earnings available to cover fixed charges for the six
weeks ended August 13, 1999 and for the seven weeks ended October 1, 1999 is
$3.1 million and $19.9 million, respectively.
(4) The deficiency of earnings available to cover fixed charges and preferred
stock dividends for the six weeks ended August 13, 1999 and for the seven
weeks ended October 1, 1999 is $3.1 million and $21.3 million, respectively.
23
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with, and is
qualified in its entirety by reference to our Consolidated Financial Statements,
including the notes thereto appearing elsewhere in this prospectus. Except for
historical information, the discussions in this section of the prospectus
contain forward-looking statements that involve risks and uncertainties. Actual
results could differ materially from those discussed below. Intersil Holding is
a holding company whose sole assets are its investment in Intersil's capital
stock and certain intangible assets. Intersil Holding is dependent on the
receipt of dividends or distributions from Intersil to fund its obligations.
OVERVIEW
We are a leading systems level designer and manufacturer of analog, mixed
signal, discrete power and wireless communications semiconductors. We use our
proprietary technologies and design capabilities to provide systems solutions
for the communications power management and wireless markets. We sell over 4,500
products to more than 28,000 customers worldwide.
BASIS OF PRESENTATION
Our first quarter of fiscal year 2000 began on July 3, 1999 and ended
October 1, 1999. The acquisition of the semiconductor business from Harris
occurred on August 13, 1999. As a result of this transaction, the assets and
liabilities of the semiconductor business were revalued to their respective fair
values under the principles of APB 16, 'Business Combinations.' The most
significant effects were to decrease property, plant and equipment and to
increase certain intangibles and liabilities. Accordingly, certain financial
information for the periods prior to August 13, 1999 is not comparable to
periods subsequent to August 13, 1999. All income statement information for the
first quarter of fiscal year 2000 represents the combined results of the
semiconductor business from July 3, 1999 through August 13, 1999 and Intersil
Holding from August 14, 1999 through October 1, 1999.
QUARTERLY RESULTS
The following table sets forth the unaudited historical quarterly net sales
and gross profits of our product groups:
<TABLE>
<CAPTION>
COMBINED
FISCAL
YEAR
FISCAL YEAR 1998 FISCAL YEAR 1999 2000
------------------------------------ ------------------------------------ --------
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
------ ------ ------ ------ ------ ------ ------ ------ --------
(IN MILLIONS, EXCEPT FOR PERCENTAGES)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Sales
Analog & Mixed-Signal........ $ 96.3 $ 93.9 $ 95.2 $105.0 $ 79.8 $ 86.2 $ 88.5 $ 98.3 $ 82.8
Discrete Power............... 44.7 45.2 45.7 40.8 38.5 34.8 42.3 46.0 44.9
Wireless..................... 2.9 2.2 2.6 2.3 4.2 3.1 4.6 6.4 6.2
------ ------ ------ ------ ------ ------ ------ ------ ------
Total.................... $143.9 $141.3 $143.5 $148.1 $122.5 $124.1 $135.4 $150.7 $133.9
------ ------ ------ ------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------ ------ ------ ------
Gross Profit
Analog & Mixed-Signal........ $ 34.2 $ 39.4 $ 39.9 $ 46.5 $ 33.0 $ 33.2 $ 38.3 $ 42.1 $ 34.7
Discrete Power............... 10.8 12.4 10.6 10.3 8.1 5.0 7.2 9.5 10.8
Wireless..................... 0.9 0.1 1.1 1.3 0.9 0.8 1.6 3.2 2.2
------ ------ ------ ------ ------ ------ ------ ------ ------
Total.................... $ 45.9 $ 51.9 $ 51.6 $ 58.1 $ 42.0 $ 39.0 $ 47.1 $ 54.8 $ 47.7
------ ------ ------ ------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------ ------ ------ ------
Gross Profit Percentage
Analog & Mixed-Signal........ 36% 42% 42% 44% 41% 39% 43% 43% 42%
Discrete Power............... 24 27 23 25 21 14 17 21 24
Wireless..................... 31 5 42 57 21 26 35 50 35
Total.................... 32 37 36 39 34 31 35 36 36
</TABLE>
24
<PAGE>
Our first fiscal quarter is generally the weakest due to slow demand from
government customers, model year changeovers in the automotive industry and
summer holiday seasons, primarily in Europe. Our fourth fiscal quarter is
generally the strongest due to strong demand from government customers.
Industry demand weakened significantly in the first half of fiscal 1999 due
to widespread inventory adjustments which led to excess manufacturing capacity
and steep declines in product prices. This trend impacted all three product
groups. Our results, and the industry as a whole, began to strengthen in the
third fiscal quarter of 1999, with an increase in sales of 9.1% from the second
quarter to the third quarter and 11.3% from the third quarter to the fourth
quarter.
As Wireless is an emerging business, gross margins have fluctuated during
the start-up period due to timing of start-up costs.
RESULTS OF OPERATIONS
The following table sets forth income statement data for the periods
indicated as a percentage of net sales:
<TABLE>
<CAPTION>
13 WEEKS ENDED
--------------------------
FISCAL YEAR COMBINED
--------------------------- OCTOBER 2, OCTOBER 1,
1997 1998 1999 1998 1999
----- ----- ----- ---------- ----------
<S> <C> <C> <C> <C> <C>
Revenue:
Analog & Mixed-Signal..................... 70.5% 67.7% 66.2% 65.2% 61.9%
Discrete Power............................ 28.3 30.6 30.4 31.4 33.5
Wireless.................................. 1.2 1.7 3.4 3.4 4.6
----- ----- ----- ----- -----
Total.................................. 100.0 100.0 100.0 100.0 100.0
----- ----- ----- ----- -----
Cost and Expenses
Cost of goods sold........................ 63.5 64.0 65.6 65.7 64.4
Research and development.................. 13.8 13.0 12.6 12.1 12.6
Selling, general and administrative....... 20.0 18.8 17.5 19.0 17.0
Intangible amortization................... 0.4 0.4 0.5 0.5 1.3
In-process research and development....... -- -- -- -- 15.5
----- ----- ----- ----- -----
Operating income....................... 2.3 3.8 3.8 2.7 (10.8)
Interest, net............................. (0.1) (0.2) (0.2) (0.2) 6.4
----- ----- ----- ----- -----
Income (loss) before income taxes........... 2.4 4.0 4.0 2.9 (17.2)
Income taxes (benefit)...................... 0.3 1.8 (1.1) (0.8) 0.1
----- ----- ----- ----- -----
Net income (loss)........................... 2.1% 2.2% 5.1% 3.7% (17.3)%
----- ----- ----- ----- -----
----- ----- ----- ----- -----
</TABLE>
Q1 FISCAL 2000 COMPARED WITH Q1 FISCAL 1999
Net Sales
Net sales for the first quarter of fiscal year 2000 increased 9.3% to
$133.9 million from $122.5 million in the first quarter of fiscal year 1999. The
quarter over quarter growth is the result of improved demand across all business
units, primarily as a result of improved market conditions. Wireless sales
growth of 48% was driven by increased market acceptance of our PRISM(Registered)
products.
Geographically, 48.7%, 22.8% and 28.5% of product sales were derived in
North America, Europe and Asia, respectively, during the first quarter of fiscal
year 2000, compared to 55.6%, 25.1%, and 19.3% in the first quarter of fiscal
year 1999.
Gross Margin
Cost of goods sold consists primarily of purchased materials, labor and
overhead (including depreciation) associated with product manufacturing, plus
royalty, warranty and sustaining engineering expenses pertaining to products
sold. Gross margin on product sales increased 13.6% to $47.7 million in the
first quarter of fiscal
25
<PAGE>
year 2000 from $42.0 million in the first quarter of fiscal year 1999. As a
percent of sales, gross margin was 35.6% in the first quarter of fiscal year
2000 and 34.3% in the first quarter of fiscal year 1999. This increase was
substantially due to greater capacity utilization and increased manufacturing
efficiencies, as well as a decrease in depreciation expense resulting from a
revaluation of our property, plant and equipment due to purchase accounting.
Operating Expenses
R&D expenses consist primarily of salaries and selected costs of employees
engaged in product/process research, design and development activities, as well
as related subcontracting activities, prototype development, cost of design
tools and technology license agreement expenses. R&D expenses increased 14.2% to
$16.9 million in the first quarter of fiscal year 2000 from $14.8 million in the
first quarter of fiscal year 1999. As a percent of sales, R&D expenses remained
relatively flat at 12.6% in the first quarter of fiscal year 2000 from 12.1% in
the first quarter of fiscal year 1999. R&D expense included continued investment
in the PRISM(Registered) chip set and in the Discrete Power integrated circuits
area, focusing in the categories of communications and computing, which led our
growth of new product revenue during fiscal year 1999.
In connection with the acquisition, we allocated $20.8 million of the
purchase price to in-process R&D projects. This allocation represents the
estimated fair value based on risk-adjusted cash flows related to the incomplete
products. At the date of acquisition, the development of these projects had not
yet reached technological feasibility and the in-process R&D had no alternative
future uses. Accordingly, these costs were expensed as a one-time charge to
earnings in the first quarter of fiscal year 2000.
In making the purchase price allocation, we relied on present value
calculations of income, an analysis of project accomplishments and completion
costs and an assessment of overall contribution and project risk. The amounts
assigned to the in-process R&D were determined by identifying significant
research projects for which technological feasibility had not been established.
The amounts assigned to the in-process R&D were determined by identifying
significant research projects for which technological feasibility had not been
established. A discussion of the most signficiant projects follows:
SMPS IGBT
SMPS IGBT refers to a project researched and in development in our discrete
power product line area. AC to DC power supplies are designed to use high
voltage power MOSFETs to convert an AC voltage into a DC voltage. The new switch
mode power supply, or SMPS, family of insulated gate bipolar transistors, or
IGBTs, will combine the fast speed, unclamped inductive switching and low gate
charge speed of the power MOSFET with the high current density and low forward
voltage drop of the IGBT. The result will be a lower cost and more efficient
product than currently available high voltage MOSFET products.
PRISM II
PRISM II refers to a project researched and in development in our wireless
product line area. PRISM II will be a complete silicon solution for the design
of Wireless Local Area Networks, or WLANs. Comprised of five highly integrated
chips incorporating advanced silicon germanium technology, PRISM II will deliver
all required analog and digital circuitry for the physical and medium access
controller layers, while providing a complete 'antenna-to-computer' solution for
high data rate WLANs. The product will provide end-users in the computer market
with a low cost, small and lightweight medium for WLAN connection.
HIP6601/2/3
HIP6601/2/3 refers to another chipset family researched and in development
in our analog and mixed signal product line area. HIP6601/2/3 will also be CPU
core DC/DC converters designed to support the new processor that will be used in
Intel's next generation YR2K motherboard. The HIP6601, HIP6602 and HIP6603 will
be a family of similar controllers and drivers designed to support various high
performance CPU power supply conversion requirements.
26
<PAGE>
HC1540
HC1540 refers to an integrated circuit and relay researched and in
development in our analog and mixed signal product line area. HC1540 will be a
high voltage, switch for use in the telecom industry.
HC7581
HC7581 refers to a new subscriber line interface circuit, or SLIC,
researched and in development in our analog and mixed signal product line area.
SLICs are required in all telecom exchange systems to interface with signals
entering into telecommunication systems.
HIP6210/6220
HIP6210/6220 refer to a chipset researched and in development in our analog
and mixed signal product line area. HIP6210/6220 are designed to support the
personal computer market by saving energy. These chips will sense different
power requirement levels and regulate the flow of the power based on essential
needs.
DC to DC Power Converters
DC to DC power converters refer to a project researched and in development
in our space and defense group. The DC to DC power converter will be the first
in a series of radiation-hardened, high reliability power supplies. This power
supply source will be smaller in size, of less weight and more efficient than
currently available technology. The initial market will be for usage in
satellites. However, a variety of other commercial and military space
applications are envisioned.
Gen III Radiation Hardened MOSFETs
Gen III radiation hardened MOSFETs refer to a project researched and in
development in our discrete power product line area. This technology will reduce
the die size used in commercial satellites by 50% while maintaining a high
degree of radiation hardness. Launch costs of commercial satellites are directly
proportional to a satellite's size and weight. The die size reduction will
enable us to place our silicon in packages that are smaller and lighter thereby
providing the end-user with a more economical printed circuit board.
The value assigned to purchased in-process R&D was determined by estimating
the costs to develop the purchased in-process R&D into commercially viable
products and discounting the net cash flows to their present value.
Remaining development efforts for these in-process R&D projects include
various phases of design, development and testing. The anticipated completion
dates for the in-process R&D projects will occur within the next one and one
half years, after which we expect to begin generating economic benefits from the
technologies. Expenditures to complete these projects are expected to total
approximately $12.1 million in fiscal year 2000, and $1.3 million in fiscal year
2001.
These estimates are subject to change, given the uncertainties of the
development process, and no assurance can be given that deviations from these
estimates will not occur. We expect to continue these development efforts and
believe we have a reasonable chance of successfully completing the R&D programs.
However, there is risk associated with the completion of the projects and there
is no assurance that any will meet with either technological or commercial
success.
SG&A costs, which include marketing, selling, administrative and general
expenses, and Harris corporate expense allocation, decreased 3.0% to $22.7
million in the first quarter of fiscal year 2000 from $23.4 million in the first
quarter of fiscal year 1999. The decrease in SG&A was primarily due to increased
efficiencies resulting from a reorganization of the internal sales force and
external sales representative firms in fiscal year 1999 and reduction of
administrative expenses including headcount reductions. Operating expenses
include allocated charges by Harris to us for legal, financial and other
administrative expenses of $1.2 million for the six weeks of the first quarter
of fiscal year 2000 and $2.1 million for all of the first quarter of fiscal year
1999. Certain intangible assets were recorded on the opening balance sheet of
Intersil as part of purchase accounting. These assets will be amortized over
their useful lives ranging from five to eleven years.
27
<PAGE>
Interest Expense
In connection with the acquisition of the semiconductor business, we
entered into new credit facilities. See '--Liquidity and Capital Resources.'
Interest expense related to this debt for Intersil Holding during the first
quarter of fiscal year 2000 was $8.6 million, excluding interest income of $0.1
million.
Tax Expense
The tax benefit for the combined first quarter of fical year 2000 is not
comparable to the first quarter of fiscal year 1999, due to the different tax
structures of the semiconductor business and Intersil Holding.
Backlog
We had backlog at October 1, 1999 of $180.8 compared to $174.0 million at
July 2, 1999.
FISCAL 1999 COMPARED WITH 1998
Net Sales
Net sales for fiscal year 1999 decreased 7.6% to $532.7 million from $576.8
million in fiscal year 1998. This decrease is the result of continued soft
market conditions and resulting adverse effects on semiconductor demand. This
trend continued through the second quarter of fiscal 1999. We believe that the
principal causes for the decline were initially high inventory levels of our
products at our distributors and customers, followed by an overall drop in
global semiconductor demand. Particularly hard hit were our Discrete Power
products where prices of power MOSFETs declined by nearly 15%. Additionally,
distributors and major OEMs reduced the amount of pipeline inventory in the
channel, taking advantage of the shorter lead-times and lower prices. During the
third fiscal quarter of 1999, we began to experience an increase in new orders,
which resulted in a 9.1% increase in sales in the third quarter versus the
preceding quarter. The positive trend continued into the fourth quarter with an
increase in sales of 11.3% from the third quarter.
Geographically, 53.5%, 24.6% and 21.9% of product sales were derived in
North America, Europe and Asia, respectively, during fiscal year 1999, compared
to 53.8%, 28.0%, and 18.2% in fiscal year 1998.
Gross Margin
Gross margin on product sales declined 11.9% to $182.9 million in fiscal
year 1999 from $207.5 million in fiscal year 1998. As a percent of sales, gross
margin was 34.3% in fiscal year 1999 and 36.0% in fiscal year 1998. This
decrease was substantially due to price pressure worldwide for our Discrete
Power products and a $13.2 million increase in our depreciation expense
resulting from the additional capital expenditures that went into our 8-inch
wafer fab in Mountaintop, Pennsylvania. Our gross margin decline was partially
offset by a series of cost reduction initiatives which resulted in lower
operating costs and improved pricing and terms with our suppliers of raw
materials.
Operating Expenses
R&D expenses decreased 10.8% to $67.0 million in fiscal year 1999 from
$75.1 million in fiscal year 1998. During fiscal year 1999, we focused our
resources on targeted applications and reduced programs that did not support our
emphasis. Major investment continued on the PRISM(Registered) chip set which
addresses the wireless local area network market. R&D for products designed for
the power management market was principally focused on computing and
communications which led our growth of new product revenue during fiscal year
1999.
SG&A costs decreased 13.7% to $93.3 million in fiscal year 1999 from $108.1
million in fiscal year 1998. The decrease in SG&A was primarily due to increased
efficiencies resulting from a reorganization of the internal sales force and
external sales representative firms and reduction of administrative expenses
including headcount reductions. Operating expenses include allocated charges by
Harris to us for legal, financial and other administrative expenses of $9.3
million for fiscal year 1999 and $10.0 million for fiscal year 1998.
28
<PAGE>
Tax Expenses
The tax benefit of $6.0 million in fiscal year 1999 was primarily driven by
changes in the Malaysian tax system, resulting in fiscal year 1999 income not
being subject to tax.
Backlog
We had backlog at July 2, 1999 of $174.0 million compared to backlog of
about $188.5 million at July 3, 1998. The decrease in backlog was primarily due
to shorter industry lead-times.
FISCAL 1998 COMPARED WITH 1997
Net Sales
Net sales for fiscal year 1998 increased 5.8% to $576.8 million from $545.3
million in fiscal year 1997. The increase was principally due to a 14% increase
in Discrete Power sales over the prior year primarily due to increased output
from our new 8-inch wafer fab in Mountaintop, Pennsylvania.
Geographically, 53.8%, 28.0%, and 18.2% of product sales were derived in
North America, Europe and Asia/Pacific, respectively, in fiscal year 1998,
compared to 55.4%, 26.6%, and 18.0% in fiscal year 1997.
Gross Margin
Gross margin in fiscal year 1998 increased 4.1% to $207.5 million from
$199.3 million in fiscal year 1997. The increase in gross margin was primarily
due to higher revenue and improved manufacturing efficiencies offset partially
by a $14.8 million increase in depreciation expense resulting from the expansion
of the Mountaintop, Pennsylvania 8-inch wafer fab. As a percentage of revenue,
our gross margin decreased to 36.0% in fiscal year 1998 compared to 36.5% for
fiscal year 1997 due primarily to the increased depreciation.
Operating Expenses
R&D expenses were $75.1 million, or 13.0% of sales in fiscal year 1998,
compared to $75.2 million, or 13.8% of sales in fiscal year 1997. During fiscal
year 1998, we continued to direct about two-thirds of our R&D investment to our
wireless and analog products.
SG&A expenses in fiscal year 1998 decreased 1.1% to $108.1 million,
compared to $109.3 million in fiscal year 1997. The decrease in SG&A as a
percent of sales from 20.0% to 18.7% was primarily due to our increased
operating efficiency and efforts to reduce selling and administrative expenses.
Operating expenses include charges by Harris for our share of legal, financial
and other administrative expenses of $10.0 million for fiscal year 1998 and
$10.0 million for fiscal year 1997.
Tax Expenses
The favorable tax rate in fiscal year 1997 was primarily due to
fluctuations in foreign income and a reinvestment allowance on capital
expenditures in Malaysia.
Backlog
We had backlog at July 3, 1998 of about $188.5 million compared to backlog
of about $223.2 million at June 27, 1997. The decline in backlog was primarily
due to shorter industry lead times.
LIQUIDITY AND CAPITAL RESOURCES
In connection with the acquisition of the semiconductor business, we
entered into new credit facilities, which provide for a Senior Term Facility of
$205.0 million and a Revolving Credit Facility in an aggregate amount up to
$70.0 million. Both the Senior Term Facility and the Revolving Credit Facility
will mature in 2005.
The Senior Term Facility is subject to certain specified amortization
payments which require 1.0% of the original principal amount to be repaid in
each of the first five years. The Revolving Credit Facility is available until
2005 unless sooner terminated. As of October 1, 1999, $15.0 million of the
Revolving Credit Facility was outstanding.
29
<PAGE>
Our principal capital requirements are to fund working capital needs, to
meet required debt payments and to complete planned maintenance and expansion.
We anticipate that our operating cash flow, together with available borrowings
under the Revolving Credit Facility, will be sufficient to meet our working
capital, capital expenditure and interest requirements on our debt obligations
for the foreseeable future. As of October 1, 1999, our total debt, preferred
stock and shareholder's deficit was $545.8 million, $86.4 million and $15.4
million, respectively. We also have additional borrowing availability of $55.0
million for working capital and capital expenditure requirements under the
Revolving Credit Facility.
Receivables and Inventories
Trade accounts and the current portion of notes receivable less the
allowance for collection losses totaled $84.8 million at October 1, 1999
compared to $100.7 million at July 2, 1999. This decrease was due to continued
emphasis on improving the receivable collection cycle and higher sales in the
fourth quarter of fiscal year 1999. Inventories remained relatively flat during
the first quarter of fiscal year 2000, with a slight increase due to the
increased sales demand, from $153.8 million at July 2, 1999 to $156.4 million at
October 1, 1999.
Capital Expenditures
Capital expenditures for the first quarter of fiscal year 2000 were $4.3
million. During fiscal year 1999, capital expenditures were $38.6 million
compared to $90.2 million in fiscal year 1998. This decrease was due primarily
to the completion of our expansion of the Mountaintop, Pennsylvania 8-inch wafer
fab during fiscal year 1998. Our previous owner invested approximately $303.9
million in capital expenditures since the beginning of fiscal 1997 for upgrading
our existing facilities with state-of-the-art manufacturing equipment and for
the building and equipping of the world's first 8-inch wafer fab for discrete
power semiconductors. As a result, we do not anticipate substantial capital
expenditures in the foreseeable future. During the fiscal year 2000, we intend
to spend about $38.0 million in capital expenditures.
RECENT ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board issued FAS No. 133,
'Accounting for Derivative Instruments and Hedging Activities.' The statement
establishes standards for recording derivative financial instruments and the
recognition of gains or losses resulting from changes in the fair values of
those instruments. We plan to adopt the new standard no later than the first
quarter of fiscal year 2001. However, we have not yet determined the anticipated
impact of FAS No. 133.
IMPACT OF YEAR 2000
We recognize the need to ensure that operations will not be adversely
impacted by Year 2000 computer hardware and software failures and embedded chip
or processor failures (non-information technology systems). Issues relating to
the Year 2000 are the result of computer programs and certain embedded-chip
systems being written or developed using two digits rather than four to define
the applicable year. Any computer programs or embedded-chip systems that have
date-sensitive software may recognize a date using '00' as the year 1900 rather
than the year 2000. This could result in a system failure or miscalculations
causing disruptions of operations, including, among other things, a temporary
inability to process transactions, obtain materials, provide packaging and test
services, generate invoices or engage in similar normal business activities.
As of October 1, 1999, we had completed a formal review of all computer
hardware, software systems, communications equipment and equipment used in the
manufacturing process. Our review included analysis of all potentially affected
business and process systems. Code which was non-compliant was replaced or
corrected, and when this was not possible, the systems were replaced.
Additionally, the systems have been tested for compliance. We believe that all
of our systems and equipment necessary for our key business processes are Year
2000 compliant in all material respects.
Currently, we do not have any information concerning the Year 2000
compliance status of our customers. If any significant customers do not
successfully and in a timely manner achieve Year 2000 compliance, business or
operations could be materially adversely affected. There can be no assurance
that another company's failure to ensure Year 2000 capability would not have a
material adverse effect on us.
30
<PAGE>
Approximately $9.1 million has been spent on Year 2000 compliance issues
through October 1, 1999. While failure of any critical technology components to
operate properly in the Year 2000 could affect our operations, we believe that
resolution of the Year 2000 issue will not require additional material costs and
will not have a material adverse effect on our results of operations.
Year 2000 contingency plans for information technology operations include
manual procedures for routing accounting, financial and product information to
support on-time delivery and processing of our customers' products. If we
experience interruptions in operations, we are prepared to correct the problems
while sustaining our operations manually.
While we currently expect no material adverse affect on our business,
financial condition or results of operations due to Year 2000 issues, our
beliefs and expectation are based on certain assumptions that ultimately may
prove to be inaccurate.
MARKET RISK MANAGEMENT
We, in the normal course of doing business, are exposed to the risks
associated with foreign currency exchange rates and changes in interest rates.
We employ established policies and procedures governing the use of financial
instruments to manage our exposure to such risks.
We use foreign exchange contracts and options to hedge both balance sheet
and off-balance sheet foreign currency commitments. Specifically, these foreign
exchange contracts offset foreign currency denominated inventory and purchase
commitments from suppliers, and accounts receivable from, and future committed
sales to customers and intercompany loans. We believe the use of foreign
currency financial instruments should reduce the risks that arise from doing
business in international markets. Our policy, effective August 1999, is to
hedge firm foreign currency exposure and forecasted exposure up to six months of
anticipated requirements. At October 1, 1999, we had open foreign exchange
contracts with a notional amount of $14.0 million, all of which were to hedge
off-balance-sheet commitments. At August 13, 1999 we had open foreign exchange
contracts with a notional amount of $6.1 million, all of which were to hedge
off-balance-sheet commitments. At July 2, 1999, we had open foreign exchange
contracts with a notional amount of $22.0 million, all of which were to hedge
off-balance-sheet commitments. At July 3, 1998, we had open foreign exchange
contracts with a notional amount of $166.4 million, all of which were to hedge
off-balance-sheet commitments. Additionally, for the fiscal year ended July 2,
1999, we purchased and sold $120.7 million of foreign exchange forward and
option contracts, compared to $139.4 million for the prior year. See Note O
'Financial Instruments' in the Notes to Financial Statements for further
information with respect to commitments to buy or sell foreign currencies. Our
hedging activities provide only limited protection against currency exchange
risks. Factors that could impact the effectiveness of our hedging programs
include accuracy of sales estimates, volatility of currency markets, and the
cost and availability of hedging instruments. A 10% adverse change in currency
exchange rates for our foreign currency derivatives held July 2, 1999, would
have an impact of approximately $6.8 million on the fair value of such
instruments. This qualification of exposure to the market risk associated with
foreign exchange financial instruments does not take into account the offsetting
impact of changes in the fair value of our foreign denominated assets,
liabilities, and firm commitments.
We are exposed to market risks related to fluctuations in interest rates on
our variable rate debt, which consists of borrowings at October 1, 1999, of
$205.0 million under our Tranche B Senior Term Facility and $15.0 million
borrowed under the Revolving Credit Facility. We also have fixed rate debt of
approximately $325.8 million comprised primarily of the 13.25% Senior
Subordinated Notes and PIK Notes. We are not currently utilizing any type of
derivative financial instrument to control our interest rate risk.
For fixed rate debt, changes in interest rates generally affect the fair
market value, but not earnings or cash flows. Conversely, for variable rate
debt, changes in interest rates generally do not influence fair market value,
but do affect future earnings and cash flows. We manage our interest exposure by
using a combination of fixed and variable rate debt. Holding the variable rate
debt balance constant, each one percentage point increase in interest rates
occurring on the first day of the year would result in an increase in interest
expense for fiscal year 2000 of approximately $2.2 million.
31
<PAGE>
INDUSTRY OVERVIEW
Semiconductors, which consist of integrated circuits and discrete
semiconductors, are the critical components used to create an increasing variety
of electronic products and systems. Integrated circuits operate at low power
levels and perform multiple functions to process and convey information in
electronic signal form. Integrated circuit capability is largely defined by
circuit density, which increases as its components are miniaturized. In contrast
to integrated circuits, discrete semiconductors perform a single function and
often have multiple uses in many different end-user applications.
SEMICONDUCTOR CLASSIFICATIONS
The following table sets forth the worldwide semiconductor total available
market, or TAM, for each of five product functions of the semiconductor industry
according to WSTS. Our products fit within the power semiconductors and analog
classifications.
WORLDWIDE SEMICONDUCTOR TAM
<TABLE>
<CAPTION>
1990 1991 1992 1993 1994 1995 1996 1997 1998 CAGR
----- ----- ----- ----- ------ ------ ------ ------ ------ ----
(DOLLARS IN BILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Analog..................... $ 7.8 $ 8.3 $ 8.7 $10.7 $ 13.6 $ 16.6 $ 17.0 $ 19.8 $ 19.1 11.8%
Discrete Power............. 4.3 4.4 4.5 5.2 6.3 8.2 7.8 8.1 8.7 9.4
Microcomponents............ 9.2 11.4 13.9 19.1 23.8 33.4 39.8 47.8 47.3 22.8
Memory..................... 11.8 12.2 14.8 21.3 32.5 53.5 36.0 29.3 23.0 8.7
Other...................... 17.5 18.2 17.9 21.1 25.7 32.7 31.3 32.2 27.5 5.8
----- ----- ----- ----- ------ ------ ------ ------ ------
Total...................... $50.6 $54.5 $59.8 $77.4 $101.9 $144.4 $131.9 $137.2 $125.6 12.1
----- ----- ----- ----- ------ ------ ------ ------ ------
----- ----- ----- ----- ------ ------ ------ ------ ------
</TABLE>
Analog integrated circuits are used to shape or condition electrical
signals, to amplify electrical signal strengths, to convert electrical signals
to and from digital 'one or zero' levels, to regulate voltage levels and to
provide interfaces between other products within an electrical system. Power
semiconductors can be either discrete power devices or analog integrated
circuits. Discrete devices perform a single function, such as switching
electricity on and off. Analog integrated circuits perform multiple functions
such as controlling and regulating currents. Microcomponents include
microprocessors and microcontrollers that process data according to instructions
embedded within the semiconductors themselves. These are considered the 'brains'
of the electronic system and are at the center of the system architecture.
Memory are devices that store data and instructions. The 'other' category
includes all electronic devices whose functions do not include one of the four
previously mentioned product functions.
ANALOG
Analog signals are not discrete binary numerical values, but rather
continuously variable electrical signals that represent continuous data
variables or wave signals, such as sound waves. The analog market is split into
two major segments: standard linear and mixed signal. The standard linear market
is comprised of building block products such as amplifiers, voltage regulators,
data conversion, interface circuits and comparators. These products are used in
all end systems, from computers and telecommunications, to industrial,
automotive and consumer applications. The mixed signal market consists of more
complex analog products, which also contain some digital circuitry for timing,
information control and data flow. Mixed signal products are often developed for
specific applications, such as video encoding, hard disk drive control, data
transmission, motor control and power management.
DISCRETE POWER
Discrete power semiconductors, such as a transistor or diode (a device that
allows current to flow in only one direction), typically contain one active
element. These devices perform a single function such as efficiently switching
electricity on and off. Examples of discrete power semiconductors include power
metal oxide semiconductor field effect transistors, or MOSFETs, and insulated
gate bipolar transistors, or IGBTs. MOSFETs are semiconductors that convert,
switch or otherwise shape or condition electricity. IGBTs typically serve the
switch function in power conversion applications that require higher current and
voltage than power MOSFETs can handle efficiently. IGBTs combine the ease of
voltage-driven power MOSFET technology with the conduction efficiency of bipolar
transistor technology.
32
<PAGE>
INDUSTRY TRENDS
As the performance of semiconductor devices has increased and size and cost
have decreased, demand for semiconductors has expanded beyond their original
primary applications in computer systems to applications in telecommunications
systems, automotive products, consumer products and industrial automation and
control systems. In addition, system users and designers have driven the demand
for systems with increased functionality, higher levels of performance, greater
reliability and shorter design cycle times, all in smaller packages at lower
costs. These demands have resulted in increased semiconductor dollar content of
electronic products. The demand for electronic systems has also expanded
geographically with the emergence of new markets, particularly in the
Asia/Pacific region. We believe that future demand for semiconductors will be
driven by the growing trend towards use of the Internet and portable
electronics, including consumer electronics, computers and cellular telephones,
and the resulting need for semiconductors that can manage connectivity and power
for longer periods of use and that require less space.
Today, nearly every form of communication is being revolutionized by the
growing use of digital communications to move all types of data, voice and video
around the world. Different technologies, protocols and media have evolved which
are uniquely suited to particular applications in this rapidly evolving
environment. Advances in broadband communications are accelerating the reach of
cost effective, fast data highways to both homes and offices. Communications
semiconductors will be used extensively in broadband communication
networks/facilities, portable communications devices, and in servers and
infrastructure supporting the Internet. Each of these technologies requires
specific transport and access hardware devices, including handsets and base
stations for wireless telephony, switches and routers for telecommunications and
data networking, set-top boxes for cable and satellite communications, and
digital cable and digital subscriber line, or xDSL, modems for Internet access.
The advent of the Internet as a communications medium has dramatically
increased business and consumer demand for high-speed access to multimedia and
entertainment content. As business and consumers increasingly rely on the
Internet and intranets, many existing networks are under significant stress. A
bandwidth constraint has emerged, particularly at the 'last mile' of network
infrastructures, challenging users and industry participants in a number of
communications segments. In response to growing network demands,
telecommunications, data communications and cable network operators are making
significant investments to alleviate congestion and support emerging high
bandwidth, integrated data, voice and video services. Specific technologies
addressing bandwidth capacity constraints include cable modems and xDSL,
including asymmetric digital subscriber line, or ADSL, for residential
applications, high speed digital subscriber line, or HDSL, symmetric digital
subscriber line, or SDSL, and T1/E1 for high speed network access in commercial
applications, and ATM, SONET and Synchronous Digital Hierarchy, or SDH, for
network backbone transmission. The importance of the Internet as a
communications medium and the increased ability to deliver access to content
available through the Internet will increase the demand for home and small
business networking solutions, provided such networking solutions are
cost-effective.
In addition, these solutions depend on enhanced performance capabilities of
advanced electronic systems. As electronic systems continue to increase in
performance and sophistication, they demand more complex power management
solutions. The latest generation personal computers rely on advances in power
conversion to operate at ever-lower voltages in order to reduce power
consumption, increase efficiency and, in notebook personal computers, prolong
battery life. Further, advanced electronic systems outside of communications
applications also have greater power management requirements. All of these
systems, including efficient power supplies for communications and computing
networks and engine and chassis management in automobiles, require advanced
power management semiconductors for more complex digital signal processors and
microcontrollers and for efficient power inverters.
The growth in Internet infrastructure, portable battery-powered computing
and communication devices and continually faster microprocessors are driving the
development of, and demand for, successively more efficient power management
integrated circuits and discrete power semiconductors. As a result of these
industry trends, we have strategically focused on designing and manufacturing
high performance analog and mixed-signal and discrete power semiconductors for
solving communications, data conversion, wireless data and power management
problems.
33
<PAGE>
BUSINESS
GENERAL
We design, manufacture and market analog and wireless integrated circuits
and discrete power semiconductors for rapidly growing communications products
and other applications. The majority of our revenue is derived from sales of our
analog and mixed-signal products developed primarily for the communications and
power management markets. Additionally, we use our proprietary technologies and
design capabilities to provide systems solutions for rapidly growing wireless
applications. We own about 1,400 patents and have substantial expertise in the
design and manufacturing of components that perform many of the essential
functions relating to the supply, distribution and regulation of electric power
in electronic products. Our core competencies include analog mixed signal,
digital signal processor, radio frequency, discrete power and radiation
hardening technologies. Our products range from components performing highly
complex functions, such as our PRISM(Registered) chip sets for wireless data
communications, to components serving as simple building blocks for electronic
circuits, such as our IGBTs, for power management applications.
OUR BUSINESS STRATEGY
Our business strategy emphasizes the following key elements:
o Focus on High Growth, Higher Margin End-User Markets. In light of the
rapid expansion of communication applications and the increased
requirement for power management in electronic systems, we focus our
investments in these areas. We believe these markets have attractive
growth characteristics and enable us to draw on our core competencies.
Accordingly, we are pursuing opportunities in communications, wireless
and power management. In addition, while we will continue to offer legacy
products such as certain automotive integrated circuits, defense products
and microcontrollers, we do not intend to invest in the development of
new products in these areas.
o Focus on Partnering with Industry Leaders. We partner with industry
leaders in each of our target end-user markets to take our strong
engineering and design capabilities to commercial levels. Our blue chip
customer base illustrates the acceptance of our products to date, and we
continue to partner with these customers and others to develop and market
our next generation products.
o Provide Systems Level Solutions to Our Customers. We design and develop
our semiconductors with a systems level approach that we believe enhances
the value of our products as they are designed into and incorporated in
our customers' electronic systems. This approach yields early integration
of our products into our customers' products, provides opportunities for
current design wins, and ultimately increases revenue as our solutions
are incorporated within a targeted end application.
o Maintain High Quality Customer Service. Quality customer service is
critical to our customer retention and sales growth. Through our customer
relations initiatives, we believe we distinguish ourselves from our
competitors. Additionally, our sales force and authorized representatives
and distributors are expanding customer information programs and
augmenting our comprehensive customer support efforts.
34
<PAGE>
PRODUCTS AND TECHNOLOGY
We design, develop and manufacture a broad range of products used in a wide
variety of microelectronic applications in the communications, wireless and
power management end-user markets. Our products are organized into three
principal product groups: Analog & Mixed-Signal, Discrete Power, and Wireless.
<TABLE>
<CAPTION>
ANALOG & DISCRETE
MIXED-SIGNAL POWER WIRELESS
-------------------------- ------------------------ ---------------------
<S> <C> <C> <C>
FISCAL YEAR 1999 REVENUES........... $352.8 million $161.6 million $18.3 million
PERCENTAGE OF REVENUES.............. 66.2% 30.3% 3.5%
KEY CUSTOMERS....................... Siemens Asustek Nokia
Compaq Emerson Sony
Dell Compaq Siemens
Intel Bosch 3Com
Cisco
</TABLE>
ANALOG & MIXED-SIGNAL
Our Analog & Mixed-Signal portfolio represented 66.2% of our fiscal year
1999 revenue. According to SIA, Communications Analog & Mixed Signal integrated
circuits are forecasted to grow 18.4% in calendar year 2000 from calendar year
1999. We deliver leading-edge analog, mixed signal, digital signal processors
and groups of semiconductors that are designed to work together, also known as
chip set solutions, for today's fastest-growing communications markets. Our
design focus targets such opportunities as wired networks, subscriber line
interface circuits, or SLICs, which interface analog and digital signals for
telecom systems, and high-speed converters for flat-panel LCD monitors. The
three analog product lines include the following:
Signal Processing Products. We have a portfolio of linear, mixed-signal
and digital signal processor integrated circuits optimized for high-speed
communications and multimedia application-specific products.
Communications Analog & Mixed-Signal integrated circuits are primarily
targeted at wired and wireless voice and data communications infrastructure
applications. We have developed a complete portfolio of digital signal
processing products and a line of 8-, 12- and 14-bit high speed data acquisition
converter integrated circuits for cellular basestations, wireless data links,
wireless local loop and broadband wireless access, which we refer to as the
wireless infrastructure market. These products, designated CommLink(Trademark),
enable our customers to increase the amount of data that can be transmitted,
enabling the addition of high speed data transmission to cellular communications
networks. These integrated circuits enable faster wireless data links between
remote basestations and also enable more efficient cable 'headends'--the ground
station for the satellite links and broadband wireless access--which is
sometimes called Wireless Cable or LMDS. Our products support cellular standards
including Generation 2 Digital such as IS-95 CDMA and GSM, Generation 2.5 such
as Edge and IS-95+, and Generation 3 Wideband CDMA. We utilize both systems
level engineering and integrated circuit expertise to offer superior products
for wireless communications systems. This combination of expertise enabled us to
introduce the first digital signal processing-based single chip digital down
converter integrated circuit, the HSP50016, which provided the technology base
used to separate telephone calls for cellular basestations. We continue that
leadership with the recently announced HSP50216 Quad programmable down converter
for use in Generation 2.5 cellular basestation designs.
New generations of high performance digital signal processing
communications integrated circuits require ever increasing performance from the
analog-to-digital and digital-to-analog converters that convert digital signals
to analog radio frequency signals for wireless applications. We currently market
a broad family of 6- to 14-bit, CMOS analog-to-digital and digital-to-analog
converters in multiple speed ranges and functional combinations in order to
service wireless infrastructure applications.
With more than 15 years of experience in the design and development of
SLICs, we continue to expand our family portfolio of SLICs. SLICs, which are
used in many telephone applications, serve two primary functions. First, they
interface analog voice signals with digital processors. Second, they serve the
simple, yet essential, function of ringing a telephone to signal an incoming
call. Recently, we introduced an advanced ringing SLIC, which combined both
functions into a single SLIC. Thus, the ringing SLIC acts as both an
35
<PAGE>
interface into the telephone and also rings the telephone. Our newest ringing
SLIC product, a voice over internet protocol or VoIP product, enables the use of
analog phones in the emerging Internet telephony market. Our SLIC family
portfolio of advanced telecom linecard solutions are ideal for today's universal
telecom exchange systems, including Plain Old Telephone Service, or POTS,
Private Branch Exchanges, Central Office, Loop Carrier, Fiber in the Loop and
Wireless Local Loop.
Included in our broad portfolio are operational amplifiers, which are
referred to as op amps, interface integrated circuits and multimedia and
professional video integrated circuits. These include the industry standard
BiCMOS high speed op amp and the low power instrumentation converter. This
portfolio is sold to a broad range of customers in industrial, medical,
computer, avionics and test and measurement instrumentation markets, primarily
through distribution partners. These products typically have long life cycles
and are designed into our customers' products thereby ensuring us long-term
sales. Our end-user markets include wireless communications, video and image
processing, high-speed satellite communications, test/measurement equipment and
medical instrumentation.
Power Management Integrated Circuits. We develop power system
architectures and provide a portfolio of computer products, file server/storage
system products, networking and VoIP products. Our power management products for
computing applications operate in a voltage range of 1 to 30 volts and are
designed into desktop personal computers, file servers and workstations. We have
also developed new power management circuits for server networks supporting the
Internet.
Our highly successful HIP6000 family of pulse width modulator controller
integrated circuits are used in about 30% of all personal computers that use
Pentium, Pentium II and Pentium III class processors.
We recently introduced an advanced multiphase controller architecture which
delivers multiphase power to microprocessors. This new platform of products
consists of three controllers (HIP6301, HIP6302 and HIP6303) and three gate
drivers (HIP6601, HIP6602 and HIP6603). We also offer a complete advanced
configuration power interface solution for instant on and sleep mode capability
used to save energy in personal computers.
We provide complete power solutions for the file server and redundant array
of independent disks, or RAID, market. Internet growth, especially e-commerce,
is driving the need for high reliability/availability in these applications. Our
family of hot plug products allows repair and maintenance of a file server and
RAID without a complete shutdown of the file server.
We are currently expanding our space-qualified portfolio by offering our
Starpower(Trademark) family of radiation hardened power management products for
commercial satellite applications. We are developing what we believe will be an
industry-leading radiation hardened DC-DC Converter power module line.
Our power management integrated circuits are also used in industrial
control and automotive engine management systems.
Defense. We provide leading edge radiation hardened and high-reliability
semiconductor solutions for today's defense market. We have a history of success
in custom products for many defense programs, and continue to supply programs
such as Minuteman III, GPS, SINCGARS, SADARM, Sparrow, AMRAAM and Aegis. Our
radiation hardened integrated circuit product portfolio includes logic,
memories, signal processing components, microprocessors and custom devices,
providing system designers with a full complement of products for radiation
hardened systems. We also have a set of legacy digital product lines which serve
both defense and commercial systems, with microprocessor, microcontroller,
memory and data communications products.
DISCRETE POWER
Our power portfolio represented 30.3% of our revenue for fiscal year 1999.
We have designed a portfolio of high value products for power system
architectures. We combine systems-level expertise with proprietary technologies
that increase the likelihood that our products will be designed directly into
our customers' products and achieve rapid and lasting market acceptance.
36
<PAGE>
In 1980, we invented IGBTs and hold some of the fundamental patents that
cover their production. We continue to develop next-generation IGBTs and
recently introduced our new 600V SMPS Series IGBT family of high-speed, high
efficiency IGBTs specifically tailored for operation in today's switched mode
power supplies. Our portfolio also includes radiation hardened N- and P-channel
MOSFETs for high-reliability applications such as satellites.
Our computing discrete power products portfolio includes low voltage
MOSFETs. These MOSFETs are designed to specifically enhance the performance of
the power supply when used in conjunction with our power integrated circuits.
Our industrial and automotive power discrete product portfolio includes IGBTs,
MOSFETs, and high-speed rectifiers for motor drive and motor control, power
supply, automotive, instrumentation, robotic, welding, and other
high-reliability industrial applications. Our power management integrated
circuits and discretes allow us to provide a complete power management solution
for our customers. We supply our discrete power products to Asustek, Bosch,
Compaq and Emerson and other customers who use our products for personal
computer motherboard power, diesel fuel injection, body and chassis controls and
industrial power supplies.
WIRELESS
Our Wireless portfolio represented 3.5% of our revenue for fiscal year
1999. We are the leading developer of semiconductor solutions for the emerging
wireless local area networking market. Our PRISM(Registered) family of chip sets
address the growing demand for wireless networking for use in both the home and
business. We believe we are the only supplier of an integrated wireless
networking product solution, including reference designs and software.
The PRISM II chip set is comprised of five highly integrated
semiconductors. They are the 2.4GHz power amplifier, RF/IF up and down
converter, quadrature modulator/demodulator, baseband processor and the medium
access controller. These integrated circuits represent design and manufacturing
competence in radio frequency, or RF, mixed signal and digital technologies. The
2.4GHz power amplifier, RF/IF up and down converter, and the quadrature
modular/demodulator are designed and manufactured using a high performance RF
silicon germanium process technology. The baseband processor and medium access
controller are designed and manufactured using mixed signal and digital process
technologies.
Because we design all components of our wireless chip set, including
reference designs and software, we believe we provide our customers with the
best available performance and value. Providing our customers with a turnkey
wireless data radio solution enables them to have the fastest time to market for
their systems which we believe is a critical competitive advantage in this
emerging market. More than 40 companies, including Nokia, Compaq, Samsung,
Aironet and Sony, have adopted use of the PRISM(Registered) chip set in their
products. We recently announced our PRISM II chip set, our second-generation
chip set capable of delivering high-speed wireless networking at data rates of
11 megabits-per-second. The PRISM II chip set incorporates advanced integrated
circuit design with silicon germanium process technology which makes the PRISM
II chip set five times faster while reducing power consumption by 50% compared
to the original the PRISM(Registered) chip set. Since the introduction of the
PRISM II chip set, we are developing relationships with original equipment
manufacturers, including among others, Compaq, Zoom, Nokia, Nortel, Siemens and
3Com, for use of the PRISM II chip set in a variety of wireless local area
network applications for home and business.
CUSTOMERS AND APPLICATIONS
We seek to capitalize on our core competencies by focusing on three
targeted end markets: Communications, Power Management and Wireless.
Our Communications end market includes signal processing and data
communications, industrial and satellite products. Applications in this area are
video including cable television systems and digital video, telephony including
central office switching solutions, digital cellular telephones, ISDN
controllers, modems and PBX systems, networking applications and space
applications including commercial and military satellites and avionics. We sell
to, among others, Cisco, Lucent, Alcatel, Dell and IBM.
37
<PAGE>
Our Power Management end market includes computing, automotive and
industrial products. Applications in this area are computing applications
including file servers, monitors, PC motherboards, printers and workstations,
automotive applications including entertainment systems, electronic power
steering and engine management systems and industrial automation and control. We
sell to, among others, Asustek, Bosch, Dell, Emerson, IBM, Intel and Siemens.
Our Wireless end market and its related applications comprises wireless
local area networks. We sell to, among others, 3Com, Compaq, Nokia, Northern
Telecom, Samsung, Siemens and Sony.
Outside of our targeted end markets, our remaining category includes
automotive integrated circuits and defense products. Applications in this
category include automotive applications including fuel injection and ignition
circuits and defense applications including smart munitions and tactical and
strategic missiles. We sell to, among others, DaimlerChrysler, Siemens, Boeing,
Lockheed Martin and Raytheon.
SALES, MARKETING AND DISTRIBUTION
In fiscal 1999, we derived about 66% of our sales from original equipment
manufacturer, or OEM, customers through our global sales organizations and 34%
of our sales through distributors. We operate sales organizations in the
Americas, Europe and the Asia/Pacific region with about 240 employed
salespersons. Our sales organizations are supported by logistics organizations.
Product orders flow to our manufacturing facilities, where the product is made.
Products are then shipped to the customer either directly or indirectly via our
warehouses in the United States and Europe.
We have dedicated direct sales organizations operating in the Americas,
Europe and Asia/Pacific regions that serve our major OEM customers. We have
strategically located our sales offices near these major OEM customers. We also
have a large network of distributors and manufacturers' representatives to
distribute our products around the world. We believe that maintaining a small,
highly focused, direct sales force selling products for each of our targeted
product areas, combined with an extensive network of distributors and
manufacturer's representatives, is the most efficient way to serve our customer
base. Our sales force is segmented by end-user markets, thereby ensuring each
salesperson has an end-user market expertise and focus. We also maintain a
dedicated marketing organization, which supports each product area on a regional
basis.
Typically, distributors handle a wide variety of products, including
products that compete with our products, and fill orders for many customers.
Some of our sales to distributors are made under agreements allowing for market
price fluctuations and/or the right of return on some unsold merchandise.
Virtually all distribution agreements contain an industry standard stock
rotation provision allowing for minimum levels of inventory returns. In our
experience, these inventory returns can usually be resold. Manufacturers'
representatives generally do not offer products that compete directly with our
products, but may carry complementary items manufactured by others.
Manufacturers' representatives do not maintain a product inventory; instead,
their customers place large quantity orders directly with us and are referred to
distributors for smaller orders.
RESEARCH AND DEVELOPMENT
Manufacturing technology is a key determinant in the improvement of
semiconductor products. Each new generation of process technology has resulted
in products with higher speed, greater performance and lower costs of
production. Infrastructure investments made in recent years will enable us to
continue to achieve high volume, high-reliability and low-cost production using
leading edge process technology. Our research and development efforts are
focused on new product development and improvements in process technology in our
growth areas which include communications, power management and wireless.
Our expenditures for research and development in fiscal years 1997, 1998
and 1999 were $75.2 million, $75.1 million and $67.0 million, respectively. Each
of our product areas maintain independent research and development
organizations. We work closely with our major customers in many research and
development situations to increase the likelihood that our products will be
designed directly into the customers' products and achieve rapid and lasting
market acceptance.
38
<PAGE>
MANUFACTURING
We fabricate wafers at three locations in the United States--Mountaintop,
Pennsylvania, Palm Bay, Florida, and Findlay, Ohio. Each of the plants has two
wafer manufacturing clean rooms. We also use a number of outside wafer
fabrication foundries for the manufacture of device types where we do not have
the necessary technologies resident in house. We also utilize advanced
manufacturing processes of outside foundries for many of our PRISM(Registered)
products.
Our principal assembly and test facility is located in Kuala Lumpur,
Malaysia. Established in 1974, this facility has 524,000 square feet on 22 acres
of land. It has the capacity to assemble and test 350 million units of plastic
integrated circuits, 25 million hermetically sealed ceramic packaged integrated
circuit units and 500 million power semiconductor units each year. We also have
limited assembly and test capability in Palm Bay, Florida. We use a number of
assembly and test subcontractors for device types and packages that cannot be
assembled and tested in Kuala Lumpur.
Our previous owner made significant capital expenditures to increase
capacity and improve our manufacturing efficiency. As a result, our wafer fabs
and assembly and test facilities are among the most productive and efficient in
the industry. We believe we can continue to maintain competitive cost, further
increase productivity and enhance our process efficiency by investing in people
and assets, where necessary.
We utilize an extensive set of manufacturing processes to fabricate our
products, including technologies such as: ULTRAFET(Registered), IGBT, BiCMOS,
Power BiCMOS, High Frequency Bipolar, CMOS and Rad Hard Processes. The table
below sets forth some information with respect to our manufacturing facilities,
products, wafer diameter and annual wafer capacity:
MANUFACTURING FACILITIES
<TABLE>
<CAPTION>
ANNUAL CAPACITY
LOCATION PRODUCTS/FUNCTIONS WAFER DIAMETER (6' EQUIVALENT WAFERS)
- - --------------------- -------------------------------------------------- ---------------- ---------------------------
<S> <C> <C> <C>
FABRICATION
FACILITIES:
Mountaintop, MOSFETs, IGBTs, Rectifiers, Rad Hard Discretes 6", 8" 420,000
Pennsylvania
Findlay, Ohio Standard Linear/Interface integrated circuits, 4", 5" 120,000
Power integrated circuits
Palm Bay, Florida Analog, Power integrated circuits, Telecom SLICs, 4", 6" 175,000
Rad Hard integrated circuits
ASSEMBLY AND TEST
FACILITIES:
Kuala Lumpur, Assembly and testing of most of our products
Malaysia
Palm Bay, Florida Assembly and testing of some of our products used
in military applications
</TABLE>
Our 4 inch wafer fab in Findlay, Ohio will close about December 31, 1999.
Our manufacturing processes use many raw materials, including silicon
wafers, copper lead frames, mold compound, ceramic packages and various
chemicals and gases. We obtain our raw materials and supplies from a large
number of sources on a just-in-time basis. Although supplies for the raw
materials used by us are currently adequate, shortages could occur in various
essential materials due to interruption of supply or increased demand in the
industry.
39
<PAGE>
BACKLOG
Our sales are made pursuant to purchase orders that are generally booked
from one to six months in advance of delivery. Backlog is influenced by several
factors including market demand, pricing and customer order patterns in reaction
to product lead times. Although quantities actually purchased by customers may
vary between booking and delivery to the extent customer needs or industry
conditions change, our backlog has historically been a reliable indicator of our
future revenues. Our backlog was about $223.2 million at June 27, 1997, about
$188.5 million at July 3, 1998, $174.0 million at July 2, 1999 and $180.8
million at October 1, 1999. We expect to ship the backlog at October 1, 1999
within twelve months of such date.
We sell some products to key customers under annual, fixed-price contracts.
These contracts allow us to schedule production capacity in advance and allow
our customers to manage their inventory levels consistent with just-in-time
principles while shortening the cycle times required to produce ordered
products. However, quantity and price agreements under these contracts are, as a
matter of industry practice, difficult to maintain and implement.
SEASONALITY
Since a lower percentage of our products are sold into the computer
end-user or market, our seasonality is not reflective of the semiconductor
industry as a whole. As a result, we typically experience lower revenue in the
first fiscal quarter, primarily due in large part to slow demand from government
customers, changeovers in automotive models and customer demand adjustments as a
result of summer and holiday seasons around the world, particularly Europe.
Revenue usually has a seasonal peak in our fourth fiscal quarter due to our
customers' need to meet government delivery requirements.
COMPETITION
Markets for our products are highly competitive. Although only a few
companies compete with us in all of our product lines, we face significant
competition within each of our product lines from major international
semiconductor companies. Some of our competitors may have substantially greater
financial and other resources with which to pursue engineering, manufacturing,
marketing and distribution of their products. Competitors include manufacturers
of standard semiconductors, application specific integrated circuits and fully
customized integrated circuits, as well as customers who develop their own
integrated circuit products.
We compete in different product lines to various degrees on the basis of
price, technical performance, product features, product system compatibility,
customized design, availability, quality and sales and technical support. Our
ability to compete successfully depends on elements both within and outside of
our control, including successful and timely development of new products and
manufacturing processes, product performance and quality, manufacturing yields
and product availability, intellectual property protection obtained by us and
our competitors, customer service, pricing, industry trends and general economic
trends.
The following chart sets forth our principal competitors by business unit:
<TABLE>
<CAPTION>
BUSINESS UNIT PRINCIPAL COMPETITORS
------------- ---------------------
<S> <C>
Analog & Mixed-Signal Analog Devices, Burr Brown, Linear Technology,
Maxim, Semtech,
Discrete Power International Rectifier, ON Semiconductor,
Siliconix, STMicroelectronics
Wireless Lucent, Philips, Proxim
</TABLE>
TRADEMARKS AND PATENTS
We own rights to a number of trademarks and patents that are important to
our business. Among others, we consider Intersil, PRISM(Registered),
ULTRAFET(Registered) and CommLink to be trademarks that are material to our
operations.
40
<PAGE>
Our corporate policy is to protect proprietary products by obtaining
patents for such products when practicable. We currently possess about 1,400
patents.
EMPLOYEES
Our worldwide workforce consisted of 5,778 employees (full- and part-time)
as of October 1, 1999 of whom 793 were represented by collective bargaining
arrangements. Of our employees, 4,743 were engaged in manufacturing, 511 were
engaged in engineering, 323 were engaged in marketing and sales, 100 were
engaged in administration and 101 were engaged in management information
systems. Of our employees, 3,519 were employed in the Analog & Mixed-Signal
area; 1,897 were employed in the Discrete Power area; and 362 were employed in
the Wireless area. We believe that our relations with our employees are
satisfactory.
PROPERTIES
In the United States, our corporate headquarters as well as some
manufacturing and warehouse operations are located in about 846,000 square feet
of space in properties owned by us in Palm Bay, Florida. Additional
manufacturing, warehouse and office facilities are housed in about 445,000
square feet and 270,000 square feet of space in properties owned by us in
Mountaintop, Pennsylvania and Findlay, Ohio, respectively.
In Kuala Lumpur, Malaysia, we own about 524,000 square feet of
manufacturing and warehouse space located upon land leased by us under three
long-term ground leases. The initial term of these leases will expire in 2086.
The improvements located upon the leased land are owned by us.
Our primary engineering activity takes place in Palm Bay, Florida and at
our other manufacturing facilities. In addition to this, we have engineering
activities taking place in leased facilities in Durham, North Carolina (Research
Triangle Park), Branchburg, New Jersey and San Antonio, Texas.
We maintain regional sales offices in Palm Bay, Florida; Burlington,
Massachusetts; Dallas, Texas; San Jose, California; Munich, Germany; Milan,
Italy; Camberly, United Kingdom; and Taipei, Taiwan and other sales offices
around the world. All our offices are leased generally under short term leases,
except our offices in Palm Bay, Florida.
We believe that our facilities around the world, whether owned or leased,
are well-maintained. Our manufacturing facilities contain sufficient production
capacity to meet our needs for the foreseeable future.
ENVIRONMENTAL MATTERS
Our operations are subject to environmental laws and regulations in the
countries in which we operate that regulate, among other things, air and water
emissions and discharges at our manufacturing facilities; the management and
disposal of hazardous substances and wastes; the investigation and remediation
of environmental contamination; and the release of contaminants into the
environment at or from properties operated by us and at other sites. As with
other companies engaged in like businesses, the nature of our operations exposes
us to the risk of liabilities or claims with respect to such matters. We
believe, however, that our operations are in substantial compliance with
applicable environmental laws and regulations. Our costs to comply with
environmental regulations were about $4.5 million, $6.3 million and $7.4 million
in each of fiscal years 1997, 1998 and 1999, respectively.
Our facilities in Findlay, Ohio have ongoing remediation projects to
respond to some releases of hazardous substances that occurred prior to the
consummation of the acquisition of Harris' semiconductor business. Our
facilities in Mountaintop, Pennsylvania have groundwater and subsurface soil
contamination from past operations, some of which occurred prior to Harris'
acquisition of those facilities, for which remediation has been conducted, and
additional remediation may be required. In addition, Harris' facilities in Palm
Bay, Florida, a portion of which includes our business, are listed on the
National Priorities List under the Comprehensive Environmental Response,
Compensation and Liability Act. Remediation activities are ongoing in Palm Bay
in accordance with Consent Decrees entered into by Harris with the United States
Environmental Protection Agency. Under the Master Transaction Agreement, Harris
has agreed to indemnify
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us for the cost of such projects at all of our facilities, including at Findlay,
Ohio, Mountaintop, Pennsylvania, Kuala Lumpur, Malaysia and Palm Bay, Florida to
the extent such costs are not currently allocated in the current balance sheet
for the Semiconductor Business. Based on the historical costs of these projects
and because the remediation projects are in advance stages, we do not believe
that the future cleanup costs will be material, even without the indemnity.
Future laws or regulations and changes in existing environmental laws or
regulations may subject our operations to different, additional or more
stringent standards. While historically the cost of compliance with
environmental laws has not had a material adverse effect on our results of
operations, business or financial condition, we cannot predict with certainty
our future costs of compliance because of changing standards and requirements.
We cannot assure you that material costs will not be incurred in connection with
the future compliance with environmental laws or with future cleanup costs
related to currently unknown contamination.
LEGAL PROCEEDINGS
From time to time we are involved in legal proceedings arising in the
ordinary course of business. A countersuit brought by a competitor of Harris in
which patent infringement claims have been asserted is currently pending in
federal court. However, to the extent our liability from this litigation, if
any, arises out of the conduct of the semiconductor business by Harris prior to
closing, such liability will be covered by Harris' agreement in connection with
the acquisition of the semiconductor business to provide us with certain
indemnities. We believe that there is no litigation pending that could have,
individually or in the aggregate, a material adverse effect on our business,
financial condition, results of operations or cash flows.
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THE TRANSACTIONS
The following contains summaries of the material agreements which we
entered into in connection with the acquisition of the semiconductor business.
The descriptions in the summaries of the terms and provisions of the agreements
are complete in all material respects, but for detailed information you should
read the agreements themselves, copies of which have been filed or incorporated
by reference as exhibits to the Registration Statement of which this prospectus
is a part.
MASTER TRANSACTION AGREEMENT
In accordance with the Master Transaction Agreement,
o Harris transferred to us selected portions of the semiconductor business
in exchange for (a) $520.0 million in cash, and (b) our subordinated
promissory note, referred to as the 11.13% Seller Holding PIK Note, in
the principal amount of $90.0 million, which permits us to pay interest
in the form of additional notes, which we call pay-in-kind, or PIK,
notes;
o Harris paid about $9.0 million in cash to us to purchase shares of our
12% Series A Cumulative Compounding Preferred Stock and common stock;
o we sold to Sterling Holding Company, LLC, referred to as Sterling, and to
senior management and other key employees, referred to as the Management
Investors, and certain other investors shares of 12% Series A Cumulative
Compounding Preferred Stock and common stock for a total of about $81.0
million in cash;
o we contributed cash in the amount of about $90.0 million to Intersil's
capital as well as certain assets with a fair market value of about $90.0
million;
o Citicorp Mezzanine Partners, L.P. contributed $30.0 million in cash to us
in exchange for our subordinated promissory note, referred to as the
13.5% Subordinated Holding PIK Note due 2010, and warrants to purchase
5,555,560 shares of Class A Common Stock;
o we contributed cash in the amount of $30.0 million received from Citicorp
Mezzanine Partners, L.P. to Intersil's capital; and
o Intersil borrowed $220.0 million available under its new senior credit
facilities and received the gross proceeds of $200.0 million from the
sale of 200,000 units, each unit consisting of $1,000 principal amounts
of Senior Subordinated Notes of Intersil and one Warrant to purchase
27.7778 shares of Class A Common Stock of Intersil Holding.
Pursuant to the Master Transaction Agreement, Intersil Holding and Intersil
purchased from Harris selected portions of the semiconductor business for a
purchase price that is further subject to a post-closing adjustment. The assets
purchased by us include, among other things, some properties located at Palm
Bay, Florida, Mountaintop, Pennsylvania, Findlay, Ohio and Kuala Lumpur,
Malaysia (see 'Business-- Properties'), as well as, with some exceptions and
limitations, all of the manufacturing equipment, motor vehicles, office
furniture, inventory, governmental permits and licenses and other assets
necessary to operate our business. In addition, purchased assets include:
o contractual rights and obligations which primarily relate to the
semiconductor business;
o intellectual property rights; and
o all of the capital stock and membership interests of four domestic and 12
foreign entities (corporations and limited liability companies) owned by
Harris. We acquired eleven of the twelve foreign entities or their assets
either directly or through a foreign subsidiary wholly owned by us. The
twelfth foreign entity, a corporation which operates our assembly and
test facility in Kuala Lumpur, Malaysia, was acquired by a British Virgin
Islands corporation that is wholly owned by our wholly-owned Malaysian
subsidiary. The acquisition of this twelfth foreign entity was made
pursuant to a separate transaction agreement and was financed with funds
both contributed by us and loaned by our wholly-owned Cayman Islands
subsidiary to our Malaysian subsidiary (the loan proceeds from the Cayman
Islands subsidiary consisting of funds contributed to this subsidiary by
us) which in turn were loaned and contributed to the British Virgin
Islands corporation.
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Among the liabilities we did not assume are the environmental liabilities
relating to the operations of the semiconductor business and the transferred
Harris subsidiaries prior to closing. The agreement provides that Harris must
indemnify us for any damages arising from such excluded liabilities. The
agreement also provides that we must offer to employ all our employees on
substantially the same terms and conditions as they were employed immediately
before the acquisition of the semiconductor business. In addition, the agreement
contains a provision that, subject to some limitations, forbids Harris for a
period of five years after the consummation of the acquisition of the
semiconductor business from engaging in business competing with most of our
products in existence on the date the transactions were consummated.
Pursuant to the Master Transaction Agreement, Harris entered into with us
the Intellectual Property Agreement, the Patent Assignment and Services
Agreement, the License Assignment Agreement, the Harris Trademark License
Agreement, the Secondary Trademark Assignment and License Agreement, the
Transition Services Agreement, the Shareholders' Agreement, the Registration
Rights Agreement and the Royalty Agreement. See 'Ownership of Capital
Stock--Shareholders' Agreement' and '--Registration Rights Agreement.'
INTELLECTUAL PROPERTY AGREEMENT
Under the Intellectual Property Agreement, Harris assigned to us its entire
ownership, right, title and interest in some intangible property rights existing
under laws respecting copyright, maskwork and trade secret, which intangible
property rights are owned by Harris and that were specific to the operations of
the semiconductor business. Harris also granted to us a royalty-free,
non-exclusive, worldwide license, with a limited right to sublicense, under
certain copyrights, maskworks and trade secrets to make, have made, use and sell
certain products, which copyrights, maskworks and trade secrets are specific to
the products or are used in the semiconductor business. Certain licenses to
software are listed in this agreement as being unassignable without the
permission of the licensor.
PATENT ASSIGNMENT AND SERVICES AGREEMENT
Under the Patent Assignment and Services Agreement, Harris assigned to us,
subject to pre-existing license rights, about 1,400 patents. Harris also granted
us a worldwide, royalty-free, non-exclusive license, without the right to
sublicense, under some other applicable patents, for the life of such patents,
to make, have made, use and sell certain of our products. Harris retained the
rights to some patents for up to three years before assigning their entire
right, title and interest therein to us (provided that the patents are not in
litigation at the time, and no royalties are owed on licenses to the patents).
During the interim preceding the assignment of these retained patents, Harris
granted us a worldwide, royalty-free, non-exclusive license thereto, without the
right to sublicense.
LICENSE ASSIGNMENT AGREEMENT
Under the License Assignment Agreement, Harris assigned to us its entire
right, title and interest in and to certain license agreements by and between
Harris and various third parties, which license agreements may be assigned
without the consent of the third parties. The agreement provides that Harris
will use commercially reasonable efforts, as requested by us in writing, to
provide us with the economic benefit of certain other license agreements between
Harris and various third parties, which license agreements are material to the
semiconductor business and require the consent of the third parties to assign.
Harris will assign to us any revenue received under certain other royalty
bearing license agreements between Harris and various third parties, which
agreements require the consent of the various third parties to assign, and will
use commercially reasonable efforts to obtain the consent of the various third
parties to such assignments.
The agreement also provides that Harris will, at our written request and to
the extent that Harris is authorized to do so and that the license is relevant
to our business as of the Closing Date, grant us a sublicense under the License
Agreement between Harris and Lemelson Medical, Education & Research Foundation,
Limited Partnership dated April 30, 1999. The agreement further provides that
Harris will assign all remaining rights in the retained license agreements to
us. The assignment of each such retained license agreement is to occur at such
time as all the amounts that are due, or are to become due under that retained
license agreement, have been paid to Harris. In the event that a retained
license agreement cannot be assigned at such time, Harris will use commercially
reasonable efforts, as requested by us, to provide us with the economic benefit
of that retained license agreement. The assignment of, or commercially
reasonable efforts to
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provide us the economic benefit of, each such retained license agreement is to
occur at such time as all the amounts that are due, or are to become due under
the retained license agreement, have been paid to Harris. The agreement still
further provides that we accept the assignments or transfers effected under the
License Assignment Agreement and assume the liabilities of Harris to each of the
license agreements so assigned or transferred.
HARRIS TRADEMARK LICENSE AGREEMENT
Under the Harris Trademark License Agreement, Harris granted to us
non-exclusive, royalty-free licenses recognizing transitional use of some
visible trademarks and product-embedded trademarks, which embedded trademarks
will not be eliminated until the relevant product is discontinued.
AGREEMENT WITH RESPECT TO PRISM(REGISTERED) REVENUES
Under an agreement with respect to PRISM(Registered) revenues, we agreed to
pay Harris 2% of the revenue generated by the sales of the PRISM(Registered)
chip sets for a period of five years after the closing of the transactions
consummated pursuant to Master Transaction Agreement.
SECONDARY TRADEMARK ASSIGNMENT AND LICENSE AGREEMENT
Under the Secondary Trademark Assignment and License Agreement, Harris
assigned to us some trademarks related to products of the semiconductor business
and we granted back to Harris worldwide, non-exclusive, royalty-free licenses
recognizing transitional use of some visible trademarks assigned by Harris to
us. The agreement further provides that Harris will cooperate with us, at our
expense, in respect to any judicial or administrative proceedings contemplated
or commenced by us under any of the trademarks assigned to us under this
agreement.
TRANSITION SERVICES AGREEMENT
Under the Transition Services Agreement, Harris will provide a number of
business support services to us that will assist in the conversion of the
semiconductor business to an independent entity. From the consummation of the
acquisition for, in most instances, up to 8 months, Harris is obligated to make
available to us:
o data processing and communication services;
o financial and administrative support; and
o human resources and benefits services.
Generally, the agreement provides that Harris will invoice us for the cost of
services provided, plus 5%, with some charges based on a fixed cost and other
charges based on Harris' actual incurred costs.
Under the Transition Services Agreement, we have also agreed to provide
Harris with certain services for a period of 18 months and certain products for
a period of 24 months related to the suppression products business. For the
services and products to be provided by us to Harris, Harris has agreed to pay
5% on top of all costs except third-party costs.
OPTION AGREEMENT
Under an agreement with respect to certain assets, we granted to Intersil
Prism, LLC an option to purchase such assets for a fixed purchase price.
However, because the exercise of the option would be prohibited by the terms of
the indenture governing the notes, the option may not be exercised while the
Notes are outstanding unless we obtain a consent from the bondholders. If the
holder of the option exercises it, holders of the Warrants and the warrants
issued to Citicorp Mezzanine Partners, L.P. (or the holders of the Class A
Common Stock issued upon exercise of such warrants) may participate in the
purchase of such assets upon payment of their pro rata share of the option
purchase price and the option exercise price.
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MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information with respect to the
persons who are members of our Board of Directors or executive officers. Each of
our directors will hold office until the relevant company's next annual meeting
of shareholders or until a successor has been elected and qualified.
<TABLE>
<CAPTION>
NAME AGE TITLE
- - ---- --- -----
<S> <C> <C>
Gregory L. Williams....................... 46 Chief Executive Officer, Director
W. Russell Morcom......................... 53 Vice President, General Manager, Discrete Power
George L. Gidzinski....................... 44 Vice President, General Manager, Analog and Mixed Signal
Business Unit
Daniel J. Heneghan........................ 44 Vice President, Controller and Secretary
Ray D. Odom............................... 46 Vice President, General Manager, Space & Defense Products
Larry W. Sims............................. 42 Vice President, Marketing and Sales
James A. Urry............................. 45 Director
Gary E. Gist.............................. 53 Director
</TABLE>
Gregory L. Williams, Chief Executive Officer, Director. Mr. Williams is
our Chief Executive Officer. From October, 1998, to August, 1999, Mr. Williams
was President of the semiconductor business at Harris. From January to October
1998, Mr. Williams was Vice President and General Manager of the Power Products
Division at Harris. From 1984 to 1998, Mr. Williams also served as Vice
President and Assistant General Manager of the Semiconductor Components Group,
Vice President and General Manager of the Power Products Division, and Vice
President and Director of Automotive World Marketing at Motorola Semiconductor,
and from 1977 to 1984, Mr. Williams served with General Electric Company.
W. Russell Morcom, Vice President, General Manager, Discrete Power. Mr.
Morcom is our Vice President and General Manager, Discrete Power. From 1997 to
August, 1999, Mr. Morcom was Vice President and General Manager, Operations and
Quality of the semiconductor business at Harris. From 1991 to 1997, Mr. Morcom
was Vice President and General Manager, Semiconductor Products Division of the
semiconductor business of Harris.
George L. Gidzinski, Vice President, General Manager, Analog and Mixed
Signal Business Unit. Mr. Gidzinski is our Vice President and General Manager,
Analog and Mixed Signal Business Unit. From 1998 until August, 1999, Mr.
Gidzinski was Vice President and General Manager of the Power Products Business
of the semiconductor business at Harris. From 1995 to 1998, Mr. Gidzinski served
as Vice President of Intelligent Power Products of the semiconductor business at
Harris and from 1991 to 1995, Mr. Gidzinski served as Vice President of
Worldwide Marketing of the semiconductor business at Harris.
Daniel J. Heneghan, Vice President, Secretary and Controller. Mr. Heneghan
is our Vice President, Secretary and Controller. From 1996 to August, 1999, Mr.
Heneghan was Vice President and Controller of the semiconductor business at
Harris. From 1994 to 1996, Mr. Heneghan was Vice President of Digital Products
of the semiconductor business at Harris. Mr. Heneghan also served at various
times as Division Controller of the semiconductor business at Harris, Director
of Planning at Harris, Director of Finance at Harris and Senior Financial
Analyst with Royal Crown Cola.
Ray D. Odom, Vice President, General Manager, Space and Defense
Products. Mr. Odom is our Vice President and General Manager, Space and Defense
Products. From July, 1998 to August, 1999, Mr. Odom was Vice President and
General Manager, Space and Defense Products of the semiconductor business at
Harris. From July 1994 to June 1997, Mr. Odom was Director of Palm Bay
Manufacturing of the semiconductor business at Harris. From February 1991 to
June 1994, Mr. Odom was Director of Manufacturing of the Military and Aerospace
Division of the semiconductor business at Harris.
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Larry W. Sims, Vice President, Marketing and Sales. Mr. Sims is our Vice
President, Marketing and Sales. From August, 1998 to August, 1999, Mr. Sims was
Vice President, Sales of the semiconductor business at Harris. Prior to joining
Harris, Mr. Sims served in various sales management positions at Motorola
Semiconductor.
James A. Urry, Director. Mr. Urry is one of our directors. Mr. Urry has
been with Citibank, N.A. since 1981 serving as a Vice President since 1986. He
has been a Vice President of Citicorp Venture Capital Ltd., which is an
affiliate of ours, since 1989. He is also a Director of Airxcel, Inc.,
AmeriSource Health Corporation, CORT Business Services, CLARK Material Handling
Corporation, Hancor Holding Corporation, IKS Corporation, Palomar Technological
Companies and York International Corporation.
Gary E. Gist, Director. Mr. Gist is one of our directors. Mr. Gist is the
President and Chief Executive Officer of, and has been with, Palomar
Technological Companies since 1995, a corporation made up of a diverse group of
companies that focus on designing and manufacturing electronic products
including the following companies: HID Corporation, AML Wireless Systems, Inc.,
Palomar Display Products, Inc., Palomar Products, Inc. and Palomar Technologies,
Inc. Prior to 1995, he was Division Manager of the Technology Products Division
of Hughes Industrial Electronics Company.
Our Board of Directors will consist of five directors, determined as
follows: our chief executive officer, one individual designated by Sterling, up
to two independent directors designated by Sterling (subject to the right of the
holders of a majority of the outstanding shares of the Class A Common Stock to
veto the election of any such independent directors) and, in the event the Board
includes two independent directors designated by Sterling, one additional
individual designated by Sterling.
DIRECTOR COMPENSATION AND ARRANGEMENTS
Those directors who are employed by us or by Citicorp Venture Capital Ltd.
do not receive compensation for their services as directors. Compensation for
other directors has not yet been determined. Members of the Board of Directors
are elected according to the voting agreements outlined in the Securities
Purchase and Holders Agreement.
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EXECUTIVE COMPENSATION
The following table sets forth certain information concerning the
compensation received by our five most highly compensated officers for services
rendered in fiscal year 1999.
SUMMARY COMPENSATION TABLE
FISCAL YEAR 1999
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
------------------------
AWARDS PAYOUTS
---------- ----------
ANNUAL COMPENSATION SECURITIES
---------------------------------------------- UNDERLYING ALL OTHER
NAME AND OTHER ANNUAL OPTIONS/ LTIP COMPENSATION
PRINCIPAL POSITION SALARY($) BONUS($)(1) COMPENSATION($)(2) SARS(#)(3) PAYOUTS($) ($)(4)
- - --------------------------------- --------- ----------- ------------------ ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Gregory L. Williams ............. 318,615 20,531 6,925 25,000 0 12,207
Chief Executive Officer
W. Russell Morcom ............... 170,000 113,623 10,798 6,000 70,875 57,114
Vice President--General
Manager--Discrete Power
George L. Gidzinski ............. 133,269 46,683 3,264 5,000 28,350 15,128
Vice President--General
Manager--Analog and Mixed
Signal Business Unit
Daniel J. Heneghan .............. 121,980 44,121 1,920 3,500 24,924 23,774
Vice President--Secretary--
Controller
Larry W. Sims ................... 185,769 117,953 47,174 0 0 1,889
Vice President--Marketing and
Sales
</TABLE>
- - ------------------
(1) This category includes Annual Incentive Plan bonus for all officers and a
sales incentive compensation bonus for Mr. Sims. It also includes awards for
Mr. Williams and for Mr. Heneghan of $50 each, a bonus of $7,108 for Mr.
Heneghan and disruption and signing bonuses, totaling $65,000, for Mr. Sims.
(2) Except for Mr. Sims, none of the executive officers named in the Summary
Compensation Table received personal benefits in excess of the lesser of
$50,000 or 10% of annual salary and bonus for fiscal year 1999. Mr. Sims'
personal benefits for fiscal year 1999 included relocation expenses and
applicable taxes. The other amounts reported represent dividend equivalent
payments on outstanding performance shares granted under Harris' Stock
Incentive Plan for which the performance period had not expired.
(3) All options granted were for Harris common stock under Harris' Stock
Incentive Plan. We did not assume Harris' obligations under the Stock
Incentive Plan.
(4) Amounts reported include:
(A) Contributions to the Harris Retirement Plan for fiscal 1999: Mr.
Williams--$3,959; Mr. Heneghan--$19,659; Mr. Gidzinski--$14,984; Mr.
Sims--$1,293; and Mr. Morcom--$17,703.
(B) Contributions to Harris' Supplemental Executive Retirement Plan for
fiscal 1999: Mr. Williams--$5,943; Mr. Heneghan--$3,700; Mr.
Gidzinski--$0; Mr. Sims--$0; and Mr. Morcom--$38,677.
(C) The taxable portion of premiums on life insurance provided by Harris for
fiscal 1999: Mr. Williams--$2,305; Mr. Heneghan--$415; Mr.
Gidzinski--$144; Mr. Sims--$596; and Mr. Morcom--$734.
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In connection with the Transactions, we and Intersil entered into an
employment agreement with Mr. Williams for him to serve as our Chief Executive
Officer and a member of our Board of Directors. His employment agreement
provides for an annual base salary of $425,000, subject to increases and annual
performance bonuses at the discretion of the Board of Directors. The agreement
also provides for Mr. Williams to receive our standard benefits. The term of the
agreement is 60 months, subject to automatic renewal for successive one year
terms, unless either we give or Mr. Williams gives prior notice of non-renewal.
Mr. Williams is subject to a noncompetition covenant during the term of his
agreement and for a period of one year following termination or expiration of
the agreement.
RETIREMENT AND SAVINGS PROGRAM
We provide retirement benefits to substantially all employees primarily
through a retirement plan having profit-sharing and savings elements.
Contributions by us to the retirement plan are based on profits and employees'
savings with no other funding requirements. We are able to make additional
contributions to the fund at our discretion. We also have non-contributory
defined benefit pension plans which are fully funded.
Retirement benefits also include an unfunded limited healthcare plan for
U.S.-based retirees and employees on long-term disability. We accrue the
estimated cost of these medical benefits, which are not material, during an
employee's active service life.
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Citicorp Venture Capital Ltd. owns an interest in Sterling. Citicorp
Mezzanine Partners, L.P., the general partner of which is an affiliate of
Citicorp Venture Capital, contributed $30.0 million in cash to Intersil Holding
in exchange for the 13.5% Subordinated PIK Note and a warrant to purchase about
5.6 million shares of Intersil Holding's Class A Common Stock. Intersil Holding
contributed the $30.0 million from Citicorp Mezzanine Partners, L.P. to Intersil
as a capital contribution.
Pursuant to the Master Transaction Agreement, the following transactions
occurred on August 13, 1999:
o Harris transferred to Intersil and Intersil Holding selected portions of
the semiconductor business in exchange for (a) $520.0 million in cash,
and (b) the 11.13% Seller Holding PIK Note in the principal amount of
$90.0 million;
o Harris paid about $9.0 million in cash to Intersil Holding to purchase
shares of Intersil Holding Preferred Stock and Intersil Holding Common
Stock;
o Intersil Holding sold to Sterling and to the Management Investors and
certain other investors shares of Intersil Holding Preferred Stock and
Intersil Holding Common Stock for a total of about $81.0 million in cash;
o Intersil Holding contributed cash in the amount of about $90.0 million to
Intersil's capital as well as certain assets with a fair market value of
about $90.0 million;
o Citicorp Mezzanine Partners, L.P. contributed $30.0 million in cash to
Intersil Holding in exchange for the 13.5% Subordinated Holding PIK Note
and warrants to purchase 5,555,560 shares of Class A Common Stock of
Intersil Holding;
o Intersil Holding contributed cash in the amount of $30.0 million received
from Citicorp Mezzanine Partners, L.P. to Intersil's capital; and
o Intersil borrowed $220.0 million available under its new senior credit
facilities and received the gross proceeds of $200.0 million from the
sale of 200,000 units, each unit consisting of $1,000 principal amounts
of Senior Subordinated Notes of Intersil and a Warrant.
Pursuant to the Master Transaction Agreement, Intersil Holding and Intersil
purchased from Harris selected portions of the semiconductor business for a
purchase price that is further subject to a post-closing adjustment. The assets
purchased include, among other things, some properties located at Palm Bay,
Florida, Mountaintop, Pennsylvania, Findlay, Ohio and Kuala Lumpur, Malaysia
(see 'Business--Properties'), as well as, with some exceptions and limitations,
all of the manufacturing equipment, motor vehicles, office furniture, inventory,
governmental permits and licenses and other assets necessary to operate our
business. In addition, purchased assets include:
o contractual rights and obligations which primarily relate to the
semiconductor business;
o intellectual property rights; and
o all of the capital stock and membership interests of four domestic and 12
foreign entities (corporations and limited liability companies) owned by
Harris. We acquired eleven of the twelve foreign entities or their assets
either directly or through a foreign subsidiary wholly owned by us. The
twelfth foreign entity, a corporation which operates our assembly and
test facility in Kuala Lumpur, Malaysia, was acquired by a British Virgin
Islands corporation that is wholly owned by our wholly-owned Malaysian
subsidiary. The acquisition of this twelfth foreign entity was made
pursuant to a separate transaction agreement and was financed with funds
both contributed by us and loaned by our wholly-owned Cayman Islands
subsidiary to our Malaysian subsidiary (the loan proceeds from the Cayman
Islands subsidiary consisting of funds contributed to this subsidiary by
us) which in turn were loaned and contributed to the British Virgin
Islands corporation.
Among the liabilities we did not assume are the environmental liabilities
relating to the operations of the semiconductor business and the transferred
Harris subsidiaries prior to closing. The agreement provides that Harris must
indemnify us for any damages arising from such excluded liabilities. The
agreement also
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provides that we must offer to employ all our employees on substantially the
same terms and conditions as they were employed immediately before the
acquisition of the semiconductor business. In addition, the agreement contains a
provision that, subject to some limitations, forbids Harris for a period of five
years after the consummation of the acquisition of the semiconductor business
from engaging in business competing with most of our products in existence on
the date the transactions were consummated.
Pursuant to the Master Transaction Agreement, the shareholders of Intersil
Holding entered into a Shareholders' Agreement containing certain agreements
among such shareholders with respect to capital stock and corporate governance
of Intersil and Intersil Holding. See 'Description of Capital
Stock-Shareholder's Agreement.'
Pursuant to the Master Transaction Agreement, Harris entered into with us
the Intellectual Property Agreement, the Patent Assignment and Services
Agreement, the License Assignment Agreement, the Harris Trademark License
Agreement, the Secondary Trademark Assignment and License Agreement, the
Transition Services Agreement, the Registration Rights Agreement and the Royalty
Agreement. See 'Description of Capital Stock--Registration Rights Agreement.'
Under the Intellectual Property Agreement, Harris assigned to us its entire
ownership, right, title and interest in some intangible property rights existing
under laws respecting copyright, maskwork and trade secret, which intangible
property rights are owned by Harris and that were specific to the operations of
the semiconductor business. Harris also granted to us a royalty-free,
non-exclusive, worldwide license, with a limited right to sublicense, under
certain copyrights, maskworks and trade secrets to make, have made, use and sell
certain products, which copyrights, maskworks and trade secrets are specific to
the products or are used in the semiconductor business. Certain licenses to
software are listed in this agreement as being unassignable without the
permission of the licensor.
Under the Patent Assignment and Services Agreement, Harris assigned to us,
subject to pre-existing license rights, about 1,400 patents. Harris also granted
us a worldwide, royalty-free, non-exclusive license, without the right to
sublicense, under some other applicable patents, for the life of such patents,
to make, have made, use and sell certain of our products. Harris retained the
rights to some patents for up to three years before assigning their entire
right, title and interest therein to us (provided that the patents are not in
litigation at the time, and no royalties are owed on licenses to the patents).
During the interim preceding the assignment of these retained patents, Harris
granted us a worldwide, royalty-free, non-exclusive license thereto, without the
right to sublicense.
Under the License Assignment Agreement, Harris assigned to us its entire
right, title and interest in and to certain license agreements by and between
Harris and various third parties, which license agreements may be assigned
without the consent of the third parties. The agreement provides that Harris
will use commercially reasonable efforts, as requested by us in writing, to
provide us with the economic benefit of certain other license agreements between
Harris and various third parties, which license agreements are material to the
semiconductor business and require the consent of the third parties to assign.
Harris will assign to us any revenue received under certain other royalty
bearing license agreements between Harris and various third parties, which
agreements require the consent of the various third parties to assign, and will
use commercially reasonable efforts to obtain the consent of the various third
parties to such assignments.
The agreement also provides that Harris will, at our written request and to
the extent that Harris is authorized to do so and that the license is relevant
to our business as of the Closing Date, grant us a sublicense under the License
Agreement between Harris and Lemelson Medical, Education & Research Foundation,
Limited Partnership dated April 30, 1999. The agreement further provides that
Harris will assign all remaining rights in the retained license agreements to
us. The assignment of each such retained license agreement is to occur at such
time as all the amounts that are due, or are to become due under that retained
license agreement, have been paid to Harris. In the event that a retained
license agreement cannot be assigned at such time, Harris will use commercially
reasonable efforts, as requested by us, to provide us with the economic benefit
of that retained license agreement. The assignment of, or commercially
reasonable efforts to provide us the economic benefit of, each such retained
license agreement is to occur at such time as all the amounts that are due, or
are to become due under the retained license agreement, have been paid to
Harris. The agreement still further provides that we accept the assignments or
transfers effected under the License
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<PAGE>
Assignment Agreement and assume the liabilities of Harris to each of the license
agreements so assigned or transferred.
Under the Harris Trademark License Agreement, Harris granted to us
non-exclusive, royalty-free licenses recognizing transitional use of some
visible trademarks and product-embedded trademarks, which embedded trademarks
will not be eliminated until the relevant product is discontinued.
Under an agreement with respect to PRISM(Registered) revenues, we agreed to
pay Harris 2% of the revenue generated by the sales of the PRISM(Registered)
chip sets for a period of five years after the closing of the transactions
consummated pursuant to the Master Transaction Agreement.
Under the Secondary Trademark Assignment and License Agreement, Harris
assigned to us some trademarks related to products of the semiconductor business
and we granted back to Harris worldwide, non-exclusive, royalty-free licenses
recognizing transitional use of some visible trademarks assigned by Harris to
us. The agreement further provides that Harris will cooperate with us, at our
expense, in respect to any judicial or administrative proceedings contemplated
or commenced by us under any of the trademarks assigned to us under this
agreement.
Under the Transition Services Agreement, Harris will provide a number of
business support services to us that will assist in the conversion of the
semiconductor business to an independent entity. From the consummation of the
acquisition for, in most instances, up to 8 months, Harris is obligated to make
available to us:
o data processing and communication services;
o financial and administrative support; and
o human resources and benefits services.
Generally, the agreement provides that Harris will invoice us for the cost of
services provided, plus 5%, with some charges based on a fixed cost and other
charges based on Harris' actual incurred costs.
Under the Transition Services Agreement, we have also agreed to provide
Harris with certain services for a period of 18 months and certain products for
a period of 24 months related to the suppression products business. For the
services and products to be provided by us to Harris, Harris has agreed to pay
5% on top of all costs except third-party costs.
Under an agreement with respect to certain assets, we granted to Intersil
Prism, LLC an option to purchase such assets for a fixed purchase price.
However, because the exercise of the option would be prohibited by the terms of
the indenture governing the notes, the option may not be exercised while the
notes are outstanding unless we obtain a consent from the bondholders. If the
holder of the option exercises it, holders of the Warrants and the warrants
issued to Citicorp Mezzanine Partners, L.P. (or the holders of the Class A
Common Stock issued upon exercise of such warrants) may participate in the
purchase of such assets upon payment of their pro rata share of the option
purchase price and the option exercise price.
The terms of the agreements described above were the result of arms-length
negotiations and in our opinion are no less favorable to Intersil and Intersil
Holding than those that could be obtained from non-affiliated parties.
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<PAGE>
OWNERSHIP OF CAPITAL STOCK
The following table sets forth information with respect to the beneficial
ownership of the Intersil Holding Preferred Stock and Intersil Holding Common
Stock. This table does not include (a) shares of Intersil Holding Class A Common
Stock issuable upon conversion of Intersil Holding Class B Common Stock or upon
conversion of the Warrants and the warrants issued in connection with the 13.5%
Subordinated Holding PIK Note, or (b) shares of Intersil Holding Class B Common
Stock issuable upon conversion of Intersil Holding Class A Common Stock. A
number of Intersil employees are expected to participate in an Employee Stock
Option Plan under which they will be offered the opportunity to acquire Intersil
Holding Class A Common Stock which would equal in the aggregate up to an
additional 3% of the Intersil Holding Common Stock outstanding. See '--Employee
Stock Option Plan.' In addition, we granted to certain senior managers a sign-on
bonus in the aggregate amount of about $574,000, in the form of options to
purchase Preferred Stock of Intersil Holding. The option price is about $250 per
share. The table also does not include shares or options that may be acquired by
our employees pursuant to the Employee Stock Option Plan or the shares of
Preferred Stock that may be acquired by certain senior managers upon exercise of
the Preferred Stock options granted to such senior managers.
<TABLE>
<CAPTION>
NUMBER AND PERCENT OF SHARES OF INTERSIL HOLDING
---------------------------------------------------------------------
PREFERRED STOCK CLASS A STOCK CLASS B STOCK
----------------- --------------------- ---------------------
NAME OF BENEFICIARY NUMBER PERCENT NUMBER PERCENT NUMBER PERCENT
- - ------------------- ------ ------- ---------- ------- ---------- -------
<S> <C> <C> <C> <C> <C> <C>
Sterling Holding Company, LLC (1) .......... 73,650 88.27% 11,088,837 48.11% 70,165,203 91.17%
c/o Intersil Corporation
2401 Palm Bay Road NE
Palm Bay, FL 32905
Harris Corporation ......................... 8,456 10.14% 2,263,028 9.82% 6,797,375 8.83%
1025 W. NASA Boulevard
Melbourne, Florida 32919
Gregory L. Williams ........................ 74 0.09% 3,347,315 14.52% -- --
W. Russell Morcom .......................... 415 0.50% 1,025,247 4.45% -- --
George L. Gidzinski ........................ 4 0.01% 684,564 2.97% -- --
Daniel J. Heneghan ......................... 27 0.03% 382,634 1.66% -- --
Larry W. Sims .............................. 145 0.17% 835,916 3.63% -- --
All directors, officers and other management 1,327 1.59% 9,695,327 42.07% -- --
investors as a group (15 persons) ..........
</TABLE>
- - ------------------
(1) Sterling agreed to permit Credit Suisse First Boston Corporation or its
affiliates to purchase a number of shares of Preferred Stock and Class A
Common Stock representing up to 1.67% of equity of Intersil Holding for
about $1.5 million.
------------------
Citicorp Venture Capital Ltd. owns a majority of the underlying interest in
Sterling. Sterling owns 88.3% of Preferred Stock, 49.0% of Class A Common Stock
and 91.2% of Class B Common Stock of Intersil Holding and also owns 30.9% of
Class A Common Stock and 95.8% of Class B Common Stock of Fairchild
Semiconductor International, Inc. Fairchild Semiconductor Corporation is a
wholly owned subsidiary of Fairchild Semiconductor International, Inc. See
'Business--Competition.'
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<PAGE>
DESCRIPTION OF CAPITAL STOCK
INTERSIL HOLDING PREFERRED STOCK
Intersil Holding's Certificate of Incorporation provides that Intersil
Holding may issue 2,000,000 shares of Preferred Stock, 1,000,000 of which is
designated as 12% Series A Cumulative Compounding Preferred Stock. Intersil
Holding Preferred Stock has a stated value of $1,000 per share and is entitled
to annual dividends when, as and if declared, which dividends are cumulative,
whether or not earned or declared, and accrue at a rate of 12%, compounding
annually. The vote of a majority of the outstanding shares of the Intersil
Holding Preferred Stock, voting as a separate class, is required to (1) create,
authorize or issue any other class or series of stock entitled to a preference
ahead of the Intersil Holding Preferred Stock with respect to any dividend or
upon distribution or any liquidation, distribution of assets, dissolution or
winding up of Intersil Holding, or increase the authorized amount of any such
other class or series, or (2) amend Intersil Holding's Certificate of
Incorporation if such amendment would adversely affect the relative rights and
preferences of the holders of the Intersil Holding Preferred Stock. Except as
described in the immediately preceding sentence or as otherwise required by law,
the Intersil Holding Preferred Stock is not entitled to vote. Intersil Holding
may not pay any dividend upon (except for a dividend payable in Junior Stock, as
defined below), or redeem or otherwise acquire shares of, capital stock junior
to the Intersil Holding Preferred Stock (including the Intersil Holding Common
Stock) ('Junior Stock') unless all cumulative dividends on the Intersil Holding
Preferred Stock have been paid in full. Upon liquidation, dissolution or winding
up of Intersil Holding, holders of Intersil Holding Preferred Stock are entitled
to receive out of the legally available assets of Intersil Holding, before any
amount shall be paid to holders of Junior Stock, an amount equal to $1,000 per
share of Intersil Holding Preferred Stock, plus all accrued and unpaid dividends
to the date of final distribution. If such available assets are insufficient to
pay the holders of the outstanding shares of Intersil Holding Preferred Stock in
full, such assets, or the proceeds thereof, will be distributed ratably among
such holders. The Intersil Holding Preferred Stock is not mandatorily redeemable
prior to June 30, 2011. Intersil Holding may optionally redeem, in whole or in
part, the Intersil Holding Preferred Stock at any time at a price per share of
$1,000, plus accrued and unpaid dividends to the date of redemption. At the
option of Intersil Holding, the Intersil Holding Preferred Stock may be
exchanged for junior subordinated debentures of Intersil Holding.
INTERSIL HOLDING COMMON STOCK
The Certificate of Incorporation of Intersil Holding provides that Intersil
Holding may issue 250,000,000 shares of Intersil Holding Common Stock, divided
into two classes consisting of 125,000,000 shares of Intersil Holding Class A
Common Stock and 125,000,000 shares of Intersil Holding Class B Stock. The
holders of Intersil Holding Class A Common Stock are entitled to one vote for
each share held of record on all matters submitted to a vote of the
shareholders. Except as required by law, the holders of Intersil Holding Class B
Common Stock have no voting rights. Under the Certificate of Incorporation of
Intersil Holding, a holder of either class of Intersil Holding Common Stock may
convert any or all of his shares into an equal number of shares of the other
class of Intersil Holding Common Stock; provided that in the case of a
conversion from Intersil Holding Class B Common Stock, which is nonvoting, into
Intersil Holding Class A Common Stock, which is voting, the holder of shares to
be converted are permitted under applicable law to hold the total number of
shares of Intersil Holding Class A Common Stock which would be held after giving
effect to the conversion.
WARRANTS RELATING TO THE 13.5% SUBORDINATED HOLDING PIK NOTE
Intersil Holding issued to Citicorp Mezzanine Partners, L.P. warrants to
purchase Intersil Holding Class A Common Stock. These warrants entitle the
holder to purchase up to 5,555,560 shares of Class A Common Stock of Intersil
Holding until August 15, 2009 at an exercise price of $0.001 per share, subject
to certain anti-dilution adjustments in certain circumstances. If Intersil
Holding prepays in full the 13.5% Subordinated Holding PIK Note due 2010 within
24 months after the issuance thereof, these warrants will be exercisable for
3,333,336 shares of the Intersil Holding Class A Common Stock. See 'Description
of Certain Indebtedness--13.5% Subordinated Holding PIK Note due 2010.'
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<PAGE>
SHAREHOLDERS' AGREEMENT
The shareholders of Intersil Holding entered into a Securities Purchase and
Holders Agreement (the 'Shareholders' Agreement') containing certain agreements
among such shareholders with respect to the capital stock and corporate
governance of us and Intersil Holding.
According to the Shareholders' Agreement, our Board of Directors and the
Board of Directors of Intersil must be composed of up to five directors as
follows: our chief executive officer; one individual designated by Sterling; up
to two independent directors designated by Sterling (to the extent permitted by
applicable law as determined by Sterling in its sole discretion), subject to the
right of the majority of holders of the outstanding shares of Intersil Holding
Class A Common Stock to veto the election of any such independent director,
provided that in the event that Sterling concludes that it is unable to
designate, or elects not to designate for any reason, one or more of such
independent directors or the election of any such independent director is not
approved by the holders of a majority of the outstanding shares of Intersil
Holding Class A Common Stock, such directorship(s) shall not be filled by the
remaining members of the Board of Directors but shall remain vacant until the
election of a director designated by Sterling to fill such vacancy in accordance
with the Shareholders' Agreement. When our Board of Directors includes two
independent directors, Sterling shall have the right to designate one additional
individual. However, if Sterling at any time owns of record in excess of 50% of
the Intersil Holding Class A Common Stock then outstanding, then our Board of
Directors shall consist of our chief executive officer and up to four
individuals designated by Sterling in its sole discretion.
The Shareholders' Agreement contains certain provisions which, with some
exceptions, restrict the ability of the shareholders to transfer any Intersil
Holding Common Stock or Intersil Holding Preferred Stock. If holders of more
than 50% of the Intersil Holding Common Stock approve the sale of Intersil or
Intersil Holding, each shareholder has agreed to consent to such sale and, if
such sale includes the sale of stock, each shareholder has agreed to sell all of
such shareholder's Intersil Holding Common Stock and Intersil Holding Preferred
Stock on the terms and conditions approved by holders of a majority of the
Intersil Holding Common Stock then outstanding. In the event Intersil Holding
proposes to issue and sell (other than in a public offering under a registration
statement declared effective by the Securities and Exchange Commission) any
shares of Intersil Holding Common Stock or any securities containing options or
rights to acquire any shares of Intersil Holding Common Stock or any securities
convertible into Intersil Holding Common Stock to Citicorp Venture Capital Ltd.,
Sterling or any of their respective affiliates, Intersil Holding must first
offer to each of the other shareholders a pro rata portion of such shares. Such
preemptive rights are not applicable to the issuance of shares of Intersil
Holding Common Stock upon the conversion of shares of one class of Intersil
Holding Common Stock into shares of the other class. Subject to certain
limitations, neither Sterling, nor any of its respective affiliates, may sell
any of its shares of Intersil Holding Preferred Stock or Intersil Holding Common
Stock without offering the other shareholders a pro rata opportunity to
participate in such sale.
The Shareholders' Agreement also provides for additional restrictions on
transfer of shares by Management Investors, including the right of Intersil
Holding to repurchase some of the Management Investors' shares of Intersil
Holding Common Stock upon termination of such shareholder's employment prior to
August 2004, at a formula price, and the grant of a right of first refusal in
favor of Intersil Holding in the event a Management Investor elects to transfer
its shares of Intersil Holding Common Stock or Intersil Holding Preferred Stock.
1999 EQUITY COMPENSATION PLAN
Intersil Holding adopted the 1999 Equity Compensation Plan, effective
August 13, 1999 (the 'Plan'). Pursuant to the Plan, Intersil Holding will be
able to grant to our salaried officers and key employees options for up to
3,000,000 shares of Intersil Holding Class A Common Stock. The Plan will
authorize Intersil Holding to grant either (1) options intended to constitute
incentive stock options under the Internal Revenue Code of 1986, as amended, (2)
non-qualified stock options, (3) shares of restricted stock, (4) stock
appreciation rights or (5) phantom share awards. Under the Plan, a committee of
the Board of Directors of Intersil Holding will determine the exercise price of
each option granted, provided that the minimum exercise price is equal to the
fair market value of the underlying stock on the date the option is granted. The
maximum term of any option will be ten years from the date of grant for
incentive stock options and ten
55
<PAGE>
years and one day from the date of grant for non-qualified stock options.
Options granted will be exercisable at the determination of the Board of
Directors of Intersil Holding, and the options will vest ratably over about five
years. Within any one-year period, an employee may not receive options to
purchase more than 1,000,000 shares of Intersil Holding Class A Common Stock.
Options to acquire 2,310,000 shares of Intersil Holding Class A Common Stock
were granted, effective as of August 14, 1999.
In addition to options, the committee may award restricted stock, stock
appreciation rights and phantom share awards under the Plan.
A grant of restricted stock represents the right to become the owner of
that stock upon the lapse of the specified restrictions, which will usually
require the performance of substantial additional services to Intersil Holding
by the recipient of the grant. If the restrictions are not satisfied, the
restricted stock is forfeited. If the restrictions are satisfied, the individual
in question becomes the owner of those shares. In the interim, the individual is
entitled to any dividends that may be paid on the restricted shares and is
allowed to vote them. The individual cannot, however, sell, assign or otherwise
transfer the subject shares.
A stock appreciation right entitles the recipient to a payment, in cash or
in shares of Intersil Holding Class A Common Stock of an amount equal to the
excess of the fair market value of Intersil Holding Class A Common Stock on the
date the stock appreciation right is exercised over the 'exercise price' of the
stock appreciation right, which will usually be the fair market value of the
subject Intersil Holding Class A Common Stock on the date the stock appreciation
right is granted.
A phantom stock award entitles the recipient to a payment in cash or in
shares of Intersil Holding Class A Common Stock of an amount equal to the
appreciation in the value of the underlying Intersil Holding Class A Common
Stock over the period from the grant of the phantom share award to the date of
settlement specified in the award.
The terms and conditions of grants of restricted stock, stock appreciation
rights and phantom stock awards will be governed by the Plan and by the terms of
the agreement making the grant or award, as determined by the committee of the
Board of Directors.
Any Intersil Holding Class A Common Stock awarded as restricted stock,
awarded upon exercise of a stock appreciation right or awarded in settlement of
a phantom stock award will count against the 3,000,000 share overall limit under
the Plan and against the 1,000,000 individual annual limit.
REGISTRATION RIGHTS AGREEMENT
In connection with their entry into the Shareholders' Agreement, Intersil
Holding, Sterling, the Management Investors, Harris and the other shareholders
of Intersil Holding entered into a Registration Rights Agreement (the
'Registration Rights Agreement'). According to the Registration Rights
Agreement, upon the written request of Sterling and subject to Intersil
Holding's option to defer action for 180 days, Intersil Holding will prepare and
file a registration statement with the Securities and Exchange Commission
concerning the distribution of all or part of the shares held by Sterling and
use its best efforts to cause such registration statement to become effective.
If at any time Intersil Holding files a registration statement for the Intersil
Holding Common Stock pursuant to a request by Sterling or otherwise (other than
a registration statement on Form S-8, Form S-4 or any similar form filed in
connection with an exchange offer or an offering solely to Intersil Holding's
employees or existing shareholders, or a registration statement registering a
unit offering (as defined)), Intersil Holding will use its best efforts to allow
the other parties to the Registration Rights Agreement to have their shares of
Intersil Holding Common Stock (or a portion of their shares under certain
circumstances) included in such registered offering of Intersil Holding Common
Stock. Registration expenses of the selling shareholders (other than
underwriting commissions, brokerage fees and transfer taxes applicable to the
shares sold by such shareholders or in certain cases the fees and expenses of
any accountants or other representatives retained by a selling shareholder) will
be paid by Intersil Holding.
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<PAGE>
DESCRIPTION OF CERTAIN INDEBTEDNESS
The following is a summary of certain indebtedness of Intersil and of
Intersil Holding. To the extent such summary contains descriptions of documents
relating to the notes, the senior credit facilities and other loan documents,
such descriptions do not purport to be complete and are qualified in their
entirety by reference to such documents, which are available upon request to us.
NOTES
On August 13, 1999, Intersil and Intersil Holding issued 200,000 units,
each unit consisting of $1,000 principal amount of Senior Subordinated Notes of
Intersil and one Warrant to purchase 27.7778 shares of Class A Common Stock of
Intersil Holding, pursuant to the unit offering for gross proceeds of
approximately $200.0 million. The notes were issued pursuant to an indenture
dated as of August 13, 1999 (the 'Indenture') between Intersil and United States
Trust Company of New York, as Trustee ('USTC'). The Warrants were issued
pursuant to the Warrant Agreement. The net proceeds of the unit offering,
together with the net proceeds of certain other funds, were used to pay the cash
consideration for the acquisition of the semiconductor business, issue the
11.13% Seller Holding PIK Note by Intersil Holding to Harris and pay related
fees and expenses. See 'The Transactions.'
The notes are initially in the principal amount of $200.0 million and
mature on August 15, 2009. Interest on the notes accrues at 13 1/4% per annum
and is payable semiannually in arrears on February 15 and August 15, commencing
February 15, 2000. Subject to certain covenants set forth in the Indenture,
Intersil may issue more notes under the Indenture in an unlimited principal
amount. Any such additional notes that are actually issued will be treated as
issued and outstanding notes (and as the same class as the initial notes) for
most purposes. The notes are unsecured senior subordinated obligations of
Intersil, are subordinated in right of payment to all existing and future Senior
Indebtedness (as defined in the Indenture) of Intersil, and are senior in right
of payment to all future Subordinated Indebtedness (as defined in the Indenture)
of Intersil. The notes are guaranteed by Intersil Holding and each Subsidiary
Guaranty (as defined in the Indenture). The Guaranties are senior subordinated
obligations of Intersil Holding and the relevant Subsidiary Guaranty.
The notes are not redeemable at the option of Intersil prior to August 15,
2004, except that prior to August 15, 2002, Intersil may redeem, at its option,
notes (including additional notes, if any) in an aggregate principal amount not
to exceed 35% of the aggregate principal amount of the notes (including
additional notes, if any) originally issued at a redemption price of 113 1/4% of
the principal amount thereof, plus accrued and unpaid interest, with the net
proceeds of one or more Equity Offerings (as defined in the Indenture) if: (1)
at least 65% of the aggregate amount of the notes (including additional notes,
if any) remains outstanding immediately after any such redemption; and (2) each
such redemption occurs within 90 days after the date of the related Equity
Offering. On or after August 15, 2004, the notes may be redeemed at the option
of Intersil, in whole or in part, at the following redemption prices (expressed
as percentages of principal amount at maturity), plus accrued and unpaid
interest, if redeemed during the 12 months beginning August 15 of the years
indicated below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
- - ---- ----------
<S> <C>
2004............................................................................... 106.625%
2005............................................................................... 104.969
2006............................................................................... 103.313
2007............................................................................... 101.656
2008 and thereafter................................................................ 100.000
</TABLE>
Upon a Change of Control (as defined in the Indenture), each holder of
notes may require Intersil to repurchase all or any portion of the holder's
notes at a purchase price equal to 101% of the principal amount thereof plus
accrued and unpaid interest to the date of purchase.
The Indenture contains certain covenants that, among other things, limit
(i) the incurrence of additional debt by Intersil and certain of its
subsidiaries, (ii) the payment of dividends on capital stock of Intersil and the
purchase, redemption or retirement of capital stock or subordinated
indebtedness, (iii) investments, (iv) certain transactions with affiliates, (v)
sales of assets, including capital stock of subsidiaries, and (vi) certain
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<PAGE>
consolidations, mergers and transfers of assets. The Indenture also prohibits
certain restrictions on distributions from certain subsidiaries. All of these
limitations and prohibitions, however, are subject to a number of important
qualifications.
Pursuant to a registration rights agreement dated August 13, 1999 (the
'Registration Rights Agreement') among Intersil Holding, Intersil and the
Initial Purchasers, Intersil agreed to (a) file with the SEC, within 90 days
after the issue date of the units, a registration statement (the 'Exchange Offer
Registration Statement') with respect to an offer to exchange the notes for new
notes of Intersil with terms substantially identical to the notes, except that
the new notes generally will not contain terms with respect to restrictions on
the resale or transfer thereof, and (b) use its best efforts to cause the
Exchange Offer Registration Statement to become effective under the Securities
Act within 150 days after the issuance of the units. Upon the effectiveness of
the Exchange Offer Registration Statement, Intersil will offer the new notes in
exchange for surrender of the notes. Under certain circumstances, Intersil may
be required under the Registration Rights Agreement to file a shelf registration
statement to cover resales of the notes or the new notes, as the case may be.
The notes and Warrants will not trade separately until the commencement of the
exchange offer or the effectiveness of such shelf registration statement, or
such earlier date after October 12, 1999, as the Initial Purchasers may
determine. Upon the failure by Intersil to comply with certain of its
obligations under the Registration Rights Agreement, additional interest will be
payable on the notes.
SENIOR CREDIT FACILITIES
General. In connection with the Transactions Intersil entered into the
senior credit facilities with a syndicate of certain financial institutions, as
lenders, Credit Suisse First Boston, as the Administrative Agent, Salomon Smith
Barney Inc., as Syndication Agent, and Morgan Guaranty Trust Company of New
York, as Documentation Agent. The description below is only a summary of the
principal terms of the senior credit facilities and related loan documents.
The senior credit facilities provide for up to $275.0 million of aggregate
borrowing capacity, consisting of:
o a secured $205.0 million funded term loan (the 'Tranche B Senior Term
Facility'); and
o a secured $70.0 million revolving line of credit, $15.0 million of which
was funded at closing of the acquisition of the semiconductor business
(the 'Revolving Credit Facility').
Use of the Senior Credit Facilities. Intersil used the proceeds from the
senior credit facilities, together with $30.0 million of proceeds from the 13.5%
Subordinated Holding PIK Note due 2010, $90.0 million of proceeds from the
11.13% Seller Holding PIK Note due 2010, the proceeds of the unit offering and
the equity contribution from Intersil Holding, (i) to fund the acquisition of
the semiconductor business, (ii) to pay related fees and expenses and (iii) for
general corporate purposes.
Guaranties; Security. Intersil's obligations under the senior credit
facilities are unconditionally guaranteed, jointly and severally, by Intersil
Holding and each of Intersil's existing and subsequently acquired or organized
domestic subsidiaries. Intersil's obligations and those of such guarantors under
the senior credit facilities are secured by a pledge of all of Intersil's
capital stock and by substantially all of the assets of Intersil Holding,
Intersil and each of Intersil's existing and subsequently acquired or organized
domestic (and, to the extent no adverse tax consequences will result, foreign)
subsidiaries. No foreign subsidiary is required to guarantee the senior credit
facilities and less than two-thirds of the capital stock of certain foreign
subsidiaries is required to be pledged to secure the senior credit facilities.
Amortization; Interest; Fees; Maturity. The Senior Term Facility is
subject to certain specified amortization payments required to be made in
quarterly installments until final payment is made upon maturity. The Revolving
Credit Facility is available until 2005 unless terminated earlier under certain
circumstances.
Borrowings under the senior credit facilities bear interest at a rate equal
to, at Intersil's option, either (i) the base rate (which is based on the prime
rate most recently announced by the Administrative Agent or the Federal Funds
rate plus one-half of 1%) or (ii) the applicable London interbank offered rate,
in each case
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<PAGE>
plus the applicable margin. In addition, the senior credit facilities are
subject to a commitment fee of 0.50% per annum of the undrawn portion of the
Revolving Credit Facility, and letter of credit fees with respect to each letter
of credit outstanding under the senior credit facilities equal to (i) the
applicable margin over the Adjusted LIBOR Rate (as defined in the Credit
Agreement) in effect for loans under the Revolving Credit Facility and (ii)
0.25% per annum on the face amount of all outstanding letters of credit.
Prepayments. The loans under the Senior Term Facility are required to be
prepaid with certain asset and capital stock sales and dispositions, certain
incurrences of indebtedness, certain offerings of common equity securities and
by certain percentages of our annual Excess Cash Flow (as defined in the Credit
Agreement). Voluntary prepayments may be made in whole or in part without
premium or penalty.
Covenants and Events of Default. The senior credit facilities contain,
among other things, covenants restricting Intersil's ability and its
subsidiaries' ability to dispose of assets, merge, pay dividends, repurchase or
redeem capital stock and indebtedness (including the notes), incur indebtedness
or guaranties, create liens, enter into agreements with negative pledge clauses,
make certain investments or acquisitions, enter into sale and leaseback
transactions, enter into transactions with affiliates, change Intersil's
business or make fundamental changes, and otherwise restrict corporate actions.
The senior credit facilities also contain a number of financial maintenance
covenants.
The senior credit facilities also include events of default usual for these
types of credit facilities and transactions, including but not limited to
nonpayment of principal or interest, violation of covenants, incorrectness of
representations and warranties, cross defaults and cross acceleration,
bankruptcy, material judgments, ERISA, actual or asserted invalidity of the
guaranties or the security documents and certain changes of control of Intersil.
The occurrence of any event of default could result in the acceleration of
Intersil's and the guarantors' obligations under the senior credit facilities,
which could materially and adversely affect you.
SUBSIDIARY CREDIT FACILITIES
Certain of our subsidiaries may incur certain indebtedness. It is expected
that the debt instruments evidencing such indebtedness will contain customary
terms and conditions, covenants and events of default.
13.5% SUBORDINATED HOLDING PIK NOTE DUE 2010
In connection with the Transactions, Intersil Holding issued to Citicorp
Mezzanine Partners, L.P. the 13.5% Subordinated Holding PIK Note due 2010 in the
original principal amount of $30.0 million. The 13.5% Subordinated Holding PIK
Note due 2010 matures on July 15, 2010 and bears interest at an annual rate
equal to 13.5%. To the extent any Intersil Holding Senior Debt prohibits
Intersil Holding from paying interest due on the 13.5% Subordinated Holding PIK
Note due 2010 in cash, such interest shall be paid by adding such interest to
the then outstanding principal amount of the 13.5% Subordinated Holding PIK Note
due 2010. Such amount shall accrue interest as a portion of the principal amount
of the 13.5% Subordinated Holding PIK Note due 2010 from the applicable interest
payment date. Under certain circumstances, interest on the 13.5% Subordinated
Holding PIK Note due 2010 may not be deductible until paid. The 13.5%
Subordinated Holding PIK Note due 2010 is subordinated to Intersil Holding
obligations (including guarantees, if any, from time to time) under the senior
credit facilities, the notes and certain other indebtedness of Intersil Holding,
other than indebtedness which by its terms is pari passu or junior in right of
payment to the 13.5% Subordinated Holding PIK Note due 2010. The 13.5%
Subordinated Holding PIK Note is senior to the 11.13% Seller Holding PIK Note.
Intersil Holding may prepay the 13.5% Subordinated Holding PIK Note due 2010 at
any time in whole or in part at 100% of the principal amount thereof plus (a)
accrued and unpaid interest to the date of prepayment and (b) certain prepayment
premiums set forth in the 13.5% Subordinated Holding PIK Note due 2010. See
'Ownership of Capital Stock--Warrant.'
11.13% SELLER HOLDING PIK NOTE DUE 2010
In connection with the Transactions, Intersil Holding issued to Harris the
Seller Holding PIK Note due 2010 in the original principal amount of $90.0
million. The Seller Holding PIK Note matures in 2010 and bears interest at an
annual rate equal to 11.13%. Intersil Holding may pay interest on the 11.13%
Seller
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Holding PIK Note by issuing additional 11.13% Seller Holding PIK Notes. Intersil
Holding may redeem the 11.13% Seller Holding PIK Note at any time in whole or in
part at 100% of the principal amount thereof plus accrued and unpaid interest to
the date of redemption. In addition, upon a 'change in control' Intersil Holding
is required to redeem the 11.13% Seller Holding PIK Note at face value subject
to some conditions. The 11.13% Seller Holding PIK Note contains some covenants
in favor of the holder, including but not limited to: (1) restrictions on the
payment by Intersil Holding and its subsidiaries of dividends and the purchase,
redemption or prepayment by Intersil Holding and its subsidiaries of its capital
stock or indebtedness which, by its terms or by operation of law, ranks pari
passu or is junior in right of payment to the 11.13% Seller Holding PIK Note and
(2) restrictions on subsidiaries entering into agreements (other than with
respect to the 11.13% Seller Holding PIK Note) restricting their ability to pay
dividends or make certain other distributions to Intersil Holding or any
subsidiary of Intersil Holding. The 11.13% Seller Holding PIK Note is
subordinated to Intersil Holding's obligations (including guaranties, if any,
from time to time) under Intersil's senior credit facilities and the notes and
is subordinated to certain other indebtedness of Intersil Holding, other than
indebtedness which by its terms is pari passu or junior in right of payment to
the 11.13% Seller Holding PIK Note (the 'Intersil Holding Senior Debt'). Until
such Intersil Holding Senior Debt is paid in full, Intersil Holding may not make
any payment of principal or interest to the 11.13% Seller Holding PIK Note
Holder: (1) following the maturity of any Intersil Holding Senior Debt (either
by lapse, acceleration or otherwise) that has not been paid in full; (2)
following a payment default on Intersil Holding Senior Debt or (3) following a
nonpayment default on Intersil Holding Senior Debt (until (a) such non-payment
default shall have been cured or waived, (b) certain events of default relating
to bankruptcy under the 11.13% Seller Holding PIK Note shall have occurred, (c)
the senior credit facilities or notes shall have become due and payable upon
acceleration or (d) 180 days shall have elapsed after notice of such non-payment
default has been received by Intersil Holding). Except for certain events of
bankruptcy, the consent of 11.13% Seller Holding PIK Note holders holding 25% or
more of the principal amount of the 11.13% Seller Holding PIK Note is required
to accelerate the payment of principal upon an event of default. If any Intersil
Holding Senior Debt is outstanding at the time of an acceleration of the 11.13%
Seller Holding PIK Note, the 11.13% Seller Holding PIK Note becomes due and
payable upon the earlier of acceleration of such Intersil Holding Senior Debt or
thirty days following notice of acceleration of the 11.13% Seller Holding PIK
Note being given to the agent for Intersil Holding Senior Debt holders. An event
of default under the 11.13% Seller Holding PIK Note includes, among other
things, failure to pay principal or interest when due, failure to comply with
the material terms of the 11.13% Seller Holding PIK Note following notice,
failure to pay certain material indebtedness of Intersil Holding and certain
events of bankruptcy or insolvency.
12% JUNIOR SUBORDINATED DEBENTURES DUE 2011
At Intersil Holding's option, Intersil Holding may issue 12% Junior
Subordinated Debentures due 2011 to holders of Intersil Holding Preferred Stock
in exchange for shares of Intersil Holding Preferred Stock in the original
principal amount of $1,000 per share of Intersil Holding Preferred Stock plus an
amount per share equal to the full accrued and unpaid cumulative dividends
thereon. The 12% Junior Subordinated Debentures due 2011 will mature on June 30,
2011 and will bear interest at an annual rate equal to 12%. To the extent any
Intersil Holding Senior Debt prohibits Intersil Holding from paying interest due
on the 12% Junior Subordinated Debentures due 2011 in cash, such interest shall
be paid by adding such interest to the then outstanding principal amount of the
12% Junior Subordinated Debentures due 2011. Such amount shall accrue interest
as a portion of the principal amount of the 12% Junior Subordinated Debentures
due 2011 from the applicable interest payment date. The 12% Junior Subordinated
Debentures due 2011 will be subordinated to Intersil Holding's obligations
(including guaranties, if any, from time to time) under the senior credit
facilities, the notes, the 11.13% Seller Holding PIK Note and certain other
indebtedness, other than indebtedness which by its terms is pari passu or junior
in right of payment to the 12% Junior Subordinated Debentures due 2011. The 12%
Junior Subordinated Debentures due 2011 contain certain covenants in favor of
the holder that are no more burdensome, in any material respect, to us than the
covenants under the notes. Intersil Holding may prepay the 12% Junior
Subordinated Debentures due 2011 at any time in whole or in part at 100% of the
principal amount thereof plus accrued and unpaid interest to the date of
prepayment.
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DESCRIPTION OF THE WARRANTS
The Warrants were issued pursuant to a Warrant Agreement dated August 13,
1999 (the 'Warrant Agreement'), between us and United States Trust Company of
New York, as warrant agent (the 'Warrant Agent'). The following summary of
certain provisions of the Warrant Agreement does not purport to be complete and
is qualified in its entirety by reference to all of the provisions of the
Warrant Agreement, including the definitions therein of certain terms.
Capitalized terms in this 'Description of the Warrants' not defined in this
prospectus have the meanings ascribed to them in the Warrant Agreement.
GENERAL
Each Warrant, when exercised, will entitle the holder thereof to purchase
27.7778 shares of Class A Common Stock from us at a price (the 'Exercise Price')
of $0.001 per share. The Exercise Price and the number of shares of Class A
Common Stock issuable upon exercise of a Warrant are both subject to adjustment
in certain cases. See '--Adjustments' below. The Warrants will initially entitle
the holders thereof to acquire, in the aggregate, 5,555,560 shares of Class A
Common Stock.
The Warrants may be exercised at any time after the first anniversary of
the Issue Date; provided, however, that holders of Warrants will be able to
exercise their Warrants only if the shelf registration statement relating to the
Class A Common Stock underlying the Warrants is effective or the exercise of
such Warrants is exempt from the registration requirements of the Securities
Act, and such securities are qualified for sale or exempt from qualification
under the applicable securities laws of the states or other jurisdictions in
which such holders reside. Unless earlier exercised, the Warrants will expire on
August 15, 2009 (the 'Expiration Date'). We will give notice of expiration not
less than 90 nor more than 120 days prior to the Expiration Date to the
registered holders of the then outstanding Warrants. If we fail to give such
notice, the Warrants will nevertheless expire and become void on the Expiration
Date. The Warrants will not trade separately from the Notes until the Separation
Date.
At our option, fractional shares of Class A Common Stock may not be issued
upon exercise of the Warrants. If any fraction of a share of Class A Common
Stock would, except for the foregoing provision, be issuable upon the exercise
of any such Warrants (or specified portion thereof), we will pay an amount in
cash equal to the Current Market Value per share of Class A Common Stock, as
determined on the day immediately preceding the date the Warrant is presented
for exercise, multiplied by such fraction, computed to the nearest whole cent.
Certificates for Warrants will be issued in fully registered form only. No
service charge will be made for registration of transfer or exchange upon
surrender of any Warrant Certificate at the office of the Warrant Agent
maintained for that purpose. We may require payment of a sum sufficient to cover
any tax or other governmental charge that may be imposed in connection with any
registration of transfer or exchange of Warrant Certificates.
In the event a bankruptcy, reorganization or similar proceeding is
commenced by or against us, a bankruptcy court may hold that unexercised
Warrants are executory contracts which may be subject to rejection by us with
approval of the bankruptcy court. As a result, holders of the Warrants may, even
if sufficient funds are available, not be entitled to receive any consideration
or may receive an amount less than they would be entitled to if they had
exercised their Warrants prior to the commencement of any such bankruptcy,
reorganization or similar proceeding.
CERTAIN TERMS
Exercise
In order to exercise all or any of the Warrants, the holder thereof is
required to surrender to the Warrant Agent the related Warrant Certificate and
pay in full the Exercise Price for each share of Class A Common Stock or other
securities issuable upon exercise of such Warrants. The Exercise Price may be
paid (i) in cash or by certified or official bank check or by wire transfer to
an account designated by us for such purpose or (ii) without the payment of
cash, by reducing the number of shares of Class A Common Stock that would be
obtainable upon the exercise of a Warrant and payment of the Exercise Price in
cash so as to yield a number of shares of Class A Common Stock upon the exercise
of such Warrant equal to the product of (a) the number of shares of Class A
Common Stock for which such Warrant is exercisable as of the date of exercise
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(if the Exercise Price were being paid in cash) and (b) the Cashless Exercise
Ratio (the 'Cashless Exercise'). The 'Cashless Exercise Ratio' shall equal a
fraction, the numerator of which is the excess of the Current Market Value per
share of Class A Common Stock on the Exercise Date over the Exercise Price per
share as of the Exercise Date and the denominator of which is the Current Market
Value per share of the Class A Common Stock on the Exercise Date. Upon surrender
of a Warrant Certificate representing more than one Warrant in connection with
the holder's option to elect a Cashless Exercise, the number of shares of Class
A Common Stock deliverable upon a Cashless Exercise shall be equal to the number
of shares of Class A Common Stock issuable upon the exercise of Warrants that
the holder specifies are to be exercised pursuant to a Cashless Exercise
multiplied by the Cashless Exercise Ratio. All provisions of the Warrant
Agreement shall be applicable with respect to a surrender of a Warrant
Certificate pursuant to a Cashless Exercise for less than the full number of
Warrants represented thereby.
No Rights as Stockholders
The holders of unexercised Warrants are not entitled, by virtue of being
such holders, to receive dividends, to vote, to consent, to exercise any
preemptive rights or to receive notice as our stockholders in respect of any
stockholders meeting for the election of our directors or any other purpose, or
the exercise any other rights whatsoever as our stockholders.
Mergers, Consolidations, etc.
In the event that we consolidate with, merge with or into, or sell all or
substantially all of our assets to, another Person, each Warrant thereafter
shall entitle the holder thereof to receive upon exercise thereof, per share of
Class A Common Stock for which such Warrant is exercisable, the number of shares
of common stock or other securities or property which the holder of a share of
Class A Common Stock is entitled to receive upon completion of such
consolidation, merger or sale of assets. However, if (i) we consolidate with,
merge with or into, or sell all or substantially all of our assets to, another
Person and, in connection therewith, the consideration payable to the holders of
Class A Common Stock in exchange for their shares is payable solely in cash or
(ii) there is a dissolution, liquidation or winding-up of us, then the holders
of the Warrants will be entitled to receive distributions on an equal basis with
the holders of Class A Common Stock or other securities issuable upon exercise
of the Warrants, as if the Warrants had been exercised immediately prior to such
event, less the Exercise Price. Upon receipt of such payment, if any, the
Warrants will expire and the rights of the holders thereof will cease. In the
case of any such merger, consolidation or sale of assets, the surviving or
acquiring person and, in the event of any dissolution, liquidation or winding-up
of us, we must deposit promptly with the Warrant Agent the funds, if any,
required to pay the holders of the Warrants. After such funds and the
surrendered Warrant Certificates are received, the Warrant Agent is required to
deliver a check in such amount as is appropriate (or, in the case of
consideration other than cash, such other consideration as is appropriate) to
such Persons as it may be directed in writing by the holders surrendering such
Warrants.
ADJUSTMENTS
The number of shares of Class A Common Stock issuable upon the exercise of
the Warrants and the Exercise Price will be subject to adjustment in certain
events including: (i) the payment by us of certain dividends (or other
distributions) on our Common Stock or including dividends or distributions
payable in shares of such Common Stock or other shares of our capital stock,
(ii) subdivisions, combinations and certain reclassifications of the Common
Stock, (iii) the issuance to all holders of Common Stock of rights, options or
warrants to subscribe for shares of Common Stock, or of securities convertible
into or exchangeable or exercisable for shares of Common Stock, for a
consideration per share which is less than the Current Market Value per share of
the Common Stock, (iv) the issuance of shares of Common Stock for a
consideration per share which is less than the Current Market Value per share of
the Class A Common Stock other than upon the conversion, exchange or exercise of
convertible, exchangable or exercisable securities of ours outstanding on the
Issue Date (to the extent in accordance with the terms of such securities as in
effect on such date), and (v) the distribution to all holders of the Common
Stock of any of our assets, debt securities or any rights or warrants to
purchase securities (excluding those rights and warrants referred to in the
foregoing clause (iii) and cash dividends and other cash distributions from
current or retained earnings other than any Extraordinary Cash Dividend). No
adjustment to the number of shares of Class A Common Stock issuable
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upon the exercise of the Warrants and the Exercise Price will be required in
certain events including: (i) the issuance of shares of Common Stock in bona
fide public offerings that are underwritten or in which a placement agent is
retained by us, (ii) the issuance of options or shares of Common Stock to
officers, directors or employees of Intersil or us, (iii) the issuance of Class
A Common Stock upon conversion of Class B Common Stock and the issuance of Class
B Common Stock upon conversion of Class A Common Stock, in each case as provided
in our Certificate of Incorporation as in effect on the Issue Date and (iv) the
issuance of shares of Common Stock in connection with acquisitions of products
and businesses other than to our affiliates.
In the event of a distribution to holders of Common Stock which results in
an adjustment to the number of shares of Class A Common Stock or other
consideration for which a Warrant may be exercised, the holders of the Warrants
may, in certain circumstances, be deemed to have received a distribution subject
to United States Federal income tax as a dividend. See 'U.S. Federal Income Tax
Considerations.'
No adjustment in the Exercise Price will be required unless such adjustment
would require an increase or decrease of at least one percent in the Exercise
Price; provided, however, that any adjustment which is not made as a result of
this paragraph will be carried forward and taken into account in any subsequent
adjustment.
AMENDMENT
From time to time we and the Warrant Agent, without the consent of the
holders of the Warrants, may amend or supplement the Warrant Agreement for
certain purposes, including curing defects or inconsistencies or making any
change that does not adversely affect the rights of any holder. Any amendment or
supplement to the warrant agreement that has an adverse effect on the interests
of the holders of the Warrants shall require the written consent of the holders
of a majority of the then outstanding Warrants. The consent of each holder of
the Warrants affected shall be required for any amendment pursuant to which the
Exercise Price would be increased or the number of shares of Class A Common
Stock issuable upon exercise of Warrants would be decreased (other than pursuant
to adjustments provided in the Warrant Agreement on the Issue Date).
REGISTRATION RIGHTS
Registration of Warrants
We are required under the Warrant Agreement to file a shelf registration
statement under the Securities Act covering the resale of the Warrants by the
holders thereof (the 'Warrant Shelf Registration Statement') within 90 days
after the date of original issuance of the Warrants and to use our best efforts
to cause the Warrant Shelf Registration Statement to be declared effective under
the Securities Act within 150 days after the date of original issuance of the
Warrants and to remain effective until the earliest of (i) such time as all of
the Warrants have been sold thereunder, (ii) two years after its effective date
and (iii) such time as the Warrants can be sold without restriction under the
Securities Act.
Each holder of Warrants that sells such Warrants pursuant to the Warrant
Shelf Registration Statement generally will be required to be named as a selling
securityholder in the related prospectus and to deliver a prospectus to the
purchaser, will be subject to certain of the civil liability provisions under
the Securities Act in connection with such sales and will be bound by certain
provisions of the Warrant Agreement which are applicable to such holder
(including certain indemnification obligations). In addition, each holder of
Warrants will be rquired to deliver information to be used in connection with
the Warrant Shelf Registration Statement in order to have its Warrants included
in the Warrant Shelf Registration Statement.
Registration of Underlying Class A Common Stock
We are required under the Warrant Agreement to file a shelf registration
statement under the Securities Act covering the issuance of shares of Class A
Common Stock to the holders of the Warrants upon exercise of the Warrants by the
holders thereof (the 'Common Shelf Registration Statement') and to use our best
efforts to cause the Common Shelf Registration Statement to be declared
effective on or before 365 days after the Issue Date and to remain effective
until the earlier of (i) such time as all Warrants have been exercised and (ii)
the Expiration Date.
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During any consecutive 365-day period, we shall be entitled to suspend the
availability of each of the Warrant Shelf Registration Statement and the Common
Shelf Registration Statement for up to two 45 consecutive-day periods (except
for the 45 consecutive-day period immediately prior to the Expiration Date) if
our Board of Directors determines in the exercise of its reasonable judgment
that there is a valid business purpose for such suspension and provides notice
that such determination was made to the holders of the Warrants; provided,
however, that in no event shall we be required to disclose the business purpose
for such suspension if we determine in good faith that such business purpose
must remain confidential. There can be no assurance that we will be able to
file, cause to be declared effective, or keep a registration statement
continuously effective until all of the Warrants have been exercised or have
expired.
CERTAIN DEFINITIONS
The Warrant Agreement contains, among others, the following definitions:
'Common Stock' means the Class A Common Stock and the Class B Common Stock
of Intersil Holding.
'Current Market Value' per share of Class A Common Stock or any other
security at any date means (i) if the security is not registered under the
Exchange Act, (a) the value of the security, determined in good faith by the
Board of Directors of Intersil Holding and certified in a board resolution,
based on the most recenty completed arm's-length transaction between Intersil
Holding and a Person other than an Affiliate of Intersil Holding, the closing of
which shall have occurred on such date or within the six-month period preceding
such date, or (b) if no such transaction shall have occurred on such date or
within such six-month period, the value of the security as determined by an
independent financial expert or (ii) if the security is registered under the
Exchange Act, the average of the daily closing bid prices (or the equivalent in
an over-the-counter market) for each Business Day during the period commencing
15 Business Days before such date and ending on the date one day prior to such
date, or if the security has been registered under the Exchange Act for less
than 15 consecutive Business Days before such date, then the average of the
daily closing bid prices (or such equivalent) for all of the Business Days
before such date for which daily closing bid prices are available; provided,
however, that if the closing bid price is not determinable for at least ten
Business Days in such period, the 'Current Market Value' of the security shall
be determined as if the security were not registered under the Exchange Act.
'Issue Date' means the date on which the Warrants are initially issued.
'Person' means any individual, corporation, partnership, joint venture,
limited liability company, association, joint-stock company, trust,
unincorporated organization, government or any agency or political subdivision
thereof or any other entity.
'Separation Date' means the date of the commencement of an exchange offer
or the effectiveness of a shelf registration statement for the Notes or such
earlier date after October 12, 1999, as the Initial Purchasers may determine.
'Warrant Certificates' mean the registered certificates (including the
Global Warrants (as defined)) issued by Intersil Holding under the Warrant
Agreement representing the Warrants.
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UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
GENERAL
The following general discussion summarizes certain of the material U.S.
Federal income and estate tax aspects of the purchase, ownership and disposition
of the Warrants and Class A Common Stock obtained upon exercise of the Warrants.
This discussion is a summary for general information only and is limited in the
following ways:
o The discussion only covers initial holders of the Warrants and the Class
A Common Stock obtained upon exercise of the Warrants.
o The discussion only covers holders of Warrants and Class A Common Stock
obtained upon exercise of the Warrants that hold such Warrants and Class
A Common Stock as capital assets (that is, for investment purposes), and
that do not have a special tax status.
o The discussion covers only the general tax consequences to holders of the
Warrants and Class A Common Stock obtained upon exercise of the Warrants.
It does not cover tax consequences that depend upon a holder's individual
tax circumstances.
o The discussion is based on current law. Changes in the law may change the
tax treatment of the Warrants and Class A Common Stock obtained upon
exercise of the Warrants on a prospective or retroactive basis.
o The discussion does not cover state, local or foreign law.
o Whenever Class A Common Stock is discussed in this discussion, we are
referring only to Class A Common Stock obtained upon the exercise of
Warrants.
The tax consequences depend upon whether you are a U.S. holder or a
non-U.S. holder. A U.S. holder is:
o a citizen or resident of the United States;
o a corporation or other entity taxable as a corporation created or
organized under U.S. law (Federal or state);
o an estate the income of which is subject to U.S. Federal income taxation
regardless of its sources;
o a trust if a U.S. court is able to exercise primary jurisdiction over
administration of the trust and one or more U.S. persons have authority
to control all substantial decisions of the trust; or
o any other person whose worldwide income and gain is otherwise subject to
U.S. Federal income taxation on a net basis.
A non-U.S. holder is a holder that is not a U.S. holder.
TAX CONSEQUENCES TO U.S. HOLDERS
Characterization
o Because of the nominal exercise price and the lack of any meaningful
contingency, it is possible that the Warrants will be characterized as
Class A Common Stock for U.S. Federal income tax purposes from the date
of issuance.
o Although the matter is not free from doubt, the Company believes that and
this summary assumes that the Warrants will be respected as warrants for
U.S. Federal income tax purposes, and describes, as appropriate,
differing U. S. Federal income tax treatment that would result if the
Warrants are treated as stock.
Exercise
o You generally will not recognize gain or loss upon exercise of a Warrant.
o Your tax basis in the Class A Common Stock received in connection with
the exercise of a Warrant will equal your basis in such Warrant
immediately prior to such exercise plus the amount of cash paid upon
exercise.
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o Your holding period in the Class A Common Stock received in connection
with the exercise of a Warrant will commence on the day after you
exercise such Warrant.
o If the Warrants are treated as Class A Common Stock from the date of
issuance:
-- you will not recognize any gain or loss in connection with the
exercise of Warrant, and
-- your holding period in the Class A Common Stock received in
connection with the exercise of a Warrant will include the entire
period during which you held such Warrant.
Adjustments
o Under certain circumstances, the exercise price of the Warrants may be
adjusted pursuant to the antidilution provisions of the Warrants which
are described in 'Description of Warrants-- Adjustments.'
o Under certain circumstances, an adjustment in the exercise price of the
Warrants may result in constructive distributions that could be taxable
as dividends. The consequences of this type of adjustment should be the
same whether or not the Warrants are treated as warrants or stock, as of
the date of issuance.
o If holders of Warrants are treated as receiving a constructive
distribution taxable as a dividend, such distribution:
-- will be taxable as a dividend (i.e., ordinary income) to the extent
of Intersil Holding's current and/or accumulated earnings and
profits, as calculated for U.S. Federal income tax purposes,
-- any excess will be treated as a return of capital (on a
dollar-for-dollar basis) to the extent of your tax basis in the
Warrant, and
-- any remaining balance will be treated as capital gain.
o Only corporate holders generally will be eligible to take the
dividends-received deduction
o Your tax basis in the Warrant generally will increase by the amount of
such distribution taxable as a dividend.
Disposition
On a sale, exchange or other disposition of a Warrant (whether or not the
Warrant is treated as a warrant or stock, as of the date of issuance) or Class A
Common Stock acquired upon exercise of a Warrant:
o you will have taxable gain or loss equal to the difference between:
-- the amount received on the sale, exchange or other disposition, and
-- your tax basis in the Warrant or Class A Common Stock.
o any gain or loss will generally be capital gain or loss.
o any capital gain or loss will be long-term capital gain or loss if your
holding period in such Warrant or Class A Common Stock is more than one
(1) year at the time of sale, exchange or other disposition.
Lapse
Upon a lapse of a Warrant, you will recognize a capital loss equal to your
tax basis in the Warrant. The result generally will be the same even if the
Warrant is treated as stock, as of the date of issuance.
Information Reporting and Backup Withholding
Under the tax rules concerning information reporting to the Internal
Revenue Service:
o Unless an exemption applies, you are required to provide us with a
correct taxpayer identification number for our use in reporting
information to the Internal Revenue Service. If you are an individual,
this is your social security number. You are also required to comply with
other Internal Revenue Service requirements concerning information
reporting.
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o If you are subject to these requirements but do not comply, we are
required to withhold 31% of all amounts payable to you. If we do withhold
part of a payment, you may use the withheld amount as a credit against
your Federal income tax liability.
o All U.S. holders that are individuals are subject to these requirements.
Certain U.S. holders, including all corporations, tax-exempt
organizations and individual retirement accounts, are exempt from these
requirements.
TAX CONSEQUENCES TO NON-U.S. HOLDERS
Warrants and Class A Common Stock
o As discussed above, although the matter is not free from doubt, the
Company believes that and this summary assumes that the Warrants will be
respected as warrants for U.S. Federal income tax purposes.
o Your tax basis in a Warrant and tax basis and holding period for Class A
Common Stock obtained upon the exercise of a Warrant will be determined
in accordance with the rules for U.S. holders, as described above.
o Although we do not expect Intersil Holding to make any distributions with
respect to the Warrants or Class A Common Stock for the foreseeable
future, if you are a non-U.S. holder, distributions (including
constructive distributions) made with respect to the Warrants or Class A
Common Stock which are taxable as dividends generally will be subject to
withholding tax at a rate of 30%, unless an applicable income tax treaty
provides for a lesser rate and you comply with certain reporting rules so
as to obtain such lesser rate.
If, however, the dividend is effectively connected with the conduct of a
trade or business in the United States by a non-U.S. holder, or, if a tax treaty
applies, is attributable to a permanent establishment of the non-U.S. holder,
the dividend will be subject to U.S. Federal income tax on a net income basis
that applies to U.S. holders generally (and, with respect to corporate holders
under certain circumstances, the branch profits tax).
Sale, Exchange or Redemption of Warrants and Class A Common Stock
If you sell or otherwise dispose of a Warrant or Class A Common Stock
obtained upon exercise of the Warrants, you generally will not be subject to
U.S. Federal income tax on any gain unless:
o The gain is effectively connected with a trade or business that you
conduct in the U.S. or, if a tax treaty applies, is attributable to a
U.S. permanent establishment of the non-U.S. holder.
o You are an individual and are present in the U.S. for at least 183 days
during the calendar year in which you dispose of such Warrant or Class A
Common Stock, and certain other conditions are satisfied.
o You are required to pay tax pursuant to the provisions of U.S. tax law
applicable to certain U.S. expatriates.
o In the case of the disposition of Class A Common Stock (or Warrants
treated as stock) where Intersil Holding is or has been a 'U.S. real
property holding corporation' at any time within the shorter of the (i)
5-year period preceding such disposition, or (ii) non-U.S. holder's
holding period in such Class A Common Stock. We believe that Intersil
Holding is not, and will conduct its affairs in a manner so that it will
not become, a U.S. real property holding corporation.
U.S. Trade or Business
If you are a corporation and hold a Warrant or Class A Common Stock in
connection with a trade or business that you are conducting in the U.S. or, if a
tax treaty applies, such holding is attributable to a U.S. permanent
establishment of yours, you may be subject to a branch profits tax on your
earnings (with some adjustments) that are connected with your U.S. trade or
business. This tax is imposed at a 30% rate, but may be reduced or eliminated by
an applicable income tax treaty (subject to compliance with certain reporting
rules).
67
<PAGE>
Estate Taxes
o Warrants and Class A Common Stock held by an individual non-U.S. holder
at the time of death will be included in such holder's gross estate for
U.S. Federal estate tax purposes, unless an applicable estate tax or
other tax treaty provides otherwise.
Information Reporting and Backup Withholding
Under applicable Treasury Regulations, if Intersil Holding pays a dividend
on its Class A Common Stock, Intersil Holding generally must report annually to
the Internal Revenue Service:
o the amount of such dividend,
o the name and address of the recipient of such dividend,
o the amount of tax withheld, if any, with respect to such dividend.
Intersil Holding generally must send a similar report to the recipient of such
dividend.
The Internal Revenue Service may make its reports available to tax
authorities in the country in which the non-U.S. holder is a resident under the
provisions of an applicable tax treaty or agreement.
Dividends paid to a non-U.S. holder at an address within the U.S. may be
subject to backup withholding at a rate of 31% if the non-U.S. holder fails to
establish that it is entitled to an exemption or provide a correct taxpayer
identification number and other information to the payor. Backup withholding
will generally not apply to dividends paid to non-U.S. holders at an address
outside the U.S. on or prior to December 31, 2000, unless the payor knows that
the payee is a U.S. person. Under recently finalized Treasury Regulations,
payments of dividends to non-U.S. holders at an address outside the U.S. on or
after January 1, 2001 may be subject to backup withholding at a rate of 31%
unless such non-U.S. holder satisfies various certification requirements.
Similarly, if you dispose of a Warrant or Class A Common Stock through a
broker:
o You must provide the broker appropriate certification of your non-U.S.
status to avoid information reporting and backup withholding.
o If you do not provide such certification, and you use the U.S. office of
a broker, you may be subject to information reporting and backup
withholding.
o If you do not provide such certification, and you use the non-U.S. office
of a broker, you will not be subject to backup withholding. However, you
may be subject to information reporting depending on whether the broker
has certain connections to the U.S.
Backup withholding is not an additional tax. The tax liability of persons
subject to backup withholding will be reduced by the amount of the tax withheld.
If withholding results in an overpayment of taxes, a refund may be obtained,
provided that the required information is furnished to the Internal Revenue
Service.
You should consult your tax advisor about the tax rules concerning information
reporting requirements and backup withholding, including the effect, if any, of
those recently finalized Treasury Regulations referred to above.
THE FOREGOING SUMMARY IS INCLUDED FOR GENERAL INFORMATION ONLY. EACH HOLDER OF
WARRANTS OR CLASS A COMMON STOCK SHOULD CONSULT WITH ITS OWN TAX ADVISOR AS TO
THE SPECIFIC TAX CONSEQUENCES (INCLUDING APPLICABLE STATE, LOCAL AND FOREIGN TAX
LAWS) TO SUCH HOLDER OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE WARRANTS
AND CLASS A COMMON STOCK.
68
<PAGE>
PLAN OF DISTRIBUTION
The Warrants and the Warrant Shares may be sold from time to time to
purchasers directly by the Selling Holders. Alternatively, the Selling Holders
may from time to time offer the Warrants or the Warrant Shares to or through
underwriters, broker-dealers or agents, who may receive compensation in the form
of underwriting discounts, concessions or commissions from the Selling Holders
or the purchasers of such securities for whom they may act as agents. The
Selling Holders and any underwriters, broker-dealers or agents that participate
in the distribution of Warrants or the Warrant Shares may be deemed to be
'underwriters' within the meaning of the Securities Act and any profit on the
sale of such securities and any discounts, commissions, concessions or other
compensation received by any such underwriter, broker-dealer or agent may be
deemed to be underwriting discounts and commissions under the Securities Act.
The Warrants and the Warrant Shares may be sold from time to time in one or
more transactions at fixed prices, at prevailing market prices at the time of
sale, at varying prices determined at the time of sale or at negotiated prices.
The sale of the Warrants and the Warrant Shares may be effected in transactions
(which may involve crosses or block transactions) (i) on any national securities
exchange or quotation service on which such securities may be listed or quoted
at the time of sale, (ii) in the over-the-counter market, (iii) in transactions
otherwise than on such exchanges or in the over-the-counter market or (iv)
through the writing of options. At the time a particular offering of the
Warrants or the Warrant Shares is made, a supplement to this prospectus (a
'prospectus supplement'), if required, will be distributed which will set forth
the aggregate amount of Warrant or Warrant Shares being offered and the terms of
the offering, including the name or names of any underwriters, broker-dealers or
agents, any discounts, commissions and other terms constituting compensation
from the Selling Holders and any discounts, commissions or concessions allowed
or reallowed or paid to broker-dealers. Each broker-dealer that receives the
Warrants or Warrant Shares for its own account pursuant to this prospectus must
acknowledge that it will deliver the prospectus and any prospectus supplement in
connection with any sale of such Warrants or Warrant Shares.
To comply with the securities laws of certain jurisdictions, if applicable,
the Warrants and Warrant Shares will be offered or sold in such jurisdictions
only through registered or licensed brokers or dealers. In addition, in certain
jurisdictions the Warrants and Warrant Shares may not be offered or sold unless
they have been registered or qualified for sale in such jurisdictions or an
exemption from registration or qualification is available and is complied with.
The Selling Holders will be subject to applicable provisions of the
Exchange Act and the rules and regulations thereunder, which provisions may
limit the timing of purchases and sales of any of the Warrants or Warrant Shares
by the Selling Holders. The foregoing may affect the marketability of such
securities.
Pursuant to the Warrant Agreement, certain expenses of the registration of
the Warrants and the Warrant Shares hereunder will be paid by Intersil Holding,
including, without limitation, filing fees of the Commission and expenses of
compliance with state securities or 'blue sky' laws; provided, however, that the
Selling Holders will pay all underwriting discounts, selling commissions and
transfer taxes, if any, applicable to any sales pursuant to the Registration
Statement. Intersil Holding has agreed to indemnify the Selling Holders against
certain civil liabilities, including certain liabilities under the Securities
Act, and the Selling Holders will be entitled to contribution in connection with
any such registration and any sales pursuant thereto. Intersil Holding will be
indemnified by the Selling Holders severally against certain civil liabilities,
including certain liabilities under the Securities Act, or will be entitled to
contribution in connection with any such registration and any sales pursuant to
the Registration Statement.
69
<PAGE>
LEGAL MATTERS
Certain legal matters with respect to the Warrants and Warrant Shares
offered hereby will be passed upon for us by Dechert Price & Rhoads,
Philadelphia, Pennsylvania.
EXPERTS
Ernst & Young LLP, independent auditors, have audited the Intersil Holding
Corporation (Successor) consolidated balance sheet at August 14, 1999 and the
consolidated financial statements of the semiconductor business of Harris
(Predecessor) at July 3, 1998 and July 2, 1999, and for each of the three years
in the period ended July 2, 1999, as set forth in their report. We've included
our financial statements in the prospectus and elsewhere in the registration
statement in reliance on Ernst & Young LLP's report, given on their authority as
experts in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
As a result of the exchange offer, we will become subject to the
informational requirements of the Exchange Act. You may read and copy any
reports or other information filed by us at the Securities and Exchange
Commission's public reference room at Room 1024, Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549 and at the SEC's regional offices located
at Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago, IL
60661 and Seven World Trade Center, 13th Floor, New York, NY 10048. Copies of
such material can be obtained from the Public Reference Section of the SEC upon
payment of fees prescribed by the SEC. You may call the Securities and Exchange
Commission at 1-800-SEC-0330 for further information contained in the public
reference room. Our filings with the Securities and Exchange Commission will
also be available to the public from commercial document retrieval services and
at the Securities and Exchange Commission's Web site at 'http://www.sec.gov.'
Our duty to file supplementary and periodic information, documents and
reports under the Exchange Act shall be automatically suspended as to our fiscal
year beginning July 2, 1999. Accordingly, we will cease to file supplementary
and periodic information, documents and reports for our fiscal year beginning
July 2, 1999.
We have filed with the SEC a registration statement on Form S-1 under the
Securities Act of 1933, covering the warrants to purchase 5,555,560 shares of
Class A Common Stock of Intersil Holding Corporation (Registration No.
333- ). This prospectus, which is a part of the registration statement, does
not contain all of the information included in the registration statement. Any
statement made in this prospectus concerning the contents of any contract,
agreement or other document is not necessarily complete. For further information
with respect to our company and the warrants to purchase 5,555,560 shares of
Class A Common Stock of Intersil Holding Corporation, please reference the
registration statement, including its exhibits. If we have filed any contract,
agreement or other document as an exhibit to the registration statement, you
should read the exhibit for a more complete understanding of the documents or
matter involved.
Copies of the registration statement, including all related exhibits and
schedules, may be inspected without charge at the public reference facilities
maintained by the SEC, or obtained at prescribed rates from the Public Reference
Section of the SEC at the address set forth above. In addition, you may request
a copy of any of these filings, at no cost, by writing or telephoning us at the
following address or phone number: Intersil Holding Corporation, 2401 Palm Bay
Road NE, Palm Bay, Florida 32905; the telephone number at that address is (321)
724-7000.
70
<PAGE>
INDEX TO FINANCIAL STATEMENTS
INTERSIL HOLDING CORPORATION
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Independent Certified Public Accountants' Report.................................... F-2
Consolidated Statement of Operations and Comprehensive Income....................... F-3
Consolidated Balance Sheet.......................................................... F-4
Consolidated Statement of Cash Flows................................................ F-5
Consolidated Statement of Shareholders' Equity...................................... F-6
Notes to Consolidated Financial Statements.......................................... F-7
</TABLE>
F-1
<PAGE>
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS' REPORT
The Board of Directors
Intersil Holding Corporation
We have audited the accompanying consolidated balance sheet of Intersil Holding
Corporation (successor) as of August 14, 1999 (successor period) and the
consolidated balance sheets of the Harris Semiconductor Business ('Semiconductor
Business') (Predecessor), which is wholly owned by Harris Corporation, as of
July 2, 1999 and July 3, 1998 and the related consolidated statements of
operations, comprehensive income and cash flows for each of the three fiscal
years in the period ended July 2, 1999 and the six weeks ended August 13, 1999
(Predecessor period). Our audits also included the financial statement schedule
listed at Item 16. These financial statements and financial statement schedule
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements and financial statement
schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the statements. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
The accompanying Predecessor consolidated financial statements were prepared on
the basis of presentation as described in Note A. The results of operations are
not necessarily indicative of the results of operations that would be recorded
by Semiconductor Business on a stand-alone basis.
In our opinion, the successor consolidated balance sheet referred to above
presents fairly, in all material respects, the financial position of Intersil
Holding Corporation as of August 14, 1999. Further, in our opinion, the
Predecessor consolidated financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Semiconductor
Business at July 2, 1999 and July 3, 1998 and the consolidated results of its
operations and its cash flows for each of the three years in the period ended
July 2, 1999 and for the six weeks ended August 13, 1999, on the basis described
in Note A, in conformity with generally accepted accounting principles. Also, in
our opinion, the related financial statement schedule, when considered in
relation to the basic financial statements taken as a whole, present fairly in
all material respects the information set forth therein.
Jacksonville, Florida Ernst & Young LLP
November 3, 1999
F-2
<PAGE>
INTERSIL HOLDING CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
PREDECESSOR PREDECESSOR SUCCESSOR
--------------------------------------------- --------------------------------- ---------------
FISCAL YEAR ENDED 13 WEEKS ENDED 6 WEEKS ENDED 7 WEEKS ENDED
-------------------------------------------- --------------- --------------- ---------------
JUNE 27, 1997 JULY 3, 1998 JULY 2, 1999 OCTOBER 2, 1998 AUGUST 13, 1999 OCTOBER 1, 1999
------------- ------------ ------------ --------------- --------------- ---------------
(UNAUDITED) (UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C>
REVENUE
Product sales.................. $ 545,321 $576,836 $532,718 $122,549 $ 57,336 $ 76,548
COSTS AND EXPENSES
Cost of product sales.......... 346,073 369,332 349,776 80,511 39,681 46,554
Research and development....... 75,208 75,125 67,079 14,779 8,499 8,398
Marketing...................... 81,390 79,787 66,873 16,074 8,208 8,421
Administrative and general..... 17,924 18,397 17,125 5,194 2,700 2,186
Harris corporate expense
allocation.................. 9,960 9,962 9,303 2,133 1,164 --
Intangible amortization........ 2,291 2,292 2,414 573 326 1,418
In-process R&D charge.......... -- -- -- -- -- 20,796
--------- -------- -------- -------- --------- ---------
Operating income (loss).......... 12,475 21,941 20,148 3,285 (3,242) (11,225)
Interest, net.................. (595) (914) (1,231) (217) (111) 8,665
--------- -------- -------- -------- --------- ---------
Income (loss) before income
taxes....................... 13,070 22,855 21,379 3,502 (3,131) (19,890)
Income taxes (benefit)......... 1,845 9,944 (6,027) (987) (102) 222
--------- -------- -------- -------- --------- ---------
NET INCOME (LOSS).............. 11,225 12,911 27,406 4,489 (3,029) (20,112)
Preferred dividends.............. -- -- -- -- -- (1,369)
--------- -------- -------- -------- --------- ---------
Net income (loss) to common
shareholders................... $ 11,225 $ 12,911 $ 27,406 $ 4,489 $ (3,029) $ (21,481)
--------- -------- -------- -------- --------- ---------
--------- -------- -------- -------- --------- ---------
LOSS PER SHARE:
Basic.......................... $ (0.22)
---------
---------
Diluted........................ $ (0.22)
---------
---------
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING (IN MILLIONS):
Basic.......................... 100.0
---------
---------
Diluted........................ 100.0
---------
---------
</TABLE>
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
<TABLE>
<CAPTION>
PREDECESSOR PREDECESSOR SUCCESSOR
------------------------------------------- --------------------------------- ---------------
FISCAL YEAR ENDED 13 WEEKS ENDED 6 WEEKS ENDED 7 WEEKS ENDED
------------------------------------------- --------------- --------------- ---------------
JUNE 27, 1997 JULY 3, 1998 JULY 2, 1999 OCTOBER 2, 1998 AUGUST 13, 1999 OCTOBER 1, 1999
------------- ------------ ------------ --------------- --------------- ---------------
(UNAUDITED) (UNAUDITED)
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Net income (loss)............... $11,225 $ 12,911 $ 27,406 $ 4,489 $(3,029) $ (20,112)
Other comprehensive income
(loss):
Currency translation
adjustments................ (2,015) (1,851) (574) 1,681 2,475 426
------- -------- -------- -------- ------- ---------
Comprehensive income (loss)..... $ 9,210 $ 11,060 $ 26,832 $ 6,170 $ (554) $ (19,686)
------- -------- -------- -------- ------- ---------
------- -------- -------- -------- ------- ---------
</TABLE>
See Notes to Consolidated Financial Statements.
F-3
<PAGE>
INTERSIL HOLDING CORPORATION
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
PREDECESSOR SUCCESSOR
--------------------------- ---------------------------------
JULY 3, 1998 JULY 2, 1999 AUGUST 14, 1999 OCTOBER 1, 1999
------------ ------------ --------------- ---------------
(IN THOUSANDS) (UNAUDITED)
<S> <C> <C> <C> <C>
ASSETS
Current Assets
Cash $ -- $ -- $ 7,377 $ 33,820
Trade receivables, less allowances for collection loss ($571 in
1998, $582 in 1999, $755 as of August 14, 1999 and $780 as of
October 1, 1999)............................................. 110,675 100,674 83,042 84,777
Inventories.................................................... 180,232 153,822 153,044 156,384
Prepaid expenses............................................... 4,658 3,725 3,051 7,265
Income tax receivable.......................................... 643 1,527 573 621
Deferred income taxes.......................................... -- 3,476 -- --
-------- -------- --------- ---------
Total Current Assets....................................... 296,208 263,224 247,087 282,867
Other Assets
Property, plant and equipment, less allowance for depreciation
($567,031 in 1998, $582,616 in 1999, -0- as of August 14,
1999 and $8,740 as of October 1, 1999)....................... 450,084 410,530 348,514 342,198
Intangibles, less accumulated amortization ($17,760 in 1998,
$19,929 in 1999, -0- as of August 14, 1999 and $1,418 as of
October 1, 1999)............................................. 44,219 45,368 111,511 89,297
Other.......................................................... 19,759 42,057 21,463 22,358
-------- -------- --------- ---------
Total Other Assets......................................... 514,062 497,955 481,488 453,853
-------- -------- --------- ---------
Total Assets..................................................... $810,270 $761,179 $ 728,575 $ 736,720
-------- -------- --------- ---------
-------- -------- --------- ---------
LIABILITIES AND STOCKHOLDERS' EQUITY/BUSINESS EQUITY
Current Liabilities
Trade account payables......................................... $ 33,305 $ 31,068 $ 29,365 $ 32,619
Retirement plan accruals....................................... 15,448 13,640 2,445 5,865
Accrued compensation........................................... 29,022 19,283 15,842 23,571
Accrued interest and sundry taxes.............................. 4,257 3,193 3,877 8,733
Other accrued items............................................ 13,403 16,418 27,222 33,440
Distributor reserves........................................... 6,189 6,542 6,512 7,073
Unearned service income........................................ 248 567 567 536
Deferred income taxes.......................................... 126 -- -- --
Long-term debt--current portion................................ 167 360 2,410 2,410
-------- -------- --------- ---------
Total Current Liabilities.................................. 102,165 91,071 88,240 114,247
Other Liabilities
Deferred income taxes.......................................... 5,126 7,022 8,199 8,199
Long-term debt................................................. 3,902 4,207 541,525 543,349
Mandatorily Redeemable Preferred Stock--1,000,000 shares
designated 12% Series A Cumulative Compounding preferred stock,
$1,000 stated value; 2,000,000 shares authorized, 85,000 shares
issued and outstanding at August 14, 1999 and October 1,
1999........................................................... -- -- 85,000 86,369
Stockholders' Equity/Business Equity.............................
Class A Common Stock, $.01 par value, voting; 125,000,000
shares authorized, 23,800,000 shares issued and outstanding
at August 14, 1999 and October 1, 1999....................... -- -- 238 238
Class B Common Stock, $.01 par value, non-voting; 125,000,000
shares authorized, 76,200,000 shares issued and outstanding
at August 14, 1999 and October 1, 1999....................... -- -- 762 762
Additional paid-in Capital..................................... -- -- 4,611 3,242
Business equity................................................ 699,077 658,879 -- --
Retained deficit............................................... -- -- -- (20,112)
Accumulated other comprehensive income......................... -- -- -- 426
-------- -------- --------- ---------
Total Stockholders' Equity/Business Equity................. 699,077 658,879 5,611 (15,444)
-------- -------- --------- ---------
Total Liabilities and Stockholders' Equity/Business
Equity.................................................. $810,270 $761,179 $ 728,575 $ 736,720
-------- -------- --------- ---------
-------- -------- --------- ---------
</TABLE>
See Notes to Consolidated Financial Statements.
F-4
<PAGE>
INTERSIL HOLDING CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
PREDECESSOR PREDECESSOR SUCCESSOR
-------------------------------------------- --------------------------------- ---------------
FISCAL YEAR ENDED 13 WEEKS ENDED 6 WEEKS ENDED 7 WEEKS ENDED
-------------------------------------------- --------------- --------------- ---------------
JUNE 27, 1997 JULY 3, 1998 JULY 2, 1999 OCTOBER 2, 1998 AUGUST 13, 1999 OCTOBER 1, 1999
------------- ------------ ------------ --------------- --------------- ---------------
(UNAUDITED) (UNAUDITED)
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
OPERATING ACTIVITIES:
Net Income (loss).............. $ 11,225 $ 12,911 $ 27,406 $ 4,489 $ (3,029) $ (20,112)
Adjustments to reconcile net
income (loss) to net cash
provided by operating
activities
Depreciation................. 50,218 65,036 78,217 19,014 8,747 8,740
Amortization................. 2,295 2,295 2,414 573 326 1,418
Write-off of in-process
technology................. -- -- -- -- -- 20,796
Non-current deferred income
taxes...................... (981) (461) 1,896 1,415 (4,756) --
Changes in assets and
liabilities:
Trade receivables............ 3,164 1,270 10,001 13,187 14,532 (1,735)
Inventories.................. (7,720) (9,859) 26,410 5,708 (1,649) (3,340)
Prepaid expenses............. 1,746 506 933 172 674 (4,214)
Trade payables and accrued
liabilities................ 24 (14,399) (13,950) (16,333) (18,705) 27,927
Unearned service income...... 94 (32) 319 (163) -- (31)
Income taxes................. (84) (3,866) (4,486) (264) 4,430 (48)
Other........................ (5,405) (5,070) (17,911) (15,059) 2,812 (1,686)
--------- -------- -------- -------- --------- ---------
Net cash provided by
operating activities.... 54,576 48,331 111,249 12,739 3,382 27,715
INVESTING ACTIVITIES:
Cash paid for acquired business.. -- -- (1,335) -- -- --
Plant and equipment.............. (173,304) (90,184) (38,563) (13,101) (1,887) (2,424)
--------- -------- -------- -------- --------- ---------
Net cash used in investing
activities.............. (173,304) (90,184) (39,898) (13,101) (1,887) (2,424)
FINANCING ACTIVITIES:
Proceeds from borrowings....... 1,450 2,750 800 -- -- --
Payments of borrowings......... (48) (83) (302) (41) (32) (65)
--------- -------- -------- -------- --------- ---------
Net cash provided by (used
in) financing
activities.............. 1,402 2,667 498 (41) (32) (65)
Effect of exchange rates on cash
and cash equivalents........... 1,221 (2,658) (4,819) (40) 1,177 1,217
Net cash transfer and
billings from (to) parent...... 116,105 41,844 (67,030) 443 (1,198) --
--------- -------- -------- -------- --------- ---------
Net increase in cash....... -- -- -- -- 1,442 26,443
Cash at the beginning of
the period.............. -- -- -- -- -- 7,377
--------- -------- -------- -------- --------- ---------
Cash at the end of the
period.................. $ -- $ -- $ -- $ -- $ 1,442 $ 33,820
--------- -------- -------- -------- --------- ---------
--------- -------- -------- -------- --------- ---------
</TABLE>
See Notes to Consolidated Financial Statements.
F-5
<PAGE>
INTERSIL HOLDING CORPORATION
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL RETAINED CUMULATIVE
------------------ PAID-IN EARNINGS TRANSLATION BUSINESS
CLASS A CLASS B CAPITAL (DEFICIT) ADJUSTMENTS EQUITY TOTAL
------- ------- ---------- -------- ----------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
Initial capitalization at August 14, 1999.. $ 238 $ 762 $4,611 $ -- $ -- $ -- $ 5,611
Net income (loss) (unaudited).............. -- -- -- (20,112) -- -- (20,112)
Accretion of undeclared dividends on
preferred stock (unaudited).............. -- -- (1,369) -- -- -- (1,369)
Foreign currency translation
(unaudited).............................. -- -- -- -- 426 -- 426
----- ----- ------ -------- ----- --------- ---------
Balances at October 1, 1999
(unaudited).............................. $ 238 $ 762 $3,242 $(20,112) $ 426 $ -- $ (15,444)
----- ----- ------ -------- ----- --------- ---------
----- ----- ------ -------- ----- --------- ---------
</TABLE>
See Notes to Consolidated Financial Statements.
F-6
<PAGE>
INTERSIL HOLDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED JUNE 27, 1997, JULY 3, 1998, JULY 2, 1999,
6 WEEKS ENDED AUGUST 13, 1999,
UNAUDITED 13 WEEKS ENDED OCTOBER 2, 1998 AND
THE UNAUDITED 7 WEEKS ENDED OCTOBER 1, 1999
NOTE A--ORGANIZATION AND BASIS OF PRESENTATION
ORGANIZATION
Intersil Holding Corporation (Intersil Holding) was formed on August 13,
1999 through a series of transactions, in which Intersil Holding and its
wholly-owned subsidiary, Intersil Corporation (Intersil), acquired the
Semiconductor Business (Semiconductor Business or Predecessor) of Harris
Corporation (Harris). Intersil Holding currently has no operations but holds
common stock related to its investment in Intersil and certain indebtedness
related to the Semiconductor Business acquisition (Harris acquisition). Intersil
and its wholly-owned domestic and foreign subsidiaries include the operations of
the Predecessor.
BASIS OF PRESENTATION
The Successor consolidated balance sheet as of August 14, 1999 reflects the
initial capitalization of Intersil Holding and the acquisition of the
Semiconductor Business. The consolidated balance sheets as of July 3, 1998 and
July 2, 1999 and the consolidated statements of operations, comprehensive income
and cash flows for the fiscal years ended June 27, 1997, July 3, 1998, July 2,
1999 and the 6 weeks ended August 13, 1999 include the accounts of Semiconductor
Business, the Predecessor company.
Accordingly, the consolidated financial statements include the power,
communications, space and defense product lines of Harris' Semiconductor
Business that were purchased in the transaction. The transaction did not include
Harris' semiconductor suppression business or photomask operations or certain
patents in the memory field that were retained by Harris. The Semiconductor
Business, which was wholly-owned by Harris, designs, manufactures and sells
discrete semiconductors and standard and custom integrated circuits to the
semiconductor markets. The Semiconductor Business' manufacturing facilities
perform manufacturing operations related to other Harris Semiconductor Product
Lines. The Semiconductor Business was not a separate legal entity and the assets
and liabilities associated with the Semiconductor Business were components of a
larger business.
The Predecessor's consolidated statements of operations include all
revenues and costs attributable to the Semiconductor Business. Costs directly
attributable to a product line are charged directly to cost of goods sold.
Certain components of costs of goods sold and operating expenses (engineering,
marketing, and administration & general) have been allocated based on
pre-established allocation methodologies established by the Semiconductor
Business, by product line. Harris Corporate expense allocations are based on a
percentage of the Semiconductor Business' net sales. Interest expense is
provided on direct borrowings of the Semiconductor Business. Interest expense of
Harris has not been allocated to the Semiconductor Business.
All of the allocations and estimates in the Predecessor's combined
statements of operations are based on assumptions that management believes are
reasonable under the circumstances. However, these allocations and estimates are
not necessarily indicative of the costs that would have resulted if the
Semiconductor Business had been operated on a stand alone basis.
The Semiconductor Business sells products to other affiliated operations of
Harris. Sales to these operations were not material.
The accompanying unaudited financial statements for the 13 weeks ended
October 2, 1998 and the 7 weeks ended October 1, 1999, reflect all adjustments,
all of which are of a normal recurring nature, necessary in the opinion of
management for a fair presentation of the results for such interim periods and
are not necessarily indicative of full-year results.
F-7
<PAGE>
INTERSIL HOLDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
YEARS ENDED JUNE 27, 1997, JULY 3, 1998, JULY 2, 1999,
6 WEEKS ENDED AUGUST 13, 1999,
UNAUDITED 13 WEEKS ENDED OCTOBER 2, 1998 AND
THE UNAUDITED 7 WEEKS ENDED OCTOBER 1, 1999
NOTE A--ORGANIZATION AND BASIS OF PRESENTATION--(CONTINUED)
ACQUISITION OF HARRIS' SEMICONDUCTOR BUSINESS
The total purchase price of the Semiconductor Business acquisition was $630
million, which included transaction costs of approximately $7.8 million and
deferred financing costs of $12.2 million (Note H). The consideration paid by
Intersil Holding was $520.0 million in cash of which $420.0 million was financed
through borrowings from the senior credit facilities, the 13 1/4% Senior
Subordinated Notes and 13.5% Subordinated Holding PIK Note and the issuance of a
$90.0 million 'Pay-In-Kind' (PIK) note to Harris.
The acquisition was accounted for using the purchase method of accounting
and accordingly, the operating results of the Semiconductor Business have been
included in Intersil's consolidated financial statements since the date of
acquisition. The total purchase price was allocated to the assets and
liabilities of the Semiconductor Business based upon their approximate fair
value. The fair value of the net assets acquired exceeded the purchase price
resulting in negative goodwill. This negative goodwill was allocated to the
identified intangibles and property and equipment based on their relative fair
values as follows (in millions).
<TABLE>
<S> <C>
Purchase price:
Cash paid to Harris........................... $ 520.0
13.5% Subordinated PIK Note................... 90.0
Transaction costs and fees.................... 20.0
-------
Total purchase price............................ $ 630.0
-------
-------
</TABLE>
<TABLE>
<CAPTION>
ALLOCATION OF
FAIR VALUE OF EXCESS FAIR ADJUSTED
ACQUIRED ASSETS VALUE FAIR VALUE
--------------- ------------- -------------
<S> <C> <C> <C>
Net current assets.............................. $ 160.9 -- $ 160.9
Other........................................... 9.0 -- 9.0
Property and equipment.......................... 486.0 $(137.5) 348.5
Developed Technology............................ 80.0 (22.6) 57.4
Customer base................................... 33.0 (9.3) 23.7
In-process research and development............. 29.0 (8.2) 20.8
Assembled workforce............................. 13.5 (3.8) 9.7
------- ---------- ----------
$ 811.4 $(181.4) $ 630.0
------- ---------- ----------
------- ---------- ----------
Excess fair value of net assets acquired over
purchase price................................ $ 181.4
-------
-------
</TABLE>
The preliminary appraisal of the acquired business included $20.8 million
of purchased in-process research and development, which was related to various
products under development. This valuation represents the 10 years after-tax
cash flow of this in-process technology using a discount rate of 20%. The
acquired technology had not yet reached technological feasibility and had no
future alternative uses. Accordingly, it was written off at the time of the
acquisition. The remaining identified intangibles (developed technology,
customer base and assembled workforce) are being amortized over 5 to 11 years.
The allocation of the purchase price is based on a preliminary valuation,
which is subject to change, although management does not believe the final
valuation will be materially different.
In connection with the acquisition of the Semiconductor Business, Intersil
formulated a restructuring plan and will involuntarily terminate the employment
of 372 employees of the Semiconductor Business. At August
F-8
<PAGE>
INTERSIL HOLDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
YEARS ENDED JUNE 27, 1997, JULY 3, 1998, JULY 2, 1999,
6 WEEKS ENDED AUGUST 13, 1999,
UNAUDITED 13 WEEKS ENDED OCTOBER 2, 1998 AND
THE UNAUDITED 7 WEEKS ENDED OCTOBER 1, 1999
NOTE A--ORGANIZATION AND BASIS OF PRESENTATION--(CONTINUED)
13, 1999, Intersil recorded $11.0 million in severance benefits and such is
included in the allocation of the acquisition cost. The severance includes the
following:
<TABLE>
<CAPTION>
LOCATION NO. OF EMPLOYEES AMOUNTS
- - --------------------------------------------------------------- ---------------- -------------
(IN MILLIONS)
<S> <C> <C>
Europe......................................................... 17 $ 5.6
Malaysia....................................................... 262 1.9
North America.................................................. 93 3.5
--- -----
372 $11.0
--- -----
--- -----
</TABLE>
As of October 1, 1999, the restructuring liability was $8.8 million. For
the seven weeks ended October 1, 1999, approximately $2.2 million of these
restructuring costs had been paid out.
The following unaudited information presents pro forma financial
information, after giving effect to certain adjustments including amortization
of intangible assets acquired, as if the Acquisition of the Semiconductor
Business had occurred at June 28, 1997. These pro forma results have been
prepared for comparative purposes only and do not purport to represent what
Intersil Holding's results of operations would actually have been had the
transactions in fact occurred on the date specified, nor do they purport to
project the results of operations for any future period.
<TABLE>
<CAPTION>
PRO FORMA
------------------------------------
13 WEEKS ENDED 13 WEEKS ENDED
OCTOBER 2, 1998 OCTOBER 1, 1999
--------------- ---------------
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C>
Product sales............................................. $ 122.5 $ 133.9
Net loss.................................................. $ (4.2) $ (27.0)
Net loss to common shareholders........................... $ (6.8) $ (29.6)
Loss per share:
Basic and diluted....................................... $ (0.07) $ (0.30)
</TABLE>
NOTE B--SIGNIFICANT ACCOUNTING POLICIES
FISCAL YEAR--The 1997 fiscal year includes the 52 weeks ended June 27,
1997; fiscal year 1998 includes the 53 weeks ended July 3, 1998; and fiscal year
1999 includes the 52 weeks ended July 2, 1999.
INVENTORIES--Inventories are carried at the lower of standard cost, which
approximates actual cost, determined by the First-In-First-Out (FIFO) method, or
market.
PLANT AND EQUIPMENT--Machinery and equipment are carried on the basis of
cost. The estimated useful lives of buildings range between 5 and 50 years. The
estimated useful lives of machinery and equipment range between 3 and 10 years.
Depreciation is computed by the straight-line method using the estimated useful
life of the asset.
REVENUE RECOGNITION--Revenue is recognized from sales to all customers,
including distributors, when a product is shipped. Sales to distributors are
made under distributor agreements which provide the distributors rights of
return and price protection on unsold merchandise held by the distributors.
Accordingly, sales are reduced for estimated returns from distributors and
estimated future price reductions of unsold merchandise held by distributors.
Product sales to two distributors for the fiscal years ended June 27, 1997, July
3, 1998, July 2, 1999, thirteen weeks ended October 2, 1998, six weeks ended
August 13, 1999 and seven weeks
F-9
<PAGE>
INTERSIL HOLDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
YEARS ENDED JUNE 27, 1997, JULY 3, 1998, JULY 2, 1999,
6 WEEKS ENDED AUGUST 13, 1999,
UNAUDITED 13 WEEKS ENDED OCTOBER 2, 1998 AND
THE UNAUDITED 7 WEEKS ENDED OCTOBER 1, 1999
NOTE B--SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
ended October 1, 1999 amounted to 20.5%, 19.0%, 16.6%, 19.1%, 29.3% and 7.8%,
respectively, of total product sales.
RESEARCH AND DEVELOPMENT--Research and development costs, consisting of the
cost of designing, developing, and testing new or significantly enhanced
products, are expensed as incurred.
RETIREMENT BENEFITS--Intersil Holding provides retirement benefits to
substantially all employees primarily through a retirement plan having
profit-sharing and savings elements. Contributions by Intersil Holding to the
retirement plan are based on profits and employees' savings with no other
funding requirements. Intersil Holding may make additional contributions to the
fund at its discretion.
Retirement benefits also include an unfunded limited health-care plan for
U.S.-based retirees and employees on long-term disability. Intersil Holding
accrues the estimated cost of these medical benefits, which are not material,
during an employee's active service life.
Retirement plans expense was $17.4 million in 1997, $15.6 million in 1998,
$14.8 million in 1999, $4.1 million for the thirteen weeks ended October 2,
1998, $1.4 million for the six weeks ended August 13, 1999 and $2.5 million for
the seven weeks ended October 1, 1999.
INCOME TAXES--Intersil Holding follows the liability method of accounting
for income taxes and for the Predecessor financial statements was included with
its parent, Harris, in a consolidated federal income tax return. Harris required
each of its businesses to provide taxes on financial statement pre-tax income or
loss at applicable statutory tax rates. United States local amounts receivable
or payable for current and prior years' income taxes were treated as
intercompany transactions and were recorded in the Semiconductor Business
equity. International current income taxes payable and deferred income taxes
resulting from temporary differences between the financial statements and the
tax basis of assets and liabilities of the Intersil Holding's international
subsidiaries are separately classified on the balance sheets.
INTANGIBLES--Intangibles resulting from acquisitions are being amortized by
the straight-line method over 5 to 40 years. Recoverability of intangibles is
assessed using estimated undiscounted cash flows of related operations.
Intangibles that are not expected to be recovered through future undiscounted
cash flows are charged to expense when identified. Amounts charged to expense
are amounts in excess of the fair value of the intangible asset. Fair value is
determined by calculating the present value of estimated expected future cash
flows using a discount rate commensurate with the risks involved.
FUTURES AND FORWARD CONTRACTS--When Intersil Holding sells products outside
the United States or enters into purchase commitments, the transactions are
frequently denominated in currencies other than U.S. dollars. To minimize the
impact on revenue and cost from currency fluctuations, Intersil Holding enters
into currency exchange agreements that qualify for hedge accounting treatment.
It is Intersil Holding's policy not to speculate in foreign currencies. Currency
exchange agreements are designated as, and are effective as, hedges of foreign
currency commitments. In addition, these agreements are consistent with the
designated currency of the underlying transaction and mature on or before the
underlying transaction. Gains and losses on currency exchange agreements that
qualify as hedges are deferred and recognized as an adjustment of the carrying
amount of the hedged asset, liability or commitment. Gains and losses on
currency exchange agreements that do not qualify as hedges are recognized in
income based on changes in the fair market value of the currency exchange
agreement.
FOREIGN CURRENCY TRANSLATION--The functional currency for the Malaysian
subsidiary is the U.S. dollar, and for other international subsidiaries it is
the local currency. Assets and liabilities are translated at current rates of
exchange, and income and expense items are translated at the weighted average
exchange rate for the
F-10
<PAGE>
INTERSIL HOLDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
YEARS ENDED JUNE 27, 1997, JULY 3, 1998, JULY 2, 1999,
6 WEEKS ENDED AUGUST 13, 1999,
UNAUDITED 13 WEEKS ENDED OCTOBER 2, 1998 AND
THE UNAUDITED 7 WEEKS ENDED OCTOBER 1, 1999
NOTE B--SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
year. The resulting translation adjustments are recorded as a separate component
of Shareholder's equity (Business Equity in the Predecessor's financial
statements). Cumulative translation gains (losses) were $(1.9) million, $(2.5)
million, $0 and $0.4 million at July 3, 1998, $2.5 million at July 2, 1999,
August 13, 1999 and October 1, 1999, respectively.
LOSS PER SHARE--Loss per share is computed and presented in accordance with
SFAS No. 128, 'Earnings per Share' and the Securities and Exchange Commission
Staff Accounting Bulletin No. 98. Net loss per common share is presented for the
seven weeks ended October 1, 1999 only because it is not meaningful for earlier
periods since the Company did not have common stock outstanding for any of the
earlier periods.
USE OF ESTIMATES--These statements have been prepared in conformity with
generally accepted accounting principles and require management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
NOTE C--ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board issued FAS No. 133,
'Accounting for Derivative Instruments and Hedging Activities'. The statement
establishes standards for recording derivative financial instruments and the
recognition of gains or losses resulting from changes in the fair values of
those instruments. Intersil Holding plans to adopt the new standard no later
than the first quarter of fiscal 2001. However, Intersil Holding has not
determined the anticipated impact of FAS No. 133.
NOTE D--INVENTORIES
Inventories are summarized below (in thousands):
<TABLE>
<CAPTION>
(PREDECESSOR) (SUCCESSOR)
-------------------- --------------------------
JULY 3, JULY 2, AUGUST 14, OCTOBER 1,
1998 1999 1999 1999
-------- -------- ---------- ------------
(UNAUDITED)
<S> <C> <C> <C> <C>
Finished products..................................... $ 64,644 $ 58,041 $ 59,708 $ 57,137
Work in process....................................... 125,647 102,457 104,262 109,903
Raw materials and supplies............................ 14,423 11,441 9,137 8,735
-------- -------- --------- --------
204,714 171,939 173,107 175,775
Less inventory reserve................................ (24,482) (18,117) (20,063) (19,391)
-------- -------- --------- --------
$180,232 $153,822 $ 153,044 $156,384
-------- -------- --------- --------
-------- -------- --------- --------
</TABLE>
At July 2, 1999, August 14, 1999 and October 1, 1999 Intersil Holding was
committed to purchase $22.5 million, $22.8 million and $22.8 million,
respectively of inventory from suppliers. Management believes the cost of this
inventory approximates current market value.
F-11
<PAGE>
INTERSIL HOLDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
YEARS ENDED JUNE 27, 1997, JULY 3, 1998, JULY 2, 1999,
6 WEEKS ENDED AUGUST 13, 1999,
UNAUDITED 13 WEEKS ENDED OCTOBER 2, 1998 AND
THE UNAUDITED 7 WEEKS ENDED OCTOBER 1, 1999
NOTE E--PLANT AND EQUIPMENT
Plant and equipment are summarized below (in thousands):
<TABLE>
<CAPTION>
(PREDECESSOR) (SUCCESSOR)
---------------------- --------------------------
JULY 3, JULY 2, AUGUST 14, OCTOBER 1,
1998 1999 1999 1999
---------- -------- ---------- ------------
(UNAUDITED)
<S> <C> <C> <C> <C>
Land................................................ $ 3,966 $ 3,966 $ 6,539 $ 6,034
Buildings........................................... 262,490 266,364 100,511 100,337
Machinery and equipment............................. 750,659 722,816 241,464 244,567
---------- -------- --------- --------
1,017,115 993,146 348,514 350,938
Less allowances for depreciation.................... 567,031 582,616 -- 8,740
---------- -------- --------- --------
$ 450,084 $410,530 $ 348,514 $342,198
---------- -------- --------- --------
---------- -------- --------- --------
</TABLE>
NOTE F--INTANGIBLES
Intangibles are summarized below (in thousands):
<TABLE>
<CAPTION>
(PREDECESSOR) (SUCCESSOR)
------------------ -------------------------
PERIOD OF JULY 3, JULY 2, AUGUST 14, OCTOBER 1,
AMORTIZATION 1998 1999 1999 1999
------------- ------- ------- ---------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Developed technology................................ 11 years $ -- $ -- $ 57,369 $57,369
Customer base....................................... 7 years -- -- 23,665 23,665
In-process research and development................. -- -- -- 20,796 --
Assembled workforce................................. 5 years -- -- 9,681 9,681
Goodwill............................................ 40 years 61,979 65,297 -- --
------- ------- --------- -------
61,979 65,297 111,511 90,715
Less accumulated amortization....................... 17,760 19,929 -- 1,418
------- ------- --------- -------
$44,219 $45,368 $ 111,511 $89,297
------- ------- --------- -------
------- ------- --------- -------
</TABLE>
NOTE G--LOSS PER SHARE
The following table sets forth the computation of basic and diluted loss
per share:
<TABLE>
<CAPTION>
(SUCCESSOR)
---------------
<S> <C>
OCTOBER 1, 1999
---------------
(UNAUDITED)
Numerator
Net loss (numerator for basic and diluted earnings per share)............... $ (21,481)
---------
---------
Denominator:
Denominator for basic earnings per share-weighted average common shares..... 100,000
Effect of dilutive securities:
Warrants................................................................. --
---------
Denominator for diluted earnings per share-adjusted weighted average
shares................................................................... 100,000
---------
---------
Basic loss per share.......................................................... $ (0.22)
---------
---------
Diluted loss per share........................................................ $ (0.22)
---------
---------
</TABLE>
F-12
<PAGE>
INTERSIL HOLDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
YEARS ENDED JUNE 27, 1997, JULY 3, 1998, JULY 2, 1999,
6 WEEKS ENDED AUGUST 13, 1999,
UNAUDITED 13 WEEKS ENDED OCTOBER 2, 1998 AND
THE UNAUDITED 7 WEEKS ENDED OCTOBER 1, 1999
NOTE G--LOSS PER SHARE--(CONTINUED)
The effect of dilutive securities is not included in the computation for
the seven weeks ended October 1, 1999 because to do so would be antidilutive.
NOTE H--LONG-TERM DEBT
LONG-TERM DEBT
Long-term debt consists of the following (in thousands):
<TABLE>
<CAPTION>
(PREDECESSOR) (SUCCESSOR)
------------------------------ ----------------------------------
JULY 3, 1998 JULY 2, 1999 AUGUST 14, 1999 OCTOBER 1, 1999
------------- ------------- --------------- ---------------
(UNAUDITED)
<S> <C> <C> <C> <C>
13.25% Senior Subordinated Notes......... $ -- $ -- $ 199,700 $ 199,700
Tranche B Senior Term Facility........... -- -- 205,000 205,000
11.13% Seller Holding PIK Note........... -- -- 90,000 91,345
13.5% Subordinated Holding PIK Note...... -- -- 29,700 30,244
Revolving Credit Facility................ -- -- 15,000 15,000
Other.................................... 4,069 4,567 4,535 4,470
------- ------- --------- ---------
4,069 4,567 543,935 545,759
Less: current portion.................... 167 360 2,410 2,410
------- ------- --------- ---------
$ 3,902 $ 4,207 $ 541,525 $ 543,349
------- ------- --------- ---------
------- ------- --------- ---------
</TABLE>
Schedule future principal payments under Intersil Holding's and Intersil's
indebtedness are as follows:
<TABLE>
<S> <C>
2000.................................................................... $ 2,410
2001.................................................................... 2,454
2002.................................................................... 2,466
2003.................................................................... 2,479
2004.................................................................... 2,438
Thereafter.............................................................. 533,512
--------
$545,759
--------
--------
</TABLE>
13.25% Senior Subordinated Notes and Warrants
On August 13, 1999, in connection with the acquisition of the Semiconductor
Business, Intersil completed an offering of 200,000 units consisting of $200
million of its 13.25% Senior Subordinated Notes due 2009 and warrants to
purchase 5,555,560 shares of Class A Common Stock of Intersil Holding. Each unit
consisted of $1,000 principal amount of 13.25% Senior Subordinated Notes of
Intersil and one warrant to purchase 27.7778 shares of Class A Common Stock of
Intersil Holding. The total gross proceeds from the sale of the 13.25% Senior
Subordinated Notes were $194.0 million, net of $6.0 million of deferred
financing fees. The $6.0 million deferred financing fees will be treated as
additional interest related to the 13.25% Senior Subordinated Notes and
amortized over the life of the 13.25% Senior Subordinated Notes on an effective
yield method.
The 13.25% Senior Subordinated Notes are unsecured and are fully and
unconditionally guaranteed by Intersil Holding and all of Intersil's current and
future domestic subsidiaries. The 13.25% Senior Subordinated Notes are not
guaranteed by Intersil's foreign subsidiaries. The 13.25% Senior Subordinated
Notes require semi-annual interest payments beginning on February 15, 2000
through maturity on August 15,
F-13
<PAGE>
INTERSIL HOLDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
YEARS ENDED JUNE 27, 1997, JULY 3, 1998, JULY 2, 1999,
6 WEEKS ENDED AUGUST 13, 1999,
UNAUDITED 13 WEEKS ENDED OCTOBER 2, 1998 AND
THE UNAUDITED 7 WEEKS ENDED OCTOBER 1, 1999
NOTE H--LONG-TERM DEBT--(CONTINUED)
2009. The 13.25% Senior Subordinated Notes may be redeemed at the option of
Intersil Holding after August 15, 2004 upon the payment of certain redemption
premiums, although up to 35% of the 13.25% Senior Subordinated Notes can be
redeemed prior to August 15, 2002 with the proceeds of certain equity offerings
and upon the payment of certain redemption premiums. The 13.25% Senior
Subordinated Notes contain various restrictive covenants, including limitations
on the incurrence of additional indebtedness, restrictions and limitations on
payment of dividends, make investments, engage in transactions with affiliates,
consolidate, merge or transfer assets and restrictions and limitations on the
sales of certain assets, among others. The 13.25% Senior Subordinated Notes also
require the maintenance of certain ratios.
Each warrant entitles the holder to purchase 27.7778 shares of Intersil
Holding Class A Common Stock at a price of $.001 per share. The warrants are
exercisable beginning on the first anniversary of their issue date (August 13,
1999) and expire on August 15, 2009. Warrant holders have no holding rights. The
warrants were preliminarily valued at $0.3 million and will be treated as
additional interest related to the 13.25% Senior Subordinated Notes and
amortized over the life of the 13.25% Senior Subordinated Notes on an effective
yield method.
Senior Credit Facilities
In connection with the Acquisition of the Semiconductor Business, Intersil
entered into senior credit facilities with a syndicate of financial
institutions. The senior credit facilities include a $205.0 million funded term
loan facility (the 'Tranche B Senior Term Facility') and a revolving line of
credit (the 'Revolving Credit Facility'). The Revolving Credit Facility has
maximum borrowings of up to $70.0 million, of which $15.0 million was funded on
August 13, 1999 in connection with the acquisition of the Semiconductor
Business. The total gross proceeds from the issuance of the Tranche B Senior
Term Facility and the Revolving Credit Facility were $212.90 million, net of
$6.2 million of deferred financing fees and $0.9 million debt issuance costs.
The $6.2 million deferred financing fees will be treated as additional interest
related to the senior credit facilities and amortized over the life of the
senior credit facilities on an effective yield method. The $0.9 million debt
issuance costs will be amortized over the life of the senior credit facilities.
The Tranche B Senior Term Facility bears interest at LIBOR + 4%. The
Tranche B Senior Term Facility matures in 2005 and requires 1% of the original
principal amount to be repaid in each of the first five years in quarterly
installments. Beginning September 2004, 24% of the original principal amount
will be repaid each quarter, for four quarters. The senior credit facilities are
subject to an annual commitment fee of .50% of the undrawn portion of the
Revolving Credit Facility.
The Revolving Credit Facility bears interest ranging from LIBOR + 2.00% to
LIBOR + 3.25%, depending on the results of applicable ratios. The Revolving
Credit Facility matures in 2005.
The senior credit facilities are unconditionally guaranteed, jointly and
severally, by Intersil Holding, Intersil and existing and subsequently acquired
or organized domestic subsidiaries. The senior credit facilities contain various
restrictive covenants, including, incurrence of indebtedness, payment of
dividends, make certain investments and acquisitions, dispose of assets, among
others. The senior credit facilities also require the maintenance of certain
ratios.
Pay-In-Kind (PIK) Notes
On August 13, 1999, in connection with the Acquisition of the Semiconductor
Business, Intersil Holding issued to Harris a $90.0 million 11.13% Seller
Holding PIK Note which matures in 2010. The 11.13% Seller Holding PIK Note bears
interest at an annual rate equal to 11.13%. Intersil Holding may pay interest on
the
F-14
<PAGE>
INTERSIL HOLDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
YEARS ENDED JUNE 27, 1997, JULY 3, 1998, JULY 2, 1999,
6 WEEKS ENDED AUGUST 13, 1999,
UNAUDITED 13 WEEKS ENDED OCTOBER 2, 1998 AND
THE UNAUDITED 7 WEEKS ENDED OCTOBER 1, 1999
NOTE H--LONG-TERM DEBT--(CONTINUED)
11.13% Seller Holding PIK Note by issuing additional 11.13% PIK notes. Intersil
Holding may redeem the 11.13% Seller Holding PIK Note at any time. In addition,
Intersil Holding will be required to redeem the 11.13% Seller Holding PIK Note
upon a change in control. The 11.13% Seller Holding PIK Note contains various
restrictive covenants and is subordinated to Intersil Holding's guarantee of
Intersil's 13.25% Senior Subordinated Notes and senior credit facilities.
Intersil and its subsidiaries are not a guarantor of the 11.13% Seller Holding
PIK Note.
Also, on August 13, 1999, Intersil Holding issued to Citicorp Mezzanine
Partners, L.P. a $30.0 million 13.5% Subordinated Holding PIK Note. The 13.5%
Subordinated Holding PIK Note matures on July 15, 2010 and bears interest at an
annual rate equal to 13.5%. To the extent Intersil Holding's senior debt
prohibits Intersil Holding from paying cash interest on the 13.5% Subordinated
Holding PIK Note, such interest shall be paid by adding the accrued interest to
the principal amount of the 13.5% Subordinated Holding PIK Note. Intersil
Holding may redeem the 13.5% Subordinated Holding PIK Note at any time in whole
or in part at 100% of the principal amount plus accrued and unpaid interest and
certain prepayment premiums. The 13.5% Subordinated Holding PIK Note contains
various restrictive covenants. The 13.5% Subordinated Holding PIK Note is
subordinated to Intersil Holding's guarantee of Intersil's Notes and senior
credit facilities. Intersil and its subsidiaries are not a guarantor of the
13.5% Subordinated Holding PIK Note.
The other debt consists of 5 loans made by agencies of the Commonwealth of
Pennsylvania with maturity dates ranging from 2003 to 2017 and are secured by
Intersil's manufacturing facility in Montaintop, Pennsylvania, which has a net
carrying value of $4.5 million at August 13, 1999 and October 1, 1999. The
weighted average interest rate for this debt was 3.0% at July 3, 1998, July 2,
1999, August 13, 1999 and October 1, 1999.
NOTE I--PREFERRED STOCK
Intersil Holding has 2.0 million shares of Preferred Stock authorized,
stated value of $1,000 per share, 1.0 million of which may be designated as 12%
Series A Cumulative Compounding Preferred Stock. On August 13, 1999, Intersil
Holding sold 85,000 shares of its 12% Series A Cumulative Compounding Preferred
Stock to certain buyers including, Sterling Intersil Holding Company LLC (75,088
shares), Harris (8,500 shares) and certain members of management (1,412 shares).
The $85.0 million proceeds were used as a cash equity contribution from Intersil
Holding to Intersil for the Acquisition of the Semiconductor Business.
The Series A Preferred Stock is (i) non-voting, (ii) entitled to cumulative
dividends whether or not declared or earned, at a rate of 12%, compounding
annually, (iii) to have approval rights of new issuances of any other class or
series of stock entitled to a preference ahead of Intersil Holding Preferred
Stock, (iv) able to amend Intersil Holding's certificate of incorporation if
such amendment adversely affects the rights and preferences of the Preferred
Stock holders, (v) entitled to $1,000 per share, plus accrued and unpaid
dividends in the event of liquidation before any distribution to holders of
Intersil Holding Common Stock, (vi) optionally redeemable by Intersil Holding in
whole or in part at a price per share of $1,000 plus accrued and unpaid
dividends, and (vii) mandatorily redeemable prior to June 30, 2011.
The total liquidation value of the shares outstanding at August 13, 1999
and October 1, 1999, in the amounts of $85.0 million and $86.4 million,
respectively, is classified in Intersil Holding's balance sheet as Mandatorily
Redeemable Preferred Stock.
F-15
<PAGE>
INTERSIL HOLDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
YEARS ENDED JUNE 27, 1997, JULY 3, 1998, JULY 2, 1999,
6 WEEKS ENDED AUGUST 13, 1999,
UNAUDITED 13 WEEKS ENDED OCTOBER 2, 1998 AND
THE UNAUDITED 7 WEEKS ENDED OCTOBER 1, 1999
NOTE J--LEASE COMMITMENTS
Total rental expense amounted to $6.7 million in 1997, $6.3 million in
1998, $6.3 million in 1999, $1.6 million for the thirteen weeks ended October 2,
1998, $0.6 million for the 6 weeks ended August 13, 1999 and $0.7 million for
the seven weeks ended October 1, 1999. Future minimum rental commitments under
leases, primarily used for land at Intersil's Malaysian facility and office
buildings at Intersil's International locations, amounted to approximately $18.7
million at July 2, 1999. Intersil's Malaysian manufacturing facility leases land
under leases expiring from 2072 to 2081. The commitments for the years following
1999 are: 2000--$4.0 million, 2001--$2.6 million, 2002--$1.6 million, 2003--$1.3
million, 2004--$1.3 million, and $7.9 million thereafter.
NOTE K--BUSINESS EQUITY
Changes in the business equity of the Predecessor's financial statements
are summarized as follows (in thousands):
<TABLE>
<CAPTION>
(PREDECESSOR) (PREDECESSOR)
------------------------------------------- --------------------------------
FISCAL YEAR ENDED 13 WEEKS ENDED 6 WEEKS ENDED
------------------------------------------- -------------- ---------------
JUNE 27, 1997 JULY 3, 1998 JULY 2, 1999 OCTOBER 2, 1998 AUGUST 13, 1999
------------- ------------ ------------ -------------- ---------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Balance at beginning of year................ $ 520,858 $646,173 $699,077 $699,077 $ 658,879
Net income (loss)........................... 11,225 12,911 27,406 4,489 (3,029)
Foreign currency translation adjustments.... (2,015) (1,851) (574) 1,681 2,475
Net cash transfers and billings from (to)
Harris Corporation........................ 116,105 41,844 (67,030) 443 (1,198)
Purchase price elimination.................. -- -- -- -- (657,127)
--------- -------- -------- -------- ---------
Balance at end of period.................... $ 646,173 $699,077 $658,879 $705,690 $ --
--------- -------- -------- -------- ---------
--------- -------- -------- -------- ---------
</TABLE>
NOTE L--COMMON STOCK
Intersil Holding is authorized to issue 250.0 million shares of Intersil
Holding Common Stock, par value $0.01 per share, divided into two classes
consisting of 125.0 million shares of Intersil Holding Class A Common Stock and
125.0 million shares of Intersil Holding Class B Common Stock. Holders of Class
A Common Stock are entitled to one vote for each share held and holders of Class
B Common Stock have no voting rights. A holder of either class of Intersil
Holding Common Stock may convert any or all shares into an equal number of
shares of the other class of Intersil Holding Common Stock.
On August 13, 1999, Intersil Holding sold 23.8 million shares of Class A
Common Stock and 76.2 million shares of Class B Common Stock for approximately
$5.0 million. The $5.0 million proceeds, along with the $85.0 million proceeds
from the sale of Series A Preferred Stock was used as a cash equity contribution
from Intersil Holding to Intersil for the acquisition of the Semiconductor
Business.
On August 13, 1999, in connection with Intersil Holding's issuance of the
13.5% Subordinated Holding PIK Note, Intersil Holding issued to Citicorp
Mezzanine Partners, L.P. warrants to purchase 5,555,560 shares of Intersil
Holding Class A Common at an exercise price of $.001 per share, subject to
certain anti-dilution adjustments. If Intersil Holding's prepays in full the
13.5% Subordinated Holding PIK Note within 24 months after issuance, the
warrants will be exercisable for 3,333,336 shares of Intersil Holding Class A
Common Stock. The warrants were valued at $0.3 million and will be treated as
additional interest related to the 13.5% Subordinated Holding PIK Note and
amortized over the life of the 13.5% Subordinated Holding PIK Note on an
effective yield method.
F-16
<PAGE>
INTERSIL HOLDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
YEARS ENDED JUNE 27, 1997, JULY 3, 1998, JULY 2, 1999,
6 WEEKS ENDED AUGUST 13, 1999,
UNAUDITED 13 WEEKS ENDED OCTOBER 2, 1998 AND
THE UNAUDITED 7 WEEKS ENDED OCTOBER 1, 1999
NOTE M--INCOME TAXES
The provisions for income taxes are summarized below (Pro Forma for
predecessor financial statements) (in thousands):
<TABLE>
<CAPTION>
(PREDECESSOR) (PREDECESSOR) (SUCCESSOR)
------------------------------------------- --------------------------------- ---------------
FISCAL YEAR ENDED 13 WEEKS ENDED 6 WEEKS ENDED 7 WEEKS ENDED
------------------------------------------- --------------- --------------- ---------------
JUNE 27, 1997 JULY 3, 1998 JULY 2, 1999 OCTOBER 2, 1998 AUGUST 13, 1999 OCTOBER 1, 1999
------------- ------------ ------------ --------------- --------------- ---------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
United States (benefit)...... $(2,595) $4,221 $ (6,626) $ (1,085) $(399) $ --
International................ 4,768 4,910 1,605 263 352 222
State and local (benefit).... (328) 813 (1,006) (165) (55) --
------- ------ -------- -------- ----- -----
$ 1,845 $9,944 $ (6,027) $ (987) $(102) $ 222
------- ------ -------- -------- ----- -----
------- ------ -------- -------- ----- -----
</TABLE>
In the year 2000, the Malaysian taxing authority will convert its income
tax system to a self-assessment system. The new self-assessment system will
require Malaysian corporate taxpayers to begin making estimated tax payments in
year 2000 based on year 2000 estimated taxable income. Currently, Malaysian
corporate taxpayers submit tax payments following the year of assessment. In
1999, the Semiconductor Business made Malaysian taxing payments based on 1998's
taxable income. As a result of the change in the Malaysian taxing system, the
Semiconductor Business will not be required to make tax payments on its 1999
Malaysian taxable income, and therefore has not provided a tax provision for
Malaysian taxes in 1999, which would have amounted to approximately $15.1
million.
The components of International deferred income tax assets (liabilities)
are as follows (in thousands):
<TABLE>
<CAPTION>
(PREDECESSOR) (SUCCESSOR)
--------------------------------------------- ---------------------------------------------
JULY 3, 1998 JULY 2, 1999 AUGUST 14, 1999 OCTOBER 1, 1999
--------------------- --------------------- --------------------- ---------------------
CURRENT NON-CURRENT CURRENT NON-CURRENT CURRENT NON-CURRENT CURRENT NON-CURRENT
------- ----------- ------- ----------- ------- ----------- ------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Receivables.............. $(663) $ -- $ -- $ -- $ -- $ -- $ -- $ --
Fixed Assets............. -- -- -- -- -- -- -- 13,296
NOL Carryforward......... -- -- -- -- -- -- -- 3,217
Credit Carryforward...... -- -- -- -- -- -- -- 4,700
Depreciation............. -- (5,126) -- (7,022) -- (12,953) -- (12,899)
All other--net........... 537 -- 3,476 -- -- 4,754 -- --
Valuation Allowance...... -- -- -- -- -- -- -- (16,513)
----- ------- ------ ------- ------ --------- ------ ---------
$(126) $(5,126) $3,476 $(7,022) $ -- $ (8,199) $ -- $ (8,199)
----- ------- ------ ------- ------ --------- ------ ---------
----- ------- ------ ------- ------ --------- ------ ---------
</TABLE>
F-17
<PAGE>
INTERSIL HOLDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
YEARS ENDED JUNE 27, 1997, JULY 3, 1998, JULY 2, 1999,
6 WEEKS ENDED AUGUST 13, 1999,
UNAUDITED 13 WEEKS ENDED OCTOBER 2, 1998 AND
THE UNAUDITED 7 WEEKS ENDED OCTOBER 1, 1999
NOTE M--INCOME TAXES--(CONTINUED)
A reconciliation of the statutory United States income tax rate to the
effective income tax rate follows:
<TABLE>
<CAPTION>
(PREDECESSOR) (PREDECESSOR) (SUCCESSOR)
------------------------------------------- ---------------------------------- ---------------
FISCAL YEAR ENDED 13 WEEKS ENDED 6 WEEKS ENDED 7 WEEKS ENDED
------------------------------------------- --------------- ---------------- ---------------
JUNE 27, 1997 JULY 3, 1998 JULY 2, 1999 OCTOBER 2, 1998 AUGUST 13, 1999 OCTOBER 1, 1999
------------- ------------ ------------ --------------- ---------------- ---------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
Statutory U.S. income tax
rate.................... 35.0% 35.0% 35.0% 35.0% 35.0% 35.0%
State taxes............... (1.6) 2.3 (3.1) (3.1) 1.1 1.5
International income...... (21.4) 5.2 (61.9) (61.9) (29.7) 5.0
Research credits.......... (4.8) (2.9) (2.7) (2.7) 2.2 1.8
In-Process R&D............ -- -- -- -- -- (25.4)
Subpart F................. -- -- -- -- -- (2.4)
Valuation Allowance....... -- -- -- -- -- (16.2)
Goodwill amortization..... 6.1 3.5 4.0 4.0 (4.9) --
Other items............... .8 .4 0.5 0.5 (0.5) (0.4)
----- ---- ----- ----- ----- -----
Effective income tax
rate.................... 14.1% 43.5% (28.2)% (28.2)% 3.2% (1.1)%
----- ---- ----- ----- ----- -----
----- ---- ----- ----- ----- -----
</TABLE>
United States income taxes have not been provided on undistributed earnings
of international subsidiaries because of Intersil Holding's intention to
reinvest these earnings. The determination of unrecognized deferred U.S. tax
liability for the undistributed earnings of international subsidiaries is not
practicable.
Pretax income (loss) of international subsidiaries was $21.1 million in
1997, $10.2 million in 1998, $41.9 million in 1999, $.6 million for the 13 weeks
ended October 2, 1998, $(1.6) million for the 6 weeks ended August 13, 1999 and
$1.1 million for the 7 weeks ended October 1, 1999.
Income taxes paid (received) were $2.4 million in 1997, $14.8 million in
1998, $3.4 million in 1999, $2.0 million for the 13 weeks ended October 2, 1998,
$.2 million for the 6 weeks ended August 13, 1999 and $.2 million for the 7
weeks ended October 1, 1999.
NOTE N--GEOGRAPHIC INFORMATION
Intersil Holding operates exclusively in the semiconductor industry.
Substantially all revenues result from the sale of semiconductor products. All
intercompany revenues and balances have been eliminated.
A summary of the operations by geographic area is summarized below (in
thousands):
<TABLE>
<CAPTION>
(PREDECESSOR) (PREDECESSOR) (SUCCESSOR)
------------------------------------------- -------------------------------- ---------------
FISCAL YEAR ENDED 13 WEEKS ENDED 6 WEEKS ENDED 7 WEEKS ENDED
------------------------------------------- --------------- --------------- ---------------
JUNE 27, 1997 JULY 3, 1998 JULY 2, 1999 OCTOBER 2, 1998 AUGUST 13, 1999 OCTOBER 1, 1999
------------- ------------ ------------ --------------- --------------- ---------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
United States operations
Net sales................. $ 531,246 $563,180 $519,555 $121,966 $ 54,664 $ 74,094
Long-lived assets......... 380,143 386,333 371,448 369,985 366,386 331,406
International
Net sales................. 14,075 13,656 13,163 583 2,672 2,454
Long-lived assets......... 102,683 122,397 121,330 148,863 118,277 123,388
</TABLE>
F-18
<PAGE>
INTERSIL HOLDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
YEARS ENDED JUNE 27, 1997, JULY 3, 1998, JULY 2, 1999,
6 WEEKS ENDED AUGUST 13, 1999,
UNAUDITED 13 WEEKS ENDED OCTOBER 2, 1998 AND
THE UNAUDITED 7 WEEKS ENDED OCTOBER 1, 1999
NOTE N--GEOGRAPHIC INFORMATION--(CONTINUED)
Export sales included in U.S. Operations were, $234.6 million in 1997,
$258.4 million in 1998, $254.8 million in 1999, $72.1 million for the 13 weeks
ended October 2, 1998, $33.5 million for the 6 weeks ended August 13, 1999 and
$48.7 million for the 7 weeks ended October 1, 1999.
NOTE O--FINANCIAL INSTRUMENTS
The carrying values of accounts receivable, notes receivable, accounts
payable, short-term debt and long-term debt approximates fair value.
Intersil Holding markets its products for sale to customers, including
distributors, primarily in the United States, Europe and Asia/Pacific. Credit is
extended based on an evaluation of the customer's financial condition, and
collateral is generally not required. Intersil Holding maintains an allowance
for losses based upon the expected collectibility of all accounts receivable.
Intersil Holding believes it is adequately reserved with regard to receivables
from its domestic and international customers.
Intersil Holding uses foreign exchange contracts and options to hedge
intercompany accounts and off-balance-sheet foreign currency commitments.
Specifically, these foreign exchange contracts offset foreign currency
denominated inventory and purchase commitments from suppliers, accounts
receivable from and future committed sales to customers and firm committed
operating expenses. Management believes the use of foreign currency financial
instruments should reduce the risks that arise from doing business in
international markets. Contracts are generally one year or less. At July 2,
1999, August 13, 1999 and October 1, 1999, open foreign exchange contracts were
$22.0 million, $6.1 million and $14.0 million, respectively (as described
below), all of which were to hedge off-balance-sheet commitments. Additionally,
for the year ended July 2, 1999, the Semiconductor Business purchased and sold
$120.7 million of foreign exchange forward contracts.
Deferred gains and losses are included on a net basis in the Consolidated
Balance Sheet as other assets and are recorded in income as part of the
underlying transaction when it is recognized. At July 2, 1999, Intersil Holding
had deferred foreign exchange contract losses on future commitments of
approximately $28.6 million. There were no deferred foreign exchange contract
losses at August 14, 1999.
Total open foreign exchange contracts at July 2, 1999, August 14, 1999 and
October 1, 1999, are described in the table below:
JULY 2, 1999
COMMITMENTS TO BUY FOREIGN CURRENCIES
<TABLE>
<CAPTION>
CONTRACT AMOUNT
--------------------------- MATURITIES
CURRENCY FOREIGN CURRENCY U.S. DEFERRED GAINS (IN MONTHS)
- - ------------------------------------------------------- ---------------- ------- -------------- -----------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Malaysian Ringgit...................................... 80,589 $19,000 $2,208 1-2
</TABLE>
COMMITMENTS TO SELL FOREIGN CURRENCIES
<TABLE>
<CAPTION>
CONTRACT AMOUNT
--------------------------- MATURITIES
CURRENCY FOREIGN CURRENCY U.S. DEFERRED GAINS (IN MONTHS)
- - ------------------------------------------------------- ---------------- ------- -------------- -----------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
French Franc........................................... 10,900 $ 1,857 $138 1-2
British Pound.......................................... 691 1,094 2 1
</TABLE>
F-19
<PAGE>
INTERSIL HOLDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
YEARS ENDED JUNE 27, 1997, JULY 3, 1998, JULY 2, 1999,
6 WEEKS ENDED AUGUST 13, 1999,
UNAUDITED 13 WEEKS ENDED OCTOBER 2, 1998 AND
THE UNAUDITED 7 WEEKS ENDED OCTOBER 1, 1999
NOTE O--FINANCIAL INSTRUMENTS--(CONTINUED)
AUGUST 14, 1999
COMMITMENTS TO BUY FOREIGN CURRENCIES
<TABLE>
<CAPTION>
CONTRACT AMOUNT
--------------------------- DEFERRED MATURITIES
CURRENCY FOREIGN CURRENCY U.S. GAINS (LOSSES) (IN MONTHS)
- - -------------------------------------------------------- ---------------- ------- -------------- -----------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Euro.................................................... 808 $ 865 $ (5) 1
French Franc............................................ 5,300 865 (6) 1
British Pound........................................... 202 327 (2) 1
Malaysian Ringgit....................................... 8,504 2,000 238 1
</TABLE>
COMMITMENTS TO SELL FOREIGN CURRENCIES
<TABLE>
<CAPTION>
CONTRACT AMOUNT
--------------------------- DEFERRED MATURITIES
CURRENCY FOREIGN CURRENCY U.S. GAINS (LOSSES) (IN MONTHS)
- - -------------------------------------------------------- ---------------- ------- -------------- -----------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Euro.................................................... 808 $ 865 $ (5) 1
French Franc............................................ 5,300 860 -- 1
British Pound........................................... 202 321 (4) 1
</TABLE>
OCTOBER 1, 1999 (UNAUDITED)
COMMITMENTS TO BUY FOREIGN CURRENCIES
<TABLE>
<CAPTION>
CONTRACT AMOUNT
--------------------------- DEFERRED MATURITIES
CURRENCY FOREIGN CURRENCY U.S. GAINS (IN MONTHS)
- - -------------------------------------------------------- ---------------- ------- -------------- -----------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Malaysian Ringgit....................................... 16,906 $ 4,000 $449 1
</TABLE>
COMMITMENTS TO SELL FOREIGN CURRENCIES
<TABLE>
<CAPTION>
CONTRACT AMOUNT
--------------------------- DEFERRED MATURITIES
CURRENCY FOREIGN CURRENCY U.S. GAINS (LOSSES) (IN MONTHS)
- - -------------------------------------------------------- ---------------- ------- -------------- -----------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
French Franc............................................ 20,000 $ 3,212 $ 22 3-6
Deutsche Mark........................................... 8,000 4,306 27 3-6
British Pound........................................... 1,520 2,491 (12) 3-5
</TABLE>
F-20
<PAGE>
INTERSIL HOLDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
YEARS ENDED JUNE 27, 1997, JULY 3, 1998, JULY 2, 1999,
6 WEEKS ENDED AUGUST 13, 1999,
UNAUDITED 13 WEEKS ENDED OCTOBER 2, 1998 AND
THE UNAUDITED 7 WEEKS ENDED OCTOBER 1, 1999
NOTE P--SUBSEQUENT EVENT--EQUITY COMPENSATION PLAN
On November 5, 1999, to be effective August 14, 1999, Intersil Holding
adopted the 1999 Equity Compensation Plan (the 'Plan') for salaried officers and
key employees. The Plan authorizes the grant of options for up to 3.0 million
shares of Intersil Holding Class A Common Stock and can include (i) options
intended to constitute incentive stock options ('ISOs') under the Internal
Revenue Code, (ii) non-qualified stock options, (iii) restricted stock, (iv)
stock appreciation rights, and (v) phantom share awards. The exercise price of
each option granted under the Plan shall be as determined by a committee of the
Board of Directors (the 'Board'). The maximum term of any option shall be ten
years from the date of grant for incentive stock options and ten years and one
day from the date of grant for non-qualified stock options. Options granted
under the Plan are exercisable at the determination of the Board, currently
vesting ratably over approximately 5 years. Employees receiving options under
the Plan may not receive in any one year period options to purchase more than
1,000,000 shares of common stock. On November 5, 1999, Intersil Holding granted
approximately 2.3 million options to acquire Intersil Holding Class A Common
Stock at a price of $1.50 per share. The Company plans to account for its Equity
Compensation Plan in accordance with Accounting Principles Board Opinion No. 25,
'Accounting for Stock Issued to Employees.'
NOTE Q--FINANCIAL INFORMATION FOR GUARANTOR AND NON-GUARANTOR SUBSIDIARIES
Intersil Holding is a holding company for Intersil. All of the operations
are conducted through Intersil and its wholly-owned domestic and foreign
subsidiaries. On August 13, 1999, in connection with the Harris acquisition,
Intersil issued the Notes and Senior Credit Facilities (Note F), which are fully
and unconditionally guaranteed on a joint and several basis by Intersil Holding
(Parent), Intersil and all of Intersil's wholly-owned current and future
domestic subsidiaries (the 'Guarantor Subsidiaries'). Intersil's wholly-owned
foreign subsidiaries are not guarantors (the 'Non-Guarantor Subsidiaries'). In
management's opinion, separate financial statements of the Guarantor
Subsidiaries and the Non-Guarantor Subsidiaries are not material to investors.
The condensed consolidating financial information presented below includes
the predecessor consolidated balance sheets as of July 3, 1998 and July 2, 1999
and the predecessor consolidated statements of income, comprehensive income and
cash flows for the fiscal years ended June 27, 1997, July 3, 1998, July 2, 1999,
the 13 weeks ended October 2, 1998 and the 6 weeks ended August 13, 1999 for the
Predecessor Guarantor and Non-Guarantor Subsidiaries. The condensed consolidated
balance sheets as of August 14, 1999 and October 1, 1999 and the condensed
consolidated statement of income, comprehensive income and cash flows for the 7
weeks ended October 1, 1999 reflect the Parent, Guarantor Subsidiaries and
Non-Guarantor Subsidiaries.
F-21
<PAGE>
INTERSIL HOLDING CORPORATION
SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
YEAR ENDED JUNE 27, 1997
<TABLE>
<CAPTION>
PREDECESSOR
------------------------------------------------------------
FOREIGN
GUARANTOR NON-GUARANTOR ELIMINATING
SUBSIDIARIES SUBSIDIARIES ENTRIES CONSOLIDATED
------------ ------------- ----------- ------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
REVENUE
Product sales.......................................... $555,110 $ 398,745 $ (408,534) $545,321
COSTS AND EXPENSES
Cost of product sales.................................. 400,997 338,666 (393,590) 346,073
Research and development............................... 74,636 572 -- 75,208
Marketing.............................................. 62,138 19,252 -- 81,390
Administrative and general............................. 16,927 997 -- 17,924
Harris corporate expense allocations................... 10,854 (894) -- 9,960
Goodwill amortization.................................. 2,291 -- -- 2,291
-------- --------- ---------- --------
Operating income (loss).................................. (12,733) 40,152 (14,944) 12,475
Interest, net.......................................... 26,693 (5,174) (22,114) (595)
-------- --------- ---------- --------
Income (loss) before income taxes...................... (39,426) 45,326 7,170 13,070
Income taxes (benefit)................................. (11,658) 6,298 7,205 1,845
-------- --------- ---------- --------
NET INCOME (LOSS)...................................... $(27,768) $ 39,028 $ (35) $ 11,225
-------- --------- ---------- --------
-------- --------- ---------- --------
</TABLE>
INTERSIL HOLDING CORPORATION
SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
YEAR ENDED JULY 3, 1998
<TABLE>
<CAPTION>
PREDECESSOR
------------------------------------------------------------
FOREIGN
GUARANTOR NON-GUARANTOR ELIMINATING
SUBSIDIARIES SUBSIDIARIES ENTRIES CONSOLIDATED
------------ ------------- ----------- ------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
REVENUE
Product sales.......................................... $609,136 $ 418,721 $ (451,021) $576,836
COSTS AND EXPENSES
Cost of product sales.................................. 402,892 388,729 (422,289) 369,332
Research and development............................... 74,466 659 -- 75,125
Marketing.............................................. 61,525 18,262 -- 79,787
Administrative and general............................. 18,022 375 -- 18,397
Harris corporate expense allocations................... 10,941 (979) -- 9,962
Goodwill amortization.................................. 2,292 -- -- 2,292
-------- --------- ---------- --------
Operating income (loss).................................. 38,998 11,675 (28,732) 21,941
Interest net........................................... 40,793 (5,325) (36,382) (914)
-------- --------- ---------- --------
Income (loss) before income taxes...................... (1,795) 17,000 7,650 22,855
Income taxes (benefit)................................. (887) (1,418) 12,249 9,944
-------- --------- ---------- --------
NET INCOME (LOSS)...................................... $ (908) $ 18,418 $ (4,599) $ 12,911
-------- --------- ---------- --------
-------- --------- ---------- --------
</TABLE>
F-22
<PAGE>
INTERSIL HOLDING CORPORATION
SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
YEAR ENDED JULY 2, 1999
<TABLE>
<CAPTION>
PREDECESSOR
------------------------------------------------------------
FOREIGN
GUARANTOR NON-GUARANTOR ELIMINATING
SUBSIDIARIES SUBSIDIARIES ENTRIES CONSOLIDATED
------------ ------------- ----------- ------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
REVENUE
Product sales.......................................... $524,142 $ 480,981 $ (472,405) $532,718
COSTS AND EXPENSES
Cost of product sales.................................. 379,282 337,287 (366,793) 349,776
Research and development............................... 67,316 (237) -- 67,079
Marketing.............................................. 47,429 19,444 -- 66,873
Administrative and general............................. 18,437 (1,312) -- 17,125
Harris corporate expense allocations................... 10,115 (812) -- 9,303
Goodwill amortization.................................. 2,414 -- -- 2,414
-------- --------- ---------- --------
Operating income (loss).................................. (851) 126,611 (105,612) 20,148
Interest, net.......................................... 33,894 (4,975) (30,150) (1,231)
-------- --------- ---------- --------
Income (loss) before income taxes...................... (34,745) 131,586 (75,462) 21,379
Income taxes (benefit)................................. (39,176) 10,313 22,836 (6,027)
-------- --------- ---------- --------
NET INCOME (LOSS)...................................... $ 4,431 $ 121,273 $ (98,298) $ 27,406
-------- --------- ---------- --------
-------- --------- ---------- --------
</TABLE>
INTERSIL HOLDING CORPORATION
SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
THIRTEEN WEEKS ENDED OCTOBER 2, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
PREDECESSOR
------------------------------------------------------------
FOREIGN
GUARANTOR NON-GUARANTOR ELIMINATING
SUBSIDIARIES SUBSIDIARIES ENTRIES CONSOLIDATED
------------ ------------- ----------- ------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
REVENUE
Product sales.......................................... $124,194 $94,542 $ (96,187) $122,549
COSTS AND EXPENSES
Cost of product sales.................................. 100,986 90,330 (110,805) 80,511
Research and development............................... 18,585 34 (3,840) 14,779
Marketing.............................................. 12,362 4,354 (642) 16,074
Administrative and general............................. 3,644 (344) 1,894 5,194
Harris corporate expense allocations................... 2,915 (197) (585) 2,133
Goodwill amortization.................................. 573 -- -- 573
-------- ------- --------- --------
Operating income (loss).................................. (14,871) 365 17,791 3,285
Interest, net.......................................... (211) (242) 236 (217)
-------- ------- --------- --------
Income (loss) before income taxes...................... (14,660) 607 17,555 3,502
Income taxes (benefit)................................. (8,133) 1,153 5,993 (987)
-------- ------- --------- --------
NET INCOME (LOSS)...................................... $ (6,527) $ (546) $ 11,562 $ 4,489
-------- ------- --------- --------
-------- ------- --------- --------
</TABLE>
F-23
<PAGE>
INTERSIL HOLDING CORPORATION
SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
SIX WEEKS ENDED AUGUST 13, 1999
<TABLE>
<CAPTION>
PREDECESSOR
------------------------------------------------------------
FOREIGN
GUARANTOR NON-GUARANTOR ELIMINATING
SUBSIDIARIES SUBSIDIARIES ENTRIES CONSOLIDATED
------------ ------------- ----------- ------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
REVENUE
Product sales.......................................... $ 39,470 $ 129,546 $ (111,680) $ 57,336
COSTS AND EXPENSES
Cost of product sales.................................. 37,484 139,292 (137,095) 39,681
Research and development............................... 8,511 (12) 8,499
Marketing.............................................. 6,288 1,920 8,208
Administrative and general............................. 2,698 (142) 144 2,700
Harris corporate expense allocations................... 1,393 (85) (144) 1,164
Intangible amortization................................ 326 -- -- 326
-------- --------- ---------- --------
Operating income (loss).................................. (17,230) (11,427) 25,415 (3,242)
Interest, net.......................................... (161) 50 -- (111)
-------- --------- ---------- --------
Income (loss) before income taxes...................... (17,069) (11,477) 25,415 (3,131)
Income taxes (benefit)................................. (4,943) (15) 4,856 (102)
-------- --------- ---------- --------
NET INCOME (LOSS)...................................... $(12,126) $ (11,462) $ 20,559 $ (3,029)
-------- --------- ---------- --------
-------- --------- ---------- --------
</TABLE>
INTERSIL HOLDING CORPORATION
SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
SEVEN WEEKS ENDED OCTOBER 1, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
SUCCESSOR
-----------------------------------------------------------------------
FOREIGN
GUARANTOR NON-GUARANTOR ELIMINATING
PARENT SUBSIDIARIES SUBSIDIARIES ENTRIES CONSOLIDATED
------- ------------ ------------- ----------- ------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
REVENUE
Product sales................................ $ -- $ 82,848 $68,979 $(75,279) $ 76,548
COSTS AND EXPENSES
Cost of product sales........................ -- 51,197 63,903 (68,546) 46,554
Research and development..................... -- 8,398 -- -- 8,398
Marketing.................................... -- 4,277 4,144 -- 8,421
Administrative and general................... -- 2,186 -- -- 2,186
Harris corporate expense allocations......... -- -- -- -- --
Intangible amortization...................... -- 7,322 (15,996) 10,092 1,418
In-process R&D charge........................ -- 20,796 -- -- 20,796
------- -------- ------- -------- --------
Operating income (loss)........................ -- (11,328) 16,928 (16,825) (11,225)
Interest, net................................ 1,889 8,605 2,267 (4,096) 8,665
------- -------- ------- -------- --------
Income (loss) before income taxes............ (1,889) (19,933) 14,661 (12,729) (19,890)
Income taxes (benefit)....................... -- 268 1,801 (1,847) 222
------- -------- ------- -------- --------
NET INCOME (LOSS)............................ (1,889) (20,201) 12,860 (10,882) (20,112)
------- -------- ------- -------- --------
Preferred dividends.......................... 1,369 1,369 -- (1,369) 1,369
------- -------- ------- -------- --------
Net income (loss) to common shareholders..... $(3,258) $(21,570) $12,860 $ (9,513) $(21,481)
------- -------- ------- -------- --------
------- -------- ------- -------- --------
</TABLE>
F-24
<PAGE>
INTERSIL HOLDING CORPORATION
SUPPLEMENTAL CONDENSED CONSOLIDATING BALANCE SHEET
JULY 3, 1998
<TABLE>
<CAPTION>
PREDECESSOR
------------------------------------------------------------
FOREIGN
GUARANTOR NON-GUARANTOR ELIMINATING
SUBSIDIARIES SUBSIDIARIES ENTRIES CONSOLIDATED
------------ ------------- ----------- ------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
ASSETS
Trade receivables, net................................. $108,895 $ 1,780 -- $110,675
Intercompany balances.................................. 51,685 (26,498) $ (25,187) --
Inventories............................................ 60,370 158,702 (38,840) 180,232
Other current assets................................... 4,630 671 -- 5,301
Property, plant and equipment, net..................... 327,098 122,986 -- 450,084
Intangibles, net....................................... 44,219 -- -- 44,219
Investment in subsidiaries............................. 21,383 65,881 (87,264) --
Other non-current assets............................... 10,350 9,409 -- 19,759
-------- --------- ---------- --------
Total Assets........................................ $628,630 $ 332,931 $ (151,291) $810,270
-------- --------- ---------- --------
-------- --------- ---------- --------
LIABILITIES AND BUSINESS EQUITY
Accounts payable....................................... $ 21,362 $ 11,943 -- $ 33,305
Compensation and benefits.............................. 39,599 4,871 -- 44,470
Other current liabilities.............................. 35,701 2,310 $ (13,621) 24,390
Other non-current liabilities.......................... 9,028 -- -- 9,028
Business Equity........................................ 522,940 313,807 (137,670) 699,077
-------- --------- ---------- --------
Total Liabilities and Business Equity............... $628,630 $ 332,931 $ (151,291) $810,270
-------- --------- ---------- --------
-------- --------- ---------- --------
</TABLE>
INTERSIL HOLDING CORPORATION
SUPPLEMENTAL CONDENSED CONSOLIDATING BALANCE SHEET
JULY 2, 1999
<TABLE>
<CAPTION>
PREDECESSOR
------------------------------------------------------------
FOREIGN
GUARANTOR NON-GUARANTOR ELIMINATING
SUBSIDIARIES SUBSIDIARIES ENTRIES CONSOLIDATED
------------ ------------- ----------- ------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
ASSETS
Trade receivables, net................................. $ 97,043 $ 3,631 -- $100,674
Intercompany balances.................................. (139,993) 19,554 $ 120,439 --
Inventories............................................ 86,986 86,049 (19,213) 153,822
Other current assets................................... 7,782 946 -- 8,728
Property, plant and equipment, net..................... 291,645 118,885 -- 410,530
Intangibles, net....................................... 45,368 -- -- 45,368
Investment in subsidiaries............................. 10,907 72,195 (83,102) --
Other non-current assets............................... 39,721 2,336 -- 42,057
-------- --------- --------- --------
Total Assets........................................ $439,459 $ 303,596 $ 18,124 $761,179
-------- --------- --------- --------
-------- --------- --------- --------
LIABILITIES AND BUSINESS EQUITY
Accounts payable....................................... $ 21,503 $ 9,565 -- $ 31,068
Compensation and benefits.............................. 26,120 6,803 -- 32,923
Other current liabilities.............................. 42,778 (8,254) $ (7,444) 27,080
Other non-current liabilities.......................... 11,229 -- -- 11,229
Business Equity........................................ 337,829 295,482 25,568 658,879
-------- --------- --------- --------
Total Liabilities and Business Equity............... $439,459 $ 303,596 $ 18,124 $761,179
-------- --------- --------- --------
-------- --------- --------- --------
</TABLE>
F-25
<PAGE>
INTERSIL HOLDING CORPORATION
SUPPLEMENTAL CONDENSED CONSOLIDATING BALANCE SHEET
AUGUST 14, 1999
<TABLE>
<CAPTION>
SUCCESSOR
------------------------------------------------------------------------
FOREIGN
GUARANTOR NON-GUARANTOR ELIMINATING
PARENT SUBSIDIARIES SUBSIDIARIES ENTRIES CONSOLIDATED
-------- ------------ ------------- ----------- ------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
ASSETS
Cash....................................... $ -- $ 5,932 $ 1,445 $ -- $ 7,377
Trade receivables, net..................... -- 79,242 3,800 -- 83,042
Intercompany balances...................... -- (155,306) (29,102) 184,408 --
Inventories................................ -- 147,441 5,643 (40) 153,044
Other current assets....................... -- 9,898 (903) (5,371) 3,624
Property, plant and equipment, net......... -- 252,796 95,718 -- 348,514
Intangibles, net........................... -- 111,511 -- -- 111,511
Investment in subsidiaries................. 210,011 23,240 68 (233,319) --
Other non-current assets................... -- 20,086 752 625 21,463
-------- -------- --------- --------- --------
Total Assets............................. $210,011 $494,840 $ 77,421 $ (53,697) $728,575
-------- -------- --------- --------- --------
-------- -------- --------- --------- --------
LIABILITIES AND BUSINESS EQUITY
Accounts payable........................... $ -- $ 16,532 $ 11,390 $ 1,443 $ 29,365
Compensation and benefits.................. -- 13,164 5,186 (63) 18,287
Other current liabilities.................. -- 41,774 (1,593) 407 40,588
Long-term debt............................. 119,700 421,825 -- -- 541,525
Other non-current liabilities.............. -- (7,370) 5,933 9,636 8,199
Preferred stock............................ 85,000 -- -- -- 85,000
Common Stock............................... 1,000 -- -- -- 1,000
Additional paid in capital................. 4,311 300 -- -- 4,611
Retained deficit........................... -- 8,615 56,505 (65,120) --
-------- -------- --------- --------- --------
Total Liabilities and Stockholders'
Equity................................ $210,011 $494,840 $ 77,421 $ (53,697) $728,575
-------- -------- --------- --------- --------
-------- -------- --------- --------- --------
</TABLE>
INTERSIL HOLDING CORPORATION
SUPPLEMENTAL CONDENSED CONSOLIDATING BALANCE SHEET
OCTOBER 1, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
SUCCESSOR
------------------------------------------------------------------------
FOREIGN
GUARANTOR NON-GUARANTOR ELIMINATING
PARENT SUBSIDIARIES SUBSIDIARIES ENTRIES CONSOLIDATED
-------- ------------ ------------- ----------- ------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
ASSETS
Cash....................................... $ -- $ 26,734 7,086 $ -- $ 33,820
Trade receivables, net..................... -- 82,211 2,566 -- 84,777
Intercompany balances...................... -- 29,655 (22,162) (7,493) --
Inventories................................ -- 133,535 33,330 (10,481) 156,384
Other current assets....................... -- 14,309 (2,757) (3,666) 7,886
Property, plant and equipment, net......... -- 243,719 98,479 -- 342,198
Intangibles, net........................... -- 89,297 -- -- 89,297
Investment in subsidiaries................. 211,900 306,502 95,613 (614,015) --
Other non-current assets................... -- 20,153 1,475 730 22,358
-------- -------- --------- --------- --------
Total Assets............................. $211,900 $946,115 $ 213,630 $(634,925) $736,720
-------- -------- --------- --------- --------
-------- -------- --------- --------- --------
LIABILITIES AND BUSINESS EQUITY
Accounts payable........................... $ -- $ 21,856 $ 10,763 $ -- $ 32,619
Compensation and benefits.................. -- 22,882 6,554 -- 29,436
Other current liabilities.................. -- 52,930 (738) -- 52,192
Long-term debt............................. 121,589 421,760 -- -- 543,349
Other non-current liabilities.............. -- 8,199 -- -- 8,199
Preferred stock............................ 86,369 -- -- -- 86,369
Common stock............................... 1,000 -- -- -- 1,000
Additional paid in capital................. 2,942 300 -- -- 3,242
Retained deficit........................... -- 418,188 197,051 (634,925) (19,686)
-------- -------- --------- --------- --------
Total Liabilities and Stockholders'
Equity................................ $211,900 $946,115 $ 213,630 $(634,925) $736,720
-------- -------- --------- --------- --------
-------- -------- --------- --------- --------
</TABLE>
F-26
<PAGE>
INTERSIL HOLDING CORPORATION
SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
YEAR ENDED JUNE 27, 1997
<TABLE>
<CAPTION>
PREDECESSOR
------------------------------------------------------------
FOREIGN
GUARANTOR NON-GUARANTOR ELIMINATING
SUBSIDIARIES SUBSIDIARIES ENTRIES CONSOLIDATED
------------ ------------- ----------- ------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net income (loss)...................................... $(27,768) $ 39,028 $ (35) $ 11,225
Adjustments to reconcile net income (loss) to net cash
provided by operating activities
Depreciation and amortization.......................... 36,857 15,656 -- 52,513
Changes in working capital............................. 31,934 16,339 (57,435) (9,162)
-------- --------- ------- --------
Net cash provided by (used in) operating
activities........................................ 41,023 71,023 (57,470) 54,576
INVESTING ACTIVITIES:
Plant and equipment...................................... (134,875) (38,429) -- (173,304)
-------- --------- ------- --------
Net cash used in investing activities............... (134,875) (38,429) -- (173,304)
FINANCING ACTIVITIES:
Proceeds from borrowings............................... 1,450 -- -- 1,450
Payments of borrowings................................. (48) -- -- (48)
-------- --------- ------- --------
Net cash provided by financing activities........... 1,402 -- -- 1,402
Effect of exchange rates on cash and cash
equivalents............................................ -- 1,221 -- 1,221
-------- --------- ------- --------
Net cash transfer and billings from (to) parent..... $ 92,450 $ (33,815) $57,470 $116,105
-------- --------- ------- --------
-------- --------- ------- --------
</TABLE>
INTERSIL HOLDING CORPORATION
SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
YEAR ENDED JULY 3, 1998
<TABLE>
<CAPTION>
PREDECESSOR
------------------------------------------------------------
FOREIGN
GUARANTOR NON-GUARANTOR ELIMINATING
SUBSIDIARIES SUBSIDIARIES ENTRIES CONSOLIDATED
------------ ------------- ----------- ------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES:
Net income (loss)...................................... $ (908) $18,418 $ (4,599) $ 12,911
Adjustments to reconcile net income (loss) to net cash
provided by operating activities
Depreciation and amortization.......................... 51,295 16,036 -- 67,331
Changes in working capital............................. (154,815) 12,669 110,235 (31,911)
---------- ------------- ----------- ----------
Net cash provided by (used in) operating
activities........................................ (104,428) 47,123 105,636 48,331
INVESTING ACTIVITIES:
Plant and equipment...................................... (49,762) (40,422) -- (90,184)
---------- ---------- ----------- ----------
Net cash used in investing activities............... (49,762) (40,422) -- (90,184)
FINANCING ACTIVITIES:
Proceeds from borrowings............................... 2,750 -- -- 2,750
Payments of borrowings................................. (83) -- -- (83)
---------- ---------- ----------- ----------
Net cash provided by financing activities........... 2,667 -- -- 2,667
Effect of exchange rates on cash and cash
equivalents............................................ -- (2,658) -- (2,658)
---------- ---------- ----------- ----------
Net cash transfer and billings from (to) parent..... $151,523 $(4,043) $ (105,636) $ 41,844
---------- ---------- ----------- ----------
---------- ---------- ----------- ----------
</TABLE>
F-27
<PAGE>
INTERSIL HOLDING CORPORATION
SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
YEAR ENDED JULY 2, 1999
<TABLE>
<CAPTION>
PREDECESSOR
------------------------------------------------------------
FOREIGN
GUARANTOR NON-GUARANTOR ELIMINATING
SUBSIDIARIES SUBSIDIARIES ENTRIES CONSOLIDATED
------------ ------------- ----------- ------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES:
Net income (loss)...................................... $ 4,431 $ 121,273 $ (98,298) $ 27,406
Adjustments to reconcile net income (loss) to net cash
provided by operating activities
Depreciation and amortization.......................... 59,615 21,016 -- 80,631
Changes in working capital............................. 147,981 19,084 (163,853) 3,212
---------- --------- --------- --------
Net cash provided by (used in) operating
activities........................................ 212,027 161,373 (262,151) 111,249
INVESTING ACTIVITIES:
Cash paid for acquired business.......................... (1,335) -- -- (1,335)
Plant and equipment...................................... (21,648) (16,915) -- (38,563)
---------- --------- --------- --------
Net cash used in investing activities............... (22,983) (16,915) -- (39,898)
FINANCING ACTIVITIES:
Proceeds from borrowings............................... 800 -- -- 800
Payments of borrowings................................. (302) -- -- (302)
---------- --------- --------- ----------
Net cash provided by financing activities........... 498 -- -- 498
Effect of exchange rates on cash and cash equivalents.... -- (4,819) -- (4,819)
---------- --------- --------- --------
Net cash transfer and billings from (to) parent..... $ (189,542) $(139,639) $ 262,151 $(67,030)
---------- --------- --------- --------
---------- --------- --------- --------
</TABLE>
INTERSIL HOLDING CORPORATION
SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
THIRTEEN WEEKS ENDED OCTOBER 2, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
PREDECESSOR
------------------------------------------------------------
FOREIGN
GUARANTOR NON-GUARANTOR ELIMINATING
SUBSIDIARIES SUBSIDIARIES ENTRIES CONSOLIDATED
------------ ------------- ----------- ------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES:
Net income (loss)...................................... $ (6,528) $ (545) $ 11,562 $ 4,489
Adjustments to reconcile net income (loss) to net cash
provided by operating activities
Depreciation and amortization.......................... 14,832 4,755 -- 19,587
Non-current deferred income taxes...................... (56,952) -- 58,367 1,415
Changes in working capital............................. (154,375) (41,274) 182,897 (12,752)
-------- ------- ---------- --------
Net cash provided by (used in) operating
activities........................................ (203,023) (37,064) 252,826 12,739
INVESTING ACTIVITIES:
Plant and equipment...................................... (9,469) (3,632) -- (13,101)
-------- ------- ---------- --------
Net cash used in investing activities............... (9,469) (3,632) -- (13,101)
FINANCING ACTIVITIES:
Proceeds from borrowings............................... -- -- -- --
Payments of borrowings................................. (4,069) -- 4,028 (41)
-------- ------- ---------- --------
Net cash provided by (used in) financing
activities........................................ (4,069) -- 4,028 (41)
Effect of exchange rates on cash and cash
equivalents............................................ -- (40) -- (40)
-------- ------- ---------- --------
Net cash transfer and billings from (to) parent..... $216,561 $40,736 $ (256,854) $ 443
-------- ------- ---------- --------
-------- ------- ---------- --------
</TABLE>
F-28
<PAGE>
INTERSIL HOLDING CORPORATION
SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
SIX WEEKS ENDED AUGUST 13, 1999
<TABLE>
<CAPTION>
PREDECESSOR
------------------------------------------------------------
FOREIGN
GUARANTOR NON-GUARANTOR ELIMINATING
SUBSIDIARIES SUBSIDIARIES ENTRIES CONSOLIDATED
------------ ------------- ----------- ------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES:
Net income (loss)...................................... $ (11,462) $ (12,126) $ 20,559 $ (3,029)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities
Depreciation and amortization.......................... 2,380 6,693 -- 9,073
Non-current deferred income taxes...................... -- 4,815 (9,571) (4,756)
Changes in working capital............................. 210,864 128,451 (337,221) 2,094
---------- --------- --------- --------
Net cash provided by (used in) operating activities.. 201,782 127,833 (326,233) 3,382
INVESTING ACTIVITIES:
Plant and equipment...................................... (1,020) (867) -- (1,887)
---------- --------- --------- --------
Net cash used in investing activities................ (1,020) (867) -- (1,887)
FINANCING ACTIVITIES:
Payments of borrowings................................. -- 4,535 (4,567) (32)
---------- --------- --------- --------
Net cash provided by (used in) financing activities.. -- 4,535 (4,567) (32)
Effect of exchange rates on cash and cash
equivalents............................................ 1,177 -- -- 1,177
Net cash transfer and billings from (to) parent.......... (200,497) (131,501) 330,800 (1,198)
---------- --------- --------- --------
Net increase in cash..................................... -- -- -- 1,442
Cash at the beginning of the period...................... -- -- -- --
---------- --------- --------- --------
Cash at the end of the period............................ $ 1,442 $ -- $ -- $ 1,442
---------- --------- --------- --------
---------- --------- --------- --------
</TABLE>
INTERSIL HOLDING CORPORATION
SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
SEVEN WEEKS ENDED OCTOBER 1, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
SUCCESSOR
------------------------------------------------------------------------
FOREIGN
GUARANTOR NON-GUARANTOR ELIMINATING
PARENT SUBSIDIARIES SUBSIDIARIES ENTRIES CONSOLIDATED
-------- ------------ ------------- ----------- ------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
OPERATING ACTIVITIES:
Net income (loss).......................... $ (1,889) $(20,201) $12,860 $ (10,882) $(20,112)
Adjustments to reconcile net income (loss) to
net cash provided by operating activities
Depreciation and amortization.............. -- 7,628 2,530 -- 10,158
Changes in working capital................. 1,889 30,573 (5,675) 10,882 37,669
-------- -------- ------- --------- --------
Net cash provided by (used in) operating
activities............................ -- 18,000 9,715 -- 27,715
INVESTING ACTIVITIES:
Plant and equipment.......................... -- 2,867 (5,291) -- (2,424)
-------- -------- ------- --------- --------
Net cash used in investing activities.... -- 2,867 (5,291) -- (2,424)
FINANCING ACTIVITIES:
Proceeds from borrowings................... -- -- -- -- --
Payments of borrowings..................... -- (65) -- -- (65)
-------- -------- ------- --------- --------
Net cash provided by financing
activities............................ -- (65) -- -- (65)
Effect of exchange rates on cash and cash
equivalents................................ -- -- 1,217 -- 1,217
Net cash transfer and billings from (to)
parent..................................... -- -- -- -- --
-------- -------- ------- --------- --------
Net increase in cash......................... -- 20,802 5,641 -- 26,443
Cash at the beginning of the period.......... -- 5,932 1,445 -- 7,377
-------- -------- ------- --------- --------
Cash at the end of the period................ $ -- $ 26,734 $ 7,086 $ -- $ 33,820
-------- -------- ------- --------- --------
-------- -------- ------- --------- --------
</TABLE>
F-29
<PAGE>
[INTERSIL LOGO]
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following expenses (other than the SEC filing fee) are estimated:
<TABLE>
<S> <C>
SEC Registration Fee...................................................................................... $ 5
Accounting Fees........................................................................................... $ *
Printing and Engraving Expenses........................................................................... $ *
Legal Fees and Expenses (other than blue sky)............................................................. $ *
Blue Sky Fees and Expenses................................................................................ $ *
Transfer Agent and Registrar Fees......................................................................... $ *
Miscellaneous Expense..................................................................................... $ *
----
Total................................................................................................ $
----
----
</TABLE>
- - ------------------
* To be completed by amendment.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
As permitted by the Delaware General Corporation Law, the Certificate of
Incorporation of each Issuer provides that directors of such Issuer shall not be
personally liable to such Issuer or its stockholders for monetary damages for
breach of fiduciary duty as a director, except for liability (i) for any breach
of the director's duty of loyalty to such Issuer or its stockholders, (ii) for
acts or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section 174 of the Delaware General
Corporation Law, relating to prohibited dividends or distributions or the
repurchase or redemption of stock, or (iv) for any transaction from which the
director derives an improper personal benefit. In addition, the By-laws of each
Issuer provide for indemnification of such Issuer's officers and directors to
the fullest extent permitted under Delaware law. Section 145 of the Delaware
General Corporation Law provides that a corporation may indemnify any persons,
including officers and directors, who were or are, or are threatened to be made,
parties to any threatened, pending or completed legal action, suit or
proceeding, whether civil, criminal, administrative or investigative (other than
an action by or in the right of such corporation), by reason of the fact that
such person was an officer, director, employee or agent of such corporation or
is or was serving at the request of such corporation as an officer, director,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise. The indemnity may include expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by such person in connection with such action, suit or proceeding,
provided such person acted in good faith and in a manner he reasonably believed
to be in or not opposed to the corporation's best interests and, for criminal
proceedings, had no reasonable cause to believe that his conduct was unlawful. A
Delaware corporation may indemnify officers and directors in an action by or in
the right of the corporation under the same conditions, except that no
indemnification is permitted without judicial approval if the officer or
director is adjudged to be liable to the corporation. Where an officer or
director is successful on the merits or otherwise in the defense of any action
referred to above, the corporation must indemnify him against the expenses that
such officer or director actually and reasonably incurred. Insofar as
indemnification for liabilities arising under the Securities Act may be
permitted to directors, officers or persons controlling an Issuer pursuant to
the foregoing provisions, the Issuers have been informed that in the opinion of
the Commission such indemnification is against public policy as expressed in the
Securities Act and is therefore unenforceable.
The directors and officers of the Registrants are insured against certain
liabilities under the Registrants' directors' and officers' liability insurance.
The foregoing summary of the Delaware General Corporation Law and of the
Certificate of Incorporation and By-laws of each Issuer is qualified in its
entirety by reference to the relevant provisions of
II-1
<PAGE>
the Delaware General Corporation Law and of each Issuer's Certificate of
Incorporation and By-laws, which are filed as exhibits to this Registration
Statement.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
On August 13, 1999, pursuant to an Amended and Restated Master Transaction
Agreement, Intersil and Intersil Holding acquired selected portions of the
semiconductor business of Harris (the 'Acquisition'). In connection with the
Acquisition, (i) Intersil Holding issued an 11.13% subordinated promissory note
to Harris in the principal amount of $90.0 million; (ii) Harris paid about $9.0
million in cash to Intersil Holding to purchase shares of 12% Series A
Cumulative Compounding Preferred Stock ('Intersil Holding Preferred Stock') and
shares of common stock ('Intersil Holding Common Stock'); (iii) Intersil Holding
sold to Sterling Holding Company, LLC shares of Intersil Holding Preferred Stock
and Intersil Holding Common Stock and to senior management and other key
employees and certain other investors shares of Intersil Holding Common Stock
for a total of about $81.0 million in cash; (iv) Citicorp Mezzanine Partners,
L.P. contributed $30.0 million in cash to Intersil Holding in exchange for a
13.5% subordinated promissory note and warrants to purchase about 5.6 million
shares of Class A Common Stock of Intersil Holding. In addition, Intersil
Holding granted to certain senior managers a sign-on bonus in the aggregate
amount of about $574,000, in the form of options to purchase Intersil Holding
Preferred Stock. Intersil Holding has determined that the issuance of the
subordinated notes, the Intersil Holding Preferred Stock, the Intersil Holding
Common Stock, the warrants and the options to purchase Intersil Holding
Preferred Stock were exempt from registration under Section 4(2) of the
Securities Act of 1933, as amended.
Also in connection with the Acquisition, Intersil commenced an offering of
Senior Subordinated Notes due 2009, the old notes, to 'qualified institutional
buyers' (as defined in Rule 144A under the Securities Act). That offering was
consummated on August 13, 1999 with the sale of 200,000 units, each unit
consisting of one 13 1/4% Senior Subordinated Note due 2009 of Intersil with a
principal amount of $1,000 and one Warrant (a 'Warrant') to purchase 27.7778
shares of Intersil Holding's Class A Common Stock. An exchange offer
registration statement was filed by Intersil on November 10, 1999 with respect
to a proposed exchange of the old notes for registered notes having
substantially identical terms, the new notes. This Registration Statement is
filed to register the Warrants and the shares of Common Stock issuable upon
exercise of the Warrants.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits:
Incorporated by reference to the Exhibit Index following page II-5 hereto.
(b) Financial Statement Schedules:
II-2
<PAGE>
SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS
(IN THOUSANDS $)
<TABLE>
<CAPTION>
ADDITIONS
CHARGED ADDITIONS
BALANCE AT TO COSTS CHARGED DEDUCTION BALANCE
BEGINNING AND TO OTHER FROM AT END OF
OF PERIOD EXPENSES ACCOUNTS RESERVES PERIOD
---------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Valuation and qualifying accounts deducted from the
assets to which they apply:
ALLOWANCE FOR UNCOLLECTIBLE ACCOUNTS
1999................................................... $ 571 $ 487 $ -- $ 476 $ 582
1998................................................... $ 1,336 $ 324 $ -- $ 1,089 $ 571
1997................................................... $ 757 $ 336 $ 300 $ 57 $ 1,336
INVENTORY RESERVE
1999................................................... $ 24,482 $ 8,373 $ 257 $14,995 $18,117
1998................................................... $ 31,736 $ 9,846 $ 120 $17,220 $24,482
1997................................................... $ 25,385 $10,007 $ 46 $ 3,702 $31,736
DISTRIBUTOR RESERVES
1999................................................... $ 6,189 $52,965 $ -- $52,612 $ 6,542
1998................................................... $ 11,278 $66,062 $ -- $71,151 $ 6,189
1997................................................... $ 7,520 $65,374 $ -- $61,616 $11,278
</TABLE>
ITEM 17. UNDERTAKINGS
(a) The undersigned registrant hereby undertakes:
(1) to file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) to reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the 'Calculation of
Registration Fee' table in the effective registration statement; and
(iii) to include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement;
(2) that, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof; and
(3) to remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise,
II-3
<PAGE>
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
(c) The registrant undertakes to respond to requests for information that
is incorporated by reference into the prospectus pursuant to Item 4, 10(b), 11
or 13 of this Form, within one business day of receipt of such request, and to
send the incorporated documents by first class mail or other equally prompt
means. This includes information contained in documents filed subsequent to the
effective date of the registration statement through the date of responding to
the request.
(d) The registrant undertakes to supply by means of a post-effective
amendment all information concerning a transaction, and the corporation being
acquired involved therein, that was not the subject of and included in the
registration statement when it became effective.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
above-named Registrant has duly caused this Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of Palm
Bay, State of Florida, on the 10th day of November, 1999.
INTERSIL HOLDING CORPORATION
By: GREGORY L. WILLIAMS
------------------------------------
Gregory L. Williams
Chief Executive Officer
POWER OF ATTORNEY
Each person whose signature appears below appoints Gregory L. Williams and
Daniel J. Heneghan, either of whom may act without the joinder of the other, as
his true and lawful attorney-in-fact and agent with full power of substitution
and resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments (including post-effective amendments)
to this Registration Statement, and to file the same, with all exhibits thereto
and all other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents full power
and authority to do and perform each and every act and thing requisite and
necessary to be done, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents or their substitute or substitutes may lawfully do or cause to be
done by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons in
the capacities indicated on November 10, 1999.
<TABLE>
<CAPTION>
SIGNATURE TITLE
- - ------------------------------------------------------ ---------------------------------------------
<S> <C>
GREGORY L. WILLIAMS Chief Executive Officer and Director
- - ------------------------------------------------------ (principal executive officer)
Gregory L. Williams
DANIEL J. HENEGHAN Secretary, Controller and Vice President
- - ------------------------------------------------------ (principal accounting officer)
Daniel J. Heneghan
JAMES A. URRY Director
- - ------------------------------------------------------
James A. Urry
GARY E. GIST Director
- - ------------------------------------------------------
Gary E. Gist
</TABLE>
II-5
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- - --------- ---------------------------------------------------------------------------------------------------------
<C> <S>
2.01* Amended and Restated Master Transaction Agreement dated as of June 2, 1999, by and among Intersil Holding
Corporation ('Holding'), Intersil Corporation ('Intersil') and Harris Corporation ('Harris').
2.02* Agreement Concerning Deferred Closings dated as of August 13, 1999, by and among Harris and Intersil.
2.03* Transition Services Agreement dated as of August 13, 1999, by and among Intersil and Harris.
2.04* Share Sale Agreement dated August 13, 1999, between Harris Airport Systems (Malaysia) Sdn. Bhd., Harris
Solid State (Malaysia) Sdn. Bhd. and Sapphire Worldwide Investments, Inc.
2.05* Agreement for the Sale and Purchase of the Business and Assets of Harris Semiconductor Limited dated as
of August 13, 1999, between Harris Semiconductor Limited and Intersil Limited.
2.06* Asset Purchase Agreement dated as of August 20, 1999, between Harris Semiconductor Design & Sales Pte.
Ltd. and Intersil Pte. Ltd.
2.07* Purchase Agreement of Corporate Quotas of a Limited Liability Company, dated as of August 13, 1999,
between Harris Semiconductor BV, Harris Semiconductor Limited and Intersil.
2.08* Assignment of Shares, dated as of August 13, 1999, between Intersil and Harris for the transfer by Harris
of all of its shares of Harris Semiconducteurs, Sarl to Intersil.
2.09* Share Transfer Agreement, dated as of August 1, 1999, between Harris and Intersil for the transfer of
stock of Harris Semiconductor Y.H.
2.10* Equity Purchase Agreement, dated as of August 13, 1999, between Harris Advanced Technology (Malaysia)
Sdn. Bhd. and Harris Airport Systems (M) Sdn. Bhd.
2.11* Agreement Re: China Subsidiaries, dated as of August 13, 1999, between Harris and Intersil.
2.12* Agreement Re: Anshan Joint Venture, dated as of August 13, 1999, between Harris Advanced Technology
(Malaysia) Sdn. Bhd. and Harris Airport Systems (M) Sdn. Bhd.
2.13* Agreement Re: Guangzhou Joint Venture, dated as of August 13, 1999, between Harris Advanced Technology
(Malaysia) Sdn. Bhd. and Harris Airport Systems (M) Sdn. Bhd.
2.14* Agreement Re: Suzhou Harris, dated as of August 13, 1999, between Harris Advanced Technology (Malaysia)
Sdn. Bhd. and Harris Airport Systems (M) Sdn. Bhd.
2.15* Intellectual Property Agreement, dated as of August 13, 1999, among Harris, Harris Semiconductor Patents,
Inc. and Holding.
2.16* Patent Assignment and Services Agreement, dated as of August 13, 1999, among Harris, Harris Semiconductor
Patents, Inc. and Holding.
2.17* License Assignment Agreement, dated as of August 13, 1999, among Harris, Harris Semiconductor Patents,
Inc. and Holding.
2.18* Harris Trademark License Agreement, dated as of August 13, 1999, among Harris, HAL Technologies, Inc. and
Holding.
2.19* Secondary Trademark Assignment and License Agreement, dated as of August 13, 1999, between Harris and
Holding.
2.20* PRISM(Registered) Intellectual Property Assignment, dated August 13, 1999, between Holding and Intersil.
2.21* Tax Sharing Agreement, dated as of August 13, 1999, among Holding, Intersil and Choice Microsystems, Inc.
2.22* Royalty Agreement, dated as of August 13, 1999, among Harris and Intersil.
2.23* Option Agreement, dated as of August 13, 1999, among Intersil and Intersil PRISM, LLC.
3.01 Certificate of Incorporation of Holding, as amended.
3.02 Bylaws of Holding.
4.01 Warrant Agreement, dated as of August 13, 1999, between Holding and United States Trust Company of New
York.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- - --------- ---------------------------------------------------------------------------------------------------------
<S> <C>
4.02 Purchase Agreement, dated as of August 6, 1999, between Intersil, Holding, Harris Semiconductor, LLC,
Harris Semiconductor (Ohio), LLC, Harris Semiconductor (Pennsylvania), LLC, Choice Microsystems, Inc.,
Credit Suisse First Boston Corporation, J. P. Morgan Securities Inc. and Salomon Smith Barney Inc.
4.03 Registration Rights Agreement, dated as of August 6, 1999, between Intersil, Holding, Harris
Semiconductor, LLC, Harris Semiconductor (Ohio), LLC, Harris Semiconductor (Pennsylvania), LLC, Choice
Microsystems, Inc., Credit Suisse First Boston Corporation, J. P. Morgan Securities Inc. and Salomon
Smith Barney Inc.
5.01** Opinion of Dechert Price & Rhoads.
10.01 Indenture, dated as of August 13, 1999, among Intersil, Holding, Harris Semiconductor, LLC, Harris
Semiconductor (Ohio), LLC, Harris Semiconductor (Pennsylvania), LLC, Choice Microsystems, Inc. and United
States Trust Company of New York for 13 1/4% Senior Subordinated Notes due 2009.
10.02 Form of 13 1/4% Senior Subordinated Notes due 2009 (included in Exhibit 10.01).
10.03 Credit Agreement, dated as of August 13, 1999, among Intersil, the Lender Parties thereto, Credit Suisse
First Boston, as the Administrative Agent, Salomon Smith Barney, as Syndication Agent, and Morgan
Guaranty Trust Company of New York, as Documentation Agent.
10.04 Subordinated Credit Agreement, dated as of August 13, 1999, among Holding and Citicorp Mezzanine
Partners, L.P. for 13 1/2% Subordinated Pay-In-Kind Note due 2010.
10.05 Form of 13 1/2% Subordinated Pay-In-Kind Note due 2010 (included in Exhibit 10.04).
10.06 Indenture, dated as of August 13, 1999, among Holding and United States Trust Company of New York for
11.13% Subordinated Pay-In-Kind Notes due 2010.
10.07 Form of 11.13% Subordinated Pay-In-Kind Note due 2010 (included in Exhibit 10.06).
10.08 Registration Rights Agreement, dated August 13, 1999, among Holding, Sterling Holding Company, LLC,
Manatee Investment Corporation, Citicorp Mezzanine Partners, L.P. and the management investors named
therein.
10.09 Securities Purchase and Holders Agreement, dated as of August 13, 1999, among Holding, Sterling Holding
Company, LLC, Manatee Investment Corporation, Intersil Prism LLC, Citicorp Mezzanine Partners, L.P.,
William N. Stout and the management investors named therein.
10.10 Option Award Agreement, dated as of August 13, 1999.
10.11 Employment Agreement, dated as of August 9, between Intersil and Gregory L. Williams.
10.12 Agreement between Harris and Local Union No. 1907 International Brotherhood of Electrical Workers,
AFL-CIO (Findlay, OH Facility), effective as of July 1, 1996.
10.13 Agreement between Harris and Local Union 177 International Union of Electronic, Electrical, Salaried,
Machine and Furniture Workers, AFL-CIO (Mountaintop, PA Facility), effective December 1, 1998.
10.14 Machinery and Equipment Loan Agreement, dated September 9, 1996, between Commonwealth of Pennsylvania,
Department of Community and Economic Development and Harris.
10.15 Machinery and Equipment Loan Agreement, dated as of November 3, 1998, between Commonwealth of
Pennsylvania, Department of Community and Economic Development and Harris.
10.16 Master Agreement, dated as of December 2, 1997, between Harris Semiconductor and Optum Software.
10.17 Purchase Agreement, dated as of March 14, 1997, between Harris Semiconductor and Praxair, Inc.
10.18 Asset Purchase Agreement, dated as of July 2, 1999, by and among Align-Rite International, Inc.,
Align-Rite, Inc. and Harris.
10.19 Bill of Sale and Assignment, dated as of July 2, 1999, by Harris in favor of Align-Rite International,
Inc. and Align-Rite, Inc.
10.20 Lease Agreement, dated as of July 2, 1999, by and among Harris Corporation Semiconductor Business Unit
and Align-Rite, Inc.
10.21 Photomask Supply and Strategic Alliance Agreement, dated as of July 2, 1999, by and among Harris,
Align-Rite International, Inc. and Align-Rite, Inc.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- - --------- ---------------------------------------------------------------------------------------------------------
<S> <C>
10.22 Site Services Agreement, dated as of July 2, 1999, by and among Harris Corporation Semiconductor Business
Unit and Align-Rite, Inc.
10.23 Software License Agreement, dated as of July 31, 1984, between Harris and Consilium Associates, Inc.
10.24 Addendum Software License and Maintenance Agreement, dated as of October 27, 1995, between Harris and
Consilium, Inc.
10.25 Specialty Gas Supply Agreement, dated as of October 15, 1996, between Air Products and Chemicals, Inc.
and Harris.
10.26 Silicon Wafer Purchase Agreement, dated as of January 1, 1997, between Mitsubishi Silicon America
Corporation and Harris.
10.27 Nitrogen Supply Agreement, dated as of September 22, 1992, between Harris Corporation Semiconductor
Sector and Liquid Air Corporation Merchant Gases Division.
10.28 Nitrogen Supply System Agreement, Amendment Number 1, dated as of September 15, 1996, between Air Liquide
America Corporation and Harris Corporation Semiconductor Sector.
10.29 Site Subscription Agreement, dated as of July 1, 1993, between Harris Semiconductor Sector of Harris and
Cadence Design Systems, Inc.
10.30 Site Subscription Addendum, dated December 19, 1997, between Harris Semiconductor Sector of Harris and
Cadence Design Systems, Inc.
10.31 HMCD--HSS Memorandum of Agreement, dated March 26, 1999, between Harris Microwave Communication Division
and Harris Semiconductor Sector.
10.32 Investment Agency Appointment and Participation Authorization, dated September 3, 1999, between Intersil,
Intersil Corporation Master Trust and T. Rowe Price Trust Company.
10.33 Investment Agency Appointment and Participation Authority, dated September 3, 1999, between Intersil
Corporation Master Trust and T. Rowe Price Trust Company.
10.34 Investment Advisory Agreement (Equity Growth Fund), dated September 3, 1999, between T. Rowe Price
Associates, Inc. and Intersil Corporation Retirement Committee.
10.35 Investment Advisory Agreement (Equity Income Fund), dated September 3, 1999, between T. Rowe Price
Associates, Inc. and Intersil Corporation Retirement Committee.
10.36 Intersil Corporation Retirement Plan (Non-Union), dated September 3, 1999.
10.37 Intersil Corporation Retirement Plan (Union), dated September 3, 1999.
10.38 Commercial Supply Agreement, dated December 3, 1998, by and between Texas Instruments Incorporated and
Harris.
10.39 Military Supply Agreement, dated December 3, 1998, by and between Texas Instruments Incorporated and
Harris.
10.40 Intellectual Property Agreement, dated December 3, 1998, by and between Texas Instruments Incorporated,
Harris, Harris Advanced Technology (Malaysia) Sdn. Bhd. and Harris Southwest Properties, Inc.
10.41 Asset Transfer Agreement, dated December 3, 1998, by and between Texas Instruments Incorporated and
Harris Advanced Technology (Malaysia) Sdn. Bhd.
10.42 Military Asset Purchase Agreement, dated October 23, 1998, by and between Texas Instruments Incorporated,
Harris, Harris Advanced Technology (Malaysia) Sdn. Bhd. and Harris Southwest Properties, Inc.
10.43 Commercial Asset Purchase Agreement, dated October 23, 1998, by and between Texas Instruments
Incorporated, Harris, Harris Advanced Technology (Malaysia) Sdn. Bhd. and Harris Southwest Properties,
Inc.
10.44 Certificate of Leasehold Property for Land Office No. 7668 by Harris Advanced Technology (M) Sdn. Bhd.
10.45 State Lease for Lot No. 7716 by Harris Advanced Technology (Malaysia) Sdn. Bhd.
10.46 Certificate of Leasehold Property for Land Office No. 7666 by Harris Advanced Technology (M) Sdn. Bhd.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- - --------- ---------------------------------------------------------------------------------------------------------
<S> <C>
12.01 Statement of Computation of Ratio of Earnings to Fixed Charges.
21.01 Subsidiaries of Holding.
23.01 Consent of Dechert Price & Rhoads (included in Exhibit 5.01).
23.02 Consent of Ernst & Young LLP.
27.01 Financial Data Schedule.
</TABLE>
- - ------------------
* Pursuant to Item 601(b)(2) of Regulation S-K, the schedules to this Exhibit
are omitted. The Exhibit contains a list identifying the contents of all
schedules and the Registrants agree to furnish supplementally copies of such
schedules to the Commission upon request.
** To be supplied by amendment.
ASSET PURCHASE AGREEMENT
dated as of
July 2, 1999,
by and among
ALIGN-RITE INTERNATIONAL, INC.,
a California corporation,
ALIGN-RITE, INC.,
a Florida corporation,
AND
HARRIS CORPORATION,
a Delaware corporation
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
ARTICLE I
<S> <C> <C>
RULES OF CONSTRUCTION AND DEFINITIONS....................................................................1
1.1 Rules of Construction...........................................................................1
1.2 Definitions.....................................................................................2
ARTICLE II
SALE OF PURCHASED ASSETS, ASSUMPTION OF ASSUMED CONTRACTS AND ASSUMED LIABILITIES AND RELATED
TRANSACTIONS.............................................................................................8
2.1 Purchase and Sale of Purchased Assets...........................................................8
(a) Purchased Assets.......................................................................8
(b) Excluded Assets........................................................................9
(c) Nonassignable Contracts................................................................9
2.2 Assumption of Liabilities......................................................................10
(a) Liabilities Not Assumed...............................................................10
(b) Assumed Liabilities...................................................................10
(c) Buyer's Obligation to Replace Photomasks..............................................10
2.3 Purchase Price.................................................................................10
(a) Purchase Price........................................................................10
(b) Allocation............................................................................11
(c) Payment...............................................................................11
ARTICLE III
CLOSING.................................................................................................11
3.1 Closing Date...................................................................................11
3.2 Items to be Delivered at the Closing By Seller.................................................11
3.3 Items to be Delivered at the Closing by Buyer..................................................11
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER................................................................12
4.1 Organization and Related Matters...............................................................12
4.2 Financial Statements; Changes; Contingencies...................................................12
(a) Audited Financial Statements..........................................................12
(b) Unaudited Interim Financial Statements................................................13
(c) No Material Adverse Changes...........................................................13
4.3 Material Contracts.............................................................................13
4.4 Condition of Property..........................................................................14
4.5 Intangible Property............................................................................14
4.6 Authorization; No Conflicts....................................................................15
4.7 Legal Proceedings..............................................................................15
</TABLE>
i
<PAGE>
<TABLE>
<S> <C> <C>
4.8 Permits........................................................................................16
4.9 Compliance with Law............................................................................16
4.10 Employee Benefits..............................................................................16
(a) Employee Benefit Plans, and Employment Agreements, and Similar Arrangements...........16
(b) Qualified Plans.......................................................................17
(c) Title IV Plans........................................................................17
(d) Union Contracts.......................................................................18
(e) Health Plans..........................................................................18
(f) Fines and Penalties...................................................................18
4.11 No Brokers or Finders..........................................................................18
4.12 Accuracy of Information........................................................................18
4.13 Inventories....................................................................................18
4.14 Customers and Suppliers........................................................................18
4.15 Environmental Compliance.......................................................................19
(a) Environmental Reports.................................................................19
(b) Compliance with Environmental Laws: Permits...........................................19
(c) Environmental Conditions: Action by Governmental Agency...............................19
(d) Treatment, Storage or Disposal Sites..................................................19
4.16 Powers of Attorney.............................................................................20
4.17 Year 2000......................................................................................20
4.18 Labor and Employment...........................................................................20
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER.................................................................21
5.1 Organization and Related Matters...............................................................21
5.2 Authorization..................................................................................21
5.3 Legal Proceedings..............................................................................21
5.4 No Conflicts...................................................................................22
5.5 No Brokers or Finders..........................................................................22
5.6 Governmental Authorizations and Consents.......................................................22
5.7 Litigation.....................................................................................22
5.8 Access.........................................................................................22
5.9 Employee Records...............................................................................23
5.10 Financial Capacity.............................................................................23
ARTICLE VI
COVENANTS AND REPRESENTATIONS AND WARRANTIES WITH RESPECT TO CONDUCT OF SELLER PRIOR TO CLOSING.........23
6.1 Access.........................................................................................23
6.2 Material Adverse Changes.......................................................................24
6.3 Conduct of Photomask Business..................................................................24
6.4 Notification of Certain Matters................................................................25
6.5 Permits and Approvals; Third Party Consents....................................................25
6.6 Preservation of Photomask Business Prior to Closing Date.......................................25
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C> <C>
6.7 Certain Filings................................................................................26
ARTICLE VII
ADDITIONAL CONTINUING COVENANTS.........................................................................26
7.1 Noncompetition.................................................................................26
(a) Restrictions on Competitive Activities................................................26
(b) Exceptions............................................................................26
(c) Restrictions on Soliciting Employees by Seller........................................26
(d) Restrictions on soliciting Employees by Buyer.........................................27
(e) Special Remedies and Enforcement......................................................27
7.2 Nondisclosure of Proprietary Data..............................................................27
7.3 Maintenance of Books and Records...............................................................28
7.4 Employment Matters.............................................................................28
(a) Employees.............................................................................28
(b) Proration of Employee Benefits........................................................29
(c) Severance Obligations.................................................................29
(d) No Third Party Beneficiaries..........................................................30
7.5 Buyer's Rights in Intellectual Property........................................................30
(a) Assignment of Intellectual Property Rights............................................30
(b) Assignment of Software Licenses.......................................................30
(c) Transfer of Tangible Software and Technology..........................................30
7.6 Representations Regarding Software.............................................................30
7.7 Sales and Transfer Taxes; Other Fees...........................................................31
ARTICLE VIII
CONDITIONS OF PURCHASE..................................................................................31
8.1 General Conditions.............................................................................31
(a) No Orders: Legal Proceedings..........................................................31
(b) Approvals.............................................................................32
8.2 Conditions to Obligations of Buyer.............................................................32
(a) Representations and Warranties and Covenants of Seller................................32
(b) No Material Adverse Change............................................................32
(c) Opinions of Counsel...................................................................32
(d) Consents..............................................................................32
(e) Changes in Law........................................................................32
(f) Employees.............................................................................32
(g) Facility Lease Agreement..............................................................33
(h) Photomask Supply and Strategic Alliance Agreement.....................................33
(i) Seller Certificate....................................................................33
(j) Site Services Agreement...............................................................33
8.3 Conditions to Obligations of Seller............................................................33
(a) Representations and Warranties and Covenants of Buyer.................................33
(b) Opinion of Counsel....................................................................33
(c) Facility Lease Agreement..............................................................33
(d) Photomask Supply and Strategic Alliance Agreement.....................................33
</TABLE>
iii
<PAGE>
<TABLE>
<S> <C> <C>
(e) Site Services Agreement...............................................................34
ARTICLE IX
TERMINATION OF OBLIGATIONS; SURVIVAL....................................................................34
9.1 Termination of Agreement.......................................................................34
(a) Mutual Consent........................................................................34
(b) Conditions to Buyer's Performance Not Met.............................................34
(c) Conditions to Seller's Performance Not Met............................................34
(d) Hart-Scott-Rodino.....................................................................34
(e) Material Breach.......................................................................34
9.2 Effect of Termination..........................................................................35
9.3 Survival of Representations and Warranties.....................................................35
ARTICLE X
INDEMNIFICATION.........................................................................................35
10.1 Obligations of Seller..........................................................................35
10.2 Obligations of Buyer...........................................................................36
(a) General...............................................................................36
(b) With Respect to Environmental Conditions..............................................36
10.3 Procedure and Other Matters....................................................................37
(a) Procedure.............................................................................37
(b) Other Matters.........................................................................37
(c) Cooperation in Defending Claims.......................................................38
10.4 Survival.......................................................................................38
10.5 Notice by Seller...............................................................................38
10.6 Exclusive Remedy...............................................................................38
10.7 No Offsets.....................................................................................39
ARTICLE XI
GENERAL.................................................................................................39
11.1 Amendments; Waivers............................................................................39
11.2 Schedules; Exhibits; Integration...............................................................39
11.3 Commercially Reasonable Efforts; Further Assurances............................................39
(a) Commitment to Commercially Reasonable Efforts.........................................39
(b) Limitation............................................................................39
11.4 Governing Law; Choice of Forum; Consent to Personal Jurisdiction...............................40
11.5 No Assignment..................................................................................40
11.6 Headings.......................................................................................40
11.7 Counterparts...................................................................................40
11.8 Publicity and Reports..........................................................................40
11.9 Confidentiality................................................................................41
11.10 Parties in Interest............................................................................41
11.11 Notices........................................................................................41
11.12 Expenses.......................................................................................42
</TABLE>
iv
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<TABLE>
<S> <C> <C>
11.13 Remedies; Waiver...............................................................................43
11.14 Attorneys' Fees................................................................................43
11.15 Knowledge Convention...........................................................................43
11.16 Representation By Counsel and Other Advisors; Interpretation...................................43
11.17 Specific Performance...........................................................................44
11.18 Severability...................................................................................44
11.19 Dispute Resolution and Arbitration 44
</TABLE>
v
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ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement is entered into as of the close of business
on July 2, 1999, by and among Align-Rite International, Inc., a California
corporation ("Parent"), Align-Rite, Inc., a Florida corporation ("Sub," and
together with Parent, "Buyer"), on the one hand, and Harris Corporation, a
Delaware corporation ("Seller"), acting through its Semiconductor Business Unit,
on the other.
RECITALS
WHEREAS, Seller is engaged in the photomask manufacturing business as a
portion of its primary business of designing, developing, manufacturing,
assembling, testing, selling and disposing of semiconductor devices.
WHEREAS, Seller desires to sell, and Buyer desires to purchase certain
assets used in connection with Seller's photomask manufacturing business
together with Buyer's assumption of certain Assumed Contracts (as defined
herein) and the Assumed Liabilities (as defined herein), on the terms and
conditions set forth in this Agreement.
AGREEMENT
In consideration of the premises and the mutual promises contained herein
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, and intending to be legally bound hereby, the
parties hereby agree as follows:
ARTICLE I
RULES OF CONSTRUCTION AND DEFINITIONS
1.1 Rules of Construction
For all purposes of this Agreement, except as otherwise expressly provided:
(a) the terms defined in this Agreement have the meanings assigned to
them in this Agreement and shall include, as appropriate, the plural as
well as the singular,
(b) all accounting terms not otherwise defined herein have the
meanings assigned under generally accepted accounting principles in the
United States, as in effect from time to time as applied on a consistent
basis (i.e. GAAP),
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(c) all references in this Agreement to designated "Articles,"
"Sections" and other subdivisions are to the designated Articles, Sections
and other subdivisions of the body of this Agreement,
(d) pronouns of either gender or neuter shall include, as appropriate,
the other pronoun forms, and
(e) the words "herein," "hereof" and "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any particular
Article, Section or other subdivision.
1.2 Definitions
As used in this Agreement and the Exhibits and Schedules delivered pursuant
to this Agreement, the following definitions shall apply:
"Action" means any action, complaint, investigation, petition, suit or
other proceeding, whether civil or criminal, in law or in equity, or before any
arbitrator or Governmental Entity.
"Affiliate" means a Person that directly or indirectly, through one or more
intermediaries, controls, or is controlled by, or is under common control with,
a specified Person.
"Agreement" means this Asset Purchase Agreement by and between Buyer and
Seller as amended or supplemented together with all Exhibits and Schedules
attached hereto.
"Approval" means any approval, authorization, consent, qualification or
registration, or any waiver of any of the foregoing, required to be obtained
from, or any notice, statement or other communication required to be filed with
or delivered to, any Governmental Entity or any other Person.
"Assumed Contracts" has the meaning specified in Section 2.1(a)(v).
"Assumed Liabilities" has the meaning specified in Section 2.2(b).
"Business Technology" means Technology owned by Seller and in the
possession of the Photomask Business as of the Closing Date that is specific to
operation of the Photomask Business. Business Technology does not include
Seller's Product Mask Information.
"Buyer" means Align-Rite International, Inc. and any subsidiary corporation
through which Align-Rite International, Inc. will take possession of the
Purchased Assets.
"Buyer's Auditors" means PricewaterhouseCoopers LLP, independent public
accountants to Buyer.
"Buyer Parties" has the meaning specified in Section 10.1.
"Claimant" has the meaning specified in Section 11.19.
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"Closing" means the consummation of the transactions contemplated by this
Agreement.
"Closing Date" means the date of the Closing.
"Code" means the Internal Revenue Code of 1986, as amended, and the related
regulations and published interpretations.
"Contract" means any agreement, arrangement, bond, commitment, franchise,
indemnity, indenture, instrument, lease, license or understanding, whether or
not in writing.
"Copyrights" means rights in any and all United States and foreign
copyright registrations and applications therefor and unregistered copyrights
owned by Seller.
"Dispute Notice" has the meaning specified in Section 11.19.
"Encumbrance" means any claim, charge, lease, covenant, easement,
encumbrance, security interest, lien, option, pledge, rights of others, or
restriction (whether on voting, sale, transfer, disposition or otherwise),
whether imposed by agreement, understanding, law, equity or otherwise, except
for any restrictions on transfer generally arising under any applicable federal
or state securities law and Permitted Encumbrances.
"Environmental Condition" means the presence in, on, under or about the
real property currently or formerly used, owned or operated in connection with
the operation of the Photomask Business or the assets of Seller used in the
Photomask Business of any Hazardous Substance which, if the presence of such
Hazardous Substance was known, would be reportable under any Environmental Law,
or which could reasonably be anticipated to require investigation or remediation
pursuant to any Environmental Law.
"Environmental Laws" means all applicable Laws pertaining to the safety of
employees or the environment including: (x) all requirements pertaining to
reporting, licensing, permitting, controlling, investigating or remediating
emissions, discharges, releases or threatened releases of Hazardous Substances,
chemical substances, pollutants, contaminants or toxic substances, materials or
wastes, whether solid, liquid or gaseous in nature, into the air, surface water,
groundwater or land, or relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of Hazardous
Substances, chemical substances, pollutants, contaminants or toxic substances,
materials or wastes, whether solid, liquid or gaseous in nature; and (y) all
requirements pertaining to the protection of the safety of employees or the
public.
"Equity Securities" means any capital stock or other equity interest or any
securities convertible into or exchangeable for capital stock or any other
rights, warrants or options to acquire any of the foregoing securities.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the related regulations and published interpretations.
3
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"ERISA Affiliate" means (i) any corporation which is a member of a group of
corporations of which Seller is a member and which is a controlled group of
corporations within the meaning of Section 414(b) of the Code; (ii) any trade or
business (whether or not incorporated) which is a member of a group of trades or
businesses under common control within the meaning of Section 414(c) of the Code
of which Seller is a member; and (iii) a member of an affiliated service group
within the meaning of Section 414(m) or (o) of the Code of which Seller, any
corporation described in clause (i) above or any trade or business described in
clause (ii) above are members.
"Excluded Assets" has the meaning specified in Section 2.1(b).
"Facility Lease Agreement" has the meaning specified in Section 8.2.
"GAAP" means generally accepted accounting principles in the United States,
as in effect from time to time, as applied on a consistent basis.
"Goodwill" means the expectation of patronage from customers of the
Photomask Business and the consumer identification and favorable consideration
shown by customers of the Photomask Business to the goods or services known to
emanate from the Photomask Business.
"Governmental Entity" means any government or any agency, bureau, board,
commission, court, department, official, political subdivision, tribunal or
other instrumentality of any government, whether federal, state or local,
domestic or foreign.
"Harris Patents" means and refers to all Patents owned by Harris as of the
Closing Date and covering activities performed in the course of business by the
Photomask Business prior to the Closing Date.
"Hart-Scott-Rodino Act" means the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended, and the related regulations and published
interpretations.
"Hazardous Substance" means (but shall not be limited to) substances that
are defined or listed in, or otherwise classified pursuant to, any applicable
Laws as "hazardous substances," "hazardous materials," "hazardous wastes" or
"toxic substances," or any other formulation intended to define, list or
classify substances by reason of deleterious properties such as ignitibility,
corrosivity, reactivity, radioactivity, carcinogenicity, reproductive toxicity
or "EP toxicity," and petroleum and drilling fluids, produced waters and other
wastes associated with the exploration, development, or production of crude oil,
natural gas or geothermal energy.
"Indemnifiable Claim" means any Loss for or against which any Person is
entitled to indemnification under this Agreement.
"Indemnified Party" means the party entitled to indemnity hereunder.
"Indemnifying Party" means the party obligated to provide indemnification
hereunder.
4
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"Intangible Property" means any permits or other property other than
personal property, real property or Intellectual Property used in or pertaining
to the Photomask Business.
"Intellectual Property" means intellectual property covered by Copyrights,
Harris Patents or Trade Secret Rights as defined herein.
"Intellectual Property Rights" means rights in Copyrights and Harris
Patents and Trade Secret Rights which (a) are owned by the Seller, (b) exist
under laws respecting Patents, Copyrights or Trade secrets, but not trademarks
and (c) cover the use of Business Technology.
"Inventory" has the meaning specified in Section 2.1(a)(iv).
"IRS" means the United States Internal Revenue Service or any successor
entity.
"Law" means any constitutional provision, statute or other law, rule,
regulation, or interpretation of any Governmental Entity and any Order, whether
federal, state or local, domestic or foreign.
"Loss" means any action, cost, damage, disbursement, expense, liability,
loss, deficiency, diminution in value, obligation, penalty or settlement of any
kind or nature, whether foreseeable or unforeseeable, including but not limited
to, interest or other carrying costs, penalties, and reasonable legal,
accounting and other professional fees and expenses incurred in the
investigation, collection, prosecution and defense of claims and amounts paid in
settlement, that is imposed on or otherwise incurred or suffered by the
specified Person.
"Material Adverse Change" or "Material Adverse Effect" means, when used in
connection with Seller, the Photomask Business, the Purchased Assets, the
Assumed Contracts and the Assumed Liabilities, any change, event or effect (or
any development that insofar as can reasonably be foreseen, is likely to result
in any change or effect) that, individually or in the aggregate, is materially
adverse to the business, assets, financial condition or results of operations of
the Photomask Business taken as a whole.
"Material Contract" means any Contract material to the Photomask Business
as of or after the effective date of this Agreement as described in Schedule
4.3.
"Order" means any decree, injunction, judgment, order, ruling, assessment
or writ.
"Parent" means Align-Rite International, Inc.
"Patents" means issued patents, including United States and foreign patents
and applications therefor, petty patents, patents of importation, and divisions,
reissues, continuations, continuations-in-part, renewals and extensions of any
of the foregoing; certificates of addition and utility models and utility model
applications; but does not include License Agreements.
"PBGC" means the United States Pension Benefit Guaranty Corporation or any
successor thereto.
5
<PAGE>
"Permit" means any license, permit, franchise, certificate of authority, or
order, or any waiver of the foregoing, required to be issued by any Governmental
Entity.
"Permitted Encumbrances" means (i) tax liens for taxes not yet payable, or
for taxes presently payable, but being contested by Seller in good faith and in
accordance with the procedures established in the jurisdiction imposing the tax,
(ii) liens relating to obligations to be paid prior to or concurrent with the
Closing, (iii) liens of carriers, warehousemen, mechanics, laborers and
materialmen and other similar liens incurred in the ordinary course of business
for sums not yet due or being contested in good faith, if such reserve or
appropriate provision, if any, as shall be required by GAAP shall have been made
therefor, (iv) real property liens of record, and (v) liens on assets other than
Purchased Assets.
"Person" means an association, a corporation, an individual, a partnership,
a limited liability company, a trust or any other entity or organization,
including a Governmental Entity.
"Photomask Business" means the manufacture and sale of photomask products
and related photomask services by Seller regardless of the name under which any
such activity is conducted, and shall be deemed to include the Purchased Assets,
the rights and assets transferred pursuant to Section 7.5 hereof, revenues and
income, Assumed Liabilities, Assumed Contracts, exclusive of cash, cash
equivalents, accounts receivable, accounts payable and any elements of the
Retained Business or Excluded Assets.
"Photomask Supply and Strategic Alliance Agreement" has the meaning set
forth in Section 8.2.
"Prepaid Expenses" has the meaning specified in Section 2.1(a)(vi).
"Purchase Price" has the meaning set forth in Section 2.3(a).
"Purchased Assets" has the meaning set forth in Section 2.1(a).
"Real Property" means the real property located within the complex of
buildings known as the Semiconductor Sector located at 2401 Palm Bay Road, NE,
Palm Bay, Florida 32905 and known as Building 60 and a portion of Building 56
used in the Photomask Business, appurtenances thereto, rights in connection
therewith, and the leasehold estates created as part of the transaction
contemplated by this Agreement.
"Representatives" shall be deemed to include the independent accountants
and counsel of the applicable party hereto.
"Respondent" has the meaning set forth in Section 11.19.
"Retained Business" means the business of the Semiconductor Business Unit
of Harris Corporation except for the Photomask Business which is the subject of
this Agreement.
"SEC" means the United States Securities and Exchange Commission or any
successor entity.
6
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"Seller" has the meaning specified in the preamble to this Agreement.
"Seller's Product Mask Information" means the product design data of Seller
for products designed or manufactured by or on behalf of Seller's Semiconductor
Business Unit from which photomasks are made, whether such data is in electronic
pattern media or Photomask tooling, and not otherwise used in the operation of
the Photomask Business.
"Site Services Agreement" has the meaning set forth in Section 8.2.
"Software" means the manifestation of computer programs and databases in
tangible or physical form, including, but not limited to magnetic media,
firmware, and documentation in the form of source code, object code or
microcode; Software includes, but is not limited to management information
systems, computer aided design and/or engineering programs, computer aided
manufacturing programs, CADBUS programs, machinery control programs, and
personal computer programs, in each case that is owned by or licensed to Seller
and relevant to the Photomask Business. Software does not include any Technology
or any Intangible Property Rights.
"Software Licenses" means agreements concerning Software (other than
Systems Software) used in or on behalf of the Photomask Business including the
agreements identified on Schedule 7.6.
"Software Type 1" means Software for which the Seller is sole owner of all
right title and interest and which is specific to the Photomask Business.
Software Type 1 does not include Systems Software.
"Software Type 2" means Software owned in whole or in part by the Seller
and licensable by Seller on a non-exclusive basis to Buyer, and which is not
specific to, but is used in, the operations of the Photomask Business. Software
Type 2 does not include Systems Software.
"Systems Software" means software not specific to the Photomask Business
and not specific to an individual personal computer.
"Sub" means the subsidiary of Align-Rite International, Inc. through which
Align-Rite International, Inc. will take possession of the Purchased Assets.
"Tax" means any foreign, federal, state, county or local income, sales and
use, excise, franchise, real and personal property, transfer, gross receipt,
capital stock, production, business and occupation, disability, employment,
payroll, severance or withholding tax or charge imposed by any Governmental
Entity, any interest and penalties (civil or criminal) related thereto or to the
nonpayment thereof.
"Tax Return" means a report, return or other information required to be
supplied to or filed with a Governmental Entity with respect to Taxes including,
where permitted or required, combined or consolidated returns for any group of
entities that includes any subsidiary.
7
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"Technology" means the manifestation in tangible or physical form of all
types of technical information and data including, but not limited to, know-how;
product definitions and designs; research and development, engineering,
manufacturing, assembly, process, test, quality control, procurement, and
service specifications, procedures, standards, and reports; maskworks;
blueprints; drawings; materials specifications, procedures, standards, and
lists; catalogs; technical information and data relating to marketing and sales
activity; and formulae, in each case that is owned by or licensed to Seller and
relevant to routine operation of the Photomask Business. Technology does not
include any Software or any Intangible Property Rights.
"Termination Date" means the specific date first set forth in Section 9.1.
"Trade Secret Rights" means any and all rights in trade secrets owned by
Seller and comprising Technology used in the operation of the Photomask
Business.
"Y2K Problem" has the meaning set forth in Section 4.17.
ARTICLE II
SALE OF PURCHASED ASSETS,
ASSUMPTION OF ASSUMED CONTRACTS AND ASSUMED
LIABILITIES AND RELATED TRANSACTIONS
2.1 Purchase and Sale of Purchased Assets
(a) Purchased Assets. Upon the terms and subject to the conditions set
forth in this Agreement, on the Closing Date, Seller shall sell, convey, assign,
transfer and deliver to Sub, and Sub shall purchase, acquire and accept from
Seller, Seller's right, title and interest in and to the assets specifically
described in this Section 2.1(a) (the "Purchased Assets").
(i) All machinery, tools, supplies, apparatus, furniture and fixtures,
supplies, and computer hardware located at and used solely by the Photomask
Business and other equipment of every type as identified on Schedule
2.1(a)(i) hereto;
(ii) The cleanroom located within Building 60, including fixtures and
improvements attached thereto as set forth in Schedule 2.1(a)(ii);
(iii) All other fixtures and improvements attached to the Real
Property used primarily in connection with the Photomask Business as
specified in Schedule 2.1(a)(iii);
(iv) All inventory of usable goods, including all merchandise,
photomasks, raw materials, work in progress, finished products and other
tangible personal property held for sale or used in connection with the
Photomask Business as of the date hereof (the "Inventory"), together with
any additions thereto and subject to any reductions therefrom received or
incurred by Seller in operating the Photomask Business in the ordinary
course and in compliance with Section 6.3 hereof after the date hereof and
through the Closing Date all as set forth in Schedule 2.1(a)(iv);
8
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(v) All of Seller's rights and interests arising under or in
connection with the Contracts to which Seller is a party specified on
Schedule 2.1(a)(v) and which Buyer assumes (the "Assumed Contracts")
including but not limited to obligations to complete work on order from
customers; provided, however, that except as otherwise specified herein,
Buyer shall not assume any of the obligations or liabilities of the Assumed
Contracts arising prior to the Closing or based on actions or inactions of
Seller prior to the Closing;
(vi) Prepaid expenses and deposits as of the date hereof (the "Prepaid
Expenses") as set forth in Schedule 2.l(a)(vi), together with any additions
thereto and subject to any reductions therefrom made or accrued by Seller
in operating the Photomask Business in the ordinary course and in
compliance with Section 6.3 hereof after the date hereof and through the
Closing Date;
(vii) Sales data and information, customer lists, information relating
to customers, suppliers' names, catalogs, sales literature, promotional
materials, advertising matter and all rights thereto relating specifically
to the Photomask Business;
(viii) Intangible Property; the Goodwill associated with the Photomask
Business; all of Seller's books, records, files, documents, pay history
papers and agreements (including, but not limited to, those contained in
computerized storage media) used solely in the Photomask Business and
related to its employees, except for those employee records consisting of
field folders, medical records and former employee actions brought against
the Seller, which actions have been settled or adjudicated and the order of
the court performed; all transferable Permits used in the Photomask
Business; unemployment compensation, workers' compensation and other
credits, reserves or deposits with applicable Governmental Entities
relating to Seller's employees of the Photomask Business who become
Employees of Buyer.
(b) Excluded Assets. No rights, properties or assets of Seller shall be
included in the Purchased Assets except to the extent specified in Section
2.1(a). As an example, no cash, receivables or Contracts not expressly assumed
hereunder by the Buyer are included as Purchased Assets. Buyer shall not acquire
under the terms of this Agreement any title to or interest in the name "Harris"
or "Harris Semiconductor" or Seller's monograms, logos, trademarks, or any
variations or combinations thereof or Seller's Product Mask Information. Buyer,
however, shall be entitled to use all of Seller's Product Mask Information
solely for the purpose of making Photomasks for Seller. Buyer shall use
reasonable care in storing and maintaining Seller's Product Mask Information.
Seller acknowledges that Seller's Product Mask Information is Seller's property
and that Buyer shall have no liability for damages or loss related thereto;
provided, however, that Buyer shall be liable for damages arising from Buyer's
negligence or willful misconduct.
(c) Nonassignable Contracts. Notwithstanding other terms set forth in this
Section 2.1, to the extent that any Software contracts to be assigned pursuant
to this Agreement are not capable of being assigned without the consent,
approval or waiver of a third person or entity, nothing in this Agreement will
constitute an assignment or require the assignment thereof.
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2.2 Assumption of Liabilities
(a) Liabilities Not Assumed. Except as expressly provided in Section
2.2(b), Buyer shall not assume, shall not take subject to and shall not be
liable for, any liabilities or obligations of any kind or nature, whether
absolute, contingent, accrued, known or unknown, of Seller or any Affiliate of
Seller, including, but not limited to the following:
(i) The liabilities set forth in the financial statements identified
in Sections 4.2(a) and (b) and the contracts set forth on Schedule 4.3;
(ii) Any liabilities or obligations incurred arising from or out of or
in connection with Seller's operations, the condition of its assets or
places of business, its ownership of the Purchased Assets, or the issuance,
sale, repayment or repurchase of any of its securities;
(iii) Any liabilities or obligations incurred, arising from or out of,
in connection with or as a result of claims made by or against Seller
whether before or after the Closing Date that arise out of events prior to
the Closing Date; and
(iv) Any product liability claims for Photomasks manufactured and
delivered to customers on or prior to the Closing Date, except, as provided
in Section 2.2(b).
(b) Assumed Liabilities. Notwithstanding Section 2.2(a), on the Closing
Date, Buyer shall assume only the obligations of Seller under the Assumed
Contracts to the extent such obligations are to be performed on and after the
Closing Date (but excluding any liability or obligation to a third party arising
from a breach of such Assumed Contract before the Closing or based on actions or
inactions of Seller prior to the Closing or arising out of Seller's failure to
obtain a required Consent to the assignment of an Assumed Contract to Buyer),
obligations for employee wages, salaries and benefits as provided in Section
7.4, and Buyer's responsibility to replace Photomasks as set forth in Section
2.2(c) below (the "Assumed Liabilities").
(c) Buyer's Obligation to Replace Photomasks. Buyer shall replace Photomask
products manufactured by Harris after January 1, 1999, and through the Closing
Date so long as such Photomask products are returned for non-compliance with
applicable customer specification within one hundred eighty (180) days of the
date on which such products were shipped to such customers by Seller. In no
event shall Buyer's liability under this Section 2.2(c) exceed in the aggregate
$25,000, which amount shall be calculated by reference to the original invoice
for such products. Seller acknowledges and agrees that Buyer's liability
hereunder shall be limited to the replacement of such products described above
and that in no event shall Buyer be liable for any other damages arising from
such products, including, without limitation, damages arising from the use of
such products.
2.3 Purchase Price.
(a) Purchase Price. The aggregate purchase price to be paid to Seller by
Buyer for the Purchased Assets shall be Thirteen Million Two Hundred Fifty
Thousand Dollars ($13,250,000) (the "Purchase Price").
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(b) Allocation. Buyer shall provide Seller with a draft of IRS Form 8594
sixty (60) days prior to the date on which such filing is due with the IRS.
(c) Payment. At the Closing, at 12:00 p.m. Eastern Daylight Time on July 2,
1999, Buyer shall pay the Purchase Price to Seller by wire transfer of
immediately available funds to Chase Manhattan Bank - New York, ABA Routing
#:021000021, Account Name: Harris Corporation Master Account, Account Number:
144046155.
ARTICLE III
CLOSING
3.1 Closing Date
Upon the terms and subject to the conditions set forth in this Agreement,
the signing and Closing of the transaction shall take place simultaneously at
the offices of Harris Corporation, 1025 NASA Boulevard, Melbourne, Florida
32919, at 12:00 p.m. Eastern Daylight Time, on July 2, 1999.
3.2 Items to be Delivered at the Closing By Seller
At the Closing, Seller shall deliver or cause to be delivered to Buyer:
(a) A Bill of Sale and Assignment, in substantially the form of Exhibit A;
(b) All documentation required to exempt Seller from the withholding
requirement of Section 1445 of the Code, consisting of (i) an affidavit from
Seller to Buyer stating under penalty of perjury that Seller is not a foreign
person and providing Seller's U.S. taxpayer identification numbers, or (ii) a
sworn affidavit of Seller that it is not "U.S. real property holding
corporations," as defined in Section 897 of the Code or (iii) a "qualifying
statement" obtained by Seller from the Internal Revenue Service;
(c) The opinions, certificates, consents and other documents referred to
herein, including in Section 8.2, as then deliverable by Seller.
(d) The key to all locks located on or in the Purchased Assets (and any and
all cards, devices or things necessary to access any Purchased Assets).
(e) The Facility Lease Agreement in substantially the form of Exhibit B.
(f) The Photomask Supply and Strategic Alliance Agreement in substantially
the form of Exhibit C.
(g) The Site Services Agreement in substantially the form of Exhibit D.
3.3 Items to be Delivered at the Closing by Buyer
At the Closing, Buyer shall deliver to Seller:
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(a) The Purchase Price;
(b) An Assumption Agreement, in substantially the form of Exhibit E;
(c) The opinions, certificates, consents and other documents referred to
herein, including in Section 8.3, as then deliverable by Buyer;
(d) The Facility Lease Agreement in substantially the form of Exhibit B;
(e) The Photomask Supply and Strategic Alliance Agreement in substantially
the form of Exhibit C; and
(f) The Site Services Agreement in substantially the form of Exhibit D.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER
As of the date hereof and as of the Closing, Seller represents and warrants
to Buyer, and agrees with Buyer, as follows:
4.1 Organization and Related Matters
Seller is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of Delaware. Seller has all requisite
corporate power and authority to execute, deliver and perform this Agreement,
the Facility Lease Agreement, the Photomask Supply and Strategic Alliance
Agreement, the Site Services Agreement and any other related agreements to which
it is a party Seller is required to be and is qualified to do business as a
foreign corporation in the State of Florida. Seller has all requisite corporate
power and authority to own the Purchased Assets and to carry on the Photomask
Business as now conducted and is duly qualified or licensed to do business as
foreign corporations in good standing in all jurisdictions in which the
character or the location of the Purchased Assets owned or leased by it or the
nature of the Photomask Business requires licensing or qualification. True,
correct and complete copies of the charter documents of Seller as in effect on
the date hereof have been delivered to Buyer.
4.2 Financial Statements; Changes; Contingencies
(a) Audited Financial Statements. Seller has delivered to Buyer
consolidated and consolidating balance sheets for the Seller at June 27, 1997,
and July 2, 1998. All such financial statements of Seller have been examined by
the auditors whose reports thereon are included with such financial statements
and which have been prepared in conformity with GAAP. Such statements of
operations and cash flow present fairly in all material respects the results of
operations and cash flows of Seller for the respective periods covered, and the
balance sheets present fairly in all material respects the financial condition
of Seller as of their respective dates. Since April 2, 1999, there has been no
change in any of the significant accounting policies, practices or procedures of
Seller.
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(b) Unaudited Interim Financial Statements. Seller has delivered to Buyer
balance sheets and income statements for the Photomask Business at April 30,
1999, and May 28, 1999 and for the ten month and eleven month periods ended
April 30, 1999 and May 28, 1999, respectively. The internal interim financial
statements present fairly the results of operations of the Photomask Business
for the respective periods covered. All such interim financial statements
reflect all adjustments (which consist only of normal recurring adjustments not
material in amount and include but are not limited to estimated provisions for
year-end adjustments) necessary for a fair presentation.
(c) No Material Adverse Changes. Except as disclosed on Schedule 4.2(c),
since April 26, 1999, whether or not in the ordinary course of business, there
has not been, occurred or arisen:
(i) any change in or event affecting the Photomask Business, the
Purchased Assets, the Assumed Liabilities, that has had or may reasonably
be expected to have a Material Adverse Effect on the Photomask Business,
the Purchased Assets, or the Assumed Liabilities, or
(ii) any agreement, condition, action or omission which would be
proscribed by (or require consent under) Section 6.3 had it existed,
occurred or arisen after the date of this Agreement, or
(iii) any strike or other labor dispute, or
(iv) any casualty, loss, damage or destruction (whether or not covered
by insurance) of any of the Purchased Assets that is material.
4.3 Material Contracts
Schedule 4.3 lists each Contract to which the Photomask Business, or Seller
(relating to the Photomask Business) is a party or to which Seller or any of its
respective properties on the date hereof is subject or by which any thereof is
bound that is deemed a Material Contract under this Agreement. Unless otherwise
so noted in Schedule 4.3, each such Contract was entered into in the ordinary
course of business. Each such Contract that (a) after April 2, 1999 obligates
Seller (with respect to the Photomask Business) to pay an amount of $25,000 or
more, (b) has an unexpired term as of April 2, 1999 in excess of six (6) months,
(c) contains a covenant not to compete or otherwise significantly restricts
business activities, (d) provides for the extension of credit other than
consistent with normal credit terms, (e) limits the ability of Seller to conduct
its business, including as to manner or place, (f) provides for a guaranty or
indemnity by Seller, (g) grants a power of attorney, agency or similar authority
to another person or entity, (h) contains a right of first refusal, (i) contains
a right or obligation of or to any Affiliate, officer or director or any
Associate, of Seller, (j) represents a Contract upon which the Photomask
Business is substantially dependent or a Contract which is material to the
Photomask Business, (k) requires Seller to buy or sell goods or services with
respect to which there will be material losses or will be costs and expenses
materially in excess of expected receipts (other than as provided for or
otherwise reserved against on the most recent of the balance sheets referred to
in Section 4.2) or (1) was not made in the ordinary course of business, shall be
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deemed to be a Material Contract. True, correct and complete copies of the
Material Contracts appearing on Schedule 4.3, including all amendments and
supplements, have been delivered to Buyer. Each Material Contract is valid and
subsisting; Seller has duly performed all its respective obligations thereunder
to the extent that such obligations to perform have accrued; and no breach or
default, or to Seller's knowledge alleged breach or default, or event which
would (with the passage of time, notice or both) constitute a breach or default
thereunder by Seller (or, to the best knowledge of Seller, any other party or
obligor with respect thereto), has occurred or as a result of this Agreement or
its performance will occur. Except as set forth in Schedule 4.3, consummation of
the transactions contemplated by this Agreement shall not (and shall not give
any Person a right to) terminate or modify any rights of, or accelerate or
augment any obligation, of Seller with respect to the Material Contracts.
4.4 Condition of Property
(a) All Purchased Assets used in connection with the Photomask
Business are owned by Seller, except as indicated on Schedule 4.4(a).
Seller has good and marketable title to the Purchased Assets, free and
clear of any Encumbrances, except for Permitted Encumbrances. Seller has
all rights, power and authority to sell, convey, assign, transfer and
deliver the Purchased Assets to Buyer in accordance with the terms of this
Agreement. At the Closing, Seller shall deliver the Purchased Assets to
Buyer, free and clear of any Encumbrances, except for Permitted
Encumbrances and except for encumbrances created by Buyer. The Purchased
Assets are in a good state of maintenance and repair, have been regularly
and appropriately maintained, repaired and replaced, and are presently
being used in their existing condition to conduct the Photomask Business.
(b) Except as set forth on Schedule 4.4(b) all water, sewer, gas,
electric, telephone, and drainage facilities and all other utilities
required by Law for the present use and operation of the Real Property in
which Buyer will obtain a leasehold interest under the Facility Lease
Agreement are installed across public property or valid easements to the
boundary lines of such Real Property, and are connected pursuant to
existing Permits, and such facilities are the existing connections
presently servicing the Real Property and are in good operating condition,
normal wear and tear excepted. Seller holds good title to the Real
Property, has not leased or otherwise encumbered, except for Permitted
Encumbrances, the Real Property, and shall deliver possession of the Real
Property to Buyer at the Closing. The Real Property may be used for the
operation of the Photomask Business.
4.5 Intangible Property
Schedule 4.5 lists all items of Intangible Property in which Seller, as
relates to the Photomask Business other than the Excluded Assets, and the
Photomask Business has an interest and the nature of such interest. Such assets
include all Permits or other rights with respect to any of the foregoing. Seller
has complete rights to and ownership of all Intangible Property required or
desirable for use in connection with the Photomask Business. Seller does not use
any Intangible Property by consent of any other Person nor is required to and
makes any payments to others with respect thereto. The Intangible Property of
Seller is fully assignable free and clear of any Encumbrances, other than
Permitted Encumbrances. Seller has in all material respects performed all
obligations required to be performed by it, and is not in default in any
material
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respect, under any Contract relating to any of the foregoing. Seller has not
received any notice to the effect (or is otherwise aware) that the Intangible
Property or any use by Seller of any such property conflicts with or infringes
(or allegedly conflicts with or infringes) the rights of any Person.
4.6 Authorization; No Conflicts
The execution, delivery and performance of this Agreement, the Facility
Lease, Photomask Supply and Strategic Alliance Agreement and any other related
agreements by Seller has been duly and validly authorized by the Board of
Directors of Seller and by all other necessary corporate action on the part of
Seller. This Agreement has been and the Facility Lease Agreement, Photomask
Supply and Strategic Alliance Agreement and any related agreements to which
Seller is a party shall, prior to or simultaneously with the Closing, be duly
executed and delivered by Seller and constitute the legally valid and binding
obligations of Seller, enforceable against Seller in accordance with their
respective terms, except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium and other similar laws and equitable
principles relating to or limiting creditors rights generally. The execution,
delivery and performance of this Agreement, the Facility Lease Agreement, the
Photomask Supply and Strategic Alliance Agreement and the Strategic Alliance
Agreement by Seller and the execution, delivery and performance of any related
agreements or contemplated transactions by Seller shall not violate, or
constitute a breach or default (whether upon lapse of time and/or the occurrence
of any act or event or otherwise) under, the charter documents or by-laws of
Seller or any Material Contract of Seller, result in the imposition of any
Encumbrance against any of the Purchased Assets, or violate any Law. Schedule
4.6 lists all Permits, Approvals and consents required to be obtained by Seller
to consummate the transactions contemplated by this Agreement. Except for
matters identified in Schedule 4.6 as requiring that certain actions be taken by
or with respect to a third party or Governmental Entity, the execution and
delivery of this Agreement by Seller and the performance of this Agreement and
any related or contemplated transactions by Seller will not require filing or
registration with, or the issuance of any Permit by, any other third party or
Governmental Entity.
4.7 Legal Proceedings
There is no Order or Action pending, or, to the knowledge of Seller,
threatened, against or affecting Seller or any of their respective properties or
assets that individually or when aggregated with one or more other Orders or
Actions has or if determined adversely might reasonably be expected to have a
Material Adverse Effect on the Photomask Business, or the Purchased Assets (or
the use, operation or value thereof), the Assumed Liabilities, Seller's ability
to perform this Agreement, or any aspect of the transactions contemplated by
this Agreement. Schedule 4.7 lists each Order and each Action that involves a
claim or potential claim of aggregate liability in excess of $10,000 against, or
that enjoins or seeks to enjoin, any activity by Seller with respect to the
Photomask Business other than any Order or Action concerning Environmental
Conditions disclosed in Schedule 4.15.
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4.8 Permits
Seller holds all Permits that to Seller's knowledge are required by any
Governmental Entity to permit it to conduct the Photomask Business as now
conducted and operate the Purchased Assets as well as all other assets material
to the Photomask Business, and all such Permits are valid and in full force and
effect, except where the failure to be in compliance would not reasonably be
expected to result in a Material Adverse Effect on the Photomask Business, and
where in effect, shall remain in full force and effect for the benefit of Buyer
upon consummation of the transactions contemplated by this Agreement, except for
those Permits identified on Schedule 4.8 as not transferable to Buyer. To
Seller's Knowledge no suspension, cancellation or termination of any of such
Permits is threatened or imminent.
4.9 Compliance with Law
(a) Seller has conducted the Photomask Business in accordance with
applicable Laws, and the forms, procedures and practices of Seller are in
material compliance with all such Laws, to the extent applicable.
(b) The use and operation of the Purchased Assets are in compliance with
all applicable Laws, building codes, environmental, zoning, subdivision, and
land use laws, and other local, state and federal laws and regulations, and
there are no material violations of any such Laws.
4.10 Employee Benefits
(a) Employee Benefit Plans, and Employment Agreements, and Similar
Arrangements.
(i) Schedule 4.10(a) lists (by entity subject thereto or bound
thereby) all employee benefit plans, employment or severance agreements and
other similar arrangements to which Seller (only insofar as applicable to
the employees of Seller dedicated to the Photomask Business) is or has been
bound for the last five (5) years, legally or otherwise, including, without
limitation, (a) any profit-sharing, deferred compensation, bonus, stock
option, stock purchase, pension, retainer, consulting, retirement,
severance, welfare or incentive plan, agreement or arrangement, (b) any
plan, agreement or arrangement providing for "fringe benefits" or
perquisites to employees, or agents, including but not limited to benefits
relating to company automobiles, clubs, vacation, child care, parenting,
sabbatical, sick leave, medical, dental, hospitalization, life insurance
and other types of insurance, (c) any employment agreement not terminable
on thirty (30) days (or less) written notice, or (d) any other "employee
benefit plan" (within the meaning of Section 3(3) of ERISA).
(ii) Seller has made available to Buyer true and complete copies of
all documents and summary plan descriptions with respect to such plans,
agreements and arrangements, or summary descriptions of any such plans,
agreements or arrangements not otherwise in writing.
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(iii) There are no negotiations, demands or proposals that are pending
or have been made which concern matters now covered, or that would be
covered, by plans, agreements or arrangements of the type described in this
section.
(iv) Seller is in compliance in all material respects with the
applicable provisions of ERISA (as amended through the date of this
Agreement), the regulations and published authorities thereunder, and all
other Laws applicable with respect to all such employee benefit plans,
agreements and arrangements. Seller has performed in all material respects
all of its respective obligations under all such plans, agreements and
arrangements and all such plans, agreements and arrangements have been
operated in compliance with their terms. To the knowledge of Seller, there
are no Actions (other than routine claims for benefits) pending or
threatened against such plans or their assets, or arising out of such
plans, agreements or arrangements, and, to the knowledge of Seller, no
facts exist which could give rise to any such Actions (other than routine
claims for benefits).
(b) Qualified Plans.
(i) Schedule 4.10(b) lists all "employee pension benefit plans"
(within the meaning of Section 3(2) of ERISA) in Schedule 4.10(a) which are
also stock bonus, pension or profit-sharing plans within the meaning of
Section 401(a) of the Code.
(ii) Each such plan has been duly authorized by the board of directors
of Seller. Each such plan is qualified in form and operation under Section
401(a) of the Code and each trust under each such plan is exempt from tax
under Section 501(a) of the Code. To the knowledge of Seller no event has
occurred that shall or could give rise to disqualification or loss of
tax-exempt status of any such plan or trust under such sections. To the
knowledge of Seller no event has occurred that shall or could subject any
such plans to tax under Section 511 of the Code. No prohibited transaction
(within the meaning of Section 4975 of the Code) or party-in-interest
transaction (within the meaning of Section 406 of ERISA) has occurred with
respect to any of such plans.
(iii) Seller has made available to Buyer for each such plan copies of
the following documents: (i) the Form 5500 filed in each of the most recent
three plan years, including but not limited to all schedules thereto and
financial statements with attached opinions of independent accountants,
(ii) the most recent determination letter from the IRS, (iii) the
consolidated statement of assets and liabilities of such plan as of its
most recent valuation date, and (iv) the statement of changes in fund
balance and in financial position or the statement of changes in net assets
available for benefits under such plan for the most recently ended plan
year. The financial statements so delivered fairly present the financial
condition and the results or operations of each of such plans as of such
dates, in accordance with GAAP.
(c) Title IV Plans. No plan listed in Schedules 4.10(a) or (b) is a plan
subject to Title IV of ERISA.
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(d) Union Contracts. Seller is not a party to any collective bargaining or
other agreements with labor unions, the members of which are employed by Seller,
in connection with the Photomask Business.
(e) Health Plans. All group health plans of Seller have been operated in
all material respects in compliance with the group health plan continuation
coverage requirements of Section 162(k) and Section 4980B of the Code to the
extent such requirements are applicable.
(f) Fines and Penalties. There has been no act or omission by Seller that
has given rise to or may give rise to fines, penalties, taxes or related charges
under Section 502(c) or (i) or Section 4701 of ERISA of Chapter 43 of the Code.
4.11 No Brokers or Finders
No agent, broker, finder, or investment or commercial banker, or other
Person or firm engaged by or acting on behalf of Seller or any of its respective
Affiliates in connection with the negotiation, execution or performance of this
Agreement or the transactions contemplated by this Agreement, is or will be
entitled to any brokerage or finder's or similar fee or other commission as a
result of this Agreement or such transactions.
4.12 Accuracy of Information
All information furnished by or on behalf of Seller to Buyer, its agents or
representatives in connection with the Purchased Assets, the Assumed Liabilities
and this Purchase Asset Agreement is true and correct in all material respects
and does not contain any untrue statement of material fact or omit to state a
material fact necessary to make any statement herein not misleading.
4.13 Inventories
All inventories of Seller are of good and merchantable quality, are carried
at cost (with respect to raw materials), standard cost (with respect to work in
process and finished goods) or expensed (with respect to spares), and are
currently useable or saleable in the ordinary course of business. The value of
obsolete, damaged or excess inventory and of inventory below standard quality
has been written down on the most recent balance sheet delivered to Buyer
pursuant to Section 4.2 or, with respect to inventories purchased since the
balance sheet date, on the books and records of Seller, to ascertainable market
value, or adequate reserves described on such balance sheet have been provided
therefor, and the value at which inventories are carried reflects the customary
inventory valuation policy of Seller (which fairly reflects the value of
obsolete, spoiled or excess inventory) for stating inventory.
4.14 Customers and Suppliers
Schedule 4.14 lists the names of and describes all Assumed Contracts with
and the appropriate percentage of Photomask Business attributable to, the ten
largest captive users/customers of the Photomask Business, the ten largest
merchant customers of the Photomask Business and the ten most significant
suppliers of the Photomask Business as of the first six (6) months of the
current fiscal year, and any sole-source suppliers of significant goods or
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services (other than electricity, gas, telephone or water) to the Photomask
Business with respect to which alternative sources of supply are not readily
available on comparable terms and conditions. To Seller's Knowledge no existing
customer has threatened to transfer business to a third Person on account of the
transactions contemplated by this Agreement.
4.15 Environmental Compliance
(a) Environmental Reports. Schedule 4.15(a) contains a list of each current
report, study or filing, of which Seller is aware, and which relates to the use
of Hazardous Substances upon the Real Property in which Buyer will obtain a
leasehold interest under this Agreement, the Facility Lease Agreement, or the
transactions contemplated hereby, or upon real property currently or formerly
used, owned or operated in connection with the operation of the Photomask
Business of Seller, any Environmental Condition existing upon the real property
currently or formerly used, owned or operated in connection with the operation
of the Photomask Business of Seller or the compliance of the Photomask Business
of Seller, or any real property in which Buyer will obtain an interest under
this Agreement, the Facility Lease Agreement, or the transactions contemplated
hereby, currently or formerly used, owned or operated in connection with the
operation of the Photomask Business of Seller with any Environmental Laws. A
copy of each item listed in Schedule 4.15(a) has been made available to Buyer.
(b) Compliance with Environmental Laws: Permits. Except as disclosed in
Schedule 4.15(b), the Photomask Business of Seller and all real property and
personal property currently or formerly used, owned or operated in connection
with the operation of the Photomask Business of Seller is, and at all times in
the past has been, used or operated in all material respect in compliance with
all Environmental Laws. Seller has obtained and presently maintains all Permits
and other governmental authorizations required to operate the Photomask Business
of Seller in compliance with all Environmental Laws.
(c) Environmental Conditions: Action by Governmental Agency. Except as
disclosed in Schedule 4.15(c), no Environmental Condition exists upon the real
property in which Buyer will obtain an interest under this Agreement, the
Facility Lease Agreement, or the transactions contemplated hereby, currently or
formerly used, owned or operated in connection with the operation of the
Photomask Business of Seller and no investigation, inquiry or other proceeding
is pending or, to the knowledge of Seller, threatened by any governmental entity
with respect to the real property in which Buyer will obtain a leasehold
interest under this Agreement or the transactions contemplated hereby, currently
or formerly used, owned or operated in connection with the operation of the
Photomask Business of Seller and relating to any actual or alleged Environmental
Condition or failure to comply with any Environmental Law.
(d) Treatment, Storage or Disposal Sites. Schedule 4.15(d) contains a list
of all Hazardous Substance or waste treatment, storage or disposal sites
currently used in the operation of the Photomask Business of Seller, which list
identifies the type of Hazardous Substances or wastes that are treated, stored
or disposed of at each site and estimates of the annual amount of Hazardous
Substances or waste sent to each site. To the knowledge of Seller none of the
sites listed is the subject of federal, state, or local enforcement action or
other investigation that may lead to claims against Seller for cleanup costs,
remedial action, damages to natural resources for personal injury or property
damage. Schedule 4.15(d) contains a list of all parties currently engaged to
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transport Hazardous Substances or wastes to such treatment, storage or disposal
sites.
4.16 Powers of Attorney
Except as set forth on Schedule 4.16. Seller has not given any power of
attorney (irrevocable or otherwise) to any Person for any purpose relating to
the Photomask Business, Purchased Assets, Assumed Liabilities, or the material
assets of the Photomask Business, other than powers of attorney given to
Governmental Authority in connection with routine qualifications to do business.
4.17 Year 2000
The Harris Semiconductor Sector (a) has conducted an assessment of its
information system technologies, automated manufacturing, billing and other
operations for the purpose of identifying, (b) has shared this assessment with
Buyer, and (c) is engaged in an effort to mitigate (which effort is continuing
in the ordinary course of business) any significant disruption in operations
that it anticipates as a consequence with of the Y2K Problem. Except as set
forth on Schedule 4.17, to the Seller's knowledge, assuming the efforts to
mitigate as set forth in the assessment are continued, with respect to the
Purchased Assets, by Buyer in the ordinary course of business after the Closing
Date, the Purchased Assets will not experience any disruption in operations as a
consequence of the Y2K problem that could reasonably be expected to have a
Material Adverse Effect on the Photomask Business. As used in this Section 4.17,
the "Y2K Problem" means a date-handling problem relating to the Year 2000 date
change that would cause a computer system, software or equipment to fail to
correctly perform, process, and handle date-related data for the dates within
and between the twentieth and twenty-first centuries and all other centuries.
4.18 Labor and Employment
Except as set forth on Schedule 4.18, Seller does not have
unfair labor practice charges or complaints pending or to the Seller's knowledge
threatened against the Semiconductor Business Unit relating to the Photomask
Business before the National Labor Relations Board or any equivalent foreign
Governmental Entity. Seller has not at any time during the last three years had,
nor to the knowledge of Seller is there now threatened, any walkout, strike,
union activity, picketing, work stoppage, work slowdown or any other similar
occurrence relating to the Photomask Business which Materially Adversely Affects
or is reasonably likely to Materially Adversely Affect the Photomask Business,
or any attempt to organize or represent the labor force of the Photomask
Business. Seller has not had a plant closing or mass layoff relating to the
Photomask Business, as such terms are defined in the Worker Adjustment and
Retraining Notification Act, or if such has occurred, Seller has given all
required notifications required in connection with such Plant Closing and/or
Mass Layoff. All products manufactured by Seller (as it relates to the Photomask
Business) are manufactured and distributed in all material respects in
compliance with all foreign, federal, state and local laws regarding the use of
labor, including, but not limited to, all laws regulating wages, hours,
immigration and working conditions. Seller (as it relates to the Photomask
Business) is in all material respects in compliance with applicable workers'
compensation insurance laws. Seller (as it relates to the Photomask Business)
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has in all material respects complied with all laws, regulations and executive
orders to which they are subject because of any agreement or contract with any
foreign, federal or state Governmental Entity. Seller has taken no actions to
encourage any employee of the Photomask Business to leave the Seller's employ
before the Closing, or discourage any employee of the Photomask Business from
accepting the offer of employment of Buyer.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
As of the date hereof and as of the Closing, Buyer represents and warrants
to Seller and agrees with Seller as follows:
5.1 Organization and Related Matters
Parent is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of California. Sub is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Florida. Buyer has all requisite corporate power and authority to execute,
deliver and perform this Agreement, the Facility Lease Agreement, the Photomask
Supply and Strategic Alliance Agreement, the Site Services Agreement and any
other related agreements to which it is a party. On the Closing Date, Parent or
Sub shall be duly qualified or licensed to do business as a foreign corporation
in good standing in the State of Florida. Buyer has all necessary corporate
power and authority to carry on its business as now being conducted.
5.2 Authorization
The execution, delivery and performance of this Agreement, the Facility
Lease Agreement, the Photomask Supply and Strategic Alliance Agreement, the Site
Services Agreement and other related agreements by Buyer has been duly and
validly authorized by the Board of Directors of Buyer, respectively, and by all
other necessary corporate action on the part of Buyer. This Agreement, the
Facility Lease, the Photomask Supply and Strategic Alliance Agreement and any
other related agreements to which Buyer is a party, shall, prior to or
simultaneously with the Closing, be duly executed and delivered by Buyer and
constitute the legally valid and binding obligations of Buyer, enforceable
against Buyer in accordance with their respective terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium and other similar laws and equitable principles relating to or
limiting creditors rights generally.
5.3 Legal Proceedings
There is no Order or Action pending, or, to the knowledge of Buyer,
threatened, against or affecting Buyer or any of its respective properties or
assets that individually or when aggregated with one or more other Orders or
Actions has or if determined adversely might reasonably be expected to have a
Material Adverse Effect on Buyer's ability to perform this Agreement or any
other aspect of the transactions contemplated by this Agreement.
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5.4 No Conflicts
The execution, delivery and performance of this Agreement, the Facility
Lease Agreement, the Photomask Supply and Strategic Alliance Agreement, the Site
Services Agreement and any related agreements by Buyer will not violate the
provisions of, or constitute a breach or default whether upon lapse of time
and/or the occurrence of any act or event or otherwise under (a) the charter
documents or bylaws of Buyer, (b) any Law to which Buyer is subject or (c) any
Contract to which Buyer is a party that is material to the financial condition,
results of operations or conduct of the business of Buyer, provided that the
appropriate regulatory approvals are received as contemplated by Section 8.1 and
specified consents, if any, are secured.
5.5 No Brokers or Finders
No agent, broker, finder or investment or commercial banker, or other
Person or firms engaged by or acting on behalf of Buyer or its Affiliates in
connection with the negotiation, execution or performance of this Agreement or
the transactions contemplated by this Agreement, is or shall be entitled to any
broker's or finder's or similar fees or other commissions as a result of this
Agreement or such transactions.
5.6 Governmental Authorizations and Consents
Except as set forth on Schedule 5.6, no consents, licenses, approvals, or
authorizations of, or registrations or declarations with, any Governmental
Authority, bureau, agency or commission, or any third party, are required to be
obtained or made by Buyer in connection with the execution, delivery,
performance, validity and enforceability of this Agreement, or the Facility
Lease Agreement, the Photomask Supply and Strategic Alliance Agreement, the Site
Services Agreement or any related agreements, other than (a) a filing with the
Federal Trade Commission and the Department of Justice under the Hart Scott
Rodino Act and (b) other consents, licenses, approvals, authorizations,
registrations or declarations, where the failure to obtain such would not have a
Material Adverse Effect on Buyer. Buyer is not currently engaged in, or
contemplating, any business transaction that would be reasonably expected to
hinder or delay the authorizations and consents referred to in this Section 5.6.
5.7 Litigation
As of the date of this Asset Purchase Agreement, no action, suit proceeding
or governmental investigation is pending or to the knowledge of Buyer,
threatened, against Buyer or its properties, at law or in equity or before any
Governmental Authority that seeks to question, delay or prevent the consummation
of the transactions contemplated hereby.
5.8 Access
Buyer has received and reviewed the Financial Statements and is acquainted
with the Photomask Business. Buyer has had an opportunity to review the assets,
books, records and contracts of the Photomask Business, and has been given the
opportunity to meet with officers and other representatives of Seller's
Semiconductor Business Unit for the purpose of
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investigating and obtaining information regarding the Photomask Business
operations and its financial and legal affairs.
5.9 Employee Records
Buyer and Seller acknowledge that Buyer is entitled to inspect and copy the
personnel and related employment files of any of the current employees, except
for those employee records consisting of field folders, medical records and
former employee actions brought against the Seller, of the Photomask Business
who are offered employment by Buyer. Buyer acknowledges that some of this
information is considered to be confidential under state and/or Federal law.
Buyer agrees that it will keep all information obtained from Seller strictly
confidential and that it will be maintained (and disclosed, if at all) in strict
compliance with applicable state and Federal Laws.
5.10 Financial Capacity
Buyer has the financial capacity to consummate the transactions
contemplated by this Agreement, the Facility Lease Agreement, the Photomask
Supply and Strategic Alliance Agreement, the Site Services and related
agreements. Buyer has heretofore provided to Seller an accurate written
explanation of the means by which Buyer plans to finance the transactions
contemplated by this Agreement.
ARTICLE VI
COVENANTS AND REPRESENTATIONS AND WARRANTIES WITH
RESPECT TO CONDUCT OF SELLER PRIOR TO CLOSING
6.1 Access
Prior to the Closing Date, upon reasonable notice from Buyer to Seller,
Seller shall authorize and permit Buyer and its Representatives to have
reasonable access during normal business hours, upon reasonable notice and in
such manner as shall not unreasonably interfere with the conduct of their
respective businesses, to the employees, Purchased Asset, the Real Property, and
the books, records, operating instructions and procedures of Seller, so as to
afford Buyer full opportunity to make such review, examination and investigation
of the Photomask Business as Buyer determines are reasonably necessary in
connection with the consummation of the transactions contemplated hereby. Buyer
will be permitted to make extracts from or copies of such books, records and
other documents of the Photomask Business as may be reasonably necessary in
connection with and to discuss their respective business with such third
Persons, including without limitations, their respective directors, officers,
employees, accountants, suppliers, customers, and creditors as Buyer considers
necessary or appropriate for the purposes of familiarizing itself with the
Photomask Business, the Purchased Assets and the Assumed Liabilities, obtaining
any necessary Approvals of or Permits for the transactions contemplated by this
Agreement and conducting an evaluation of the organization and Photomask
Business of Seller. The access provided by this Section 6.1 shall be subject to
the obligations of confidentiality and return of information obligations set
forth in Section 11.9 hereof.
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6.2 Material Adverse Changes
From the date hereof to the earlier of the Closing Date or the Termination
Date, Seller shall promptly notify Buyer of, and set forth in Schedule 4.2(c),
any event of which Seller obtains knowledge which has had a Material Adverse
Effect on the Photomask Business or any of the Purchased Assets or Assumed
Liabilities or which if known as of the date hereof would have been required to
be disclosed to Buyer.
6.3 Conduct of Photomask Business
Seller hereby agrees that, with respect to the Photomask Business, from the
date hereof to the earlier of the Closing Date or the Termination Date, Seller
shall not without the prior consent in writing of Buyer (such consent not to be
unreasonably withheld or delayed):
(a) conduct the Photomask Business except in the ordinary course; or
(b) except as required by its terms, amend, terminate, renew/fail to renew
or renegotiate any Material Contract or default (or take or omit to take any
action that with or without the giving of notice or passage of time or both,
would constitute a default) in any of its obligations under any Material
Contract or any Lease or enter into any new Material Contract or any Lease to
the extent such event is adverse to the interest of the Photomask Business; or
(c) terminate, amend or fail to renew or preserve any Permits; or
(d) incur or agree to incur any obligation or liability (absolute or
contingent), except for normal and customary trade payables incurred in the
ordinary course of business, that individually calls for payment by Seller of
more than $50,000 in any specific case or $150,000 in the aggregate; or
(e) except for normal scheduled salary increases as set forth on Schedule
6.3(e), grant any general or uniform increase in the rates or pay or benefits to
employees of the Photomask Business (or a class thereof) or any increase in
salary or benefits of any employee of the Photomask Business or agent of pay any
bonus to any person, or enter into any new employment, collective bargaining or
severance agreement, or hire any Person at an annual salary in excess of
$50,000; or
(f) sell, transfer, mortgage, encumber or otherwise dispose of any
Purchased Assets (other than Inventory sold in the ordinary course of business
and replacements of equipment in the ordinary course); or
(g) make any capital expenditures or commitments on behalf of the Photomask
Business aggregating more than $50,000; or
(h) make any material investment, by purchase, contribution to capital,
property transfer, or otherwise, on behalf of the Photomask Business in any
other Person; or
(i) dispose of or permitted to lapse any Intellectual Property related
solely to the Photomask Business or any rights to its use; or
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(j) fail to maintain or repair any Purchased Asset in accordance with
normal operating procedures and consistent with past practices of the
Semiconductor Business Unit of Seller; or
(k) quote for sale or enter into any sales transactions with any customer
on terms inconsistent with past practice; or
(l) enter into sales transactions with payment terms in excess of sixty
(60) days; or
(m) agree to or make any commitment to take any action that is or would
have been prohibited by this Section 6.3.
6.4 Notification of Certain Matters
From the date hereof to the earlier of the Closing Date or the Termination
Date, Seller shall give prompt notice to Buyer, and Buyer shall give prompt
notice to Seller, of (i) the occurrence, or failure to occur, of any event that
would be likely to cause any of its representations or warranties, contained in
this Agreement to be untrue or inaccurate in any material respect at any time
from the date of this Agreement to the Closing Date and (ii) any failure on its
part to comply with or satisfy, in any material respect, any covenant, condition
or agreement to be complied with or satisfied by it under this Agreement.
6.5 Permits and Approvals; Third Party Consents
(a) From the date hereof to the earlier of the Closing Date and the
Termination Date, Seller and Buyer each agree to cooperate and use their
commercially reasonable efforts to obtain (and shall immediately prepare all
registrations, filings and applications, requests and notices preliminary to
obtaining all) Approvals and Permits that may be necessary or that may be
reasonably requested by Buyer to consummate the transactions contemplated by
this Agreement.
(b) To the extent that the Approval of a third party with respect to any
Assumed Contract is required in connection with the transactions contemplated by
this Agreement, Seller shall use its commercially reasonable efforts to obtain
such Approval, prior to the Closing Date and in the event that any such Approval
is not obtained (but without limitation on Buyer's rights under Section 8.2),
Seller shall cooperate with Buyer to ensure that Buyer obtains the benefits of
each such Assumed Contract.
6.6 Preservation of Photomask Business Prior to Closing Date
During the period beginning on the date hereof and ending on the earlier of
the Closing Date and the Termination Date, (a) Seller shall use their
commercially reasonable efforts to preserve the Photomask Business and to
preserve the goodwill of customers, suppliers and others having business
relations with Seller relating to the Photomask Business and (b) Seller and
Buyer shall consult with each other concerning, and Seller shall cooperate to
keep available to Buyer, the services of the employees of Seller engaged in the
Photomask Business. Nothing in this Section 6.6 shall obligate Buyer after the
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Closing to retain or offer employment to any officer or employee of Seller
except as provided in Section 7.4.
6.7 Certain Filings
From the date hereof until the earlier of the Closing Date and the
Termination Date, Buyer and Seller shall make any and all filings required to be
made on their respective parts or the part of Persons controlling such entities
under the Hart-Scott-Rodino Act. Seller and Buyer shall furnish each other such
necessary information and reasonable assistance as the other may request in
connection with its preparation of necessary filings or submissions under the
provisions of such laws. Seller and Buyer shall supply each other with copies of
all correspondence, filings or communications, including file memoranda
evidencing telephonic conferences, with representatives of any Governmental
entity or member of its staff, with respect to the transactions contemplated by
this Agreement and any related or contemplated or inconsistent transactions.
ARTICLE VII
ADDITIONAL CONTINUING COVENANTS
7.1 Noncompetition
(a) Restrictions on Competitive Activities. Seller agrees that, after the
Closing, Buyer shall be entitled to the Goodwill and going concern value of the
Photomask Business and to protect and preserve the same to the maximum extent
permitted by law. Seller also acknowledges that its management contribution to
the Photomask Business have been uniquely valuable and involve proprietary
information that would be competitively unfair to make available to any
competitor of the Photomask Business. For these and other reasons and as an
inducement to Buyer to enter into this Agreement, Seller agrees that for a
period of five (5) years after the date hereof, Seller, its subsidiaries and any
purchaser of the Harris Semiconductor Business Unit and its subsidiaries
(excluding the other portfolio companies of Sterling Holding) shall not,
directly or indirectly, for their own benefit or as agent for another, carry on
or participate in the ownership, management or control of, or the financing of,
or allow their name, reputation or knowledge to be used in or by any other
present or future business enterprise that competes with buyer, or any
subsidiary of buyer, in activities similar to the Photomask Business as of the
Closing Date in the United States and Europe using technology generally
available as of the Closing Date or derived from technology generally available
as of the Closing Date for so long as Buyer or any person entitled to or
acquiring ownership of the Goodwill of the Photomask Business or the Purchased
Assets through Buyer conducts a like business therein.
(b) Exceptions. Nothing contained herein shall preclude Seller from (i)
owning an equity interest of five percent or less of any publicly traded company
listed on a national stock exchange or on the Nasdaq national market system or
(ii) acquiring the capital stock or assets of any business that derives less
than 10% of its consolidated revenues from an activity prohibited by Section
7.1(a) above, so long as the Seller makes a commercially reasonable effort to
divest that portion of the acquired business that is engaged in said prohibited
acts within 12 months following such acquisition.
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(c) Restrictions on Soliciting Employees by Seller. In addition, to protect
Buyer against any efforts by Seller, its Subsidiaries or Affiliates to cause
employees of the Photomask Business to terminate their employment, Seller agrees
that for a period of three (3) years following the Closing Date, neither Seller,
nor the Semiconductor Business unit of Seller shall directly or indirectly
solicit for employment any employee of the Photomask Business to leave Buyer, or
to accept any other employment or position. Nor shall Seller nor Seller's
Semiconductor Business Unit permit any employee of Buyer to participate in
Seller's job opportunity posting system.
(d) Restrictions on Soliciting Employees by Buyer. In addition, to protect
Seller and Seller's Semiconductor Business Unit against any efforts by Buyer,
its Subsidiaries or Affiliates to cause employees of the Semiconductor Business
Unit to terminate their employment, Buyer agrees that for a period of three (3)
years following the Closing Date, Buyer, shall not directly or indirectly
solicit for employment any employee of the Semiconductor Business Unit to leave
Seller or Seller's Semiconductor Business Unit, or to accept any other
employment or position with Buyer.
(e) Special Remedies and Enforcement. Seller recognizes and agrees that a
breach by Seller of any of the covenants set forth in this Section 7.1 could
cause irreparable harm to Buyer, that Buyer's remedies at law in the event of
such breach would be inadequate, and that, accordingly, in the event of such
breach a restraining order or injunction or both may be issued against Seller,
in addition to any other rights and remedies which are available to Buyer. If
this Section 7.1 is more restrictive than permitted by the Laws of any
jurisdiction in which Buyer seeks enforcement hereof, this Section 7.1 shall be
limited to the extent required to permit enforcement under such Laws. In
particular, the parties intend that the covenants contained in the preceding
portions of this Section 7.1 shall be construed as a series of separate
covenants, one for each county and city or other location in which Seller
conducts business as of the Closing Date. Except for geographic coverage, each
such separate covenant shall be deemed identical in terms. If, in any judicial
proceeding, a court shall refuse to enforce any of the separate covenants deemed
included in this paragraph, then such unenforceable covenant shall be deemed
eliminated from these provisions for the purpose of those proceedings to the
extent necessary to permit the remaining separate covenants to be enforced.
7.2 Nondisclosure of Proprietary Data
(a) After the Closing, subject to the limitations in Section 11.9 neither
Seller nor any of its representatives shall, at any time, make use of, divulge
or otherwise disclose, directly or indirectly, any trade secret or other
proprietary data (including, but not limited to, any customer list, record or
financial information) concerning the Photomask Business or the business or
policies of Seller related to the Photomask Business that Seller or any
representative of Seller may have learned as an owner or a shareholder,
employee, officer or director of the Photomask Business. In addition, neither
Seller nor any of its representatives shall make use of, divulge or otherwise
disclose, directly or indirectly, to Persons other than Buyer, any confidential
information concerning the conduct of the Photomask Business that may have been
learned in any such capacity. This Section 7.2 shall not apply to any such
information of the Photomask Business which becomes part of the public domain
through no fault of Seller. Nor shall this Section 7.2 apply to any confidential
information of Seller related to Seller's conducting its primary business of
designing, developing, manufacturing, assembling, testing, selling, leasing, and
disposing of semiconductor devices and integrated circuits.
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(b) After the Closing, subject to the limitations in Section 11.9 neither
Buyer nor any of its representatives shall, at any time, make use of (other than
in connection with the manufacture of photomasks on behalf of Seller and the
Semiconductor Business Unit), divulge or otherwise disclose, directly or
indirectly, any trade secret or other proprietary information of Seller or
Seller's Product Mask Information that Buyer or any representative of Buyer may
have learned as the purchaser or employee of the Photomask Business. In
addition, neither Buyer nor any of its representatives shall make use of,
divulge or otherwise disclose, directly or indirectly, to Persons other than
Seller, any confidential information concerning Seller's semiconductor products
that Buyer may learn in any capacity through the purchase of the Photomask
Business. This Section 7.2 shall not apply to any such information which becomes
part of the public domain through no fault of Buyer.
7.3 Maintenance of Books and Records
Each of Seller and Buyer shall preserve until the seventh anniversary of
the Closing Date all records possessed by such party relating to the Purchased
Assets, Assumed Liabilities or operations of the Photomask Business prior to the
Closing Date. After the Closing Date, where there is a legitimate purpose, such
party shall provide the other party with access, upon prior reasonable written
request specifying the need therefor, during normal business hours, to (i) the
relevant officers and employees of such party and (ii) the books of account and
records of such party, but, in each case, only to the extent relating to the
Purchased Assets, Assumed Liabilities and operations of the Photomask Business
prior to the Closing Date, and the other party and its representatives shall
have the right to make copies of such books and records; provided, however, that
the foregoing right of access shall not be exercisable in such manner as to
interfere unreasonably with the normal operations and business of such party;
and further provided that, as to so much of such information as constitutes
trade secrets or confidential business information of such party, the requesting
party and its representatives will use due care to not disclose such information
except (x) as required by Law, (y) with the prior consent of such party, which
consent shall not be unreasonably withheld, or (z) where such information
becomes available to the public generally, or becomes generally known to
competitors of such party, through sources other than the requesting party and
its representatives. Such records may nevertheless be destroyed by a party if
such party sends the other party written notice of its intent to destroy
records, specifying with particularity the contents of the records to be
destroyed. Such records may then be destroyed after the 30th day following
delivery of such notice unless the other party objects to the destruction, in
which case the party seeking to destroy the records shall either agree to retain
such records or deliver such records to the objecting party at the objecting
party's expense.
7.4 Employment Matters
(a) Employees. Except as to individuals set forth on Schedule 7.4, as of
the close of business on the Closing Date, Seller shall cease to employ, and
Buyer shall offer employment to, all existing employees of the Photomask
Business, excluding the employee on ninety (90) day general leave of absence due
back on July, 9, 1999. The terms and conditions of the employment of the
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employees who accept employment with Buyer shall as of the Closing Date be
substantially similar, in the aggregate, to the terms and conditions of their
employment with Seller. Seller shall use its commercially reasonable efforts to
assist Buyer in hiring such employees of the Photomask Business. Seller shall
not take any action, directly or indirectly, to prevent or discourage any such
employee of the Photomask Business from being employed by Buyer as of the
Closing Date and shall not solicit, invite, induce or entice any such employee
of the Photomask Business to remain in the employ of Seller or otherwise attempt
to retain the services of any such employee, except with the prior written
consent of Buyer. Seller agrees to consult with Buyer on all material oral or
written communications or meetings primarily regarding future employment with
such employees.
(b) Proration of Employee Benefits. All obligations for compensation,
wages, bonuses, vacation time, pay in lieu of vacation, leaves of absence, and
similar employee benefits provided by Seller or the Photomask Business and due,
earned or accrued in accordance with GAAP, prior to the Closing Date shall be
paid by Seller either directly to the employees or to Buyer on behalf of the
employees as set forth in Schedule 7.4(b). Seller shall reimburse its former
employees of the Photomask Business the value of employee education
reimbursements earned by any such employee enrolled in a qualified education
class on the Closing Date, who completes said course work after the Closing Date
in accordance with Seller's policy on educational reimbursements and the Buyer
shall have no liability in connection therewith.
(c) Severance Obligations. Seller shall be solely responsible for
liabilities and obligations, if any, for severance pay owed to employees of the
Photomask Business prior to the Closing, including, but not limited any such
liabilities and obligations arising from the events described in the first
sentence of Section 7.4(a) hereto. Buyer shall be solely responsible for any
liabilities or obligations for severance pay for employees of the Photomask
Business who become employees of Buyer. Buyer acknowledges that it has not
informed Seller of any planned or contemplated decisions or actions by Buyer or
one of its subsidiaries that would require service of notice under the WARN Act,
Buyer agrees that neither it nor any of its subsidiaries will take any action
which will cause the notice provisions of the WARN Act to become applicable to
the transactions contemplated by this Agreement.
(d) Buyer and its subsidiaries will credit employees of the Photomask
Business who become employees of Buyer with service with Seller (and
predecessors of Seller) for purposes of(i) vesting for and eligibility to
participate a 401(k) plan, but not for benefit accruals; (ii) any waiting
periods, eligibility or pre-existing condition limitations for employee welfare
benefit plans (as defined in Section 3(1) of ERISA); and (iii) eligibility and
benefit computations for vacation and flexible holiday; provided, however, that
with respect to vacation and flexible holiday plans for the remainder of
calendar year 1999 only, Buyer shall maintain vacation and flexible holiday
plans equivalent to, and in lieu of, Seller's vacation and flexible holiday
plans covering the employees of the Photomask Business immediately prior to the
Closing Date (offset by vacation time and flexible holiday time used under
Seller's vacation plans as of the Closing Date). Seller shall pay to employees
of the Photomask Business immediately prior to the Closing any amount of
flexible holiday pay credited to employees in excess of thirty-two (32) hours
after offsetting any flexible holiday time previously used in calendar year 1999
as set forth on Schedule 7.4(b). Buyer shall credit said employees with any
amounts paid prior to the Closing Date under any Welfare Plan that is a health
plan toward the satisfaction of deductible amounts and copayment minimums under
the Buyer's corresponding welfare benefit plans.
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(e) No Third Party Beneficiaries. Notwithstanding any possible inferences
to the contrary, neither Seller nor Buyer intends for this Section 7.4 to create
any rights or obligations except as between Seller and Buyer, and no past,
present or future employees of Seller or Buyer shall be treated as third-party
beneficiaries of this Section 7.4.
7.5 Buyer's Rights in Intellectual Property
(a) Assignment of Intellectual Property Rights.
(i) Seller hereby assigns to the Buyer its entire ownership, right,
title and interest in and to Business Technology.
(ii) Seller hereby grants to Buyer (and each of its present or future
wholly-owned subsidiaries for so long as they are subsidiaries) a
royalty-free, non-exclusive, worldwide license to use the Technology under
the Intellectual Property Rights in activities similar to activities
undertaken by the Photomask Business as of the Closing Date in the
locations in the United States and Europe. This license may not be
sublicensed and may be assigned only to any person entitled to or acquiring
ownership of the Goodwill of the Photomask Business or substantially all of
the Purchased Assets through Buyer for the purpose of conducting a like
business therein.
(iii) Assignment of Software Type 1. Seller hereby assigns to Buyer
all of its right, title and interest in and to the Software Type 1
identified on Schedule 7.5(a) (iii).
(iv) License of Software Type 2. Seller hereby grants to Buyer a
royalty-free, non-exclusive, worldwide license to use Software Type 2
identified on Schedule 7.5(a)(iv) in the Photomask Business as of the
Closing Date.
(b) Assignment of Software Licenses. To the extent assignable by Seller to
Buyer, Seller hereby assigns all of its right, title, and interest in and to
Software Licenses specific to the Photomask Business and listed on Schedule
7.5(b). To the extent any Software License listed on Schedule 7.5(b) is not
assignable to Buyer, but is both specific to and used in the operation of the
Photomask Business, Seller will use commercially reasonable efforts as requested
by Buyer in writing to provide at Buyer's expense the economic benefit of such
Software License Agreement to Buyer, and upon doing such, shall be deemed to
have satisfied any and all obligations of Buyer regarding assignment or transfer
of each such Software License Agreement.
(c) Transfer of Tangible Software and Technology. Seller hereby tenders and
Buyer hereby accepts delivery of all Technology and Software Licenses assigned
to Seller under this Section 7.5
7.6 Representations Regarding Software
Seller represents that to the Seller's Knowledge:
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(a) Schedule 7.6(a) identifies all Software Licenses used in or on behalf
of the Photomask Business on the Closing Date and during the five (5) calendar
days prior thereto;
(b) Schedule 7.5(a)(iii) identifies all Software Type 1 used in or on
behalf of the Photomask Business on the Closing Date and during the five (5)
calendar days prior thereto;
(c) Schedule 7.5(a)(iv) identifies all Software Type 2 used in or on behalf
of the Photomask Business on the Closing Date and during the five (5) calendar
days prior thereto.
If it is later determined after the Closing Date that any Software should
have been, but was not, identified on any of the Schedules 7.6(a), 7.5(a)(iii)
or 7.5(a)(iv), then as the sole remedy of Buyer to Seller's failure to identify
such Software, Seller shall consent to assign or license and effect delivery of
such Software in accord with the provisions of Section 7.5.
7.7 Sales and Transfer Taxes; Other Fees
To Seller's Knowledge pursuant to applicable Florida Department of Revenue
regulations and interpretations thereof, no sales/use tax will be due on the
sale of the machinery, equipment, supplies, or other tangible personal property
(other than inventory) used in the Photomask Business, and none of the Assets
consist of motor vehicles, aircraft, boats, mobile homes or salvage, surplus or
obsolete property on which sales/use tax would be due. However, Buyer shall pay
all real and personal property transfer taxes, if any, and all sales, use and
other similar taxes that may be imposed as a result of Buyer's failure to supply
a Resale Exemption Certificate, if any, imposed on or in connection with the
purchase, sale or transfer of the Purchased Assets to, and the assumption of the
Assumed Liabilities by, Buyer pursuant to this Agreement or on the use thereof
by Buyer after the Closing Date. Buyer shall furnish Seller with a Resale
Exemption Certificate for all inventory purchased from Seller. Buyer shall pay
all fees incurred in connection with the transfer of the Purchased Assets and
Assumed Contracts, including, but not limited to, any applicable fees which may
be due in connection with the transfer of Seller's ETEC Systems.
ARTICLE VIII
CONDITIONS OF PURCHASE
8.1 General Conditions
The obligations of the parties to effect the Closing shall be subject to
the following conditions unless waived in writing by the parties to the
Agreement:
(a) No Orders; Legal Proceedings. No Law or Order shall have been enacted,
entered, issued, promulgated or enforced by any Governmental Entity, nor shall
any Action have been instituted and remain pending or, to the knowledge of
Seller or Buyer, have been threatened and remain so by any Governmental Entity
at what would otherwise be the Closing Date, that prohibits or restricts or
would (if successful) prohibit or restrict the transactions contemplated by this
Agreement. No Governmental Entity shall have notified any party to this
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Agreement that consummation of the transactions contemplated by this Agreement
would constitute a violation of any Laws of any jurisdiction or that it intends
to commence proceedings to restrain or prohibit such transactions or force
divestiture or rescission, unless such Governmental Entity shall have withdrawn
such notice and abandoned any such proceedings prior to the scheduled Closing,
unless nationally recognized counsel known to have expertise as to such matters
on behalf of the party against whom such action or proceeding was or would be
instituted renders to the parties a favorable opinion that such action or
proceeding is or would be without merit.
(b) Approvals. To the extent required by applicable Law, all Permits and
Approvals required to be obtained from any Governmental Entity, shall have been
received or obtained on or prior to the Closing Date without the imposition of
any burdens or conditions materially adverse to the party or parties entitled to
the benefit thereof and any applicable waiting period under the
Hart-Scott-Rodino Act shall have expired or been terminated.
8.2 Conditions to Obligations of Buyer
The obligations of Buyer to effect the Closing shall be subject to the
following conditions except to the extent waived in writing by Buyer:
(a) Representations and Warranties and Covenants of Seller. The
representations and warranties of Seller herein contained shall be true in all
material respects at the Closing Date with the same effect as though made at
such time; Seller shall have performed all obligations and complied with all
covenants and conditions required by this Agreement to be performed or complied
with by Seller at or prior to the Closing Date.
(b) No Material Adverse Change. There shall not have been any Material
Adverse Change in or affecting the Photomask Business subsequent to April 2,
1999.
(c) Opinions of Counsel. Buyer shall receive at the Closing from Howard E.
Rothman, counsel to Seller, opinions dated the Closing Date, in form and
substance substantially as set forth in Exhibit F.
(d) Consents. Seller shall have obtained and provided to Buyer evidence of
the receipt of all required Approvals and Permits listed on Schedule 4.6 and
Buyer shall have obtained all Approvals and Permits required by Law or referred
to in Section 5.2, each in form and substance reasonably satisfactory to Buyer.
(e) Changes in Law. No Law or Order shall have been enacted, entered,
issued, promulgated or enforced by any Governmental Entity, nor shall any Action
have been instituted and remain pending or, to the best knowledge of Seller,
have been threatened and remain so by any Governmental Entity at what would
otherwise be the Closing Date which would not permit the Photomask Business as
presently conducted to be continued by Buyer unimpaired following the Closing
Date.
(f) Employees. Buyer shall have determined to its satisfaction in its sole
discretion that (i) each of the persons identified by Buyer on Schedule 8.2(f)
hereto as key employees of the Photomask Business have agreed to become an
employee of Buyer upon Closing, and (ii) a satisfactory number of other
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employees of the Photomask Business have agreed to become employees of Buyer
upon Closing.
(g) Facility Lease Agreement. Seller shall have executed and delivered to
Buyer a Lease covering the facilities used in the operation of the Photomask
Business (the "Facility Lease Agreement") substantially in the form attached
hereto as Exhibit B.
(h) Photomask Supply and Strategic Alliance Agreement. Seller shall have
executed and delivered to Buyer a photomask product supply agreement (the
"Photomask Supply and Strategic Alliance Agreement"), in form and substance
substantially as set forth in Exhibit C.
(i) Seller Certificate. An Officer of Seller shall execute a Certificate
as of the Closing Date in form and substance substantially as set forth in
Exhibit G.
(j) Site Services Agreement. Seller shall have executed and delivered to
Buyer a Site Services Agreement pursuant to which, during the term of the
Facility Lease, Seller shall provide at a commercially reasonable price to Buyer
electricity, cooling water, D.I. water, compressed air, and nitrogen, building,
clean room and environmental chamber maintenance and repair services, security
services, parking, administrative and management information systems services at
its then current prices for such services (the "Site Services Agreement") at a
commercially reasonable price. The Site Services Agreement shall be in form and
substance substantially as set forth in Exhibit D.
8.3 Conditions to Obligations of Seller
The obligations of Seller to effect the Closing shall be subject to the
following conditions, except to the extent waived in writing by Seller:
(a) Representations and Warranties and Covenants of Buyer. The
representations and warranties of Buyer herein contained shall be true in all
material respects at the Closing Date with the same effect as though made at
such time; Buyer shall have in all material respects performed all obligations
and complied with all covenants and conditions required by this Agreement to be
performed or complied with by it at or prior to the Closing Date, and Buyer
shall have delivered to Seller certificates of Buyer in form and substance
reasonably satisfactory to Seller, dated the Closing Date and signed by the
chief executive officer of Buyer, to such effect.
(b) Opinion of Counsel. Seller shall receive at the Closing from O'Melveny
& Myers LLP, counsel to Buyer, opinions dated the Closing Date, in form and
substance substantially as set forth in Exhibit H.
(c) Facility Lease Agreement. Buyer shall have executed and delivered to
Seller the Facility Lease Agreement, substantially in the form of Exhibit B.
(d) Photomask Supply and Strategic Alliance Agreement. Buyer shall have
executed and delivered to Seller the Photomask Supply and Strategic Alliance
Agreement, substantially in the form of Exhibit C.
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(e) Site Services Agreement. Buyer shall have executed and delivered to
Seller the Site Services Agreement, substantially in the form of Exhibit D.
ARTICLE IX
TERMINATION OF OBLIGATIONS; SURVIVAL
9.1 Termination of Agreement
Anything herein to the contrary notwithstanding, this Agreement and the
transactions contemplated by this Agreement shall terminate at the close of
business on July 5, 1999 (the "Termination Date") unless extended by mutual
consent in writing of Buyer and Seller and may otherwise be terminated at any
time before the Closing as follows and in no other manner:
(a) Mutual Consent. By mutual consent in writing of Buyer and Seller.
(b) Conditions to Buyer's Performance Not Met. By Buyer upon written notice
to Seller if any event occurs which would render impossible the satisfaction of
one or more conditions to the obligations of Buyer to consummate the
transactions contemplated by this Agreement as set forth in Section 8.1 or 8.2
and the Seller cannot or will not take action to cure the deficiency within
thirty days of the event.
(c) Conditions to Seller's Performance Not Met. By Seller upon written
notice to Buyer if any event occurs which would render impossible the
satisfaction of one or more conditions to the obligation of Seller to consummate
the transactions contemplated by this Agreement as set forth in Section 8.1 or
8.3 and the Buyer cannot or will not take action to cure the deficiency within
thirty days of the event.
(d) Hart-Scott-Rodino. By Buyer if Buyer shall receive a request for
further information under the Hart-Scott-Rodino Act with respect to its filing
thereunder from either the FTC or Department of Justice (provided Buyer
exercises its right to terminate this Agreement at any time prior to making a
responsive filing to such request) by delivering written notice of such
termination to Seller.
(e) Material Breach. By Buyer or Seller if there has been a material
misrepresentation or material breach on the part of the other party in its
representations, warranties or covenants set forth herein; provided, however,
that if such breach or misrepresentation is susceptible to cure, Seller or
Buyer, as the case may be, shall have 10 business days after receipt of notice
from the other party of its intention to terminate this Agreement pursuant to
this Section 9.1(f) if such misrepresentation or breach continues in which to
cure such breach or misrepresentation before the other party may so terminate
this Agreement.
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9.2 Effect of Termination
In the event that this Agreement shall he terminated pursuant to Section
9.1, all further obligations of the parties under this Agreement shall terminate
without further liability of any party to another; provided, that, the
obligations of the parties contained in Section 11.9 and Section 11 .12 shall
survive any such termination. A termination under Section 9.1 shall not relieve
any party of any liability for a breach of, or for any misrepresentation under
this Agreement, or be deemed to constitute a waiver of any available remedy
(including specific performance if available) for any such breach or
misrepresentation.
9.3 Survival of Representations and Warranties
(a) The representations and warranties set forth in this Agreement shall
survive the Closing Date and the consummation of the transactions contemplated
hereby for a period of 18 months from the Closing Date; provided, however, that
(i) the representations and warranties set forth in Section 4.15 respecting
environmental compliance and Seller's obligations set forth in Section 10.1(d),
(e), (f) and (g) shall survive until the expiration of the applicable statute of
limitations, and (ii) the second and fourth sentences of Section 4.4(a) and the
second sentence of Section 4.4(b) shall survive indefinitely. The rights to
indemnification set forth in this Agreement based on the representations,
warranties, covenants and obligations set forth herein shall not be affected by
any investigation conducted with respect to, or any knowledge acquired (or
capable of being acquired) at any time, whether before or after the execution
and delivery of this Agreement or the Closing Date, with respect to the accuracy
or inaccuracy of or compliance with, any such representation, warranty, covenant
or obligation.
(b) No claim for the recovery of indemnifiable damages based upon the
inaccuracy of such representations and warranties may be asserted by a party
after such representations and warranties have expired; provided, however, that
claims first asserted in reasonable detail in writing to the other party within
the applicable period shall not thereafter be barred.
(c) This Section 9.3 shall not limit actions with respect to any covenant
or agreement of the parties hereto which by its terms contemplates performance
after the Closing Date, other than the indemnity obligations of the parties set
forth in Article X, hereof.
ARTICLE X
INDEMNIFICATION
10.1 Obligations of Seller
During the time periods set forth in Section 9.3, the Seller, agrees to
indemnify and hold harmless Buyer and its respective directors, officers,
shareholders, employees, affiliates, agents and assigns (the "Buyer Parties") in
respect of any and all claims, actions, suits or other proceedings and any and
all Losses, incurred by, imposed on or borne by Buyer, directly or indirectly,
as a result of, or based upon or arising from:
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(a) any inaccuracy in or breach or nonperformance of any of the
representations, warranties, covenants or agreements made by Seller in this
Agreement whether or not of a material nature; or
(b) any other matter as to which Seller in other provisions of this
Agreement has agreed to indemnify Buyer; or
(c) any liability or obligation of Seller or any of their Affiliates
related to Seller (including the Photomask Business) not expressly assumed by
Buyer pursuant to Section 2.2(b) hereof; or
(d) any claim by a current or former employee of Seller the facts upon
which such claim is based occurred prior to the Closing Date, including but not
limited to, claims alleging wrongful discharge, employment discrimination and
wage and hour violations; or
(e) the alleged or actual violation of any law, rule or regulation, prior
to the Closing, by Seller, including, without limitation, any Environmental Law
or any conditions existing at the Closing that constitutes a violation of
Environmental Laws; or
(f) the generation, use, transportation, treatment, storage, release or
disposal, before the Closing, of Hazardous Substances by Seller at, on or under
the real property currently or formerly used, owned or operated in connection
with the operation of the business of Seller; or
(g) the presence of Hazardous Substances or the existence of an
Environmental Condition at the real property currently or formerly used, owned
or operated in connection with the operation of the business of Seller which was
present at such property or facility at any time on or prior to the Closing.
Notwithstanding the foregoing, in no event shall the aggregate liability of
Seller hereunder with respect to any Losses of the Buyer Parties exceed Five
Million Dollars ($5,000,000), except with respect to Losses resulting from
Seller's fraudulent actions or inactions, in which case the aggregate liability
of Seller hereunder shall be without limit.
10.2 Obligations of Buyer
(a) General. During the time periods set forth in Section 9.3, Buyer agrees
to indemnify and hold harmless, Seller and their respective directors, officers,
shareholders, employees, affiliates, agents and assigns in respect of any and
all claims, actions, suits or other proceedings, and any and all Losses incurred
by, imposed on or borne by Seller, directly or indirectly, as a result of, or
based upon or arising from, any inaccuracy in or breach or nonperformance of any
of the Assumed Contracts, Assumed Liabilities and post-Closing obligations of
the Photomask Business, the representations, warranties, covenants or agreements
made by Buyer in or pursuant to this Agreement.
(b) With Respect to Environmental Conditions. Buyer agrees to indemnify and
hold Seller and its Subsidiaries and Affiliates harmless from and against and in
respect of any of the following, including any damage, expense, loss, claims,
incidental and consequential damages (including attorney and expert fees) and
any such amounts related to, arising from or caused by the following:
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(i) All liabilities of any nature, whether accrued, absolute,
contingent or otherwise, arising from or caused by any act or omission by
Buyer after the Closing Date including the storage, use, manufacture,
transportation, disposal, release, discharge or emission by Buyer of any
Hazardous Substance while operating the Photomask Business; and
(ii) the exposure to any Hazardous Substance after the Closing Date of
any person engaged in activities on the Real Property, provided the
presence of such Hazardous Substance is not the result of any act or
omission of Seller or Seller's employees on, after or prior to the Closing
Date;
(iii) any disposal after the Closing Date into any landfill or other
disposal facility of a Hazardous Substance by Buyer or by any person to
whom Hazardous Substances have been directly or indirectly delivered in
connection with the operation by Buyer of the Photomask Business.
10.3 Procedure and Other Matters
(a) Procedure. If a claim by a third party is made against an indemnified
party (the "Indemnified Party"), and if such party intends to seek indemnity
with respect thereto under this Agreement from the other party (the
"Indemnifying Party"), the Indemnified Party shall promptly, but in any event,
within ten (10) business days, notify the Indemnifying Party in writing of such
claims setting forth such claims in reasonable detail. The failure to give such
notice shall not relieve the Indemnifying Party of any liability hereunder
except to the extent that the Indemnifying Party is actually prejudiced thereby.
The Indemnifying Party shall have thirty (30) days after receipt of such notice
to undertake, conduct and control, through counsel of its own choosing and at
its own expense, the settlement or defense thereof (except in such instances
where the settlement includes other than strictly the payment of money, in which
case such settlement shall not be entered into without the written consent of
the Indemnified Party, which consent shall not be unreasonably withheld or
delayed). An Indemnifying Party's undertaking to conduct and control the
settlement and defense of such a claim shall constitute an acknowledgement of
such Indemnifying Party's obligation hereunder to indemnify the Indemnified
Party against such claim. The Indemnified Party may participate in (but not
control) such settlement or defense through counsel chosen by such Indemnified
Party; provided, that, the fees and expenses of such counsel shall be borne by
such Indemnified Party. If the Indemnifying Party does not notify the
Indemnified Party in writing within thirty (30) days after the receipt of the
Indemnified Party's notice of a claim of indemnity hereunder that it elects to
undertake the defense thereof, the Indemnified Party shall have the right to
contest, settle or compromise the claim but shall not thereby waive any right to
indemnity therefor pursuant to this Agreement.
(b) Other Matters. The provisions of this Article X are subject to the
rights of any Indemnified Party's insurer which may be defending any such claim.
If the Indemnifying Party makes any payment hereunder of a Loss, the
Indemnifying Party shall be subrogated, to the extent of such payment, to the
rights of the Indemnified Party against any insurer or third party with respect
to such Loss. Nothing in this Section 10.3 shall be deemed to obligate any
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Person to maintain any insurance or to pursue any claim against any insurer or
third party.
Notwithstanding anything to the contrary contained in this Agreement, (i)
any indemnification owed under this Agreement shall be reduced by the amount of
any reimbursement actually received by an Indemnified Party from any insurance
carriers or from third parties; (ii) the amount of any payment to Buyer by
Seller on account of indemnification for Losses relating to taxes shall be
reduced or increased, as appropriate, by the amount of any corresponding
federal, state, local, foreign or other income tax benefit or income tax cost
actually received or paid by Buyer from payment of the liability upon which the
claim for indemnification is based or from payment to Buyer of the amount of the
indemnity payment.
(c) Cooperation in Defending Claims. Each party to this Agreement shall
cooperate in every reasonable way with the party or parties assuming
responsibility for the defense and disposition of any claim of indemnity
hereunder, including making available to the defending party reasonable access
during normal business hours, upon reasonable notice and in such a manner as
shall not unreasonably interfere with the conduct of the other party's business,
all books, records, operating instructions and procedures, and other information
as the defending party may from time to time reasonably request in order to
defend such claim, including the right to make copies of such books, records and
other documents and to discuss with such third Persons, including, without
limitation, the directors, officers, employees, accountants, counsel, suppliers,
customers and creditors, of the other parties, as the defending party considers
necessary or appropriate for the purpose of defending such claim. The access
provided by this Section 10.3(c) shall be subjection to the obligations of
confidentiality and return of information obligations set forth in Section 11.9
hereof.
10.4 Survival
Subject to Section 9.3, this Article X shall survive any termination of
this Agreement.
10.5 Notice by Seller
Seller agrees to notify Buyer of any liabilities, claims or
misrepresentations, breaches or other matters covered by this Article X upon
discovery or receipt of notice thereof (other than from Buyer), whether before
or after Closing.
10.6 Exclusive Remedy
To the extent permitted by Law, the indemnity provisions of this Article X
shall be the sole and exclusive remedy of the parties with respect to any breach
of the representations and warranties contained in this Agreement that is
asserted subsequent to Closing, provided that the foregoing shall not prohibit
any party from seeking an injunction or any other equitable remedy in respect
thereof.
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10.7 No Offsets
Nothing herein shall be construed so as to permit either party to offset
the amount of any unresolved claim which may arise under this Agreement from any
payments due the other party under this Agreement.
ARTICLE XI
GENERAL
11.1 Amendments; Waivers
This Agreement and any schedule or exhibit attached hereto may be amended
only by agreement in writing of the parties to the Agreement. No waiver of any
provision nor consent to any exception to the terms of this Agreement or any
agreement contemplated hereby shall be effective unless in writing and signed by
the party to be bound and then only to the specific purpose, extent and instance
so provided.
11.2 Schedules; Exhibits; Integration
Each Schedule and Exhibit delivered pursuant to the terms of this Agreement
shall be in writing and shall constitute a part of this Agreement, although
Schedules need not be attached to each copy of this Agreement. This Agreement,
together with such Schedules and Exhibits, constitutes the entire agreement
among the parties pertaining to the subject matter hereof and supersedes all
prior agreements and understandings of the parties in connection therewith,
including, but not limited to, the letter of intent dated April, 20, 1999,
between Buyer and Seller.
11.3 Commercially Reasonable Efforts; Further Assurances
(a) Commitment to Commercially Reasonable Efforts. Each party shall use its
commercially reasonable efforts to cause all conditions to its and the other
parties' obligations to be timely satisfied and to perform and fulfill all
obligations on its part to be performed and fulfilled under this Agreement, to
the end that the transactions contemplated by this Agreement shall be effected
substantially in accordance with its terms as soon as reasonably practicable.
The parties shall cooperate with each other in such actions and in securing
requisite Approvals. Each party shall execute and deliver both before and after
the Closing such further certificates, agreements and other documents and take
such other actions, including obtaining third party consents, as the other party
may reasonably request to consummate or implement the transactions contemplated
hereby or to evidence such events or matters including the assignment of the
Insurance Claims.
(b) Limitation. As used in this Agreement, the term "commercially
reasonable efforts" shall not mean efforts which require the performing party to
do any act that is unreasonable under the circumstances or to expend any funds
other than in payment of reasonable out-of-pocket expenses incurred in
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satisfying obligations hereunder, including but not limited to the fees,
expenses and disbursements of its accountants, actuaries, counsel and other
professional advisers.
11.4 Governing Law; Choice of Forum; Consent to Personal Jurisdiction
This Agreement and the legal relations between the parties shall be
governed by and construed in accordance with the laws of the State of Florida
except to the extent that certain matters are preempted by federal law or are
governed by the law of the jurisdiction of organization/incorporation of the
respective parties.
11.5 No Assignment
Neither this Agreement (nor related agreements pursuant to this Agreement)
nor any rights or obligations under any of them are assignable, except that
Buyer may assign its rights hereunder and under any related agreement entered
into in connection herewith (including but not limited to its rights under
Article X) to any wholly-owned subsidiary or Affiliate of Buyer or to any
post-Closing purchaser(s) of all of the capital stock of Buyer or of
substantially all of the Purchased Assets, and except that Seller may assign its
rights hereunder and under any related agreement entered into in connection
herewith (including but not limited to its rights under Article X) to any
wholly-owned subsidiary or Affiliate of Seller or to any post-Closing
purchaser(s) of substantially all of the Semiconductor Business Unit of the
Seller.
11.6 Headings
The descriptive headings of the articles, sections and subsections of this
Agreement are for convenience only and do not constitute a part of this
Agreement.
11.7 Counterparts
This Agreement and any amendment hereto or any other agreement (or
document) delivered pursuant hereto may be executed in one or more counterparts
and by different parties in separate counterparts. All of such counterparts
shall constitute one and the same agreement (or other document) and shall become
effective (unless otherwise therein provided) when one or more counterparts have
been signed by each party and delivered to the other party.
11.8 Publicity and Reports
Seller and Buyer shall coordinate all publicity relating to
the transactions contemplated by this Agreement, and no party shall issue any
press release, publicity statement or other public notice relating to this
Agreement, or the transactions contemplated by this Agreement, without obtaining
the prior consent of Seller and Buyer except to the extent that independent
legal counsel to Seller or Buyer, as the case may be, shall advise the other
party to the effect that a particular action is required by applicable Law.
Buyer and Seller shall obtain the prior consent of the other party to the form
and content of any application or report made to any Governmental Entity that
relates or refers to this Agreement.
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11.9 Confidentiality
All information disclosed in writing and designated in writing as
confidential by any party (or its representatives) whether before or after the
date hereof, in connection with the transactions contemplated by, or the
discussions and negotiations preceding, this Agreement to any other party (or
its representatives) shall be kept confidential by such other party and its
representatives and shall not be used by any Persons other than as contemplated
by this Agreement, except to the extent that such information (i) was known by
the recipient when received and was not covered by any other obligation of
confidentiality, whether contained elsewhere in this Agreement, or in a separate
agreement, (ii) it is or hereafter becomes lawfully obtainable from other
sources, (iii) is necessary or appropriate to disclose to a Governmental Entity
having jurisdiction over the parties, (iv) as may otherwise be required by law
or (v) to the extent such duty as to confidentiality is waived in writing by the
other party. If this Agreement is terminated, each party shall use all
reasonable efforts to return upon written request from the other party all
documents (and reproductions thereof) received by it or its representatives from
such other party (and, in the case of reproductions, all such reproductions made
by the receiving party) that include information not within the exceptions
contained in the first sentence of this Section 11.9, unless the recipients
provide reasonable written assurances satisfactory to the requesting party that
such documents have been destroyed and no originals or copies of such documents
have been retained for any purpose. Upon consummation of the Closing, this
Section 11.9 shall not, however, limit Buyer's use of information provided to it
in connection with the operation of the Photomask Business except with respect
to Seller's Product Mask Information which may not be used in manufacturing
Photomasks for third parties but may be used in manufacturing Photomasks for
Seller and its Affiliates.
11.10 Parties in Interest
This Agreement shall be binding upon and inure to the benefit of each
party, and nothing in this Agreement, express or implied, is intended to confer
upon any other person any rights or remedies of any nature whatsoever under or
by reason of this Agreement. Nothing in this Agreement is intended to relieve or
discharge the obligation of any third person to, or to confer any right of
subrogation or action over against, any party to this Agreement.
11.11 Notices
Any notice or other communication hereunder must be given in writing and
either (a) delivered in person, (b) transmitted by telex, facsimile or
telecommunications mechanism provided that any notice so given is also mailed as
provided in clause (c), or (c) mailed by certified or registered mail, postage
prepaid, as follows:
If to Buyer, addressed to:
Align-Rite International, Inc.
2428 Ontario Street
Burbank, CA 91504
Attention: James L. MacDonald
Chairman of the Board and Chief Executive Officer
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With a copy to:
J. Jay Herron, Esq.
Robert L. Davis, Esq.
O'Melveny & Myers LLP
610 Newport Center Drive, Suite 1700
Newport Beach, California 92660
Fax: (949) 823-6994
If to Seller, addressed to:
Harris Corporation
Semiconductor Sector
Attention: Gregory L. Williams
2401 Palm Bay Road N.E.
Mail Stop 53-198
Palm Bay, FL 32905
With a copy to:
Harris Corporation
Richard L. Ballantyne
Vice President, General Counsel and Secretary
1025 W. NASA Boulevard
Melbourne, Fl 32919
Fax: (407)727-9222
or to such other address or to such other person as either party shall have last
designated by such notice to the other party. Each such notice or other
communication shall be effective (i) if given by telecommunication, when
transmitted to the applicable number so specified in (or pursuant to) this
Section 11.11 and an appropriate confirmation is received, (ii) if given by
certified mail, postage prepaid, return receipt requested, three days after such
communication is deposited in the mails with first class postage prepaid,
addressed as aforesaid or (iii) if given by any other means, when actually
delivered at such address.
11.12 Expenses
Except as provided in Section 2.3 hereof, each of Seller and Buyer shall
pay its own expenses incident to the negotiation, preparation and performance of
this Agreement and the transactions contemplated hereby, including but not
limited to the fees, expenses and disbursements of its investment bankers,
accountants and counsel and of securing third party consents and approvals
required to be obtained by it except as otherwise expressly provided in this
Section 11.12. Seller agrees to pay one-half of Buyer's fees and expenses
related to compliance with the Hart-Scott-Rodino Act, in an amount not to exceed
$25,000, within thirty (30) days of the Closing Date.
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Buyer shall pay (i) any documentary transfer tax, real property transfer or
gains tax, document recording fees and charges, and any income, franchise or
revenue tax or excise tax (and any surtax thereon) due in connection with the
consummation of the transactions contemplated by this Agreement.
11.13 Remedies; Waiver
Except to the extent this Section 11.13 is inconsistent with any other
provision in this Agreement or applicable law, all rights and remedies existing
under this Agreement and any related agreements or documents are cumulative to,
and not exclusive of, any rights or remedies otherwise available under
applicable Law. No failure on the part of any party to exercise or delay in
exercising any right hereunder shall be deemed a waiver thereof, nor shall any
single or partial exercise preclude any further or other exercise of such or any
other right.
11.14 Attorneys' Fees
In the event of any Action for the breach of this Agreement or
misrepresentation by any party, the prevailing party shall be entitled to
reasonable attorneys' fees, costs and expenses incurred in such Action.
Attorneys' fees incurred in enforcing any judgment in respect of this
Agreement are recoverable as a separate item. The preceding sentence is intended
to be severable from the other provisions of this Agreement and to survive any
judgment and, to the maximum extent permitted by law, shall not be deemed merged
into any such judgment.
11.15 Knowledge Convention
Whenever any statement herein or in any schedule, exhibit, certificate or
other documents delivered to any party pursuant to this Agreement is made "to
the knowledge of' or words of similar intent or effect of any party or its
representative, such statement shall refer to the knowledge of such Person, and
such Person shall make such statement only after conducting a reasonable inquiry
concerning the subject matter thereof, and each statement shall be deemed to
include a representation that such investigation has been conducted; provided,
however, that with respect to Seller, such phrases shall mean the knowledge of
Tim Muth, Suzanne Jones, Jay Duncombe, Howard Rothman, Charles Burns and Holly
Carothers.
11.16 Representation By Counsel and Other Advisors; Interpretation
Seller and Buyer each acknowledge that each party to this Agreement has
been represented by counsel, financial, technical or other experts it deems
necessary or desirable before entering into this Agreement. and the transactions
contemplated by this Agreement. Each party represents and warrants that it has
read, knows, understands and agrees with the terms and conditions of the
Agreement. Neither party has relied upon any oral representation of the other
party in entering this Agreement. All discussions, estimates or projections
developed by a party during the course of negotiating the terms and conditions
of this Agreement are by way of illustration only, and are not binding or
enforceable against the other party in law or in equity. The provisions of this
Agreement shall be interpreted in a reasonable manner to effect the intent of
Buyer and Seller.
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11.17 Specific Performance
Seller and Buyer each acknowledge that, in view of the uniqueness of the
Photomask Business and the transactions contemplated by this Agreement, the
other party would not have an adequate remedy at law for money damages in the
event that this Agreement has not been performed in accordance with its terms.
Each party therefore agrees that the other party shall be entitled to specific
enforcement of the terms hereof in addition to any other remedy to which it may
be entitled, at law or in equity.
11.18 Severability
If any provision of this Agreement is determined to be invalid, illegal or
unenforceable by any Governmental Entity, the remaining provisions of this
Agreement shall remain in full force and effect provided that the economic and
legal substance of the transactions contemplated is not affected in any manner
materially adverse to any party. In the event of any such determination, the
parties agree to negotiate in good faith to modify this Agreement to fulfill as
closely as possible the original intents and purposes hereof. To the extent
permitted by Law, the parties hereby to the same extent waive any provision of
Law that renders any provision hereof prohibited or unenforceable in any
respect.
11.19 Dispute Resolution and Arbitration
In the event that any dispute arises among the parties pertaining to the
subject matter of this Agreement, and the parties, through the Buyer's senior
management and the Seller's senior management, are unable to resolve such
dispute within a reasonable time through negotiations and mediation efforts by
senior executives of both parties, such dispute shall be resolved as set forth
in this Section 11.19
(a) The procedures of this Section 11.19 may be initiated by a written
notice ("Dispute Notice") given by one party ("Claimant") to the other, but not
before 30 days have passed during which the parties have been unable to reach a
resolution as described above. The Dispute Notice shall be accompanied by (i) a
statement of the Claimant describing the dispute in reasonable detail and (ii)
documentation, if any, supporting the Claimant's position on the dispute. Within
twenty (20) days after the other party's ("Respondent") receipt of the Dispute
Notice and accompanying materials, the parties shall submit the dispute to
mediation in the Orlando, Florida area under the rules of the American
Arbitration Association. All negotiations and mediation procedures pursuant to
this paragraph (a) shall be confidential and treated as compromise and
settlement negotiations and shall not be admissible in any arbitration or other
proceeding.
(b) If the dispute is not resolved as provided in paragraph (a) within
sixty (60) days after the Respondent's receipt of the Dispute Notice, the
dispute shall be resolved by binding arbitration. Within the sixty-day period
referred to in the immediately preceding sentence, the parties shall agree on a
single arbitrator to resolve the dispute. If the parties fail to agree on the
designation of an arbitrator within said sixty-day period, the American
Arbitration Association in the Orlando, Florida area shall be requested to
designate the single arbitrator. If the arbitrator becomes disabled, resigns or
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is otherwise unable to discharge the arbitrator's duties, the arbitrator's
successor shall be appointed in the same manner as the arbitrator was appointed.
(c) Except as otherwise provided in this Section 11.19, the arbitration
shall be conducted in accordance with the Commercial Rules of the American
Arbitration Association, which shall be governed by the United States
Arbitration Act.
(d) Any resolution reached through mediation and any award arising out of
arbitration (i) shall be binding and conclusive upon the parties; (ii) shall be
limited to a holding for or against a party, and affording such monetary remedy
as is deemed equitable, just and within the scope of this Agreement; (iii) may
not include special, incidental, consequential or punitive damages; (iv) may in
appropriate circumstances include injunctive relief; and (v) may be entered in
court in accordance with the United States Arbitration Act.
(d) Arbitration shall not be deemed a waiver of any right of termination
under this Agreement, and the arbitrator is not empowered to act or make any
award other than based solely on the rights and obligations of the parties prior
to termination in accordance with this Agreement.
(f) The arbitrator may not limit, expand or otherwise modify the terms of
this Agreement.
(g) The laws of the State of Florida shall apply to any mediation,
arbitration, or litigation arising under this Agreement.
(h) Each party shall bear its own expenses incurred in any mediation,
arbitration or litigation, but any expenses related to the compensation and the
costs of any mediator or arbitrator shall be borne equally by the parties to the
dispute.
(i) A request by a party to a court for interim measures necessary to
preserve a party's rights and remedies for resolution pursuant to this Section
11.19 shall not be deemed a waiver of the obligation to mediate or of the
agreement to arbitrate.
(j) The parties, their representatives, other participants and the mediator
or arbitrator shall hold the existence, content and result of mediation or
arbitration in confidence.
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IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed by a duly authorized officer as of the day and year first above
written.
ALIGN-RITE INTERNATIONAL, INC.,
a California corporation
By: /s/ James MacDonald
-------------------------
James MacDonald
Chairman of the Board and
Chief Executive Officer
ALIGN-RITE, INC.,
a Florida corporation
By: /s/ James MacDonald
-------------------------
James MacDonald
Chairman of the Board
HARRIS CORPORATION,
a Delaware corporation
By: /s/ W.R. Morcom
-------------------------
W.R. Morcom
Vice President-General Manager Operations
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SCHEDULE 2.1(a)(i) Fixed Assets, Equipment, Machinery, Tools and Computer
Hardware being purchased by Buyer (continued)
FIXED ASSETS P11 FY'99
BUILDING 60 - SORTED BY ASSET NUMBER
<TABLE>
<CAPTION>
- - -----------------------------------------------------------------------------------------------
BLDG. ASSET DIV DEPT ASSET DESCRIPTION
NUMBER
- - -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
60 792031B OR 9460 STEAM HUMIDIFIER ORF
60 900111A OR 7150 APPLE LASERWRITER
60 908790F OR 7140 ETHERNET
60 913351B OR 7120 SOFTWARE, DBCS, CALMA
60 913489A OR 7140 CHAMBER. GCA. PBS
60 913489B OR 7140 INSTALL, CHAMBER, GC
60 913636B OR 7120 NIKON MEASURING INST
60 914496A OR 7120 HOTTANK, CORNING, VC
60 914536A OR 7120 REPAIR, QUANTRONICS I
60 914936A OR 7140 PROCESSOR, APT, 9155
60 915393A OR 7120 GRINDER, BUEHLER, LXUT
60 916177A OR 7120 INSPECT, HORIBA, P1000
60 916177B OR 7120 FREIGHT
60 916259A OR 7120 CHAMBER, HORIBA
60 916400A OR 7120 MOTORIZED IMAGE ROTA
60 916400B OR 7120 UPG FOR MEASURE UNIT
60 920918A OR 7120 MICRO LASER PARTICLE
60 930187A OR 7140 CD, OSI, VIDEO
60 930187B OR 7140 RETROFIT KIT, OSI CC
60 940719A OR 7120 ISOLATION, BARRY, 219E
60 940758A OR 7120 CONTACT PRINTER
60 941637A OR 7120 INSPECT, KLA, 219E
60 941637B OR 7120 UPG TO RIA II
60 941637C OR 7120 7 X 7 MASK HOLDER
60 942964A OR 7120 PHOTOMASK CLEANER W/
60 952025A OR 7120 QC MASK INSPECT SYST
60 952301A OR 7120 PELLICLE MOUNTER
60 952981A OR 7120 NIKON 5i LASER MEASU
60 955104A OR 7140 TEKSCOPE
60 G10320078 OR 7140 MEBES, ETEC, M78
60 G1030078A OR 7140 REFURBISHED M78
60 G1030078C OR 7140 MEBES IV E-BEAM UPG
60 G10336548 OR 7140 MEBES, ETEC, M67
60 G1033654A OR 7140 ETHERNET
60 G10336572 OR 7150 AMPLIFIER SYSTEM
60 G10336580 OR 7140 AMPLIFIER, ROGERS, N
60 G10336603 OR 7120 COMPARATOR, NIKON 2
60 G10336637 OR 7120 INSPECT, KLA, 101
- - -----------------------------------------------------------------------------------------------
</TABLE>
47
<PAGE>
SCHEDULE 2.1(a)(i) Fixed Assets, Equipment, Machinery, Tools and Computer
Hardware being purchased by Buyer (continued)
<TABLE>
<CAPTION>
- - -----------------------------------------------------------------------------------------------
BLDG. ASSET DIV DEPT ASSET DESCRIPTION
NUMBER
- - -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
60 G10336679 OR 7140 PROCESSOR, APT, 915
60 G10336653 OR 7120 CHAMBER
60 G10336661 OR 7140 PROCESSOR, APT, 915
60 G1354467A OR 7130 PRINTER, TAMARACK, 1
60 G1354558A OR 7130 PRINTER, TAMARACK, 1
60 G1354777A OR 7130 TITLER, TAMARACK, CP
60 G13354813A OR 7130 PROCESSOR, APT, 914-
60 G1354975A OR 7130 PROCESSOR, APT, 914
60 G1355180A OR 7130 STEPPER, GCA, 3696
60 G1355182A OR 7140 PROCESSOR, APT, 914-
60 G1355238A OR 7120 REPAIR, QUANTRONICS, I
60 G1355239A OR 7120 INSPECT, KLA, 201
60 G1355239B OR 7120 HOLDER, KLA, 5X5X0.0
60 G1355261A OR 7120 CD, LEITZ, MPVCD#1
60 G1355366A OR 7140 PLOTTER, VERDATEC, M
60 G1355435A OR 7120 INSP.REP, KLA/QUANT
60 G1355435B OR 7120 PAY, FINAL, DRSII/22
60 G1355435C OR 7120 KLA 204 CONVERSION K
60 G1355435D OR 7120 UPGRADE TO DRS-II
60 G1355465A OR 7120 COMPUTER, IBM
60 G1355549A OR 7120 CD, LETIZ, MPVCD#2
60 G1355605A OR 7130 SCOPE, B&L STEREO
60 G1355606A OR 7130 SCOPE, B&L, STEREO
60 G1355615A OR 7140 SURFSCAN
60 G1355618A OR 7120 CD, LEITZ, MPVCD#3
60 G1355668A OR 7150 COMPUTER, TANDY, 200
60 G1355669A OR 7120 COMPUTER, TANDY, 300
60 G1355690 OR 7120 INSPECT, KLA, 101
60 G1610325A OR 7130 CLEANER, UT, 603
60 G1610326A OR 7120 CLEANER, UT 603
60 G1610327A OR 7120 CLEANER, UT 603
60 G1900053A OR 7140 SCOPE, LEITZ, ERGOLUX
60 G1900074A OR 7140 COMPRESSOR, CHAMP #3
60 G1900075A OR 7140 COMPRESSOR, CHAMP #4?
60 G1900076A OR 7140 COMPRESSOR, CHAMP #1
60 G190077A OR 7140 COMPRESSOR, CHAMP #2
60 G1900079A OR 7140 N2 CABINET, OHIO, ET
- - -----------------------------------------------------------------------------------------------
</TABLE>
48
<PAGE>
SCHEDULE 2.1(a)(i) Fixed Assets, Equipment, Machinery, Tools and Computer
Hardware being purchased by Buyer (continued)
<TABLE>
<CAPTION>
- - -----------------------------------------------------------------------------------------------
AR- Asset Bldg. Div. Dept. Description
Tag
- - -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
79 No Tag 60 OR 7150 PT/HP 9-track tape/on Mask
80 No Tag 60 OR 7150 Disk Drive tower/on Mask
81 60 CONTROL, ROBERTSHAW
103 910205A 60 OR 7120 WETDECK, 4'
104 906340A 60 OR 7130 WETDECK 5'
105 G10314794 60 INSPECT, KLA201, 106
106 903698A 60 OR 5450 PRINTER, KLA, 70
107 920086 60 TERMINAL, VT330
108 60 HCM 100D, PMN9193
112 913496A 60 OR 7120 CAMERA, NIKON, 21
114 012101 60 MICROSCOPE, M&M
115 911499A 60 OR 7140 SCOPE, LEITZ, SMLUX
121 906344A 60 OR 7130 WETDECK, 6'
121 906343A 60 OR 7130 WETDECK, 6'
126 9114325A 60 OR 7120 ISOLATION, BARRY, KLA, 69
127 SOM900110 60 PRINTER, KLA, 70
128 905979 60 PRINTER, DECWRITER II
131 906342A 60 OR 7140 WETDECK, 4'
132 906341A 60 OR 7140 WETDECK, 4'
135 916455 60 CD, OS12
136 907731A 60 OR 7140 PLASMA, LFE
136 907738A 60 OR 7140 PUMP, LFE, PLASMA
137 914183 60 CD, OS13
138 60 TABLE, KINETIC
143 954255 60 PROCESSOR, HME
145 905900A 60 OR 7130 PROCESSOR, APT, 914, ET ETCH
148 012468 60 OVEN BLUE M
150 906338 60 WETDECK, 4'
153 G10247040 60 PRINTER, TAMARCK, 5"
154 SOM900014 60 CLEANER, UT, 603
155 913401A 60 OR 7120 METER OAI EXPOSURE
158 909101B 60 OR 7120 MASK HOLDER, KLA, 100
158 909101A 60 OR 7120 INSPECT, KLA, 100
162 60 OR 7120 MEBES LOADER - M78
164 G10269195 60 TITLER, TAMARACK, 153
167 914970 60 CLEANER, UT, 2066
168 913179 60 OVEN, BLUE M
169 G619932430 60 COMPARATOR, NIKON, CM6
170 906339A 60 OR 7130 WETDECK, 4'
171 012463 60 INSPECT, CODE A, 012565
</TABLE>
49
<PAGE>
SCHEDULE 2.1(a)(i) Fixed Assets, Equipment, Machinery, Tools and Computer
Hardware being purchased by Buyer (continued)
MECHANICAL AND ELECTRICAL ROOM
Compressed Air Dryer (2)
Piping
Central Chiller (L96)
Central Chiller (L92)
Emergency Chiller
Chilled Water Pump (2)
Refrigerant Monitor
Steam Humidifier (AHU 1, 2, 3, 4)
Boiler-Steam Air Handlers (1, 2, 3, 4, 5)
Air Handlers (6, 7)
Chillers Controls (CSI)
Vacuum Pump
DI Wafer Pumpsl Filters
ExideSys. 150
Installation Charges
Electrical Upgrade (1991)
MCC Model 5 Control
Elec. Switch Gears
Basic Lite Fixtures
VAX HARDWARE ASSETS
Harris Alias Model/Device
- - ------------ --------------
Vmsy2K VAX 4000-700 (128m of memory)
Chetah Alpha Server 2100
Mask Microvax 3800
Tiger I Felix Microvax 3100
Jaguar VAXstation 3100
Cougar/Lynx VAXstation 4000-60
Lion/Puma DECstation 3000-60
HSSDEV AU 4/52 DLT Tape Silo
HSSDEV P228 2.L GB SCSI Disk
HSSDEV RZ29 4.3 GB SCSI Disk
HSSDEV BA350-JA SCSI Storage Shelf
HSSDEV TKZO9-VA (8mm Tape Drive)
50
<PAGE>
SCHEDULE 2.1(a)(i) Fixed Assets, Equipment, Machinery, Tools and Computer
Hardware being purchased by Buyer - (continued)
Telecommunications Equipment, Personal Computer
and Related Equipment
Customer Service (Bldg. 56)
HP Design Jet 455A Plotter
Cougar 4000-60/Cougar
VAX 4000 CPU Upgrade
TAPE, DEC, on Cougar
VAX 3000 Puma/sn AB43800GCC
ULTRA 30/Wildfire
8505XL EXABYTE/on Wildfire
SUN SPARC 2/Starfire
VAX 3000/Lion/sn AB43800GWG
Plain Paper Fax
HP LaserJet Printer I Wildfire
Dell Optiplex/Cust. Data PC
Compaq DP SB/Ed Mills
Compaq Deskpro/Sue Umberger
Compaq DP 4000/Robert Quigley
Compaq DP 575/Debbie Fleming
Compaq Deskpro/Shiela Tyre
Compuadd 486/Lydia Guthridge
Compaq P166 I Andra Nathanson
Compaq DP 575/Luis Pinto
Compaq 575/Phung Luu
Compaq DP4000/Dave Moffett
Portege6SOCT Laptop/J Milispaugh
HP LaserJet ifi/J Millspaugh
Compaq DP5 100/C Romano
HP LaserJet II Printer/C Romano
Compaq 266/Steve Suhling
Maintenance
Terminal, Dec, VT340/J Carter
Camera, 3M, Microfiche
CPQ Deskpro 2000/Pat Kervin
HP LaserJet 4si/Old Starfire Printer
Compaq DP/J Maciejewski
Compaq DP 4000/Scott Gallagher
Compaq 575/Pat Schappert
Compaq DP SB/Walt Rauch
51
<PAGE>
SCHEDULE 2.1(a)(i) Fixed Assets, Equipment, Machinery, Tools and Computer
Hardware being purchased by Buyer - (continued)
Telecommunications Equipment, Personal Computer
and Related Equipment - continued
Telecommunications (Bldg. 56)
Fastiron -24 Ports
Chassis, Base T Conc
10 Base T Chassis
28115E 100M Stackable
Xyplex Server Chassi
10Baset Monitor Card
2115R 16 Port 100 BA
Base T Connector
3000 T Connector
3000 T Concentrator
Telecom & Computers - Building 60
Dell P75/Bonnie Mitchell
Compaq DPSB/N Miller
Gateway 2000/Beth Morey
Lexmark Printer/B & Ship
Compaq DPSB/Bob Quinn
CPQ Deskpro 2000/F Trimboli
Compaq Prolinea 486 I MEBES
Compaq/Robert Shaw Sys
Compaq 286 I Particle Monitor
Add-on Costs/Particle Monitor
Compaq 486/Tom Thum box
CPQ 5166MMXJ/Bill & Ship
Compaq 386/R Manion/home
Compaq DP2000/Rick M
Compaq 5133 MMX/Robe
Lanier Fax 3800
Chassis, Base T Conc
Max 4500T Server
Vax Station Adapter
Terminal, VT240
Dell P75/Liz Helms
Compaq DP 575/Doug Quinn
Compaq DP/Charlie Burns
Compaq 386 I MEBES
Compaq DP I Supervisors' PC
Compaq MT 466 I Bay 2
HP LaserJet 4Plus/Prd Control
Compaq 433/Billie Hogan
52
<PAGE>
SCHEDULE 2.1(a)(ii) Cleanroom Fixtures and Improvements
being purchased by Buyer
Recirc. CHW/CW Pumps (11)
Air Handling Unit 08 & 09
Air Handling Unit 10 & 11
Air Handling Unit 12, 13, 14 & 15 (Pace)
HVAC Upgrade
Hood Duct Filter System
Processing Piping System
DDC System Progrss
EPE Power Block 3OKVA
Clean Room Flooring
Doors I Walls/Ceiling
Particle Meas. System (Less Facility View Software)
Under Raised Floor Fire Alarm (Vesda)
53
<PAGE>
SCHEDULE 2.1(a)(iii) Fixtures and Improvements attached to the Real Property
being purchased by Buyer
Cooling Tower
Cooling Tower Pumps (2)
Cooling Tower Base
Chiller Plant Upgrades (1997)
Scrubber/Exhaust System
Generator/Fuel System
54
<PAGE>
SCHEDULE 2.1(a)(iv) Inventory and Raw Materials being purchased by Buyer
Item Est. Value
Raw Material - Photomask Blanks & Pellicles $226,000
Work-in-Progress (WIP) $15,000
Finished Goods
Chemicals $14,000
Mask Boxes $25,000
Equipment Spare Parts (see list below) $103,000
On-site Equipment Maintenance Spares
New parts:
QC Optics
- - ------------------------------------------------------------------
Microscope Div. Bd. $1,600.00
- - ------------------------------------------------------------------
DMABD $ 825.00
L/OBd.A $1,150.00
Analog Bd. $4,250.00
Sensor, Hammatsu $ 880.00
PMT Tube $ 550.00
Motor 22N $ 300.00
Motor M1616C $ 340.00
Laser, Pellicle $ 580.00
Misc. Parts $1,600.00
Ultra-Tech Plate Cleaner
Pump, High Pressure $2,000.00
Robert-Shaw System
DCM-UC $2,700.00
DCM-GPC $2,640.00
MSC-AC $ 550.00
MSC-PO $ 286.00
MSC-P1504 $ 450.00
DMSA-848 $ 650.00
DMSA-849 $ 610.00
DMSA-850 $ 400.00
MSC-U1000 $1,770.00
DCM-1OC $3,200.00
Misc. Parts $1,400.00
55
<PAGE>
SCHEDULE 2.1(a)(iv) Inventory and Raw Materials being purchased by Buyer
(continued)
On-site Equipment Maintenance Spares - continued
- - -----------------------------------------------------------------------------
Used Parts
- - -----------------------------------------------------------------------------
QC Optics
Laser, Argon $9,350.00
Laser Power Sup. $3,375.00
Ultra-Tech Plate Cleaner
Pump, High Pressure $1,500.00
Misc. Parts $4,000.00
- - -----------------------------------------------------------------------------
MEBES
- - -----------------------------------------------------------------------------
H-P 8V Power Sup. $1,200.00
M-III
EBC $81200.00
M-III
Vacuum System Cntrl $1,100.00
M-III
Stage Cntrl Interface $1,200.00
M-III Electron Source Cntrl $1,400.00
CVI Cryo-pump $6,000.00
M-III Column Electronic P.S. $1,100.00
V-80 Plotter (2) $2,600.00
LaB6 Gun $4,200.00
Misc. Parts $8,900.00
KLA 100
Printer Circuit Bds. $3,200.00
DRS-I & II
Misc. parts $5,000.00
APT Processor
Misc. parts $5,000.00
56
<PAGE>
SCHEDULE 2.1(a)(iv) Inventory and Raw Materials being purchased by Buyer
(continued)
On-site Equipment Maintenance Spares - continued
- - -----------------------------------------------------------------------------
Tamarack Printer
- - -----------------------------------------------------------------------------
Misc. Parts $2,000.00
OSI/MPV Measuring Systems
Misc. Parts $2,500.00
- - -----------------------------------------------------------------------------
Nitrogen Booster System
- - -----------------------------------------------------------------------------
Haskel Pump (4) $2,600.00
TOTAL $103,156.00
57
<PAGE>
SCHEDULE 2.1(a)(v) Assumed Contracts
<TABLE>
<CAPTION>
- - ------------------------------------------------------------------------------------------------------------------------------------
Order Order Order Part
Div Dept Charge Vendor Date Number Status Number Description
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
R 1999 510056 MICROLITHOGRAPHY 9/4/97 230799 O 710627-999999 PELLICLE, ENGINEERING
- - ------------------------------------------------------------------------------------------------------------------------------------
R 1999 510056 MICROLITHOGRAPHY 9/4/97 230801 O 710627-999999 PELLICLE, ENGINEERING
- - ------------------------------------------------------------------------------------------------------------------------------------
R 1999 510056 INKO INDUSTRIAL 7/10/98 238430 O 710627-0103 PELLICLE, ASM
- - ------------------------------------------------------------------------------------------------------------------------------------
R 1999 C10055 FISHER SCIENTIFIC CO. 7/14/98 238564 O 210549 DEVELOPER, AC-12350-2500
(250 ML)
- - ------------------------------------------------------------------------------------------------------------------------------------
R 1999 510055 FISHER SCIENT 7/14/98 238564 O 2104\549 DEVELOPER, AC-12350-2500
- - ------------------------------------------------------------------------------------------------------------------------------------
R 1999 C10055 FISCHER SCIENTIFIC CO. 7/14/98 238565 O 210548 DEVELOPER, AC149660025
(.25 LI.)
- - ------------------------------------------------------------------------------------------------------------------------------------
R 1999 510055 FISCHER SCIENT 7/14/98 238565 O 210548 DEVELOPER, AC149660025
- - ------------------------------------------------------------------------------------------------------------------------------------
R 1999 510056 DUPONT PHOTOMASKS INC 7/24/98 238687 O 710627-999999 PELLICLE, ENGINEERING
- - ------------------------------------------------------------------------------------------------------------------------------------
R 1999 510056 DUPONT PHOTOMASKS INC 7/24/98 238688 O 710627-999999 PELLICLE, ENGINEERING
- - ------------------------------------------------------------------------------------------------------------------------------------
R 1999 510056 INKO INDUSTRIAL 10/21/98 240438 O 710627-0106 ASM17P-113-1015-H
- - ------------------------------------------------------------------------------------------------------------------------------------
R 1999 510056 HOYA CORPORATION USA 11/3/98 240644 O 710538-31603 5*5 .090-2UM-EHQ-AR-PBS-U
- - ------------------------------------------------------------------------------------------------------------------------------------
R 1999 510056 HOYA CORPORATION USA 11/2/98 240645 O 710538-61603 6*6 .250-2UM-EHQ-AR-PBS-U
- - ------------------------------------------------------------------------------------------------------------------------------------
R 1999 510056 MICROLITHOGRAPHY INC 11/23/98 241105 O 710627-0503 PELLICLE, PE
- - ------------------------------------------------------------------------------------------------------------------------------------
R 1999 510056 INKO INDUSTRIAL 11/23/98 241106 O 710627-0602 PELLICLE, UT
- - ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- - ------------------------------------
Original Invoiced Dollars
Dollars Dollars Available
- - ------------------------------------
<S> <C> <C>
$8,000 $2,400 $5,600
- - ------------------------------------
$8,000 $2,400 $5,600
- - ------------------------------------
$250,000 $175,625 $74,375
- - ------------------------------------
$26,569 $19,587 $6,982
- - ------------------------------------
$26,569 $19,587 $6,982
- - ------------------------------------
$53,059 $39,640 $13,419
- - ------------------------------------
$53,060 $39,40 $13,420
- - ------------------------------------
$54,000 $15,525 $38,475
- - ------------------------------------
$54,000 $15,525 $38,475
- - ------------------------------------
$112,000 $35,455 $76,545
- - ------------------------------------
$424,000 $182,850 $241,150
- - ------------------------------------
$727,650 $417,725 $309,925
- - ------------------------------------
$60,000 $32,820 $27,180
- - ------------------------------------
$35,500 $30,530 $4,970
- - ------------------------------------
</TABLE>
58
<PAGE>
SCHEDULE 2.1(a)(v) Assumed Contracts (continued)
<TABLE>
<CAPTION>
- - ------------------------------------------------------------------------------------------------------------------------------------
Order Order Order Part
Div Dept Charge Vendor Date Number Status Number Description
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
R 1999 510056 DUPONT PHOTOMASKS INC 12/3/98 241296 O 710627-0307 PELLICLE:GN501G-5221H
- - ------------------------------------------------------------------------------------------------------------------------------------
R 1999 510056 DUPONT PHOTOMASKS INX 12/3/98 241297 O 710627-0306 PELLICLE:GN501P-5221H
- - ------------------------------------------------------------------------------------------------------------------------------------
R 1999 C10055 VWR SCIENTIFIC PRODUCTS 2/3/99 241979 O 210062-031 CHEMICAL, CERIUM AMMONIUM
NITRATE
- - ------------------------------------------------------------------------------------------------------------------------------------
R 1999 510056 HOYA CORP 2/2/99 242092 O 710538-03000 4 4 .060-10UM-SLW-AR-1350
- - ------------------------------------------------------------------------------------------------------------------------------------
R 1999 510056 HOYA CORPORATION USA 2/2/99 242093 O 710538-32400 5 5 .090-5UM-QZ-AR-1350-S
- - ------------------------------------------------------------------------------------------------------------------------------------
R 1999 510056 HOYA CORP 2/2/99 242094 O 710538-32103 5X5 .090-5UM-WC-AR-PBS-U
- - ------------------------------------------------------------------------------------------------------------------------------------
R 1999 510056 HOYA CORPORATION USA 2/2/99 242095 O 710538-31501 5 5 .090-2UM-EQZ-AR-1350-U
- - ------------------------------------------------------------------------------------------------------------------------------------
R 1999 510056 HOYA CORP 2/2/99 242096 O 710538-33000 5 5 .090-10UM-SLW-AR-1350-S
- - ------------------------------------------------------------------------------------------------------------------------------------
R 1999 510056 HOYA CORP 2/2/99 242097 O 710538-53000 6 6 .120-10UM-SLW-AR-1350-S
- - ------------------------------------------------------------------------------------------------------------------------------------
R 1999 510056 HOYA CORPORATION USA 2/2/99 242098 O 710538-33200 5 5 .090-5UM-NA-AR-1350-S
- - ------------------------------------------------------------------------------------------------------------------------------------
R 1999 510056 HOYA CORP 2/2/99 242100 O 710538-31501 5 5 .090-2UM-EQZ-AR-1350-U
- - ------------------------------------------------------------------------------------------------------------------------------------
R 1999 510056 IMAGEX 2/5/99 242101 O 710538-11503 4 4 .090-2UM-EQZ-AR-PBS-U
- - ------------------------------------------------------------------------------------------------------------------------------------
R 1999 510056 HOYA CORP 2/2/99 242102 O 710538-11412 4 4 .090-2UM-QZ-CT-PBS-U
- - ------------------------------------------------------------------------------------------------------------------------------------
R 1999 510056 HOYA CORP 2/2/99 242103 O 710538-02103 4X4 .060-5UM-WC-AR-PBS-U
- - ------------------------------------------------------------------------------------------------------------------------------------
R 1999 510056 IMAGEX 2/5/99 242104 O 710538-01503 4X4 .060-2UM-EQZ-AR-PBS-U
- - ------------------------------------------------------------------------------------------------------------------------------------
R 1999 510056 MICROLITHOGRAPHY INC 2/5/99 242105 O 710627-0204 PELLICLE, CANON
- - ------------------------------------------------------------------------------------------------------------------------------------
R 1999 510056 INKO INDUST 2/5/99 242106 O 710627-0208 PELLICLE, CANON
- - ------------------------------------------------------------------------------------------------------------------------------------
R 1999 510056 INKO INDUST 2/5/99 242107 O 710627-0207 PELLICLE, CANON
- - ------------------------------------------------------------------------------------------------------------------------------------
R 1999 510056 MICROLITHOGRAPHY 2/5/99 242108 O 710627-0206 PELLICLE, CANON
- - ------------------------------------------------------------------------------------------------------------------------------------
R 1999 510056 MICROLITHOGRAPHY 2/5/99 242109 O 710627-0205 PELLICLE, CANON
- - ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- - ---------------------------------------
Original Invoiced Dollars
Dollars Dollars Available
- - ---------------------------------------
<S> <C> <C>
$13,500 $12,825 $675
- - ---------------------------------------
$13,500 $12,825 $675
- - ---------------------------------------
$34,040 $15,183 $18,857
- - ---------------------------------------
$1,300 $-- $1,300
- - ---------------------------------------
$18,000 $7,200 $10,800
- - ---------------------------------------
$8,700 $-- $8,700
- - ---------------------------------------
$42,250 $2,600 $39,850
- - ---------------------------------------
$2,600 $-- $2,600
- - ---------------------------------------
$3,300 $-- $3,300
- - ---------------------------------------
$155,000 $18,600 $136,400
- - ---------------------------------------
$42,250 $-- $42,250
- - ---------------------------------------
$12,000 $2,400 $9,600
- - ---------------------------------------
$7,250 $-- $7,250
- - ---------------------------------------
$6,300 $-- $6,300
- - ---------------------------------------
$5,750 $-- $5,750
- - ---------------------------------------
$49,500 $4,950 $44,550
- - ---------------------------------------
$3,400 $-- $3,400
- - ---------------------------------------
$5,600 $-- $5,600
- - ---------------------------------------
$2,750 $-- $2,750
- - ---------------------------------------
$2,750 $-- $2,750
- - ---------------------------------------
</TABLE>
59
<PAGE>
SCHEDULE 2.1(a)(v) Assumed Contracts (continued)
<TABLE>
<CAPTION>
- - ------------------------------------------------------------------------------------------------------------------------------------
Order Order Order Part
Div Dept Charge Vendor Date Number Status Number Description
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
R 1999 510056 MICROLITHOGRAPHY 2/5/99 242110 O 710627-0200 PELLICLE, CANON
- - ------------------------------------------------------------------------------------------------------------------------------------
R 1999 510056 INKO INDUST 2/5/99 242111 O 710627-0301 PELLICLE, GCA
- - ------------------------------------------------------------------------------------------------------------------------------------
R 1999 510056 INKO INDUST 2/5/99 242112 O 710627-0001 PELLICLE, TRE
- - ------------------------------------------------------------------------------------------------------------------------------------
R 1999 510056 MICROLITHOGRAPHY 2/5/99 242114 O 710627-0201 PELLICLE, CANON
- - ------------------------------------------------------------------------------------------------------------------------------------
R 1999 510056 MICROLITHOGRAPHY 2/5/99 242115 O 710627-0202 PELLICLE, CANON
- - ------------------------------------------------------------------------------------------------------------------------------------
R 1999 510056 INKO INDUST 2/5/99 242116 O 710627-0209 PELLICLE, CANON
- - ------------------------------------------------------------------------------------------------------------------------------------
R 1999 510056 INKO INDUST 2/5/99 242117 O 710627-0210 PELLICLE, CANON
- - ------------------------------------------------------------------------------------------------------------------------------------
R 1999 510056 INKO INDUSTRIAL 2/5/99 242118 O 710627-0303 PELLICLE, GCA
- - ------------------------------------------------------------------------------------------------------------------------------------
R 1999 510056 INKO INDUSTRIAL 2/5/99 242119 O 710627-0304 PELLICLE, GCA
- - ------------------------------------------------------------------------------------------------------------------------------------
R 1999 510056 INKO INDUSTRIAL 2/5/99 242120 O 710627-0503 PELLICLE, GCA
- - ------------------------------------------------------------------------------------------------------------------------------------
R 1999 510056 INKO INDUST 2/5/99 242121 O 710627-0400 PELLICLE, NIK
- - ------------------------------------------------------------------------------------------------------------------------------------
R 1999 510056 INKO INDUST 2/5/99 242122 O 710627-0401 PELLICLE, NIK
- - ------------------------------------------------------------------------------------------------------------------------------------
R 1999 510056 MICROLITHOGRAPHY 2/5/99 242123 O 710627-0402 PELLICLE, NIK
- - ------------------------------------------------------------------------------------------------------------------------------------
R 1999 510056 MICROLITHOGRAPHY 2/5/99 242124 O 710627-0403 PELLICLE, NIK
- - ------------------------------------------------------------------------------------------------------------------------------------
R 1999 510056 MICROLITHOGRAPHY 2/5/99 242125 O 710627-0500 PELLICLE, PE
- - ------------------------------------------------------------------------------------------------------------------------------------
R 1999 510056 INKO INDUST 2/5/99 242126 O 710627-0504 PELLICLE, PE
- - ------------------------------------------------------------------------------------------------------------------------------------
R 1999 510056 INKO INDUSTRIAL 2/5/99 242127 O 710627-0505 PELLICLE, PE
- - ------------------------------------------------------------------------------------------------------------------------------------
R 1999 510056 MICROLITHOGRAPHY 2/5/99 242128 O 710627-0600 PELLICLE, UT
- - ------------------------------------------------------------------------------------------------------------------------------------
R 1999 510056 MICROLITHOGRAPHY INC 2/5/99 242129 O 710627-0501 PELLICLE, PE
- - ------------------------------------------------------------------------------------------------------------------------------------
R 1999 510056 INKO INDUSTRIAL 2/5/99 242130 O 710627-0300 PELLICLE, GCA
- - ------------------------------------------------------------------------------------------------------------------------------------
R 7160 510056 RTD EXPRESS 2/2/99 242266 O SERVICE SERVICE, SEE BELOW PLEASE
- - ------------------------------------------------------------------------------------------------------------------------------------
R 1999 510056 HOYA CORPORATION USA 2/2/99 242287 O 710538-E1503 7.25 .150-2UM-EQZ-AR-PBSU
- - ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- - ---------------------------------------
Original Invoiced Dollars
Dollars Dollars Available
- - ---------------------------------------
<S> <C> <C>
$60,000 $8,700 $51,300
- - ---------------------------------------
$64,000 $6,080 $57,920
- - ---------------------------------------
$32,000 $-- $32,000
- - ---------------------------------------
$48,000 $9,360 $38,640
- - ---------------------------------------
$44,800 $3,540 $41,260
- - ---------------------------------------
$3,500 $-- $3,500
- - ---------------------------------------
$3,500 $00 $3,500
- - ---------------------------------------
$9,600 $1,280 $8,320
- - ---------------------------------------
$6,500 $3,250 $3,250
- - ---------------------------------------
$6,500 $3,250 $3,250
- - ---------------------------------------
$3,450 $-- $3,450
- - ---------------------------------------
$3,450 $-- $3,450
- - ---------------------------------------
$6,500 $1,950 $4,550
- - ---------------------------------------
$6,500 $2,275 $4,225
- - ---------------------------------------
$4,500 $600 $3,900
- - ---------------------------------------
$11,550 $-- $11,550
- - ---------------------------------------
$19,200 $1,280 $17,920
- - ---------------------------------------
$3,100 $-- $3,100
- - ---------------------------------------
$31,050 $8,775 $22,275
- - ---------------------------------------
$30,500 $2,745 $27,755
- - ---------------------------------------
$500 $115 $385
- - ---------------------------------------
$520,000 $298,480 $221,520
- - ---------------------------------------
</TABLE>
60
<PAGE>
SCHEDULE 2.1(a)(v) Assumed Contracts (continued)
<TABLE>
<CAPTION>
- - ------------------------------------------------------------------------------------------------------------------------------------
Order Order Order Part
Div Dept Charge Vendor Date Number Status Number Description
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
R 1999 510056 DUPONT PHOTOMASKS INC 2/11/99 242386 O 710627-0406 PELLICLE; N1522P-5211H
- - ------------------------------------------------------------------------------------------------------------------------------------
R 1999 510056 DUPONT PHOTOMASKS INC 2/11/99 242387 O 710627-0407 PELLICLE; N1522G-5211H
- - ------------------------------------------------------------------------------------------------------------------------------------
R 1999 510056 MICROLITHOGRAPHY INC 3/2/99 242728 O 710627-0203 PELLICLE, CANON
- - ------------------------------------------------------------------------------------------------------------------------------------
R 1999 510056 HOYA CORPORATION USA 3/24/99 243283 O 710538-51503 6 6 .120-2UM-EQZ-AR-PBSU
- - ------------------------------------------------------------------------------------------------------------------------------------
R 1999 510056 DUPONT PHOTOMASKS INC 3/30/99 243337 O 710627-0409 PELLICLE; N1609P-7043L
- - ------------------------------------------------------------------------------------------------------------------------------------
R 1999 510056 DUPONT PHOTOMASKS INC 3/30/99 243338 O 710627-0306 PELLICLE: GN501P-5221H
- - ------------------------------------------------------------------------------------------------------------------------------------
R 1999 510056 DUPONT PHOTOMASKS INC 3/30/99 243339 O 710627-0307 PELLICLE: GN501G-5221H
- - ------------------------------------------------------------------------------------------------------------------------------------
R 7150 568550 INSTRUMENTATION 5/5/99 244192 O 03-07720-02 PRINTER HEAD, STYLUS 6470
SERVICES
- - ------------------------------------------------------------------------------------------------------------------------------------
R 7140 568550 INTEGRATED SOFTWARE 5/7/99 244269 O SERVICE ON-TAP ALPHA DEPT. S
DESIGN INC 4000, 2100 SER. 5294A
- - ------------------------------------------------------------------------------------------------------------------------------------
R 1999 510054 ASHLAND CHEMICAL CO 5/17/99 244458 O 210062-017 ACETIC ACID, (4 X 9 LB. PER
CASE)
- - ------------------------------------------------------------------------------------------------------------------------------------
R 1999 510053 FLUOROWARE INCORPORATED 5/21/99 244552 O 215494-012 BOX FOR FINISHED PHOTOMASK-
PA'S H60-60-0615 WHT
- - ------------------------------------------------------------------------------------------------------------------------------------
R 1999 510053 FLUOROWARE INCORPORATED 5/21/99 244553 O 215494-014 BOX FOR FINISHED PHOTO
- - ------------------------------------------------------------------------------------------------------------------------------------
R 7120 568202 ZEPHYRHILLS WATER 2/10/99 252032 O 1 DRINKING WATER SYSTEM AND
BOTTLED WATER
- - ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- - ---------------------------------------
Original Invoiced Dollars
Dollars Dollars Available
- - ---------------------------------------
<S> <C> <C>
$14,500 $11,600 $2,900
- - ----------------------------------------
$14,500 $9,425 $5,075
- - ----------------------------------------
$81,000 $25,920 $55,080
- - ----------------------------------------
$240,000 $52,000 $188,000
- - ----------------------------------------
$94,000 $9,400 $84,600
- - ----------------------------------------
$54,000 $8,100 $45,9900
- - ----------------------------------------
$54,000 $7,425 $46,575
- - ----------------------------------------
$220 $-- $220
- - ----------------------------------------
$795 $-- $795
- - ----------------------------------------
$799 $396 $403
- - ----------------------------------------
$756 $378 $378
- - ----------------------------------------
$4,310 $2,155 $2,155
- - ----------------------------------------
$500 $243 $257
- - ----------------------------------------
</TABLE>
61
<PAGE>
SCHEDULE 2.1(a)(vi) Prepaid Expenses
Software - Est. Value $4,000
62
<PAGE>
SCHEDULE 2.1(a)(viii) Environmental Support Systems being purchased by Buyer
See Schedules 2.1(a)(i) - (a)(iii)
63
<PAGE>
SCHEDULE 4.2(c) Material Adverse Changes since April 26, 1999
Considered a material change, but not adverse, is the sale of the Semiconductor
Business Unit by Harris Corporation to a subsidiary of Sterling Holding Company
LLC, a Citicorp Venture Capital, Ltd. Investment portfolio company on June 2,
1999.
64
<PAGE>
SCHEDULE 4.3 Material Contracts
CONTRACTS > $25,000.00
<TABLE>
<CAPTION>
SUPPLIER PURCHASE ORDER DESCRIPTION
- - -------- -------------- -----------
<S> <C> <C>
ETEC 0241795 MEBES Service
- - -------------------------------------------------------------------------------------------------
Nikon Precision 0243192 Service Agreement
- - -------------------------------------------------------------------------------------------------
Quantronix 0240600 Service Agreement
- - -------------------------------------------------------------------------------------------------
KLA 0228165 Service Agreement
- - -------------------------------------------------------------------------------------------------
Hoya Consignment Mask Blanks
- - -------------------------------------------------------------------------------------------------
Hoya 0242287 Blanks
- - -------------------------------------------------------------------------------------------------
Hoya 0240644 Blanks
- - -------------------------------------------------------------------------------------------------
Hoya 0240645 Blanks
- - -------------------------------------------------------------------------------------------------
Hoya 0243283 Blanks
- - -------------------------------------------------------------------------------------------------
Hoya 0242095 Blanks
- - -------------------------------------------------------------------------------------------------
Hoya 0242098 Blanks
- - -------------------------------------------------------------------------------------------------
MLI 0241105 Pellicle
- - -------------------------------------------------------------------------------------------------
MLI 0242728 Pellicle
- - -------------------------------------------------------------------------------------------------
MLI 0242105 Pellicle
- - -------------------------------------------------------------------------------------------------
MLI 0242110 Pellicle
- - -------------------------------------------------------------------------------------------------
MLI 0242114 Pellicle
- - -------------------------------------------------------------------------------------------------
MLI 0242115 Pellicle
- - -------------------------------------------------------------------------------------------------
Dupont Photomask 0238682 Pellicle
- - -------------------------------------------------------------------------------------------------
Dupont Photomask 0238687 Pellicle
- - -------------------------------------------------------------------------------------------------
Dupont Photomask 0238688 Pellicle
- - -------------------------------------------------------------------------------------------------
Dupont 0243337 Pellicle
- - -------------------------------------------------------------------------------------------------
Dupont 0243338 Pellicle
- - -------------------------------------------------------------------------------------------------
Dupont 0243339 Pellicle
- - -------------------------------------------------------------------------------------------------
INKO 0242130 Pellicle
- - -------------------------------------------------------------------------------------------------
INKO 0241106 Pellicle
- - -------------------------------------------------------------------------------------------------
INKO 0240438 Pellicle
- - -------------------------------------------------------------------------------------------------
INKO 0238430 Pellicle
- - -------------------------------------------------------------------------------------------------
INKO 0242111 Pellicle
- - -------------------------------------------------------------------------------------------------
Quinn Associates 0239986 Sales
- - -------------------------------------------------------------------------------------------------
</TABLE>
65
<PAGE>
SCHEDULE 4.4(a) Purchased Assets Without Good and Marketable Title
NONE
66
<PAGE>
SCHEDULE 4.4(b) Exceptions to the Good Condition of Utility Delivery
Systems
Champ Air Compressors #3 & #4 are fully functional, but the Accumulator tanks
have external corrosion.
67
<PAGE>
SCHEDULE 4.5 Tangible Property
NONE
68
<PAGE>
SCHEDULE 4.6 Permits, Approvals and Consents to be Obtained by Seller
o Buyer will not be able to utilize Seller's U.S.E.P.A. ID# to ship any
hazardous waste generated by Buyer. Buyer may or may not be required to
obtain their own separate EPA ID# and must conduct their own
investigation to ascertain this requirement.
o Any Business License, registration, etc. required by the State of Florida,
Brevard County, or the City of Palm Bay.
o Additionally, that Permit as set forth in Schedule 4.8.
69
<PAGE>
SCHEDULE 4.7 Orders and Actions in Excess of $10,000
o A potential claim by Lucent Technologies for the replacement of five mask
levels.
o A potential claim by Lockheed-Martin for the replacement of three mask
levels.
70
<PAGE>
SCHEDULE 4.8 Permits Required but not Transferable to Buyer
The Seller's Florida Department of Environmental Protection (FDEP) Air Pollution
Permit for the Complex is being modified to exclude Building 60 emissions. Buyer
may or may not be required to obtain their own separate Air Pollution Permit,
and must conduct their own investigation to ascertain this requirement.
71
<PAGE>
SCHEDULE 4.10(a) Employee Benefit Plans
1. 401(k) Plan which includes:
- Employee Contributions (Before and After Taxes up to a maximum of 12%
of annual salary)
- Company Matching (Dollar for dollar on first 6% of employees annual
salary)
- Company Profit Sharing
- Stock Purchase at 30% discount through 401k plan. Employees can elect
to have one percent of their deductions to purchase the stock.
2. Severance Pay
3. Variable Pay
4. Retiree Insurance
5. Employee Insurance Plans:
- Employee Life/Accidental Death and Supplemental
- Dependent Life
- Short Term Disability
- Long Term Disability
6. Medical Insurance (Employee or Family Plan)
- Major Medical
- Dental
- Vision
- Health Care Reimbursement Account Plan
- Dependent Care Reimbursement Account Plan
- Employee Assistance Program (EAP)
7. Agreements:
- Employee Agreement
- Conflict of Interest and Outside Activities Policy and Report
- Standards of Business Conduct
- Foreign Business Travel and Incoming Foreign National Visitors
8. Workers' Compensation
9. State Unemployment Insurance
10. Shift Differential
11. Annual Salary Plan (e.g., Promotions, adjustments and performance base pay
increases or Lump Sums and/or MBO's)
12. REFER Recruiting Program
13. Employee Recognition & Awards Programs:
- ZAP Award, Employee Excellence Award, Technical Excellence Award, Patent
Award Program, Golden Quill Program, Quality Awards, etc.
14. Educational Assistance
15. Employee Service Recognition Award
16. Sick/Personal Business Pay
17. Vacation Pay
18. Call-In Pay
19. Holiday Pay
20. Bereavement Pay
72
<PAGE>
SCHEDULE 4.10(a) Employee Benefit Plans - continued
21. Jury Duty/Witness Pay
22. Special Pay (e.g., Loss time Pay in case of a Hurricane or some other type
of disaster)
23. Military Leave Pay
24. Non-exempt Overtime/Doubletime/Exempt Extra Time Pay
25. Area attractions employee discounts (e.g., Disney
World, Cypress Gardens, Universal, Sea World, etc.)
26. American Express Corporate Cards issued to employees
27. MCI Phone Card
28. Special rates for auto rentals/hotels established through Corporate Travel
29. Reimbursement for personal automobile expenses used for business purposes.
73
<PAGE>
SCHEDULE 4.10(b) Employee Pension Benefit Plans
401(k) Plan which includes:
- Employee Contributions (Before and After Taxes up to a maximum of 12%
of annual salary)
- Company Matching (Dollar for dollar on first 6% of employees annual
salary)
- Company Profit Sharing
- Stock Purchase at 30% discount through 401k plan. Employees can elect
to have one percent of their deductions to purchase the stock.
74
<PAGE>
SCHEDULE 4.14 Customers and Suppliers
Ten most significant suppliers
Hoya mask blanks
Imagex mask blanks
MLI pellicles
Inko pellicles
Cyantek chemicals
Ashland chemicals
Chemcentral chemicals
Fisher chemicals
Fluorware mask boxes
Dynamic Micro Systems mask boxes
Sole Source suppliers of significant services
ETEC Systems Inc. Mebes service
KLA Tencor KLA services
QUANTRONIX DRS Iie services
NIKON Nikon 5i services
Largest Captive customers: (% is based upon internal transfer prices)
1. Harris Semi Palm Bay, FL 14.6%
2. Harris Semi Findlay, OH 10.6%
3. Harris Semi Mountaintop, PA 8.7%
Ten largest Merchant customers
1. VTC Incorporated 26.0%
2. Honeywell 16.6%
3. Eastman Kodak 4.6%
4. Sawtek, Incorporated 3.7%
5. Lucent Technologies Inc. 2.4%
6. National Security Agency 2.0%
7. Sandia Labs 1.9%
8. Digital Optics Corp. 0.9%
9. Photo Sciences Inc. 0.7%
10. Lockheed Martin Corp. 0.6%
The % of business following the company name is based upon July-Dec 1998 as
specified and are calculated on the total captive plus merchant sales dollars.
They make up 93.3% of the sales.
75
<PAGE>
SCHEDULE 4.15(a) Environmental Reports
At the request of Harris' Corporate Environmental Legal Counsel, an
Environmental Audit was conducted during March 15-24, 1999, at the Semiconductor
facilities located in Palm Bay. The audit was conducted to assess environmental
compliance and to advise Semiconductor management where efforts should be
directed to improve the focus of environmental programs.
The scope of the audit included applicable federal, and state/local
environmental regulations; and management system controls required by Harris
Policy G-17. This report has been redacted to omit issues unrelated to B60.
Issues Related to B60:
Ensure that hazardous waste training requirements are met, including (40 CFR
265.16):
a) Maintaining a job title and a job description for each position
related to hazardous waste management and the name of each employee
filling such position; and
b) Conducting and documenting initial hazardous waste training and annual
refresher training to all employees with 90-day hazardous waste
duties.
Ensure that copies of land disposal restriction certifications are maintained
onsite and that copies accompany each hazardous waste shipment (40 CFR
268.7(a)(8)).
Ensure that the hazardous waste contingency plan includes a list of all
emergency equipment, physical descriptions, and their locations, (40 CFR
265.52).
Ensure that universal waste batteries and lamps are properly managed, including:
a) Providing awareness communication and training related to proper
handling and emergency procedures (40 CFR 273.16 and 62-737.400 FAC).
Ensure that the conditions of the underground injection control permit are being
met, in accordance with permit number UO05-215659, including:
a) Notifying FDEP of potential noncompliance with any permit limitation
(general condition 8); and
b) Providing all required information on all pages of the monthly
operating reports (specific condition (2)(b)(2)(f)).
Ensure that the April 11, 1997 Water Conservation Plan is updated and submitted
to SJRWMD in accordance with the consumptive use permit for ground water
(permit number 2-009-0032NM3R2, specific condition 19).
Ensure that DOT shipping papers are prepared correctly, including:
a) Indicating all hazardous materials (including nonhazardous and
universal wastes as such by checking the HM column (49 CFR 172.201);
and
b) Not using the word "waste" in the DOT shipping name for universal
wastes (40 CFR 273.52(b)).
76
<PAGE>
SCHEDULE 4.15(b) Non-compliance with Environmental Permits
NONE
77
<PAGE>
SCHEDULE 4.15(c) Environmental Conditions
(i) The entire Harris Semiconductor Palm Bay facility is Operable Unit 2
("OU2") of the Palm Bay NPL Site. Both the Florida Department of
Environmental Protection ("FDEP") and the U.S. Environmental Protection
Agency ("USEPA") have overseen investigation and remediation of this
facility, with USEPA taking the lead. On February 15, 1995, USEPA issued a
Record of Decision ("ROD") regarding OU2, identifying certain required
remediating and monitoring activities. Harris negotiated and signed a
Consent Decree and Scope of Work relating to implementation of the OU2 ROD.
That Consent Decree was filed in federal court on November 20, 1996; it was
entered by the federal district court on January 27, 1997. In 1999 Harris
received notification from USEPA of Construction Complete of the remedial
action. The five year review will occur in February 2000.
(ii) The Florida Department of Environmental Protection ("FDEP") conducted an
unannounced facility-wide RCRA compliance inspection at the Harris
Semiconductor Palm Bay facility on March 30, 1999. Harris has not received
a Notice of Violation, but FDEP identified some issues in the closing
meeting related to FDEP's paperwork review and physical inspection. Harris
has already resolved several items noted by FDEP and is preparing
aggressive plans to address the remaining items.
78
<PAGE>
SCHEDULE 4.15(d) Lit of Hazardous Substances TSDF Sites Used in the Operation of
the Business; Amount of Hazardous Substances used
Treatment, storage and disposal facilities used for current operations at
building 60.
<TABLE>
<CAPTION>
- - ----------------------------------------------------------------------------------------------------------------------
*Quantity
Substance Per Year Vendor (TSDF) Transporter
- - ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Sulfuric Acid 800 gal Heritage Environmental Services Heritage Transport
(16 drums) 4132 Pompano Road
(Nanostrip) Charlotte, NC 28216
phone # 1-800-326-1175
phone # 1-800-326-1175
contact person - Regan
- - ----------------------------------------------------------------------------------------------------------------------
Corrosive cleanup 100 gal Heritage Environmental Services Heritage Transport
(2 drums) 4132 Pompano Road
(solids) Charlotte, NC 28216
phone # 1-800-326-1175
phone # 1-800-326-1175
contact person - Regan
- - ----------------------------------------------------------------------------------------------------------------------
Flammable cleanup 100 gal Heritage Environmental Services Heritage Transport
(2 drums) 4132 Pompano Road
(solids) Charlotte, NC 28216
phone # 1-800-326-1175
phone # 1-800-326-1175
contact person - Regan
- - ----------------------------------------------------------------------------------------------------------------------
Mixed Solvents 600 gal Safety-Kleen Safety-Kleen (TG) Inc.
(12 drums) 170 Bartow Municipal Airport
Bartow, FL 33830-9504
phone # 1-800-699-8916
contact person - Olin phone # 1-800-699-8916
- - ----------------------------------------------------------------------------------------------------------------------
Used Oil 100 gal Safety-Kleen Safety-Kleen (TG) Inc.
(2 drums) 170 Bartow Municipal Airport
Bartow, FL 33830-9504
phone # 1-800-699-8916
contact person - Olin phone # 1-800-699-8916
- - ----------------------------------------------------------------------------------------------------------------------
</TABLE>
79
<PAGE>
SCHEDULE 4.15(d) Lit of Hazardous Substances TSDF Sites Used in the Operation of
the Business; Amount of Hazardous Substances used - CONTINUED
Treatment, storage and disposal facilities used for current operations at
building 60.
<TABLE>
<CAPTION>
- - ----------------------------------------------------------------------------------------------------------------------
*Quantity
Substance Per Year Vendor (TSDF) Transporter
- - ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Oil filters one 55 gal drum Solid Waste Technologies Intersol Inc.
300 Swett Ave 5625-G West Waters Ave
(Nanostrip) Americus, GA 31709 Tampa, FL 33634
phone # 1-912-928-5148 phone # 1-813-249-8500
- - ----------------------------------------------------------------------------------------------------------------------
Fluorescent lamps **200 lamps Mercury Technologies A.E.T.S.
(MTI)
(4 foot tubes) 4317-L Fortune Pl.
West Melbourne, FL 32904
phone # 1-407-952-1516 phone # 1-407-722-2455
contact person - Terisa
- - ----------------------------------------------------------------------------------------------------------------------
Labpacks One 55 gal drum Safety-Kleen Safety-Kleen (TG) Inc.
170 Bartow Municipal Airport
Bartow, FL 33830-9504
phone # 1-800-699-8916
contact person - Olin phone # 1-800-699-8916
- - ----------------------------------------------------------------------------------------------------------------------
</TABLE>
* Wastestreams have previously been consolidated and stored with site
wastes. (quantities are approximations)
** Records on lamp replacement are not available, this is an estimate.
80
<PAGE>
SCHEDULE 4.16 Powers of Attorney given by Seller
NONE
81
<PAGE>
SCHEDULE 4.17 Y2K Readiness Issues
KLA70
Particle Monitoring System (Seller to remedy)
82
<PAGE>
SCHEDULE 4.18 Unfair Labor Practice Charges against Seller
NONE
83
<PAGE>
SCHEDULE 5.6 Government Authorizations Required to be Obtained by Buyer
TO BE PROVIDED BY ALIGN-RITE
84
<PAGE>
SCHEDULE 6.3(e) Unusual Salary Actions
NONE
85
<PAGE>
SCHEDULE 7.4(a) Excluded Employees
Charles M. Burns
86
<PAGE>
SCHEDULE 7.4(d) Flex Holiday Hours
<TABLE>
<CAPTION>
AVAIL. AVAIL.
see HOURLY HOURS HOURS EARNED EARNED
NAME TITLE note RATE VACATION HOLIDAY VACATION HOLIDAY
---- ----- ----- -------- ------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
BASS, LENORA R Fab Tech IV $11.13 85.48 -- $ 951.39 $ --
BOGGESS, JAMES R Fab Tech IV $13.44 16.00 -- $ 215.04 $ --
BOX, TIMOTHY L Fab Tech IV $13.68 38.50 8.00 $ 526.68 $ 109.44
BROOKS, HAZEL Maintenance $6.24 47.74 32.00 $ 297.90 $ 199.68
Worker
CARTER, JAKE JR Electronic $21.42 158.82 48.00 $ 3,401.92 $ 1,028.16
Tech Spec.
CASEY, DANE Y Fab Tech IV $12.77 97.00 40.00 $ 1,238.69 $ 510.80
DEUBEL, NANCY N Fab Tech III $10.30 26.00 43.00 $ 267.80 442.90
DORSEY, JAMES W Production $20.60 290.00 48.00 $ 5,974.00 $ 988.80
Sup. - Sr.
FLEMING, DEBORAH A Assy. Tech IV $11.25 66.50 56.00 $ 748.13 $ 630.00
FOWLES, WOODY A Fab Tech IV * $11.37 13.39 0.50 $ 152.24 $ 5.69
GALLAGHER, SCOTT L Fab Tech IV $15.70 89.00 19.00 $ 1,397.30 $ 298.30
GUTHRIDGE, LYDIA M Fab Tech IV $10.71 16.41 24.00 $ 175.75 $ 257.04
HELMS, ELIZABETH A Dir./Dept. $12.08 60.25 40.00 $ 727.82 $ 483.20
Secretary
HOGAN, BILLIE RAE Fab Tech IV $11.91 104.48 48.00 $ 1,244.36 $ 571.68
JOHNSON, THOMAS E Fab Tech III $10.00 19.40 8.50 $ 194.00 $ 85.00
KERVIN, WILLIAM P III Mfg. $28.72 105.41 56.00 $ 3,027.38 $ 1,608.32
Engineer -
Lead
LADD, RICHARD C Fab Tech III $9.99 33.74 39.00 $ 337.06 $ 389.61
LARSEN, AARON L Fab Tech IV * $12.43 15.41 26.00 $ 191.55 $ 323.18
LEWIS, SCOTT A Fab Tech III * $9.21 11.91 1.50 $ 109.69 $ 13.82
LLOYD, ELIZABETH A Fab Tech V $13.48 123.32 43.00 $ 1,662.35 $ 579.64
LUU, PHUNG M Fab Tech VI $18.45 116.00 48.00 $ 2,140.20 $ 885.60
MACIEJEWSKI, JOHN E Electronic $21.02 85.00 56.00 $ 1,786.70 $ 1,177.12
Tech Spec.
MANION, RICHARD A JR Prod. Sup. - $20.74 368.81 8.00 $ 7,649.12 $ 165.92
Lead
MILLER, KATIE M Fab Tech IV $11.55 114.82 40.00 $ 1,326.17 $ 462.00
MILLER, NORMAN C Eng. Spec. - $18.47 160.00 8.00 $ 2,955.20 $ 147.76
Mask - Sr.
MILLS, EDWARD A Mfg. $39.23 346.08 -- $ 13,576.72 $ --
Engineer -
Sr. Princ.
MILLSPAUGH, JAMES S Mfg. $26.76 280.82 44.00 $ 7,514.74 $ 1,177.44
Engineer -
Staff
MINE, RAEBETH Fab Tech III $9.25 60.00 8.00 $ 555.00 $ 74.00
</TABLE>
- - --------------
Note: *indicates remaining holiday hours out of 80 hours
87
<PAGE>
SCHEDULE 7.4(d) Flex Holiday Hours - continued
<TABLE>
<CAPTION>
AVAIL. AVAIL.
see HOURLY HOURS HOURS EARNED EARNED
NAME TITLE note RATE VACATION HOLIDAY VACATION HOLIDAY
---- ----- ---- -------- ------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
MITCHELL, BONNIE D Fab Tech V $15.60 162.82 3.00 $ 2,539.99 $ 46.80
MOFFETT, DAVID R Mfg. $30.48 233.38 9.00 $ 7,113.42 $ 274.32
Engineer -
Staff
MOREY, ELIZABETH M Fab Tech IV $11.70 127.00 48.00 $ 1,485.90 $ 561.60
NATHANSON, ANDRA S Fab Tech V $13.73 92.50 56.00 $ 1,270.03 $ 768.88
PEPLINSKI, JOHN A Fab Tech III $9.08 22.65 5.00 $ 205.66 $ 45.40
PHILBECK, KERRY L Fab Tech IV $12.66 92.41 52.00 $ 1,169.91 $ 658.32
PINTO, LUIS H Fab Tech V $14.38 103.06 56.00 $ 1,482.00 $ 805.28
PUCYLOWSKI, THEODORE C Production $15.14 28.74 -- $ 435.12 $ --
Sup.
RAUCH, WALTER M Fab Tech IV $11.13 19.74 19.50 $ 219.71 $ 217.04
ROBINSON, WILLIAM G Fab Tech V $14.37 193.41 48.00 $ 2,779.30 $ 689.76
RODRIGUEZ, CARMEN Fab Tech III * $9.75 34.00 2.00 $ 331.50 $ 19.50
ROLA, MUKESH N Fab Tech IV * $12.45 20.41 -- $ 254.10 $ --
ROLO, STEPHEN R Fab Tech III $10.03 79.41 40.00 $ 796.48 $ 401.20
ROMANO, CARMEN M Production $18.68 220.82 -- $ 4,124.92 $ --
Sup. - Sr.
SCHAPPERT, PATRICKK M Fab Tech VI $16.62 290.00 45.00 $ 4,819.80 $ 747.90
SERGEL, CAROL A Fab Tech III $10.28 -- 6.00 $ -- $ 61.68
SIAS, RONALD D Fab Tech VI $15.85 3.50 -- $ 55.48 $ --
SLATER, JUDITH A Customer $8.10 40.02 32.00 $ 324.16 $ 259.20
Svc. Coord.
SUHLING, STEPHEN M Software $41.83 226.82 36.00 $ 9,487.88 $ 1,505.88
Eng. - Sr.
Princ.
THORNQUEST, JUDITH G Fab Tech IV $13.17 185.00 56.00 $ 2,436.45 $ 737.52
TRIMBOLI, FRANK B Process Eng. $34.65 174.00 4.00 $ 6,029.10 $ 138.60
- Staff
TURNER, JANICE M Fab Tech IV $10.75 64.28 -- $ 691.01 $ --
TYRE, SHEILA J Fab Tech V $14.76 46.82 47.00 $ 691.06 $ 693.72
UMBERGER, SUSAN D Fab Tech V $15.54 129.32 25.00 $ 2,009.63 $ 396.27
VALENTIN, MARY A Fab Tech IV $12.17 108.94 4.00 $ 1,325.80 $ 48.68
WOODROW, DAVID S Equip. $12.10 53.41 27.00 $ 646.26 $ 326.70
Maint. Tech
WYATT, JEFFREY D Fab Tech III $9.36 12.00 2.00 $ 112.32 $ 18.72
ZIPPERER, JAMIE J Fab Tech IV $11.74 48.41 20.00 $ 568.33 $ 234.80
TOTAL 5,763.16 1,435.50 $113,750.24 $ 22,272.86
</TABLE>
- - -----------------
Note: *indicates remaining holiday hours out of 80 hours
88
<PAGE>
SCHEDULE 7.5(a)(iii) List of Software Type 1 (being Assigned to Buyer)
Note: The following software applications may require separate operating system
platforms in order to run the software (e.g., Microsoft Access). The purchase of
said platforms is not contemplated by this Agreement, nor are the platforms
being assigned or transferred to Align-Rite.
PGPOST
MIZER
MDECK
EYORE
TABBY
MNET
MICE II
SARA
BILL AND SHIP
CASPER
PERF EVAL
JSURVEY
LABELING
HITG Web Sites
Customer Web Sites
89
<PAGE>
SCHEDULE 7.5(a)(iv) List of Software Type 2
(Non-Exclusive License granted to Buyer)
On Line SPC
Tom Thum
90
<PAGE>
SCHEDULE 7.5(b) Software Licenses Assigned to Buyer to the
extent Assignable by Seller
Kea!
Adobe Acrobat 3.0
Corel PhotoPaint
PowerBuilder 6.0
Visio
Visual C++
FrontPage98
Microsoft Developer
Wave Star 1.1.2
Pocket Logger
FedEx Shipping
Harvard Graphics 3.05
LabelWorks 2.0
Lotus 1-2-3, v3.1
Microsoft Liquid Motion
Omni Page (OCR software)
Paradox 4.0
Paradox 4.5
PGP 5.5 for Enterprise Security
ProComm Plus
Quick Books 4.0.2
Telemoney PC Batch 2.2 (VISA)
CATS GRAPHICS
CATS FRACTURE
VMS 5.5-2 OS
VMS 5.4 OS
VMS 6.2 OS
Solaris Unix 2.5.1 OS
Sun 4.1.4 OS
91
<PAGE>
SCHEDULE 7.6(a) All Software Licenses used in or on
behalf of the Photomask Business
Facility View
Standard Client (Windows 95/NT, MS Office 97 Pro, Outlook, I.E., Onnet, McAfee)
Kea!
Adobe Acrobat 3.0
Corel PhotoPaint
PowerBuilder 6.0
Visio
Hub/Docs: Exceed 6.1
L-View Pro 2.0
WinZip
Visual Basic 5.0
Visual C++
Project
FrontPage98
Microsoft Developer
Wave Star 1.1.2
Pocket Logger
Perl
FedEx Shipping
Harvard Graphics 3.05
LabelWorks 2.0
Lotus 1-2-3, v3.1
Microsoft Liquid Motion
Omni Page (OCR software)
Paradox 4.0
Paradox 4.5
PGP 5.5 for Enterprise Security
ProComm Plus
Quick Books 4.0.2
Telemoney PC Batch 2.2 (VISA)
Cobol
Ontap
JSS
DECset
CDD/DBMS
DECForms
Diskeeper
Multinet
Pascal
DEC C
FMS
RS 1
Robomon
92
<PAGE>
SCHEDULE 7.6(a) All Software Licenses used in or on behalf of the
Photomask Business (continued)
SLS
PGPOST
MIZER
MDECK
EYORE
TABBY
CATS GRAPHICS
CATS FRACTURE
MNET
MICE II
SARA INGRESS
BILL AND SHIP
CASPER
PERF EVAL
CONNX
JSURVEY
PGP UNIX ENCRYP
LABELING
UCX TCP/IP
VMS 5.5-2 OS
VMS 5.4 OS
VMS 6.2 OS
VAX Watcher
VAX DW-MOTIF
Consilium Workstream
On Line SPC
Tom Thum
HITG Web Site
Customer Web Sites
Solaris Unix 2.5.1 OS
Sun 4.1.4 OS
93
<PAGE>
SCHEDULE 8.2(f) Key Employees
Dorsey, James
Kervin, Pat
Luu, Phung
Maciejewski, John
Miller, Norman
Mills, Edward
Millspaugh, James
Mitchell, Bonnie
Suhling, Steve
Trimboli, Frank
94
<PAGE>
Exhibit A
[Form of]
Bill of Sale
THIS BILL OF SALE AND ASSIGNMENT is effective as of July 2, 1999 by Harris
Corporation, a Delaware corporation ("Seller"), acting through its Semiconductor
Business Unit, in favor of Align-Rite International, Inc., a California
corporation ("Parent") and Align-Rite, Inc., a Florida corporation ("Sub," and
together with Parent, "Buyer").
WITNESSETH
WHEREAS, pursuant to that certain Asset Purchase Agreement, dated as of July 2,
1999 (the "Asset Purchase Agreement"), by and among Buyer and Seller, Seller
agreed to sell to Buyer and Buyer agreed to purchase from Seller certain of the
assets of Seller.
NOW, THEREFORE, for good and valuable consideration, the receipt and adequacy of
which is hereby acknowledged and intending to be legally bound hereby, the
parties hereto agree as follows:
Definitions. As used in this Bill of Sale and Assignment and the Schedules
attached to this Bill of Sale and Assignment, the following definitions shall
apply:
"Business Technology" means Technology owned by Seller and in the possession of
the Photomask Business as of the Closing Date that is specific to operation of
the Photomask Business. Business Technology does not include Seller's Product
Mask Information.
"Closing" means the consummation of the transactions contemplated by the Asset
Purchase Agreement.
"Closing Date" means the date of the Closing.
"Contract" means any agreement, arrangement, bond, commitment, franchise,
indemnity, indenture, instrument, lease, license or understanding, whether or
not in writing.
"Copyrights" means rights in any and all United States and foreign copyright
registrations and applications therefor and unregistered copyrights owned by
Seller.
"Goodwill" means the expectation of patronage from customers of the Photomask
Business and the consumer identification and favorable consideration shown by
customers of the Photomask Business to the goods or services known to emminate
from the Photomask Business.
"Harris Patents" means and refers to all Patents owned by Harris as of the
Closing Date and covering activities performed in the course of business by the
Photomask Business prior to the Closing Date.
"Intangible Property" means any permits or other property other than personal
property, real property or Intellectual Property used in or pertaining to the
Photomask Business.
<PAGE>
"Intellectual Property" means intellectual property covered by Copyrights,
Harris Patents or Trade Secret Rights as defined herein.
"Intellectual Property Rights" means rights in Copyrights and Harris Patents and
Trade Secret Rights which (a) are owned by the Seller, (b) exist under laws
respecting Patents, Copyrights or Trade secrets, but not trademarks and (c)
cover the use of Business Technology.
"Inventory" has the meaning specified in Section 2.1(a)(iv) of the Asset
Purchase Agreement.
"Material Contract" means any Contract material to the Photomask Business as of
or after the effective date of the Asset Purchase Agreement as described in
Schedule 4.3 of the Asset Purchase Agreement.
"Patents" means issued patents, including United States and foreign patents and
applications therefor, petty patents, patents of importation, and divisions,
reissues, continuations, continuations-in-part, renewals and extensions of any
of the foregoing; certificates of addition and utility models and utility model
applications; but does not include License Agreements.
"Photomask Business" means the manufacture and sale of photomask products and
related photomask services by Seller regardless of the name under which any such
activity is conducted, and shall be deemed to include the Purchased Assets, the
rights and assets transferred pursuant to Section 7.5 of the Asset Purchase
Agreement, revenues and income, Assumed Liabilities, Assumed Contracts,
exclusive of cash, cash equivalents, accounts receivable, accounts payable and
any elements of the Retained Business or Excluded Assets.
"Real Property" means the real property located within the complex of buildings
known as the Semiconductor Sector located at 2401 Palm Bay Road, NE, Palm Bay,
Florida 32905 and known as Building 60 and a portion of Building 56 used in the
Photomask Business, appurtenances thereto, rights in connection therewith, and
the leasehold estates created as part of the transaction contemplated by the
Asset Purchase Agreement.
"Seller's Product Mask Information" means the product design data of Seller for
products designed or manufactured by or on behalf of Seller's Semiconductor
Business Unit from which photomasks are made, whether such data is in electronic
pattern media or Photomask tooling, and not otherwise used in the operation of
the Photomask Business.
"Site Services Agreement" has the meaning set forth in Section 8.2 of the Asset
Purchase Agreement.
"Software" means the manifestation of computer programs and databases in
tangible or physical form, including, but not limited to magnetic media,
firmware, and documentation in the form of source code, object code or
microcode; Software includes, but is not limited to management information
systems, computer aided design and/or engineering programs, computer aided
manufacturing programs, CADBUS programs, machinery control programs, and
personal computer programs, in each case that is owned by or licensed to Seller
and relevant to the Photomask Business. Software does not include any Technology
or any Intangible Property Rights.
<PAGE>
"Software Licenses" means agreements concerning Software (other than Systems
Software) used in or on behalf of the Photomask Business including the
agreements identified on Schedule 7.6 attached hereto.
"Software Type 1" means Software for which the Seller is sole owner of all right
title and interest and which is specific to the Photomask Business. Software
Type 1 does not include Systems Software.
"Software Type 2" means Software owned in whole or in part by the Seller and
licensable by Seller on a non-exclusive basis to Buyer, and which is not
specific to, but is used in, the operations of the Photomask Business. Software
Type 2 does not include Systems Software.
"Systems Software" means software not specific to the Photomask Business and not
specific to an individual personal computer.
"Technology" means the manifestation in tangible or physical form of all types
of technical information and data including, but not limited to, know-how;
product definitions and designs; research and development, engineering,
manufacturing, assembly, process, test, quality control, procurement, and
service specifications, procedures, standards, and reports; maskworks;
blueprints; drawings; materials specifications, procedures, standards, and
lists; catalogs; technical information and data relating to marketing and sales
activity; and formulae, in each case that is owned by or licensed to Seller and
relevant to routine operation of the Photomask Business. Technology does not
include any Software or any Intangible Property Rights.
All capitalized terms used herein, but not otherwise defined herein, shall have
the meanings ascribed in the Asset Purchase Agreement.
Transfer. Seller hereby sells, conveys, assigns, transfers and delivers to Sub,
and Sub shall purchase, acquire and accept from Seller, Seller's right, title
and interest in and to the assets specifically described in Section 2.1 (a) of
the Asset Purchase Agreement (the "Purchased Assets") and as set forth below:
All machinery, tools, supplies, apparatus, furniture and fixtures, supplies, and
computer hardware located at and used solely by the Photomask Business and other
equipment of every type as identified on Schedule 2.1(a)(i) attached hereto;
The cleanroom located within Building 60, including fixtures and improvements
attached thereto as set forth on Schedule 2.1(a)(ii) attached hereto;
All other fixtures and improvements attached to the Real Property used primarily
in connection with the Photomask Business as specified in Schedule 2. 1(a)(iii)
attached hereto;
All inventory of usable goods, including all merchandise, photomasks, raw
materials, work in progress, finished products and other tangible personal
property held for sale or used in connection with the Photomask Business as of
the Closing Date (the "Inventory"), together with any additions thereto and
subject to any reductions therefrom received or incurred by Seller in operating
the Photomask Business in the ordinary course and in compliance with Section 6.3
of the Asset Purchase Agreement through the Closing Date all as set forth in
Schedule 2.1(a)(iv) attached hereto;
<PAGE>
All of Seller's rights and interests arising under or in connection with the
Contracts to which Seller is a party specified on Schedule 2. 1(a)(v) attached
hereto and which Buyer assumes (the "Assumed Contracts") including but not
limited to obligations to complete work on order from customers; provided,
however, that except as otherwise specified in the Asset Purchase Agreement,
Buyer shall not assume any of the obligations or liabilities of the Assumed
Contracts arising prior to the Closing or based on actions or inactions of
Seller prior to the Closing;
Prepaid expenses and deposits as of the Closing Date (the "Prepaid Expenses") as
set forth in Schedule 2.1(a)(vi) attached hereto, together with any additions
thereto and subject to any reductions therefrom made or accrued by Seller in
operating the Photomask Business in the ordinary course and in compliance with
Section 6.3 of the Asset Purchase Agreement after the Closing Date;
Sales data and information, customer lists, information relating to customers,
suppliers' names, catalogs, sales literature, promotional materials, advertising
matter and all rights thereto relating specifically to the Photomask Business;
Intangible Property; the Goodwill associated with the Photomask Business; all of
Seller's books, records, files, documents, pay history papers and agreements
(including, but not limited to, those contained in computerized storage media)
used solely in the Photomask Business and related to its employees, except for
those employee records consisting of field folders, medical records and former
employee actions brought against the Seller, which actions have been settled or
adjudicated and the order of the court performed; all transferable Permits used
in the Photomask Business; unemployment compensation, workers' compensation and
other credits, reserves or deposits with applicable Governmental Entities
relating to Seller's employees of the Photomask Business who become Employees of
Buyer. Excluded Assets.
The Purchased Assets do not include the assets set forth below (the "Excluded
Assets"): No rights, properties or assets of Seller shall be included in the
Purchased Assets except to the extent specified in Section 2.1 (a) of the Asset
Purchase Agreement. As an example, no cash, receivables or Contracts not
expressly assumed hereunder by the Buyer are included as Purchased Assets. Buyer
shall not acquire under the terms of the Asset Purchase Agreement any title to
or interest in the name "Harris" or "Harris Semiconductor" or Seller's
monograms, logos, trademarks, or any variations or combinations thereof or
Seller's Product Mask Information. Buyer, however, shall be entitled to use all
of Seller's Product Mask Information solely for the purpose of making Photomasks
for Seller. Buyer shall use reasonable care in storing and maintaining Seller's
Product Mask Information. Seller acknowledges that Seller's Product Mask
Information is Seller's property and that Buyer shall have no liability for
damages or loss related thereto; provided, however, that Buyer shall be liable
for damages arising from Buyer's negligence or willful misconduct.
IN WITNESS WHEREOF, Seller has caused this Bill of Sale and Assignment to be
executed as of the day and year first above written.
HARRIS CORPORATION,
a Delaware corporation
By:
-------------------------------------------
W.R. Morcom
Vice President - General Manager Operations
<PAGE>
Schedule 2.1(a)(i)
<PAGE>
SCHEDULE 2.1(a)(i) Fixed Assets, Equipment, Machinery, Tools, and Computer
Hardware being purchased by Buyer - Continued
FIXED ASSETS P11 FY'99
BUILDING 60 - SORTED BY ASSET NUMBER
- - ------------------------------------------------------------------------------
BLDG. ASSET NUMBER DIV DEPT ASSET DESCRIPTION
- - ------------------------------------------------------------------------------
60 792031B OR 9460 STEAM HUMIDIFIER ORF
- - ------------------------------------------------------------------------------
60 900111A OR 7150 APPLE LASERWRITER
- - ------------------------------------------------------------------------------
60 908790F OR 7140 ETHERNET
- - ------------------------------------------------------------------------------
60 913351B OR 7120 SOFTWARE, DBCS, CALMA
- - ------------------------------------------------------------------------------
60 913489A OR 7140 CHAMBER, GCA, PBS
- - ------------------------------------------------------------------------------
60 913489B OR 7140 INSTALL, CHAMBER, GC
- - ------------------------------------------------------------------------------
60 913636B OR 7120 NIKON MEASURING INST
- - ------------------------------------------------------------------------------
60 914496A OR 7120 HOTTANK, CORNING, VC
- - ------------------------------------------------------------------------------
60 914536A OR 7120 REPAIR, QUANTRONICS I
- - ------------------------------------------------------------------------------
60 914936A OR 7140 PROCESSOR, APT. 9155
- - ------------------------------------------------------------------------------
60 915393A OR 7120 GRINDER BUEHLER, LXUT
- - ------------------------------------------------------------------------------
60 916177A OR 7120 INSPECT, HORIBA, P1000
- - ------------------------------------------------------------------------------
60 916177B OR 7120 FREIGHT
- - ------------------------------------------------------------------------------
60 916259A OR 7120 CHAMBER, HORIBA
- - ------------------------------------------------------------------------------
60 916400A OR 7120 MOTORIZED IMAGE ROTA
- - ------------------------------------------------------------------------------
60 916400B OR 7120 UPG FOR MEASURE UNIT
- - ------------------------------------------------------------------------------
60 920918A OR 7120 MICRO LASER PARTICLE
- - ------------------------------------------------------------------------------
60 930187A OR 7140 CD, OSI, VIDEO
- - ------------------------------------------------------------------------------
60 930187B OR 7140 RETROFIT KIT, OSI CC
- - ------------------------------------------------------------------------------
60 940719A OR 7120 ISOLATION, BARRY, 219E
- - ------------------------------------------------------------------------------
60 940758A OR 7120 CONTACT PRINTER
- - ------------------------------------------------------------------------------
60 941637A OR 7120 INSPECT, KLA, 219E
- - ------------------------------------------------------------------------------
60 941637B OR 7120 UPG TO RIA II
- - ------------------------------------------------------------------------------
60 941637C OR 7120 7 X 7 MASK HOLDER
- - ------------------------------------------------------------------------------
60 942964A OR 7120 PHOTOMASK CLEANER W/
- - ------------------------------------------------------------------------------
60 952025A OR 7120 QC MASK INSPECT SYST
- - ------------------------------------------------------------------------------
60 952301A OR 7120 PELLICLE MOUNTER
- - ------------------------------------------------------------------------------
60 952981A OR 7120 NIKON 5i LASER MEASU
- - ------------------------------------------------------------------------------
60 955104A OR 7140 TEKSCOPE
- - ------------------------------------------------------------------------------
60 G10320078 OR 7140 MEBES, ETEC, M78
- - ------------------------------------------------------------------------------
60 G10320078A OR 7140 REFURBISHED M78
- - ------------------------------------------------------------------------------
60 G10320078C OR 7140 MEBES IV E-BEAM UPG
- - ------------------------------------------------------------------------------
60 G10336548 OR 7140 MEBES, ETEC, M67
- - ------------------------------------------------------------------------------
60 G10336548A OR 7140 ETHERNET
- - ------------------------------------------------------------------------------
60 G10336572 OR 7150 AMPLIFIER SYSTEM
- - ------------------------------------------------------------------------------
60 G10336580 OR 7140 AMPLIFIER, ROGERS, N
- - ------------------------------------------------------------------------------
60 G10336603 OR 7120 COMPARATOR, NIKON, 2
- - ------------------------------------------------------------------------------
60 G10336637 OR 7120 INSPECT, KLA 101
- - ------------------------------------------------------------------------------
60 G10336653 OR 7120 CHAMBER
- - ------------------------------------------------------------------------------
60 G10336661 OR 7140 PROCESSOR, APT, 915
- - ------------------------------------------------------------------------------
60 G10336679 OR 7140 PROCESSOR, APT, 915
- - ------------------------------------------------------------------------------
60 G1354467A OR 7130 PRINTER, TAMRACK, 1
- - ------------------------------------------------------------------------------
60 G1354558A OR 7130 PRINTER, TAMARACK, 1
- - ------------------------------------------------------------------------------
60 G1354777A OR 7130 TITLER, TAMARACK, CP
- - ------------------------------------------------------------------------------
60 G1354813A OR 7140 PROCESSOR, APT. 914
- - ------------------------------------------------------------------------------
60 G1354975A OR 7130 PROCESSOR, APT, 914
- - ------------------------------------------------------------------------------
60 G1355180A OR 7130 STEPPER, GCA, 3696
- - ------------------------------------------------------------------------------
60 G1355182A OR 7140 PROCESSOR, APT, 914
- - ------------------------------------------------------------------------------
60 G1355238A OR 7120 REPAIR, QUANTRONICS, I
- - ------------------------------------------------------------------------------
60 G1355239A OR 7120 INSPECT, KLA, 201
- - ------------------------------------------------------------------------------
60 G1355239B OR 7120 HOLDER, KLA 5X5X0.0
- - ------------------------------------------------------------------------------
60 G1355261A OR 7120 CD, LEITZ, MPVCD#1
- - ------------------------------------------------------------------------------
60 G1355366A OR 7140 PLOTTER, VERDATEC, M
- - ------------------------------------------------------------------------------
60 G1355435A OR 7120 INSP. REP., KLA/QUANT
- - ------------------------------------------------------------------------------
60 G1355435B OR 7120 PAY, FINAL DRSII/22
- - ------------------------------------------------------------------------------
60 G1355435C OR 7120 KLA 204 CONVERSION K
- - ------------------------------------------------------------------------------
60 G1355435D OR 7120 UPGRADE TO DRS-II
- - ------------------------------------------------------------------------------
60 G1355465A OR 7120 COMPUTER, IBM
- - ------------------------------------------------------------------------------
60 G1355549A OR 7120 CD, LETIZ, MPVCD#2
- - ------------------------------------------------------------------------------
60 G1355605A OR 7130 SCOPE, B&L STEREO
- - ------------------------------------------------------------------------------
60 G1355606A OR 7130 SCOPE, B&L STEREO
- - ------------------------------------------------------------------------------
<PAGE>
SCHEDULE 2.1(a)(i) Fixed Assets, Equipment, Machinery, Tools, and Computer
Hardware being purchased by Buyer - Continued
- - ------------------------------------------------------------------------------
60 G1355615A OR 7140 SURFSCAN
- - ------------------------------------------------------------------------------
60 G1355618A OR 7120 CD, LEITZ, MPVCD#3
- - ------------------------------------------------------------------------------
60 G1355668A OR 7150 COMPUTER, TANDY, 200
- - ------------------------------------------------------------------------------
60 G1355669A OR 7120 COMPUTER, TANDY, 300
- - ------------------------------------------------------------------------------
60 G1355690A OR 7120 INSPECT, KLA, 101
- - ------------------------------------------------------------------------------
60 G1610325A OR 7130 CLEANER, UT, 603
- - ------------------------------------------------------------------------------
60 G1610326A OR 7120 CLEANER, UT, 603
- - ------------------------------------------------------------------------------
60 G1610327A OR 7120 CLEANER, UT, 603
- - ------------------------------------------------------------------------------
60 G1900053A OR 7140 SCOPE, LEITZ, ERGOLUX
- - ------------------------------------------------------------------------------
60 G1900074A OR 7140 COMPRESSOR, CHAMP #3
- - ------------------------------------------------------------------------------
60 G1900075A OR 7140 COMPRESSOR, CHAMP #4
- - ------------------------------------------------------------------------------
60 G1900076A OR 7140 COMPRESSOR, CHAMP #1
- - ------------------------------------------------------------------------------
60 G1900077A OR 7140 COMPRESSOR, CHAMP #2
- - ------------------------------------------------------------------------------
60 G1900079A OR 7140 N2 CABINET, OHIO, ET
- - ------------------------------------------------------------------------------
<PAGE>
SCHEDULE 2.1(a)(i) Fixed Assets, Equipment, Machinery, Tools, and Computer
Hardware being purchased by Buyer - continued
- - ----------------------------------------------------------------------------
AR- Asset Bldg. Div. Dept. Description
TAG
- - ---------------------------------------------------------------------------
79 No Tag 60 OR 7150 PT/HP 9-track tape/on Mask
- - ---------------------------------------------------------------------------
80 No Tag 60 OR 7150 Disk Drive tower/on Mask
- - ---------------------------------------------------------------------------
81 60 CONTROL ROBERTSHAW
- - ---------------------------------------------------------------------------
103 910205A 60 OR 7120 WETDECK, 4'
- - ---------------------------------------------------------------------------
104 60 WETDECK 4'
- - ---------------------------------------------------------------------------
104 906340A 60 OR 7130 WETDECK 5'
- - ---------------------------------------------------------------------------
105 G10314794 60 INSPECT, KLA201, 106
- - ---------------------------------------------------------------------------
106 903698A 60 OR 5450 PRINTER, KLA, 70
- - ---------------------------------------------------------------------------
107 920086 60 TERMINAL, VT330
- - ---------------------------------------------------------------------------
108 60 HCM 100D, PMN9193
- - ---------------------------------------------------------------------------
112 913496A 60 OR 7120 CAMERA, NIKON, 21
- - ---------------------------------------------------------------------------
114 012101 60 MICROSCOPE, M&M
- - ---------------------------------------------------------------------------
115 911499A 60 OR 7140 SCOPE, LEITZ, SMLUX
- - ---------------------------------------------------------------------------
121 906344A 60 OR 7130 WETDECK, 6'
- - ---------------------------------------------------------------------------
121 906343A 60 OR 7130 WETDECK 6'
- - ---------------------------------------------------------------------------
126 914325A 60 OR 7120 ISOLATION, BARRY, KLA, 69
- - ---------------------------------------------------------------------------
127 SOM900110 60 PRINTER, KLA, 70
- - ---------------------------------------------------------------------------
128 905979 60 PRINTER, DECWRITER II
- - ---------------------------------------------------------------------------
131 906342A 60 OR 7140 WETDECK 4'
- - ---------------------------------------------------------------------------
132 906341A 60 OR 7140 WETDECK 4'
- - ---------------------------------------------------------------------------
135 916455 60 CD, OS12
- - ---------------------------------------------------------------------------
136 907731A 60 OR 7140 PLASMA, LFE
- - ---------------------------------------------------------------------------
136 907738A 60 OR 7140 PUMP, LFE, PLASMA
- - ---------------------------------------------------------------------------
137 914183 60 CD, OS13
- - ---------------------------------------------------------------------------
138 60 TABLE KINETIC
- - ---------------------------------------------------------------------------
143 954255 60 PROCESSOR HME
- - ---------------------------------------------------------------------------
145 905900A 60 OR 7130 PROCESSOR, APT, 914, EB ETCH
- - ---------------------------------------------------------------------------
148 012468 60 OVEN, BLUE M
- - ---------------------------------------------------------------------------
150 906338 60 WETDECK, 4'
- - ---------------------------------------------------------------------------
153 G10247040 60 PRINTER, TAMARACK, 5"
- - ---------------------------------------------------------------------------
154 SOM900014 60 CLEANER, UT, 603
- - ---------------------------------------------------------------------------
155 913401A 60 OR 7120 METER OAI EXPOSURE
- - ---------------------------------------------------------------------------
158 909101B 60 OR 7120 MASK HOLDER, KLA, 100
- - ---------------------------------------------------------------------------
158 909101A 60 OR 7120 INSPECT, KLA, 100
- - ---------------------------------------------------------------------------
162 60 7120 MEBES LOADER -M78
- - ---------------------------------------------------------------------------
164 G10269195 60 TITLER, TAMARACK, 153
- - ---------------------------------------------------------------------------
167 914970 60 CLEANER, UT, 2066
- - ---------------------------------------------------------------------------
168 913179 60 OVEN, BLUE M
- - ---------------------------------------------------------------------------
169 G619932430 60 COMPARATOR, NIKON, CM6
- - ---------------------------------------------------------------------------
170 906339A 60 OR 7130 WETDECK 4'
- - ---------------------------------------------------------------------------
171 012463 60 INSPECT, CODE A, 012565
- - ---------------------------------------------------------------------------
<PAGE>
SCHEDULE 2.1(a)(i) Fixed Assets, Equipment, Machinery, Tools, and Computer
Hardware being purchased by Buyer - continued
MECHANICAL AND ELECTRICAL ROOM
Compressed Air Dryer (2)
Piping
Central Chiller (L96)
Central Chiller (L92)
Emergency Chiller
Chilled Water Pump (2)
Refrigerant Monitor
Steam Humidifier (AHU 1,2,3,4)
Boiler-Steam
Air Handlers (1,2,3,4, 5)
Air Handlers (6, 7)
Chillers Controls (CSI)
Vacuum Pump
DI Wafer Pumps/Filters
Exide Sys. 150
Installation Charges
Electrical Upgrade (1991)
MCC Model 5 Control
Elec. Switch Gears
Basic Lite Fixtures
VAX HARDWARE ASSETS
Harris Alias Model/Device
- - ------------ ------------
Vmsy2K VAX 4000 - 700 (128m of memory)
Chetah Alpha Server 2100
Mask Microvax 3800
Tiger/Felix Microvax 3100
Jaguar VAXstation 3100
Cougar/Lynx VAXstation 4000-60
Lion/Puma DECstation 3000-300X
HSSDEV ATL4/52 DLT Tape Silo
HSSDEV RZ28 2.L GB SCSI Disk
HSSDEV RZ29 4.3 GB SCSI Disk
HSSDEV BA350-JA SCSI Storage Shelf
HSSDEV TKZ09-VA (8mm Tape Drive)
<PAGE>
SCHEDULE 2.1(a)(i) Fixed Assets, Equipment, Machinery, Tools, and Computer
Hardware being purchased by Buyer - continued
Telecommunications Equipment, Personal Computer
and Related Equipment
Customer Service (Bldg. 56)
HP Design Jet 455A Plotter
Cougar 4000-60/Cougar
VAX 4000 CPU Upgrade
TAPE, DEC, on Cougar
VAX 3000 Puma/sn AB43800GCC
ULTRA 30/Wildfire
8505XL EXABYTE/on Wildfire
SUN SPARC 2/Starfire
VAX 3000/Lion/sn AB43800GWG
Plain Paper Fax
HP Laserjet Printer/Wildfire
Dell Optiplex/Cust. Data PC
Compaq DP SB/Ed Mills
Compaq Deskpro/Sue Umberger
Compaq DP 4000/Robert Quigley
Compaq DP 575/Debbie Fleming
Compaq Deskpro/Shiela Tyre
Compuadd 486/Lydia Guthridge
Compaq P166/Andra Nathanson
Compaq DP 575/Luis Pinto
Compaq 575/Phung Luu
Compaq DP4000/Dave Moffett
Portege 650CT Laptop/J Millspaugh
HP LaserJet III/J Millspaugh
Compaq DP5100/C Romano
HP Laserjet II Printer/C Romano
Compaq 266/Steven Suhling
Maintenance
Terminal, Dec, VT340/J Carter
Camera, 3M, Microfiche
CPQ Deskpro 2000/Pat Kervin
HP Laserjet 4si/Old Starfire Printer
Compaq DP/J Maciejewski
Compaq DP 4000/Scott Gallagher
Compaq 575/Pat Schappert
Compaq DP SB/Walt Rauch
Telecommunications (Bldg. 56)
Fastiron - 24 Ports
<PAGE>
Chassis, Base T Conc
10 Base T Chassis
28115E 100M Stackable
Xyplex Server Chassi
10Baset Monitor Card
2115R 16 Port 100 BA
Base T Connector
3000 T Connector
3000 T Concentrator
Telecom & Computers - Building 60
Dell P75/ Bonnie Mitchell
Compaq DPSB/N Miller
Gateway 2000/Beth Morey
Lexmark Printer/B & Ship
Compaq DPSB/Bob Quinn
CPQ Deskpro 2000/F Trimboli
Compaq Prolinea 486/MEBES
Compaq/Robert Shaw Sys
Compaq 286/Particle Monitor
Add-on Costs/Particle Monitor
Compaq 486/Tom Thum box
CPQ 5166MMX/Bill & Ship
Compaq 386/R Manion/home
Compaq DP2000/Rick M
Compaq 5133 MMX/Robe
Lanier Fax 3800
Chassis, Base T Conc
Max 4500T Server
Vax Station Adapter
Terminal, VT240
Dell P75/Liz Helms
Compaq DP 575/Doug Quinn
Compaq DP/Charlie Burns
Compaq 386/MEBES
Compaq DP/Supervisors' PC
Compaq MT 466/Bay 2
HP LaserJet 4Plus/Prd Control
Compaq 433/Billie Hogan
<PAGE>
Schedule 2.1(a)(ii)
<PAGE>
SCHEDULE 2.1(a)(ii) Cleanroom Fixtures and Improvements
being purchased by Buyer
Recirc. CHW/CW Pumps (11)
Air Handling Unit 08 & 09
Air Handling Unit 10 & 11
Air Handling Unit 12,13,14 & 15 (Pace)
HVAC Upgrade
Hood Duct Filter System
Processing Piping System
DDC System Progrss
EPE Power Block 30KVA
Clean Room Flooring
Doors/Walls/Ceiling
Particle Meas. System (Less Facility View Software)
Under Raised Floor Fire Alarm (Vesda)
<PAGE>
Schedule 2.1(a)(iii)
<PAGE>
SCHEDULE 2.1(a)(iii) Fixed Assets, Equipment, Machinery, Tools, and Computer
Hardware being purchased by Buyer - continued
Cooling Tower
Cooling Tower Pumps (2)
Cooling Tower Base
Chiller Plant Upgrades (1997)
Scrubber/Exhaust System
Generator/Fuel System
<PAGE>
Schedule 2.1(a)(iv)
<PAGE>
SCHEDULE 2.1(a)(iv) Inventory and Raw Materials being purchased by Buyer
Item Est. Value
- - ---- ----------
Raw Material - Photomask Blanks & Pellicles $226,000
Work-in-Progress (WIP) $15,000
Finished Goods
Chemicals $14,000
Mask Boxes $25,000
Equipment Spare Parts (see list below) $103,000
On-site Equipment Maintenance Spares
New parts:
QC Optics
- - -------------------------------------------------
Microscope Drv. Bd. $1,600.00
- - -------------------------------------------------
DMA BD $ 825.00
- - -------------------------------------------------
I/O Bd.A $1,150.00
- - -------------------------------------------------
Analog Bd. $4,250.00
- - -------------------------------------------------
Sensor, Hammatsu $ 880.00
- - -------------------------------------------------
PMT Tube $ 550.00
- - -------------------------------------------------
Motor 22N $ 300.00
- - -------------------------------------------------
Motor M1616C $ 340.00
- - -------------------------------------------------
Laser, Pellicle $ 580.00
- - -------------------------------------------------
Misc. Parts $1,600.00
- - -------------------------------------------------
Ultra-Tech Plate Cleaner
- - -------------------------------------------------
Pump, High Pressure $2,000.00
- - -------------------------------------------------
- - -------------------------------------------------
Robert-Shaw System
- - -------------------------------------------------
DCM-UC $2,700.00
- - -------------------------------------------------
DCM-GPC $2,640.00
- - -------------------------------------------------
MSC-AC $ 550.00
- - -------------------------------------------------
MSC-PO $ 286.00
- - -------------------------------------------------
MSC-P1504 $ 450.00
- - -------------------------------------------------
DMSA-848 $ 650.00
- - -------------------------------------------------
DMSA-849 $ 610.00
- - -------------------------------------------------
DMSA-850 $ 400.00
- - -------------------------------------------------
MSC-U1000 $1,770.00
- - -------------------------------------------------
DCM-10C $3,200.00
- - -------------------------------------------------
Misc. Parts $1,400.00
- - -------------------------------------------------
<PAGE>
SCHEDULE 2.1(a)(i) Fixed Assets, Equipment, Machinery, Tools, and Computer
Hardware being purchased by Buyer - continued
On-site Equipment Maintenance Spares - continued
- - -------------------------------------------------
Used Parts
- - -------------------------------------------------
QC Optics
- - -------------------------------------------------
Laser, Argon $ 9,350.00
- - -------------------------------------------------
Laser Power Sup. $ 3,375.00
- - -------------------------------------------------
Ultra-Tech Plate Cleaner
- - -------------------------------------------------
Pump, High Pressure $ 1,500.00
- - -------------------------------------------------
Misc. Parts $ 4,000.00
- - -------------------------------------------------
- - -------------------------------------------------
MEBES
- - -------------------------------------------------
H-P 8V Power Sup. $ 1,200.00
- - -------------------------------------------------
M-III EBC $ 8,200.00
- - -------------------------------------------------
M-III Vacuum System Cntrl $ 1,100.00
- - -------------------------------------------------
M-III Stage Cntrl Interface $ 1,200.00
- - -------------------------------------------------
M-III Electron Source Cntrl $ 1,400.00
- - -------------------------------------------------
CVI Cryo-pump $ 6,000.00
- - -------------------------------------------------
M-III column Electronic P.S. $ 1,100.00
- - -------------------------------------------------
V-80 Plotter (2) $ 2,600.00
- - -------------------------------------------------
LaB6 Gun $ 4,200.00
- - -------------------------------------------------
Misc. Parts $ 8,900.00
- - -------------------------------------------------
KLA 100
- - -------------------------------------------------
Printer Circuit Bds. $ 3,200.00
- - -------------------------------------------------
DRS-I & II
- - -------------------------------------------------
Misc. parts $ 5,000.00
- - -------------------------------------------------
- - -------------------------------------------------
APT Processor
- - -------------------------------------------------
Misc. parts $ 5,000.00
- - -------------------------------------------------
- - -------------------------------------------------
Tamarack Printer
- - -------------------------------------------------
Misc. Parts $ 2,000.00
- - -------------------------------------------------
- - -------------------------------------------------
OSI/MPV Measuring Systems
- - -------------------------------------------------
Misc. Parts $ 2,500.00
- - -------------------------------------------------
- - -------------------------------------------------
Nitrogen Booster System
- - -------------------------------------------------
Haskel Pump (4) $ 2,600.00
- - -------------------------------------------------
TOTAL $103,156.00
- - -------------------------------------------------
<PAGE>
Schedule 2.1(a)(v)
<PAGE>
SCHEDULE 2.1(a)(v) Assumed Contracts
<TABLE>
<CAPTION>
Order Order Order Part
Div Dept Charge Vendor Date Number Status Number
<S> <C> <C> <C> <C> <C> <C> <C>
R 1999 510056 MICROLITHOGRAPHY 9/4/97 230799 O 710627-999999
R 1999 510056 MICROLITHOGRAPHY 9/4/97 230801 O 710627-999999
R 1999 510056 INKO INDUSTRIAL 7/10/98 238430 O 710627-0103
R 1999 C10055 FISHER SCIENTIFIC CO. 7/14/98 238564 O 210549
R 1999 510055 FISHER SCIENT 7/14/98 238564 O 210549
R 1999 C10055 FISCHER SCIENTIFIC CO. 7/14/98 238565 O 210548
R 1999 510055 FISCHER SCIENT 7/14/98 238565 O 210548
R 1999 510056 DUPONT PHOTOMASKS INC 7/24/98 238687 O 710627-999999
R 1999 510056 DUPONT PHOTOMASKS INC 7/24/98 238688 O 710627-999999
R 1999 510056 INKO INDUSTRIAL 10/21/98 240438 O 710627-0106
R 1999 510056 HOYA CORPORATION USA 11/3/98 240644 O 710538-31603
R 1999 510056 HOYA CORPORATION USA 11/2/98 240645 O 710538-61603
R 1999 510056 MICROLITHOGRAPHY INC 11/23/98 241105 O 710627-0503
R 1999 510056 INKO INDUSTRIAL 11/23/98 241106 O 710627-0602
Original Invoiced Dollars
Div Description Dollars Dollars Available
<S> <C> <C> <C> <C>
R PELLICLE, ENGINEERING $8,000 $2,400 $5,600
R PELLICLE, ENGINEERING $8,000 $2,400 $5,600
R PELLICLE, ASM $250,000 $175,625 $74,375
R DEVELOPER, AC-12350-2500
(250 ML) $26,569 $19,587 $6,982
R DEVELOPER, AC-12350-2500 $26,569 $19,587 $6,982
R DEVELOPER, AC149660025 (2.5 $53,059 $39,640 $13,419
LI.)
R DEVELOPER, AC149660025 $53,060 $39,640 $13,420
R PELLICLE, ENGINEERING $54,000 $15,525 $38,475
R PELLICLE, ENGINEERING $54,000 $15,525 $38,475
R ASM17P-113-1015-H $112,000 $35,455 $76,545
R 5*5 .090-2UM-EHQ-AR-PBS-U $424,000 $182,850 $241,150
R 6*6 .250-2UM-EHQ-AR-PBS-U $727,650 $417,725 $309,925
R PELLICLE, PE $60,000 $32,820 $27,180
R PELLICLE, UT $35,500 $30,530 $4,970
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Order Order Order Part
Div Dept Charge Vendor Date Number Status Number
<S> <C> <C> <C> <C> <C> <C> <C>
R 1999 510056 DUPONT PHOTOMASKS INC 12/3/98 241296 O 710627-0307
R 1999 510056 DUPONT PHOTOMASKS INC 12/3/98 241297 O 710627-0306
R 1999 C10055 VWR SCIENTIFIC PRODUCTS 2/3/99 241979 O 210062-031
R 1999 510056 HOYA CORP 2/2/99 242092 O 710538-03000
R 1999 510056 HOYA CORPORATION USA 2/2/99 242093 O 710538-32400
R 1999 510056 HOYA CORP 2/2/99 242094 O 710538-32103
R 1999 510056 HOYA CORPORATION USA 2/2/99 242095 O 710538-31501
R 1999 510056 HOYA CORP 2/2/99 242096 O 710538-33000
R 1999 510056 HOYA CORP 2/2/99 242097 O 710538-53000
R 1999 510056 HOYA CORPORATION USA 2/2/99 242098 O 710538-33200
R 1999 510056 HOYA CORP 2/2/99 242100 O 710538-31501
R 1999 510056 IMAGEX 2/5/99 242101 O 710538-11503
R 1999 510056 HOYA CORP 2/2/99 242102 O 710538-11412
R 1999 510056 HOYA CORP 2/2/99 242103 O 710538-02103
R 1999 510056 IMAGEX 2/5/99 242104 O 710538-01503
R 1999 510056 MICROLITHOGRAPHY INC 2/5/99 242105 O 710627-0204
R 1999 510056 INKO INDUST 2/5/99 242106 O 710627-0208
Original Invoiced Dollars
Div Description Dollars Dollars Available
<S> <C> <C> <C> <C>
R PELLICLE:GN501G-5221H $13,500 $12,825 $675
R PELLICLE:GN501P-5221H $13,500 $12,825 $675
R CHEMICAL, CERIUM AMMONIUM $34,040 $15,183 $18,857
NITRATE
R 4 4 .060-10UM-SLW-AR-1350 $1,300 $ $1,300
R 5 5 .090-5UM-QZ-AR-1350-S $18,000 $7,200 $10,800
R 5X5 .090-5UM-WC-AR-PBS-U $8,700 $ $8,700
R 5 5 .090-2UM-EQZ-AR-1350-U $42,250 $2,600 $39,650
R 5 5 .090-10UM-SLW-AR-1350-S $2,600 $ $2,600
R 6 6 .120-10UM-SLW-AR-1350-S $3,300 $ $3,300
R 5 5 .090-5UM-NA-AR-1350-S $155,000 $18,600 $136,400
R 5 5 .090-2UM-EQZ-AR-1350-U $42,250 $ $42,250
R 4 4 .090-2UM-EQZ-AR-PBS-U $12,000 $2,400 $9,600
R 4 4 .090-2UM-QZ-CT-PBS-U $7,250 $ $7,250
R 4X4 .060-5UM-WC-AR-PBS-U $6,300 $ $6,300
R 4X4 .060-2UM-EQZ-AR-PBS-U $5,750 $ $5,750
R PELLICLE, CANON $49,500 $4,950 $44,550
R PELLICLE, CANON $3,400 $ $3,400
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Order Order Order Part
Div Dept Charge Vendor Date Number Status Number
<S> <C> <C> <C> <C> <C> <C> <C>
R 1999 510056 INKO INDUST 2/5/99 242107 O 710627-0207
R 1999 510056 MICROLITHOGRAPHY 2/5/99 242108 O 710627-0206
R 1999 510056 MICROLITHOGRAPHY 2/5/99 242109 O 710627-0205
R 1999 510056 MICROLITHOGRAPHY 2/5/99 242110 O 710627-0200
R 1999 510056 INKO INDUST 2/5/99 242111 O 710627-0301
R 1999 510056 INKO INDUST 2/5/99 242112 O 710627-0001
R 1999 510056 MICROLITHOGRAPHY 2/5/99 242114 O 710627-0201
R 1999 510056 MICROLITHOGRAPHY 2/5/99 242115 O 710627-0202
R 1999 510056 INKO INDUST 2/5/99 242116 O 710627-0209
R 1999 510056 INKO INDUST 2/5/99 242117 O 710627-0210
R 1999 510056 INKO INDUSTRIAL 2/5/99 242118 O 710627-0303
R 1999 510056 INKO INDUSTRIAL 2/5/99 242119 O 710627-0304
R 1999 510056 INKO INDUSTRIAL 2/5/99 242120 O 710627-0305
R 1999 510056 INKO INDUST 2/5/99 242121 O 710627-0400
R 1999 510056 INKO INDUST 2/5/99 242122 O 710627-0401
R 1999 510056 MICROLITHOGRAPHY 2/5/99 242123 O 710627-0402
R 1999 510056 MICROLITHOGRAPHY 2/5/99 242124 O 710627-0403
R 1999 510056 MICROLITHOGRAPHY 2/5/99 242125 O 710627-0500
R 1999 510056 INKO INDUST 2/5/99 242126 O 710627-0504
R 1999 510056 INKO INDUSTRIAL 2/5/99 242127 O 710627-0505
R 1999 510056 MICROLITHOGRAPHY 2/5/99 242128 O 710627-0600
R 1999 510056 MICROLITHOGRAPHY INC 2/5/99 242129 O 710627-0501
Original Invoiced Dollars
Div Description Dollars Dollars Available
<S> <C> <C> <C> <C>
R PELLICLE, CANON $5,600 $ $5,600
R PELLICLE, CANON $2,750 $ $2,750
R PELLICLE, CANON $2,750 $ $2,750
R PELLICLE, CANON $60,000 $8,700 $51,300
R PELLICLE, GCA $64,000 $6,080 $57,920
R PELLICLE, TRE $32,000 $ $32,000
R PELLICLE, CANON $48,000 $9,360 $38,640
R PELLICLE, CANON $44,800 $3,540 $41,260
R PELLICLE, CANON $3,500 $ $3,500
R PELLICLE, CANON $3,500 $00 $3,500
R PELLICLE, GCA $9,600 $1,280 $8,320
R PELLICLE, GCA $6,500 $3,250 $3,250
R PELLICLE, GCA $6,500 $3,250 $3,250
R PELLICLE, NIK $3,450 $ $3,450
R PELLICLE, NIK $3,450 $ $3,450
R PELLICLE, NIK $6,500 $1,950 $4,550
R PELLICLE, NIK $6,500 $2,275 $4,225
R PELLICLE, PE $4,500 $600 $3,900
R PELLICLE, PE $11,550 $ $11,550
R PELLICLE, PE $19,200 $1,280 $17,920
R PELLICLE, UT $3,100 $ $3,100
R PELLICLE, PE $31,050 $8,775 $22,275
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Order Order Order Part
Div Dept Charge Vendor Date Number Status Number
<S> <C> <C> <C> <C> <C> <C> <C>
R 1999 510056 INKO INDUSTRIAL 2/5/99 242130 O 710627-0300
R 7160 510056 RTD EXPRESS 2/2/99 242266 O SERVICE
R 1999 510056 HOYA CORPORATION USA 2/2/99 242287 O 710538-E1503
R 1999 510056 DUPONT PHOTOMASKS INC 2/11/99 242386 O 710627-0406
R 1999 510056 DUPONT PHOTOMASKS INC 2/11/99 242387 O 710627-0407
R 1999 510056 MICROLITHOGRAPHY INC 3/2/99 242728 O 710627-0203
R 1999 510056 HOYA CORPORATION USA 3/24/99 243283 O 710538-51503
R 1999 510056 DUPONT PHOTOMASKS INC 3/30/99 243337 O 710627-0409
R 1999 510056 DUPONT PHOTOMASKS INC 3/30/99 243338 O 710627-0306
R 1999 510056 DUPONT PHOTOMASKS INC 3/30/99 243339 O 710627-0307
R 7150 568550 INSTRUMENTATION 5/5/99 244192 O 03-07720-02
SERVICES
R 7140 568550 INTEGRATED SOFTWARE 5/7/99 244269 O SERVICE
DESIGN INC
R 1999 510054 ASHLAND CHEMICAL CO 5/17/99 244458 O 210062-017
R 1999 510053 FLUOROWARE INCORPORATED 5/21/99 244552 O 215494-012
Original Invoiced Dollars
Div Description Dollars Dollars Available
<S> <C> <C> <C> <C>
R PELLICLE, GCA $30,500 $2,745 $27,755
R SERVICE, SEE BELOW PLEASE $500 $115 $385
R 7.25 .150-2UM-EQZ-AR-PBSU $520,000 $298,480 $221,520
R PELLICLE; NI522P-5211H $14,500 $11,600 $2,900
R PELLICLE; NI522G-5211H $14,500 $9,425 $5,075
R PELLICLE, CANON $81,000 $25,920 $55,080
R 6 6 .120-2UM-EQZ-AR-PBSU $240,000 $52,000 $188,000
R PELLICLE; NI609P-7043L $94,000 $9,400 $84,600
R PELLICLE: GN501P-5221H $54,000 $8,100 $45,900
R PELLICLE: GN501G-5221H $54,000 $7,425 $46,575
R PRINTER HEAD, STYLUS 6470 $220 $ $220
R ON-TAP ALPHA DEPT. S $795 $ $795
4000, 2100 SER. 5294A
R ACETIC ACID, (4 X 9 LB. PER $799 $396 $403
CASE)
R BOX FOR FINISHED PHOTOMASK-5" $756 $378 $378
PA'S H60-60-0615 WHT
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Order Order Order Part
Div Dept Charge Vendor Date Number Status Number
<S> <C> <C> <C> <C> <C> <C> <C>
R 1999 510053 FLUOROWARE INCORPORATED 5/21/99 244553 O 215494-014
R 7120 568202 ZEPHYRHILLS WATER 2/10/99 252032 O 1
Original Invoiced Dollars
Div Description Dollars Dollars Available
<S> <C> <C> <C> <C>
R BOX FOR FINISHED PHOTO $4,310 $2,155 $2,155
R DRINKING WATER SYSTEM AND $500 $243 $257
BOTTLED WATER
</TABLE>
<PAGE>
Schedule 2.1(a)(vi)
<PAGE>
Schedule 2.1(a)(vi) Prepaid Expenses
Software - Est. Value $4,000
<PAGE>
Schedule 7.6
<PAGE>
Schedule 7.6(a) All Software Licenses used in or on behalf of the Photomask
Business
Facility View
Standard Client (Windows 95/NT, MS Office 97 Pro, Outlook, I.E., Onnet, McAfee)
Kea!
Adobe Acrobat 3.0
Corel PhotoPaint
PowerBuilder 6.0
Visio Hub/Docs: Exceed 6.1
L-View Pro 2.0
WinZip Visual Basic 5.0
Visual C++
Project
FrontPage98
Microsoft Developer
Wave Star 1.1.2
Pocket Logger
Perl
FedEx Shipping
Harvard Graphics
3.05 LabelWorks
2.0 Lotus 1-2-3, v3.1
Microsoft Liquid Motion
Omni Page (OCR software)
Paradox 4.0
Paradox 4.5
PGP 5.5 for Enterprise Security
ProComm Plus
Quick Books 4.0.2
Telemoney PC Batch 2.2 (VISA)
Cobol
Ontap
JSS
DECset
CDD/DBMS
DECForms
Diskeeper
Multinet
Pascal
DEC C
FMS
RS 1
Robomon
<PAGE>
Schedule 7.6(a) All Software Licenses used in or on behalf of the Photomask
Business (continued)
SLS
PGPOST
MIZER
MDECK
EYORE
TABBY
CATS GRAPHICS
CATS FRACTURE
MNET
MICE II
SARA
INGRESS
BILL AND SHIP
CASPER
PERF EVAL
CONNX
JSURVEY
PGP UNIX ENCRYP
LABELING
UCX TCP/IP
VMS 5.5-2 OS
VMS 5.4 OS
VMS 6.2 OS
VAX Watcher
VAX DW-MOTIF
Consilium Workstream
On Line SPC
Tom Thum
HITG Web Site
Customer Web Sites
Solaris Unix 2.5.1 OS
Sun 4.1.4 O
<PAGE>
Exhibit B
[Form of]
Lease Agreement
by and among
Harris Corporation
Semiconductor Business Unit
and
Align-Rite, Inc.
<PAGE>
LEASE SUMMARY
Lessor: Harris Corporation
Semiconductor Business Unit
Notice Address: 2401 Palm Bay Road NE, m/s 53-205
Palm Bay, FL 32905
Attention: Tim Muth
Phone Number: (407) 724-7988
Fax Number: (407) 729-4887
with a copy to: Vice President Counsel
Harris Semiconductor Business Unit
2401 Palm Bay Road NE, m/s 53-216
Fax Number: (407) 729-5952
- - ----------------------------------------------------------------------------
Lessee: Align-Rite, Inc.
Notice Address: c/o 2428 Ontario Street
Burbank, CA 91504
Attention: Petar Katurich
Phone Number: (818) 843-7220
Fax Number: (818) 563-4902
with a copy to: J. Jay Herron, Esquire
Robert L. Davis, Esquire
O'Melveny & Myers
610 Newport Beach, California 92660
Phone Number: (949) 823-6906
Fax Number: (949) 823-6994
- - ----------------------------------------------------------------------------
Date of this Agreement: July 2, 1999
Description of Demised Premises: Building 60 and a portion of
Building 56, as described in
Exhibits "A" through "D" hereof
Gross Rentable Square Feet: Building 60: approx. 25,567 sq. ft.
Building 56: approx. 8,108 sq. ft.
<PAGE>
LEASE SUMMARY (continued)
Lessee's proportionate Share: Building 60: 100%
Building 56: 50.6% (4,101 sq. ft.)
with option to expand
to 95%
Rent: Years 1 - 2 $225,000.00 annually,
plus tax; adjusted if
the option to expand the
occupied portion of
building 56 is exercised
("Adjusted Rent")
$225,000 or the adjusted
rent increased by
the increase, if
any, in the
Producer Price
Index for the
month of July in
the year in which
any option to
renew is exercised
over the Producer
Price Index for
July, 1999, if
option to renew is
exercised.
Term of Lease: Two (2) years
Option to Extend Term: Six (6) options of three (3) years
each
Commencement date: July 3, 1999
Liability Insurance: Lessor to provide for Building Shells
Lessee to provide for Building contents
Security Deposit: None
<PAGE>
Table of Contents
1. Premises
2. Term
3. Rent
4. Additional Rent/Tax
5. Use of Premises
6. Utilities
7. Maintenance, Repairs & Alterations
8. Fixtures
9. Security
10. Services
11. Signs
12. Parking Spaces
13. Entry Way
14. Hazardous Material Storage Area
15. Stock Room
16. Telephone Communications Equipment
17. Condition of Premises
18. Insurance
19. Destruction of Premises
20. Condemnation
21. Default
22. Remedies Upon Event of Default
23. Option to Renew
24. Option to Expand
25. Hazardous Materials
26. Indemnification
27. Abandonment of Premises
28. Assignment and Subletting
29. Option to Cancel
30. Compliance with Law
31. Holding Over
32. Lessor's Right to Entry and Inspection
33. Lessor's Right to Perform Lessee's Covenants
34. Late Payment Charges
35. Liens
36. Notices
37. Quiet Enjoyment
38. Security Deposit
39. Successors and Assigns
40. Surrender of Premises
41. Transfer of Property by Lessor
42. Estoppel Certificate and Subordination
<PAGE>
Table of Contents - continued
43. General
44. Governing Law
45. Force Majeure
46. Entire Agreement
47. Attorneys' Fees
48. Authority
Exhibits
Exhibit A - Map of the Complex located at 2401 Palm Bay Road NE, Palm Bay, FL
32905
Exhibit B - Description of the demised Premises
Exhibit C - Layout of Building 56, first floor
Exhibit D - Layout of Building 56, second floor
<PAGE>
COMMERCIAL NET LEASE
This Lease Agreement is entered into this 2nd day of July, 1999 at Palm Bay,
Florida, by and among Harris Corporation, a Delaware Corporation, acting through
its Semiconductor Business Unit, 2401 Palm Bay Rd. NE, Palm Bay, FL 32905
("Lessor"), and Align-Rite, Inc., a Florida Corporation, c/o 2428 Ontario
Street, Burbank, CA 91504-3195 ("Lessee").
RECITALS
WHEREAS, Lessor and Lessee have or will enter into a separate Asset
Purchase Agreement ("Asset Purchase Agreement") of even date herewith for the
sale of certain assets to Lessee used in connection with Lessor's Photomask
Business; and
WHEREAS, Lessor and Lessee have or will enter into a separate Site Services
Agreement ("Site Service Agreement") of even date herewith for the provision of
certain services to Lessee used in connection with Lessor's Photomask Business;
and
WHEREAS, Lessor has agreed to lease the principal facilities used in the
Photomask Business ( as defined in the Asset Purchase Agreement) to Lessee.
AGREEMENT
In consideration of the premises, the mutual promises contained herein, and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, and intending to be legally bound hereby, the parties agree
as follows:
1. PREMISES:
Lessor hereby leases to Lessee and Lessee hires from Lessor for the Term,
at the rental, and upon all of the conditions set forth herein, a portion of the
complex situated in the City of Palm Bay, Brevard County, State of Florida,
located at 2401 Palm Bay Rd. NE, Palm Bay, FL 32905 (the "Complex", a map of
which is attached hereto and incorporated herein as Exhibit "A"), said portion
consisting of Building 60, which contains the Imaging Technology Group photomask
manufacturing facilities, and a portion of Building 56, which contains office
space, more particularly depicted in Exhibits "B" through "D" attached hereto
and incorporated herein by reference (the "Premises").
<PAGE>
2. TERM:
The term of this Lease shall be for twenty-four (24) months commencing July
3, 1999, (the "Commencement Date") and terminating on July 2, 2001, The term
shall be automatically renewed for six extensions of three years each, pursuant
to Section 23, unless terminated pursuant to Section 29 (as so extended the
"Term").
3. RENT:
Rent shall be payable in advance on the first day of each month, commencing
on July 3, 1999 without abatement, deduction, offset, prior notice or demand.
Building 60 is a triple-net lease, whereby the monthly rent covers the building
shell only; real property taxes, utilities, site services and insurance on the
building shell are not included. Building 56 is a fully-burdened lease, whereby
the monthly rent includes all utilities, real property taxes, and insurance on
the building shell. The total rent for the Premises, consisting of 100%
occupancy of building 60 and initially 50.6% occupancy of Building 56, shall be
$225,000.00 annually, which is $18,750.00 per month.
If the Commencement Date of this Lease is other than on the first of the
month, that month's rent shall be pro-rated accordingly. The rent for the last
month of the Lease, whether during the Term, shall also be pro-rated. Commencing
on the twenty-fifth (25th) month of the Term hereof and thereafter every three
(3) years, the annual rent shall be adjusted (as illustrated below) by adding to
the annual rent an amount calculated by multiplying Base Rent by the Increase in
PPI, if a positive number. As used herein: "Base Rent" means $225,000 or, if
Lessee has exercised its option to increase occupancy of Building 56 to 95% of
this area of the Building, $250,000; "Increase in PPI" means the amount obtained
by subtracting the Commencement PPI from the Final PPI and dividing such
difference by the Final PPI' "Commencement PPI" means the PPI for July 1999;
"Final PPI" means, with respect to the first renewal term, the PPI for June 2001
and, with respect to each successive renewal term, the PPI for the month
immediately preceding the first month of the applicable successive renewal term;
and "PPI" means the Producer Price Index for the month in question as published
by the United States Department of Commerce ("USDC"), or such substitute or
replacement index therefor as may be published by the USDC. In the event that
the PPI is discontinued and not replaced by an index published by the USDC, the
parties hereto shall agree to a reasonable replacement index to approximate the
results under the foregoing formulas that would be achieved through use of the
PPI.
Example of Rent Calculation
New Rent (1st Renewal Term) =
Base Rent + [(Base Rent) x ({PPI (6/01)} - {Commencement PPI}/Commencement PPI)]
New Rent (2nd Renewal Term) =
Base Rent + [(Base Rent) x ({PPI (6/04)} - {Commencement PPI}/Commencement PPI)]
<PAGE>
Should Lessee exercise the option to expand as set forth in Section 23 herein,
the monthly rent of Building 56 will increase to reflect 95% occupancy, and the
total rent for the Premises shall be $250,000 annually, which is $20,833.33 per
month.
4. ADDITIONAL RENT/TAX:
a) In addition to the rent required to be paid under this Lease,
Lessee shall pay, as additional rent, the utilities charges as set forth in
the "Consumables" Section (provided to Align-Rite by Harris) on page 2 of
Exhibit "A" of the Site Services Agreement.
b) In addition to the rent required to be paid under this Lease,
Lessee shall pay, as additional rent, six percent (6%) Florida sales tax on
the monthly rental amount as required by Florida Statutes ss. 212.031.
c) In addition to the rent required to be paid under this Lease,
Lessee shall pay, as additional rent, a monthly pro-rata portion of any and
all Real Property Taxes levied or assessed against Buildings 60 during the
Term of this Lease. The estimated real estate taxes in fiscal year 2000 for
Building 60 is $17,244.
d) For purposes of this Lease, Real Property Taxes shall be defined as
follows: (i) All real estate taxes, including but not limited to town,
county and school taxes payable (adjusted after protest or litigation, if
any) for any part of the term of this Lease including any extension period
hereof on the Premises, (ii) any taxes that shall be levied in lieu of the
taxes described in (i) above or that shall be levied on the gross rentals
of the Premises but excluding all income taxes of Lessor, (iii) any other
governmental real estate taxes, levies, impositions or charges of a similar
or dissimilar nature, whether general, special, supplemental, ordinary,
extraordinary, foreseen or unforeseen that may be assessed, levied or
imposed upon all or any part of the Premises, and (iv) the reasonable
expense of contesting the amount or validity of any such taxes, charges or
assessments, such expense (including reasonable attorneys' fees) to be
applicable to the period of the item contested. If the method of taxation
of real estate utilized by the taxing jurisdictions having jurisdiction
over the Premises at the time of execution of this Lease shall be altered
so as to cause the whole or any part of the taxes now or hereafter levied,
assessed or imposed on real estate to be levied, assessed or imposed upon
Lessor wholly or partially, as a capital levy or other tax or otherwise, or
on or measured by the rents received therefrom, then such new or altered
taxes attributable to the Premises shall be included within the term "Real
Estate Taxes."
e) Tax Hold-Harmless Clause: Lessee shall indemnify and hold Lessor
and the property of Lessor, including said Premises and any improvements
now or hereafter on said Premises, free and harmless from any liability,
loss, or damage resulting from any taxes, assessments, or other charges
required by this Article to
<PAGE>
be paid by Lessee and from all interests, penalties, and other sums imposed
thereon and from any sales or other proceedings to enforce collection of
any such increase in taxes, assessments, or other charges.
f) Payment by Lessor: Should Lessee fail to pay within the time
specified in this Article any taxes, assessments, or other charges required
by this Article to be paid by Lessee, Lessor may, but is not obligated to,
without notice to or demand on Lessee, pay, discharge, or adjust such tax,
assessment, or other charge for the benefit of Lessee. In such event,
Lessee shall promptly on written demand of Lessor reimburse Lessor for the
full amount paid by Lessor in paying, discharging, or adjusting such tax,
assessment, or other charge together with interest thereon at the rate of
ten percent (10%) per annum from the date of payment by Lessor until the
date of repayment by Lessee. Where no time within which any charge required
by this Article to be paid by Lessee is specified in this Article, such
charge must be paid by Lessee before it becomes delinquent.
g) Lessee shall pay all taxes assessed against or levied upon
fixtures, furnishings, equipment and all other personal property of Lessee
located in the Premises other than those furnished and paid for by Lessor.
5. USE OF PREMISES:
The Premises shall be used and occupied by Lessee for its lawful business
consistent with the Photomask Business conducted on the Premises by Lessor prior
to the Closing Date and incidental uses thereto. Lessee is responsible to obtain
any and all licenses and/or permits required for the lawful operation of
Lessee's business.
6. UTILITIES:
Lessee shall pay or cause to be paid all charges for the furnishings of
utilities to Building 60 including, but not limited to, water, electricity,
nitrogen and deionized water to the Premises during the term of this Lease as
set forth in the Site Services Agreement. Lessor will provide utilities in
accordance with Lessor's specifications. Lessee hereby acknowledges that Lessor
is not in the business of providing the utilities herein and that Lessor does
not warrant the performance of providing utilities hereunder. In the event of an
error or omission in the provision of utilities which shall be established to be
principally caused by Lessor's performance hereunder, Lessor shall credit Lessee
for any previously invoiced charges in connection with such utilities. Such
adjustment shall be Lessee's only remedy. Lessor shall have no liability to
Lessee for any special, consequential, or incidental damages. Lessor shall
undertake to perform services hereunder for Lessee substantially in the same
manner as if it were performing such services for a Lessor business unit.
Lessor's obligations to provide any service hereunder is conditioned
<PAGE>
upon the responsible party obtaining prior to the commencement of such services
all necessary governmental licenses, approvals, and permits. The utility charges
shall be considered additional rent in accordance with Article 4 of this Lease.
7. MAINTENANCE, REPAIRS & ALTERATIONS:
a) Lessee agrees that the Premises are now in a tenantable and good
condition. Lessor shall maintain the building structure, all utility and
production supply piping up to the point of entry into the Premises or to
the meter, if applicable, windows, doors, landscaping, parking lot, fire
detection and alert system, and the interior sprinkler system of the
Premises in good condition and repair in accordance with the policies and
procedures of Lessor, whether written or oral, by which Lessor maintains
the other buildings on the Complex. Repairs will be performed in accordance
with Lessor's standard procedures for scheduling such work, using the same
workmanship levels and materials used for the adjacent buildings of the
Complex as shown on Exhibit "A". Lessee shall maintain the remainder of the
Premises in good condition and repair.
b) Lessee may use any contractor of Lessee's choice to complete any
repair, maintenance, alteration, or improvement to be completed under this
Section. All such contractors must submit required information to Lessor's
facility and security functions and be cleared and badged appropriately
before being admitted to the Complex. Information required to be submitted
to the Facilities department prior to the commencement of work includes the
scope of the work, detailed engineering drawings, and a bill of materials.
In the alternative, at Lessee's request, Lessor shall make available to
Lessee, Lessor's list of qualified contractors, which Lessee is free to
hire to complete any repair, maintenance, alteration, or improvement.
c) The Premises shall not be materially altered, repaired or changed
without the written consent of Lessor, which will not be unreasonably
withheld. Detailed descriptions or drawings ("Plans") of proposed
alterations are to be supplied to the Lessor ten (10) business days prior
to the start of work. The Lessor will respond in writing within ten (10)
business days of its receipt of any Plans; Lessor's failure to respond
within such period shall be conclusively deemed to be Lessor's approval of
the applicable Plans.
d) Lessee may at Lessee's option and Lessee's expense submit a work
order to Lessor's facilities department to complete any repair,
maintenance, alteration, or improvement. In such event Lessor shall charge
Lessee for the work in accordance with the Site Services Agreement between
Lessor and Lessee.
8. FIXTURES:
Only those fixtures and improvements set forth in Schedules to the Asset
<PAGE>
Purchase Agreement shall belong to Lessee; all other fixtures and improvements
to the Premises shall remain the property of Lessor. All fixtures and
improvements other than Lessee's trade fixtures and equipment which are
installed or constructed upon or attached to the Premises by either the Lessor
or the Lessee shall become a part of the realty and belong to Lessor. Lessee
may, at the termination or expiration of this Lease, or at any other time,
remove from the Premises all trade fixtures, equipment, and other personal
property owned by Lessee and not permanently affixed to the Premises. Upon said
removal, Lessee shall restore the Premises to its original condition at the time
of occupancy, normal wear and tear and other casualty damage excepted.
9. SECURITY:
Building security will be supplied by the Lessor at the cost and terms set
forth in the Site Services Agreement. These services include:
(a) Guard Services:
o Periodic checks of the closed area: twice per day during 1st
shift, and every two hours during 2nd and 3rd shifts, weekends,
and holidays.
(b) Badging:
o Badge Lessee's guests and employees with a badge different from
that of Lessor's employees, but permitting Lessee's employees
unrestricted access to all common areas of the Complex. Lessor's
employees and agents shall have unrestricted access to both
Building 56 and 60.
o Lobby training and support for Building 60 receptionist
o Provide perimeter access control and interface with Cardkey
systems
o Handle incoming and outgoing classified visits
(c) Clearances:
o Fingerprinting, paperwork processing, electronic submission to
appropriate government agencies, appointments for polygraphs,
interviews with government investigators.
(d) Briefings:
o Initial security briefings to all cleared employees, rebrief when
appropriate, debrief when employees terminate.
o Foreign travel briefing and reporting
o Computer Security briefings
(e) Security Education:
o Periodic reminders of security practice for cleared employees
(f) Locks and Combinations:
o Furnish "approved containers" and approved locks for classified
storage,
<PAGE>
maintain classified combinations. Change combinations when
required.
(g) Classified Material Control:
o Control and accountability of all classified materials (documents
and hardware).
o Shipping and Receiving of all classified material on the
premises.
(h) Computer Security support
(i) CSSO (Contractor Special Security Officer) and COMSEC
(Communications Security) Custodian on premises.
(j) Liaison with Defense Security Service Reps. and NSA for internal
audits and inspections.
Lessee shall appoint a security officer responsible for all security
matters relating to Lessee's Photomask Business. The name of this person shall
be provided to Lessor within five (5) business days after the commencement of
this Lease. Lessee shall, at its sole cost, obtain a security clearance for the
Premises as required to handle classified materials in accordance with U.S.
Government Department of Defense requirements.
Lessee will have access to and use of the secure conference room located in
Building 52 as shown on Exhibit "A", subject to preemption by Lessor for
confidential meetings which necessarily take priority over said use by Lessee.
Lessee shall comply with Lessor's on-site hurricane preparedness and evacuation
plan as directed by the Complex Director of Emergency Operations. Lessee
acknowledges receipt of a copy of Lessor's Hurricane Plan.
10. SERVICES:
Lessor will provide Lessee with site services in accordance with the cost
and terms set forth in the Site Services Agreement.
11. SIGNS:
a) Lessee may install a suitable sign on the Complex which meets all
applicable signage codes, with the prior written approval of the Lessor,
which shall not be unreasonably withheld. Lessee shall not construct any
projecting sign or awning without the prior written consent of Lessor,
which consent shall not be unreasonably withheld. The cost of the sign, its
installation, operation, and maintenance expenses shall be Lessee's sole
expense.
b) Lessee may install suitable signs which meet all applicable signage
codes for the six (6) designated parking spaces assigned in Section 12,
subject to the prior written approval of the Lessor, which consent shall
not be unreasonably withheld. Upkeep of the signs shall be at Lessee's sole
expense.
<PAGE>
12. PARKING SPACES:
Lessee shall be assigned and entitled to use at no additional cost six (6)
parking spaces in the parking lot located to the south of Building 54 and to the
east of Building 53 of the Complex as shown on Exhibit "A". Lessee may mark
these as designated spaces with signs as set forth in Section 11.
13. ENTRY WAY:
Lessee may install a separate covered entry way to Building 60 from the
parking lot located to the south of Building 54 and to the east of Building 53
of the Complex as shown on Exhibit "A", with the prior written consent of the
Lessor, which consent shall not be unreasonably withheld. The cost of the entry
way, its installation, operation, and maintenance shall be at Lessee's sole
expense.
14. HAZARDOUS MATERIAL STORAGE AREA:
Lessee may build a separate storage area for Hazardous Materials on the
west side of Building 60 adjacent to the loading dock with approximate
dimensions of twenty-four feet by twenty feet (24' x 20'), having access from
both inside and outside the building, subject to the prior written consent of
Lessor, which consent shall not be unreasonably withheld. The cost of
installation, operation, and maintenance of this storage area shall be at
Lessee's sole expense.
15. STOCK ROOM:
Lessee shall have access to and use of the Building 61 stock room during
Lessor's normal operating hours for those materials necessary for operation of
Lessee's Photomask Business. Materials stored by Lessee shall be substantially
the same as those stored by Lessor for use in the Photomask Business prior to
the Closing Date. No material change in the type or kind of materials stored in
Building 61 after the Closing Date by Lessee is allowed without the prior
written approval of Lessor, which consent shall not be unreasonably withheld.
Lessee must furnish Material Safety Data Sheets with any new chemicals approved
for storage by Lessor. For the purposes of Sections 15 and 25 the introduction,
use, storage or disposal of any materials not used by the Photomask Business
prior to the Closing Date, which are toxic, corrosive, hazardous substances or
flammable (including solvents) constitutes a material change.
16. TELEPHONE COMMUNICATIONS EQUIPMENT:
Lessee shall be allowed to use the local telephone service provider's
external telephone lines and network interface on the Complex for connecting
their
<PAGE>
own separate telephone system with the service provider. Lessor's
telecommunications personnel shall be consulted prior to any work relating to
telephone connections is performed. All work, equipment, connection fees, and
usage fees for a separate telephone system and account will be at Lessee's sole
expense. If Lessee exercises the option to expand as set forth in Section 24
herein, Lessor's telecommunications personnel shall be allowed access to the
sixty-nine (69) square-foot Communications Equipment Room (CER) located in
Building 56 as shown in Exhibit "C" during the remainder of the Term, with
reasonable prior notice to Lessee. Lessor shall maintain possession and control
of the four-hundred (400) square-foot CER located in Building 56 as shown on
Exhibit "C" throughout the entire Term of this Lease, including renewal Terms.
17. CONDITION OF PREMISES:
Except as otherwise provided in this Lease, Lessee has inspected and hereby
accepts the Premises in their condition existing as of the Commencement Date or
the date that Lessee takes possession of the Premises, whichever is earlier,
subject to all applicable zoning, municipal, county and state laws, ordinances
and regulations governing and regulating the use of the Premises, and any
covenants or restrictions of record, and accepts this Lease subject thereto and
to all matters disclosed thereby and by all exhibits attached hereto. Lessee
acknowledges that neither Lessor nor Lessor's agent has made any representation
or warranty as to the present or future suitability of the Premises for the
conduct of Lessee's business, except as set forth in the Asset Purchase
Agreement.
Notwithstanding the foregoing, Lessor agrees to deliver the Premises to
Lessee with basic facilities equipment in repair and operational including those
mechanical, plumbing and electrical systems which were in place as of July 2,
1999. Lessor agrees to provide a knowledgeable individual to review the start-up
of the basic facility equipment and transfer the information to the appropriate
staff member of Lessee. This support will not exceed one week of time and will
be a one-time event.
18. INSURANCE:
Lessor will obtain and keep in effect throughout the Term an insurance
policy providing general comprehensive property damage insurance for the
building shells, including floor, walls and ceiling (but not the cleanroom)
only. Lessee will obtain and keep in effect throughout the Term an insurance
policy providing bodily injury liability insurance with a limit amount of not
less than $2,000,000.00 per occurrence, which names Lessor as an additional
insured. The limits of said insurance shall not however limit the indemnity
provisions of Lessee hereunder.
(a) Lessee hereby agrees that Lessor shall not be liable for injury to
Lessee's business or any loss of income therefrom or for damage to the
goods, wares,
<PAGE>
merchandise or other property of Lessee, Lessee's employees, invitees,
customers or any person in, on, or about the Premises nor shall Lessor be
liable for injury to the person of Lessee, Lessee's employees, agents,
invitees or contractors whether such damage or injury is caused by or
results from fire, wind, steam, electricity, gas, water or rain or from the
breakage, leakage, obstruction or other defects of pipes, sprinklers,
wires, appliances, plumbing, air conditioning or lighting fixtures or from
any other cause whether the same damage or injury results from conditions
arising upon the Premises or upon other portions of the Complex of which
the Premises are a part or from other sources or places and regardless of
whether the cause of such damage or injury or the means of repairing the
same is inaccessible to Lessee, unless such damage or injury results from
the gross negligence or willful acts of Lessor, Lessor's employees, agents
or contractors.
(b) Property Damage Insurance: Lessee agrees at its sole expense to
maintain in full force during the Term, a policy of property damage
coverage for any and all personal property of Lessee on the Premises in the
amount of its reasonable replacement value. Consistent with the foregoing,
Lessee shall, at Lessee's own cost and expense at all times herein, during
the Term of this Lease and any extended term thereof, keep the contents of
the Premises, including the cleanroom, improvements and other personal
property on the Premises insured for their full replacement cost against
loss or destruction by fire, earthquake, flood wind, and other perils,
including vandalism and malicious mischief, commonly covered under the
standard extended coverage endorsement in Brevard County, State of Florida.
"Full replacement cost" as used in this section shall mean the actual
cost of replacement for personal property and other improvements on the
Premises as determined from time to time. If at any time during the term of
this Lease, Lessor believes that the full replacement cost has increased,
Lessor shall notify Lessee in writing. If Lessee agrees with the increased
full replacement cost set forth in Lessor's notice, Lessee shall increase
the amount of insurance carried to the amount stated in the notice. If the
parties are unable to agree within that time period, the increased full
replacement cost, if any, shall be determined by the insurance carrier that
is then carrying the largest amount of fire and extended coverage on the
Premises. That determination shall be final and Lessee shall immediately
increase the amount of insurance to the amount determined by that carrier.
(c) Waiver of Subrogation Rights: Lessee and Lessor each hereby
release and relieve the other and waive their entire right of recovery
against the other for loss or damage arising out of or incident to all
perils insured against, which perils occur in, on or about the Premises
whether due to the negligence of Lessor or Lessee or their agents,
employees, contractors or invitees. Lessee and Lessor shall, upon obtaining
the policies of insurance required hereunder, give notice to the insurance
carrier or carriers of the foregoing mutual waiver of subrogation.
<PAGE>
19. DESTRUCTION OF PREMISES:
(a) Duty to Repair or Restore: If any improvements, including
buildings and other structures, located on the Premises are damaged or
destroyed during the term of this Lease or any renewal or extension
thereof, the damage shall be repaired as follows:
(i) If the damage or destruction is caused by a peril against
which fire and extended coverage insurance is required to be carried
by Section 18 of this Lease, Lessor shall repair that damage as soon
as reasonably possible and restore the Premises and improvements to
substantially the same condition as existed before the damage or
destruction, regardless of whether the insurance proceeds are
sufficient to cover the actual cost of repair and restoration.
(ii) If the damage or destruction is of personal property of
Lessee and is caused by a peril against which fire and extended
coverage insurance is required to be carried by Section 18 of this
Lease, Lessee shall repair that damage as soon as reasonably possible
and restore the Premises and improvements to substantially the same
condition as existed before the damage or destruction, regardless of
whether the insurance proceeds are sufficient to cover the actual cost
of repair and restoration.
(iii) If the damage or destruction is caused by a peril against
which insurance is not required to be carried by this Lease, subject
to their rights to terminate this Lease described in this Section,
Lessor shall repair that damage to the buildings and Lessee shall
repair that damage to its personal property and any improvements to
the Premises owned by Lessee, trade fixtures, equipment and the like
as soon as reasonably possible and restore the Premises to
substantially the same condition as existed before the damage or
destruction.
(b) Termination of Lease for Certain Losses:
(i) Notwithstanding any other provision of this Lease, if any
improvements located on the Premises are damaged or destroyed to such
an extent it will cost more than $250,000.00 (as determined by Lessor
in the exercise of its reasonable discretion) to repair or replace
them, and the damage or destruction is caused by a peril against which
insurance is not required to be carried by this Lease, Lessor may
terminate this Lease by giving Lessee written notice of the
termination. The notice must be given within thirty (30) days after
occurrence of the damage or destruction.
(ii) Lessee and Lessor shall each have the right in its
respective sole and absolute discretion, to terminate this Lease under
either of the following circumstances:
(A) If the Premises are damaged or destroyed from any cause
whatsoever, insured or uninsured, and the laws then in existence
do not permit the repair or restoration of the Premises provided
for in this article; or
(B) If the Premises are destroyed from any cause
<PAGE>
whatsoever, insured or uninsured, during the last twelve (12)
months of the Term.
(iii) Either party may terminate this Lease in accordance with
Section 18(b)(i) or (ii) by giving written notice of termination to
the other not later than thirty (30) days after occurrence of the
event giving rise to the termination under subsection (ii), and
termination shall be effective as of the date of the notice of
termination. In the event of a termination under subsection (ii),
Lessee shall not be entitled to collect any insurance proceeds
attributable to insurance policies covering the Premises or
improvements, except those proceeds attributable to Lessee's personal
property and trade fixtures.
(iv) If this Lease is terminated pursuant to either subsection
(i) or (ii) above, rent, taxes, assessments, and other sums payable by
Lessee to Lessor under this Lease shall be prorated as of the
termination date. If any taxes, assessments, or rent has been paid in
advance by Lessee, Lessor shall refund it to Lessee for the unexpired
period for which the payment has been made.
(c) Time for Construction of Repairs: Any and all repairs and
restoration of improvements required by this section shall be commenced by
Lessor or Lessee, as the case may be, within a reasonable time after
occurrence of the damage or destruction requiring the repairs or
restoration, shall be diligently pursued after being commenced, and shall
be completed within a reasonable time after the loss. If Lessor is required
under this Lease to perform the repairs and restoration, Lessor shall cause
the repairs and restoration to be completed not later than one hundred
twenty (120) days after occurrence of the event causing destruction or
Lessee shall have the right to terminate this Lease. In the event of damage
or destruction to the Premises as described in this Section 18, rent shall
be abated in proportion to the extent that the Premises are rendered
untenantable by such damage or destruction from the date of such damage or
destruction to the date of substantial completion of all required repairs
and restoration.
20. CONDEMNATION:
(a) Total Condemnation Defined: The term "total condemnation" as used
in this section shall mean the taking by eminent domain or transfer under
threat thereof ("condemnation") by a public or quasi-public agency or other
entity having the power of eminent domain ("condemnor") of either:
(i) More than thirty-three percent (33%) of the ground area of
Building 60; or
(ii) Less than thirty-three percent (33%) of the ground area of
Building 60 at a time when the remaining portion of Building 60 or
improvements thereon cannot reasonably be restored in Lessor's
reasonable judgment to a condition suitable for Lessee's occupancy for
the uses permitted by this Lease within thirty (30) normal eight-hour
working days under all laws and regulations then applicable; or
(iii) Less than thirty-three percent (33%) of the ground area of
<PAGE>
Building 60 in such a manner that Lessee is substantially prevented
from carrying on operations of a permitted use under this Lease on the
remaining portion of the Premises.
(iv) If Building 56 or any portion thereof is taken by
condemnation, Lessor shall provide Lessee substantially similar office
space, reasonably acceptable to Lessee, elsewhere on the Complex.
(b) Partial Condemnation Defined: The term "partial condemnation" as
used in this section shall mean any condemnation of a portion of the
Premises that is not a total condemnation under Section 20(a) of this
Lease.
(c) Termination for Total Condemnation: In the event of a total
condemnation of the Premises during the term of this Lease, this Lease
shall terminate without further notice as of 12:01 A.M. on the date that
Lessee surrenders the Premises as a result of the order or decree of
condemnation ("Surrender Date") All rent payable under this Lease shall be
prorated as of 12:01 A.M. on said date and a prompt refund or payment of
rent for the unexpired period of this Lease shall be made by Lessor to
Lessee. On the making of that rent adjustment, both Lessor and Lessee will
be released and discharged from any and all further obligations under this
Lease.
(d) Effect of Partial Condemnation: In the event of a partial
condemnation of the Premises, this Lease shall terminate as to the portion
of the Premises taken on Surrender Date, but shall remain in full force and
effect as to the remainder of the Premises; provided, however, that
promptly after the Surrender Date, Lessor shall restore, at Lessor's own
cost and expense, the improvements on the remainder of the Premises to a
condition making the Premises tenantable by Lessee for the uses permitted
by this Lease. Any rent payable under this Lease after the Surrender Date
shall be reduced by the percentage the ground area of the portion taken by
eminent domain bears to the total ground area of the Premises on the date
of this Lease. In addition, the rent payable under this Lease shall be
further abated during the time and to the extent Lessee is prevented from
occupying all of the remainder of the Premises by the work of restoration
required by this section to be performed by Lessor.
(e) Lessor's Power to Sell in Lieu of Condemnation: Lessor may,
without any obligation or liability to Lessee and without affecting the
validity or continuation of this Lease other than as expressly provided in
this section, agree to sell or convey to the condemnor, without first
requiring that an action or proceeding for condemnation be instituted or
tried, that portion of the Premises sought by the condemnor, free from this
Lease and the rights of Lessee in the Premises other than as provided in
this Section 20.
(f) Condemnation Award: All compensation and damages awarded or
<PAGE>
paid for the condemnation of the Premises or any portion of the Premises,
or for any sale in lieu of condemnation as authorized by Section 20(e)
above, shall, except as otherwise expressly provided in this section,
belong to and be the sole property of Lessor. Lessee hereby assigns to
Lessor any claim Lessee might have except for enforcement of this provision
against Lessor, the leased Premises, or condemnor for diminution in value
of the leasehold estate created by this Lease or the value of the unexpired
term of this Lease; provided, however, that Lessee is entitled to seek to
recover from the condemnor, but not from Lessor:
(i) The cost of removing any trade fixtures, furniture, or
equipment from the portion of the Premises taken by condemnation;
(ii) The value of any improvements installed by Lessor on the
portion of the Premises taken by condemnation that Lessee has a right
to remove under this Lease but that Lessee elects not to remove; and
(iii) The then amortized value of all improvements made by Lessee
on the portion of the Premises taken by condemnation that could not be
removed by Lessee on expiration of this Lease because of provisions of
this Lease.
21. DEFAULT:
Lessor will provide Lessee advance written notice in the event of any
default. Lessee will have ten (10) days to cure said default in the event of a
monetary default, and thirty (30) days to cure said default in the event of a
non-monetary default or such longer period as may be necessary to cure such
non-monetary default if not reasonably susceptible of cure within thirty (30)
days provided that Lessee diligently and continuously prosecutes such cure to
completion. Any one or more of the following, if not cured following notice by
Lessor within the periods specified in the foregoing sentence, will constitute
an event of default by Lessee hereunder, if Lessee during the Term:
a) Does not pay in full within ten (10) days after notice is given of
all base rent, additional rent, expenses and charges due under this Lease;
or,
b) Violates, fails to perform, or otherwise breaches any term,
covenant, or condition of this Lease and the same is not cured after notice
thereof; or,
c) Permits leasehold estate or any property of Lessee to be exposed
for sale or judgment or execution process by sheriff, marshal, or
constable; or,
d) Becomes insolvent, makes an assignment for the benefit of
creditors, is adjudicated bankrupt, files a bill in equity, or otherwise
initiates proceedings for the appointment of a receiver of its assets,
files a voluntary petition under the provisions of the United States
Bankruptcy Court or under the insolvency laws of any state, or has an
involuntary petition filed against it, which involuntary petition is not
discharged within ninety (90) days of filing; or,
e) Records or attempts to record this Lease in any office of public
recording; or,
f) Assigns or sublets this Lease, except as provided herein; or,
g) Fails to move into or take possession of the Leased Premises upon
commencement of the Term.
<PAGE>
h) Fails to abide by the Hazardous Materials storage, handling, and
discharge requirements set forth in Section 25 herein.
22. REMEDIES UPON EVENT OF DEFAULT:
Upon the occurrence of an event of default, Lessor may terminate Lessee's
right to possession of the Premises at any time by written notice to Lessee. If
the Lessor terminates this Lease as herein provided, Lessor may retake
possession, or pursue any other remedy afforded by law, provided that such
default and all other defaults at the time existing have not been fully cured,
and all reasonable expenses and costs incurred by Lessor, including all
reasonable attorneys' fees, in connection with enforcing this Lease, shall not
have been fully paid.
Any such termination shall apply to any extension or renewal of the term
herein demised, and to any right or option on the part of Lessee that may be
contained in this Lease or any agreement. Following an event of default as
defined herein or abandonment of the leased Premises by the Lessee, in addition
to all other remedies, Lessor shall have the option to declare immediately due
and payable the entire base rent, and such shall then become immediately due and
payable, including all applicable sales tax.
Nothing herein contained shall be construed as precluding Lessor from
having such remedy as may be and become necessary in order to preserve Lessor's
right or interest in the leased Premises and in this Lease, even before the
expiration of the grace or notice periods provided for in this Lease, if under
particular circumstances then existing the allowance of such grace or the giving
of such notice will prejudice or will endanger the rights and estate of Lessor
in this Lease and in the leased Premises.
23. OPTION TO RENEW:
Provided no event of default exists and is continuing at the time of giving
notice of Lessee's exercise of its option, Lessor grants to Lessee an option to
renew the Lease for six (6) additional three (3) year periods, commencing at the
close of the initial lease Term and each succeeding option period respectively.
24. OPTION TO EXPAND:
Provided no event of default exists and is continuing at the time of giving
notice of Lessee's exercise of its option, Lessor grants to Lessee, on July 3,
2000, an option to expand the leased Premises to include the 2,533 square foot
portion of Building 56 presently occupied by Lessor's calibration laboratory as
identified on Exhibit "C". Lessee shall give Lessor ninety (90) days written
notice of its intent to exercise this option. The cost of reconfiguring said
portion of Building 56 to suit Lessee's needs shall be at Lessee's sole expense.
If Lessee does not exercise this option on July 3, 2000, the next time it may be
exercised is on July 3, 2001 and
<PAGE>
every subsequent anniversary thereof, if not already exercised, until the
termination date of this Lease as specified in Section 2 herein.
Upon the exercise of this option, the monthly base rent shall be increased
to reflect the total rentable square footage of Building 56 to be occupied by
Lessee, which is 7,708 square feet (95%). The 400 square-foot Communications
Equipment Room shown on Exhibit "C" is excluded from this Option, as set forth
in Section 15 herein. Lessor's employees, agents, and contractors shall be
allowed unrestricted access to and use of the hallway running east-west through
Building 56 for purposes of traversing the Complex.
25. HAZARDOUS MATERIALS:
Lessee shall not use, generate, manufacture, produce, store, release,
discharge, or dispose of, on, under or about the Premises or any part of the
Complex, or transport to or from the Premises or any part of the Complex, any
Hazardous Materials or allow its employees, agents, contractors, invitees or any
other person or entity to do so except in material compliance with all Federal,
state and local laws, regulations and ordinances. The term "Hazardous Materials"
shall include without limitation:
(a) Those substances defined as a "Hazardous Substance" under Section
1.1 of the Asset Purchase Agreement;
(b) Those substances included within the definition of "hazardous
substances", "hazardous materials", "toxic substances", or "solid wastes"
under CERCLA, RCRA, and the Hazardous Materials Transportation Act, 49
U.S.C. ss. 1801 et seq., and in the regulations promulgated pursuant to
said laws.
Lessee hereby acknowledges receipt of and agrees to comply with Lessor's
Stormwater Pollution Prevention Plan for the handling and storage of Hazardous
Materials. In addition to the foregoing, Lessee further agrees that except as
previously disposed of in the conduct of the Photomask Business by Lessor
without material variation, without Lessor's prior written consent which may be
given or withheld in Lessor's sole discretion, only ordinary domestic sewage is
permitted to be put into the sanitary waste drains of the Premises.
So long as the Photomask Business operations carried on by Lessee are
conducted substantially in the same way that Lessor conducted the Photomask
Business prior to the Closing Date, Lessee's industrial wastewater will be
treated in Lessor's wastewater treatment system and the effluent from that
system will be disposed of in Lessor's deep well. If Lessee desires to put any
substances other than what was disposed of prior to the Closing Date by Lessor
in the industrial wastewater drains, it shall first submit to Lessor a complete
description of each such substance, including its chemical composition, and a
sample of such substance
<PAGE>
suitable for laboratory testing. Lessor shall properly determine whether or not
the substance can be deposited into the drains and its determination shall be
absolutely binding on Lessee. Upon demand, Lessee shall reimburse Lessor for the
reasonable expenses incurred by Lessor in making such determination. Any change
in the type or kind of chemicals used by Lessee or a material change in the
volume of effluent produced by Lessee must first be approved in writing by
Lessor. Lessee must furnish Material Safety Data Sheets with any new chemicals
approved for use by Lessor.
Regardless of whether Lessor approves of Lessee's use, storage or disposal
of Hazardous Materials, Lessee shall be liable to Lessor for and indemnify and
hold Lessor harmless against all direct damages (including, but not limited to,
investigation, remedial costs, fines, and judgments), liabilities and claims to
the extent arising out of Lessee's activities associated with storing, handling,
using, or disposing of Hazardous Materials on the Complex. In the event Lessee's
activities with Hazardous Materials create a contamination problem on or
adjacent to the Premises or Complex, Lessee shall promptly commence
investigation and remedial activities to remedy the problem. If appropriate or
required by law, these activities shall be conducted in conjunction with
Federal, state and local oversight and approvals and in accordance with
applicable government regulations.
Lessee agrees immediately to report to Lessor any unlawful and material
release on or adjacent to the Premises or Complex by Lessee of any Hazardous
Materials in order to allow Lessor's Emergency Response Team ("ERT") to respond
to such release. Lessee and Lessee's employees shall follow directions from the
incident commander of Lessor's ERT in responding to such release. In addition,
Lessee shall provide Lessor with copies of any and all correspondence between
Lessee and any environmental regulatory agencies of any federal, state or local
governmental authorities relating to a violation or alleged violation of
environmental laws, rules or regulations by Lessee at the Premises. If Lessee
performs or causes to be performed any environmental testing of the Premises,
Lessee shall provide Lessor with a complete copy of the results of any such
tests and any reports analyzing such results. Any testing required by an
environmental regulatory agency because of a permit modification due to Lessee's
operations shall be at Lessee's expense.
Lessor shall have the right to enter on the Premises and any part thereof,
after reasonable notice and at reasonable times during normal business hours,
for the purpose of performing any of the work for which Lessor is responsible
under the Lease, or to engage in any other activities deemed reasonably
necessary by Lessor to ensure the compliance of the Premises with applicable
environmental laws and regulations, including the performance of any such
activities required to be performed by Lessee hereunder or under applicable laws
or regulations, following reasonable notice and an opportunity to Lessee to
cure, if appropriate in the light of
<PAGE>
the circumstances. In the event of a release or other environmental emergency at
the Premises Lessor shall have the right to enter the Premises for purposes of
responding to such release or emergency without giving Lessee notice in advance.
Lessor reserves the right to immediately stop any wrongful or unlawful discharge
by Lessee.
26. INDEMNIFICATION:
Lessee shall indemnify and hold Lessor harmless from and against any claims
arising from Lessee's use of the Premises or from the conduct of Lessee's
business or from any activity, work or things done, permitted or suffered by
Lessee in or about the Premises or elsewhere, including, but not limited to,
releases of Hazardous Materials or a violation of environmental laws. Lessee
shall further indemnify and hold harmless Lessor from and against any claims
arising from any breach or default in the performance of any obligation on
Lessee's part to be performed under the terms of this Lease, and Lessee hereby
waives all claims in respect thereof against Lessor.
Lessee shall indemnify and save Lessor harmless from any and all direct
liability, loss, damage, expense, causes of action, suits, claims, or judgments
arising from injury to person or property resulting from or based upon the
actual use of the Complex or Premises by Lessee's employees, agents,
contractors, or guests, and shall, at its own cost and expense, defend any and
all suits which may be brought against Lessor, either alone or in conjunction
with others upon any such liability or claim and shall satisfy, pay and
discharge any and all judgments and fines that may be recovered against Lessor
in any such action, provided that Lessor shall give Lessee prompt written notice
of any such claim or demand.
Lessor shall indemnify and hold Lessee harmless against all direct damages
(including investigation and remedial costs), liabilities and claims arising out
of any and all pre-Commencement Date activities related to the Premises
associated with Hazardous Materials or a violation of environmental laws.
No indemnity provided by Lessee to Lessor hereunder shall apply to the
extent that the applicable claim, expense, liability, loss, damage, cause of
action, suit or judgment is caused by the negligence or willful misconduct of
Lessor, its agents or employees.
27. ABANDONMENT OF PREMISES:
Lessee shall not vacate or abandon the Premises at any time during the term
hereof for a period exceeding 90 days, and if Lessee shall abandon or vacate the
Premises, or be dispossessed by process of law, or otherwise, any personal
property belonging to Lessee left upon the Premises shall be deemed to be
abandoned, at the option of Lessor. All rent due under the remaining term of
this Lease shall be due and payable immediately.
<PAGE>
28. ASSIGNMENT AND SUBLETTING:
Lessee shall not assign this Lease, or any interest therein, and shall not
sublet the Premises, or any part thereof, or any right or privilege appurtenant
thereto, or suffer any other person (the agents and servants of Lessee excepted)
to occupy or use the Premises, or any portion thereof, without the written
consent of Lessor first had and obtained, except that Lessee may sublet office
space to their Sales Representatives for a term consistent with the Term of this
Lease, subject to the rights of Lessor and obligations of Lessee in this Lease.
Should Lessor cancel this Lease as provided in Section 29 herein, Lessee must
immediately cancel the sublease with the Sales Representative. Lessor shall not
be responsible to Lessee's Sales Representatives in any way for exercising the
option to cancel.
The consent to this or any other assignment, subletting, occupation or use
by any other person, shall not be deemed to be a consent to any subsequent
assignment, subletting, occupation or use by another person. Any such assignment
or subletting without such consent shall be void, and shall at the option of
Lessor, terminate this Lease. Notwithstanding the foregoing, Lessee may assign
without the prior consent of Lessor, its rights hereunder to any wholly-owned
subsidiary or Affiliate of Align-rite International, Inc., or to any
post-Closing purchaser(s) of all of the capital stock of Align-Rite
International, Inc. or of substantially all of its assets, and except that
Lessor may assign, without the prior consent of Lessee, its rights hereunder to
any wholly-owned subsidiary or Affiliate of Harris Corporation or to any
post-Closing purchaser(s) of substantially all of the Semiconductor Business
Unit of Harris Corporation. Notwithstanding the above, Harris covenants and
agrees that in the event it sells all or substantially all of its assets related
to its semiconductor business (including, but not limited to, its June 3, 1999
announced sale of its semiconductor business to a subsidiary of Sterling Holding
Company, Citicorp Venture Capital investment portfolio company), it shall
require as a condition of completion of such transaction that the purchaser of
such assets, as well as any successors of any such purchaser, enters into an
express assumption of this Agreement, as if such purchaser or such successor
were the original party to this Agreement, and the form of any such assumption
agreements shall be reasonably acceptable to Align-Rite. In the event of any
such assignments, Harris shall be deemed to have guaranteed the performance of
such purchaser's or successor's obligations hereunder and be responsible
therefor. Align-Rite covenants and agrees that in the event it sells all or
substantially all of the Business Assets, it shall require that the purchaser of
such assets, as well as any successors of any such purchaser, enters into an
express assumption of this Agreement, as if such purchaser or such successor
were the original party to this Agreement, and the form of any such assumption
agreements shall be reasonably acceptable to Harris. In the event of any such
assignments, Align-Rite shall be deemed to have guaranteed the performance of
such purchaser's or successor's obligations hereunder and be responsible
therefor.
<PAGE>
In the event Lessor disposes of the Complex or that portion containing the
Premises, Lessor may assign its rights and delegate its obligations under this
Lease to the purchaser without consent of the Lessee, which purchaser shall be
bound by this Lease, including the obligations of the Lessor hereunder, provided
that such terms of assignment are accepted in writing by the purchaser.
29. OPTION TO CANCEL:
Lessor agrees that Lessee may cancel its obligations under this Lease at
the beginning of the twenty-fifth (25th) month of the Term hereof after
providing Lessor with ninety (90) days written notice of Lessee's intent to
cancel. Lessor also agrees that Lessee may cancel its obligations under this
Lease at the beginning of the sixty-first (61st) month of the Term hereof after
providing Lessor with one hundred eighty (180) days written notice of Lessee's
intent to cancel. This option may also be exercised at the beginning of each
successive thirty-six (36) month period (e.g. 97th month, 133rd month, 169th
month, etc.) thereafter, including all renewal option terms, upon Lessee giving
Lessor one hundred eighty (180) days notice of its intent to cancel. Upon
exercise of this option, Lessee shall pay Lessor the amount of four (4) times
the monthly rental for the month in which notice of cancellation was given,
payable upon notification to Lessor of Lease cancellation, as consideration for
Lessor's cancellation of the Lease Agreement between the parties. Lessee shall
vacate the Premises promptly within ninety (90) days following notification to
Lessor hereunder, and in the event Lessee does not vacate promptly, the rental
shall continue to be payable in accordance with the Lease, without credit for
said payment of four times the monthly rental, until such time as Lessee vacates
the Premises. Lessee shall vacate the Premises in the condition required under
Section 40 of this Lease.
Lessee agrees that Lessor may cancel its obligations under this Lease at
the beginning of the twenty-fifth (25th) month of the Term hereof after
providing Lessee with ninety (90) days written notice of Lessor's intent to
cancel. Lessee also agrees that Lessor may cancel its obligations under this
Lease at the beginning of the sixty-first (61st) month of the Term hereof after
providing Lessee with one hundred eighty (180) days written notice of Lessor's
intent to cancel This option may also be exercised at the beginning of each
successive thirty-six (36) month period (e.g. 97th month, 133rd month, 169th
month, etc.)thereafter, including the renewal option terms, upon Lessee giving
Lessor one hundred eighty (180) days notice of its intent to cancel. Upon
exercise of this option, Lessor shall pay Lessee the amount of four (4) times
the monthly rental for the month in which notice of cancellation was given,
payable upon notification to Lessee of Lease cancellation, as consideration for
Lessee's cancellation of the Lease Agreement between the parties. Upon
cancellation of this Lease by either party, Lessor shall have, and Lessee hereby
grants to Lessor, the option to repurchase all fixtures and improvements as set
forth in Schedule 2.1(a)(i) Attachment V (excluding the Exide 150 System and the
Generator/Fuel system) of the Asset Purchase Agreement attached to the real
<PAGE>
property at their fair market value.
30. COMPLIANCE WITH LAW:
Lessee shall, at Lessee's expense, comply promptly and materially with all
applicable statutes, ordinances, rules, regulations, orders, covenants and
restrictions of record, and requirements in effect during the term or any part
of the term hereof, regulating the use by Lessee of the Premises. Lessee shall
not use or permit the use of the Premises in any manner that will create a waste
or a nuisance or unreasonably disturb use of the adjacent premises.
31. HOLDING OVER:
Any holding over after the expiration of this Lease, with the consent of
Lessor, shall be construed as a month-to-month tenancy at the then existing
rental rate. If Lessee fails without the consent of Lessor to vacate the
Premises at the expiration of this Lease or any extension period thereof, if
extended, then Lessee shall pay Lessor at 150% of the then existing rental rate
for the time Lessee thus remains in possession and, in addition thereto, shall
be responsible for and reimburse Lessor for all direct damages sustained by
Lessor by reason of Lessee's retention of possession. The provisions of this
section do not exclude Lessor's rights of re-entry or any other right or remedy
of Lessor hereunder.
32. LESSOR'S RIGHT TO ENTRY AND INSPECTION:
Lessee shall permit and shall cooperate with Lessor or Lessor's agents to
enter upon the Premises at reasonable times and upon reasonable notice, for the
purpose of inspecting and/or repairing the same, and during the last six months
of the Term, will permit persons desiring to purchase or lease the same to
inspect the Premises thereafter upon reasonable notice to Lessee, so long as
they do not disrupt Lessee's business activities.
Lessor reserves the right to retain at all times pass keys to the Premises
and, at any time and without notice in the event of an emergency, and otherwise
upon reasonable notice and at reasonable times, to enter onto the Premises and
any buildings or other improvements of the Premises to take any and all
measures, including inspections, repairs, alterations, additions and
improvements to the Premises, the buildings or to the land, as may be necessary
or desirable for the safety, protection or preservation of the Premises, the
buildings or the land or Lessor's interests, or as may be necessary or desirable
in the operation or improvement of the Premises, the buildings or the land or in
order to comply with all laws, order and requirements of governmental or other
authority.
<PAGE>
33. LESSOR'S RIGHT TO PERFORM LESSEE'S COVENANTS:
If Lessee shall at any time fail to make any payment or perform any other
act on its part to be made or performed under this Lease, Lessor may, but shall
not be obligated to, and without waiving or releasing Lessee from any obligation
of Lessee under this Lease, make such payment or perform such other act to the
extent Lessor deems desirable, and in connection therewith, pay expenses and
employ counsel. All sums so paid by Lessor and all penalties, interest, and
costs in connection therewith shall be due and payable by Lessee on the next day
after Lessee receives notice of any such payment by Lessor, together with
interest thereon at the rate of 12 percent (12%) per annum, or the highest legal
rate of interest, whichever is lower, from such date to the date of payment
thereof by Lessee to Lessor plus collection costs and attorneys' fees. Lessor
shall have the same rights and remedies for the non-payment thereof as in the
case of default in the payment of rent.
34. LATE PAYMENT CHARGES:
If the rent is not paid within ten (10) days from the date same is due,
Lessor, at its option, may charge a late fee of two percent (2%) per annum above
the prime interest rate published in the Wall Street Journal as of the date on
which payment was due, calculated on a daily basis. If the rent or any other
amount due hereunder becomes more than ninety (90) days past-due, Align-Rite
International, Inc. guarantees and will make payment of such amount on behalf of
Lessee.
35. LIENS:
Lessee shall keep the Premises free from any liens arising out of any work
performed, materials furnished, or obligations incurred by or on behalf of
Lessee. Lessee shall cause any such lien imposed to be released of record by
payment or posting of a proper bond within ten (10) days after imposition of the
lien or written request by Lessor, or furnish other assurances for payment
reasonably acceptable to Lessor. Lessee shall give Lessor written notice of
Lessee's intention to perform work on the Premises which might result in any
claim of lien at least twenty (20) days prior to the commencement of such work
to enable Lessor to post and record a notice of non-responsibility or other
notice deemed proper before the commencement of any such work.
36. NOTICES:
Any notice, demand, request, consent, approval or communication that either
party desires or is required to give to the other party under this Lease shall
be in writing and shall be served personally, delivered by independent messenger
or overnight courier service, or sent by U.S. certified mail, return receipt
requested, postage prepaid, in which event such notice shall be deemed to have
been given
<PAGE>
when seventy-two (72) hours have elapsed from the time when such notice was
deposited in the United States mail, addressed to the other party at the address
set forth in the Lease Summary herein. Either party may change its address by
giving notice of same in accordance with this paragraph.
37. QUIET ENJOYMENT:
Upon the performance by Lessee of all of the agreements herein set forth,
Lessee may quietly hold and occupy the Premises without any interruption (except
as expressly contemplated by this Lease) by Lessor or persons claiming through
or under Lessor. Lessor's liability under the covenants of this section is
limited to the abatement of rent, unless Lessee is dispossessed by an act of bad
faith on the part of Lessor or persons claiming through or under Lessor, in
which case Lessee shall be also entitled to reimbursement for actual documented
moving expenses up to a maximum of $150,000, but shall not include any
consequential or incidental damages incurred by Lessee. Nonetheless, Lessor
shall not be barred from bringing any valid action on the Lease. Any lawsuit
brought by Lessor to enforce the terms of this Lease or seeking a declaration of
Lessor's rights pursuant to this Lease shall not be deemed a violation of this
clause.
38. SECURITY DEPOSIT:
No security deposit is required under this Lease.
39. SUCCESSORS AND ASSIGNS:
The covenants and conditions herein contained shall, subject to the
provisions as to assignment, apply to and bind the heirs, successors, executors,
administrators and assigns of all of the parties hereto, and all of the
administrators and assigns of all of the parties hereto, and all of the parties
hereto shall be jointly and severally liable hereunder.
40. SURRENDER OF PREMISES:
On the last day of the Term hereof, or on any sooner termination, Lessee
shall surrender the Premises to Lessor in the same condition as when received,
ordinary wear and tear excepted, clean and free of debris. Lessee shall repair
any damage to the Premises occasioned by the installation or removal of Lessee's
trade fixtures, furnishings and equipment. Lessee shall remove the cleanroom.
Lessee shall decontaminate Building 60 and remove all hazardous substances,
toxic substances, solid waste and hazardous materials (as described in Section
25(b) herein) from all ceilings, floors and walls and any permanent structures
remaining within Building 60. In the event Lessee is surrendering the premises
due to Lessor's
<PAGE>
expressed desire to reoccupy Building 60, Lessor shall be responsible for
decontaminating Building 60. Lessee shall remove all signs installed on the
Complex under Section 11 herein. Any clean-up and/or repairs required to restore
the Premises to the condition it was in at the commencement of this Lease not
performed by Lessee as of the last day of the term hereof shall be performed by
Lessor or Lessor's agent at Lessee's expense, unless otherwise provided herein.
41. TRANSFER OF PROPERTY BY LESSOR:
Except as may be provided in Section 28, in the event of any conveyance
of the Complex and assignment by Lessor of this Lease, Lessor shall be and is
hereby entirely freed and relieved of all liability under any and all of its
covenants and obligations contained in or derived from this Lease occurring
after the consummation of such conveyance and assignment so long as Lessor's
successor agrees and covenants to assume all of Lessor's obligations under this
Lease occurring after the consummation of such conveyance assignment.
42. ESTOPPEL CERTIFICATE AND SUBORDINATION:
a) Lessee shall upon Lessor's written request, promptly execute and
deliver to Lessor, without charge, a statement certifying that this Lease
is in full force and effect in its original form or is in full force and
effect as modified, and if applicable, the date to which the rent has been
prepaid and any other information as may be reasonably required by Lessor.
b) Lessee agrees to promptly execute and deliver to Lessor, upon
written request, without charge, in such form as may be reasonably required
by any prospective lender to Lessor, an instrument or instruments whereby
Lessee will agree to subordinate this Lease to the lien of said lender's
mortgage or deed of trust or other encumbrance, and in the case of
foreclosure will attorn to such mortgagee or holder acquiring title by
foreclosure; provided such new Lessor shall agree that Lessee may continue
to occupy the Premises in accordance with this Lease. As used herein, the
term "foreclosure" shall include both judicial proceedings and the exercise
of a power of sale under any mortgage or deed of trust without recourse to
judicial proceedings.
c) In the event such instruments are required for the sale of the
Complex, Lessee further agrees to promptly execute and deliver said
instruments to Lessor, upon which delivery Lessee shall attorn to the buyer
of the Complex.
43. GENERAL:
a) The meaning of terms not defined in this Lease shall be the same as
that defined in said Asset Purchase Agreement or Site Services Agreement.
b) The captions used in this lease are for the purpose of convenience
only and shall not be construed to limit or extend the meaning of any part
of this Lease.
<PAGE>
c) Any executed copy of this Lease Agreement shall be deemed an
original for all purposes.
d) In case any one or more of the provisions contained herein shall
for any reason be held to be invalid, illegal, or unenforceable in any
respect, such invalidity, illegality, or unenforceability shall not affect
any other provision of this Lease, but this Lease shall be construed as if
such invalid, illegal, or unenforceable provision had not been contained
herein.
e) When the context of this Lease requires, the neuter gender includes
the masculine, the feminine, a partnership, corporation, or joint venture,
and the singular includes the plural.
f) The waiver by Lessor of any breach of any term, condition, or
covenant of this Lease shall not be deemed a waiver of such provision or
any subsequent breach of the same or any other term, condition, or covenant
of this Lease.
g) The words "herein", "hereof", "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any particular
Article, Section or other subdivision.
44. GOVERNING LAW:
This Lease and the relationship between Lessor and Lessee shall be governed
by and construed in accordance with the laws of the State of Florida.
45. FORCE MAJEURE:
Neither party shall be liable in damages for any delay or default in the
performances of any or all obligations of this Lease, if such delay or default
is caused by conditions beyond its control, including, but not limited to: acts
of the elements, fires, explosions, floods or other casualties, governmental
orders or restrictions, and the inability despite diligent efforts to obtain
necessary governmental approvals. The party incurring the delay shall promptly
notify the other party in writing, and performance shall be extended one day for
each day of delay.
46. ENTIRE AGREEMENT:
This Lease, together with the Asset Purchase Agreement and the Site
Services Agreement, contains all of the terms, covenants and conditions agreed
to by Lessor and Lessee, integrates all discussions and understandings leading
up to this Agreement, supersedes all prior agreements between the parties
pertaining to the subject matter herein, and may not be modified orally or in
any manner other than by an agreement in writing signed by all of the parties to
this Lease or their respective successors in interest.
<PAGE>
47. ATTORNEYS' FEES:
In case suit should be brought for recovery of the Premises, or for any sum
due hereunder, for the enforcement or interpretation of any of the terms or
conditions of this Lease, or because of any act which may arise out of the
possession of the Premises, by either party, the prevailing party shall be
entitled to all costs incurred in connection with such action, including a
reasonable attorney's fee.
48. AUTHORITY:
Lessee and Lessor warrant and represent that their respective
representatives executing this Lease each have the full power and authority to
execute this Lease on behalf of Lessee and Lessor, respectively, and that this
Lease, once executed by the signatory of Lessee or Lessor, as the case may be,
shall constitute a legal and binding obligation of that party and is fully
enforceable in accordance with its terms.
IN WITNESS WHEREOF, Lessor and Lessee have executed this Lease Agreement as of
the day and year first written above.
Harris Corporation Align-Rite, Inc.
Semiconductor Business Unit
- - ---------------------------- -------------------------------------
By: W. Russ Morcom By: James L. MacDonald
V.P.-GM Operations Chairman of the Board
As to the guarantees,
Align-Rite International, Inc.
------------------------------------
By: James L. MacDonald
Title: Chairman of the Board and
Chief Executive Officer
<PAGE>
[In the printed version of the document there appears a diagram
of the property captioned Exhibit A]
<PAGE>
Exhibit B
Description of demised Premises:
Building 60
Building 60 is part of the Complex located at 2401 Palm Bay Road NE, Palm
Bay, FL 32907, and is approximately fifty (50) feet north of Building 53, to the
east of Building 56 and to the west of Building 54 as shown on Exhibit "A". It
contains approximately 25,567 square feet of space, including 16,279 sq. ft.
under air, 4,883 sq. ft. of facilities service area on the first floor, and
4,405 sq. ft. of facilities service area on the second floor, and all
improvements thereon and appurtenances thereto.
Building 56
Building 56 is part of the Complex located at 2401 Palm Bay Road NE, Palm
Bay, FL 32907, and is adjacent to the north side of Building 53, to the east of
Building 52 and to the west of Building 60 as shown on Exhibit "A". It contains
approximately 8,108 square feet, of which ITG uses 4,170 rentable square feet as
shown on Exhibit "C". The rentable square foot area does not include the 400
square-foot Communications Equipment Room (CER) identified on Exhibit "C".
Lessee shall have access to and use of the 486 square-foot area located on the
second floor of Building 56 as identified on Exhibit "D", but shall not be
charged for such usage.
Lessor will retain title to the Real Property on which Buildings 56 and 60
are located, including all fixtures, improvements, and appurtenances thereto.
Lessor will also retain title to the Real Property on which an entry-way to
building 60 is constructed as set forth in Section 13 herein as well as the Real
Property on which the six parking spaces designated for use by Lessee are
located as set forth in Section 12 herein.
<PAGE>
[In the printed version there is a floor plan of Building 56
captioned Exhibit C]
<PAGE>
[In the printed version there is a floor plan of Building 56
captioned Exhibit D]
<PAGE>
Exhibit C
[Form of]
PHOTOMASK SUPPLY
AND STRATEGIC ALLIANCE AGREEMENT
BY AND AMONG
ALIGN-RITE INTERNATIONAL, INC.,
ALIGN-RITE, INC.
AND
HARRIS CORPORATION
DATED JULY 2, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
ARTICLE 1 Definitions.............................................................1
ARTICLE 2 Supply of Products......................................................3
ARTICLE 3 Product Quality, Delivery, Service and Pricing..........................4
ARTICLE 4 New and Derivative Products.............................................6
ARTICLE 5 Product Orders..........................................................7
ARTICLE 6 Manufacture.............................................................9
ARTICLE 7 Delivery and Payment....................................................9
ARTICLE 8 Strategic Alliance, Consultation and Cooperation Arrangements..........10
ARTICLE 9 Termination Rights And Obligations Upon Termination....................10
ARTICLE 10 Warranties.............................................................11
ARTICLE 11 Dispute Resolution and Arbitration.....................................12
ARTICLE 12 Confidentiality........................................................14
ARTICLE 13 General................................................................14
13.1 Independent Contractors..........................................14
13.2 Amendments; Waivers..............................................14
13.3 Schedules; Exhibits; Integration.................................14
13.4 Force Majeure....................................................15
13.5 Assignment.......................................................15
ARTICLE 14 Notices................................................................15
</TABLE>
<PAGE>
PHOTOMASK SUPPLY AND STRATEGIC ALLIANCE AGREEMENT
This Supply Agreement is entered into as of July 2, 1999, (the "Effective
Date") by and among Align-Rite International, Inc., a California corporation
("Align-Rite"), and Align-Rite, Inc., a Florida corporation ("Sub"), on the one
hand, and Harris Corporation, a Delaware corporation ("Harris"), on the other
acting through its Semiconductor Business.
RECITALS
WHEREAS, Sub has purchased the Photomask business unit of Harris (the
"Photomask Business Unit") on the date hereof pursuant to the terms of that
certain Asset Purchase Agreement, dated as of even date, by and among Align-Rite
and Sub, on the one hand, and Harris on the other (the "Asset Purchase
Agreement").
WHEREAS, the parties hereto have agreed that Align-Rite will manufacture
and supply to Harris, and Harris will purchase exclusively from Align-Rite, 100%
of Harris' Photomask requirements in accordance with the terms of this Agreement
for a period of 10 years from the Effective Date (the "Term").
WHEREAS, Harris shall use its commercially reasonable efforts to promote
Align-Rite's Photomask products and services to (i) the merchant customers of
the Photomask Business Unit, (ii) Harris' joint venture partners, (iii) the
semiconductor foundry businesses utilized by Harris which will or are envisioned
to require the purchase of Photomask (as defined below) products and services,
and (iv) other companies and foundries within the influence or under the control
of Harris, in each case in accordance with the terms of this Agreement.
WHEREAS, Align-Rite shall strive to be the industry leader in quality,
delivery, service and price, and provide the benefit of such world class
operation to Harris.
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
promises and covenants set forth below, the parties mutually agree as follows:
AGREEMENT
ARTICLE 1
Definitions
In this Agreement, unless the context otherwise requires, the following
expressions shall have the following meanings:
"Affiliates" shall mean (a) any company owned or controlled to the extent
of at least fifty percent (50%) of its issued and voting capital by a party to
this Agreement and any other company so owned or controlled (directly or
indirectly) by any such company or the owner of any such company, or (b) any
partnership, joint venture or other entity directly or indirectly controlled by,
controlling, or under common control of, to the extent of fifty percent (50%) or
more of voting power (or otherwise having power to control its general
activities), a party to this Agreement, but in each case only for so long as
such ownership or control shall continue;
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"Align-Rite" means Align-Rite International Inc., a California corporation,
and each of its subsidiaries from time to time;
"Business Assets" means those assets previously owned and used by Harris to
manufacture Photomasks which were purchased by Align-Rite pursuant to the Asset
Purchase Agreement, including equipment, materials, know-how, work in progress,
related inventory and goodwill used by and associated with the Photomask
business unit of Harris;
"Cosmetic Defects" means particles, scratches, stains and/or imperfections
in or on the photomask quartz or glass substrate which are outside the active
patterned area on the photomask quartz or glass substrate which the customer
uses to transfer the circuit patterns onto the silicon wafer;
"Derivative Products" means any Photomask product built on a substrate,
then currently being produced by Align-Rite for other customers, which is
required by Harris from time to time, which is not currently on the Product and
Services Pricing Schedule, or which is either a tightening of specifications or
a relaxing of specifications of an existing Product.
"Facility Lease" means the lease of the Premises entered into among Sub and
Hams on the date hereof;
"Force Majeure" means, in relation to any party, circumstances beyond the
reasonable control of that party including, without limitation, acts of God,
acts of any governmental or super-national authority, war or national emergency,
riots, civil commotion, fire, explosion, flood, epidemic, lock-outs (whether or
not by that party), strikes and other industrial disputes (in each case, whether
or not relating to that party's work force);
"Mask Order" means a written order from an authorized originator employed
by Harris specifying the Product(s) required, applicable Specification(s),
amount of Product(s), date(s) required and delivery instructions (i.e. standard
or expedited);
"New Products" means any Photomask product, other than a Product or
Derivative Product, built on a substrate, required by Harris from time to time,
which is not currently being produced by Align-Rite for other customers, is not
currently on the Product and Services Pricing Schedule, and which is neither a
tightening of specifications nor a relaxing of specifications of an existing
Product.;
"Photomask Business Unit" has the meaning set forth in the recitals.
"Photomasks" means precision photographic quartz or glass plates containing
microscopic images of integrated circuits for use as master images to transfer
circuit patterns onto semiconductor wafers during the fabrication of integrated
circuits and other semiconductor products;
"Premises" means the real property located within the complex of buildings
known as the Semiconductor Sector located at 2401 Palm Bay Road, N.E., Palm Bay,
Florida 32905 and known as Building 60 and a portion of Building 56 used in the
Photomask Business
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Unit, which are the subject of the Facility Lease entered into among Sub and
Harris on the date hereof;
"Product Period" means a continuous twelve month period, the first such
period ending on June 30, 2000.
"Products" means the Photomask products and services listed on the Product
and Services Pricing Schedule, as amended from time to time, or any other
Photomask Product or services purchased from Align-Rite by Harris;
"Product and Services Pricing Schedule" means a schedule listing the
Product and related services, together with the relevant Specification thereof
and applicable price based on anticipated demand for the Products, which
schedule shall be modified in accordance with Article 3 hereof (the first such
schedule being in the form set out in Schedule 1);
"Quarter" means a continuous calendar period of three months, the first
such period ending on September 30, 1999;
"Specification" means, in respect of any Product, the specification agreed
in writing between Harris and Align-Rite from time to time. A schedule for the
initial Specifications for Products, effective as of July 2, 1999, is noted in
and/or attached to Schedule 1;
"Standard Delivery" has the meaning specified in Section 5.5; and
"Term" shall mean the ten-year term of this Agreement
ARTICLE 2
Supply of Products
2.1 The parties hereby agree that, during the Term of the Agreement, Harris
shall satisfy 100% of its and its Affiliates' requirements for Photomasks, or
any other product with similar functional characteristics, solely through its
purchase of Products, Derivative Products and New Products from Align-Rite;
provided, however, that (i) Align-Rite manufactures and supplies such Products,
Derivative Products and New Products in accordance with the competitive
standards for quality, delivery, price and service as set forth in Article 3,
and (ii) such Products, Derivative Products and New Products are within the
capabilities of the Photomask technologies then utilized by Align-Rite.
2.2 Harris hereby confirms its intent to order and purchase during the
first three Product Periods, solely on its behalf or on behalf of its Affiliates
approximately Fifteen Million Dollars ($15,000,000) in aggregate of Products,
Derivative Products and New Products from Align-Rite at the Product prices set
forth on the Product and Services Pricing Schedule, as such Product and Services
Pricing Schedule is amended pursuant hereto.
2.3 Harris may purchase Photomasks from semiconductor foundry companies or
the Photomasks suppliers designated by such foundries, pursuant to its
agreements to facilitate the manufacturing of certain Harris integrated circuit
products at such foundries, but such
3
<PAGE>
Photomask purchases shall not decrease the purchase requirements of Harris from
Align-Rite hereunder or Harris' obligations pursuant to Article 8.
ARTICLE 3
Product Quality, Delivery, Service and Pricing
3.1 Align-Rite shall be deemed to have satisfied the standards for quality
referred to in Section 2.1(i) herein by maintaining a 1% or less product return
rate during the first Product Period for non-compliance with Specifications,
excluding Cosmetic Defects which will be handled as a separate issue, as set
forth in applicable Mask Orders.
3.2 Align-Rite shall be deemed to have satisfied the standards for delivery
referred to in Section 2.1(i) herein by maintaining no less than a 90%
performance to schedule rating during the first Product Period with respect to
the products delivered pursuant to Section 5.5 herein.
3.3 Pricing.
3.3.1 Align-Rite shall be deemed to have satisfied the standards for
price referred to in Section 2.1(i) herein by satisfying the provisions set
forth in this Section 3.3.1. The parties agree that for the first Product
Period the price per unit for each Product shall be, so long as Harris and
Align-Rite are in compliance with Article 2 hereof, as set forth in the
Product and Services Pricing Schedule. Within 30 days prior to the end of
each Product Period, Align-Rite and Harris shall agree to adjust the
Product and Services Pricing Schedule in effect at such time to provide
that such new product prices for the ensuing Product Period shall be 100%
or less of the then current lowest Photomask prices provided by Align-Rite
to its best top twelve customers (excluding ASM Lithography The Netherlands
and Temic/Atmel-Europe) with comparable product specifications, annual mask
purchases, unit volume levels and cycletime requirements (provided,
however, that with respect to the E-Beam, 725_1XPA Quartz 7.25 x .150
Photomask Product, the purchase price for such product during the second
Product Period shall not increase by more than 10% from the purchase price
for such product as set forth in the Product and Services Pricing Schedule
and at no time during the Term of this Agreement shall the purchase price
for such product be greater than the prices provided to Align-Rite's best
top twelve customers (excluding ASM Lithography The Netherlands and
Temic/Atmel-Europe) with comparable product specifications, annual mask
purchases, unit volume levels and cycletime requirements) so long as (i)
Harris and Align-Rite are in compliance with Article 2 hereof, and (ii) the
aggregate product volume required by Harris meets a minimum targeted amount
to be mutually agreed upon by the parties during the fourth through the
tenth Product Periods. For the sole purpose of providing Hams with an
opportunity to confirm Align-Rite's compliance with this Section 3.3.1
during the last two months of each Product Period, Align-Rite shall, at a
frequency of no more than once per Product Period (commencing after the ten
month of the first Product Period) and upon thirty days written notice from
Harris and at Harris' cost, provide Harris' nominated accounting firm,
which shall be an accounting firm of national reputation, or reputable
4
<PAGE>
semiconductor industry consultant, with access to and copies of all
invoices, records and other documents which relate to the Products and
Services Pricing for comparable products and services provided by
Align-Rite to its best top twelve customers (excluding ASM Lithography The
Netherlands and Temic/Atmel-Europe). Harris' nominated accounting firm or
reputable semiconductor industry consultant shall be bound by Article 12
hereof as if such nominated accounting firm or reputable semiconductor
industry consultant is a party hereto.
3.3.2 Beginning with the commencement of the second Product Period and
for each subsequent Product Period thereafter during the Term of this
Agreement, Align-Rite shall provide Harris with the following volume
discounts on Harris' purchases of Products, Derivative Products and New
Products aggregating in excess of $5 million in a single Product Period:
Amounts in Excess of Amount of
$5 million Discount
-------------------- ----------
$1 - $ 999,999 5.0%
$1,000,000 - $1,999,999 7.5%
Amounts in excess of 10.0%
$2,000,000
Any such discounts shall be caliculated by Align-Rite and confirmed by
Harris at the end of each applicable Product Period and shall be paid by
Align-Rite to Harris within thirty (30) days of the end of such Product
Period.
3.3.3 During the first eighteen months of the Term, Align-Rite shall
provide Harris with a 20% discount to the then current foundry Photomask
prices with respect to Photomasks manufactured by Align-Rite for use at
Harris' semiconductor foundry companies or the Photomask suppliers
designated by such foundries. For purposes of this Section 3.3.3, current
foundry Photomask prices shall be determined by Align-Rite's nominated
accounting firm, which shall be of national reputation or reputable
semiconductor consultant, through a review of Harris' purchase orders,
records and other documents which relate to such foundry Photomask products
for comparable product specifications, annual mask purchases, unit volume
levels and cycletime requirements. Following such eighteen-month period,
the products supplied by Align-Rite under this Section 3.3.3 shall be added
to the Product and Services Pricing Schedule and shall be treated as a
"Product" for purposes of this Agreement.
3.3.4 The price of the Products as set out in the Product and Services
Pricing Schedule is, and shall be, exclusive, of(i) any costs of transport
and insurance of the Products; and (ii) any value added tax or other
applicable sales tax or duty which may be chargeable in respect of the
manufacture and supply of the Products.
3.4 Align-Rite shall be deemed to have satisfied the standards for service
referred to in Section 2.1(i) herein during the first Product Period by
satisfying the provisions set forth in this Section 3.4. The parties agree that
5
<PAGE>
at the commencement of the second Product Period, the parties will agree to a
set of written, reasonable, competitive, mutually agreeable, measurable and
quantifiable service goals.
3.5 Within thirty (30) days of the end of each Product Period during the
Term of this Agreement, an executive representative of each of Align-Rite and
Harris shall agree to a set of written, reasonable, competitive, mutually
agreeable, measurable and quantifiable goals with respect to product quality,
delivery and service for the ensuing Product Period. A status report on
Align-Rite's performance to goals shall be provided to Harris on a quarterly
basis. Align-Rite shall be deemed to have satisfied the standards for product
quality, delivery and service hereunder for such applicable Product Period by
materially satisfying such goals.
3.6 If, during the Term of the Agreement, Align-Rite does not satisfy the
provisions of Sections 3.1, 3.2, 3.3 and/or 3.4, Harris shall be entitled to
give written notice to Align-Rite within thirty (30) days of the relevant
event(s) specifying the details of such noncompliance and Align-Rite shall have
fifteen (15) calendar days following receipt of such notice to present Harris
with a plan and/or set of procedures to remedy such noncompliance. Such planned
remedies and/or procedures shall meet with Harris' satisfaction and Harris'
satisfaction shall not be unreasonably withheld. Such planned remedies and/or
procedures shall be completed within a subsequent forty five (45) calendar day
period. During the period of sixty (60) days or less following receipt by
Align-Rite of such noncompliance notice from Harris describing the points of
noncompliance, Harris shall have the right on an as necessary basis to procure
only such applicable Photomask products and services from third parties as it
deems necessary to support its semiconductor manufacturing activities which are
limited to the Products and or services covered in the notice of noncompliance.
Harris agrees to resume satisfying 100% of its and its Affiliates requirements
for Photomasks pursuant to Section 2.1 immediately upon Align-Rite's completing
its plan and/or set of procedures to Harris' reasonable satisfaction and such
reasonable satisfaction shall not be unreasonably withheld to remedy such
noncompliance. In the event that Align-Rite fails to remedy any and all such
noncompliance(s) during the sixty (60) day period from the date of notice of
such noncompliance by Harris then Harris shall have the right to procure from
third parties only such applicable non-compliant Photomask products or services
as the case may be on a continuous basis for the remainder of the Term of this
Agreement or until such time as Align-Rite may provide a written request that
Harris requalify Align-Rite for the supply of the applicable product(s) or
service(s) with such requalification not to be unreasonably delayed. Following
such requalification, Harris shall again be bound by Section 2.1.
ARTICLE 4
New and Derivative Products
4.1 In the event Harris anticipates a requirement for a Derivative Product,
it shall (i) notify Align-Rite as soon as practicable, (ii) provide Align-Rite
with the Specification for such Derivative Product together with an estimate of
its anticipated annual demand for such Derivative Product, and (iii) request
Align-Rite to provide a quotation for the manufacture and supply of such
Derivative Product.
6
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4.2 Align-Rite shall provide a quotation for the Derivative Product at an
amount equal to 100% or less of the then current lowest Photomask prices
provided by Align-Rite to its best top twelve customers (excluding ASM
Lithography The Netherlands and Temic/Atmel-Europe) for comparable volume levels
and product specifications, and subject to verification as provided in Section
3.3, Hams shall place its orders for such Derivative Product.
4.3 Upon acceptance of the quotation by Harris and the placing of the first
order for any Derivative Product, such Derivative Product and the unit price
shall be added to the Product and Services Pricing Schedule and the Derivative
Product shall be treated as a "Product" for the purposes of this Agreement.
4.4 In the event Harris anticipates a requirement for a New Product, it
shall (i) notify Align-Rite as soon as practicable, (ii) provide Align-Rite with
the specification for the New Product together with an estimate of its
anticipated annual demand for such New Product, and (iii) request Align-Rite
provide a quotation for the manufacture and supply of such New Product.
4.5 Upon acceptance of the quotation by Harris and the placing of the first
order for any New Product, such New Product and the unit price shall be added to
the Product and Services Pricing Schedule and the New Product shall be treated
as a "Product" for the purposes of this Agreement.
4.6 In the event Harris does not accept the quotation given by Align-Rite,
it shall be entitled to obtain bona fide quotes from at least two nationally
recognized, third party manufacturers of Photomasks for the manufacture and
supply of the New Product and the provisions of Section 4.7 shall apply.
4.7 In the event that the average of the quotations received by Harris
pursuant to Section 4.6 results in a price for a New Product which is less than
the price quoted for such New Product by Align-Rite. If Align-Rite reduces its
quotation to the lower of the quotations received by Harris for said New
Product, then the provisions of Section 4.5 shall apply.
4.8 Harris shall provide Align-Rite's accounting firm with access to, and
copies of, all quotations obtained pursuant to Section 4.6 (and relevant
supporting documents) for verification in the same manner as Harris verification
under Section 3.3.
ARTICLE 5
Product Orders
5.1 Harris shall, no later than five (5) days before the beginning of each
month, give Align-Rite written notice of its anticipated requirements for
Products for the forthcoming month.
5.2 In order to facilitate the purchase of Products, all applicable
Business Units of Harris which require Photomask Products shall issue to
Align-Rite upon the execution of this Agreement, a blanket purchase order
regarding its anticipated Photomask requirements for the first Product Period.
At the end of the first Product Period new blanket purchase orders will be
issued for each succeeding Product Period.
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5.3 All applicable Photomask Business Units of Harris which require
Photomask Products shall issue Mask Orders for Products in writing.
5.4 Align-Rite shall provide Harris with expedited Product services at an
additional charge, which shall be in addition to the Product prices set forth in
the Product and Services Pricing Schedule, and shall be payable by Harris in
accordance with Section 7.3. Such additional charge shall be calculated as
follows: (i) for 24-hour Product delivery cycletime, Harris shall pay Align-Rite
an additional amount equal to 65% of the Product prices set forth in the Product
and Services Pricing Schedule, as such Product and Services Pricing Schedule is
amended pursuant to Section 3.1, and (ii) for 48-hour Product delivery
cycletime, Harris shall pay Align-Rite an additional amount equal to 32.5% of
the Product prices set forth in the Product and Services Pricing Schedule, as
such Product and Services Pricing Schedule is amended pursuant to Section 3.1;
provided, however, that during the first Product Period of the Agreement,
Align-Rite shall provide Harris with such expedited product services at no
additional charge to Harris for up to an aggregate amount not to exceed $28,354
per month, which monthly amount shall be calculated using the formulae set forth
in items (i) and (ii) above.
5.5 Unless Harris requests expedited Product delivery service pursuant to
Section 5.4, Align-Rite shall provide its standard delivery ("Standard
Delivery") service pursuant to which it shall ship the first 2 Photomask levels
within three working days from receipt of the Mask Order and relevant data,
excluding the period from the time Align-Rite sends the completed array of
patterns to appear on the applicable Photomask product to the appropriate Harris
engineer until approval from said appropriate Harris engineer is received by
Align-Rite, and ship the remaining sequential Photomask levels at a rate of one
Photomask level per successive working day thereafter.
5.6 During the Term, Align-Rite shall use the Business Assets to provide
Harris' purchase orders and/or Mask Orders first priority among the other mask
orders received by Align-Rite from third parties so long as Harris is in
compliance with Article 2 hereof. In the event Align-Rite is unable to satisfy
Harris' purchase orders and/or Mask Orders using the Business Assets, Align-Rite
shall use commercially reasonable efforts to utilize such other Photomask
manufacturing facilities as are then owned by Align-Rite to satisfy the purchase
orders and/or Mask Orders in accordance with Standard Delivery or expedited
delivery, if applicable, or as otherwise may be agreed between the parties in
writing from time to time. If the purchase orders and/or Mask Orders for
Products exceed the output capacity of the Business Assets and the other
Photomask manufacturing facilities as are then owned by Align-Rite, Align-Rite
shall, as soon as practicable, notify Harris, and Align-Rite shall have the
right to contract with such third party Photomask manufacturers for a period of
time as agreed between the parties, until Align-Rite establishes the requisite
capacity.
5.7 During the Term, Align-Rite shall, as it deems appropriate, make the
capital expenditures at its own expense necessary to accommodate the manufacture
of all Photomask products required by Harris or its subsidiaries.
5.8 Cancellations and Schedule Changes.
8
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5.8.1 Harris may cancel without charge any purchase order and/or Mask
Order or portion thereof for a Product at any time prior to the date on
which Align-Rite has started manufacturing such Product.
5.8.2 In the event Harris cancels a purchase order and/or Mask Order
for a Product after Align-Rite has purchased custom raw materials for such
Product, but before Align-Rite has started manufacturing such Product,
Harris shall reimburse Align-Rite for the cost of such custom raw
materials.
5.8.3 In the event Harris cancels a purchase order and/or Mask Order
for a Product after Align-Rite has started manufacturing the Product,
Harris shall pay one hundred percent (100%) of the price of such Product.
Payment of amounts due under this Section shall be made within thirty (30)
days of the date of each invoice.
ARTICLE 6
Manufacture
6.1 Each Product sold by Align-Rite to Harris pursuant to this Agreement
shall conform in all respects to its Specification as set forth on the
applicable purchase order and/or Mask Order.
6.2 Align-Rite and Harris shall consult with one another annually (or more
frequently if appropriate or desirable) during the Term in order to ensure that
the Specifications of the Products are mutually acceptable to both parties.
Align-Rite shall agree to any reasonable change to a Specification requested by
Harris provided that such change is capable of being made by Align-Rite and that
the price of the Product in question is increased or decreased to cover any
increased or decreased cost of manufacture.
ARTICLE 7
Delivery and Payment
7.1 Align-Rite shall use commercially reasonable efforts to fulfill Mask
Orders received from Harris for the Products on the date specified in the
purchase order and/or Mask Order and shall give Harris as much advance notice as
reasonably possible if despite its commercially reasonable efforts it is unable
for any reason to fulfill any purchase order and/or Mask Order on the specified
date.
7.2 Align-Rite shall deliver the Products to the designated ship address
set forth on each purchase order and/or Mask Order, FOB/CIP Align-Rite's
manufacturing sites located in the United States. Harris shall be responsible
for all shipping and other costs of delivery from the manufacturing sites
located in the United States. Align-Rite shall retain a security interest and
right of possession in the Products and Harris hereby grants such security
interest therein to Align-Rite until Harris makes full payment. Title and risk
of loss or damage to Products shall pass to Harris at the FOB/CIP point.
7.3 Harris shall pay for the Products which are supplied under this
Agreement in full within thirty (30) days of the date of the applicable invoice.
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ARTICLE 8
Strategic Alliance, Consultation and Cooperation Arrangements
8.1 During the Term, Harris and Align-Rite shall make their respective
representatives available once every Quarter in order for:
8.1.1 Harris to advise Align-Rite of its Product development programs
and its anticipated needs for Products and New Products;
8.1.2 Align-Rite to inform Harris of its capacity and technological
capabilities relating to Photomask products and services offered by it from
time to time; and
8.1.3 Harris to review Align-Rite's performance in supplying Harris'
Product requirements.
8.2 During the Term, Harris shall use its commercially reasonable efforts
to maintain for Align-Rite the good will of the business of the Photomask
Business Unit at the Closing Date (including, without limitation, merchant
Photomask customers, suppliers and other parties having relationships with the
Photomask Business Unit).
8.3 During the Term, Harris agrees at Align-Rite's expense as set forth in
the Site Services Agreement to cooperate and to provide such assistance as
Align-Rite may require from time to time in maintaining the Photomask Business
Unit's current ability to manufacture Products which meet Department of Defense
("DOD") Secret and Top Secret status, provided such cooperation and assistance
is permitted under DOD and NSA regulations and is acceptable to DOD and NSA.
Harris shall allow Align-Rite the use of Harris' Classified Material Control
Center (CMCC) for processing, storing and shipping classified material pursuant
to DD254 requirements, if such use is permissible under DOC and NSA regulations.
8.4 During the Term of the Agreement, Harris shall use its commercially
reasonable efforts to promote Align-Rite's Photomask products and services to
(i) the merchant customers of the Photomask Business Unit, (ii) Harris' joint
venture partners, (iii) the semiconductor foundry businesses utilized by Harris
which will or are envisioned to require the purchase of Photomask products and
services, and (iv) other companies and foundries within the influence or under
the control of Harris, in each case in accordance with the terms of this
Agreement.
ARTICLE 9
Termination Rights And
Obligations Upon Termination
9.1 Unless otherwise terminated pursuant to the provisions of this Article
9, this Agreement shall continue in effect for the Term. The Term may be
extended on terms mutually acceptable to the parties.
9.2 This Agreement may be terminated at any time before the end of the Term
as follows and in no other manner:
9.2.1 By mutual agreement in writing by Align-Rite and Harris;
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9.2.2 By Align-Rite upon Harris' failure to pay when due any amounts
required to be paid to Align-Rite after reasonable notice under this
Agreement;
9.2.3 By Harris upon the entry of any order for relief under any
provision of any applicable bankruptcy code in any bankruptcy proceedings
initiated by or against Align-Rite or the presentation of a petition or
convening of a meeting for the purpose of winding up Align-Rite's business,
or entering into liquidation whether compulsory or voluntarily, or
compounding with its creditors generally, or the appointment of a receiver
of any part of all of either party's assets, or either party taking or
suffering any similar action in consequence of debt;
9.2.4 By Align-Rite upon the entry of any order for relief under any
provision of any applicable bankruptcy code in any bankruptcy proceedings
initiated by or against Harris or the presentation of a petition or
convening of a meeting for the purpose of winding up Harris' business, or
entering into liquidation whether compulsory or voluntarily, or compounding
with its creditors generally, or the appointment of a receiver of any part
of all of either party's assets, or either party taking or suffering any
similar action in consequence of debt;
9.2.5 By Harris upon Align-Rite's material breach of any of the terms
or conditions of this Agreement after written notice thereof and a failure
by Align-Rite to then cure such breach within thirty (30) days except as
otherwise provided in Section 3.6; and
9.2.6 By Align-Rite upon Harris' material breach of any of the terms
or conditions of this Agreement after written notice thereof and a failure
by Harris to then cure such breach within thirty (30) days.
9.3 In addition to any other remedies available to Align-Rite, in the
event Align-Rite terminates the Agreement, it shall have the following
rights: (i) if the Product has been delivered, Align-Rite may recover,
together with any incidental damages, any unpaid portion of the purchase
price of the Product; and (ii) if the Product has not been delivered,
Align-Rite may withhold delivery of such Product.
9.4 The failure of either party to enforce any provision of this
Agreement shall not be deemed a waiver of such provision.
ARTICLE 10
Warranties
10.1 Harris shall as soon as practicable, and in any event within thirty
(30) working days of the delivery of a Product at its premises, notify
Align-Rite in writing of any noncompliance with applicable Specifications.
10.2 If Harris fails to give notice in accordance with Section 10.1, then
except in respect of any noncompliance with applicable Specifications which is
such that it would not be apparent upon a reasonable visual inspection, the
Product in question shall be conclusively presumed to be in all respects in
accordance with its Specification, and Harris shall be deemed to have accepted
11
<PAGE>
the quality of such Product, and Align-Rite shall have no liability to Harris
with respect to that Product and the warranties made in Section 10.4 shall not
apply thereafter.
10.3 If Harris rejects any delivery of a Product which it believes is not
in accordance with its Specification, then Align-Rite shall as soon as
practicable and in any event within five (5) working days of being requested to
do so by Harris supply a replacement Product which is in accordance with its
Specifications or shall notify Harris that it is unable to do so whereupon
Harris shall be entitled to obtain such replacement Product from a third party.
10.4 Align-Rite warrants that Products delivered hereunder shall be free
and clear of liens and encumbrances arising from actions or inactions of
Align-Rite and shall have been manufactured to the applicable Harris
Specification. This warranty shall terminate in accordance with Section 10.2 or
for any noncompliance which is not apparent upon reasonable visual inspection
upon expiration of 135 calendar days following receipt by Harris or its designee
of a shipment. In the event a problem occurs or is discovered after receipt by
Harris, Align-Rite and Harris agree to discuss and resolve such problem in good
faith.
10.5 The liability of Align-Rite hereunder is solely and exclusively
limited to replacement, or repair, or credit of the purchase price, at Harris'
option, for any Product which is returned by Harris during the applicable
warranty period and which is found by Harris to be subject to adjustment under
this warranty.
10.6 THIS WARRANTY EXTENDS TO HARRIS ONLY. THIS WARRANTY IS IN LIEU OF ALL
OTHER WARRANTIES WHETHER EXPRESS, IMPLIED OR STATUTORY, INCLUDING IMPLIED
WARRANTIES OF MERCHANTABILITY OR FITNESS FOR PARTICULAR PURPOSE. THIS WARRANTY
DOES NOT APPLY TO DEFECTS ARISING AS A RESULT OF HARRIS' DESIGN OR FORMULA. IN
NO EVENT SHALL ALIGN-RITE BE LIABLE FOR ANY INCIDENTAL OR CONSEQUENTIAL DAMAGES
DUE TO BREACH OF THIS WARRANTY. HARRIS' SOLE REMEDY FOR ANY BREACH SHALL BE
LIMITED TO THE REMEDIES SET FORTH IN SECTION 10.5.
ARTICLE 11
Dispute Resolution and Arbitration
11.1 In the event that any dispute arises among the parties pertaining to
the subject matter of this Agreement, and the parties, through Align-Rite's
senior management and Harris' senior management are unable to resolve such
dispute within a reasonable time through negotiations and mediation efforts by
senior executives of both parties, such dispute shall be resolved as set forth
in this Article.
11.1.1 The following procedures may be initiated by written notice
("Dispute Notice") given by one party ("Claimant") to the other, but not
before thirty (30) days have passed during which the parties have been
unable to reach a resolution as described above. The Dispute Notice shall
be accompanied by (i) a statement of the Claimant describing the dispute in
reasonable detail and (ii) documentation, if any, supporting the Claimant's
position on the dispute. Within twenty (20) days after the other party's
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("Respondent") receipt of the Dispute Notice and accompanying materials,
the parties shall submit the dispute to mediation in the Orlando, Florida
area under the rules of the American Arbitration Association. All
negotiations and mediation procedures pursuant to this paragraph 11.1.1
shall be confidential and treated as compromise and settlement negotiations
and shall not be admissible in any arbitration or other proceeding.
11.1.2 If the dispute is not resolved as provided in Section 11.1.1
within sixty (60) days after the Respondent's receipt of the Dispute
Notice, the dispute shall be resolved by binding arbitration. Within the
sixty-day period referred to in the immediately preceding sentence, the
parties shall agree on a single arbitrator to resolve the dispute. If the
parties fail to agree on the designation of an arbitrator within said
sixty-day period, the American Arbitration Association in the Orlando,
Florida area shall be requested to designate the single arbitrator. If the
arbitrator becomes disabled, resigns or is otherwise unable to discharge
the arbitrator's duties, the arbitrator's successor shall be appointed in
the same manner as the arbitrator was appointed.
11.1.3 Except as otherwise provided in this Article, the arbitration
shall be conducted in accordance with the Commercial Rules of the American
Arbitration Association, which shall be governed by the United States
Arbitration Act.
11.1.4 Any resolution reached through mediation and any award arising
out of arbitration (i) shall be binding and conclusive upon the parties;
(ii) shall be limited to a holding for or against a party, and affording
such monetary remedy as is deemed equitable, just and within the scope of
this Agreement; (iii) may not include special, incidental, consequential or
punitive damages; (iv) may in appropriate circumstances include injunctive
relief and (v) may be entered in court in accordance with the United States
Arbitration Act.
11.1.5 Arbitration shall not be deemed a waiver of any right of
termination under this Agreement, and the arbitrator is not empowered to
act or make any award other than based solely on the rights and obligations
of the parties prior to termination in accordance with this Agreement.
11.1.6 The arbitrator may not limit, expand or otherwise modify the
terms of this Agreement.
11.1.7 The laws of the State of Florida shall apply to any mediation,
arbitration, or litigation arising under this Agreement.
11.1.8 Each party shall bear its own expenses incurred in any
mediation, arbitration or litigation, but any expenses related to the
compensation and the costs of any mediator or arbitrator shall be borne
equally by the parties to the dispute.
11.1.9 A request by a party to a court for interim measures necessary
to preserve a party's rights and remedies for resolution pursuant to this
Article shall not be deemed a waiver of the obligation to mediate or of the
agreement to arbitrate.
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11.1.10 The parties, their representatives, other participants and the
mediator or arbitrator shall hold the existence, content and result of
mediation or arbitration in confidence.
ARTICLE 12
Confidentiality
12.1 During the course of this Agreement each party may obtain possession
of information belonging to the other parties which contains confidential or
secret information (e.g. inventions, know-how, trade secrets, future product
plans). As far as such information is disclosed by one party to the other party
it shall be clearly labeled "Confidential" or the like.
12.2 The party which obtains possession of such confidential information
shall maintain all such information in confidence and shall not disclose it to a
third party without the prior written consent of the other party. These
non-disclosure obligations shall terminate ten (10) years after receipt of such
information.
12.3 These non-disclosure obligations shall not apply with respect to any
information which: (i) now or hereafter, through no act or failure to act on the
part of the obtaining party, becomes generally known or available; (ii) is known
by the party at the time of obtaining it from the other party; (iii) is
furnished to third parties by the party without restriction on disclosure; (iv)
is independently developed by the obtaining party; or (v) is furnished to the
obtaining party by a third party as a matter of right and without restriction on
disclosure. The obligations of this Article 12 shall survive the expiration or
any termination of this Agreement.
ARTICLE 13
General
13.1 Independent Contractors. Both parties are independent contractors
under this Agreement. Nothing contained in this Agreement is intended nor is to
be construed so as to constitute Align-Rite and Harris as partners, agents or
joint venturers with respect to this Agreement. Neither party hereto shall have
any express or implied right or authority to assume or create any obligations on
behalf of or in the name of the other party or to bind the other party to any
contract, agreement or undertaking with any third party.
13.2 Amendments; Waivers. This Agreement and any schedule or exhibit
attached hereto may be amended only by agreement in writing of the parties to
the Agreement. No waiver of any provision nor consent to any exception to the
terms of this Agreement or any agreement contemplated hereby shall be effective
unless in writing and signed by the party to be bound and then only to the
specific purpose, extent and instance so provided.
13.3 Schedules; Exhibits; Integration. Each Schedule and Exhibit delivered
pursuant to the terms of this Agreement shall be in writing and shall constitute
a part of this Agreement, although Schedules need not be attached to each copy
of this Agreement. This Agreement, together with such Schedules and Exhibits,
and the Asset Purchase Agreement constitutes the entire agreement among the
parties pertaining to the subject matter hereof and supersedes all prior
agreements and understandings of the parties in connection therewith, including,
but not limited to, the letter of intent dated April, 20, 1999, between Harris
and Align-Rite.
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13.4 Force Majeure. No party to this Agreement shall be deemed to be in
breach of this Agreement or otherwise liable to any other party in any manner
whatsoever for any failure or delay in performing its obligations under this
Agreement due to Force Majeure. If a party's performance of its obligations
under this Agreement is affected by Force Majeure, then: (i) it shall give
written notice to the other parties, specifying the nature and extent of the
Force Majeure, as soon as reasonably practicable on becoming aware of the Force
Majeure and will at all times use its reasonable endeavors to mitigate the
severity of the Force Majeure; (ii) the date for performance of such obligation
shall be deemed suspended only for a period equal to the delay caused by such
event; and (iii) it shall not be entitled to payment from the other party in
respect of extra costs and expenses incurred by virtue of the Force Majeure
event.
13.5 Assignment. Neither Align-Rite nor Harris may assign this Agreement
without the prior written consent of the other, except that Align-Rite may
assign its rights hereunder to any wholly-owned subsidiary or Affiliate of
Align-Rite or to any post-Closing purchaser(s) of all of the capital stock of
Align-Rite or of substantially all of its assets, and except that Harris may
assign its rights hereunder to any wholly-owned subsidiary or Affiliate of
Harris or to any post-Closing purchaser(s) of substantially all of the
Semiconductor Business Unit of Harris. Notwithstanding the above, Harris
covenants and agrees that in the event it sells all or substantially all of its
assets related to its semiconductor business (including, but not limited to, its
June 3, 1999 announced sale of its semiconductor business to a subsidiary of
Sterling Holding Company, Citicorp Venture Capital investment portfolio
company), it shall require as a condition of completion of such transaction that
the purchaser of such assets, as well as any successors of any such purchaser,
enters into an express assumption of this Agreement, as if such purchaser or
such successor were the original party to this Agreement, and the form of any
such assumption agreements shall be reasonably acceptable to Align-Rite. In the
event of any such assignments, Harris shall be deemed to have guaranteed the
performance of such purchaser's or successor's obligations hereunder and be
responsible therefor. Align-Rite covenants and agrees that in the event it sells
all or substantially all of the Business Assets, it shall require that the
purchaser of such assets, as well as any successors of any such purchaser,
enters into an express assumption of this Agreement, as if such purchaser or
such successor were the original party to this Agreement, and the form of any
such assumption agreements shall be reasonably acceptable to Harris. In the
event of any such assignments, Align-Rite shall be deemed to have guaranteed the
performance of such purchaser's or successor's obligations hereunder and be
responsible therefor.
ARTICLE 14
Notices
14.1 Any notice or any other information required or authorized by this
Agreement to be given by any party to the other must be given in writing by U.S.
mail, facsimile or overnight courier to the other party at the address for
service notified in Section 14.3 or to such other address as any party may
notify to the others from time to time in writing as being the address for
service.
14.2 To be a valid and enforceable notice, evidence of receipt by the
recipient of such notice shall be required.
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14.3 The addresses and contact numbers of those persons who are authorized
to accept service on behalf of the parties to this Agreement are set out below:
On behalf of Align-Rite and Sub to:
Mr. James MacDonald
Mr. Petar Katurich
Align-Rite International, Inc.
2428 Ontario Street
Burbank, California 91504
USA
Telephone No: (818)843-7220
Facsimile No: (818)563-4902
With a copy to:
J. Jay Herron, Esq.
Robert L. Davis, Esq.
O'Melveny & Myers LLP
610 Newport Center Drive, Suite 1700
Newport Beach, California 92660
Telephone No: (949)760-9600
Facsimile No: (949)823-6994
On behalf of Harris to:
Harris Corporation
Semiconductor Sector
Attention: Gregory L. Williams
2401 Palm Bay Road N.E.
Mail Stop 53-198
Palm Bay, FL 32905
Telephone No: (407) 729-5756
Facsimile No: (407) 729-5773
With a copy to:
Harris Corporation
Leslie J. Hart
Vice President-Counsel
2401 Palm Bay Road N.E.
Mail Stop 53-198
Palm Bay, FL 32905
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Telephone No: (407)729-5395
Facsimile No: (407)729-5392
IN WITNESS WHEREOF, this agreement is entered into by duly authorized
representatives of the parties hereto on the date first above written.
ALIGN-RIGHT INTERNATIONAL, INC.,
a California corporation
By:
--------------------------------------
James L. MacDonald
Chairman of the Board and Chief
Executive Officer
ALIGN-RITE, INC.,
a Florida corporation
BY:
--------------------------------------
James L. MacDonald
Chairman of the Board
HARRIS CORPORATION,
a Delaware corporation
BY:
--------------------------------------
W.R. Morcom
Vice President-General Manager
Operations
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Exhibit D
[Form of]
Site Services Agreement
by and among
Harris Corporation
Semiconductor Business Unit
and
Align-Rite, Inc.
<PAGE>
This Site Services Agreement ("Agreement") is entered into this 2nd day of July,
1999 by and between Harris Corporation, a Delaware Corporation, acting through
its Semiconductor Business Unit ("Harris"), Align-Rite Inc., a Florida
Corporation, ("Align-Rite").
RECITALS
WHEREAS, Harris and Align-Rite have or will enter into a separate Asset
Purchase Agreement of even date herewith for the sale of certain assets to
Align-Rite in connection with Harris' Photomask Business; and
WHEREAS, Harris and Align-Rite have or will enter into a separate Lease
Agreement of even date herewith for the lease of facilities to Align-Rite used
in connection with Harris' Photomask Business; and
WHEREAS, Align-Rite desires to purchase certain services from Harris
pertaining to the operation of the Photomask Business in the leased facilities
and Harris is willing to provide these services.
AGREEMENT
In consideration of the premises, the mutual promises contained herein,
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, and intending to be legally bound hereby, the parties
agree as follows:
1. SCOPE OF CONTRACT
Align-Rite hereby contracts with Harris to purchase the following services
from Harris, and Harris hereby agrees to provide Align-Rite with said services
through the action of employees of the Semiconductor Business Unit:
a) Facilities Systems/Equipment Maintenance
b) Utilities
c) Training & Development
d) Calibration
e) Factory Control Systems & VMS Administration
f) Desktop Computing Services
g) Emergency Response Team
h) Occupational Health Services
i) Hazardous Waste Operations
j) Security
k) Purchasing, Stockroom, Receiving, Shipping, IQC
l) Telecommunications
m) Quality Engineering
n) Internal Quality Audit
2
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2. TERM:
The term of this Agreement shall commence on July 3, 1999 and shall
continue in effect until either (a) the Lease Agreement expires or is cancelled,
or (b) this Agreement is terminated as provided in Section 8 herein, whichever
occurs first.
3. PAYMENT
Services will be billed to Align-Rite on a monthly basis. Services which
commence or end on other than the first or last day of the month, respectively,
shall be billed pro-rata accordingly. Align-Rite shall pay the invoiced amount
for the services provided within thirty (30) days from the date of Harris'
invoice. Any payment or part thereof remaining unpaid after thirty (30) days
shall, in the absolute discretion of Harris, carry interest thereon at the rate
of two percent (2%) per annum above the prime interest rate published in the
Wall Street Journal as of the date on which payment was due, calculated on a
monthly basis.
Payment made by check shall be drawn on a U.S. Bank. Alternatively, direct
wire payments shall be made to an account designated by Harris. In the event
payment becomes more than ninety (90) days past due, Align-Rite International,
Inc. agrees to pay for services rendered. Rates on the services provided to
Align-Rite are subject to review by Harris and may change on each anniversary of
this Agreement, except that if a utility rate changes, Harris shall adjust said
rate in the "Consumables (provided to Align-Rite by Harris) Section" on page 2
of Exhibit "A" hereto and the new rate shall become effective immediately and
shall be shown at the new rate on the next monthly invoice..
4. DESCRIPTION OF SERVICES
Harris agrees to provide the following services at the specified intervals
and cost in substantially the same manner as provided to Harris employees and
other buildings on the Complex. If a service provided to Harris employees or
other buildings on the Complex is modified, Harris reserves the right to modify
such service provided to Align-Rite accordingly.
a) Facilities Systems & Equipment Maintenance
Harris shall make available to Align-Rite maintenance and repair
services for the equipment and systems set forth in Exhibit "A". Harris shall
use its standard procedures for scheduling work, and shall use the same
workmanship levels and materials used for the adjacent buildings of the Complex
owned by Harris. Harris will provide coverage every day of the year except two
days, July 4th and December 23rd. In the event of an emergency, Harris will be
able to respond within two (2) hours.
The systems and equipment maintenance services for the Photomask
Business systems is divided into three programs: the Harris Preventive
Maintenance (HPM) Program, Contract Preventive Maintenance (CPM) Program, and
Time and Materials (T&M) Program as described in Exhibit "A". The HPM and T&M
Programs will be performed by Harris employees and/or their selected qualified
contractors, and the CPM Program will be performed by outside contractors who
specialize in the type of equipment and services set forth in Exhibit "A". Under
the HPM Program, Harris shall provide all the material and labor required to
maintain the systems identified in Exhibit "A" in good operating conditions.
This includes, but is not limited to, all the preventive maintenance and regular
repair.
Systems modifications, upgrades, equipment/tool installations, or other
work that might be requested by Align-Rite will be performed under the T&M
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Program. The HPM, CPM and T&M hours and costs listed in Exhibit "A" are
estimates. Harris will bill Align-Rite based on actual hours expended and costs
plus applicable mark-ups as stated in Exhibit "A".
Align-Rite reserves the right to change the type of the maintenance
program on a piece of equipment, or to remove a piece of equipment from the
maintenance program after giving Harris thirty (30) days written notice. The
cost of the services shall be adjusted accordingly.
b) Utilities
Harris shall make available to Align-Rite metered electricity, nitrogen,
deionized water, and city water in accordance with the costs set forth in
Exhibit "A". Align-Rite shall pay a one-time charge not to exceed in the
aggregate thirteen thousand dollars ($13,000.00) for the purchase and
installation of all four meters. Harris will also provide clean, dry compressed
air in exchange for chilled water from Align-Rite to cool the Centac air
compressor owned and operated by Harris. In addition to the actual metered
amount for each utility, Align-Rite shall pay one hundred twenty-five dollars
($125.00) per month per each of the four utilities, which includes the
administrative costs for meter reading, maintenance, and billing.
c) Training & Development
Harris shall provide Align-Rite with general training and development
skills in accordance with the description and costs as set forth in Exhibits "B"
and "C". While Harris' standard policy is to require a minimum of five (5)
persons attending a training class before commencing with said training, Harris
will make available to Align-Rite the training classes listed on said exhibits
only without imposing a minimum number of attendees. Emergency Response Team
training and Occupational Health Services training are as set forth in Exhibits
"J" and "K", subject to the minimum five (5) person standard attendance policy.
Training may occur simultaneously with other Harris employees at such dates and
times established by Harris, or may occur at a separate time and date for
Align-Rite employees only.
d) Calibration
Harris shall provide Align-Rite with calibration and repair services for
equipment used in the Photomask Business in accordance with the costs set forth
in Exhibit "D" on the equipment and schedules set forth in Exhibit "E".
e) Factory Control Systems & VMS Administration
Harris shall provide Align-Rite with Factory Control System and VMS
administration services in accordance with the description and costs as set
forth in Exhibit "F".
f) Desktop Computing Services
Harris shall provide Align-Rite with Desktop Computing Services ("DCS")
in accordance with the description, purpose and frequency as set forth in
Exhibit "G", for assets listed in Exhibit "H" at the cost listed in Exhibit "I".
If Align-Rite deviates from the standard software support model used by all
other Harris employees, DCS reserves the right to discontinue support services
immediately.
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g) Emergency Response Team
Harris shall provide Align-Rite with Emergency Response Team ("ERT')
services in accordance with the description and costs as set forth in Exhibit
"J".
h) Occupational Health Services
Harris shall provide Align-Rite with Occupational Health Services in
accordance with the description and costs as set forth in Exhibit "K".
i) Hazardous Waste Operations
Harris shall provide Align-Rite with Hazardous Waste Operation services
in accordance with the description and costs as set forth in Exhibit "L".
j) Security
Harris shall provide Align-Rite with Security services in accordance
with the description as set forth in Section 9 of the Lease Agreement and cost
as set forth in Exhibit "M" of this Agreement.
k) Purchasing, Stockroom, Receiving, Shipping, IQC
Harris shall provide Align-Rite with Purchasing, Stockroom, Receiving,
Shipping, and Incoming Quality Control (IQC) in accordance with the description
and costs as set forth in Exhibit "N".
l) Telecommunications
Harris shall provide Align-Rite with Telecommunication services in
accordance with the description and costs as set forth in Exhibit "O".
m) Quality Engineering
Harris shall provide Align-Rite with Quality Engineering services to
Align-Rite in accordance with the description and costs as set forth in Exhibit
"P".
n) Internal Quality Audit
Harris shall provide Align-Rite with Internal Quality Audit services in
accordance with the description and costs as set forth in Exhibit "Q".
5. GENERAL
a) The meaning of terms not defined in this Site Services Agreement shall
be the same as that defined in said Asset Purchase Agreement or Lease
Agreement.
b) The captions used in this agreement are for the purpose of convenience
only and shall not be construed to limit or extend the meaning of any
part of this Agreement.
c) All Exhibits attached hereto are incorporated herein by reference.
d) In case any one or more of the provisions contained herein shall for
any reason be held to be invalid, illegal, or unenforceable in any
respect, such invalidity, illegality, or unenforceability shall not
affect any other provision of this Agreement, but this Agreement shall
be construed as if such invalid, illegal, or unenforceable provision
had not been contained herein.
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<PAGE>
e) When the context of this Agreement requires, the neuter gender
includes the masculine, the feminine, a partnership, corporation, or
joint venture, and the singular includes the plural.
f) The waiver by either party of any breach of any term, condition, or
covenant of this Agreement shall not be deemed a waiver of such
provision or any subsequent breach of the same or any other term,
condition, or covenant of this Agreement.
g) The words "herein", "hereof", "hereunder" and other words of similar
import refer to this Agreement as a whole and not to any particular
Article, Section or other subdivision.
6. CANCELLATION OF SERVICES
Either Align-Rite or Harris may cancel any one or more of the
aforementioned services other than utilities with ninety (90) days written
notice to the other party, except that maintenance services may be modified with
thirty (30) days notice as stated in Section 4(a) herein. Utility delivery and
termination is provided under the terms and conditions of Section 6 of the
Facility Lease Agreement.
7. SUCCESSORS AND ASSIGNS
The covenants and conditions herein contained shall, subject to the
provisions as to assignment, apply to and bind the heirs, successors, executors,
administrators and assigns of all of the parties hereto, and all of the
administrators and assigns of all of the parties hereto, and all of the parties
hereto shall be jointly and severally liable hereunder.
8. TERMINATION
In the event Harris or its successor ceases substantially all operations at
the Complex, Harris may terminate this Agreement in its entirety with one
hundred eighty (180) days written notice to Align-Rite.
9. ASSIGNMENT
Neither Align-Rite nor Hams may assign this Agreement without the prior
written consent of the other, except that Align-Rite may assign its rights
hereunder to any wholly-owned subsidiary or Affiliate of Align-Rite or to any
post-Closing purchaser(s) of all of the capital stock of Align-Rite or of
substantially all of its assets, and except that Harris may assign its rights
hereunder to any wholly-owned subsidiary or Affiliate of Harris or to any
post-Closing purchaser(s) of substantially all of the Semiconductor Business
Unit of Harris. Notwithstanding the above, Harris covenants and agrees that in
the event it sells all or substantially all of its assets related to its
semiconductor business (including, but not limited to, its June 3, 1999
announced sale of its semiconductor business to a subsidiary of Sterling Holding
Company, Citicorp Venture Capital investment portfolio company), it shall
require as a condition of completion of such transaction that the purchaser of
such assets, as well as any successors of any such purchaser, enters into an
express assumption of this Agreement, as if such purchaser or such successor
were the original party to this Agreement, and the form of any such assumption
agreements shall be reasonably acceptable to Align-Rite. In the event of any
such assignments, Harris shall be deemed to have guaranteed the performance of
such purchaser's or successor's obligations hereunder and be responsible
therefor. Align-Rite covenants and agrees that in the event it sells all or
substantially all of the Business Assets, it shall require that the purchaser of
such assets, as well as any successors of any such purchaser, enters into an
express assumption of
6
<PAGE>
this Agreement, as if such purchaser or such successor were the original party
to this Agreement, and the form of any such assumption agreements shall be
reasonably acceptable to Harris. In the event of any such assignments,
Align-Rite shall be deemed to have guaranteed the performance of such
purchaser's or successor's obligations hereunder and be responsible therefor.
10. TRANSFER OF PROPERTY BY HARRIS
In the event of any conveyance of the Complex or Premises and assignment by
Harris of this Agreement, Harris shall be and is hereby entirely freed and
relieved of all liability under any and all of its covenants and obligations
contained in or derived from this Agreement occurring after the consummation of
such conveyance and assignment so long as Harris' successor agrees and covenants
to assume all of Harris' obligations under this Agreement occurring after the
consummation of such conveyance assignment.
11. NOTICES
Any notice, demand, request, consent, approval or communication that either
party desires or is required to give to the other party under this Agreement
shall be in writing and shall be served personally, delivered by independent
messenger or overnight courier service, or sent by U.S. certified mail, return
receipt requested, postage prepaid, in which event such notice shall be deemed
to have been given when seventy-two (72) hours have elapsed from the time when
such notice was deposited in the United States mail, addressed to the other
party at the address set forth below:
If to Harris:
Harris Corporation
Semiconductor Business Unit
Notice Address: 2401 Palm Bay Road NE, m/s 53-205
Palm Bay, FL 32905
Attention: Tim Muth
Phone Number: (407) 724-7988
Fax Number: (407) 729-4887
with a copy to: Harris Corporation
Semiconductor Business Unit
2401 Palm Bay Road NE, m/s 53-216
Palm Bay, FL 32905
Attention: Vice President Counsel
Fax Number: (407) 729-5952
- - --------------------------------------------------------------------------------
If to Align-Rite: Align-Rite, Inc.
Notice Address: c/o 2428 Ontario Street
Burbank, CA 91504
Attention: Petar Katurich
Phone Number: (818) 843-7220
Fax Number: (818) 563-4902
7
<PAGE>
with a copy to: J. Jay Herron, Esquire
Robert L. Davis, Esquire
O'Melveny & Myers
610 Newport Center Drive
Newport Beach, California
Phone Number: (949) 823-6906
Fax Number (949) 823-6994
Either party may change its address by giving notice of same in accordance with
this paragraph.
12. RESPONSIBILITY OF HARRIS
Align-Rite hereby acknowledges that Harris is not in the business of
providing the services herein and that Harris does not warrant the performance
of services hereunder. In the event of an error or omission in the provision of
a service which shall be established to be principally caused by Harris'
performance hereunder, Harris shall credit Align-Rite for any previously
invoiced charges in connection with such service. Such adjustment shall be
Align-Rite's only remedy. Harris shall have no liability to Align-Rite for any
special, consequential, or incidental damages. Harris shall undertake to perform
services hereunder for Align-Rite substantially in the same manner as if it were
performing such services for a Harris business unit. Harris' obligations to
provide any service hereunder is conditioned upon the responsible party
obtaining prior to the commencement of such services all necessary governmental
licenses, approvals, and permits.
13. GOVERNING LAW
This Agreement and the relationship between Harris and Align-Rite shall be
governed by and construed in accordance with the laws of the State of Florida.
14. DISPUTE RESOLUTION AND ARBITRATION
In the event that any dispute arises among the parties pertaining to the
subject matter of this Agreement, and the parties, through Align-Rite's senior
management and Harris' senior management are unable to resolve such dispute
within a reasonable time through negotiations and mediation efforts by senior
executives of both parties, such dispute shall be resolved as set forth in this
Section.
a) The following procedures may be initiated by written notice ("Dispute
Notice") given by one party ("Claimant") to the other, but not before
thirty (30) days have passed during which the parties have been unable
to reach a resolution as described above. The Dispute Notice shall be
accompanied by (i) a statement of the Claimant describing the dispute
in reasonable detail and (ii) documentation, if any, supporting the
Claimant's position on the dispute. Within twenty (20) days after the
other party's ("Respondent") receipt of the Dispute Notice and
accompanying materials, the parties shall submit the dispute to
mediation in the Orlando, Florida area under the rules of the American
Arbitration Association. All negotiations and mediation procedures
pursuant to this Section 14(a) shall be
8
<PAGE>
confidential and treated as compromise and settlement negotiations and
shall not be admissible in any arbitration or other proceeding.
b) If the dispute is not resolved as provided in Section 14(a) within
sixty (60) days after the Respondent's receipt of the Dispute Notice,
the dispute shall be resolved by binding arbitration. Within the
sixty-day period referred to in the immediately preceding sentence,
the parties shall agree on a single arbitrator to resolve the dispute.
If the parties fail to agree on the designation of an arbitrator
within said sixty-day period, the American Arbitration Association in
the Orlando, Florida area shall be requested to designate the single
arbitrator. If the arbitrator becomes disabled, resigns or is
otherwise unable to discharge the arbitrator's duties, the
arbitrator's successor shall be appointed in the same manner as the
arbitrator was appointed.
c) Except as otherwise provided in this Section, the arbitration shall be
conducted in accordance with the Commercial Rules of the American
Arbitration Association, which shall be governed by the United States
Arbitration Act.
d) Any resolution reached through mediation and any award arising out of
arbitration (i) shall be non-binding upon the parties; (ii) shall be
limited to a holding for or against a party, and affording such
monetary remedy as is deemed equitable, just and within the scope of
this Agreement; (iii) may not include special, incidental,
consequential or punitive damages; (iv) may in appropriate
circumstances include injunctive relief; and (v) may be entered in
court in accordance with the United States Arbitration Act.
e) Arbitration shall not be deemed a waiver of any right of termination
under this Agreement, and the arbitrator is not empowered to act or
make any award other than based solely on the rights and obligations
of the parties prior to termination in accordance with this Agreement.
f) Each party shall bear its own expenses incurred in any mediation,
arbitration or litigation, but any expenses related to the
compensation and the costs of any mediator or arbitrator shall be
borne equally by the parties to the dispute.
g) A request by a party to a court for interim measures necessary to
preserve a party's rights and remedies for resolution pursuant to this
Section shall not be deemed a waiver of the obligation to mediate or
of the agreement to arbitrate.
h) The parties, their representatives, other participants and the
mediator or arbitrator shall hold the existence, content and result of
mediation or arbitration in confidence.
15. FORCE MAJEURE
Neither party shall be liable in damages for any delay or default in the
performances of any or all obligations of this Agreement, if such delay or
default is caused by conditions beyond its control, including, but not limited
to: acts of the elements, fires, explosions, floods or other
9
<PAGE>
casualties, governmental orders or restrictions, and the inability to obtain
necessary governmental approvals. The party incurring the delay shall promptly
notify the other party in writing, and performance shall be extended one day for
each day of delay.
16. AMENDMENT
This Agreement may be amended or any provision of this Agreement may be
waived only if set forth in writing, executed by both parties to this Agreement.
17. ENTIRE AGREEMENT
This Agreement, the Asset Purchase Agreement and the Facility Lease
Agreement contains all of the terms, covenants and conditions agreed to by
Harris and Align-Rite, integrates all discussions and understandings leading up
to this Agreement, supersedes all prior agreements between the parties
pertaining to the subject matter herein, and may not be modified orally or in
any manner other than by an agreement in writing signed by all of the parties to
this Agreement or their respective successors in interest.
18. ATTORNEYS' FEES
In case suit should be brought for any sum or services due hereunder, for
the enforcement or interpretation of any of the terms or conditions of this
Agreement, or because of any act which may arise out of the operation of the
Photomask Business on the Complex, by either party, the prevailing party shall
be entitled to all costs incurred in connection with such action, including a
reasonable attorney's fee.
19. AUTHORITY
Harris and Align-Rite warrant and represent that their respective
representatives executing this Agreement each have the full power and authority
to execute this Agreement on behalf of Harris and Align-Rite, respectively, and
that this Agreement, once executed by the signatory of Harris or Align-Rite, as
the case may be, shall constitute a legal and binding obligation of that party
and is fully enforceable in accordance with its terms.
IN WITNESS WHEREOF, Harris and Align-Rite have executed this Site Services
Agreement as of the day and year first written above.
Harris Corporation Align-Rite, Inc.
Semiconductor Business Unit
- - --------------------------- -----------------------
By: W. Russell Morcom By: James L. MacDonald
V.P.-GM Operations Chairman of the Board
10
<PAGE>
<TABLE>
<CAPTION>
Exhibit A
Facilities Systems/Equipment Maintenance and Utilities - Page 1 of 4
- - -----------------------------------------------------------------------------------------------------------------------------------
HSS PM T&M
- - -----------------------------------------------------------------------------------------------------------------------------------
Bldg. 60: Facilities Systems/ Plus HSS and/or
Equipment Itemized Maintenance Property (@) Material EST Hrs. Contractor
Owner PM Freq. EST HRS/YR Cost+ 10% Cost Plus 20%
- - -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Champion Air Compressors (4) AR S 12 $384 X
-----------------------------------------------------------
Air Dryers, for Champion Air Compressors (2) AR S 3 $96 X
-----------------------------------------------------------
Chillers (3) AR W 52 $1,664 X
-----------------------------------------------------------
Chiller Water Circulation Pumps (2) AR S 3 $96 X
-----------------------------------------------------------
Chilled Water piping (pipe, valve) AR - 0 $0 X
-----------------------------------------------------------
Chilled/Cooling water pumps (11) AR S 12 $384 X
-----------------------------------------------------------
Cooling Tower (1) AR S/SA/A 28 $896 X
-----------------------------------------------------------
Cooling Tower Pumps (2) AR S 3 $96 X
-----------------------------------------------------------
Make-up Water Piping (for scrubber, cooling tower, AR/HSS1 - 0 $0 X
chilled water)
-----------------------------------------------------------
Chiller Plant Controls, DDC (CSI)*** AR - 0 $0 X
-----------------------------------------------------------
Environmental Control DDC (Robert Shaw) AR - 0 $0 X
-----------------------------------------------------------
Process Vacuum Pumps (2) AR S 3 $96 X
-----------------------------------------------------------
Boiler (1) AR - 0 $0 X
-----------------------------------------------------------
Air Handling Units (AHUs), (14) AR S 24 $768 X
-----------------------------------------------------------
Humidifiers, duct mounted (4) AR A 4 $128 X
-----------------------------------------------------------
Filters (prefilters and recirculation filters for AHUs, AR - 0 $0 X
excluding Hi-Efficiency filters)
-----------------------------------------------------------
Air Dist. Sys. (ductwork, Canopies, HEPAs) AR - 0 $0 X
-----------------------------------------------------------
Heat Exhaust for mech, electrical & UPS rooms (4) AR S 2 $64 X
-----------------------------------------------------------
HEPA Hood Certification (Canopies) NA SA 16 $512 X
-----------------------------------------------------------
Particle Measurement System (less Facility View AR M 6 $192 X
Software)***
-----------------------------------------------------------
Fume Scrubber (1) AR W/S 28 $896 X
-----------------------------------------------------------
Fume Exhaust Ductwork AR S 2 $64 X
-----------------------------------------------------------
General Bldg. Interior (ceiling, walls, floor/raised AR - 0 $0 X
floor, light bulbs)
-----------------------------------------------------------
Fire Extinguishers Inspection AR - 0 $0 X
- - -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Exhibit A
Facilities Systems/Equipment Maintenance and Utilities - Page 1 of 4
- - ----------------------------------------------------------------------------------------------------------
Contract PM
- - ----------------------------------------------------------------------------------------------------------
HSS
Bldg. 60: Facilities Systems/ Contract Contract HSS Est.
Equipment Itemized Maintenance Work Freq Est. Cost Est. Cost Total
$ (K)/YR + 20% Cost
- - ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Champion Air Compressors (4) - $0 $0
----------------------------------------------
Air Dryers, for Champion Air Compressors (2) A $5,500 $6,600
----------------------------------------------
Chillers (3) M/A $14,000 $16,800
----------------------------------------------
Chiller Water Circulation Pumps (2) - $0 $0
----------------------------------------------
Chilled Water piping (pipe, valve) - $0 $0
----------------------------------------------
Chilled/Cooling water pumps (11) - $0 $0
----------------------------------------------
Cooling Tower (1) - $0 $0
----------------------------------------------
Cooling Tower Pumps (2) - $0 $0
----------------------------------------------
Make-up Water Piping (for scrubber, cooling tower, - $0 $0
chilled water)
----------------------------------------------
Chiller Plant Controls, DDC (CSI)*** A $1,900 $2,280
----------------------------------------------
Environmental Control DDC (Robert Shaw) - $0 0
----------------------------------------------
Process Vacuum Pumps (2) - $0 0
----------------------------------------------
Boiler (1) A $2,000 $2,400
----------------------------------------------
Air Handling Units (AHUs), (14) - $0 $0
----------------------------------------------
Humidifiers, duct mounted (4) - $0 $0
----------------------------------------------
Filters (prefilters and recirculation filters for AHUs, M/Q $6,000 $7,200
excluding Hi-Efficiency filters)
----------------------------------------------
Air Dist. Sys. (ductwork, Canopies, HEPAs) - $0 $0
----------------------------------------------
Heat Exhaust for mech, electrical & UPS rooms (4) - $0 $0
----------------------------------------------
HEPA Hood Certification (Canopies) - $0 $0
----------------------------------------------
Particle Measurement System (less Facility View A $700 $840
Software)***
----------------------------------------------
Fume Scrubber (1) - $0 $0
----------------------------------------------
Fume Exhaust Ductwork - $0 $0
----------------------------------------------
General Bldg. Interior (ceiling, walls, floor/raised - $0 $0
floor, light bulbs)
----------------------------------------------
Fire Extinguishers Inspection M $600 $720
- - ----------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Exhibit A
Facilities Systems/Equipment Maintenance and Utilities - Page 2 of 4
- - -----------------------------------------------------------------------------------------------------------------------------------
HSS PM T&M
- - -----------------------------------------------------------------------------------------------------------------------------------
Bldg. 60: Facilities Systems/ Plus HSS and/or
Equipment Itemized Maintenance Property (@) Material EST Hrs. Contractor
Owner PM Freq. EST HRS/YR Cost+ 10% Cost Plus 20%
- - -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
House Cleaning Vacuum, Supplied from bldg 54 AR/HSS1 S 2 $64 X
(1/3 sys cost)
-----------------------------------------------------------
Process Piping (CDA, N2, PV, IWW, etc. AR/HSS1 - 0 $0 X
-----------------------------------------------------------
DI water Booster Pumps/Filters (2) AR S 3 $96 X
-----------------------------------------------------------
VESDA Fire Alarm (under raised floor, MEBES and Console) AR - 0 $0 X
-----------------------------------------------------------
Emergency Generator (1) AR W 52 $1,664 X
-----------------------------------------------------------
UPS (1) AR - 0 $0 X
-----------------------------------------------------------
Electrical Distribution Sys (switchgear, elect dist AR W 120 $3,840 X
panel)
- - -----------------------------------------------------------------------------------------------------------------------------------
HSS Owned, Maintained and Operated Systems/
Equip/Structure:
- - -----------------------------------------------------------------------------------------------------------------------------------
15 KV Transformers (2) HSS W 60 $1,920 X
-----------------------------------------------------------
Bldg. Shell (ext. walls & roof) & Concrete Floor HSS $0
-----------------------------------------------------------
Fire Alarm (less the VESDA system) HSS A 16 $512
-----------------------------------------------------------
Fire Sprinkler HSS Q 32 $1,024
-----------------------------------------------------------
Bathroom(s) and Under Slab Plumbing HSS - 0 $0
- - -----------------------------------------------------------------------------------------------------------------------------------
Consumables: (provided to AR by HSS)
- - ---------------------------------------------------------- -----------------------------------
Electricity (present rates 0.043 $/KWH) $0
-----------------------------------
Nitrogen ($1.80 per 1000 cubic feet; $2.60 per 1000 $0
cubic feet if Nitrogen plant is not operational)
-----------------------------------
DI Water $28 per 1,000 Gallon $0
-----------------------------------
City Water (present rate $3.55 per 1,000 gallon) $0
-----------------------------------
Clean Dry Comp. Air (trade air for chilled water to cool $0
Harris' Centac air compressor)
-----------------------------------
HSS will add a fixed administrative cost of $125 per $0
month per each metered consumable
- - -----------------------------------------------------------------------------------------------------------------------------------
483 $15,456
- - -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Exhibit A
Facilities Systems/Equipment Maintenance and Utilities - Page 2 of 4
- - -----------------------------------------------------------------------------------------------------------
Contract PM
- - -----------------------------------------------------------------------------------------------------------
HSS
Bldg. 60: Facilities Systems/ Contract Contract HSS Est.
Equipment Itemized Maintenance Work Est. Cost Est. Cost Total
Freq $ (K)/YR Plus 20% Cost
- - -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
House Cleaning Vacuum, Supplied from bldg 54 - $0 $0
(1/3 sys cost)
-----------------------------------------------
Process Piping (CDA, N2, PV, IWW, etc. - $0 $0
-----------------------------------------------
DI water Booster Pumps/Filters (2) - $0
-----------------------------------------------
VESDA Fire Alarm (under raised floor, MEBES and Console) A $500 $600
-----------------------------------------------
Emergency Generator (1) A $5,000 $6,000
-----------------------------------------------
UPS (1) SA $1,200 $1,440
-----------------------------------------------
Electrical Distribution Sys (switchgear, elect dist $0 $0
panel)
- - -----------------------------------------------------------------------------------------------------------
HSS Owned, Maintained and Operated Systems/
Equip/Structure:
- - -----------------------------------------------------------------------------------------------------------
15 KV Transformers (2) A $1,500 $1,800
-----------------------------------------------
Bldg. Shell (ext. walls & roof) & Concrete Floor $0
-----------------------------------------------
Fire Alarm (less the VESDA system) $0
-----------------------------------------------
Fire Sprinkler Q $500 $600
-----------------------------------------------
Bathroom(s) and Under Slab Plumbing $0
- - -----------------------------------------------------------------------------------------------------------
Consumables: (provided to AR by HSS)
- - ---------------------------------------------------------- -----------------------------------------------
Electricity (present rates 0.043 $/KWH) $0
-----------------------------------------------
Nitrogen ($1.80 per 1000 cubic feet; $2.60 per 1000 $0
cubic feet if Nitrogen plant is not operational)
-----------------------------------------------
DI Water $28 per 1,000 Gallon $0
-----------------------------------------------
City Water (present rate $3.55 per 1,000 gallon) $0
-----------------------------------------------
Clean Dry Comp. Air (trade air for chilled water to cool $0
Harris' Centac air compressor)
-----------------------------------------------
HSS will add a fixed administrative cost of $125 per $0
month per each metered consumable
- - -----------------------------------------------------------------------------------------------------------
$39,400 $47,280
- - -----------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Exhibit A
Facilities Systems/Equipment Maintenance and Utilities - Page 3 of 4
DEFINITIONS:
AR = Align-Rite W = Weekly S = Every 4 Months
HSS = Harris Semiconductor Sector M = Monthly SA = Semi Annual
PM = Preventive Maintenance Q = Quarterly A = Annual
CPM = Contractor Preventative Maintenance
T & M = Time & Materials
AR/HSS1 = AR owns inside the building and HSS owns outside the building. If
meter exists then AR owns downstream of meter and HSS owns meter and upstream of
meter
Estimated costs based upon straight time.
(@) = bill for actual hours
HSS owned system: the cost for maintaining and operating these systems is part
of the Lease. (not services to AR)
T&M HSS / Contractor: This will cover any work outside the PM or contracted-out
work. Example: Break downs, system modification, upgrades, Work Orders
Coverage = 7x24x363
The particle measurement system in bldg. 60 is owned by AR but the front end
software (PMS Facility View) is owned by HSS.
DI Water Cost includes: Cooling Tower Water, Scrubber Water, Waste Water
Treatment, Electric, Chemicals, N2, Labor and Material to run the system.
<PAGE>
<TABLE>
<CAPTION>
Exhibit A
Facilities Systems/Equipment Maintenance and Utilities - Page 4 of 4
- - ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
HSS Skilled Trades
- - ----------------------------------------------------------------------------------------------------------------
Job Category FY99 Rate/hr. Overtime Premium
- - ----------------------------------------------------------------------------------------------------------------
Administration $26.00 $39.00 $52.00
Mechanic $32.00 $48.00 $64.00
Drafting $32.50 $48.75 $65.00
Engineer $58.50
Construction Mgt. $39.00 $58.50 $78.00
- - ----------------------------------------------------------------------------------------------------------------
HSS Non-Skilled Trades
- - ----------------------------------------------------------------------------------------------------------------
Job Category FY99 Rate/hr. Overtime Premium
- - ----------------------------------------------------------------------------------------------------------------
Janitor $11.02 $16.54 $22.05
Record Retention $19.50 $29.25 $39.00
Mover $25.53 $38.30 $51.06
- - ----------------------------------------------------------------------------------------------------------------
Rates are: avg. actual plus fringe plus 30% overhead
- - ----------------------------------------------------------------------------------------------------------------
Job Category FY99 Rate/hr. Materials Contractor
- - ----------------------------------------------------------------------------------------------------------------
Administration $26.00 Cost + 10% Administrative + 20%
Mechanic $32.00
Drafting $32.50
Engineer $58.50
- - ----------------------------------------------------------------------------------------------------------------
Construction Mgt. $39.00
- - ----------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- - ----------------------------------------------------------------------------------------------------------------------------------
HSS Skilled Trades (Mechanics) FY 99 Age Rates HSS Non-Skilled Trades
- - ----------------------------------------------------------------------------------------------------------------------------------
Trade Avg.$/hr plus fringe Rate plus 30% Trade Avg.$/hr plus fringe Rate plus 30%
- - ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Bldg. Mgt. Sys. $25.34 $32.94 Janitor $8.48 $11.02
Electrician $24.25 $31.53 Record Retention $15.00 $19.50
HVAC $22.33 $29.03 Mover $19.64 $25.53
Plumber $24.98 $32.47
Hi-Purity Gas Weld $29.20 $37.96
Multi-Skilled Crafts $21.35 $27.76
Glass Blower $26.09 $33.92
- - ----------------------------------------------------------------------------------------------------------------------------------
AVERAGE RATE $24.58 $32.23 AVERAGE RATE $14.37 $18.69
- - ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Exhibit B
Training & Development
- - --------------------------------------------------------------------------------
Services Description
- - --------------------------------------------------------------------------------
1. New Hire Orientation
- - --------------------------------------------------------------------------------
2. Dept. Transfer Orientation
- - --------------------------------------------------------------------------------
3. Training Coordination for Teams
- - --------------------------------------------------------------------------------
4. Team Meeting Facilitation
- - --------------------------------------------------------------------------------
5. Knowledge Broker to Teams and Management
- - --------------------------------------------------------------------------------
6. Internal and External Audit Support
- - --------------------------------------------------------------------------------
7. Coordination/Maintenance of TRACS; SAFIRE; PACE; DOCS; HUB
- - --------------------------------------------------------------------------------
8. Presentation Coaching to Teams
- - --------------------------------------------------------------------------------
9. Required Platform Team Training
- - --------------------------------------------------------------------------------
10. Compliance Training
- - --------------------------------------------------------------------------------
11. Operator Certification Program Coordination
- - --------------------------------------------------------------------------------
12. Goal Deployment process
- - --------------------------------------------------------------------------------
13. Team Interventions to Improve Behaviors
- - --------------------------------------------------------------------------------
14. Experiential Learning Intervention Expertise
- - --------------------------------------------------------------------------------
15. Team Development Program Coordination
- - --------------------------------------------------------------------------------
16. Local Steering Committee Membership
- - --------------------------------------------------------------------------------
17. Site Communications, Palm Bay Pulse Team Member
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
Itemized Services Approx. Cost ($)
- - --------------------------------------------------------------------------------
1. Training Classes, see Exhibit "C" $12.50/hr/person plus materials
- - --------------------------------------------------------------------------------
2. Facilitation $320.00/day
- - --------------------------------------------------------------------------------
3. Technical Training Center $12.50/hr/person plus materials
- - --------------------------------------------------------------------------------
See Exhibit "C" for a list of classes provided and the cost. Additional classes
will be added to this list, as well as terminated and updated classes.
Align-Rite will be informed of class additions, terminations and updating. Any
costing changes will be reviewed with Align-Rite before any increase in charges
are occurred.
Continental Breakfasts, Lunches and afternoon snacks for the longer classes will
be the responsibility of Align-Rite.
<PAGE>
Exhibit C
Training & Development - Page 1 of 2
Palm Bay Manufacturing Training Department
Course Costs
(These are per student charges.)
<TABLE>
<CAPTION>
- - --------------------------------------------------------------------------------------------------------------
PACE # Manufacturing CORE Course Classes HRS Material $ Tuition $ Total $
- - --------------------------------------------------------------------------------------------------------------
TECHNICAL
- - --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
AD8X-42 HARRIS 8D ROADMAP (no experience) 8 $60.00 $100.00 $160.00
- - --------------------------------------------------------------------------------------------------------------
TBD HARRIS 8D ROADMAP (review) 4 $40.00 $50.00 $90.00
- - --------------------------------------------------------------------------------------------------------------
AD85-05 WORKSTREAM 4 $30.00 $50.00 $80.00
- - --------------------------------------------------------------------------------------------------------------
AD8R-34 CAPA/CARS 2 $20.00 $25.00 $45.00
- - --------------------------------------------------------------------------------------------------------------
AD8Y-06 TPM OVERVIEW 1 $10.00 $12.50 $22.50
- - --------------------------------------------------------------------------------------------------------------
AD8R-42 TOC OVERVIEW 2 $20.00 $25.00 $45.00
- - --------------------------------------------------------------------------------------------------------------
AD8P-01 SPC for NEW HIRES 12 $25.00 $150.00 $175.00
- - --------------------------------------------------------------------------------------------------------------
AD8P-15 FUNCTIONAL SPC 20 $50.00 $250.00 $300.00
- - --------------------------------------------------------------------------------------------------------------
AD8R-46 IYM OVERVIEW 2 $20.00 $25.00 $45.00
- - --------------------------------------------------------------------------------------------------------------
AD8N-11 GOAL DEPLOYMENT 8 $50.00 $100.00 $150.00
- - --------------------------------------------------------------------------------------------------------------
AD8R-01 5 S CAND0 2 $20.00 $25.00 $45.00
- - --------------------------------------------------------------------------------------------------------------
AEU4-15 PRODUCT SUBSTITUTION 2 $20.00 $25.00 $45.00
- - --------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Exhibit C
Training & Development - Page 2 of 2
Course Costs (cont.)
<TABLE>
<CAPTION>
- - ------------------------------------------------------------------------------------------------------------------
PACE # Manufacturing CORE Course Classes HRS Material $ Tuition $ Total $
- - --------------- --------------------------------------------------------------------------------------------------
- - --------------- --------------------------------------------------------------------------------------------------
SOCIAL
- - --------------- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
AD8X-06 TEAM DYNAMICS (4-2 hour sessions optional) 8 $50.00 $100.00 $150.00
- - --------------- --------------------------------------------------------------------------------------------------
AD8N-21 MEETING DYNAMICS 4 30.00 $50.00 $80.00
- - --------------- --------------------------------------------------------------------------------------------------
AD8X-11 CONFLICT 101 2 20.00 $25.00 $45.00
- - --------------- --------------------------------------------------------------------------------------------------
AD8X-06 TEAM BEST PRACTICES 4 30.00 $50.00 $80.00
- - --------------- --------------------------------------------------------------------------------------------------
AD8X-16 EFFECTIVE COMMUNICATIONS 2 20.00 $25.00 $45.00
- - --------------- --------------------------------------------------------------------------------------------------
AD8M-28 SEMISPEAKS 4 30.00 $50.00 $80.00
- - ------------------------------------------------------------------------------------------------------------------
- - ------------------------------------------------------------------------------------------------------------------
PACE # Manufacturing CORE Course Classes HRS Material $ Tuition $ Total $
- - ------------------------------------------------------------------------------------------------------------------
SAFETY
- - ------------------------------------------------------------------------------------------------------------------
AEU4-17 HAZARD COMMUNICATION/RIGHT TO KNOW 1 10.00 $12.50 $22.50
- - ---------------- -------------------------------------------------------------------------------------------------
AD8T-01 HAZARDOUS ENERGY CONTROL (level 2) 2 20.00 $25.00 $45.00
- - ---------------- -------------------------------------------------------------------------------------------------
LEADERSHIP
- - ------------------------------------------------------------------------------------------------------------------
AD8N-48 EFFECTIVE COACHING BEHAVIORS 8 50.00 $100.00 $150.00
- - --------------- --------------------------------------------------------------------------------------------------
AD8N-04 FACILITATION SKILLS WORKSHOP 101 8 50.00 $100.00 $150.00
- - --------------- --------------------------------------------------------------------------------------------------
AD8N-23 ADVANCED FACILITATION SKILLS 8 75.00 $100.00 $175.00
- - --------------- --------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Exhibit D
Calibration
<TABLE>
<CAPTION>
- - --------------------------------------------------------------------------------------------
Itemized Services Approx. Monthly Cost ($)
- - --------------------------------------------------------------------------------------------
<S> <C> <C>
1. Calibration and repair service
- - --------------------------------------------------------------------------------------------
2. Repair $78/hr as requested
- - --------------------------------------------------------------------------------------------
3. Calibration $78/hr (estimate is 88hrs/year or $6864.00/yr) approximately $572.00
- - --------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Exhibit E - Calibration - Page 1 of 2
- - -----------------------------------------------------------------------------------------------------------------------
PROP. MFR. MFR. EQ. MFR SER. DUE ROOM CAL CAL CAL CAL
ID NAME MODEL DESC. NO DATE LOC STATUS INTVL. CODE HOURS
- - -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
920918 PMS 110 PTCL 0688-116 4/17/99 MASK IP 365 IOPP 0.5
COUNT
- - -----------------------------------------------------------------------------------------------------------------------
014104 PREC INV CONTROLLER 9155 CHMB 4/21/99 MASK XX 182 HIP 0.5
- - -----------------------------------------------------------------------------------------------------------------------
930187 OSI NIKON MEAS SYS 5354 5/1/99 MASK XX 365 HIP 1
- - -----------------------------------------------------------------------------------------------------------------------
010299 NIKON 6 COMPARATOR BAY 3 5/1/99 MASK XX 365 HIP 1
- - -----------------------------------------------------------------------------------------------------------------------
912243 OAI 316/365NM EXPOS MTR C399 C551 5/19/99 MASK XX 182 VCAL 1
- - -----------------------------------------------------------------------------------------------------------------------
011698 HONWLL 612X9 T-RH-REC 378033 5/20/99 MASK XX 182 HCAL 2
- - -----------------------------------------------------------------------------------------------------------------------
010096 SOLOMAT 455 T-RH-MTR 5/25/99 MASK XX 182 HCAL 6
- - -----------------------------------------------------------------------------------------------------------------------
004098 BACH T-SCRIBE TEMP REC 5/26/99 MASK XX 182 HCAL 1
- - -----------------------------------------------------------------------------------------------------------------------
012468 BLEUM TOUCH MST OVEN 6/1/99 BAY2 XX 365 HIP 0.5
- - -----------------------------------------------------------------------------------------------------------------------
012465 KLA 101 INSP STA 6/1/99 BAY1 XX 365 HIP 0.5
- - -----------------------------------------------------------------------------------------------------------------------
012470 QUANTRONIX DRS 21 RPR STA 108 6/1/99 BAY3 XX 365 IOPP 0.5
- - -----------------------------------------------------------------------------------------------------------------------
012466 QUANTRONIX DRS 1 RPR STA 64 6/1/99 BAY1 XX 365 IOPP 0.5
- - -----------------------------------------------------------------------------------------------------------------------
014484 OHAUS 700/1610 3 BALANCE 6/4/99 MASK XX 182 HCAL 1
- - -----------------------------------------------------------------------------------------------------------------------
913401 OAI 316 EXPOS MTR C438 C279 6/9/99 MASK XX 182 VCAL 1
- - -----------------------------------------------------------------------------------------------------------------------
006576 KLA INSP STA 6/15/99 MASK XX 365 HIP 1
- - -----------------------------------------------------------------------------------------------------------------------
013971 FLUKE 8021B DMM 4855155 6/22/99 SHOP XX 365 HCAL 1
- - -----------------------------------------------------------------------------------------------------------------------
012462 ATC SEC TIMER BAY # 1 7/7/99 MASK XX 182 HIP 0.5
- - -----------------------------------------------------------------------------------------------------------------------
014292 ATC TIMER 7/7/99 MASK XX 182 HIP 0.5
- - -----------------------------------------------------------------------------------------------------------------------
014294 ATC TIMER 7/7/99 MASK XX 182 HIP 0.5
- - -----------------------------------------------------------------------------------------------------------------------
013279 ATC SEC TIMER BAY #1 7/7/99 MASK XX 182 HIP 0.5
- - -----------------------------------------------------------------------------------------------------------------------
014291 ATC TIMER 7/19/99 MASK XX 182 HIP 0.5
- - -----------------------------------------------------------------------------------------------------------------------
014293 ATC TIMER 7/19/99 MASK XX 182 HIP 0.5
- - -----------------------------------------------------------------------------------------------------------------------
014295 ATC TIMER 7/19/99 MASK XX 182 HIP 0.5
- - -----------------------------------------------------------------------------------------------------------------------
014296 ATC TIMER 7/19/99 MASK XX 182 HIP 0.5
- - -----------------------------------------------------------------------------------------------------------------------
955104 TEK THS730A DIG B012042 7/21/99 MASK XX 365 HCAL 2
OSCOPE
- - -----------------------------------------------------------------------------------------------------------------------
910608 TEK AM503 C PROBE B052654 7/22/99 MASK XX 182 HCAL 1
AMP
- - -----------------------------------------------------------------------------------------------------------------------
909643 TEK FG 502 FUNC GEN B050365 7/22/99 MASK XX 182 HCAL 1
- - -----------------------------------------------------------------------------------------------------------------------
910211 TEK DC 503A COUNTER B022152 7/22/99 MASK XX 182 HCAL 1
- - -----------------------------------------------------------------------------------------------------------------------
013615 TEK 2236 OSCOPE B016189 7/29/99 MASK XX 182 HCAL 2
- - -----------------------------------------------------------------------------------------------------------------------
010287 LEITZ ERGOLUX COMPARATOR BAY2 8/26/99 MASK XX 365 HIP 0.5
- - -----------------------------------------------------------------------------------------------------------------------
010279 B&L 4X MICROSCOPE 8/26/99 MASK XX 365 PM 1
- - -----------------------------------------------------------------------------------------------------------------------
010283 B&L 6X MICROSCOPE 8/26/99 MASK XX 365 PM 1
- - -----------------------------------------------------------------------------------------------------------------------
012565 MANN S MICROSCOPE 8/26/99 MASK XX 365 PM 1
- - -----------------------------------------------------------------------------------------------------------------------
010455 LEITZ MICROSCOPE 8/26/99 MASK XX 365 PM 1
- - -----------------------------------------------------------------------------------------------------------------------
<PAGE>
<CAPTION>
Exhibit E - Calibration - Page 1 of 2
- - ---------------------------------------------------------------
PROP. REP CAL CAL REP Defect
ID HOURS DATE TIMES TIMES Rate
- - ---------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
920918 0 4/17/98 5 1 20%
- - ---------------------------------------------------------------
014104 0 10/21/98 10 0 0%
- - ---------------------------------------------------------------
930187 0 5/1/98 9 0 0%
- - ---------------------------------------------------------------
010299 0 5/1/98 10 0 0%
- - ---------------------------------------------------------------
912243 0 11/18/98 10 1 30%
- - ---------------------------------------------------------------
011698 0 11/19/98 20 0 0%
- - ---------------------------------------------------------------
010096 0 11/24/98 20 0 0%
- - ---------------------------------------------------------------
004098 0.5 11/25/98 19 4 21%
- - ---------------------------------------------------------------
012468 0 6/1/98 9 0 0%
- - ---------------------------------------------------------------
012465 0 6/1/98 9 0 0%
- - ---------------------------------------------------------------
012470 0 6/1/98 9 0 0%
- - ---------------------------------------------------------------
012466 0 6/1/98 9 0 0%
- - ---------------------------------------------------------------
014484 0 12/4/98 7 0 0%
- - ---------------------------------------------------------------
913401 0 12/9/98 12 0 8%
- - ---------------------------------------------------------------
006576 0 6/15/98 9 0 0%
- - ---------------------------------------------------------------
013971 0 6/22/98 6 0 0%
- - ---------------------------------------------------------------
012462 0 1/6/99 17 0 0%
- - ---------------------------------------------------------------
014292 0 1/6/99 9 0 0%
- - ---------------------------------------------------------------
014294 0 1/6/99 10 0 0%
- - ---------------------------------------------------------------
013279 0 1/6/99 15 0 0%
- - ---------------------------------------------------------------
014291 0 1/18/99 9 0 0%
- - ---------------------------------------------------------------
014293 0 1/18/99 10 0 0%
- - ---------------------------------------------------------------
014295 0 1/18/99 9 0 0%
- - ---------------------------------------------------------------
014296 0 1/18/99 9 0 0%
- - ---------------------------------------------------------------
955104 0 7/21/98 2 0 0%
- - ---------------------------------------------------------------
910608 0 1/21/99 19 0 0%
- - ---------------------------------------------------------------
909643 0 1/21/99 19 00 0%
- - ---------------------------------------------------------------
910211 0 1/21/99 19 00 0%
- - ---------------------------------------------------------------
013615 0 1/28/99 9 00 0%
- - ---------------------------------------------------------------
010287 0 8/26/98 6 1 17%
- - ---------------------------------------------------------------
010279 0 8/26/98 25 0 0%
- - ---------------------------------------------------------------
010283 2 8/26/98 24 1 4%
- - ---------------------------------------------------------------
012565 1 8/26/98 22 1 5%
- - ---------------------------------------------------------------
010455 0 8/26/98 23 0 0%
- - ---------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Exhibit E - Calibration - Page 2 of 2
- - ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
911499 LEITZ ORTHOLUX MICROSCOPE 8/26/99 MASK XX 365 PM 1
- - ------------------------------------------------------------------------------------------------------------------------
011054 OSI NIKON MICROSCOPE 5345 8/28/99 MASK XX 365 HIP 1
- - ------------------------------------------------------------------------------------------------------------------------
012100 LEITZ ORTHOLUX MICROSCOPE 8/28/99 MASK XX 365 PM 1
- - ------------------------------------------------------------------------------------------------------------------------
010289 LEITZ ERGOLUX MICROSCOPE 8/28/99 MASK XX 365 PM 1
- - ------------------------------------------------------------------------------------------------------------------------
010290 LEITZ POLOROID CAMERA 8/28/99 MASK XX 365 PM 1
- - ------------------------------------------------------------------------------------------------------------------------
012563 LEITZ POLOROID CAMERA 8/28/99 MASK XX 365 PM 1
- - ------------------------------------------------------------------------------------------------------------------------
012096 LEITZ METALLOPLN MICROSCOPE 8/28/99 MASK XX 365 PM 1
- - ------------------------------------------------------------------------------------------------------------------------
009619 SOLOMAT 455 T-RH-MTR 51509 9/16/99 MASK XX 182 HCAL 3.5
- - ------------------------------------------------------------------------------------------------------------------------
906733 OLYMPUS BHMJL MICROSCOPE 200059 9/30/99 MASK XX 365 PM 1
- - ------------------------------------------------------------------------------------------------------------------------
015109 ASHCROFT 1009 PRES. 10/11/99 MASK XX 182 RCAL 1
GUAGE
- - ------------------------------------------------------------------------------------------------------------------------
501234 KEITHLEY 178 DMM 10139 12/9/99 PHMK XX 365 HCAL 1
- - ------------------------------------------------------------------------------------------------------------------------
012559 NIKON 2-1 LASER BAY #4 1/18/00 MASK XX 365 HIP 1
MEAS
- - ------------------------------------------------------------------------------------------------------------------------
014289 FLUKE 8020B DMM 4155192 1/28/00 MASK XX 365 HCAL 1
- - ------------------------------------------------------------------------------------------------------------------------
014300 FLUKE 8021B DMM 4920167 2/1/00 MASK XX 365 HCAL 1
- - ------------------------------------------------------------------------------------------------------------------------
014290 FLUKE 8021B DMM 4915075 2/1/00 MASK XX 365 HCAL 1
- - ------------------------------------------------------------------------------------------------------------------------
014288 FLUKE 8020B DMM 4660116 2/1/00 MASK XX 365 HCAL 1
- - ------------------------------------------------------------------------------------------------------------------------
907713 KEITHLEY 179 DMM 28969 2/11/00 MASK XX 365 HCAL 1
- - ------------------------------------------------------------------------------------------------------------------------
911739 OLYMPUS BHMJL MICROSCOPE 203562 3/24/00 ANAL XX 365 PM 1
- - ------------------------------------------------------------------------------------------------------------------------
010284 WILD M-450 MICROSCOPE 3/31/00 LAB XX 365 PM 1
- - ------------------------------------------------------------------------------------------------------------------------
913752 OLUMPUS BHMJL MICROSCOPE 203594 4/4/00 1113 XX 365 PM 1
- - ------------------------------------------------------------------------------------------------------------------------
011407 OMEGA 871 K DIG TEMP 4/13/00 MASK XX 365 HCAL 0.75
- - ------------------------------------------------------------------------------------------------------------------------
904903 B&L 7X MICROSCOPE 4/15/00 MASK XX 365 PM 1
- - ------------------------------------------------------------------------------------------------------------------------
012095 LEITZ ERGOLUX MICROSCOPE 027542 4/15/00 OFFI XX 365 PM 1
- - ------------------------------------------------------------------------------------------------------------------------
012101 B&L MICROZOOM MICROSCOPE 61187 4/15/00 MASK XX 365 PM 1
- - ------------------------------------------------------------------------------------------------------------------------
014816 FLUKE 8060A DMM 6486034 4/20/00 MASK XX 365 HCAL 1
- - ------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Exhibit E - Calibration - Page 2 of 2
- - -------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
911499 2 8/26/98 25 2 8%
- - -------------------------------------------------------------------
011054 0 8/28/98 9 0 0%
- - -------------------------------------------------------------------
012100 0 8/28/98 22 0 0%
- - -------------------------------------------------------------------
010289 4 8/28/98 16 2 13%
- - -------------------------------------------------------------------
010290 0 8/28/98 22 0 0%
- - -------------------------------------------------------------------
012563 0 8/28/98 22 0 0%
- - -------------------------------------------------------------------
012096 1 8/28/98 21 1 5%
- - -------------------------------------------------------------------
009619 0.5 3/18/99 20 2 10%
- - -------------------------------------------------------------------
906733 4 9/30/98 17 7 41%
- - -------------------------------------------------------------------
015109 4/12/99 1 0 0%
- - -------------------------------------------------------------------
501234 1 12/9/98 10 1 10%
- - -------------------------------------------------------------------
012559 0 1/18/99 9 0 0%
- - -------------------------------------------------------------------
014289 0 1/28/99 5 0 0%
- - -------------------------------------------------------------------
014300 0 2/1/99 5 0 0%
- - -------------------------------------------------------------------
014290 0 2/1/99 5 0 0%
- - -------------------------------------------------------------------
014288 0 2/1/99 5 0 0%
- - -------------------------------------------------------------------
907713 0 2/11/99 10 1 10%
- - -------------------------------------------------------------------
911739 1 3/25/99 23 2 9%
- - -------------------------------------------------------------------
010284 0 4/1/99 17 0 0%
- - -------------------------------------------------------------------
913752 1 4/5/99 19 1 5%
- - -------------------------------------------------------------------
011407 0.5 4/14/99 11 2 18%
- - -------------------------------------------------------------------
904903 0 4/16/99 25 0 0%
- - -------------------------------------------------------------------
012095 1 4/16/99 28 3 11%
- - -------------------------------------------------------------------
012101 0 4/16/99 25 0 0%
- - -------------------------------------------------------------------
014816 4/21/99 2 0 0%
- - -------------------------------------------------------------------
</TABLE>
<PAGE>
Exhibit F
Factory Control Systems & VMS Administration - Page 1 of 2
1. Factory Control Application Services:
a) 24x7x365 Coverage for Application Problem Resolution
b) Application-level Security Administration
c) WorkStream Database Administration
d) WorkStream Application Modeling
e) Application Performance Monitoring and Tuning
f) Job Scheduling
g) Rules-based Event Monitoring for Applications, Databases and Batch Jobs
h) Enhancements to Internally-developed Systems
i) Product Upgrades for existing Commercial Software Packages
j) Development of Custom Software Solutions
k) Deployment and Maintenance of new Commercial Software Packages
Service Cost
$1,500/Month + $85/Hour Weekdays 8AM-5PM; $105/Hour Weekdays 5PM-8AM, Weekends
or National Holidays
Conditions:
1. Align-Rite will be charged a 2 hour minimum for any call received
weekdays between 5PM-8AM or on weekends or national holidays.
2. Harris reserves the right to terminate or change this service with
(90) days advance notice to Align-Rite.
3. Align-Rite reserves the right to terminate or change this service with
(90) days advance notice to Harris.
4. The service fees are valid from July 4, 1999 through June 30, 2000.
5. Harris will bill Align-Rite at most monthly.
6. Harris will require Align-Rite stay current with Harris revisions of
commercial and internally developed systems for applications used by both
companies. Timing of upgrades will be negotiated with Align-Rite.
Definitions/Explanations:
1. The $1,500/month flat fee covers management overhead and separate accounts
payable/receivable services associated with providing this outside service.
2. VMS Administration Services: The Harris Computing and Communications
Services group will provide Align-Rite with the following VMS
administration services:
a) 24x7x365 Coverage for VMS Problem Resolution
b) Rules-based Event Monitoring
c) System Security Administration
d) Account Administration
<PAGE>
e) File and Print Services
f) VMS Network Administration (TCP/IP, DECnet)
g) VAX-Mail Services
h) VMS Capacity Planning
i) Help Desk Problem Tracking and Call Routing
j) Hardware and Software Installation and Upgrades
Service Cost:
$2,000/Month + $85/Hour Weekdays 8AM-5PM; $105/Hour Weekdays 5PM-8AM, Weekends
or National Holidays
Conditions:
1. Align-Rite will be charged for 2 hour minimum for any call received
weekdays between 5PM-8AM or on weekends or national holidays.
2. Harris reserves the right to terminate or change this service with (90)
days advance notice to Align-Rite.
3. Align-Rite reserves the right to terminate or change this service with (90)
days advance notice to Harris.
4. Align-Rite will be billed for a minimum 20 hours/week at $85/hour from the
time the definitive agreement is signed through the completion of the VAX
cluster re-configuration project.
5. Align-Rite will be billed for a minimum 10 hours/week at $85/hour after the
VAX cluster reconfiguration project.
6. The service fees are valid from July 4, 1999 through June 30, 2000.
7. Harris will bill Align-Rite at most monthly.
8. Harris will require Align-Rite stay current with Harris revisions of VMS
layered and 3rd-party products on the Align-Rite Factory Control Systems
VAX. Timing of upgrades will be negotiated with Align-Rite.
Definitions/Explanations:
1. The $2,000/month flat fee covers Help Desk and Accounts Payable/Receivables
services along with VMS administration management overhead.
2. The hour rate will only be applied to VMS administration labor.
3. UNIX Voyage website ordering Service costs.
a) One time set up fee of $120.00
b) $216.00 per month utilization charge.
2
<PAGE>
<TABLE>
<CAPTION>
Exhibit G
Desktop Computing Services (DCS) - Page 1 of 2
- - ----------------------------------------------------------------------------------------------
Services Description Frequency
- - ----------------------------------------------------------------------------------------------
<S> <C> <C>
1. Help Desk first level support for hardware and/or software issues As needed.
(we purchase from Corporate).
- - ----------------------------------------------------------------------------------------------
2. DCS on-site second level support for hardware and/or software issues. As needed.
- - ----------------------------------------------------------------------------------------------
3. Purchasing of all hardware and/or software. As needed.
- - ----------------------------------------------------------------------------------------------
4. Asset Tracking, software compliance, licensing for all computing Assets. On-going.
- - ----------------------------------------------------------------------------------------------
5. Software Distribution for software upgrades, McAfee .dat file As needed.
Updates, Y2K issues, fixes, etc.
- - ----------------------------------------------------------------------------------------------
6. File/Print Services (we purchase from Corporate). 24 x 7
- - ----------------------------------------------------------------------------------------------
7. Messaging Services, i.e. Exchange (we purchase from Corporate) 24 x 7
- - ----------------------------------------------------------------------------------------------
8. Installations/configurations of all Standard Client computing Assets, As needed.
i.e. labtops, PC's, printers, scanners, etc.
- - ----------------------------------------------------------------------------------------------
9. Loaner labtops/PC's. As needed.
- - ----------------------------------------------------------------------------------------------
10. WinFrame server capabilities. As needed.
- - ----------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- - ----------------------------------------------------------------------------------------------------------------------------------
Purpose Qty Annual Service
Name (Include Computing Platform) Licenses Ownership Contract Cost
- - ----------------------------------------------------------------------------------------------------------------------------------
ITG Non-ITG
- - ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Client End:
- - ----------------------------------------------------------------------------------------------------------------------------------
1. Win 95 or NT Wkstn Operating Systems All Non-Transferable
- - ----------------------------------------------------------------------------------------------------------------------------------
2. MS Office Pro 95 Word, Excel, Powerpoint, Access All Non-Transferable
- - ----------------------------------------------------------------------------------------------------------------------------------
3. MS Project Project Scheduling All Non-Transferable
- - ----------------------------------------------------------------------------------------------------------------------------------
4. Internet Explorer Internet Access All Non-Transferable
- - ----------------------------------------------------------------------------------------------------------------------------------
5. Outlook 97 E-mail (going to 98 August) All Non-Transferable
- - ----------------------------------------------------------------------------------------------------------------------------------
6. Onnet 4.0 Mainframe Emulation All See attached
- - ----------------------------------------------------------------------------------------------------------------------------------
7. Exceed Unix emulation All Non-Transferable
- - ----------------------------------------------------------------------------------------------------------------------------------
8. KeaTerm Vax emulation All See attached
- - ----------------------------------------------------------------------------------------------------------------------------------
9. McAfee AntiVirus Virus Protection All (Corp Site Lic)
- - ----------------------------------------------------------------------------------------------------------------------------------
10. Adobe Acrobat 3.0 Writer - document exchange 1 No maint - License transfer
- - ----------------------------------------------------------------------------------------------------------------------------------
11. PGP (Enterprise Sec.)
- - ----------------------------------------------------------------------------------------------------------------------------------
12. Labelworks Mask box labels 2 No maint - license transfer
- - ----------------------------------------------------------------------------------------------------------------------------------
13. ProComm Plus W/modem for incoming data PC 1 No maint - license transfer
- - ----------------------------------------------------------------------------------------------------------------------------------
14. Visual Basic Programming Language 2 Non-Transferable
- - ----------------------------------------------------------------------------------------------------------------------------------
15. Pearl Scripting Language 1
- - ----------------------------------------------------------------------------------------------------------------------------------
16. VISA Billing w/modem
- - ----------------------------------------------------------------------------------------------------------------------------------
17. ConnX Connectivity to WorkStream
- - ----------------------------------------------------------------------------------------------------------------------------------
18. Front Page Web Page Administration
- - ----------------------------------------------------------------------------------------------------------------------------------
19. Visio Drawings/Presentations See attached
- - ----------------------------------------------------------------------------------------------------------------------------------
20. Lview Graphics Viewer 1 No maint - license transfer
- - ----------------------------------------------------------------------------------------------------------------------------------
21. WinZip File compression No maint - license transfer
- - ----------------------------------------------------------------------------------------------------------------------------------
22. Various Single apps See attached
- - ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Exhibit G
Desktop Computing Services (DCS) - Page 2 of 2
- - ----------------------------------------------------------------------------------------------------------------------------------
Name Purpose Qty Annual Service
(Include Computing Platform) Licenses Ownership Contract Cost
- - ----------------------------------------------------------------------------------------------------------------------------------
ITG Non-ITG
- - ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Server End:
- - ----------------------------------------------------------------------------------------------------------------------------------
1. NT Server File/Print Services 1 Non-Transferable
- - ----------------------------------------------------------------------------------------------------------------------------------
2. Exchange Server E-mail messaging 1 Non-Transferable
- - ----------------------------------------------------------------------------------------------------------------------------------
3. Server Backup SW Server tape backup
- - ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Exhibit H
Desktop Computing Services (DCS) - Page 1 of 2
- - -----------------------------------------------------------------------------------------------------------------------------
Asset # Description Div Dept Class Bldg SN Model Present?
- - -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
930811A COMPAQ 433 B HOGAN R 7120 W 60 A336HGN52720 486/33DXS YES
- - -----------------------------------------------------------------------------------------------------------------------------
931193A COMPAQ 386/R MANION (AT HOME) R 7150 W 60 4850HSEH1296 386/20E YES
- - -----------------------------------------------------------------------------------------------------------------------------
940553A COMPAQ 286 CLEAN ROOM PARTICLE R 7120 W 60 4925HZ1H1491 286E YES
MONITOR
- - -----------------------------------------------------------------------------------------------------------------------------
940553B ADD ON COSTS R 7110 Z 60
- - -----------------------------------------------------------------------------------------------------------------------------
942361A GATEWAY 2000/E MOREY R 7150 W 60 1141494 486-33 YES
- - -----------------------------------------------------------------------------------------------------------------------------
942605A COMPAQ 575 L PINTO R 7150 W 56 6533HMY60497 575 YES
- - -----------------------------------------------------------------------------------------------------------------------------
942606A COMPAQ 575 PHUNG LUU R 7150 W 56 D533HMY6E997 575 YES
- - -----------------------------------------------------------------------------------------------------------------------------
942658A COMPUADD 486 L GUTHRIDGE R 7150 W 56 746038 486-33V YES
- - -----------------------------------------------------------------------------------------------------------------------------
943988A COMPAQ 486/MASK SHOP/TOM THUM BOX R 7150 W 60 A507HNC3H712 PROLINEA YES
MT 4/6
- - -----------------------------------------------------------------------------------------------------------------------------
952070A DELL P75/E HELMS R 7110 W 60 4YLZF DIMENSION YES
P75
- - -----------------------------------------------------------------------------------------------------------------------------
952074A DELL P75/B MITCHELL R 7150 W 60 4YLZF DIMENSION YES
P75
- - -----------------------------------------------------------------------------------------------------------------------------
952292A DELL OPTIPLEX/CUST SVC DATA PC R 7150 W 56 52PTV 466/MT YES
"MORRIS"
- - -----------------------------------------------------------------------------------------------------------------------------
952566A COMPAQ DESKPRO575/D FLEMING R 7150 W 56 6533HMY60608 575 YES
- - -----------------------------------------------------------------------------------------------------------------------------
952705A COMPAQ DESKPRO - SHEILA TYRE R 7150 W 56 6533HMY6D442 575 YES
- - -----------------------------------------------------------------------------------------------------------------------------
952796A COMPAQ DESKPRO 575/DOUG QUINN R 7110 W 60 G540HMY70498 575MT YES
- - -----------------------------------------------------------------------------------------------------------------------------
952825A COMPAQ 575/PATRICK SCHAPPERT R 7120 W 60 D533HMY6322 575MT YES
- - -----------------------------------------------------------------------------------------------------------------------------
953139A COMPAQ 486/W KERVIN/MEBES SYSTEM R 7140 W 56 6422HKD30305 575MT YES
- - -----------------------------------------------------------------------------------------------------------------------------
953651A COMPAQ DP5100/CARMEN ROMANO R 7120 W 56 6602HNX7D297 Apr-66 YES
- - -----------------------------------------------------------------------------------------------------------------------------
953666A COMPAQ DESKPRO - SUSAN UMBERGER R 7150 W 60 D533HMY60732 5100 YES
- - -----------------------------------------------------------------------------------------------------------------------------
953785A COMPAQ - "ROBERT SHAW" SYSTEM R 7110 W 60 6650HVX66505 575 YES
- - -----------------------------------------------------------------------------------------------------------------------------
954441A CPQ DESKPRO 2000 - W. KERVIN R 9120 W 56 8639HVX60805 P133 YES
- - -----------------------------------------------------------------------------------------------------------------------------
954466A CPQ DESKPRO 2000 - F TRIMBOLI R 7120 W 60 8639HVX60506 2000 YES
- - -----------------------------------------------------------------------------------------------------------------------------
954808A HP LASERJET PRINTER/CUSTOMER SERVICE R 7150 Y 56 USB1031636 2000 YES
- - -----------------------------------------------------------------------------------------------------------------------------
955241A COMPAQ P166/A NATHANSON R 7120 W 56 6740BPN3D689 5000N YES
- - -----------------------------------------------------------------------------------------------------------------------------
955632A COMPAQ DP4000/ROBERT QUIGLEY R 7150 S 56 6751BPN3P960 DP4000 YES
- - -----------------------------------------------------------------------------------------------------------------------------
Robert Quigley is no longer with Harris.
His PC is in ITG Customer Service.
- - -----------------------------------------------------------------------------------------------------------------------------
955678A COMPAQ DP4000/D MOFFETT R 7150 S 56 6750BPN3P648 DP4000 YES
- - -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Exhibit H
Desktop Computing Services (DCS) - Page 2 of 2
- - -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
955680A COMPAQ DP4000/SCOTT GALLAGHER R 7140 S 56 6750BPN3P546 DP4000 YES
- - -----------------------------------------------------------------------------------------------------------------------------
955820A LEXMARK PRINTER/BILL AND SHIP R 7150 Y 60 11-HW870 DP4000 YES
- - -----------------------------------------------------------------------------------------------------------------------------
955860A COMPAQ 266/STEVE SUHLING R 7156 W 56 6825BZD2J052 S1855 YES
- - -----------------------------------------------------------------------------------------------------------------------------
955915A COMPAQ DP SB/ED MILLS R 7150 W 56 6821BZG2J232 P266 YES
- - -----------------------------------------------------------------------------------------------------------------------------
955916A COMPAQ DB/WALTER RAUCH R 7150 W 56 6821BZG2J184 P300 YES
- - -----------------------------------------------------------------------------------------------------------------------------
955938A COMPAQ DP SB/BOBBY QUINN R 7110 S 60 P300 YES
- - -----------------------------------------------------------------------------------------------------------------------------
955947A COMPAQ DP SB/NORM MILLER R 7120 S 60 6824BYS2J132 P300 YES
- - -----------------------------------------------------------------------------------------------------------------------------
PCs not on original list: P2 350
- - -----------------------------------------------------------------------------------------------------------------------------
955033 COMPAQ DP/C BURNS R 7110 60 6719HVX6B059 YES
- - -----------------------------------------------------------------------------------------------------------------------------
955073 COMPAQ DP/R MANION (AND OTHERS) R 7120 60 6552HVX6H820 ? YES
- - -----------------------------------------------------------------------------------------------------------------------------
955153 COMPAQ DP/"BILL AND SHIP" SYSTEM R 7150 60 6735BPN3D223 ? YES
- - -----------------------------------------------------------------------------------------------------------------------------
94446A Protege 650 CT laptop/Jim Millspaugh R ?
- - -----------------------------------------------------------------------------------------------------------------------------
940786A Laserjet III/Jim Millspaugh R
- - -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Exhibit I
Desktop Computing Services (DCS)
ITG DCS Services and Costs Overview - FY '00
Chuck Palmer - 5/10/99
<TABLE>
<CAPTION>
- - -------------------------------------------------------------------------------------------------------------------------
ITG Users
$ Per User per Month ITG Total Cost per Year
- - -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NT Ops - 24x7 NT services support of Semi 23.00 32 $8,832
managed servers for APP, WF, DBS, and NAS
services. Note: Rates based on $34.6k/year local,
27.9k/year remote, $7/GB/week.
- - -------------------------------------------------------------------------------------------------------------------------
HelpDesk - Standard Client Help Desk support, 17.00 32 $6,528
and call center services on other computing
services based on 12 minutes of service with
a client contacting the Help Desk, 1.2 times
per month.
- - -------------------------------------------------------------------------------------------------------------------------
Domain (2.75) - Domain Control application 2.75 32 $1,056
support, virus management depoyment to remote
servers, and tally management.
- - -------------------------------------------------------------------------------------------------------------------------
Domain Security - Account administration, and 4.30 32 $1,651
security event monitoring. The cost recovered at
the Palm Bay Site for the entire Semi Sector.
- - -------------------------------------------------------------------------------------------------------------------------
HEMS - Harris Enterprise Messaging Service - 10.00 32 $3,840
Email services operational support, and NT server
support for Exchange servers. Cost reflects
<20MB personal store.
- - -------------------------------------------------------------------------------------------------------------------------
Microsoft Software - Corporate agreement for 13.75 32 $5,280 Note: Current M/S
client and applicable server Microsoft licenses. licenses are
non-transferable. Cost
reflects current HSS M/S
Enterprise Agreement.
- - -------------------------------------------------------------------------------------------------------------------------
Desktop Break-Fix Support Services - Desktop 62.00 32 $23,808 Non-reoccuring workorder
Procurement, software compliance, break-fix, charges - $65 per
software distribution, asset tracking services desktop visit.
- - -------------------------------------------------------------------------------------------------------------------------
Printer Break-Fix Support Services 60.00 2 $1,440
- - -------------------------------------------------------------------------------------------------------------------------
Internet Access 1.57 32 $603
- - -------------------------------------------------------------------------------------------------------------------------
Total 194.37 $53,038
- - -------------------------------------------------------------------------------------------------------------------------
- - -------------------------------------------------------------------------------------------------------------------------
Notes: *HEMS costs per month = $17/month if 20-50MB message store, $24/month if 50-100MB store.
- - -------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Exhibit J
Emergency Response Team
<TABLE>
<CAPTION>
- - ----------------------------------------------------------------------------------------------------------------
Services Description Frequency
- - ----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
1. Emergency Response to support As needed.
o Fire Alarms (presently < 5 per year at B60; < 30
o Chemical Spills per year total on the Complex)
- - ----------------------------------------------------------------------------------------------------------------
2. Training
o 40 hour initial Hazardous Material training o One Time
o 8-16 hours refresher training o Annual
- - ----------------------------------------------------------------------------------------------------------------
- - ----------------------------------------------------------------------------------------------------------------
Itemized services Approx. Monthly Cost ($)
- - ----------------------------------------------------------------------------------------------------------------
1. Replacement of used supplies (mats, neutralizer, etc.) Per response at appropriate - market price
- - ----------------------------------------------------------------------------------------------------------------
2. External Services (e.g., spill response contractor - Per response at necessary - market price
current contracts with Florida Spill Response and
Canaveral Marine Services)
- - ----------------------------------------------------------------------------------------------------------------
3. Periodic training sessions (4 sessions, 4/year, 4 hours each) $25/person per session
- - ----------------------------------------------------------------------------------------------------------------
4. External training (e.g. Incident Commander, gas systems, Market price - per person etc.)
- - ----------------------------------------------------------------------------------------------------------------
</TABLE>
Please note the following conditions:
o Align-Rite ERT employees must attend periodic ERT Training sessions to
maintain certification.
o At a minimum, Align-Rite must maintain one trained ERT responder per work
shift.
o Contracted ERT training will be billed at market price.
o Replacement supplies to B60 ERT responses will be billed at market price.
o Contracted ERT Services (e.g., spill response) will be billed at market
price.
o Align-Rite ERT employees must maintain physical requirements and receive
annual ERT physical exams.
o Harris EHS On Call services available for ERT responses only.
o Building 56 ERT responses are included in this service.
o Harris EHS/DEO must be aware of any changes of chemicals and volumes (e.g.,
gallons to drum delivery, installation of compressed gases, etc.) to
accurately and efficiently respond to ERT incidents and to ensure the ERT
manual is accurate.
o A 10% management overhead cost will be added for costs of licensing,
certifications, training, insurance, and regulatory compliance activities.
o Align-Rite ERT employees shall respond to all ERT calls on the Complex, and
Harris ERT employees shall respond to all ERT calls on the Premises.
<PAGE>
Exhibit K
Occupational Health Services - Page 1 of 2
Harris Semiconductor Occupational Health Services places top priority on
employee health by providing quality occupational health services. Services
provided to Align-Rite will include:
o Medical Surveillance: audiometric exams, pulmonary function testing,
baseline and placement physical assessments and periodic assessments as
indicated by job classification.
o Occupational Health Care: initial occupational injury and illness
treatment, initiation of First Report of Injury and referral to acute
medical provider within Align-Rite identified network.
o On site medical response for Emergency Response Team and Medical
Emergencies (first shift only): including training for backshift personnel
in First AID, CPR and obtaining emergency medical assistance. (5 hour
class)
o Maintenance of Medical Records: maintaining medical records observing
guidelines for confidentiality and providing employee access as required by
ADA.
<TABLE>
<CAPTION>
- - -------------------------------------------------------------------------------------------------------
<S> <C>
Services Description Frequency
- - -------------------------------------------------------------------------------------------------------
1. Medical Surveillance Exams Annual
- - ------------------------------------------------------------------------------- -----------------------
o Respirator Exams (9 current) Annual
- - -------------------------------------------------------------------------------------------------------
o Emergency Response Team Exams (6 current) Annual
- - -------------------------------------------------------------------------------------------------------
o Forklift Exams (1 current) Annual
- - -------------------------------------------------------------------------------------------------------
o Chemical Handler/Maintenance Worker (4 current) Annual
- - ------------------------------------------------------------------------------- -----------------------
o Laser Eye Exams (4 current) Baseline, Exit and Post Event
- - -------------------------------------------------------------------------------------------------------
o Audiometric Testing + Hearing Conservation Training (1 Current) Annual
- - -------------------------------------------------------------------------------------------------------
o Baseline/Placement As Needed for New Hires
- - -------------------------------------------------------------------------------------------------------
2. Occupational Health Care (Avg. 1-2 Accidents Per Year) As Needed
- - -------------------------------------------------------------------------------------------------------
3. Emergency Medical Response (Avg. 5 per Year) As Needed
- - -------------------------------------------------------------------------------------------------------
4. Maintenance of Medical Records Ongoing
- - -------------------------------------------------------------------------------------------------------
5. Non-Occupational Health Care (Approximately 10 per month) As Needed
- - -------------------------------------------------------------------------------------------------------
6. Training Annual (5 hours total)
- - -------------------------------------------------------------------------------------------------------
o CPR - AD8T-02
- - -------------------------------------------------------------------------------------------------------
o First Aid - AD8T-45
- - -------------------------------------------------------------------------------------------------------
o Bloodborne Pathogens - AEU4-32
- - -------------------------------------------------------------------------------------------------------
o Emergency Procedures (Supervisor Training) - AD8T-44
- - -------------------------------------------------------------------------------------------------------
</TABLE>
Currently, there are five Health Services employees. Estimated time for ITG
needs would be 120 hours of Nursing Time Plus 12 hours of Medical Director time
for review of physical assessments and consultation on Occupational Issues.
Laser Eye exams would be scheduled by Occupational Health with appropriate
Ophthalmologist and charged at the market price.
<PAGE>
Exhibit K
Occupational Health Services - Page 2 of 2
Detail specialized education and skills required to provide this service:
Registered Nurse licensed to practice in the State of Florida having physical
assessment skills. Completion of a NIOSH approved training in Occupational
Pulmonary Function Testing is required. COAHC certification is required for
Audiometric Testing. Nurses operated under the direction of an Medical Doctor
licensed in the State of Florida, possessing certification in Occupational
Medicine. This physician reviews all ERT physical assessments, as required per
OSHA, and other abnormal findings.
<TABLE>
<CAPTION>
- - --------------------------------------------------------------------------------------------------------
<S> <C>
Itemized services Approx. Cost ($)
- - --------------------------------------------------------------------------------------------------------
1. Respirator exam $ 90 each
- - --------------------------------------------------------------------------------------------------------
2. Emergency Response Team Exams $100 each
- - --------------------------------------------------------------------------------------------------------
3. Forklift Exam $ 50 each
- - --------------------------------------------------------------------------------------------------------
4. Audiometric Testing and Training $ 80 each
- - --------------------------------------------------------------------------------------------------------
5. Laser Eye Exams $150 each
- - --------------------------------------------------------------------------------------------------------
6. Chemical Handler/Maintenance exams $ 90 each
- - --------------------------------------------------------------------------------------------------------
7. Pre-placement/baseline exams $ 90 each
- - --------------------------------------------------------------------------------------------------------
8. Occupational Health Care $ 30 per visit
- - --------------------------------------------------------------------------------------------------------
9. Emergency Medical Response $ 30 per call
- - --------------------------------------------------------------------------------------------------------
10. Maintenance of Medical Records $100 per month
- - --------------------------------------------------------------------------------------------------------
11. Training (First Aid, CPR, BBP, Emergency Procedures = 5 hours) $62.50 each plus $10 materials
- - --------------------------------------------------------------------------------------------------------
</TABLE>
Please note the following conditions:
o Proposed services to be contracted annually on a fiscal year basis. Pricing
reflects FY '00 costs. If an extension to this contract beyond FY "00 is
desired, anticipate a 10% price increase per fiscal year.
o A 10% management overhead cost will be added for costs of licensing,
certifications, insurance, training, insurance and regulatory compliance
activities.
o Current medical records of HSS employees transitioning to Align-Rite will
be retained by HSS.
o Desired EHS training can be scheduled through the HSS Training Department,
as appropriate. A minimum of five (50 employees are required for each
class, including Harris employees.
o Maintenance of Medical Records is closely related to the medical exams and
Occupational Health care. HSS would not choose to provide medical records
maintenance if not selected to provide medical surveillance and
occupational health services.
<PAGE>
Exhibit L
Environmental, Health & Safety
<TABLE>
<CAPTION>
- - --------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Services Description Frequency
- - --------------------------------------------------------------------------------------------------------------------------------
1. Collect acid and solvent "RCRA empty" one gallon containers and Daily
prepare for disposal (triple rinse acid bottles, crush all bottles,
and prepare for disposal)
- - --------------------------------------------------------------------------------------------------------------------------------
2. Delivery empty drums to B60 as needed for waste accumulation. As needed
- - --------------------------------------------------------------------------------------------------------------------------------
EHS Environmental Operators have been trained in the following areas:
o RCRA Hazardous Waste Management
o DOT
o Hazardous Materials/ERT
o Hazard Communication
- - --------------------------------------------------------------------------------------------------------------------------------
Itemized services Approx. Monthly Cost ($)
- - --------------------------------------------------------------------------------------------------------------------------------
1. Bottle collection and disposal $100
- - --------------------------------------------------------------------------------------------------------------------------------
2. Empty drum purchase, storage, and disposition to B60 Market price of drum ($15-30 depending on drum type)
- - --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
EHS offers to provide the above listed services with the following conditions:
o All RCRA empty bottles sent to Building 55 must be emptied to the maximum
extent possible and caps must be tightly screwed on.
o Acid and solvent bottles must be segregated in separate collection
containers provided by Harris.
o Pricing relfects FY '00 costs. If an extension to this proposal beyond FY
"00 is desired, anticipate a 10% price increase per fiscal year
o A 10% management overhead cost will be added for costs of certifications,
administrative work training, insurance and regulatory compliance
activities.
o Anticipate that all billing will be conducted on a quarterly basis.
<PAGE>
Exhibit M
Security
- - --------------------------------------------------------------------------------
Itemized services Approx. Monthly Cost ($)
- - --------------------------------------------------------------------------------
1. All services as set forth in Section 9
of the Lease Agreement $834.00
- - --------------------------------------------------------------------------------
Harris will not be able to provide computer security services for at
least the next two years. It takes specialized technical expertise to write
security plans for the equipment in the Mask Fab. Due to a recent greatly
diminished capability of the EES computer security staff, Harris no longer has
the ability to tap into that pool of expertise.
Harris will help Align-Rite find a consulting firm capable of working with
both the Department of Defense and the National Security Agency. Such a firm can
provide the technical expertise necessary to write computer security plans and
support government audits on an "as needed" basis. This service would only be
required occasionally when there are changes to already existing computer
security plans and when new equipment with memory needs to be used for
classified processing.
**Please note, there may be a period of time while the government is doing
its investigation when Align-Rite will not have the ability to process
classified information. Harris has no control over how long this process will
take. While Harris is doing everything it can to get ready ahead of time,
officially nothing can happen until after the Closing Date.
<PAGE>
Exhibit N
Purchasing/Stockroom/Receiving/Shipping/IQC
- - ------------------------------------------------------------------- ------------
Services Description Frequency
- - --------------------------------------------------------------------------------
1. Purchasing: order placement and administration twice per week
- - --------------------------------------------------------------------------------
2. Maintain stockroom inventory once per week
- - --------------------------------------------------------------------------------
3. Receive and deliver to stock and ITG daily
- - --------------------------------------------------------------------------------
4. Incoming Quality Control (chemicals only) twice per month
- - --------------------------------------------------------------------------------
5. Shipping (miscellaneous items/non-customer) twice per week
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
Itemized services Approx. Monthly Cost ($)
- - --------------------------------------------------------------------------------
1. MIMS - MITI SYSTEM, INVENTORY $1000.00
MANAGEMENT, PROCUREMENT, BUILDING
STORAGE, MATERIAL DELIVERY TO BUILDING 60
- - --------------------------------------------------------------------------------
2. Lanier Copier Service (includes full maintenance
and toner-no paper)
Model 6745 $232.00
Model 6725 $200.00
- - --------------------------------------------------------------------------------
3. CAFETERIA SERVICES WILL BE DIRECT BILLED TO AR
- - --------------------------------------------------------------------------------
<PAGE>
Exhibit O
Telecommunications - Page 1 of 3
The services provided include Data and Voice Communications Services. The
support provided includes design, installation, daily support, and problem
resolution of data networks, voice mail, PBX services, domain name services etc.
Also supported by this group are items such as pagers, cell phones, wireless and
desktop phones, fax machines, Internet service, remote access, local and long
distance calling, DHCP and boot services.
- - --------------------------------------------------------------------------------
Services Description Frequency
- - --------------------------------------------------------------------------------
1. NETWORK MONITORING CONSTANT
- - --------------------------------------------------------------------------------
2. NETWORK MOVES, ADDS, AND CHANGES (MAC'S) RUN RATE = 5 PER MONTH
- - --------------------------------------------------------------------------------
3. NETWORK PROBLEM RESOLUTION, LEVEL 1
- - --------------------------------------------------------------------------------
4. NETWORK PROBLEM RESOLUTION, LEVEL 2 25-50 hours annually
- - --------------------------------------------------------------------------------
5. NETWORK INFRASTRUCTURE
- - --------------------------------------------------------------------------------
6. INTERNET SERVICE A-R responsibility
- - --------------------------------------------------------------------------------
7. DOMAIN NAME SERVICE A-R responsibility
- - --------------------------------------------------------------------------------
8. DHCP SERVICE A-R responsibility
- - --------------------------------------------------------------------------------
9. BOOTP and TFTP SERVICES A-R responsibility
- - --------------------------------------------------------------------------------
10. REMOTE ACCESS
- - --------------------------------------------------------------------------------
11. VIDEO CONFERENCING
- - --------------------------------------------------------------------------------
12. EQUIPMENT MAINTENANCE - see note #1 on page 3
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
Services Description - VOICE Frequency
- - --------------------------------------------------------------------------------
1. PBX SERVICES
- - --------------------------------------------------------------------------------
2. LOCAL EXCHANGE SERVICE
- - --------------------------------------------------------------------------------
3. LONG DISTANCE CALLING
- - --------------------------------------------------------------------------------
4. VOICE MAC'S
- - --------------------------------------------------------------------------------
5. VOICE PROBLEM RESOLUTION
- - --------------------------------------------------------------------------------
6. VOICE MAIL
- - --------------------------------------------------------------------------------
7. PAGERS, LOCAL and NATIONAL, NUMERIC/ALPHA-NUMERIC
- - --------------------------------------------------------------------------------
8. FAX MACHINES
- - --------------------------------------------------------------------------------
9. WIRELESS PHONES
- - --------------------------------------------------------------------------------
10. CELLULAR PHONES
- - --------------------------------------------------------------------------------
11. MEET-ME AUDIO CONFERENCING
- - --------------------------------------------------------------------------------
12. BILLING
- - --------------------------------------------------------------------------------
<PAGE>
Exhibit O
Telecommunications - Page 2 of 3
<TABLE>
<CAPTION>
- - ------------------------------------------------------------------------------------------------------------------------------
Ownership
------------------ Current Book Value Annual Service
Equipment Description Vendor ITG Non-ITG (Non-ITG only) Contract Cost
- - ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1. 10/100M ETHERNET SWITCH, FOUNDRY NETWORKS $3864.95 $695
FASTIRON, 24 PORTS
- - ------------------------------------------------------------------------------------------------------------------------------
2. 10M SHARED HUB, 72 PORTS, SYNOPTICS
3030 WITH 3313SA
- - ------------------------------------------------------------------------------------------------------------------------------
3. 10M SHARED HUB, 72 PORTS, SYNOPTICS
3030 WITH 3313SA
- - ------------------------------------------------------------------------------------------------------------------------------
4. RACK MOUNT UPS APC
- - ------------------------------------------------------------------------------------------------------------------------------
5. RACK MOUNT UPS APC
- - ------------------------------------------------------------------------------------------------------------------------------
6. ASYNCHRONOUS TERMINAL SERVER, XYPLEX
32 PORTS
- - ------------------------------------------------------------------------------------------------------------------------------
7. 10M ETHERNET SWITCH, 8 PORTS NETGEAR
- - ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- - -----------------------------------------------------------------------------------------------------------------
Ownership
--------------------- Network Annual Service
Equipment Description ITG Non-ITG Connection Contract Cost
- - -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1. 2 NATIONAL PAGERS X $718.80
- - -----------------------------------------------------------------------------------------------------------------
2. 7 LOCAL ALPHA-NUMERIC PAGERS X $630.00
- - -----------------------------------------------------------------------------------------------------------------
3. 22 LOCAL NUMERIC PAGERS X $594.00
- - -----------------------------------------------------------------------------------------------------------------
4. 6 CELLULAR PHONES X $2400.00
- - -----------------------------------------------------------------------------------------------------------------
5. 8 WIRELESS PHONES X $2112.00
- - -----------------------------------------------------------------------------------------------------------------
6. 26 DIGITAL OPTIC PHONE SETS X $6864.00
- - -----------------------------------------------------------------------------------------------------------------
7. 23 ANALOG POTS PHONES X $6072
- - -----------------------------------------------------------------------------------------------------------------
8. 16 VOICE LINES (MODEMS, ALARM CIRCUITS, X $4224
AND FAXES.)
- - -----------------------------------------------------------------------------------------------------------------
9. 3 VOICE MAIL BOXES X included
- - -----------------------------------------------------------------------------------------------------------------
10. 2 FAX MACHINES X $792
- - -----------------------------------------------------------------------------------------------------------------
11. 1 HOME PHONE LINE X $192
- - -----------------------------------------------------------------------------------------------------------------
12. 12 REMOTE ACCESS ACCOUNTS X $1728
- - -----------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Exhibit O
Telecommunications - Page 3 of 3
- - --------------------------------------------------------------------------------
Itemized services Approx. Monthly Cost ($)
- - --------------------------------------------------------------------------------
1. NETWORK PORTS - 76 PORTS $20 PER PORT
- - --------------------------------------------------------------------------------
2. VOICE AND DATA MAC'S $90 PER DEVICE MAC REQUEST
- - --------------------------------------------------------------------------------
3. NETWORK TROUBLESHOOTING, LEVEL 2 $100 PER HOUR
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- - ------------------------------------------------------------------------------------------------------------
Ownership
------------------- Network Monthly
Itemized voice services ITG Non-ITG Connection Cost($)
- - ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1. 2 NATIONAL PAGERS X see note #2 $59.90
- - ------------------------------------------------------------------------------------------------------------
2. 7 LOCAL ALPHA-NUMERIC PAGERS X see note #2 $52.50
- - ------------------------------------------------------------------------------------------------------------
3. 22 LOCAL NUMERIC PAGERS X see note #2 $49.50
- - ------------------------------------------------------------------------------------------------------------
4. 6 CELLULAR PHONES X see note #2 $200
- - ------------------------------------------------------------------------------------------------------------
5. 8 WIRELESS PHONES X $176
- - ------------------------------------------------------------------------------------------------------------
6. 26 DIGITAL OPTIC PHONE SETS X $572
- - ------------------------------------------------------------------------------------------------------------
7. 23 ANALOG POTS PHONES X $506
- - ------------------------------------------------------------------------------------------------------------
8. 16 VOICE LINES (MODEMS, ALARM CIRCUITS, X $352
AND FAXES.)
- - ------------------------------------------------------------------------------------------------------------
9. 3 VOICE MAIL BOXES X included
- - ------------------------------------------------------------------------------------------------------------
10. 2 FAX MACHINES X $44
- - ------------------------------------------------------------------------------------------------------------
11. 1 HOME PHONE LINE X $16
- - ------------------------------------------------------------------------------------------------------------
12. 12 REMOTE ACCESS ACCOUNTS X $144
- - ------------------------------------------------------------------------------------------------------------
</TABLE>
Notes
1) Align-Rite must maintain ethernet switch spares if they discontinue annual
maintenance agreements (e.g., Foundry Networks)
2) Align-Rite must obtain their own separate account(s) with local service
provider(s) for pagers and cell phones. Requests for repair service may
still go through Harris Telecommunications group.
3) Align-Rite will be charged a 2 hour minimum for any call received weekdays
between 5PM-8AM or on weekends or national holidays. The rate for overtime
is $105/Hour Weekdays 5PM-8AM, Weekends, or National Holidays. 4) The
service fees are valid from July 4, 1999 through June 30, 2000.
<PAGE>
Exhibit P
Quality Engineering
Measure bacteria levels in deionized water used in the manufacture of mask
plates. Bacterial measurement water samples are taken at a port entering Bldg.
60 and from the clean room area within the mask fab.
<TABLE>
<CAPTION>
- - -------------------------------------------------------------------------------------------
<S> <C>
Services Description Frequency
- - -------------------------------------------------------------------------------------------
1. Measure bacteria levels at the entering port to Bldg. 60 Every 2 weeks
- - -------------------------------------------------------------------------------------------
2. Measure bacteria levels in mask fab Every 4 weeks
- - -------------------------------------------------------------------------------------------
- - ------------------------------------------------------------------------------- -----------
Itemized Services Approx. Monthly Cost ($)
- - -------------------------------------------------------------------------------------------
1. D.I. Water Testing $310.00
- - -------------------------------------------------------------------------------------------
</TABLE>
Additional requirements are for Align-Rite to perform this testing:
o Align-Rite notification system and contact for out of tolerance to let
Harris know of water issues
o Safety shower/eye wash
o D.I. Water Source
o Solvent Sink
<PAGE>
Exhibit Q
Internal Quality Audit Group
<TABLE>
<CAPTION>
- - -------------------------------------------------------------------------------------
Services Description Frequency
- - -------------------------------------------------------------------------------------
<S> <C>
1. Audit HITG for compliance to QML and ISO 9002. 1 time a year
Prepare audit report and distribute to auditee
and management. Follow up on corrective action.
- - -------------------------------------------------------------------------------------
2. Support ISO 9002 Periodical audit 2 times a year
- - -------------------------------------------------------------------------------------
- - -------------------------------------------------------------------------------------
Itemized services Approx. Monthly Cost ($)
- - -------------------------------------------------------------------------------------
1. Internal Quality Audit Labor = 160 hrs. @ 12.75/hr. 2040 annually
- - -------------------------------------------------------------------------------------
2. System time for Audit reports @ 10.25/hr for 10 hrs. 102.50 annually
- - -------------------------------------------------------------------------------------
</TABLE>
Align-Rite will schedule time for audit and support personnel as needed by
Auditor. Identify corrective action and completion date and schedule follow up
date.
<PAGE>
EXHIBIT E
[FORM OF]
ASSUMPTION AGREEMENT
For good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, and pursuant to the Asset Purchase Agreement entered
into as of the close of business on July 2, 1999 (the "Asset Agreement"), by and
among Align-Rite International, Inc., a California corporation ("Parent"),
Align-Rite, Inc., a Florida corporation ("Sub," and together with Parent,
"Buyer"), on the one hand, and Harris Corporation, a Delaware corporation
("Seller"), acting through its Semiconductor Business Unit, on the other.
Notwithstanding Section 2.2(a) of the Asset Agreement, on the Closing Date,
Buyer hereby assumes only the obligations of Seller under the Assumed Contracts
to the extent such obligations are to be performed on and after the Closing Date
(but excluding any liability or obligation to a third party arising from a
breach of such Assumed Contract before the Closing or based on actions or
inactions of Seller prior to the Closing or arising out of Seller's failure to
obtain a required Consent to the assignment of an Assumed Contract to Buyer),
obligations for employee wages, salaries and benefits as provided in Section 7.4
of the Asset Agreement, and Buyer's responsibility to replace Photomasks as set
forth in Section 2.2(c) of the Asset Agreement (the "Assumed Liabilities").
This Assumption Agreement shall be binding upon and inure to the benefit of
Buyer and Seller and their respective successors in interest.
Capitalized terms used and not defined herein have the meanings assigned to
them in the Asset Agreement.
1
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Assumption
Agreement to be executed as of July 2, 1999.
ALIGN-RITE INTERNATIONAL, INC.,
a California corporation
By:
---------------------------------------
James MacDonald
Chairman of the Board
and Chief Executive Officer
ALIGN-RITE, INC.,
a Florida corporation
By:
---------------------------------------
James MacDonald
Chairman of the Board
HARRIS CORPORATION,
a Delaware corporation
By:
---------------------------------------
W.R. Morcom
Vice President-General Manager
Operations
2
<PAGE>
EXHIBIT F
July 2, 1999
Align-Rite International, Inc.
2428 Ontario Street
Burbank, CA 91504
Re: Asset Purchase Agreement-Harris Photomask Business
Gentlemen:
I am Senior Counsel for Harris Corporation, a Delaware corporation
("Harris"), assigned to the Semiconductor Sector and have acted as such in
connection with the Asset Purchase Agreement by and between Harris, and
Align-Rite International, Inc., a California corporation ("Align-Rite"), dated
as of July 2, 1999 (the "Asset Purchase Agreement"). Unless otherwise defined
herein, terms defined in the Asset Purchase Agreement and used herein shall have
the meanings given to them in the Asset Purchase Agreement.
The opinions expressed below are furnished pursuant to Section 7.6 of the
Asset Purchase Agreement.
In connection with the opinions expressed below, I have examined and relied
on the originals, or copies certified or otherwise identified to my satisfaction
of the Asset Purchase Agreement and each of the ancillary agreements thereto,
including, the Photomask Supply and Strategic Alliance Agreement, the Site
Services Agreement and the Facility Lease, ("Transaction Documents") to which
Harris is a party. In connection with rendering the opinions expressed below, I
have also examined and relied upon originals, or copies authenticated to my
satisfaction, of such public and corporate records, certificates of public
officials and of officers and representatives of Harris and other documents and
instruments as I have deemed relevant and necessary as the basis for the
opinions expressed below.
I have assumed for purposes of the opinions expressed below that (i) all
Transaction Documents have been duly authorized, executed and delivered by the
respective parties thereto other than Harris, (ii) the respective parties
thereto which are corporations, other than Harris, are duly organized and
validly existing under the laws of the respective jurisdictions of their
organization and have full power, authority and legal right to execute, deliver
and perform each Transaction Document to which they are parties, and (iii) such
authorization, execution and delivery by each party thereto, other than Harris,
did not, and such performance will not, breach or constitute a violation of any
applicable law.
In rendering the opinions set forth herein, I have also assumed, with your
permission, without independent investigation or inquiry, that: (i) all
1
<PAGE>
documents submitted to me as originals are authentic; (ii) all documents
submitted to me as certified; conformed or photostat copies conform to the
original documents; (iii) all signatures of parties other than Harris on all
documents submitted to me for examination are genuine; (iv) all natural persons
who executed any of the documents that were reviewed or relied upon by me had
full legal capacity at the time of such execution; and (v) all public records
reviewed by me or on my behalf are accurate and complete.
As to various matters of fact relevant to the opinions herein expressed, I
have assumed the correctness of, and have relied upon, the statements and
representations, including, without limitation, the statements and
representations contained in the Transaction Document, and certificates of
Harris and their respective officers, and on certificates of public officials
and other Persons.
Based on the foregoing and subject to the limitations, assumptions and
qualifications set forth herein, I am of the opinion that:
A. Harris is a corporation duly incorporated, validly existing and in
good standing under the laws of the State of Delaware and has full
corporate power and authority to execute and deliver the Asset Purchase
Agreement and each of the other Transaction Documents to which Harris is a
party, and to perform its obligations thereunder. The foregoing opinion as
to good standing is based solely upon a certificate provided by an agency
of the State of Delaware, a copy of which Harris has delivered to you at
the Closing, and is limited to the meaning ascribed to such certificate by
such Government Authority.
B. All corporate proceedings required to be taken by Harris to
authorize it to execute and deliver the Asset Purchase Agreement and each
of the other Transaction Documents to which Hams is a party, and to
consummate the contemplated transactions, have been duly and validly taken.
The Asset Purchase Agreement and each of the other Transaction Documents to
which Harris is a party has been duly and validly authorized, executed and
delivered by Harris.
C. To my knowledge, there is no claim, action, suit, proceeding or
governmental investigation pending, threatened against or involving Harris
which questions the validity of the Asset Purchase Agreement or seeks to
prohibit, enjoin or otherwise challenge the contemplated transactions.
D. Neither the execution and delivery of the Asset Purchase Agreement
and each of the other Transaction Documents to which Harris is a party nor
the performance by Harris of its obligations thereunder will (i) conflict
with, or (ii) result in a breach of the terms, conditions or provisions of,
or (iii) constitute a default under, or (iv) result in the violation of, or
(v) result in the creation of any lien upon any of the material assets of
Harris, pursuant to (x) the charter or by-laws of Harris, or (y) any
material agreement or any other material instrument to which Harris
Semiconductor Sector is a party, and to my knowledge, without any inquiry
or investigation any material agreement or any other material instrument to
which Harris is a party or by which their properties may be bound.
2
<PAGE>
E. The Asset Purchase Agreement and each of the other Transaction
Documents to which Harris is a party, when duly executed and delivered by
Harris will constitute, the valid and legally binding obligation of Harris,
enforceable against Harris in accordance with its terms, subject, as to
enforcement of remedies, to the laws of bankruptcy, insolvency,
reorganization, receivership, moratorium, fraudulent conveyances and other
similar laws affecting the rights and remedies of creditors generally, and
of principles of equity.
F. No order, consent, permit or approval of any Florida or federal
governmental authority that we have, in the exercise of customary
professional diligence recognized as applicable to Harris or to the
transactions of the type contemplated by the Transaction Documents is
required on the part of Harris for the execution and delivery of, and
performance of its obligations under the Transaction Documents.
This opinion relates only to matters as of the date hereof, and I express
no opinion with respect to any events occurring after the date hereof. I have no
obligation to advise you of any changes of law or fact that may hereafter occur,
even though the legal analysis or legal conclusion in the opinion may be
affected.
I am an attorney licensed to practice law in the State of Florida. This
opinion is limited to matters governed by the federal laws of the United States
and the General Corporation Law of the State of Delaware, and I do not express
an opinion as to the laws, rules, regulations, codes, or other promulgation of
any other jurisdiction (including state, local, or regional bodies). With
respect to the opinions concerning matters governed by the General Corporation
Law of the State of Delaware, you are aware that I am not admitted to the Bar of
the State of Delaware and the such opinions are based upon my general
familiarity with the General Corporation Law of the State of Delaware.
The opinions expressed herein are limited to the matters expressly set
forth in this letter, and no other opinions should be inferred beyond the
matters expressly stated.
This opinion has been rendered to you for your exclusive use solely in
connection with the transactions contemplated by the Asset Purchase Agreement
and may not be used, circulated, quoted, relied upon or otherwise referred to
for any other purpose without my prior written consent.
Very truly yours,
Howard E. Rothman, Esq.
Senior Counsel
3
<PAGE>
EXHIBIT G
July 2, 1999
Align-Rite International, Inc.
2428 Ontario Street
Burbank, CA 91504
Re: Asset Purchase Agreement-dated as of July 2, 1999, by and between Harris
Corporation, on the one hand and Align-Rite International, Inc., on the
other hand (the "Asset Purchase Agreement")
Gentlemen:
This certificate is delivered to you by the undersigned in compliance with
Section 8.2(a) of the Asset Purchase Agreement and as an inducement to and part
of the consideration of the sale on this date by Harris Corporation ("Harris")
of the assets identified in the Asset Purchase Agreement constituting the
Photomask Business of the Semiconductor Business Unit of Harris to Align-Rite
International, Inc. ("Align-Rite") and its subsidiaries. Terms used herein with
initial capital letters shall, unless otherwise defined herein, have the
respective meanings assigned thereto in the Asset Purchase Agreement.
The undersigned, a representative of Harris, hereby certifies that:
1. The representations and warranties of Harris contained in the Asset
Purchase Agreement or otherwise made on behalf of Harris (in writing) in
connection with the transaction contemplated by the Asset Purchase
Agreement are true and correct in all material respects on and as of the
date of this Certificate with the same effect as though such
representations had been made on and as of the date of this Certificate.
2. Harris has duly performed and complied in all material respects
with its covenants and obligations as required by the Asset Purchase
Agreement to be performed on or prior to the date hereof.
IN WITNESS WHEREOF, I have hereunto set my hand on behalf of Harris
Corporation this 2nd day of July, 1999.
HARRIS CORPORATION
By
----------------------------------------
Name: W.R. Morcom
Title: Vice President-General Manager
Operations
4
EXHIBIT 12.01
Intersil Holding Corporation
Computation of Ratio of Earnings to Fixed Charges
(In millions, except ratio amounts)
<TABLE>
<CAPTION>
Predecessor Predecessor Successor
---------------------------------------- -------------------------------- ---------------
Year Ended
---------------------------------------- 13 Weeks Ended 6 Weeks Ended 7 Weeks Ended
1995 1996 1997 1998 1999 October 2, 1998 August 13, 1999 October 1, 1999
----- ----- ----- ----- ----- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Income (loss) before income taxes $21.3 $42.5 $13.1 $22.8 $21.4 $ 3.5 $ (3.1) $(19.9)
Add (deduct):
Fixed charges less preferred
stock dividends 2.5 2.1 2.2 2.1 2.2 0.5 0.2 8.9
----- ----- ----- ----- ----- ----- ------ ------
Adjusted Earnings $23.8 $44.6 $15.3 $24.9 $23.6 $ 4.0 $ (2.9) $(11.0)
===== ===== ===== ===== ===== ===== ====== ======
Fixed Charges:
Interest $ -- $ -- $ -- $ -- $ -- $ -- $ -- $ 8.5
Amortization of debt expense
and debt discounts -- -- -- -- -- -- -- 0.2
Portion of rents representative
of interest factor 2.5 2.1 2.2 2.1 2.1 0.5 0.2 0.2
----- ----- ----- ----- ----- ----- ------ ------
Total fixed charges $ 2.5 $ 2.1 $ 2.2 $ 2.1 $ 2.2 $ 0.5 $ 0.2 $ 8.9
===== ===== ===== ===== ===== ===== ====== ======
Ratio of Earnings to fixed charges 9.5x 21.2x 7.0x 11.9x 10.7x 8.0x -- --
===== ===== ===== ===== ===== ===== ====== ======
</TABLE>
(1) Earnings for the six weeks ended August 13, 1999 and for the seven weeks
ended October 1, 1999 were not able to cover fixed charges by $3.1
million and $19.9 million, respectively.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE COMPANY'S FINANCIAL STATEMENTS FOR THE PERIODS ENDED
JULY 2, 1999 AND OCTOBER 1, 1999, AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C> <C>
<PERIOD-TYPE> 12-MOS 3-MOS
<FISCAL-YEAR-END> JUL-02-1999 OCT-01-1999
<PERIOD-END> JUL-02-1999 JUN-30-2000
<CASH> 0 33,820
<SECURITIES> 0 0
<RECEIVABLES> 100,674 84,777
<ALLOWANCES> 582 780
<INVENTORY> 153,822 156,384
<CURRENT-ASSETS> 263,224 282,867
<PP&E> 410,530 342,198
<DEPRECIATION> 582,616 8,740
<TOTAL-ASSETS> 761,179 736,720
<CURRENT-LIABILITIES> 91,071 114,247
<BONDS> 4,207 543,349
0 86,369
0 0
<COMMON> 0 1,000
<OTHER-SE> 658,879 (16,444)
<TOTAL-LIABILITY-AND-EQUITY> 761,179 736,720
<SALES> 532,718 133,884
<TOTAL-REVENUES> 532,718 133,884
<CGS> 349,776 86,235
<TOTAL-COSTS> 349,776 86,235
<OTHER-EXPENSES> 162,794 62,116
<LOSS-PROVISION> 487 198
<INTEREST-EXPENSE> (1,231) 8,554
<INCOME-PRETAX> 21,379 (23,021)
<INCOME-TAX> (6,027) 120
<INCOME-CONTINUING> 27,406 (23,141)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 27,406 (23,141)
<EPS-BASIC> 0 (.22)
<EPS-DILUTED> 0 (.22)
</TABLE>
EXHIBIT 2.01
AMENDED AND RESTATED
MASTER TRANSACTION AGREEMENT
among
INTERSIL HOLDING CORPORATION,
INTERSIL CORPORATION
and
HARRIS CORPORATION
June 2, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
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<S> <C> <C> <C>
ARTICLE 1 DEFINITIONS AND RULES OF CONSTRUCTION .................................. 1
1.1 Definitions ................................................... 1
ARTICLE 2 SALE AND PURCHASE OF THE ASSETS ........................................ 1
2.1 Transferred Assets ............................................ 1
2.2 Excluded Assets ............................................... 4
2.3 Assumption of Liabilities...................................... 6
2.4 Excluded Liabilities........................................... 8
2.5 Election to Transfer Assets Using Subsidiary................... 10
2.6 Election to Transfer United Kingdom Assets..................... 10
ARTICLE 3 THE CLOSING ............................................................ 10
3.1 Place and Date ................................................ 10
3.2 Purchase Price ................................................ 11
3.3 Allocation of Purchase Price; Section 338(h)(10) Elections..... 11
3.4 Deliveries .................................................... 12
3.5 Closing Balance Sheet.......................................... 12
3.6 Post-Closing Purchase Price Adjustment......................... 13
3.7 Limitations.................................................... 14
3.8 Consent of Third Parties; Further Assurances .................. 14
3.9 Shared Contracts............................................... 15
3.10 Apportionment at Closing Date; Customer Billing................ 15
3.11 Warranty Claims................................................ 16
3.12 Purchase Agreement for Harris Malaysia......................... 16
3.13 Deferred Closing............................................... 16
3.14 Environmental Consents......................................... 16
3.15 Pennsylvania Indebtedness...................................... 16
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF HARRIS ............................... 17
4.1 Organization, Standing, Etc. of Business Entities.............. 17
4.2 Corporate Authorization; Enforceability ....................... 17
4.3 Charters and Bylaws; Capitalization of Transferred
Subsidiaries .................................................. 18
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
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<S> <C> <C> <C>
4.4 No Violations ................................................. 18
4.5 Governmental Authorizations and Consents ...................... 18
4.6 Compliance with Other Instruments and Laws .................... 18
4.7 Baseline Financial Statements ................................. 19
4.8 Absence of Certain Changes or Events .......................... 19
4.9 Title to Transferred Assets ................................... 21
4.10 Year 2000 Readiness ........................................... 24
4.11 Assumed Contract Obligations .................................. 24
4.12 Litigation .................................................... 26
4.13 Licenses and Permits .......................................... 26
4.14 Environmental Compliance ...................................... 26
4.15 Absence of Certain Business Practices ......................... 27
4.16 Personnel Matters ............................................. 27
4.17 Labor Matters ................................................. 28
4.18 Seller Benefit Plans........................................... 28
4.18.1 United States....................................... 28
4.18.2 Non-U.S. Employee Benefit Plans..................... 30
4.19 Insurance ..................................................... 31
4.20 Powers of Attorney............................................. 31
4.21 Brokers ....................................................... 31
4.22 Taxes.......................................................... 32
4.23 Transferred Assets - General................................... 33
4.24 Personal Property.............................................. 33
4.25 Warranty Claims................................................ 33
4.26 Inventory...................................................... 34
4.27 Malaysian Activities........................................... 34
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF BUYER AND PARENT ..................... 34
5.1 Organization and Standing of Buyer and Parent; Charter
and Bylaws .................................................... 34
5.2 Authorization ................................................. 35
5.3 Enforceability ................................................ 35
5.4 Compliance with Other Instruments and Laws .................... 35
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
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<S> <C> <C> <C>
5.5 Governmental Authorizations and Consents ...................... 35
5.6 Litigation .................................................... 36
5.7 Access......................................................... 36
5.8 Financial Capacity ............................................ 36
5.9 Brokers........................................................ 36
5.10 Hart-Scott-Rodino Antitrust Improvements Act of 1976........... 36
ARTICLE 6 COVENANTS RELATING TO PERSONNEL ARRANGEMENTS............................ 36
6.1 Employees; Collective Bargaining Agreements;
Transferee Employees........................................... 36
6.2 Severance Obligations.......................................... 37
6.3 Plans, Benefits and Policies................................... 38
6.4 Foreign Employees.............................................. 39
6.5 Commissions and Bonuses........................................ 40
ARTICLE 7 COVENANTS OF SELLERS ................................................... 40
7.1 Conduct of Business ........................................... 40
7.2 Non-Competition................................................ 42
7.3 Access......................................................... 43
7.4 Environmental Transfer Statutes ............................... 44
7.5 Title Insurance................................................ 44
7.6 Surveys........................................................ 45
7.7 Estoppel Certificates.......................................... 45
7.8 Zoning Letters................................................. 45
7.9 Foreign Real Estate -- Due Diligence and Assurances............ 45
7.10 No Shop........................................................ 46
ARTICLE 8 COVENANTS OF BUYER AND PARENT .......................................... 46
8.1 Investigation ................................................. 46
8.2 Assistance with Respect to Excluded Assets .................... 46
8.3 Names and Logo ................................................ 46
8.4 Space Used by Harris ESS....................................... 46
8.5 Reimbursement and Indemnity for Certain Costs and
Liabilities.................................................... 47
ARTICLE 9 COVENANTS OF ALL PARTIES ............................................... 47
9.1 Commercially Reasonable Efforts ............................... 47
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
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<S> <C> <C> <C>
9.2 HSR Filing; Other Filings ..................................... 47
9.3 Public Announcements .......................................... 48
9.4 Consents; Cooperation ......................................... 48
9.5 Communications with Customers and Suppliers ................... 48
9.6 Liability for Transfer Taxes................................... 49
9.7 Tax Matters.................................................... 49
9.7.1 Tax Returns........................................... 49
9.7.2 Indemnity............................................. 50
9.7.3 Tax Liability......................................... 51
9.7.4 Tax Contests.......................................... 51
9.7.5 Cooperation........................................... 52
9.7.6 Transfer Pricing Agreements and Related
Documentation......................................... 53
9.8 Tax Elections.................................................. 53
9.9 Confidentiality................................................ 53
9.10 Books and Records.............................................. 54
9.11 Ancillary Agreements........................................... 54
9.12 Obligations Concerning China Subsidiaries...................... 54
9.13 Latham Lease................................................... 55
9.14 Ownership of Intersil Name..................................... 56
ARTICLE 10 CONDITIONS TO OBLIGATIONS OF BUYER AND PARENT TO CLOSE ................. 56
10.1 Accuracy of Representations and Warranties .................... 56
10.2 Performance ................................................... 56
10.3 No Conflict ................................................... 57
10.4 Material Adverse Change........................................ 57
10.5 Certificate ................................................... 57
10.6 HSR Act ....................................................... 57
10.7 Consents ...................................................... 57
10.8 Transfer Documents ............................................ 57
10.9 Transaction Documents.......................................... 58
10.10 Resignations................................................... 58
10.11 Corporate Records.............................................. 58
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
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<S> <C> <C> <C>
10.12 Further Instruments............................................ 58
10.13 Sellers' Counsel Opinion....................................... 58
10.14 Financing...................................................... 58
10.15 Environmental Transfer Statutes................................ 58
10.16 Possession..................................................... 58
10.17 Working Capital Amount......................................... 58
10.18 Real Estate Matters............................................ 58
10.19 Real Property Agreements....................................... 58
10.20 Harris Advanced Technology (Malaysia) Sdn Bhd.................. 58
ARTICLE 11 CONDITIONS TO OBLIGATIONS OF HARRIS TO CLOSE ........................... 59
11.1 Accuracy of Representations and Warranties .................... 59
11.2 Performance ................................................... 59
11.3 No Conflict ................................................... 59
11.4 Certificate ................................................... 60
11.5 HSR Act ....................................................... 60
11.6 Consents ...................................................... 60
11.7 Assumption Agreement .......................................... 60
11.8 Transaction Documents.......................................... 60
11.9 Buyer's Counsel Opinion........................................ 60
11.10 Further Instruments............................................ 60
11.11 Financing...................................................... 60
11.12 Working Capital Amount......................................... 60
11.13 Royalty Agreement.............................................. 60
ARTICLE 12 TERMINATION ............................................................ 61
12.1 Right to Terminate Agreement .................................. 61
12.2 Effect of Termination ......................................... 61
ARTICLE 13 CERTAIN REMEDIES AND LIMITATIONS ....................................... 62
13.1 Expiration of Representations, Warranties and Covenants ....... 62
13.2 Indemnity by Harris ........................................... 62
13.3 Indemnity by Buyer and Parent.................................. 63
13.4 General Indemnification Procedures ............................ 63
13.5 Environmental Procedures....................................... 65
13.6 Costs Related to Direct Claims................................. 67
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
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<S> <C> <C> <C>
13.7 Exclusivity ................................................... 67
13.8 No Set-Off..................................................... 67
13.9 Retention of Records .......................................... 68
13.10 Notice as to Representations .................................. 68
13.11 Separate Indemnification for Taxes ............................ 68
13.12 Indemnification Payments as Purchase Price Adjustment.......... 68
ARTICLE 14 MISCELLANEOUS .......................................................... 69
14.1 Material Adverse Effect ....................................... 69
14.2 Disclaimer of Projections, Etc. ............................... 69
14.3 Expenses ...................................................... 69
14.4 Compliance with Bulk Sales Laws................................ 69
14.5 Inconsistencies................................................ 69
ARTICLE 15 AGREEMENT CONVENTIONS................................................... 70
</TABLE>
<PAGE>
SCHEDULES
Schedule Subject Matter
- - -------- --------------
2.1(a) Owned Fixed Assets
2.1(d) Equity Interests of Transferred Subsidiaries
2.1(t) Other Transferred Assets
2.2(t) Other Excluded Assets
2.3 Mountaintop, Pennsylvania Facility Debt
2.4 Other Excluded Liabilities
4.3 Capitalization of Transferred Subsidiaries
4.4 Seller Violations
4.5 Government Authorizations and Consents Required by Sellers
4.6 Compliance with Other Instruments and Laws
4.7 Financial Statements
4.8 Certain Changes and Events
4.9(a) Title to Transferred Assets Other than Real Estate
4.9(b) Title to and Duality of Real Estate
4.11 Contractual Obligations
4.12 Litigation
4.13 Licenses and Permits Exceptions
4.14 Environmental Compliance Exceptions
4.16(b) Disputes between Employees and Business Entities
4.16(c) Employee Policies and Manuals
4.17 Labor Orders and Disputes
4.18 Seller Benefit Plans
4.19 Insurance Policies
4.20 Powers of Attorney
4.22 Tax Matters
4.23 Exceptions to Transferred Assets
4.24 Personal Property Operation Exceptions
<PAGE>
Schedule Subject Matter
- - -------- --------------
4.25 Warranty Claims
5.5 Government Authorizations and Consents Required by Buyer
7.1 Covenants of Sellers
10.7 Consents That Are Conditions to Buyer's Obligations
11.6 Consents That Are Conditions to Sellers' Obligations
<PAGE>
EXHIBITS
A. Definitions and Rules of Construction
B. Agreement Conventions
C. Intellectual Property Agreement
D. Patent Assignment and Services Agreement
E. License Assignment Agreement
F. Harris Trademark License Agreement
G. Secondary Trademark Assignment and License Agreement
H. Transition Services Agreement
I. Subordinated Promissory Note
J. Indenture
K. Securities Purchase and Holders Agreement
L. Registration Rights Agreement
<PAGE>
AMENDED AND RESTATED MASTER TRANSACTION AGREEMENT
THIS AMENDED AND RESTATED MASTER TRANSACTION AGREEMENT (this "Master
Agreement") is entered into as of June 2, 1999, by and among intersil
CORPORATION, a Delaware corporation ("Buyer"), intersil HOLDING CORPORATION, a
Delaware corporation ("Parent"), and HARRIS CORPORATION, a Delaware corporation
("Harris").
RECITALS
WHEREAS, Harris, through the Harris Semiconductor Sector (as defined in
Exhibit A), including the Transferred Subsidiaries, is engaged in the business
(the "Business", as defined in Exhibit A) of defining, designing, developing,
manufacturing and selling integrated circuits and other semiconductors and
related products and certain other activities related thereto;
WHEREAS, Parent, the direct parent of Buyer, owns directly all of the stock
of Buyer and desires to assist Buyer in acquiring the assets and liabilities to
be conveyed hereunder;
WHEREAS, Buyer and Parent wish to purchase and acquire from Harris, and
Harris wishes to sell, assign and transfer to Buyer and Parent, certain assets
of the Business, and Buyer and Parent have agreed to assume certain specified
liabilities of the Business, all for the purchase price, and upon the terms and
subject to the conditions, herein set forth; and
WHEREAS, following the closing of the transactions contemplated by this
Master Agreement, Buyer and Harris will have certain ongoing business
relationships as set forth in the Ancillary Agreements (as defined in Exhibit
A).
NOW, THEREFORE, in consideration of the premises and of the
representations, warranties and covenants hereinafter set forth, and intending
to be legally bound hereby, the parties agree as follows:
ARTICLE 1
DEFINITIONS AND RULES OF CONSTRUCTION
1.1 Definitions. The definitions and rules of construction set forth in
Exhibit A are incorporated herein by reference.
ARTICLE 2
SALE AND PURCHASE OF THE ASSETS
2.1 Transferred Assets. Subject to and upon the terms and conditions set
forth in this Master Agreement, at the Closing, Harris shall, or shall cause the
other Sellers to, sell, assign, transfer, convey and deliver to Buyer (or, as to
certain assets selected by Buyer, at
1
<PAGE>
Buyer's written request to Harris five (5) Business Days prior to the Closing
Date, to Parent), and Buyer and Parent shall purchase and acquire from each
Seller, all right, title and interest of each Seller in and to all of the
properties, assets, contracts and rights constituting or primarily used or held
primarily for use in the Business (other than the Excluded Assets), wherever
such assets, properties and rights are located and whether such assets are real,
personal or mixed, tangible or intangible, matured or unmatured, known or
unknown, contingent or fixed, and whether or not any of such assets have any
value for accounting purposes or are carried or reflected on or specifically
referred to in Sellers' books or financial statements (collectively, the
"Transferred Assets"), including, without limitation, the assets listed below
(as listed below, the Transferred Assets include properties, contracts, rights
and assets owned by the Transferred Subsidiaries and all such properties,
contracts, rights and assets shall be transferred indirectly by transferring the
capital stock of the Transferred Subsidiaries):
(a) all of the Fixed Assets described on Schedule 2.1(a);
(b) all of the Owned Real Estate;
(c) the assets and rights conveyed pursuant to the terms of the IP
Transfer Agreements;
(d) all ownership interests in the Transferred Subsidiaries listed on
Schedule 2.1(d);
(e) all of the Assumed Contract Obligations, including those under the
Material Contracts listed on Schedule 4.11;
(f) all inventory, wherever located (including inventory in transit),
including, without limitation, all the raw materials, work in process,
recycled materials, finished products, supplies, and spare parts located at
the Manufacturing Facilities or elsewhere and primarily used or held
primarily for use in the conduct of the Business, including items of the
type and nature of the materials identified as inventory in the Baseline
Financial Statements;
(g) all of the furniture and office equipment, including desks,
tables, chairs, file cabinets and other storage devices, communications
equipment, computers and office supplies which are owned or leased by a
Seller and located at the Transferred Facilities or elsewhere and that are
primarily used or held primarily for use in the conduct of the Business, or
that are in transit to or temporarily removed from a location specified
above and which would otherwise be included among the items identified
above;
(h) all of the prepaid expenses and security deposits reflected on the
Audited Closing Balance Sheet;
(i) all of the Books and Records;
2
<PAGE>
(j) to the extent their transfer is permitted by Applicable Law, all
Governmental Approvals primarily used or held primarily for use in the
Transferred Facilities or the Business, including all applications
therefor;
(k) to the extent transferable, all rights under express or implied
warranties and licenses from Sellers' suppliers (including manufacturers
and distributors) with respect to the Transferred Assets and any related
claims, credits, rights of recovery and set-off with respect to such items;
(l) all rights to causes of action, lawsuits, claims and demands of
any nature available to the Business Entities that relate primarily to the
Transferred Assets (it being understood that Buyer's rights to causes of
action, lawsuits, claims and demands in respect of Patents and Intangible
Property Rights are governed by the IP Transfer Agreements) or the Assumed
Liabilities;
(m) to the extent transferable, all guarantees, warranties,
indemnities and similar rights in favor of Sellers in connection with the
Transferred Assets and any related claims, credits, rights of recovery and
set-off with respect thereto;
(n) the Policies;
(o) all of the Leased Real Estate, except for the Retained Leased Real
Estate;
(p) all of the motor vehicles, whether or not licensed or registered
to operate on public highways, including automobiles, trucks,
self-propelled carts, and other motorized lifting, material handling or
transporting equipment and all spare parts, fuel and other supplies, tools
and other items used in the operation or maintenance thereof which are
owned or leased by a Seller and located at the Transferred Facilities or
elsewhere and which are primarily used or held for use primarily in the
conduct of the Business, or which are in transit to or temporarily removed
from a location specified above and which would otherwise be included among
the items described above;
(q) all rights of the Business Entities to any insurance proceeds
relating to the damage, destruction or impairment of assets or other rights
described in this Section 2.1 which would have been Transferred Assets but
for such damage, destruction or impairment prior to the Closing;
(r) all assets (other than Excluded Assets) reflected in the April 2,
1999 balance sheet which is included in the Baseline Financial Statements,
together with all replacements thereof, all expansions, enhancements and
modifications thereto and all assets (other than Excluded Assets) of like
character that have been or are acquired by the Business Entities
subsequent to such balance sheet date and on or prior to the Closing Date,
primarily for use in the Business, except to the extent such assets have
been disposed of in the ordinary course of business on or after such date;
3
<PAGE>
(s) foreign currency hedges related primarily to the operations of the
Business;
(t) all the items, if any, listed on Schedule 2.1(t);
(u) unrestricted cash on deposit in the United States, as of the close
of business on the Closing Date, in the amount of $2,000,000;
(v) [RESERVED]; and
(w) cash (to be transferred to Buyer at the time other assets of
Harris Semiconductor GmbH (Germany) are transferred to Buyer) in Germany in
an amount equivalent to the amount accrued as of the Closing Date, as
reflected in the Audited Closing Balance Sheet, for all German pension
obligations including that disclosed on Schedule 4.18.2 and unrestricted
cash in the United States in an amount equivalent to the amount accrued as
of the Closing Date, as reflected in the Audited Closing Balance Sheet, for
obligations with respect to Transferred Employees, whether based inside or
outside the United States, under Harris' supplemental employee retirement
plan.
In addition to the foregoing, Sellers shall sublease to Buyer all or such
portions of the Retained Leased Real Estate as Sellers and Buyer may mutually
agree in writing upon prior to the Closing (all of such subleased real estate,
the "Subleased Real Estate") under and pursuant to subleases in form and
substance mutually acceptable to Sellers and Buyer (collectively, the
"Subleases") and, except where specifically excluded, as used herein the term
"Transferred Assets" includes the Subleased Real Estate.
The assets to be acquired by Parent shall consist of the Intellectual
Property as may be specified in accordance with Section 2.1, and if the fair
market value of the Intellectual Property shall be less than ninety million
dollars ($90,000,000), with such difference in value being called the Parent
Additional Assets Value, the Parent will acquire additional Transferred Assets
having an aggregate fair market value equal to the Parent Additional Assets
Value. The assets acquired by Parent (other than certain Intellectual Property
determined by Parent) shall be transferred by Parent to Buyer as a capital
contribution immediately following the Closing, and Parent hereby directs that
Harris transfer at Closing such assets directly to Buyer on its behalf. All
other Transferred Assets shall be acquired directly by Buyer from Harris.
Buyer shall be permitted to have the acquisition of any Transferred
Subsidiary not formed or incorporated in a state of the United States to be made
by a wholly-owned subsidiary of Buyer incorporated under the laws of any
jurisdiction, including, but not limited to, the laws of Malaysia.
2.2 Excluded Assets. Notwithstanding anything contained in Section 2.1
hereof to the contrary, the Transferred Assets do not include any of the
following (herein referred to collectively as the "Excluded Assets"):
(a) except to the extent set forth in the IP Transfer Agreements, the
names and marks "Harris" and "Harris Corporation" and any name or mark
derived from or
4
<PAGE>
including the foregoing, including all corporate symbols or logos
incorporating "Harris" or "Harris Corporation";
(b) the rights in Intellectual Property, Intangible Property Rights,
License Agreements and Software Licenses not transferred, assigned or
licensed to Buyer in accordance with the terms of the IP Transfer
Agreements;
(c) all cash, and cash equivalents, and similar type investments, such
as certificates of deposit, treasury bills and other marketable securities,
as of the close of business on the Closing Date including any such items
remaining with any of the Transferred Subsidiaries or with any of the other
Transferred Assets as of the Closing Date, but excluding the cash specified
in Sections 2.1 (u) and (w);
(d) intercompany receivables and payables arising from the conduct of
the Business prior to the Closing Date (which receivables and payables
shall be settled as of the Closing Date as provided in Section 7.1(c));
(e) all books and records relating to or used in the business of
Sellers which are not primarily used or held primarily for use in the
conduct of Business;
(f) except for the Policies, all insurance policies maintained by the
Business Entities and all rights of action, lawsuits, claims and demands,
rights of recovery and set-off, and proceeds, under or with respect to such
insurance policies;
(g) all rights to causes of action, lawsuits, claims and demands
available to or being pursued by Sellers as of the Closing Date to the
extent they do not relate to the Business or they relate to Excluded Assets
or Excluded Liabilities;
(h) all claims against third parties for Losses suffered in connection
with Excluded Assets and Excluded Liabilities;
(i) all right, title and interest of the Business Entities in and to
and any claims for any refund, credit, rebate or abatement with respect to
Taxes of the Business for any period or portion thereof prior to the
Closing Date;
(j) any of Business Entities' right, title, estate or interest in any
of the Retained Leased Real Estate or the Retained Leases, except for
Buyer's right, title, estate and interest in the Subleased Real Estate
under the Subleases;
(k) all assets relating to Seller Benefit Plans, except as
specifically provided in Article 6;
(l) to the extent owned or held, directly or indirectly, by the
Business Entities, all equity interests in, and debt if any of, Guangzhou
Harris Telecommunications Company Ltd. and Anshan Harris Broadcast
Equipment Company Ltd.;
5
<PAGE>
(m) the assets that are identified on Exhibit D to the Transition
Services Agreement;
(n) except to the extent provided under the Ancillary Agreements
following the Closing Date, the Transition Services Software and services
available to the Business Entities that are not primarily used or held
primarily for use in the Business as conducted prior to the Closing Date;
(o) assets and rights primarily used or held primarily for use in the
Sellers' Suppression Business conducted primarily from Dundalk, Ireland;
(p) assets and rights (including the right to occupy specified
premises in the Manufacturing Facility in Palm Bay, Florida under and
pursuant to a lease or other agreement or arrangement mutually reasonably
acceptable in form and substance to Buyer and Sellers) primarily used or
held primarily for use in the Sellers' Photomask Business conducted
primarily from Palm Bay, Florida;
(q) all rights to any royalty payments made pursuant to the Retained
License Agreements;
(r) the fabrication inventory in process with respect to Suppression
Products of the Sellers at the Findlay, Ohio facilities of the Business;
(s) the value of assembly and testing services in process with respect
to Suppression Products of the Sellers on consignment for assembly and
testing at the Kuala Lumpur facilities of the Business;
(t) the assets listed on Schedule 2.2(t);
(u) Harris corporate assets not primarily used in the Business but
which have been made available to the Business, and which are not either
(i) reflected on the Baseline Financial Statements, or (ii) necessary to
the day-to-day operations of the Business, such as, but not limited to, the
Harris Customer Briefing Center; and
(v) all leases and subleases for property located in Milpitas,
California.
2.3 Assumption of Liabilities. Subject to the terms and conditions set
forth herein, at the Closing, Buyer shall assume and agree to pay, honor,
perform and discharge when due all of the Liabilities and obligations relating
to the Transferred Assets (including the Transferred Subsidiaries) and the
Business (other than the Excluded Liabilities), including, without limitation,
the following:
(a) all Liabilities and obligations of the Business Entities arising
and to be performed from and after the Closing Date under or relating to
the Assumed Contract Obligations;
6
<PAGE>
(b) all Liabilities (other than Tax Liabilities and Retirement Plan
Accruals) and obligations of the Business Entities relating to or arising
out of the operation of the Business (i) as reflected in the Baseline
Financial Statements, (ii) as reflected in an identified reserve reflected
in the Baseline Financial Statements, or (iii) that arise in the ordinary
course of business between the date of the Baseline Financial Statements
and the Closing Date;
(c) all Liabilities and obligations relating to or arising out of the
conduct of the Business following the Closing Date;
(d) all warranty obligations of the Business Entities relating to (i)
products sold by the Business, whether before or after the Closing Date,
and (ii) the Assumed Contract Obligations;
(e) indebtedness related to the Transferred Facilities in Mountaintop,
Pennsylvania listed on Schedule 2.3 in the original principal amount of
$5,000,000;
(f) all Liabilities with respect to License Agreements assigned under
the terms of the License Assignment Agreement;
(g) all Liabilities related to foreign currency hedges included in the
Transferred Assets;
(h) all Tax liabilities for foreign Taxes of Sellers that are foreign
entities of the type reflected in the Baseline Financial Statements and
also reflected on the Audited Closing Balance Sheet up to a maximum
aggregate liability of $3,600,000 (the "Assumed Pre-Closing Taxes");
(i) Liabilities for post-Closing performance of (excluding Liabilities
in the nature of indemnities for breaches of representations, warranties or
covenants) agreements entered into with the consent of Buyer, such consent
not to be unreasonably withheld, conditioned or delayed, in connection with
the disposition of the Sellers' Suppression Business and the Sellers'
Photomask Business;
(j) to the extent provided in Article 6, all Liabilities and
obligations of the Business Entities with respect to (i) severance payments
for Employees of the Business and (ii) accrued vacation of Employees of the
Business as reflected in the Final Closing Balance Sheet;
(k) reimbursement and similar obligations related to bonds or letters
of credit, if any, delivered in connection with the Transferred Facilities
or the conduct of the Business that will remain in effect following the
Closing Date in an aggregate amount not to exceed $2,000,000 (the
liabilities and obligations described in clauses (a) through (k) are
collectively referred to as the "Assumed Liabilities"); and
(l) all Liabilities with respect to European Severance Accruals.
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2.4 Excluded Liabilities. Buyer and Parent shall not assume or in any way
be responsible for, and the Sellers shall remain responsible for and shall pay,
the following debts, claims, commitments, liabilities and obligations of Sellers
and the Business (the "Excluded Liabilities"):
(a) (i) all Tax liabilities (including those of the Transferred
Subsidiaries and those arising from the transactions contemplated by
Sections 7.1(c), 3.12, and 10.20), including penalties and interest, in
respect of taxable years ending on or prior to the Closing Date or portions
thereof ending on or prior to the Closing Date, including Tax liabilities
associated with the consummation of the transactions contemplated by this
Master Agreement (including any liabilities associated with a Section
338(h)(10) Election, as defined in Section 3.3), but excluding the Assumed
Pre-Closing Taxes, Parent's and Buyer's share of Transfer Taxes (as defined
in Section 9.6), Taxes incurred as a result of transfers made pursuant to
Section 2.5 (other than Sellers' share of Transfer Taxes with respect
thereto, which shall be Excluded Liabilities), and Taxes incurred as a
result of transfers among Parent, Buyer and their Affiliates, and (ii) Tax
liabilities arising pursuant to Treasury Regulation 1.1502-6 or any similar
provision of foreign, state or local law;
(b) except as provided in Sections 2.3(e) and 2.3(k), indebtedness for
borrowed money or negative cash balances relating to the conduct of the
Business for all periods prior to the Closing Date including all debt
secured by mortgages or deeds of trust on the Owned Real Estate or on
Sellers' leasehold estates in the Leased Real Estate;
(c) Liabilities to the extent related to the Excluded Assets;
(d) intercompany payables and receivables arising from the conduct of
the Business prior to the Closing Date;
(e) the Retirement Plan Accruals and obligations under, or with
respect to, any Seller Benefit Plan or collective bargaining agreement,
except as specifically provided in Article 6, or except as accrued on the
Audited Closing Balance Sheet with respect to the period from July 3, 1999,
to the Closing Date as regards profit sharing contributions to be made to
the Harris Corporation Union Retirement Plan or the Harris Corporation
Retirement Plan;
(f) Liabilities arising out of any Business Entity's failure or
alleged failure to comply, prior to the Closing Date, with the rules and
regulations of any Governmental Authority;
(g) the Liabilities, if any, listed on Schedule 2.4;
(h) Environmental Liabilities to the extent not reflected in the
Baseline Financial Statements;
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(i) Liabilities of any Business Entity or any of its Affiliates
(including, without limitation, any Environmental Liability) incurred by
any Business Entity or any of its Affiliates in connection with the conduct
of their businesses other than the Business;
(j) Liabilities of any Business Entity or any of its Affiliates (other
than obligations of Buyer or Parent under this Master Agreement, the
Ancillary Agreements and the Shareholders Agreement) arising under this
Master Agreement, the Ancillary Agreements or the Shareholders Agreement;
(k) Liabilities of any Business Entity or any of its Affiliates for
indemnification of, or advancement of expenses or payment of insurance
proceeds to, any present or former director or officer of (or other person
serving in a fiduciary capacity at the request of) any Business Entity or
any of its Affiliates based upon an actual or alleged breach of fiduciary
duty of such person prior to the Closing;
(l) Liabilities arising out of or relating to any business or product
line formerly owned or operated by any Business Entity or any predecessor
thereof but not currently so owned or operated, except for those referred
to in Section 2.3(i);
(m) Liabilities arising out of, or related to, any indemnification or
other provision under any contract or other agreement pursuant to which any
sale or disposition was made of any business or product line formerly owned
or operated by any Business Entity or any predecessor thereof but not
currently so owned or operated, except for those referred to in Section
2.3(i);
(n) Liabilities of any Seller or any of its Affiliates arising out of
matters occurring, or obligations incurred, after the Closing;
(o) Liabilities of any Business Entity for any professional, financial
advisory or consulting fees and expenses incident to or arising out of the
negotiation, preparation, approval or authorization of the Master
Agreement, the Ancillary Agreements and the transactions contemplated
hereby or thereby, or any other proposed transaction for the direct or
indirect sale of the Business or any portion thereof, including without
limitation, the fees, expenses and disbursements of Sellers' counsel and
accountants (including accountants fees, expenses and disbursements in
connection with the preparation of the Baseline Financial Statements);
(p) Liabilities of any Business Entity or any of its Affiliates
arising out of any Shared Contract;
(q) Liabilities of any Business Entity or any of its Affiliates
arising during or related to periods prior to the Closing Date to the
extent the amount of such liability or obligation is covered by a policy of
insurance or other indemnity agreement maintained by or for the benefit of
any Business Entity or any of its Affiliates, unless the rights under such
policy of insurance or indemnity agreement have been assigned to Buyer;
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(r) Liabilities to which Buyer, any Transferred Assets or the Business
becomes subject that would not otherwise constitute an Assumed Liability
arising as a result of failure to comply with bulk sales laws or any
similar law;
(s) Taxes, expenses and any other Liabilities, if any, arising from
the transfers and transactions contemplated by Sections 7.1(c) and 9.12,
subject in the case of Section 9.12 to the use, in accordance with such
section, of proceeds, if any, from the disposition of the facility owned by
Harris Suzhou; and
(t) all Liabilities arising out of, resulting from or relating to
claims, whether founded upon negligence, strict liability in tort or other
similar legal theory (but not breach of warranty or infringement or breach
of Patents or Intangible Property Rights), seeking compensation or recovery
for or relating to injury to person or damage to property arising out of
the conduct of the Business prior to the Closing Date.
2.5 Election to Transfer Assets Using Subsidiary. Notwithstanding Section
2.1 hereof, Buyer may, at Buyer's election, require Harris, prior to the Closing
Date, and conditioned upon the occurrence of the transactions contemplated by
this Master Agreement, to transfer any or all of the Transferred Assets to a
corporation duly and properly incorporated by Harris in the state of Delaware
(or in another state mutually satisfactory to the parties) at least 5 days
preceding the Closing Date, which corporation shall have only one class of stock
authorized, all the outstanding shares of which shall, at any time, have been
held solely by Harris, and which shall have no right, title or interest in or to
any assets, have assumed or become subject to any liabilities, or conducted any
business or operations (other than as is necessary to incorporate) prior to such
transfer. The stock of such corporation shall be a Transferred Asset, and such
corporation shall be a Transferred Subsidiary. At the election of Buyer, Buyer
and Harris shall make an election under Section 338(h)(10) of the Code (and any
comparable election under any Tax law) with respect to such corporation in
accordance with the procedures set forth in Section 3.3.
2.6 Election to Transfer United Kingdom Assets. Sellers may elect, at their
sole discretion, to transfer the assets of Harris Semiconductor Ltd. (UK) in
lieu of transferring the equity interest in such entity. In the event Sellers so
elect, Buyer shall designate the entity to which such assets shall be
transferred and an appropriate portion of the Purchase Price shall be allocated
to such assets.
ARTICLE 3
THE CLOSING
3.1 Place and Date. The closing of the sale and purchase of the Transferred
Assets (the "Closing") and the assumption of the Assumed Liabilities shall take
place at 10:00 A.M. local time not later than the second Business Day following
the satisfaction or waiver of the conditions referred to in Articles 10 and 11
at the offices of Dechert Price & Rhoads, 30 Rockefeller Plaza, New York, NY, or
such other place upon which the parties may agree. The day on which the Closing
actually occurs is sometimes referred to herein as the "Closing Date."
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3.2 Purchase Price. On the terms and subject to the conditions set forth in
this Master Agreement, upon the Closing, Parent and Buyer shall pay an aggregate
consideration to Harris, or another Seller as directed by Harris, of U.S.
$610,000,000 (as adjusted pursuant to Section 3.6, the "Purchase Price"), in the
following manner:
(a) Parent shall pay to Harris U.S. $90,000,000 by a subordinated
promissory note of Parent substantially in the form attached hereto as Exhibit I
(the "Note"), and, if the value of the property transferred to Parent shall
exceed $90,000,000 (with such excess value being called the "Excess Value"),
then Parent shall pay to Harris U.S. dollars in an amount equal to the Excess
Value by wire transfer of immediately available funds to an account, or
accounts, designated by Harris; and
(b) Buyer shall pay U.S. dollars in an aggregate amount equal to
$520,000,000 less the Excess Value, if any, to Harris and the other Sellers, as
directed by Harris, which amount shall be paid by wire transfer of immediately
available funds to an account or accounts designated by Harris.
3.3 Allocation of Purchase Price; Section 338(h)(10) Elections.
(a) The parties shall allocate the aggregate consideration received by
Sellers with respect to the Transferred Assets other than the Transferred
Subsidiaries for which a Section 338(h)(10) Election (as defined in Section
3.3(b) is made (each, an "Elected Subsidiary"), in accordance with Section 1060
of the Code, as mutually agreed to by the parties pursuant to the procedure
described below. The parties shall allocate the consideration received by
Sellers with respect to each Elected Subsidiary among the assets of such
subsidiary in accordance with Section 338(h)(10) of the Code and the Treasury
Regulations promulgated thereunder, as mutually agreed to by the parties
pursuant to the procedure described below. Subject to the requirements of any
applicable Tax law or election, all such mutually agreed-to allocations shall be
used by each party in preparing any filings required pursuant to Section 1060 or
Section 338(h)(10) of the Code or any similar provisions of state or local law
and all relevant Income Tax Returns. Neither Buyer, Parent nor Sellers will take
any position before any taxing authority or in any judicial proceeding with
respect to Income Taxes or other Taxes that is inconsistent with such mutually
agreed-to allocations without the prior written consent of the other party,
which consent shall not unreasonably be withheld. The parties shall exercise
commercially reasonable efforts to support such mutually agreed-to reported
allocations in any audit proceedings initiated by any taxing authority;
provided, however, that none of Sellers shall have any obligation to incur
unreasonable or extraordinary out-of-pocket expenses.
(b) At the election of Buyer (or, if relevant, Parent), Buyer (or, if
relevant, Parent) and Sellers shall make an election under Section 338(h)(10) of
the Code (and any comparable election under any Tax law) for any or all of the
Transferred Subsidiaries for which such election is permissible (a "Section
338(h)(10) Election"). If any Section 338(h)(10) Election is made, Buyer (or, if
relevant, Parent) and Sellers shall jointly execute IRS Form 8023 and all
attachments required to be filed therewith as well as any other forms required
to be executed pursuant to any Tax law.
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(c) With respect to the Transferred Assets other than the Elected
Subsidiaries, Buyer, Parent and Sellers shall report the consideration allocated
to such assets on IRS Form 8594 and all attachments required to be filed
therewith as well as on any other forms required to be executed pursuant to any
Tax law.
(d) Buyer and Parent, no later than 150 days after the Closing Date,
shall deliver to Harris a statement reflecting (i) with respect to each Elected
Subsidiary, a proposed determination of the "MADSP" (as determined in accordance
with Treasury Regulation Section 1.338(h)(10)-1(f)) for the assets of such
subsidiary and a proposed allocation of such MADSP among such assets and (ii)
with respect to all other Transferred Assets, a proposed allocation of the
consideration received therefor (the "Allocation Statement"). If a Section
338(h)(10) Election is not made for a Transferred Subsidiary, the Allocation
Statement shall provide an allocation of a portion of the consideration to the
stock of such subsidiary. Within 30 days after receipt of the Allocation
Statement, Harris shall deliver to Buyer and Parent a statement of proposed
changes with respect to such Allocation Statement (the "Statement of Changes").
If Harris shall fail to deliver a Statement of Changes within such 30-day
period, Harris shall be deemed to have accepted the Allocation Statement. If
Harris delivers a Statement of Changes, Buyer, Parent and Harris shall attempt
in good faith to accommodate such changes, but if they are unable to do so
within 15 days after Buyer and Parent's receipt of the Statement of Changes,
final determination of the amounts set forth on the Allocation Statement shall
be made by the Independent Accounting Firm whose costs shall be borne 50% by
Buyer and Parent and 50% by Harris.
3.4 Deliveries. At the Closing, (a) Buyer shall deliver to, or as directed
by, Harris the Purchase Price and the agreements, instruments of assumption,
opinions, certificates and other documents required to be delivered by Buyer or
Parent pursuant to Article 11 and (b) Sellers shall deliver to Buyer the
agreements, instruments of transfer, opinions, certificates and other documents
required to be delivered by Sellers pursuant to Article 10 and possession of (i)
all of the Real Estate except the Retained Leased Real Estate and (ii) the
Subleased Real Estate.
3.5 Closing Balance Sheet.
(a) At least five Business Days prior to the Closing, Harris shall
prepare in good faith and deliver to Buyer an estimated unaudited balance sheet
(the "Estimated Closing Balance Sheet") of the Business as of the Closing Date
setting forth the Estimated Working Capital of the Business as of the Closing
Date, together with (i) a statement of the calculations and supporting detail of
Estimated Working Capital and (ii) a certificate signed by Harris to the effect
that the Estimated Working Capital was determined in accordance herewith. Buyer
shall have the right to review any work papers relating to the Estimated Closing
Balance Sheet. The Estimated Closing Balance Sheet shall be prepared in a manner
consistent with the Baseline Financial Statements and the terms of this Master
Agreement and shall reflect Harris's best estimate of the Transferred Assets,
Assumed Contract Obligations and other Assumed Liabilities as of the Closing
Date.
(b) In the event that the amount of Estimated Working Capital of the
Business as reflected on the Estimated Closing Balance Sheet is either less or
more than $189,900,000, then the amount of the cash portion of the Purchase
Price payable under Section 3.2(b) shall be
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reduced or increased, as the case may be, by an amount equal to such difference.
Any adjustment to the Purchase Price made under this Section 3.5, or under
Section 3.6, or otherwise made under this Master Agreement shall first be
applied against the portion of the Purchase Price paid by the Buyer, with any
excess being applied against the portion paid by Parent.
(c) Harris shall cause the cash portion of the Estimated Closing
Balance Sheet to be not less than $2,000,000, not including any cash in the
possession of any of the Transferred Subsidiaries as of the Closing Date.
3.6 Post-Closing Purchase Price Adjustment.
(a) As promptly as practicable, but in no event later than 60 days
following the Closing Date, Buyer shall cause to be prepared and delivered to
Harris (i) an audited balance sheet of the Business as of the Closing Date (the
"Audited Closing Balance Sheet"), together with an audit report thereon by Ernst
& Young LLP, or another national accounting firm selected by the Buyer (the
"Buyer accountants"), prepared in accordance with GAAP, and (ii) a statement
based on such Audited Closing Balance Sheet setting forth in detail a
calculation of the Closing Date Working Capital. For purposes of this Agreement,
"Estimated Working Capital" and "Closing Date Working Capital" shall mean an
amount equal to (i) all accounts receivable plus inventory plus prepaid assets
plus the assets described in Section 2.1(w) plus, in the case of the calculation
of the Closing Date Working Capital, the assets described in Section 2.1(u), as
such constitute Transferred Assets, minus (ii) accounts payable and accrued
liabilities (other than accrued Tax Liabilities, the Retirement Plan Accruals
and any European Severance Accruals) including the liabilities referred to in
Sections 6.3(k) and 6.4, as such constitute Assumed Liabilities, in each case as
are accrued and reflected on the Estimated Closing Balance Sheet and the Audited
Closing Balance Sheet, respectively. Except as set forth below in this Section
3.6(a), the Audited Closing Balance Sheet shall be deemed to be and shall be
final, binding and conclusive on the parties hereto. The Audited Closing Balance
Sheet shall be deemed final for the purposes of this Section 3.6(a) upon the
earlier of (i) the failure of Harris to notify Buyer of a dispute within 30 days
of the delivery of the Audited Closing Balance Sheet to Harris, (ii) the
resolution of all disputes, pursuant to Section 3.6(b), by Harris' accountants
and Buyer's accountants, and (iii) the resolution of all disputes, pursuant to
Section 3.6(b), by the Independent Accounting Firm.
(b) Harris may dispute any amounts reflected on the Audited Closing
Balance Sheet delivered pursuant to Section 3.6(a), to the extent the net effect
of such disputed amounts would affect the Closing Date Working Capital reflected
on the Audited Closing Balance Sheet by more than $1,000,000, but only on the
basis that the amounts reflected on such statement are incorrect or were not
arrived at in accordance with GAAP consistently applied. In the event of such a
dispute, Buyer's accountants and Harris's accountants shall attempt to reconcile
their differences, and any resolution by them as to any disputed amounts shall
be final, binding and conclusive on the parties hereto. If Buyer's accountants
and Harris's accountants are unable to reach a resolution within 60 days after
the delivery of the Audited Closing Balance Sheet, Buyer's accountants and
Harris's accountants shall submit the items remaining in dispute for resolution
to an independent accounting firm of international reputation mutually
acceptable to Buyer and Harris (the "Independent Accounting Firm"), which shall,
within 30 days after such submission, determine and report to Buyer and Harris
upon such remaining disputed items, and
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such report shall be final, binding and conclusive on Buyer and Harris. The
balance sheet resulting from that report shall be the Audited Closing Balance
Sheet. The fees and disbursements of the Independent Accounting Firm shall be
allocated between Buyer and Harris in the same proportion that the aggregate
amount of such remaining disputed items so submitted to the Independent
Accounting Firm that is unsuccessfully disputed by each such party as finally
determined by the Independent Accounting Firm bears to the total amount of such
remaining disputed items.
(c) The Purchase Price adjustment shall be an amount equal to the
Closing Date Working Capital minus the Estimated Working Capital. If the result
is a positive number in excess of $1,000,000, then the Purchase Price determined
pursuant to Section 3.5(b) shall be adjusted upward in an amount equal to the
result obtained under this Section 3.6(c), and such amount shall be paid in cash
by wire transfer of immediately available funds by Buyer to Harris as soon as
practicable (but in no event more than 10 days) after such determination. If the
result obtained in this Section 3.6(c) is a negative number in excess of
$1,000,000, then the Purchase Price determined pursuant to Section 3.5(b) shall
be adjusted downward in an amount equal to the result obtained under this
Section 3.6(c), and such amount shall be paid by wire transfer of immediately
available funds by Harris to Buyer as soon as practicable (but in no event more
than 10 days) after such determination.
3.7 Limitations. To the extent that a Liability is reflected on the Audited
Closing Balance Sheet, Buyer shall not have the right to also recover under a
claim for indemnification for such Liability pursuant to Article 9 or Article 13
hereof.
3.8 Consent of Third Parties; Further Assurances.
(a) From time to time following the Closing, Sellers shall execute and
deliver, or cause to be executed and delivered, to Buyer such additional
instruments of conveyance and transfer as Buyer may reasonably request or as may
be otherwise reasonably necessary to more effectively convey or transfer to, and
vest in, Buyer and put Buyer in possession of, any part of the Transferred
Assets. Nothing in this Master Agreement shall be construed as an attempt or
agreement to assign any asset, contract, lease, permit, license or other right
which would otherwise be included in the Transferred Assets but which is by its
terms or by law nonassignable without the consent of the other party or parties
thereto or any Governmental Authority unless such consent shall have been given,
or as to which all the remedies for the enforcement thereof enjoyed by Sellers,
any other Business Entity or the Business would not, as a matter of law, pass to
Buyer as an incident of the assignments provided for by this Agreement (the
"Non-Assignable Assets"). Sellers shall use their Best Efforts to obtain such
consent promptly. At such time as any Non-Assignable Assets is properly assigned
to Buyer, such Non-Assignable Asset shall become a Transferred Asset. Following
the Closing and until such time as such Non-Assignable Assets may be properly
assigned to Buyer, such Non-Assignable Assets shall be held by Sellers in trust
for Buyer and the covenants and obligations thereunder shall be performed by
Buyer in the name of Sellers and all benefits and obligations existing
thereunder shall be for the account of Buyer. During such period, Sellers shall
take or cause to be taken such action in its name or otherwise as Buyer may
reasonably request, at Buyer's expense, so as to provide Buyer with the benefits
of the Non-Assignable Assets and to effect collection of money or other
consideration to become due and payable under the Non-Assignable Assets and
Sellers shall promptly pay over to Buyer all money or other consideration
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received by them (or their Affiliates) in respect of all Non-Assignable Assets.
Following the Closing, Sellers authorize Buyer, to the extent permitted by
Applicable Law and the terms of the Non-Assignable Assets, at Buyer's expense,
to perform all of the obligations and receive all of the benefits under the
Non-Assignable Assets and appoints Buyer their attorney-in-fact to act in their
name on its behalf (and on behalf of its Affiliates) with respect thereto.
(b) Notwithstanding anything in this Master Agreement to the contrary,
this Master Agreement shall not constitute an agreement by Sellers to assign or
delegate, or by Buyer to assume and agree to pay, perform or otherwise
discharge, any Non-Assignable Asset if an attempted assignment, delegation or
assumption thereof without the consent of a third Person (including, without
limitation, any Governmental Authority) thereto would constitute a breach
thereof unless and until such consent is obtained.
(c) Except as set forth in Section 3.8(a), Section 3.9 or as provided
in the Transition Services Agreement, to the extent reasonably practicable, the
Sellers shall perform all obligations and be entitled to all the benefits under
the Non-Assignable Assets; provided, however, that Sellers shall be liable for
the failure to perform any such obligation.
3.9 Shared Contracts. Subject to the terms of the Transition Services
Agreement, to the extent any Contracts relate both to the Business and to other
businesses of the Sellers ("Shared Contracts"), such Shared Contracts shall not
be assigned to Buyer. At Buyer's request, with respect to any Shared Contract,
the Sellers shall use Best Efforts to obtain the agreement of the other party or
parties to any Shared Contract to enter into a separate agreement with Buyer
with respect to the matters covered by such Shared Contract that relate to the
Business. Buyer shall be responsible for fulfilling the obligations under the
Shared Contracts related to or arising from benefits received by Buyer pursuant
to the Shared Contracts as contemplated by the Transition Services Agreement.
3.10 Apportionment at Closing Date; Customer Billing.
(a) At the Closing, the parties shall make, without duplication of
adjustments reflected in the Audited Closing Balance Sheet, customary closing
adjustments with respect to the conveyance of the Transferred Facilities as of
the Closing Date and the usual adjustments relating to the Business as of the
Closing Date, including prepaid lease payments, security deposits, rents, real
estate taxes, local improvements charges, assessments (special and ordinary),
sewer impost charges, utility charges, water rents, monthly maintenance charges,
rebates and royalties, deposits and prepaid expenses with any public utility or
any municipal, governmental or other public authority, wages and any other
ongoing charges, and all such payments, taxes and charges shall be apportioned
and adjusted as of the Closing Date, and at the Closing the net amount thereof
shall be pro rata paid by Harris to Buyer or paid by Buyer to Harris, as the
case may be. Any such apportionments and adjustments shall be subject to
correction for any errors or omissions that subsequently may be discovered
provided that the party discovering such error or omission provides written
notice of same to the other party. Such other party shall, within 15 days after
receipt of such notice, reimburse the party delivering such notice for the full
amount of such error or omission.
(b) In the event that Harris or any of its Affiliates receives payment
after the Closing Date on invoices issued by Buyer relating to products sold or
services rendered on or after
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the Closing Date, Harris will promptly notify Buyer of such receipt and will
promptly remit, or will cause such Affiliate to promptly remit, such payment to
Buyer. In the event that Buyer or any Affiliate of Buyer receives payment after
the Closing Date on invoices issued by Harris or any of its Affiliates relating
to products sold or services rendered prior to the Closing Date that have given
rise to accounts receivable that are included in the Excluded Assets, Buyer will
promptly notify Harris of such receipt and will promptly remit, or will cause
such Affiliate to promptly remit, such payment to Harris.
3.11. Warranty Claims. Except as expressly provided in Sections 2.3 and 2.4
and this Section 3.11, all of the obligations and liabilities of the Business
Entities with respect to any Products transferred to Buyer as part of the
Transferred Assets which are shipped or provided by Buyer on or after the
Closing shall be for the account of, and exclusively the obligation of Buyer.
Buyer shall assume the obligation to satisfy all warranty claims or liabilities
with respect to any products or services shipped or provided by the Business
Entities prior to the Closing.
3.12 Purchase Agreement for Harris Malaysia. On or prior to the Closing
Date, at Harris' request, Buyer will, or will cause a Subsidiary, to enter into
a separate Purchase Agreement (the "Malaysian Purchase Agreement") with HAS and
HSSM to purchase the stock of Harris Malaysia on terms mutually acceptable to
Buyer, HAS and HSSM. The closing date for such purchase shall be the Closing
Date, or such other date as the parties shall agree. The purchase price for the
stock of Harris Malaysia shall be paid in cash to HAS and HSSM and shall reduce
the cash portion of the Purchase Price to be paid to Harris pursuant to Section
3.2.
3.13 Deferred Closing. The parties expect that the shares of Harris
Semiconductor (Taiwan) Ltd. and Harris Semiconductor Y.H. (Korea) and the assets
of Harris Semiconductor GmbH, the assets of Harris S.A. (Belgium), and the
assets of Harris Semiconductor Design & Sales Pte. Ltd. (Singapore) may be
Non-Assignable Assets, as defined in Section 3.8, as of the Closing Date.
Sellers and Buyer shall, on the Closing Date, execute a deferred closing
agreement with respect to such assets containing provisions substantially the
same as Section 3.8, except that such agreement shall contain an absolute
obligation to complete the transfer of the shares of Harris Semiconductor
(Taiwan) Ltd., the shares of Harris Semiconductor Y.H. (Korea), the assets of
Harris Semiconductor GmbH (Germany), the assets of Harris S.A. (Belgium) and the
assets of Harris Semiconductor Design and Sales Pte. Ltd. (Singapore), within
180 days of the Closing Date (each such closing a "Deferred Closing" and
collectively, the "Deferred Closings"). The Non-Assignable Assets shall be
considered Transferred Assets for purpose of calculating the Estimated Closing
Balance Sheet and the Audited Closing Balance Sheet. No adjustment shall be made
to the Purchase Price as a result of such assets being Non-Assignable Assets.
3.14 Environmental Consents. To the extent that environmental permits are
not obtained by the Closing Date, the parties agree to use Best Efforts to
obtain the transfer of such permits as promptly as possible following the
Closing Date.
3.15 Pennsylvania Indebtedness. To the extent the indebtedness listed on
Schedule 2.3 is unable to be transferred to Buyer because the holder of such
debt does not consent to such transfer or because the merger of Harris
Semiconductor (Pennsylvania), Inc. into
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a limited liability company was a breach of one or more of such loans, Harris
shall repay the debt in full, and Buyer shall enter into a loan agreement, or
agreements, with Harris on substantially the same terms and security as the
indebtedness which could not be so transferred, provided that, Buyer shall repay
to Harris the outstanding balance of such loans (the "Replacement Loans") at the
time the outstanding principal balance of the Note is repaid if, and only if,
the bonds issued by Buyer on the Closing Date have been repaid, and provided
further, if the due dates of such bonds are extended, the Buyer shall cause the
terms governing such bonds to be modified to permit the repayment of the
Replacement Loans at the time the Note is paid.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF HARRIS
Except as set forth in the Disclosure Schedule delivered to Buyer
contemporaneously herewith (the "Disclosure Schedule"), of which the Schedules
referred to below are a part, and in the documents and other materials
identified in the Disclosure Schedule, and subject to the limitations contained
in Article 13, Harris represents and warrants to Buyer as set forth below as of
the date of this Master Agreement. This Article 4 does not apply to Transferred
Assets conveyed to Buyer through the IP Transfer Agreements, which include the
only representations and warranties of Harris made with respect to such assets.
4.1 Organization, Standing, Etc. of Business Entities. Each Business Entity
(other than Harris Semiconductor, LLC, Harris Semiconductor (Ohio), LLC, and
Harris Semiconductor (Pennsylvania), LLC) is a corporation duly incorporated,
validly existing and in good standing under the laws of the jurisdiction where
it is organized and has all requisite corporate power and authority to carry on
the Business as currently conducted by it and to own or lease and to operate the
properties of the Business used by it. Each Business Entity (other than Harris
Semiconductor, LLC, Harris Semiconductor (Ohio), LLC, and Harris Semiconductor
(Pennsylvania), LLC) is qualified to do business and is in good standing in each
state of the United States in which the Business is conducted that requires such
qualification and where the failure to so qualify would have a Material Adverse
Effect on the Business. For the purposes of the Transaction Documents, a
"Material Adverse Effect on the Business" means any material adverse change in,
or material adverse effect on, the assets, liabilities, business or operations
of the Transferred Assets or the Business taken as a whole.
4.2 Corporate Authorization; Enforceability.
(a) The execution, delivery and performance of this Master Agreement
and all other documents executed or to be executed pursuant to this Master
Agreement by any Seller, and the consummation of the transactions contemplated
hereby and thereby, have, or prior to the Closing will have, been duly
authorized by all necessary corporate action on the part of each Seller. This
Master Agreement and the Ancillary Agreements executed or to be executed by a
Seller have been, or will have been, at the time of their respective executions
and deliveries, duly executed and delivered by a duly authorized officer of each
such Seller.
(b) This Master Agreement and each Ancillary Agreement executed or to
be executed by a Seller constitutes, or at the time executed by a Seller will
constitute, the valid and
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legally binding obligation of each Seller, enforceable in accordance with its
terms, except as such enforceability may be limited by equitable principles and
by applicable bankruptcy, insolvency, reorganization, arrangement, moratorium or
similar laws relating to or affecting the rights of creditors generally.
4.3 Charters and Bylaws; Capitalization of Transferred Subsidiaries. Copies
of the charters and bylaws and other organizational documents of the Business
Entities have been made previously available to Buyer, and each such copy is
true, correct and complete. Schedule 4.3 sets forth the authorized and
outstanding capital stock of the Transferred Subsidiaries. Except as set forth
on Schedule 4.3, none of the Transferred Subsidiaries has any outstanding
securities convertible into or exercisable for any shares of its capital stock,
nor does it have any outstanding rights to subscribe for or to purchase, or any
options for the purchase, or any arrangements providing for the issuance
(contingent or otherwise), of, or any calls against, commitments by or claims
against it of any character relating to, any shares of its capital stock or any
securities convertible into or exchangeable or exercisable for any shares of its
capital stock.
4.4 No Violations. The execution, delivery and performance of this Master
Agreement and the Ancillary Agreements executed or to be executed by Sellers,
and the consummation of the transactions contemplated hereby and thereby, will
not cause or result in any violation of or default under any provision (a) of
the charter or bylaws of any Business Entity, (b) except as set forth on
Schedule 4.4, of any mortgage, indenture, trust, lease, partnership or other
agreement or other instrument, permit, concession, grant, franchise, license,
judgment, order, decree, statute, law, ordinance, rule or regulation applicable
to any Seller or the Business, the result of which, with respect to items
identified in clause (b), would (either individually or in the aggregate) have a
Material Adverse Effect on the Business or would have a Material Real Estate
Impairment.
4.5 Governmental Authorizations and Consents. Except as set forth on
Schedule 4.5, no consents, licenses, approvals or authorizations of, or
registrations or declarations with, any Governmental Authority are required to
be obtained or made by any Business Entity in connection with the execution,
delivery, performance, validity and enforceability of this Master Agreement or
any Ancillary Agreement, other than (a) a filing with the Federal Trade
Commission and the Department of Justice under the HSR Act, (b) if required, a
filing with the Committee on Foreign Investment in the United States under
Section 721 of Title VII of the United States Defense Production Act of 1950, as
amended by Section 5021 of the Omnibus Trade and Competitiveness Act of 1988,
and (c) other consents, licenses, approvals, authorizations, registrations or
declarations, where the failure to obtain such would not have a Material Adverse
Effect on the Business and would not cause a Material Real Estate Impairment.
4.6 Compliance with Other Instruments and Laws. No Business Entity is in
violation of any term of its charter or bylaws or other charter documents or,
except as set forth on Schedule 4.6, any mortgage, indenture, instrument or
agreement relating to indebtedness for borrowed money or of any judgment, decree
or order which names such Business Entity, or of any term of any other Assumed
Contract Obligation which is among the Transferred Assets, which violation,
either individually or when aggregated with all other such violations, would
have a Material Adverse Effect on the Business or would have a Material Real
Estate
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Impairment. To Sellers' Knowledge, no Business Entity is in violation of any
Applicable Law applicable to the Business or any of the Transferred Assets,
which violation, either individually or when aggregated with all other such
violations, would have a Material Adverse Effect on the Business or would have a
Material Real Estate Impairment. This Section 4.6 does not apply to
Environmental Laws.
4.7 Baseline Financial Statements. Harris has delivered to Buyer the
statement of the Transferred Assets and Assumed Liabilities and the related
statement of income of the Business (other than Excluded Assets) for the nine
months ended April 2, 1999 (the "Financial Statements Date") (such statements,
including the notes thereto, hereinafter being referred to as the "Baseline
Financial Statements"). The Baseline Financial Statements are included in
Schedule 4.7 and have been prepared in accordance with the accounting records
and policies of Harris and with GAAP and present fairly in all material respects
the Transferred Assets and the Assumed Liabilities of the Business as of the
dates thereof and the results of its operations for the period then ended,
except (a) as set forth on Schedule 4.7 and (b) that the Baseline Financial
Statements do not contain all footnote disclosures required by GAAP. During the
last five fiscal years ended July 2, 1998, there has not been any material
change in the method of accounting or keeping of books of account or accounting
practices with respect to the Business, except as (i) required by GAAP or (ii)
described in Harris' annual reports on Form 10-K or 10-K/A for the five fiscal
years ended July 2, 1998 as filed with the Securities and Exchange Commission.
4.8 Absence of Certain Changes or Events. Except as set forth on Schedule
4.8 as of the date of this Master Agreement, since the Financial Statements
Date, and except for activities related to the transactions contemplated by this
Master Agreement, each Business Entity has conducted its operations related to
the Business in the ordinary course of business, and neither the Business nor
the Transferred Assets have suffered a Material Adverse Effect on the Business
or a Material Real Estate Impairment. Without limiting the generality of the
foregoing, except as set forth on Schedule 4.8, since the Financial Statements
Date in each case as related to the Business:
(a) no Business Entity has or has entered into any agreement to sell,
lease, transfer, mortgage or assign or subject to any lien any of the
Transferred Assets, tangible or intangible, other than in the ordinary
course of business;
(b) no party (including any Business Entity) has, other than in the
ordinary course of business, accelerated, terminated, materially modified,
or canceled any contract, lease, sublease, license, or sublicense (or
series of related contracts, leases, subleases, licenses, and sublicenses),
involving more than $125,000 to which any Business Entity is a party or by
which the Transferred Assets are bound;
(c) no Business Entity has made any commitment for any capital
expenditure (or series of related capital expenditures) outside the
ordinary course of business for an amount that exceeds $250,000;
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(d) no Business Entity has made any capital investment in, any loan
to, or any acquisition of the securities or assets of any other Person
other than in the ordinary course of business;
(e) no Business Entity has canceled, compromised, knowingly waived or
released any material right or claim (or series of related rights and
claims) under Material Contracts, outside the ordinary course of business;
(f) no Business Entity has incurred, assumed, guaranteed or discharged
any obligation or liability, absolute, accrued, contingent or otherwise,
whether due or to become due, or any indebtedness for borrowed money,
except current liabilities for trade or business obligations incurred in
connection with the purchase of goods or services in the ordinary course of
business consistent with prior practice;
(g) no Business Entity has received any notice of termination of any
Material Contract or any work order thereunder, lease or other agreement
which in any case or in the aggregate would reasonably be expected to have
a Material Adverse Effect on the Business, and there has not been any
change or, to the Sellers' Knowledge, any threat of any change in any
relation with, or any loss or, to the Sellers' Knowledge, threat of loss
of, any of the suppliers, distributors or customers of the Business which,
individually or in the aggregate, has had or reasonably could be expected
to have a Material Adverse Effect on the Business;
(h) no Business Entity has suffered any damage to or destruction or
loss of any tangible assets (whether or not covered by insurance), in any
case or in the aggregate, in excess of $150,000;
(i) no Business Entity has made any material change in the rate of
compensation, commission, bonus or other direct or indirect remuneration
payable, or agreed to pay, conditionally or otherwise, any material bonus,
incentive, retention or other compensation, retirement, welfare, fringe or
severance benefit or vacation pay, to or in respect of any Employee of the
Business, other than increases and payments in the ordinary course of
business consistent with past practice in the compensation payable to
Employees of the Business;
(j) no Business Entity has encountered any labor union organizing
activity or had any actual or overtly threatened employee strikes, work
stoppages, slowdowns or lockouts and has not entered into any material
agreement or material negotiation with any labor union or other collective
bargaining representative of any Employee of the Business; and
(k) no Business Entity has made a change in accounting method, keeping
of books of account or accounting practices, nor has any Business Entity
made any election for Tax purposes or for purposes of a Tax Return (or had
any such election made on its behalf) except as set forth in Sections 4.22
and 10.20, or entered into any agreement, arrangement or settlement with
respect to Taxes.
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4.9 Title to Transferred Assets.
(a) Personal Property. Except as set forth on Schedule 4.9(a), and
except for personal property subject to valid leases, each Business Entity has
good title to or other valid ownership rights in the Transferred Assets. Except
as set forth on Schedule 4.9(a), and except for personal property subject to
valid leases, the Transferred Assets are owned free and clear of all material
Liens except for Permitted Liens. This Subsection 4.9(a) does not apply to Real
Estate.
(b) Real Estate.
1. Owned Real Estate.
(i) Schedule 4.9(b) sets forth a list of all of the real estate
owned by any one or more of the Business Entities and used primarily in the
Business (such real estate, together with all beneficial, appurtenant easements
and other appurtenances thereto and with all buildings, structures and other
improvements thereon and all fixtures attached thereto or forming a part
thereof, is collectively referred to herein as the "Owned Real Estate"), and
includes the street address of each parcel of the Owned Real Estate. Except as
set forth on Schedule 4.9(b) and subject to any lease or other written agreement
executed prior to Closing pursuant to Section 8.4, each Business Entity has
good, valid, marketable and indefeasible fee simple title to, and is in actual,
exclusive possession of, its respective Owned Real Estate. The Sellers have
made, or at the request of Buyer will make prior to Closing, available to Buyer
true, correct and complete copies of all (i) legal descriptions, (ii) title
reports, title insurance policies and commitments therefor, (iii) surveys, (iv)
licenses, certificates of occupancy, plans, specifications and permits,
pertaining to the Owned Real Estate that are in the possession or control of any
of the Business Entities.
(ii) The Owned Real Estate is free and clear of all Liens except
for Permitted Liens.
(iii) To the Sellers' Knowledge, no portion of any of the Owned
Real Estate is subject to a special ad valorem tax valuation or rate that will
be lost as a result of the transfer to Buyer pursuant to the provisions hereof.
(iv) The Owned Real Estate and the use thereof by the Business
Entities in connection with the Business as currently used and consistent with
past practice complies, in all material respects, with all covenants, easements
and restrictions of record affecting the Owned Real Estate.
(v) All construction of the facilities and improvements located
in Mountaintop, PA have been completed to the reasonable satisfaction of the
Business Entities in accordance with the appropriate construction contracts, and
there is not currently any ongoing construction at any of the Owned Real Estate
other than ordinary course maintenance and repair and to Sellers' Knowledge no
Business Entity has any claim for any construction defect.
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2. Leased Real Estate.
(i) Schedule 4.9(b) sets forth a list of all of the leases or rights
of occupancy pursuant to which any Business Entity leases or subleases any real
property or interest therein related to or used primarily in the Business
(collectively, as heretofore modified, amended or extended, the "Leases"),
including the identification of each of the lessors thereof and the street
addresses of all of the real estate demised under each of the Leases
(collectively, the "Leased Real Estate"). One or more of the Business Entities
is the lessee under all Leases, and no party other than one or more of the
Business Entities has any right to possession, occupancy or use of any of the
Leased Real Estate. True and correct copies of (i) leasehold title insurance
policies and commitments therefor, title reports, surveys, licenses,
certificates of occupancy, plans, specifications, permits and other documents,
pertaining to the Leased Real Estate that are in the possession or control of
any of the Business Entities, and (ii) each of the Leases, including all
amendments, modifications and extensions, and together with all subordination,
non-disturbance and/or attornment agreements related thereto have been, or at
the request of Buyer will be prior to Closing, made available by the Business
Entities to Buyer. Each of the Leases is valid and in full force and effect and
is binding and enforceable in accordance with its terms. Except as set forth on
Schedule 4.9(b), none of the Sellers has received any written notice of default
under any provision of any of the Leases. Except as set forth on Schedule
4.9(b), to the Sellers' Knowledge, none of the Business Entities and none of the
lessors under any of the Leases is in material default under any of the Leases
and no event has occurred that with notice, the passage of time or both would
constitute such a default.
(ii) Except as set forth in Schedule 4.9(b), the Business Entities
are in actual, exclusive possession of the Leased Real Estate. The Business
Entities have good, valid and indefeasible title to all the leasehold estates
conveyed under the Leases free and clear of all Liens, except Permitted Liens.
(iii) Except as set forth in Schedule 4.9(b), the basic rent, all
additional rent and all other charges and amounts payable under the Leases by
the lessee thereunder have been paid to date. All work required to be performed
under the Leases by the lessors thereunder or by any of the Business Entities
has been performed in all material respects, and, to the extent that any of the
Business Entities is responsible for payment of such work, has been fully paid
for, whether directly to the contractor performing such work or to such lessor
as reimbursement therefor, except for items (i) which any of the Sellers is
disputing in good faith by appropriate action, and (ii) are not reasonably
expected to have a Material Adverse Effect on the Business or cause a Material
Real Estate Impairment.
(iv) Except as set forth on Schedule 4.9(b) or reflected in the
Baseline Financial Statements, there are no brokerage commissions or finder's
fees due from any of the Business Entities which are unpaid with regard to any
of the Leases or the Leased Real Estate, or which will become due at any time in
the future with regard to the Leases or the Leased Real Estate, including with
respect to the Existing Subleases.
(v) Except as set forth on Schedule 4.9(b), there have been no acts
of God, forces of nature, or other casualties which could result in the
termination of any of the Leases.
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(vi) Except as set forth on Schedule 4.9(b): (i) no consent of any of
the lessors under any of the Leases is required by reason of any of the
transactions contemplated by this Master Agreement; and (ii) none of the rights
of any of the Business Entities under any of the Leases will be impaired by the
consummation of the transactions contemplated by this Master Agreement and all
of such rights (other than those under the Retained Leases) and all of Buyer's
rights under the Subleases will be enforceable by the Buyer after the Closing
Date, to the same degree as by the Sellers prior to the Closing Date without the
consent or agreement of any other party (except in the case of the Subleases, in
which case Buyer shall have such rights as are provided to it by the Subleases).
(vii) The use of the Leased Real Estate located in the Triangle
Research Park in North Carolina and the Leased Real Estate located in Malaysia
as currently used and consistent with past practice complies, in all material
respects, with the applicable Leases and with all covenants easements and
restrictions of record affecting such Leased Real Estate.
(viii) Except pursuant to the subleases and similar agreements
described on Schedule 4.11(l) (collectively, the "Existing Subleases"), no
portion of any of the Leased Real Estate has been leased or subleased to any
Person and no Person, other than one or more of the Transferred Business
Entities, has any right to use or occupy any portion of the Leased Real Estate.
All of the Existing Subleases are in full force and effect and, to Sellers'
Knowledge, no default or event or occurrence which with notice, the passage of
time or both would constitute a default, on the part of any party to any
Existing Sublease, has occurred. None of the Existing Subleases interferes or
grants rights which if exercised could reasonably be expected to interfere with
Seller's use of the affected Leased Real Estate or the conduct of the Business
thereon as currently conducted and as conducted consistent with past practice,
in a manner that has or could reasonably be expected to have a Material Adverse
Effect or a Material Real Estate Impairment.
3. General.
(i) The water, gas, electricity and other utilities serving the Owned
Real Estate and the Leased Real Estate (collectively, the "Real Estate") have
been and are currently adequate to service the normal operations conducted
thereon consistent with past practice.
(ii) Each parcel of the Real Estate has physical and, to the Sellers'
Knowledge, legal vehicular and pedestrian access to and from public roadways. To
the Sellers' Knowledge, no fact or condition exists which would result in the
termination of the current access from the Real Estate to any presently existing
highways and roads adjoining or situated on the Real Estate.
(iii) Except as set forth on Schedule 4.9(b), no Business Entity has
received any written or, to the Sellers' Knowledge, oral notice or order from
any Governmental Authority, insurance company which has issued a policy with
respect to any of the Real Estate or any board of fire underwriters or other
body performing similar functions or any other Person which (x) relates to or
alleges a violation of or nonconformity with any zoning, building, safety,
subdivision, wetlands or other similar law, code, rule, regulation, ordinance,
permit, license, certificate, covenant, restriction or condition with respect to
any of the Real Estate or the use thereof which violation of nonconformity could
reasonably be expected to have a Material Real Estate
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Impairment, or (y) requests the performance of any material repairs, alterations
or other work that have not yet been cured or performed, as applicable. None of
the Sellers have received any written notice from any Governmental Authority or
other Person of any condemnation action, eminent domain proceeding or other
similar proceeding concerning any of the Real Estate. There is no pending
condemnation, expropriation, eminent domain, or similar proceeding affecting any
of the Real Estate and, to the Sellers' Knowledge, no such action, proceeding or
litigation is threatened.
(iv) All of the buildings and improvements situated upon the Real
Estate are operable and in normal condition and repair, subject to ordinary wear
and tear and to the items set forth on Schedule 4.9(b).
(v) Other than: (x) the Owned Real Estate, (y) the Leased Real Estate
other than the Retained Leased Real Estate, and (z) the Subleased Real Estate,
no other real estate or rights, titles, estates or interest therein is
reasonably necessary to the conduct of the Business as currently conducted and
consistent with past practice.
4.10 Year 2000 Readiness. The Harris Semiconductor Sector (a) has conducted
an assessment of its information system technologies, automated manufacturing,
billing and other operations for the purpose of identifying, and (b) is engaged
in an effort to mitigate (which is continuing in the ordinary course of
business), any significant disruption in operations that it anticipates as a
consequence of the Y2K Problem. Assuming the efforts to mitigate are continued,
with respect to the Transferred Assets, by Buyer in the ordinary course of
business after the Closing Date, the Transferred Assets are not reasonably
expected to experience any disruption in operations as a consequence of the Y2K
Problem that could reasonably be expected to have a Material Adverse Effect on
the Business or to have a Material Real Estate Impairment. As used in this
Section 4.10, the "Y2K Problem" means a date-handling problem relating to the
Year 2000 date change that would cause a computer system, software or equipment
to fail to correctly perform, process and handle date-related data for the dates
within and between the twentieth and twenty-first centuries and all other
centuries.
4.11 Assumed Contract Obligations. Harris has made available to Buyer a
copy or description of all outstanding active Contracts constituting:
(a) All customer contracts and open purchase orders of the Business
with a reasonably expected value in excess of $250,000 per annum;
(b) All pending bids for customer contracts for Products with a
reasonably expected value in excess of $250,000 per annum;
(c) All contracts for the employment of any Person by a Business
Entity specific to the Business and providing for cash compensation equal to or
greater than $100,000 per annum;
(d) All collective bargaining agreements specific to the Business;
(e) All consulting agreements to which the Business Entities are
parties in connection with the conduct of the Business;
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(f) All joint venture, teaming and similar arrangements to which the
Business Entities are parties in connection with the Business;
(g) All subcontracts, agreements and other arrangements pursuant to
which a third party processes products for the Business with reasonably expected
annual payments in excess of $250,000;
(h) All agreements for the purchase by a Business Entity of raw
materials or other supplies specific to the Business with a reasonably expected
value in excess of $250,000 per annum;
(i) All agreements for the purchase by a Business Entity of equipment
specific to the Business involving outstanding commitments in excess of
$500,000;
(j) All mortgages, indentures, notes and installment obligations and
other instruments and contracts specific to the Business and relating to any
borrowing of, or issuance of letters of credit for, an amount in excess of
$250,000 by one or more Business Entities;
(k) All guaranties of any obligation specific to the Business in
excess of $250,000 by a Business Entity (excluding any non-recourse guaranties
and any endorsement made in the ordinary course of business for collection);
(l) All leases of real or personal property specific to the Business
under which a Business Entity is lessor;
(m) All leases of real property to be (i) assumed by Buyer and (ii)
subleased to Buyer;
(n) All leases of personal property specific to the Business under
which a Business Entity is lessee and is obligated to make payments of more than
$250,000 per annum;
(o) All agreements materially limiting the freedom of a Business
Entity to compete in the Business with any Person or other entity or in any
geographical area;
(p) All Contracts specific to the Business not otherwise listed with a
reasonably expected contract value in excess of $250,000 per annum or $500,000
in the aggregate; and
(q) All distributor and sales agent agreements specific to the
Business.
A list or description of each of the items described above (the "Material
Contracts") is set forth on Schedule 4.11, and Sellers have made available to
Buyer true copies of each of the Material Contracts. As of the date of this
Master Agreement, except as disclosed on Schedule 4.11, all Material Contracts
are valid, binding and enforceable against each Business Entity which is a party
thereto, and to the Sellers' Knowledge, the other parties thereto, in accordance
with their terms and are in full force and effect and, as to each Material
Contract, there does not exist thereunder any default on the part of any
Business Entity, and there does not exist any event,
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occurrence or condition, including the consummation of the transactions
contemplated hereunder, which (after notice, passage of time, or both) would
constitute a default thereunder on the part of such Business Entity, which
default has had or would have a Material Adverse Effect on the Business. Except
as disclosed on Schedule 4.11, no Business Entity has received any written claim
from any other party to any Material Contract that any Business Entity has
breached any obligations to be performed by it thereunder, or is otherwise in
default or delinquent in performance thereunder, except any of the foregoing
which could not reasonably be expected to have a Material Adverse Effect on the
Business.
4.12 Litigation. Except as set forth on Schedules 4.12 and 4.14, there are
no actions, suits, proceedings or governmental investigations pending against
any Business Entity or Transferred Asset or, to the Sellers' Knowledge,
threatened, involving the Business or the Transferred Assets, at law or in
equity or before any Governmental Authority (including, without limitation,
relating to the Management or Release of Hazardous Materials), or that have been
settled, dismissed or resolved on or since the Financial Statements Date, that
have had or would reasonably be expected to have a Material Adverse Effect on
the Business. As of the date of this Master Agreement, no Business Entity or
Transferred Asset is subject to any judgment, stipulation, order or decree
arising from any action, suit, proceeding or investigation that individually or
in the aggregate would reasonably be expected to have a Material Adverse Effect
on the Business or a Material Real Estate Impairment.
4.13 Licenses and Permits. Each Business Entity has all licenses,
certificates of occupancy, permits and other authorizations from Governmental
Authorities necessary for the conduct of the Business or the use, ownership or
occupancy of any of the Transferred Assets as conducted, used, owned or occupied
by the Business Entities prior to the date hereof and for the use, occupancy and
operation of the Transferred Assets (collectively "Permits") except where the
failure to have such Permits could not reasonably be expected to result in a
Material Adverse Effect on the Business or a Material Real Estate Impairment.
Except as set forth on Schedule 4.13, (a) each of said Permits is in full force
and effect, (b) the Business is in compliance with the terms, provisions and
conditions thereof, except where the failure to be so in compliance could not
reasonably be expected to result in a Material Adverse Effect on the Business or
a Material Real Estate Impairment, (c) there are no, and Sellers have not
received any written notice of any, outstanding violations, notices of
noncompliance, judgments, consent decrees, orders or judicial or administrative
actions, investigations or proceedings adversely affecting any of said Permits,
and (d) to the Sellers' Knowledge, no condition exists and no event has occurred
which (whether with or without notice, lapse of time or the occurrence of any
other event) would permit the suspension or revocation of any material Permits
other than by expiration of the term set forth therein. Sellers make no
representation or warranty with respect to the transferability of the Permits to
Buyer.
4.14 Environmental Compliance. Except as set forth in Schedule 4.14, (a)
the conduct of the Business complies in all material respects with all
Environmental Laws; (b) neither Harris nor any of the Transferred Subsidiaries
Manage or have Managed Hazardous Materials in connection with the operations of
the Business in a manner which, to the Sellers' Knowledge, has caused, causes or
threatens to cause environmental conditions which give rise to liability under
Environmental Laws or under common law; and (c) with respect to the Real
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Estate and the Business, neither Harris nor any of the Transferred Subsidiaries
has received and, to the Sellers' Knowledge, no one else has received, any
requests for information, notices of claim, demands or other notifications that
it or they (or any of their predecessors) are or may be potentially responsible
with respect to any Remediation or other liability arising out of or resulting
from any Hazardous Materials Released or Managed at any property now or formerly
owned, operated or leased by Harris or any of the Transferred Subsidiaries or
their predecessors, or at any other property, facility or off-site location to
which the Hazardous Materials Released or Managed by Harris or any of the
Transferred Subsidiaries or any of their predecessors have been transported or
disposed of or have come to be located. "Environmental Laws" shall mean all
applicable foreign, Federal, state and local laws, ordinances and regulations
pertaining to air and water quality, Hazardous Materials, waste, disposal or
other environmental matters, including the Clean Water Act, the Clean Air Act,
the Federal Water Pollution Control Act, the Solid Waste Disposal Act, the
Resource Conservation Recovery Act, the Occupational Health and Safety Act, the
Comprehensive Environmental Response, Compensation, and Liability Act, and the
rules, regulations and ordinances of the cities and counties in which the
Business is located, the Environmental Protection Agency and all other
applicable Governmental Authorities, in each case as in effect on the Closing
Date.
4.15 Absence of Certain Business Practices. To the Sellers' Knowledge, no
Business Entity nor any officer, employee or agent of any Business Entity, or
any other Person acting on their behalf, has, directly or indirectly, since the
date of formation of such Business Entity, respectively, given, offered,
solicited or agreed to give, offer or solicit any contribution, gift, bribe,
rebate, payoff, influence payment, kickback or other payment, regardless of form
and whether in money, property or services, to any customer, supplier,
governmental employee or other Person who is or may be in a position to help or
hinder the Business in connection with the conduct of the Business (a) which
subjected or could reasonably be expected to have subjected a Business Entity to
any material damage or penalty in any civil, criminal or governmental litigation
or proceeding, (b) which, if not given in the past, could reasonably be expected
to have had a Material Adverse Effect on the Business, (c) which, if not
continued in the future, could not reasonably be expected to have a Material
Adverse Effect on the Business or subject a Business Entity to suit or penalty
in any private or governmental litigation or proceeding, (d) for any purposes
described in Section 162(c) of the Code, or (e) for the purpose of establishing
or maintaining any concealed fund or concealed bank account.
4.16 Personnel Matters.
(a) Sellers have heretofore provided to Buyer a list of all of the
employees for which Buyer will be responsible pursuant to Article 6 (such
employees, collectively, "Employees of the Business") and their respective job
titles, salaries, wages, and other compensation paid during calendar year 1998
as well as dates of employment, and date and amount of last salary increase.
(b) Except as set forth on Schedule 4.16(b), there are no material
employment related disputes, grievances, or disciplinary actions pending or, to
the Sellers' Knowledge, threatened, by or between any of the Business Entities
and any Employees of the Business.
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(c) All currently effective personnel policies and manuals of the
Business Entities are listed on Schedule 4.16(c) and true, accurate, and
complete copies of all such written personnel policies and manuals have been
made available to Buyer.
4.17 Labor Matters. This Section 4.17 does not extend to the subject matter
of Section 4.18. Except as set forth on Schedule 4.17, in relation to the
conduct of the Business:
(a) No Business Entity is obligated by, or subject to, any order of
the National Labor Relations Board or other labor board or administration, or
any unfair labor practice decision.
(b) No Business Entity is a party or subject to any pending or, to
Sellers' Knowledge, threatened labor or civil rights dispute or any other labor
or employment related law suit, controversy or grievance or any unfair labor
practice proceeding with respect to claims of, or obligations of, any employee
or group of employees. No Business Entity has during the last three years
received any notice that any labor representation petition or request is pending
or is threatened with respect to Employees of the Business.
(c) Each Business Entity is in compliance in all material respects
with all (i) Applicable Laws respecting employment and employment practices,
terms and conditions of employment and wages and hours and (ii) collective
bargaining agreements related to the Union Plants.
(d) To the Sellers' Knowledge, no Employees of the Business or former
employee of any Business Entity has any claim against any Business Entity
(whether under Applicable Law, pursuant to any employment agreement, or
otherwise) on account of, or for: (i) overtime pay, other than for the current
payroll period; (ii) wages or salary (excluding bonuses and amounts accruing
under any pension or profit-sharing plan, including but not limited to any
Benefit Arrangement (as such term is defined in Section 4.18.1)) for a period
other than the current payroll period; (iii) vacation, time off or pay in lieu
of vacation or time off, other than vacation or time off (or pay in lieu
thereof) earned in respect of the current or past fiscal year or accrued on the
Audited Closing Balance Sheet for Seller; or (iv) any other claim arising under
any law governing labor and employment matters, including without limitation,
discrimination claims.
(e) To the Sellers' Knowledge, during the last three years, there have
been no strikes, work stoppages, work slowdowns or other such concerted
activities.
4.18 Seller Benefit Plans.
4.18.1 United States.
(a) Schedule 4.18.1 lists and identifies (i) each employee
pension benefit plan, as defined in Section 3(2) of ERISA (a "Pension Plan");
(ii) each employee welfare benefit plan, as defined in Section 3(1) of ERISA (a
"Welfare Plan"); and (iii) each compensation and employment arrangement,
including, but not limited to, any fringe benefit,
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incentive compensation, stock option, stock purchase, bonus, severance, deferred
compensation, and supplemental executive compensation plan or employment
agreement (a "Benefit Arrangement"), that is maintained by a Business Entity for
Employees of the Business based in the United States (collectively, the "U.S.
Benefit Plans"). True and complete copies of all U.S. Benefit Plans have been
provided or made available to Buyer, including, but not limited to (i) each
Pension Plan and any related trust agreement (including all amendments to such
Pension Plan and trust) and its most recent summary plan description, any
determination letter issued by the Internal Revenue Service, and (ii) each
Welfare Plan and Benefit Arrangement and any related insurance contracts or
other funding arrangement, administrative services agreement and summary plan
description and the most recent annual reports on Form 5500 required to be filed
with the Internal Revenue Service in respect of any Pension Plan, Welfare Plan
and Benefit Arrangement. Except as specifically disclosed on Schedule 4.18, no
Business Entity maintains or contributes to any Welfare Plan that provides
benefits to employees after termination of employment other than as required by
Part 6 of Title I of ERISA.
(b) Except as disclosed on Schedule 4.18.1, neither any
Business Entity nor any ERISA Affiliate is obligated to contribute to any
multiemployer plan, as defined in Section 3(37) of ERISA nor has been obligated
to contribute to any multiemployer plan, at any time during the six most recent
calendar years preceding the year of this Master Agreement. As used herein, the
term "ERISA Affiliate" shall mean a (i) corporation which is a member of the
same controlled group of corporations (within the meaning of Section 414(b) of
the Code) as Harris, (ii) partnership or other trade or business (whether or not
incorporated) under common control (within the meaning of Section 414(c) of the
Code) with Harris, or (iii) member of the same affiliated service group (within
the meaning of Section 414(m) of the Code) as Harris, any corporation described
in clause (i) above or any partnership or trade or business described in clause
(ii) above. With respect to any such multiemployer plan, no Business Entity or
ERISA Affiliate had incurred, or is reasonably likely to incur, any withdrawal
liability under Title IV of ERISA, nor is any such plan in reorganization.
(c) Except for the Pension Plan of Choice Microsystems, Inc.,
no Pension Plan is subject to Title IV of ERISA. No liability under Subtitle C
or D of Title IV of ERISA has been or is expected to be incurred by any Business
Entity or any ERISA Affiliate with respect to any "single-employer plan", within
the meaning of Section 4001(a)(15) of ERISA, currently or formerly maintained by
Harris or any ERISA Affiliate. All contributions required to be made by any
ERISA Affiliate to any employee benefit plan subject to Section 412 of the Code
or Section 302 of ERISA have been timely made. No employee benefit plan subject
to Section 412 of the Code sponsored, maintained or contributed to by any ERISA
Affiliate has an "accumulated funding deficiency" (whether or not waived) within
the meaning of Section 412 of the Code or Section 302 of ERISA and no ERISA
Affiliate has an outstanding funding waiver.
(d) Each Pension Plan which is intended to be qualified under
Section 401(a) of the Code as currently in effect has been determined by the
Internal Revenue Service to be so qualified and each trust related to any such
Pension Plan has been determined to be exempt from federal income tax under
Section 501(a) of the Code. There have been no prohibited transactions (as
described in Section 406 or Section 4975 of the Code) with respect to any
Pension Plan for which there is any outstanding liability. No material
litigation or
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administrative or other proceedings involving the U.S. Benefit Plans has
occurred which would reasonably be expected to have a Material Adverse Effect on
the Business.
(e) Each U.S. Benefit Plan has been administered in accordance
with its terms and Applicable Law except where the failure to be so administered
either individually or in the aggregate with respect to all U.S. Benefits Plans,
would not have a Material Adverse Effect on the Business.
4.18.2 Non-U.S. Employee Benefit Plans.
(a) Except as set forth on Schedule 4.18.2, with respect to all
Employees of the Business whose employment is based outside of the United
States, none of the Business Entities presently maintains, contributes to or has
any liability under any material non-U.S. bonus, incentive compensation, profit
sharing, retirement, pension, group insurance, death benefit, health,
disability, stock option, stock purchase, savings, deferred compensation,
severance pay or termination pay (to the extent established and formally
communicated to employees), welfare or other employee benefit or fringe benefit
plan, program or arrangement, excluding any foreign government sponsored or
mandated plan, program or arrangement affecting such employees ("Government
Sponsored or Mandated Plans"). The plans, programs and arrangements set forth on
Schedule 4.18.2 are herein referred to as the "Non-U.S. Employee Benefit Plans."
(b) With respect to each of the Non-U.S. Employee Benefit
Plans, Harris has made or will, prior to the Closing Date, make, available to
Buyer true and complete copies of:
(i) The plan documents, including any related trust
agreements or insurance contracts, including amendments thereto,
or a written summary of the terms and conditions of the plan if
there is no written plan document.
(ii) With respect to any Non-U.S. Employee Benefit Plan
maintained primarily for the benefit of employees of a Business
Entity, the most recent actuarial valuations and financial
statements, if any.
(c) To the Sellers' Knowledge, the Non-U.S. Employee Benefit
Plans and Government Sponsored or Mandated Plans administered by Sellers have
been administered and are in material compliance with all material requirements
of Applicable Law and the terms of each such plan; any Non-U.S. Employee Benefit
Plan which is intended to be qualified under Applicable Law or registered or
approved by a Governmental Authority has been determined to be so qualified,
registered or approved by the appropriate Governmental Authority; and to the
Sellers' Knowledge, nothing has occurred between the date of the last such
determination and the Closing Date to cause the appropriate Governmental
Authority to revoke such determination or which would materially adversely
affect the continuing qualified, registered or approved status of such Non-U.S.
Employee Benefit Plan.
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(d) All contributions (including premiums) required by law or
contract to have been paid or accrued, under or with respect to the Non-U.S.
Employee Benefit Plans and Government Sponsored or Mandated Plans to the Closing
Date (including periods from the first day of the then current plan year to the
Closing Date) will have been paid or accrued prior to the Closing Date except to
the extent failure to pay or accrue such contributions individually or in the
aggregate would not be reasonably expected to have a Material Adverse Effect on
the Business.
(e) The accrued benefits provided under each Non-U.S. Employee
Benefit Plan and Government Sponsored or Mandated Plans providing retirement,
severance or similar benefits (to the extent established and formally
communicated to employees), determined as of the Closing Date, will not exceed
the fair market value as of such date of the assets applicable to such Non-U.S.
Employee Benefit Plan or Government Sponsored or Mandated Plan, or the book
reserve, balance sheet reserve or other reserve with respect thereto as of the
Closing Date. Notwithstanding the foregoing, the only amounts so required to be
so funded or reserved shall be the amounts required to be funded, reserved or
provided for in conformity with generally accepted accounting principles in the
applicable country. For this purpose, "accrued benefits" means the present value
of all retirement, severance or similar benefits (as described above) under a
plan recognizing salary and service to Closing.
(f) There are no material pending or, to the Sellers'
Knowledge, threatened claims (other than routine claims for benefits),
investigations, litigation or other enforcement actions against Seller, the
Business Entities or any of their officers, directors, employees or agents, with
respect to any of the Non-U.S. Employee Benefit Plans, nor is there any other
liability with respect to such plans except those incurred in the normal course
of operation.
(g) No material improvement in the benefits accrued or provided
under the Non-U.S. Employee Benefit Plans will be made on or before the Closing
Date.
4.19 Insurance. Schedule 4.19 contains a list of all material insurance
policies (excluding title insurance policies) maintained by or on behalf of or
covering any Seller that is specific to the Business (the "Policies"). Each
Business Entity has made available to Buyer copies of all current declaration
sheets relating to the Policies. Except as noted on Schedule 4.19, as of the
date of the Agreement, the Policies are in full force and effect, no notices of
cancellation or nonrenewal have been received by any Business Entity with
respect thereto, and all premiums due thereon have been paid.
4.20 Powers of Attorney. Except as set forth on Schedule 4.20, none of the
Business Entities has given any irrevocable power of attorney (other than such
powers of attorney given in the ordinary course of business with respect to
routine matters or as may be necessary or desirable in connection with the
consummation of the transactions contemplated herein) to any person, firm, or
corporation for any purpose whatsoever with respect to the Business.
4.21 Brokers. No agent, broker, Person or firm acting on behalf of Sellers
or their stockholders is, or will be, entitled to any commission or broker's or
finder's fees from any of
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the parties hereto, or from any Person controlling, controlled by or under
common control with any of the parties hereto, in connection with any of the
transactions contemplated herein.
4.22 Taxes. Except as set forth on Schedule 4.22:
(a) Each Business Entity has, except where failure to do so would not
have a Material Adverse Effect on the Business or a Material Real Estate
Impairment, (i) timely filed (or caused to be filed) all Tax Returns required to
be filed by it and each Tax Return is true, complete and accurate, (ii) timely
paid all Taxes shown thereon as due and owing, (iii) paid all other Taxes which
otherwise have become due and payable, and (iv) adequately provided for, on its
books of account and related records, liability for all other current Taxes not
yet due and payable.
(b) None of the Business Entities has received any written notice of a
material proposed adjustment, deficiency or underpayment in relation to the
Business, which notice has not been satisfied by payment or been withdrawn, and
there are no material claims that have been asserted or threatened relating to
Taxes related to the Business.
(c) Each of the Business Entities has withheld and paid all Taxes
required to be withheld and paid in connection with amounts paid or owing to any
employee, independent contractor, creditor, stockholder or third party in
relation to the Business.
(d) There are no liens with respect to Taxes upon the Transferred
Assets other than customary liens for current Taxes not yet due and payable.
(e) As relates to the Business, none of the Business Entities (i) has
ever made any election under Treasury Regulation Section 301.7701-3(c) to treat
any of the Transferred Subsidiaries as other than an association, except for
entities organized in Malaysia, or (ii) has filed a consent under Code Section
341(f) concerning collapsible corporations.
(f) None of the Transferred Subsidiaries formed other than under the
laws of a state of the United States has ever owned a United States real
property interest within the meaning of Code Section 897(c).
(g) With respect to the Business Entities other than Harris
("Subsidiary Entities"): (i) no Subsidiary Entity has requested, nor has there
been granted with respect thereto, an extension of time within which to file a
Tax Return; (ii) no Subsidiary Entity is under audit, nor are any of such
entities aware of any material threatened or proposed audits of their Tax
Returns; (iii) no claim for Taxes (or request for Tax Returns) has ever been
made of a Subsidiary Entity in a jurisdiction where such entity does not file
Tax Returns; (iv) except as provided under Treas. Reg. Section 1.1502-6 (or any
similar provision of state, local or foreign law), none of the Subsidiary
Entities has any liability for or any obligation to pay Taxes of another or of
Harris as a transferee or successor, by contract or otherwise; (v) no Subsidiary
Entity has waived any statute of limitations in respect of Taxes or agreed to
any extension of time with respect to a Tax assessment or deficiency; (vi) no
Subsidiary Entity is a party to a closing agreement, or the subject of a private
ruling, concerning Taxes with any Governmental
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Authority; (vii) none of the Subsidiary Entities is required to make any
adjustment under Section 481 of the Code (or any comparable provision of state,
local or foreign law) by reason of a change in accounting method; (viii) no
Subsidiary Entity is a partner in any entity considered to be a partnership for
federal income tax purposes; (ix) no Subsidiary Entity has ever entered into an
advanced pricing agreement or any other agreement, whether arising upon audit or
otherwise, relating to Section 482 of the Code, and (x) none of the Subsidiary
Entities has made any payments, is obligated to make any payments, or is a party
to any agreement, including this Master Agreement, that could obligate it to
make any payments that will not be deductible under Code Section 280G.
(h) Except as disclosed on Schedule 4.22(h), Harris has never (with
respect to the Business and relating to any taxable year subsequent to fiscal
1993 ) entered into an advanced pricing agreement or any other agreement,
whether arising upon audit or otherwise, relating to Section 482 of the Code,
and Harris has never (with respect to the Business) made any payments, is not
obligated to make any payments, and is not a party to any agreement, including
this Master Agreement, that could obligate Harris to make any payments that will
not be deductible under Code Section 280G.
(i) With respect to the three year period ending with the Closing
Date, (i) Harris, Harris Malaysia and their Affiliates in the United States have
taken the position, for Federal income tax purposes, that: (A) all or
substantially all of the sales made by Harris Malaysia to Harris do not generate
United States source income within the meaning of Code Section 861 through 865,
and (B) Harris Malaysia does not have an office or other fixed place of business
in the United States nor does Harris Malaysia have any employees or agents
engaging in sales activities in the United States; and (ii) there has not been
any challenge to such positions taken by the Internal Revenue Service.
4.23 Transferred Assets - General. Except for the Excluded Assets and
except as set forth on Schedule 4.23, the Transferred Assets include (a) all of
the assets and rights of Harris and the other Business Entities which were or
are material to the conduct of the Business as conducted by Harris and the other
Business Entities during fiscal 1999, subject to such changes as have occurred
in the ordinary course of business since the end of Harris' fiscal 1998 and (b)
all assets that will be reflected on the Audited Closing Balance Sheet.
4.24 Personal Property. Except as set forth on Schedule 4.24, to the
Sellers' Knowledge, the items of personal property included in the Transferred
Assets and presently and actively used in the operation of the Business are in
normal operating condition, free of any defects (except those resulting from
normal wear and operation) which individually or in the aggregate, reasonably
could be expected to have a Material Adverse Effect on the Business. Matters
within the scope of Section 4.10 are outside the scope of this Section 4.24.
4.25 Warranty Claims. The Business Entities have paid (whether in money,
property or services) claims relating to breaches of express or implied
warranties (excluding claims founded upon negligence, strict liability in tort
or other similar legal theory) made with respect to products of the Business
Harris' fiscal years 1998, 1997 and 1996 in amounts not in excess of 2.5% of
sales of the Business for such years, respectively. Except as set forth on
Schedule 4.25, there are no pending or, to the Sellers' Knowledge, threatened
claims for the breach of any express or implied warranty
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made with respect to products of the Business, except for individual claims
which involve claims for money, property or services of less than $50,000.
4.26 Inventory. Except for inventory in the possession of sales agents and
distributors, in transit, and as disclosed prior to the Closing Date, all
inventory of the Business (other than Excluded Assets) is located at the
Transferred Facilities.
4.27 Malaysian Activities. To the best of the knowledge of Harris Malaysia
and Harris, with respect to the three year period ending with the Closing Date,
Harris Malaysia and Harris, with respect to substantially all of the sales made
by Harris Malaysia to Harris, represent that:
(a) title passage occurred from Harris Malaysia to Harris outside the
United States;
(b) shipping was made by a freight forwarder located outside the
United States or, in any other situation, FOB at a location outside the United
States;
(c) all risk of loss passed from Harris Malaysia to Harris outside the
United States;
(d) all insurance and shipping costs are borne by Harris;
(e) all governmental filing made in the United States reflect the
facts that Harris is the importer of record to the United States; and
(f) all documentation was consistence with the foregoing.
Furthermore, Harris Malaysia and Harris represent that Harris Malaysia does not
have any leased or owned premises available for its use in the United States in
its own name nor does Harris Malaysia have any employees on its payroll engaging
in sales activities in the United States.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF BUYER AND PARENT
Buyer and Parent represent and warrant to Harris as set forth below as of
the date of this Master Agreement:
5.1 Organization and Standing of Buyer and Parent; Charter and Bylaws. Each
of Buyer and Parent is a corporation duly organized, validly existing and in
good standing under the laws of Delaware and has all requisite corporate power
and authority to enter into this Master Agreement and the Ancillary Agreements,
to carry out the transactions contemplated hereby and thereby to perform its
obligations hereunder. Copies of the charter and bylaws or other organizational
documents of each of Buyer and Parent have been made available to Harris, and
each such copy is true, correct and complete.
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5.2 Authorization. The execution, delivery and performance of this Master
Agreement and the Ancillary Agreements executed or to be executed by Buyer and
Parent pursuant to this Master Agreement, and the consummation of the
transactions contemplated hereby and thereby, have been duly authorized by all
necessary corporate and other action on the part of Buyer and Parent. This
Master Agreement and the Ancillary Agreements executed or to be executed by
pursuant to this Master Agreement have been, or will have been, at the time of
their respective executions and deliveries, duly executed and delivered by a
duly authorized officer of Buyer and Parent, as the case may be.
5.3 Enforceability. This Master Agreement and each Ancillary Agreement
constitutes, or when executed and delivered will constitute, the valid and
legally binding obligation of Buyer and Parent, enforceable in accordance with
its terms, except as such enforceability may be limited by equitable principles
and by applicable bankruptcy, insolvency, reorganization, arrangement,
moratorium or similar laws relating to or affecting the rights of creditors
generally.
5.4 Compliance with Other Instruments and Laws. The execution, delivery and
performance of this Master Agreement and the Ancillary Agreements executed or to
be executed by Buyer and Parent pursuant to this Master Agreement, and the
consummation of the transactions contemplated hereby and thereby will not
conflict with or result in any violation of or default under any provision (a)
of the charter or bylaws of Buyer or Parent, or (b) of any mortgage, indenture,
trust, lease, partnership or other agreement or other instrument, permit,
concession, grant, franchise, license, judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to Buyer or Parent or any of their
properties or assets, the result of which, with respect to items identified in
clause (b) would (either individually or in the aggregate) have a material
adverse effect on the operations or financial condition of Buyer or Parent and
their subsidiaries, taken as a whole, or would materially impair Buyer's or
Parent's ability to consummate the transactions contemplated hereby (a "Material
Adverse Effect on Buyer").
5.5 Governmental Authorizations and Consents. Except as set forth on
Schedule 5.5, no consents, licenses, approvals or authorizations of, or
registrations or declarations with, any Governmental Authority, bureau, agency
or commission, or any third party, are required to be obtained or made by Buyer
or Parent or their Affiliates in connection with the execution, delivery,
performance, validity and enforceability of this Master Agreement or the other
Ancillary Agreements, other than (a) a filing with the Federal Trade Commission
and the Department of Justice under the HSR Act, (b) a filing with the Committee
on Foreign Investment in the United States under Section 721 of Title VII of the
United States Defense Production Act of 1950, as amended by Section 5021 of the
Omnibus Trade and Competitiveness Act of 1988, and (c) other consents, licenses,
approvals, authorizations, registrations or declarations, where the failure to
obtain such would not have a Material Adverse Effect on Buyer. Neither Buyer nor
Parent is currently engaged in, or contemplating, any business transaction that
would be reasonably expected to hinder or delay the authorizations and consents
referred to in this Section 5.5.
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5.6 Litigation. As of the date of this Master Agreement, no action, suit,
proceeding or governmental investigation is pending or, to the knowledge of
Buyer or Parent or their Affiliates, threatened, against Buyer or Parent or
their properties, at law or in equity or before any Governmental Authority that
seeks to question, delay or prevent the consummation of the transactions
contemplated hereby.
5.7 Access. Buyer and Parent have received and reviewed the Baseline
Financial Statements and are acquainted with the Business. Buyer and Parent have
had an opportunity to review the assets, books, records and contracts of the
Business, and has been given the opportunity to meet with officers and other
representatives of Harris for the purpose of investigating and obtaining
information regarding the operations of the Business and its financial and legal
affairs.
5.8 Financial Capacity. Buyer and Parent have heretofore provided to Harris
an accurate written explanation of the Financing. As used herein, "Financing"
shall mean the financing described in the "highly confident" and commitment
letters (the "Commitment Letters") received by Buyer from financing sources
providing for sufficient funds to pay the cash portion of the Purchase Price, to
pay expenses in connection with the purchase of the Transferred Assets and to
perform any necessary refinancing of existing indebtedness of the Business;
provided that, in the event that any portion of the Financing pursuant to the
Commitment Letters becomes unavailable, regardless of fault, Buyer may obtain
such portion of the Financing from other sources, on terms no less favorable to
Buyer than those applicable to the portion of the Financing which has become
unavailable; provided, further, that such new terms do not reduce Buyer's equity
to less than $90,000,000.
5.9 Brokers. No agent, broker, Person or firm acting on behalf of Buyer or
Parent or their stockholders is, or will be, entitled to any commission or
broker's or finder's fees from any of the parties hereto, or from any Person
controlling, controlled by or under common control with any of the parties
hereto, in connection with any of the transactions contemplated hereby.
5.10 Hart-Scott-Rodino Antitrust Improvements Act of 1976. Parent is not
controlled by any other entity for purposes of the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, and the implementing regulations
thereunder, 16 C.F.R. Parts 801-803 (the "HSR Rules"). The total assets and
annual net sales of the person consisting of Parent and all entities it
controls, determined at the time of Closing in accordance with Section 801.11 of
the HSR Rules, are each less than $10 million.
ARTICLE 6
COVENANTS RELATING TO PERSONNEL ARRANGEMENTS
6.1 Employees; Collective Bargaining Agreements; Transferee Employees.
(a) Buyer will recognize and engage in collective bargaining with the
labor unions which are the bargaining agents for the represented employees at
the Union Plants. Following the Closing, Buyer will continue in effect the terms
and conditions of employment for the represented employees at the Union Plants,
except as those terms and conditions may be
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modified pursuant to the collective bargaining process. Sellers shall not agree
to any modification or change in the terms and conditions of employment for the
represented employees at the Union Plants prior to the Closing without Buyer's
written approval.
(b) Effective upon the Closing Date as of 11:59 p.m. Eastern Daylight
Savings Time, Sellers shall terminate the employment of the Employees of the
Business, other than the employees of the Transferred Subsidiaries, and Buyer or
one of its Subsidiaries shall offer employment to all employees whose employment
is so terminated effective as of the time of their termination of employment
with Sellers, including all employees who are not actively at work on the
Closing Date and who (i) are not actively at work and who have recall or
return-to-work rights under any collective bargaining agreement, or (ii) are not
actively at work due to short-term disability, military service or other
authorized leave of absence provided such employees return to work at the end of
any such authorized leave of absence or in the case of military leave, before
their statutory re-employment rights expire. In addition, Buyer shall offer
employment to all Employees of the Business who on the Closing Date are absent
from work due to a long-term disability and who notify Buyer within six months
of the date of disability that they have recovered from such long-term
disability. Each such offer shall be made on terms and conditions, including
compensation and benefits, substantially equivalent in the aggregate to those
provided by Sellers on the date hereof. All such employees who accept Buyer's
offer of employment and all employees of Transferred Subsidiaries shall be
referred to herein as "Transferee Employees." Except as otherwise provided
herein, Sellers shall be responsible for (by payment or accrual on the Final
Closing Balance Sheet) wages, salaries and benefits (including vacations) of
employees until they become Transferee Employees.
6.2 Severance Obligations. Buyer will be solely responsible for
obligations, if any, for severance pay for any Employees of the Business who do
not become Transferee Employees if Buyer did not offer employment to such
employees on substantially the same terms as such employees were employed by
Sellers. Notwithstanding anything in this Agreement to the contrary, Buyer shall
be responsible for severance pay to Eduard Verbeek and Dieter Schacht, whether
termination of either or both of such individuals occurs before or after the
Closing Date. Buyer shall be solely responsible for any obligation for severance
pay for Employees of the Business who become Transferee Employees and are
subsequently terminated by Buyer. Buyer acknowledges that it has not informed
Sellers of any planned or contemplated decisions or actions by Buyer or one of
its subsidiaries that would require service of notice under the Warn Act. Buyer
agrees that it will be solely responsible for any liabilities created if either
it or any of its subsidiaries takes any action (other than as set forth in the
following sentence) which will cause the notice provision of the Warn Act to
become applicable to the transactions contemplated by this Agreement. Buyer
acknowledges that it has been informed by Seller that the closing of the 4"
wafer FAB of the plant located in Findlay, Ohio, and the terminations related
thereto, will require service of notice under the Warn Act and that the timing
of some of such terminations will require Buyer to provide certain of such
notices following the Closing Date.
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6.3 Plans, Benefits and Policies.
(a) Except as otherwise provided herein, Buyer and its Subsidiaries
will, as of 12:00 a.m. Eastern Daylight Savings Time on the day immediately
after the Closing Date, adopt and provide for Transferee Employees whose
employment is based in the United States employment and benefit packages
(including, to the extent applicable, profit sharing and retirement plans,
medical, severance, and post-retirement benefits) equivalent to Buyer's
employment and benefit packages maintained for similarly situated employees of
Buyer.
(b) Buyer and its Subsidiaries will credit Transferee Employees with
service with Sellers (and predecessors of Sellers) for purposes of (i) vesting
for and eligibility to participate in any employee pension benefit plans (as
defined in Section 3(2) of ERISA), but not for benefit accruals; (ii) any
waiting periods, eligibility or pre-existing condition limitations for employee
welfare benefit plans (as defined in Section 3(1) of ERISA); and (iii)
eligibility and benefit computation for vacation and severance pay plans;
provided, however, that with respect to vacation plans for the remainder of
calendar year 1999 only, Buyer shall maintain vacation plans equivalent to, and
in lieu of, Sellers' vacation plans covering the Transferee Employees
immediately prior to the Closing Date (offset by vacation time used under
Sellers' vacation plans as of the Closing Date). Buyer shall credit Transferee
Employees with any amounts paid prior to the Closing Date under any Welfare Plan
that is a health plan toward the satisfaction of deductible amounts and
copayment minimums under the Buyer's corresponding welfare benefit plans.
(c) Effective as of 11:59 p.m. Eastern Daylight Savings Time on the
Closing Date, sponsorship of the Harris Corporation Union Retirement Plan shall
be transferred to the Buyer and Buyer shall become the successor employer under
such plan and thereby shall assume all liabilities related to such plan.
(d) Harris and Buyer shall effectuate a trust-to-trust transfer of the
assets and liabilities of the Harris Corporation Retirement Plan in respect of
the account balances of Transferee Employees to a defined contribution plan
established or maintained by Buyer or one of its Subsidiaries (the "Buyer's
Retirement Plan") as follows. As soon as administratively practicable after the
Closing Date, Harris shall cause the account of each Transferee Employee in the
Harris Corporation Retirement Plan to be valued and assets equal in value to the
amount credited each such Transferee Employee's account under the Harris
Corporation Retirement Plan, determined without regard to any vesting schedule,
to be transferred to the trust maintained under Buyer's Retirement Plan. Such
transferred assets shall be in cash or, to the extent mutually agreed upon by
Harris and Buyer, in kind, and shall also include any promissory notes
evidencing outstanding loan balances owed to the Harris Corporation Retirement
Plan by the Transferee Employees. Prior to, and as a condition of, any transfer
of assets from the Harris Corporation Retirement Plan to Buyer's Retirement
Plan, each party shall provide the other with a copy of a determination letter
from the Internal Revenue Service, or other reasonably satisfactory evidence,
representations and relevant undertakings, including an opinion of counsel,
evidencing the tax-qualified status of its plan and the tax-exempt status of the
applicable plan's trust. As of the transfer date, and contingent upon the
transfer, Buyer shall be liable for the
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payment of benefits accrued by and liabilities transferred in respect of the
Transferee Employees under the Harris Corporation Retirement Plan.
(e) As soon as practicable after the Closing Date, Harris and Buyer
shall take any action necessary to transfer the accounts of Transferee Employees
in the "cafeteria plan," as defined in section 125 of the Code, maintained by a
Seller to a cafeteria plan established or maintained by Buyer or one of its
subsidiaries.
(f) Except as otherwise provided herein, as of 11:59 p.m. Eastern
Daylight Savings Time on the Closing Date all Transferee Employees whose
employment is based in the United States shall cease participation in Seller
Benefit Plans.
(g) Sellers or the applicable employee benefit programs administered by
Sellers shall be responsible for benefits accrued or claims incurred prior to
the Closing with respect to Transferee Employees and their eligible dependents
in accordance with the provisions of the applicable Seller's employee benefit
program with respect to: (i) disability benefits, both long-term and short-term,
for disabilities that commenced before 11:59 p.m. Eastern Daylight Savings Time
on the Closing Date; (ii) benefits for confinements covered under Seller's
medical plans that commenced before 11:59 p.m. Eastern Daylight Savings Time on
the Closing Date; (iii) health care benefits for services rendered or materials
received under Seller's medical plans before 11:59 p.m. Eastern Daylight Savings
Time on the Closing Date; and (iv) worker's compensation benefits for
disabilities resulting from an accident or occurrence while employed by Seller
or a Subsidiary of Seller or a predecessor thereof which occurred prior to the
Closing Date.
(h) After Closing, Buyer and Sellers will cooperate with each other and
provide each other such information as is required concerning Transferee
Employees in order to determine whether a Transferee Employee is entitled to
compensation from either party or benefits under any plan, program or
arrangement sponsored or maintained by either party.
(i) No provision in this Section 6.3 shall create any third-party
beneficiary rights in any employee or former employee (including any beneficiary
or dependent thereof) of Harris, any Business Entity or any of their Affiliates.
(j) Nothing in this Section 6.3 shall be construed to constitute an
assumption by Parent or Buyer of any Retirement Plan Accruals.
(k) Notwithstanding the foregoing, Buyer shall assume any obligation
that Harris has to any Transferred Employee, whether based inside or outside of
the United States, with respect to the Harris supplemental employee retirement
plan.
6.4 Foreign Employees. As of the Closing Date Buyer shall provide benefit
plans for Transferee Employees whose employment is based outside the U.S. which
are reasonably equivalent, in the aggregate, to those provided by Sellers
immediately prior to the Closing Date, subject to the right of Buyer and its
Subsidiaries to amend or terminate such benefit plans. Buyer
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shall assume all obligations with respect to all German pension supplements
including that disclosed on Schedule 4.18.2.
6.5 Commissions and Bonuses. Sellers and Buyer agree that Employees of the
Business who become Transferee Employees will continue under the applicable
commissions or bonus compensation policy of Seller through July 2, 1999. Buyer
shall use commercially reasonable efforts to cooperate with Sellers in preparing
the necessary sales and business performance data required to calculate such
commissions or bonuses for performance during such period. Payment of such
bonuses will be allocated between Sellers and Buyer on the basis of time of
ownership of the unit for the applicable period for which the bonus is being
paid. Sellers will use commercially reasonable efforts to forward such payments
to such Transferee Employees as soon as possible, and Sellers shall invoice
Buyer for its allocated share of such payments. Commissions with respect to
shipments prior to the Closing Date and which were not accrued for in the Final
Closing Balance Sheet will be paid by Sellers; all other commissions will be
paid by Buyer.
ARTICLE 7
COVENANTS OF SELLERS
7.1 Conduct of Business.
(a) Except as set forth on Schedule 7.1 or as may be otherwise
expressly permitted by this Master Agreement or with the prior written consent
of Buyer in Buyer's sole discretion, from the date hereof and prior to the
Closing, Harris will, and will cause each Business Entity to: (i) operate the
Business only in the ordinary course and substantially in accordance with past
practice and will use its reasonable efforts to not take any action inconsistent
with this Master Agreement or with the consummation of the Closing; (ii) use
commercially reasonable efforts to preserve intact the organization of the
Business; (iii) continue in full force and effect all existing insurance
policies (or comparable insurance) specific to the Business or the Transferred
Assets; and (iv) except for changes resulting from the ongoing reorganization of
the sales distribution organization of the Harris Semiconductor Sector unrelated
to the transactions contemplated by this Master Agreement, use commercially
reasonable efforts to preserve each Business Entity's relationships with its
suppliers, customers, licensors and licensees and others having business
dealings with any Business Entity relating to the Business.
(b) Without limiting the generality of Section 7.1(a), and except as
may be otherwise expressly permitted by this Master Agreement or with the prior
written consent of Buyer, in Buyer's sole discretion, from the date hereof
through the Closing, Harris shall not permit any Business Entity, with respect
to the Business, to:
(i) enter into, extend, materially modify or renew any Contract
in connection with the Business that would increase or cause Buyer to
be obligated to pay future payments in excess of $400,000 per year, in
the aggregate with other such Contracts, or otherwise materially
affect the rights or obligations of any Business Entity under such
Contract, except in the ordinary course;
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(ii) conduct the Business in a manner that departs materially
from the manner in which the Business was being conducted prior to the
date of this Master Agreement or take any action or permit to occur
any event set forth in Section 4.4;
(iii) sell, assign, transfer, convey, lease, sub-lease, mortgage,
pledge or otherwise dispose of or encumber or allow the encumbrances
of any of the Transferred Assets or any interests therein or exercise
any purchase option or right of first refusal contained in any of the
Transferred Assets, except in the ordinary course of business and,
without limiting the generality of the foregoing, the Business
Entities may maintain and sell inventory consistent with its past
practices;
(iv) fail to maintain the Transferred Assets in substantially
their current state of repair, excepting normal wear and tear, or fail
to replace consistent with the Business Entities' past practice
inoperable, worn-out or obsolete or destroyed Transferred Assets;
(v) intentionally do any other act or intentionally fail to take
any action which would cause any representation or warranty of Harris
in this Master Agreement to be or become untrue in any material
respect;
(vi) make any material change in its accounting methods except to
the extent required by GAAP;
(vii) incur or assume any debt, obligation, trade payable or
liability for which the Business is liable (whether absolute or
contingent and whether or not currently due and payable), except in
the ordinary course of business or obligations under Material
Contracts;
(viii) pay, directly or indirectly, any of the Business Entities'
liabilities as they relate to the Business before the same became due
in accordance with their terms or defer the payment of any liabilities
or change its payable levels, in each case other than in the ordinary
course of business;
(ix) accelerate the collection, directly or indirectly, of any of
its accounts receivable other than in the ordinary course of business
or defer the collection of any such accounts other than in the
ordinary course of business;
(x) defer or delay the purchase of any inventory or change its
inventory levels, except in the ordinary course of business;
(xi) other than in the ordinary course of business, cancel any
debts or waive any claims or rights of substantial value;
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(xii) sell, transfer, or otherwise dispose of any of its
Transferred Assets, other than in the ordinary course of business at
prices, on terms and in quantities consistent with past practice;
(xiii) make any loan or advance other than in the ordinary course
of business; (xiv) cancel, compromise, knowingly waive or lease any
material right or claim (or series of related rights and claims) under
Material Contracts, outside the ordinary course of business;
(xv) make a change in accounting method, keeping of books of
account or accounting practices, or make any election for Tax purposes
or for purposes of a Tax Return (or have any such election made on its
behalf) except as set forth in Sections 4.22 and 10.20, or enter into
any agreement, arrangement or settlement with respect to Taxes;
(xvi) make any change in the rate of compensation. commission,
bonus or other direct or indirect remuneration payable, or agree to
pay, conditionally or otherwise, any bonus, incentive, retention or
other compensation, retirement, welfare, fringe or severance benefit
or vacation pay, to or in respect of any Employee of the Business,
other than the increases and payments in the ordinary course of
business consistent with past practice in the compensation payable to
Employees of the Business; or
(xvii) agree or otherwise become obligated to do any of the
foregoing.
(c) Notwithstanding anything to the contrary contained herein, but
without limiting the effects of the representations and warranties set forth in
Sections 4.7 and 4.23, (i) at any time prior to the Closing, Sellers may cause
any asset of a Transferred Subsidiary that would not be included in the
Transferred Assets if the assets, rather than the stock, of such Transferred
Subsidiary were being conveyed hereunder, to be transferred to Harris or one or
more of its Subsidiaries, and (ii) prior to the Closing, Harris shall remove
from the books of each Subsidiary any intracompany receivable or intracompany
payable, so that at and after the Closing no Subsidiary shall owe, or have the
right to receive from, Harris or any of its Subsidiaries any amount for goods,
services or cash advances or other extensions of credit provided prior to the
Closing.
7.2 Non-Competition. For a period of five (5) years from the Closing Date,
Harris shall not, and shall not permit any Affiliate of Harris to, for its own
account or for the account of others, directly or indirectly (i) engage in any
Competing Business, or (ii) own, manage, operate, join, control or participate
in the ownership, management, operation or control of any person or entity who
or which at any relevant time during such period is engaged in any Competing
Business. Ownership of not more than 10% of the outstanding equity of any
company registered under Section 12 of the Securities Exchange Act of 1934 or
ownership in any venture, partnership or other person or entity that does not
constitute an Affiliate of Harris shall not be a violation of this Section 7.2.
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(a) As used herein, "Competing Business" shall mean the design,
production, manufacture, assembly, testing, distribution, marketing or sale for
Harris' own account or for the account of others of any product that has
substantially the same specifications as any Products or the purchase for resale
or repackaging of any Products.
(b) For a period of one year from and after the Closing Date, Harris
will not and will cause its Affiliates not to, directly or indirectly, solicit
or attempt to solicit any person or entity who is or has been a customer,
supplier, licensor, licensee or business relation of the Business prior to or
during such period to cease its particular business relationship with the
Business.
(c) For a period of two years from the Closing Date with respect to any
director, officer, employee or agent, no party hereto will, and the parties
hereto will cause their respective Affiliates not to, directly or indirectly,
solicit or induce any person or entity who is a director, officer, employee or
agent of the other party or any of its Affiliates to terminate his, her or its
relationship with, or employment by, such entity. This Subsection 7.2(c) shall
not prohibit the parties and their Subsidiaries from engaging in general
solicitations, in the form of newspaper, internet and similar advertising and
solicitations, and accepting inquiries and applications in response thereto.
(d) This Section 7.2 shall not prevent Sellers or their Affiliates from
engaging in the activities contemplated by the Ancillary Agreements or acquiring
the capital stock or assets of any business that derives less than fifteen
percent (15%) of its consolidated revenues during the twelve calendar months
immediately preceding such acquisition from any Competing Business, so long as
Harris uses commercially reasonable efforts to divest that portion of the
acquired business that is engaged in a Competing Business as soon as
commercially practicable.
(e) The restrictive covenants contained in this Section are covenants
independent of any other provision of this Master Agreement and the existence of
any claim which any party to this Master Agreement may allege against any other
party to this Master Agreement, whether based on this Master Agreement or
otherwise, shall not prevent the enforcement of these covenants. Each of Harris
and Buyer agrees that the other's remedies at law for any breach or threat of
breach of the provisions of this Section will be inadequate, and that each party
shall be entitled to an injunction or injunctions to prevent breaches of the
provisions of this Section and to enforce specifically the terms and provisions
hereof, in addition to any other remedy to which such party may be entitled at
law or equity. In the event of litigation regarding the covenant not to compete,
the prevailing party in such litigation shall, in addition to any other remedies
the prevailing party may obtain in such litigation, be entitled to recover from
the other party its reasonable legal fees and out of pocket costs incurred by
such party in enforcing or defending its rights hereunder. The length of time
for which this covenant not to compete shall be in force shall not include any
period of violation or any other period required for litigation during which the
party seeking to enforce this covenant seeks to enforce this covenant. Should
any provisions of this Section be adjudged to any extent invalid by any
competent tribunal, such provision will be deemed modified to the extent
necessary to make it enforceable.
7.3 Access. Subject to reasonable notice and as permitted by law, each
Business Entity shall afford to Buyer and Parent and their respective officers,
employees, accountants,
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counsel and other agents and representatives full access during normal business
hours throughout the period prior to the Closing Date to all of their officers,
employees and properties and full access for inspection and copying of all Books
and Records, Contracts, commitments and any other information relating to the
Business and, during such period, each Business Entity shall furnish promptly to
Buyer and its representatives in relation to the Business access to all other
information concerning the business, properties and personnel of the Business as
Buyer may reasonably request. Each Business Entity shall promptly upon request
provide Buyer access to a true, complete and correct copy of each written
agreement or other instrument, together with all amendments or clarifications
thereto, and a true, complete and correct summary of the terms and conditions of
each oral agreement, identified in the Disclosure Schedule. If access is
restricted due to a term in the agreement or by Applicable Law, each Business
Entity shall use its Best Efforts to secure consent from the other party(ies) to
the agreement to provide such access prior to Closing with sufficient time for
Buyer review. Buyer will treat the documents and other material and information
referred to in this Section 7.3 in compliance with Section 9.9.
7.4 Environmental Transfer Statutes. Harris shall comply and cause each of
the Transferred Subsidiaries to comply, at Harris' sole cost and expense, with
all obligations, requirements or responsibilities under New Jersey's Industrial
Sites Recovery Act ("ISRA") or any similar foreign, state, federal, or
provincial statute, each as may be amended ("Environmental Transfer Statute"),
as may be imposed based on the execution and delivery of this Master Agreement
or the Ancillary Agreements or the consummation of the transactions contemplated
thereby. If Remediation is required at any property pursuant to any
Environmental Transfer Statute, whether before or after the Closing, Harris
shall carry out all such obligations, requirements or responsibilities, in form
and substance reasonably satisfactory to Buyer including, without limitation,
the execution of Remediation Agreement (as defined in ISRA) or similar document.
7.5 Title Insurance. Harris shall and shall cause the other Business
Entities to cooperate with Buyer and use their Best Efforts to assist Buyer in
obtaining, at Buyer's cost, good and valid, irrevocable ALTA title insurance
commitments (collectively, the "Title Commitments," and each a "Title
Commitment"), in final form, from one or more title insurance companies
reasonably acceptable to Buyer (collectively, the "Title Company"), irrevocably
committing the Title Company (subject only to the satisfaction of any industry
standard requirements contained in the Title Commitment and reasonably
acceptable to Buyer) to issuing ALTA form of title insurance policies insuring
good, valid, indefeasible fee simple title to the Owned Real Estate located in
the United States in Buyer and, at Buyers' request, similar or equivalent
insurance with respect to the Malaysian Facility, in all cases, in the
respective amounts that Buyer requests prior to Closing, subject to no Liens or
other exceptions to title other than Permitted Liens (collectively, the "Title
Policies") and insuring pedestrian and vehicular access to and from one or more
legally and physically open public rights of way satisfactory to Buyer, in its
sole but reasonable discretion. Each of the Title Commitments shall be effective
as of a date occurring not earlier than the date of this Master Agreement and
the effective dates of each of them shall be brought down to the time of the
Closing. Each such Title Policy shall include such endorsements thereto as may
reasonably be requested by Buyer. On or prior to the Closing Date, the Sellers
shall execute and deliver, or cause to be executed and delivered, to the Title
Company any affidavits, standard gap indemnities and
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similar documents reasonably requested by the Title Company in connection with
the issuance of the Title Commitments or the Title Policies.
7.6 Surveys. Sellers shall cooperate with Buyer and use their Best Efforts
to assist Buyer in obtaining, at Buyer's cost, no later than fifteen (15) days
prior to Closing, as-built surveys of each parcel of the Owned Real Estate
located in the United States and, at Buyer's request, of the Malaysian Facility
(collectively, the "Surveys") in accordance with (a) the 1997 minimum standard
detail requirements for ALTA/ACSM Land Title Surveys, including, without
limitation, Table A items 2, 3, 4, 6, 7, 8, 9, 10, 11 and 13 and such additional
or different Table A Items as Buyer may, in its discretion, require, (b) with
the Accuracy Standards (as adopted by ALTA and ACSM) of an Urban Survey, and (c)
local standards required by Buyer, in its discretion, dated after the date
hereof, and showing, without limiting the foregoing, with respect to each parcel
of the Owned Real Estate (and the Malaysia Facility, if applicable), all
easements and other appurtenances benefiting and all easements and other
encumbrances burdening such parcel. Each Survey shall be certified to any lender
providing financing to Buyer for the transactions contemplated hereby, the
Buyer, the Title Company and any other person reasonably requested by Buyer and
shall comply with any requirements imposed by the Title Company as a condition
to the removal of any survey exception from the general exceptions to the Title
Policy covering the Owned Real Estate shown on such survey.
7.7 Estoppel Certificates. Promptly following execution of this Master
Agreement, the Sellers shall exercise their, and shall cause the other Business
Entities to cooperate with Buyer and to exercise their, Best Efforts to have
delivered to Buyer prior to the Closing any estoppel certificates and lessor
waivers reasonably determined by Buyer to be necessary to the completion of the
transactions contemplated by this Agreement, in forms reasonably acceptable to
Buyer and Harris (the "Estoppel Certificates"), from each lessor under the
Leases.
7.8 Zoning Letters. Sellers shall, at the request of Buyer, reasonably
cooperate with Buyer in attempting to obtain building code and zoning code
compliance letters stating that each parcel of Owned Real Estate complies with
the building and zoning codes applicable thereto and otherwise in form and
substance reasonably satisfactory to Buyer from the Governmental Authorities
having jurisdiction over such matters.
7.9 Foreign Real Estate -- Due Diligence and Assurances. As set forth on
Schedule 4.9(b), some of each of the Owned Real Estate and the Leased Real
Estate is located outside of the United States of America (the "Foreign Owned
Real Estate" and the "Foreign Leased Real Estate," respectively and
collectively, the "Foreign Real Estate"). To the extent that Buyer reasonably
determines that with respect to the Foreign Leased Real Estate, the items
provided for in Sections 7.6 and 7.7 and with respect to the Foreign Owned Real
Estate, the items provided for in any of Sections 7.5, 7.6 and 7.8 are either
insufficient or not practical or desirable to be obtained, then Harris shall use
its Best Efforts to help Buyer to obtain reasonable or locally customary due
diligence materials and assurances: (a) of the validity and marketability of the
Sellers' or Transferred Subsidiaries' fee or leasehold title to such Foreign
Real Estate, as appropriate, and (b) that Buyer or Transferred Subsidiaries,
from and after the Closing, shall be able to operate the subject Foreign Real
Estate and conduct the Business thereon as currently conducted and consistent
with past practice.
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7.10 No Shop. During the period from the date hereof until the Closing or
until this Master Agreement is terminated in accordance with its terms, Harris
will not, and will not authorize or permit any of its officers, directors,
affiliates or representatives to, take, directly or indirectly, any action with
respect to the Business to initiate, assist, solicit, negotiate, encourage,
accept or otherwise pursue any offer or inquiry from any person or entity (a) to
engage in any Business Combination (as defined below) other than the
transactions contemplated by the Transaction Documents or (b) to reach any
agreement or understanding (whether or not such agreement or understanding is
absolute, revocable, contingent or conditional) for, or otherwise attempt to
consummate, any Business Combination other than the transactions contemplated by
the Transaction Documents. For purposes hereof, "Business Combination" means any
(i) merger, consolidation, sale of assets, business combination or similar
transaction to which Harris or any or all of the Business Entities is a party
relating to any or all of the Business, its assets or any interest therein, or
(ii) any sale or other disposition of capital stock of or other equity interests
in any of Harris' Subsidiaries which comprise any portion of the Business or any
sale, dividend or other disposition of all or any material portion of the assets
and properties of any or all of the Business.
ARTICLE 8
COVENANTS OF BUYER AND PARENT
8.1 Investigation. In conducting their review of the Business, each of
Buyer and Parent shall conduct itself so as to not unreasonably interfere with
the Business or with the performance of any Business Entity's employees.
8.2 Assistance with Respect to Excluded Assets. Following the Closing Date,
upon request of Harris, Buyer and Parent will use their commercially reasonable
efforts to assist in connection with the collection of any royalties with
respect to any Retained License Agreements. To the extent Buyer or Parent
receives payment in respect of such items following the Closing Date, Buyer or
Parent shall promptly pay such amounts to Harris.
8.3 Names and Logo. Promptly after the Closing Date, Buyer shall, or shall
cause its Subsidiaries to, amend the certificate of incorporation (or other
charter documents) of each Transferred Subsidiary whose name includes Harris, or
any derivative thereof, to change the name of each such Subsidiary to a name
that does not include such name and is not confusingly similar therewith. Within
a reasonable time after the Closing Date, Buyer shall, or shall cause its
Subsidiaries to, revise product literature, change signage and stationery, and
discontinue the use of the logo "Harris" except as permitted in the Harris
Trademark License Agreement.
8.4 Space Used by Harris ESS. Following the Closing Date, Harris shall be
entitled to continue to occupy the space in the Manufacturing Facilities in Palm
Bay, Florida ("Palm Bay, Florida Facility") (Building 63) and Kuala Lumpur,
Malaysia, currently used by the Harris electronic systems business on mutually
agreeable terms that shall provide for a pass-through equivalent to Harris of
the costs of such occupancy and use, pursuant, in each case, to a written lease
or other written agreement executed by Buyer, or the appropriate Transferred
Subsidiary, and by Harris, or one of its Subsidiaries, at or prior to Closing
and in form and substance reasonably acceptable to each party thereto
(collectively, the "Leaseback Agreements").
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8.5 Reimbursement and Indemnity for Certain Costs and Liabilities.
a. On or immediately after the Closing Date, Buyer shall reimburse
Harris for all documented, third-party expenses and capital contributions
incurred or made after the date hereof by Harris on Parent's or Buyer's behalf
in connection with the organization of direct or indirect subsidiaries of Buyer
or the organization or establishment of employee and benefit plans of Parent or
Buyer or similar organization expenses.
b. Buyer and Parent shall indemnify and hold Sellers harmless from any
cost or expense including Taxes or Transfer Taxes arising as a result of the
conversion of Harris Semiconductor, Inc., and Harris Semiconductor (Ohio), Inc.
into limited liability companies and from the merger of Harris Semiconductor
(Pennsylvania), Inc. into a limited liability company, except to the extent
otherwise provided in Section 3.15.
ARTICLE 9
COVENANTS OF ALL PARTIES
9.1 Commercially Reasonable Efforts. Subject to the terms and conditions of
this Master Agreement, each party agrees, both before and after the Closing to
use all commercially reasonable efforts to take, or cause to be taken, all
actions and to do, or cause to be done, all things necessary or desirable under
Applicable Law and the terms of this Master Agreement to consummate the
transactions contemplated by this Master Agreement, including the execution and
delivery of any further instruments or documents of any kind which are
reasonably requested by a party or its counsel to any party signatory hereto in
order to evidence or facilitate the consummation of the transactions
contemplated hereby.
9.2 HSR Filing; Other Filings.
(a) Not later than June 15, 1999, and pursuant to the applicable
requirements of the HSR Act and the rules and regulations thereunder, the
parties shall cause to be filed with the Federal Trade Commission and the
Antitrust Division of the Department of Justice all requisite documents and
notifications in connection with the transactions contemplated by this Master
Agreement. The parties shall diligently and expeditiously comply with the HSR
Act in connection with securing all necessary approvals or waivers thereunder
and shall each use its reasonable best efforts to obtain an early termination of
the applicable waiting period.
(b) The parties shall cooperate with one another (i) in determining
whether any other action by or in respect of, or filing with, any Governmental
Authority is required, or any actions, consents, approvals or waivers are
required to be obtained from parties to any Material Contracts, in connection
with the consummation of the transactions contemplated by this Master Agreement
and (ii) in taking such actions or making any such filings, in furnishing such
information as may be required in connection therewith, and in seeking timely to
obtain any such actions, consents, approvals or waivers.
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9.3 Public Announcements. None of Buyer, Parent, the Business Entities nor
any of their Affiliates will issue any press release or make any public
statement with respect to this Master Agreement or the transactions contemplated
hereby, or disclose the existence of this Master Agreement to any Person or
entity, prior to the Closing and, after the Closing, will not issue any such
press release or make any such public statement without the prior consent of the
other party (which consent shall not be unreasonably withheld or delayed),
subject to any applicable disclosure obligations pursuant to Applicable Law
(including the parties' requirement to issue a press release promptly after the
execution of this Master Agreement and Harris's obligation to file a Form 8-K
with the U.S. Securities and Exchange Commission), provided that the party
proposing to issue any press release or similar public announcement or
communication in compliance with any such disclosure obligations shall use
commercially reasonable efforts to consult in good faith with the other party
before doing so.
9.4 Consents; Cooperation. The parties will use their respective Best
Efforts, and Harris will cause the other Business Entities to use their
respective Best Efforts:
(a) to obtain prior to the earlier of the date required (if so
required) or the Closing Date, all authorizations, consents, orders, permits or
approvals of, or notices to, or filings, registrations or qualifications with,
all Governmental Authorities and any other Person or entity that are required on
their respective parts, for the consummation of the transactions contemplated by
this Master Agreement;
(b) to defend, consistent with applicable principles and requirements
of law, any lawsuit or other legal proceeding, whether judicial or
administrative, whether brought derivatively or on behalf of third Persons
(including Governmental Authorities) challenging this Master Agreement or the
transactions contemplated hereby;
(c) to furnish to each other such information and assistance as may
reasonably be requested in connection with the foregoing; and
(d) to reasonably assist each other as necessary with regard to the
determination of contract or order closeouts or other issues which affect the
Assumed Contract Obligations, to notify Buyer of additional disallowances or
potential adverse audit findings, and to consult and reach agreement with
respect to advanced coordination of negotiating positions, offers of compromise,
or final agreements or settlements, all such cooperation to be without charge to
both parties to this Master Agreement.
9.5 Communications with Customers and Suppliers. Harris agrees, in
consultation with Buyer, to promptly notify suppliers and customers of the
Business of the consummation of the transactions contemplated by this Master
Agreement and to reasonably assist Buyer, at Buyer's expense, in making
arrangements with such customers for the payment of Buyer's accounts receivable
in a manner satisfactory to Buyer.
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9.6 Liability for Transfer Taxes.
(a) Parent and Buyer, on the one hand, and Harris, on the other hand,
shall share equally in the payment of all sales, use, value added, documentary,
stamp, gross receipts, registration, transfer, conveyance, excise, recording,
license and other similar Taxes and fees (for the avoidance of doubt, exclusive
of any Income Taxes) ("Transfer Taxes") arising out of or in connection with or
attributable to the transactions contemplated by this Master Agreement, except
that Sellers shall pay any and all Transfer Taxes relating to the China
subsidiaries, as provided in Section 9.12. Each party hereto shall prepare and
timely file all Tax Returns required to be filed in respect of Transfer Taxes
that are the primary responsibility of such party under Applicable Law,
provided, however, that such parties' preparation of any such Tax Returns shall
be subject to the other parties' approval which approval shall not be
unreasonably withheld, conditioned or delayed, and provided further, that if any
value added tax is paid by the parties and such tax is subsequently recovered,
the recovery shall also be shared equally between Parent and Buyer, in the one
hand, and Harris on the other.
(b) The Transferred Assets are composed of (i) assets as to which the
"isolated, casual or occasional sale" exemption or similar exemption from
Transfer Taxes is or may be applicable and (ii) other assets as to which other
exemptions from Transfer Taxes are or may be applicable. In order to obtain any
exemption or favorable tax rate, the parties shall, to the extent consistent
with Applicable Law, provide the other parties with any exemption or resale
certificate, permit, license or such other documentation as may be required by
any taxing authority to establish the right to such exemption or tax rate.
9.7 Tax Matters.
9.7.1 Tax Returns.
(a) All tax sharing agreements, arrangements, policies and guidelines,
formal or informal, express or implied, that may exist between the Transferred
Subsidiaries, or between one or more of the Transferred Subsidiaries and Harris
and/or any other Person, and any obligations thereunder, shall terminate as of
the Closing Date, and none of the Transferred Subsidiaries shall have any
liability thereunder for any and all amounts due in respect of periods ending on
or before the Closing Date.
(b) Harris shall timely prepare and file (or cause to be prepared and
filed) all Tax Returns of the Transferred Subsidiaries for taxable periods that
end on or before the Closing Date and all other Tax Returns of the Transferred
Subsidiaries required to be filed on or before the Closing Date. Harris shall
timely pay (or cause to be paid) all Taxes shown as due and payable on such Tax
Returns.
(c) Harris shall be the sole and exclusive agent of the Transferred
Subsidiaries in any and all matters relating to the U.S. Federal income tax
liability of the consolidated group of which Harris is the common parent (the
"Seller Consolidated Group") for all consolidated return years. Harris shall,
inter alia, have the right with respect to any Federal consolidated returns
which it files (i) to determine (x) the manner in which such returns shall be
prepared and
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filed, including, without limitation, the manner in which any item of income,
gain, loss, deduction or credit shall be reported, (y) whether any extensions of
the due dates for filing of such returns or of the applicable statutes of
limitations may be requested and (z) the elections that will be made by any
member of Seller Consolidated Group, (ii) to file and prosecute any claim for
refund, and (iii) to determine whether any refunds, to which Seller Consolidated
Group may be entitled, shall be paid by way of refund or credited against the
tax liability of Seller Consolidated Group. Prior to the Closing, Harris will
cause the Transferred Subsidiaries to irrevocably appoint Harris as agent and
attorney-in-fact to take such action (including the execution of documents) as
Harris may deem appropriate to effect the foregoing.
(d) Harris shall have the sole right (but not the obligation), at its
sole expense and for its sole benefit, to prepare and file or cause to be
prepared and filed any amended Tax Return, or claim for refund, and to prosecute
any claim for refund, with respect to any Taxes paid or payable by the
Transferred Subsidiaries with respect to periods ending on or prior to the
Closing Date.
(e) Buyer shall timely prepare and file (or cause to be prepared and
filed) all Tax Returns of the Transferred Subsidiaries for taxable years or
periods ending after the Closing Date and shall pay (or cause to be paid) the
Taxes shown to be due on any such return. Upon notification and satisfactory
documentation from Buyer at least fifteen days prior to the due date of such
return, Harris shall pay to Buyer the Taxes paid with such return that Harris is
liable for pursuant to Section 9.7.2(b) of this Master Agreement. Following the
Closing Date, Buyer shall not cause or permit any of the Transferred
Subsidiaries formed or incorporated in jurisdictions other than a state of the
United States or in Malaysia to pay any dividend, or make any other
distribution, during the taxable year that includes the Closing Date, that would
affect the liability of Sellers for Taxes in respect of periods prior to the
Closing Date.
(f) Buyer shall have the sole right (but not the obligation), at its
sole expense and for its sole benefit (except as provided in Section 9.7.2(b)
hereof), to prepare and file (or cause to be prepared and filed) any amended Tax
Return, or claim for refund, and to prosecute any claim for refund, with respect
to any Taxes paid or payable by the Transferred Subsidiaries with respect to
periods ending after the Closing Date.
9.7.2 Indemnity.
(a) Harris hereby agrees to indemnify and hold the Transferred
Subsidiaries (and Buyer or any Affiliate thereof) harmless with respect to any
Tax Liability of Seller Consolidated Group where such Liability arises solely by
reason of any of the Transferred Subsidiaries being severally liable for any
Taxes of Seller Consolidated Group pursuant to Treas. Reg. ss. 1.1502-6 or any
similar provision of foreign, state or local law.
(b) Harris shall indemnify and hold Buyer harmless from and against,
and pay and reimburse Buyer for, any and all Taxes of the Seller Consolidated
Group or any member thereof, or of any other Transferred Subsidiary (other than
Assumed Pre-Closing Taxes) for any taxable year or period ending on or before
the Closing Date and the portion of any such Taxes for any taxable year or
period ending thereafter that is attributable to the portion of such year or
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period prior to and including the Closing Date, and Harris shall be entitled to
all refunds of such Taxes.
(c) Buyer shall indemnify and hold Harris harmless from and against,
and pay and reimburse Harris for, any and all Taxes due by the Transferred
Subsidiaries or any affiliated group of which the Transferred Subsidiaries
become members after the Closing Date for any Taxable year or period beginning
on or after the Closing Date and the portion of any such Taxes for any period
beginning before and ending after the Closing Date that is attributable to the
portion of such year or period beginning after the Closing Date, and Buyer shall
be entitled to all refunds of such Taxes.
(d) Notwithstanding anything in this Master Agreement to the contrary,
all of indemnity obligations set forth in this Section 9.7.2 shall terminate and
expire, and shall cease to be of any force or effect, at 5:00 P.M. (Florida
time) thirty (30) days after the expiration of the applicable statutes of
limitation, including waivers and extensions thereof, and all liabilities with
respect to the obligations set forth in this Section 9.7.2 shall thereupon be
extinguished; provided, however, that to the extent a written notice asserting
any claim for indemnification hereunder shall have been given prior to such date
to the Tax Indemnitor, obligations relating to such claim shall survive, until
such claim is fully resolved.
9.7.3 Tax Liability. Whenever it is necessary for purposes of this
Section 9.7 to determine the Tax Liability of the Transferred Subsidiaries for a
taxable year or period that begins before and ends after the Closing Date, the
determination shall be made by assuming that the entity had a Taxable year that
ended at the close of the Closing Date and by using the accounting practices and
procedures previously used by Harris in preparing its Tax Returns, provided that
(a) exemptions, allowances or deductions that are calculated on an annual basis,
such as the deduction for depreciation, shall be apportioned on a time basis,
(b) Taxes (other than income taxes) that are determined based upon specific
transactions (including but not limited to value added, sales, and use Taxes)
shall be allocated in accordance with the timing of such specific transactions,
and (c) responsibility for real estate, personal property, license, franchise,
doing business, and similar Taxes (but not including any Taxes based on income)
shall be pro rated as of the Closing Date as set forth on the Final Closing
Balance Sheet.
9.7.4 Tax Contests.
(a) The party obliged to provide indemnification under this Section 9.7
(the "Tax Indemnitor") shall assume and direct the defense or settlement of any
hearing, arbitration, suit or other proceeding (each a "Tax Contest") commenced,
filed or otherwise initiated or convened to investigate or resolve the existence
and extent of a liability with respect to which the Tax Indemnitor would have an
indemnification obligation under this Section 9.7 ("Tax Indemnification
Liability"). The party entitled to be indemnified under this Section 9.7 (the
"Tax Indemnified Party") shall have the right to participate, as its own cost
and expense, in the defense of such Tax Contest, it being understood that the
Tax Indemnitor shall control such Tax Contest.
(b) The Tax Indemnitor shall pay all out-of-pocket expenses and other
costs related to the Tax Indemnification Liability, including but not limited to
reasonable fees for attorneys, accountants, expert witnesses or other
consultants retained by the Tax Indemnitor
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and/or Tax Indemnified Party (other than fees for attorneys, accountants, expert
witnesses or other consultants retained solely by the Tax Indemnified Party),
and incurred at any time during which the Tax Indemnitor is controlling and
directing the Tax Contest in respect of which such fees are incurred. To the
extent that any such expenses and other costs have been or are paid by a Tax
Indemnified Party, the Tax Indemnitor shall promptly reimburse the Tax
Indemnified Party therefor.
(c) Any Tax Indemnified Party shall give written notice to the Tax
Indemnitor of any settlement proposed by the Taxing authority. The Tax
Indemnitor shall have the right, in its sole discretion, to settle any claim for
which indemnification has been sought under this Section 9.7; provided, however,
that the Tax Indemnitor shall not enter into any settlement, closing agreement
or other agreement with respect to any Tax liability with respect to the
Business, the Transferred Assets or the Transferred Subsidiaries without the
prior written consent of the Tax Indemnified Party (such consent not to be
unreasonably withheld or delayed) if such settlement, closing agreement or other
agreement will adversely affect Taxes payable by the Tax Indemnified Party for
taxable periods or portions thereof beginning on or after the Closing Date.
9.7.5 Cooperation.
(a) Harris and Buyer shall provide each other with such assistance and
documents, without charge and in a timely fashion, as may be reasonably
requested by either of them in connection with (i) the preparation of any Tax
Return (including any amended Tax Return), (ii) the conduct of any Tax Contest,
or (iii) any other matter that is the subject of this Master Agreement. Such
assistance shall include, without limitation: (i) the provision on demand of
books, records, Tax Returns, documentation or other information relating to any
relevant Tax Return ("Tax Data"); (ii) the execution of any document that may be
necessary or reasonably helpful in connection with the filing of any Tax Return,
or in connection with any Tax Contest, including, without limitation, the
execution of powers of attorney and extensions of applicable statutes of
limitations; and (iii) the use of reasonable efforts to obtain any documentation
from any Governmental Authority or other Person that may be necessary or
reasonably helpful in connection with the foregoing. Such cooperation shall
include, without limitation, making their respective employees and independent
auditors reasonably available on a mutually convenient basis for all reasonable
purposes, including, without limitation, to provide explanations and background
information and to permit the copying of books, records, schedules, workpapers,
notices, revenue agent reports, settlement or closing agreements and other
documents containing the Tax Data ("Tax Documentation"). If either party
reasonably determines that the other party is not in compliance with this
Section, the party reaching such conclusion shall have the right to retain a
third party to obtain the necessary documentation and other assistance
contemplated by this Section at the expense of the party which is not in
compliance.
(b) Harris and each other member of Seller Consolidated Group and
Harris' Affiliates, and Buyer and the Transferred Subsidiaries, shall retain or
cause to be retained the Tax Data, the Tax Documentation, all Tax Returns,
schedules and workpapers, and all material records or other documents relating
thereto, until one year after the expiration of all applicable statutes of
limitations (including any waivers or extension thereof) with respect to the
Taxable
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periods to which such Tax Returns and other documents relate or until the
expiration of any additional period that either Buyer or Seller, as the case may
be, may reasonably request in writing with respect to specifically designated
material records or documents; provided, however, that in the event an audit,
examination, investigation or other proceeding has been instituted prior to the
expiration date of an applicable statute of limitations, the Tax Data and Tax
Documentation relating thereto shall be retained until there is a final
determination thereof (and the time for any appeal has expired). After the
expiration of the time when the Tax Data and the Tax Documentation must be
retained pursuant to this Section 9.7.5(b), then any such material may be
destroyed. Harris shall give Buyer not less than thirty (30) days prior written
notice before Tax Data or Tax Documentation in the possession or control of any
member of the Seller Consolidated Group or other Harris Affiliate is destroyed
and shall give Buyer an opportunity to copy any such material during such thirty
(30) day period. Buyer shall give Harris not less than thirty (30) days prior
written notice before any Tax Data or Tax Documentation in the possession or
control of Buyer or any Transferred Subsidiary is destroyed and shall give
Harris an opportunity to copy any such material during such thirty (30) day
period.
(c) In order to assist Harris in the preparation of Sellers' Tax
Returns, Buyer will report to Seller on a calendar quarterly basis payments made
by Buyer on or after the Closing Date with respect to the accrued vacation
liability assumed by Buyer at Closing. Buyer and Seller agree that vacation is
taken on a FIFO basis. Such reports will be prepared on a FIFO basis every
calendar quarter and for each two and a half month period after each calendar
year until the accrued vacation liability is extinguished.
9.7.6 Transfer Pricing Agreements and Related Documentation. Sellers
will supply Buyer with a copy of all closing or other agreements related to the
Business entered into with the Internal Revenue Service, the Malaysian taxing
authorities, or any other state, local or foreign taxing authorities relating in
whole or in part to Code Section 482 or any other comparable transfer pricing
provision set forth under state, local or foreign tax law that arise from any
transaction between (i) Harris Malaysia or any other Business Entity with (ii)
any other Business Entity or with the Business, and Sellers will use their Best
Efforts to supply, with respect thereto, any supporting documentation including,
but not limited to, any transfer pricing or economic studies obtained for, or in
anticipation of, any such proceeding.
9.8 Tax Elections. No material new elections with respect to Taxes, or any
material changes in current elections with respect to Taxes, affecting the
Transferred Assets or the Transferred Subsidiaries for periods including the
Closing Date that will have a material adverse effect on Taxes as to which
Harris indemnifies Buyer under this Master Agreement shall be made after the
date of this Master Agreement, with respect to the taxable year which includes
the Closing Date, without the prior written consent of both Harris and Buyer.
9.9 Confidentiality.
(a) For a period of five years after the Closing Date, Harris agrees
that it will keep confidential all of Buyer's Proprietary Information and Buyer
and Parent agree that they will keep confidential all of Sellers' Proprietary
Information except that Buyer and Parent shall not be required to keep
confidential Proprietary Information relating to the Business and
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conveyed to Buyer as part of the Transferred Assets; such Proprietary
Information shall include any Proprietary Information obtained in connection
with the Ancillary Agreements. The obligation of each party to keep such
Proprietary Information confidential shall not apply to any information which
(i) is or becomes available to such party from a source other than the other
party (or any Person who is bound by a confidentiality agreement with such other
party with respect to such information), (ii) is or becomes available to the
public other than as a result of disclosure by such party or its agents, or
(iii) is required to be disclosed under Applicable Law or judicial process;
provided, however, that if a party is requested or becomes legally compelled (by
oral questions, interrogatories, requests for information or documents,
subpoenas, civil investigative demand or similar process) to disclose any of
such information, to the extent permitted by law, such party will provide the
other party with prompt written notice to, and will cooperate with, such other
party so that such other party may seek a protective order or other appropriate
remedy; provided, further, that in the event such other party waives compliance
with the provisions of this Section 9.9, such party shall disclose only that
portion of the confidential information which is legally required and will
exercise its Best Efforts to seek confidential treatment for such information.
Notwithstanding anything in this Section 9.9 to the contrary, in the event that
any such information is also subject to a limitation on disclosure or use
contained in another written agreement between Buyer and Seller which is more
restrictive than the limitation contained in this Section 9.9, then the
limitation in such agreement shall supersede this Section 9.9.
(b) Buyer acknowledges that, in obtaining copies of personnel-related
records, it understands that certain of this information is confidential as a
matter of state and/or federal law. Buyer further agrees to maintain (and
disclose, if at all) such information in compliance with Applicable Law.
9.10 Books and Records. Subject to the confidentiality provisions hereof,
Harris shall have the right to retain copies of the Books and Records. From and
after the Closing and until the sixth anniversary thereof, (a) each Seller
agrees to grant to Buyer, upon reasonable notice and during normal business
hours, reasonable access to any books and records that pertain to the Business,
but which are not Books and Records, and (b) Buyer and Parent agree to grant to
Harris, upon reasonable notice and during normal business hours, reasonable
access to any Books and Records included in the Transferred Assets that pertain
to the operations of the Business on or prior to the Closing Date.
9.11 Ancillary Agreements. Following the Closing Date, Harris and Buyer
will perform, or cause to be performed, their respective obligations under the
Ancillary Agreements.
9.12 Obligations Concerning China Subsidiaries.
(a) On or prior to the Closing Date, Harris Malaysia shall transfer
its beneficial interest, and agree to transfer its title, in the shares of the
China Subsidiaries to HAS. Harris Malaysia shall enter into purchase agreements
(the "China Purchase Agreements") with HAS providing for such transfers. The
China Purchase Agreements shall provide that any Net Proceeds realized from the
ownership, sale, rental or other disposition of the assets or stock of any of
the China Subsidiaries shall be paid to HAS. For purposes of this Section
9.12(a), Net
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Proceeds shall mean any proceeds realized from any such ownership, sale, rental,
or other disposition net of all of expenses and other Liabilities associated
with such ownership, sale, rental or other disposition and net of all Taxes,
including Transfer Taxes and taxes imposed by the People's Republic of China and
by the Republic of Malaysia, in connection with such ownership, sale, rental or
other disposition and in connection with the distribution of the proceeds of
such ownership, sale, rental or other disposition to Harris Malaysia and the
further distribution to HAS.
(b) The China Purchase Agreements shall appoint HAS as Harris
Malaysia's exclusive agent for purposes of exercising Harris Malaysia's rights
as a shareholder in any of the China Subsidiaries and selling the equity of, or
liquidating, any of the China Subsidiaries, as HAS shall, in its sole
discretion, determine. The China Purchase Agreements shall require Harris
Malaysia to cause each of the China Subsidiaries to appoint HAS as each China
Subsidiary's exclusive agent for purposes of selling or renting the assets of
such China Subsidiary, as HAS shall, in its sole discretion, determine. Buyer
shall cause Harris Malaysia and each China Subsidiary to take any and all
actions reasonably requested by Harris, at Harris' expense, to support the
foregoing including any actions reasonably requested by Harris in order to
distribute to Harris Malaysia any proceeds realized from the sale or rental of
the assets of such China Subsidiary. Subject to the provisions of this Master
Agreement, such proceeds shall be for the account of HAS. Harris agrees that,
provided Harris Malaysia cooperates, it will use Best Efforts to arrange for and
consummate the transfer to HAS of title to the shares of Anshan Harris and
Guangzhou Harris within six months of the Closing Date. Harris agrees that it
will arrange for and consummate the sale, liquidation or other disposition of
all of the China Subsidiaries or the assets thereof or the transfer to HAS of
title to the shares of such China Subsidiaries within two (2) years of the
Closing Date.
(c) In connection with the power and authority to be granted to HAS
pursuant to the China Purchase Agreements and this Section 9.12, Harris agrees
to pay, and to indemnify, defend and hold harmless Harris Malaysia and Buyer
from, all costs, losses, Liabilities, claims and expenses (excluding any loss of
investment value in the China Subsidiaries) related to, or in any way resulting
from, (i) the ownership or transfer by Harris Malaysia of any China Subsidiary,
or (ii) the ownership or operation or transfer by any China Subsidiary of its
assets, including any Taxes incurred by Harris Malaysia in connection with such
ownership, operation or transfer (including all Transfer Taxes) and any
contributions or payments Harris Malaysia or Buyer is legally obligated to make
in connection with such ownership provided that any Taxes or other expenses or
Liabilities arising as a result of the sale of any China Subsidiary or the
distribution of funds from any China Subsidiary as a result of liquidation or
otherwise shall be paid, in the first instance, from such proceeds or
distributions. The indemnification obligations of Harris under this Section
9.12(c) shall be in addition to those obligations set forth in this Master
Agreement, including those set forth under Section 9.7.2 hereof, and shall not,
in any event, be considered indemnification obligations of Buyer under this
Master Agreement.
9.13 Latham Lease. Harris is the lessee under a certain Lease Agreement
dated November 18, 1992 with 762 Madison Avenue Associates, as lessor, as
amended by Amendments First through Seventh thereof dated January 8, 1993,
January 26, 1993, August 1, 1993, March 25, 1994, November 1, 1995, March 1,
1996 and January 1, 1998, respectively, for space in the building commonly known
as 3 Northway Lane North, Latham, Town of Colonie,
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County of Albany, NY (the "Latham Lease"). Pursuant and subject to a certain
Assignment and Assumption of Lease (the "Latham Lease Assignment") dated as of
November 2, 1998, Harris has assigned the Latham Lease to Silicon Power
Corporation, a Pennsylvania Corporation. Buyer and Sellers agree that the Latham
Lease shall at Buyer's election be (i) transferred to Buyer and constitute a
Transferred Asset, or (ii) retained by Harris and constitute an Excluded Asset.
If Buyer elects to have the Latham Leased assigned to it, then (a) the Latham
Lease shall constitute one of the Leases, (b) the real estate demised thereby
shall constitute Leased Real Estate, (c) Schedule 4.11(m) shall be deemed to
include the Latham Lease, (d) the Latham Lease and the Latham Lease Assignment
shall constitute Assumed Contract Obligations, and (e) Schedule 4.11(l) shall be
deemed to include the Latham Lease Assignment. If Buyer does not elect to have
the Latham Lease assigned to it, the Latham Lease, the real estate demised
thereby and the Latham Assignment shall constitute Excluded Assets and Excluded
Liabilities for all purposes.
9.14 Ownership of Intersil Name. Parent and Buyer hereby acknowledge and
agree that the name "Intersil" is owned by Harris until the Closing at which
time the ownership of such name shall pass to Parent and Buyer. Harris agrees
that Parent and Buyer have a limited and nontransferable license to use such
name in their respective corporate names. Such license shall terminate in the
event the Master Agreement is terminated. Upon the occurrence of such event,
Buyer and Parent shall have no further rights in and to the name "Intersil" and
shall promptly amend their respective charters to remove such name from their
respective corporate names."
ARTICLE 10
CONDITIONS TO OBLIGATIONS OF BUYER AND PARENT TO CLOSE
The obligations of Buyer and Parent to purchase the Transferred Assets and
otherwise consummate the transactions that are to be consummated at the Closing
are subject to the satisfaction, as of the Closing Date, of the following
conditions (any of which may be waived by Buyer and Parent, in their sole
discretion, in whole or in part):
10.1 Accuracy of Representations and Warranties. The representations and
warranties of Sellers set forth in Article 4 shall be true and correct in all
material respects (or, for representations and warranties that have any
materiality qualifiers, in all respects) as of the date of this Master Agreement
and as of the Closing, as though made on and as of the Closing Date, except to
the extent that any of such representations and warranties refers specifically
to a date other than the Closing Date, in which case such representation or
warranty shall have been accurate in all material respects (or, for
representations and warranties that have any materiality qualifiers, in all
respects) as of such other date, and all representations and warranties of
Sellers contained in the Ancillary Agreements shall be true and correct in all
material respects (or, for representations and warranties that have any
materiality qualifiers, in all respects) at and as of the Closing Date.
10.2 Performance. Harris shall have, and shall have caused each Business
Entity to have, performed and satisfied in all material respects all agreements,
covenants and obligations required by this Master Agreement to be performed by
Buyer or Parent or any Business Entity on or before the Closing Date.
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10.3 No Conflict. The transactions contemplated by this Master Agreement
and the consummation of the Closing shall not be illegal or prohibited under any
Applicable Law. No temporary restraining order, preliminary or permanent
injunction, cease and desist order or other order issued by any court of
competent jurisdiction or any competent Governmental Authority or any other
legal restraint or prohibition preventing the transfer contemplated hereby or
the consummation of the Closing, or imposing Condition-Triggering Losses in
respect thereto, shall be in effect, and there shall be no pending or threatened
actions or proceedings by any Governmental Authority (or determinations by any
Governmental Authority) that result, or would reasonably be expected to result,
in Condition-Triggering Losses.
10.4 Material Adverse Change. From the date of this Master Agreement, no
change that will have a Material Adverse Effect on the Business shall have
occurred.
10.5 Certificate. Buyer shall have received from a duly authorized officer
of each Seller a certificate dated the Closing Date confirming that the
conditions in Sections 10.1 and 10.2 have been met.
10.6 HSR Act. Any applicable waiting period under the HSR Act relating to
the transactions contemplated hereby shall have expired or been terminated.
10.7 Consents. All approvals, consents, waivers and authorizations required
to be obtained by Sellers in connection with the transactions contemplated by
this Master Agreement that are identified on Schedule 10.7, including without
limitation any authorizations, consents, orders, permits, approvals or
notifications required under Environmental Laws necessary for the operation of
the Business, shall have been obtained and shall be in full force and effect,
except where the failure to obtain such consents did not and would not
reasonably be expected to result in Condition-Triggering Losses.
10.8 Transfer Documents. Harris shall, and shall have caused each Seller
to, have delivered to Buyer at the Closing all documents, certificates and
agreements necessary to transfer to Buyer title to the Transferred Assets and,
in the case of the Real Estate, good and marketable fee simple title to the
Owned Real Estate (or the practical equivalent with respect to the Malaysia
Facility) and good and valid leasehold title with respect to the Leased Real
Estate (other than the Retained Leased Real Estate) free and clear of any and
all Liens thereon, other than Permitted Liens, including, without limitation:
(a) bills of sale, limited warranty deeds, assignments and general
conveyances, in form and substance reasonably satisfactory to Buyer, dated the
Closing Date, with respect to the Transferred Assets other than Transferred
Assets owned by the Transferred Subsidiaries;
(b) certificates representing all of the outstanding equity of the
Transferred Subsidiaries accompanied by duly executed stock powers;
(c) assignments of all Assumed Contract Obligations and any other
agreements and instruments constituting Transferred Assets (other than such
Transferred Assets
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owned by the Transferred Subsidiaries), dated the Closing Date, assigning to
Buyer all of each Seller's right, title and interest therein and thereto; and
(d) certificates of title to all owned motor vehicles, if any,
included in the Transferred Assets to be transferred to Buyer hereunder, duly
endorsed for transfer to Buyer as of the Closing Date.
10.9 Transaction Documents. The parties other than Buyer, Parent and their
respective Affiliates shall have entered into the Ancillary Agreements and other
Transaction Documents.
10.10 Resignations. Sellers shall have delivered to Buyer the resignations
of the directors and officers of the Transferred Subsidiaries.
10.11 Corporate Records. Sellers shall deliver or otherwise make available
to Buyer the minute books and corporate records of the Transferred Subsidiaries.
10.12 Further Instruments. Sellers shall deliver to Buyer such further
instruments of assignment, conveyance or transfer or other documents of further
assurance as Buyer may reasonably request.
10.13 Sellers' Counsel Opinion. Buyer shall have received an opinion of
Sellers' counsel in form and substance reasonably acceptable to Buyer.
10.14 Financing. Buyer and Parent shall have secured the proceeds of the
Financing on terms satisfactory to Buyer and Parent, which terms may require
equity of $90,000,000.
10.15 Environmental Transfer Statutes. Harris will have complied with the
requirements of Section 7.4 hereof and shall provide evidence of such compliance
in form and substance satisfactory to Buyer prior to the Closing.
10.16 Possession. Sellers shall deliver possession of: (i) the Real Estate,
except for the Retained Leased Real Estate, and (ii) the Subleased Real Estate,
to Buyer.
10.17 Working Capital Amount. The parties shall have agreed on the
normalized working capital amount as contemplated by Section 3.5(b).
10.18 Real Estate Matters. Buyer shall have received the Title Policies.
10.19 Real Property Agreements. Buyer or the appropriate Transferred
Subsidiary (with Buyer's approval) and Sellers shall have fully executed and
entered into all of the Subleases, the Malaysian Purchase Agreement, and the
Leaseback Agreements and there shall be no default under the Malaysian Purchase
Agreement.
10.20 Harris Advanced Technology (Malaysia) Sdn Bhd. Sellers shall have
caused the ownership interests of Harris Advanced Technology (Malaysia) Sdn Bhd
("Harris Malaysia")
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to have been sold to a Business Entity that is a domestic or foreign corporation
(at Buyer's sole discretion). Sellers shall be permitted in their sole
discretion to make the election under Treasury Regulation Section 301.7701-3(c)
as to Harris Malaysia and the current owners of its membership interests at any
time prior to the Closing Date, and Buyer and Parent hereby consent to such
election. If such election is made, it shall remain in full force and effect as
of the Closing Date. In the event Sellers do not make such election, Buyer shall
have the right, at its sole discretion, to make an election under Section 338(g)
of the Code with respect to Harris Malaysia and the current owners of its
membership interest with Sellers bearing any costs related to the making of such
election. In addition, if mutually satisfactory to both Buyer and Sellers, the
consideration paid for Harris Malaysia (and the aggregate consideration to be
paid Sellers pursuant to this Master Agreement) shall be reduced by an amount
equal to that amount that can be borrowed by Harris Malaysia on or prior to the
Closing Date, provided such borrowing shall be used to redeem a portion of the
ownership interests in Harris Malaysia, with the balance of the ownership
interests in Harris Malaysia being sold to Buyer pursuant to the provisions of
this Section 10.19 and this Master Agreement including Section 3.12.
ARTICLE 11
CONDITIONS TO OBLIGATIONS OF HARRIS TO CLOSE
The obligation of Harris to sell the Transferred Assets and otherwise
consummate the transactions that are to be consummated at the Closing is subject
to the satisfaction, as of the Closing Date, of the following conditions (any of
which may be waived by Harris, in its sole discretion in whole or in part):
11.1 Accuracy of Representations and Warranties. The representations and
warranties of Buyer and Parent set forth in Article 5 shall be true and correct
in all material respects (or, for representations and warranties that have any,
materiality qualifiers, in all respects) as of the date of this Master Agreement
and as of the Closing, as though made on and as of the Closing Date, except to
the extent that any of such representations and warranties refers specifically
to a date other than the Closing Date, in which case such representation or
warranty shall have been accurate in all material respects (or, for
representations and warranties that have any, materiality qualifiers, in all
respects) as of such other date, and all representations and warranties of Buyer
and Parent contained in the Ancillary Agreements shall be true and correct in
all material respects (or, for representations and warranties that have any
materiality qualifiers, in all respects) at and as of the Closing Date.
11.2 Performance. Each of Buyer and Parent shall have performed and
satisfied in all material respects all agreements, covenants and obligations
required by this Master Agreement to be performed by Buyer or Parent on or
before the Closing Date.
11.3 No Conflict. The transactions contemplated by this Master Agreement
and the consummation of the Closing shall not be illegal or prohibited under any
Applicable Law. No temporary restraining order, preliminary or permanent
injunction, cease and desist order or other order issued by any court of
competent jurisdiction or any competent Governmental Authority or any other
legal restraint or prohibition preventing the transfer contemplated hereby or
the consummation of the Closing, or imposing damages in respect thereto, shall
be in effect, and
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there shall be no pending or threatened actions or proceedings by any
Governmental Authority (or determinations by any Governmental Authority) that
would reasonably be expected to have a material adverse effect on the
transactions contemplated by this Master Agreement.
11.4 Certificate. Harris shall have received from duly authorized officers
of Buyer and Parent a certificate dated the Closing Date confirming that the
conditions in Sections 11.1, 11.2 and 11.3 have been met.
11.5 HSR Act. Any applicable waiting period under the HSR Act relating to
the transactions contemplated hereby shall have expired or been terminated.
11.6 Consents. All approvals, consents, waivers and authorizations required
to be obtained by Buyer or Parent in connection with the transactions
contemplated by this Master Agreement that are identified on Schedule 11.6 shall
have been obtained and shall be in full force and effect, except where the
failure to obtain such consents did not and would not reasonably be expected to
have a material adverse effect on the transactions contemplated by this Master
Agreement.
11.7 Assumption Agreement. Harris shall have received from Buyer or Parent,
as appropriate, an Assumption Agreement, in substance and form reasonably
satisfactory to Harris, under which Buyer or Parent, as appropriate, shall have
assumed the Assumed Liabilities.
11.8 Transaction Documents. The parties other than Harris and its
Affiliates shall have entered into the Ancillary Agreements and the other
Transaction Documents.
11.9 Buyer's Counsel Opinion. Harris shall have received the opinion of
counsel for Buyer and Parent in form and substance reasonably satisfactory to
Harris.
11.10 Further Instruments. Buyer and Parent shall deliver to Harris such
further instruments of assumption or other documents of further assurance as
Sellers may reasonably request.
11.11 Financing. Buyer and Parent shall have secured the proceeds of the
Financing.
11.12 Working Capital Amount. The parties shall have agreed on the
normalized working capital amount as contemplated by Section 3.5(b).
11.13 Royalty Agreement. The parties shall have entered into a mutually
acceptable agreement providing for the payment to Harris Semiconductor Patents,
Inc., of a royalty equal to 2% of the revenue generated by the sales of prism
chip sets for a period of five years after the Closing Date.
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ARTICLE 12
TERMINATION
12.1 Right to Terminate Agreement. This Master Agreement may be terminated
prior to the Closing:
(a) by the mutual written agreement of Harris and Buyer; or
(b) by written notice by either Harris or Buyer at any time after
September 30, 1999 (the "Section 12.1 Date"), if the Closing shall not have
occurred on or prior to such date; provided, however, that the right to
terminate this Master Agreement under this Section 12.1(b) shall not be
available to such party (i) unless such party is expressly entitled to refuse to
close the transactions contemplated by this Master Agreement under Article 10 or
11, as the case may be, or (ii) if the action of such party or any of its
Affiliates has been a principal cause of or resulted in the failure of the
Closing to occur on or before such date and such action or failure to act
constitutes a breach of this Master Agreement. Notwithstanding the foregoing,
the Section 12.1 Date shall be extended as follows: (i) if the Closing does not
occur because one or more of the representations and warranties in Article 4 is
not true as of the Closing Date, Harris shall have thirty (30) days to cure such
representation or warranty and the Section 12.1 Date shall be extended until the
expiration of such cure period; (ii) if the Closing does not occur because it is
enjoined by a court of competent jurisdiction or is otherwise prevented as a
consequence of court proceedings, the Section 12.1 Date shall be extended until
such injunction or other court ruling preventing the Closing is vacated or
becomes final and is either nonappealable or the time for any such appeal has
expired without an appeal having been filed; and (iii) if the Closing does not
occur because the approval of the transaction under the HSR Act or foreign
counterparts has not been obtained or the waiting period pursuant to such act
has not expired, the Section 12.1 Date shall be extended until such approval is
obtained or denied, or such waiting period expires. In no event shall the
Section 12.1 Date be extended beyond December 31, 1999.
12.2 Effect of Termination. Upon the termination of this Master Agreement
pursuant to Section 12.1:
(a) Buyer and Parent shall promptly cause to be returned to Harris all
documents and information obtained from Harris in connection with this Master
Agreement and the transactions contemplated by this Master Agreement and all
documents and information obtained in connection with Buyer's investigation of
the Business, including any copies made by or supplied to Buyer or any of
Buyer's agents of any such documents or information; and
(b) No party hereto shall have any obligation or liability to the
other party hereto, except that the parties hereto shall remain bound by the
provisions of this Section 12.2 and Sections 9.3, 9.5, 9.11 and Article 14 and
by the provisions of the Confidentiality Agreement between Citicorp Venture
Capital and Harris.
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ARTICLE 13
CERTAIN REMEDIES AND LIMITATIONS
13.1 Expiration of Representations, Warranties and Covenants. All covenants
set forth in this Master Agreement shall survive the Closing Date. All of the
representations and warranties of Seller set forth in this Master Agreement and
the Ancillary Agreements shall terminate and expire, and shall cease to be of
any force or effect, at 5:00 P.M. (Florida time) on the date that is eighteen
months after the Closing Date, and all liability with respect to such
representations and warranties shall thereupon be extinguished, except as to
matters with respect to which notice of a claim has been given prior to the
expiration of such eighteen month period, provided that the representations and
warranties of Seller set forth in (a) Section 4.18 and Section 4.22 shall
continue in full force and effect until 60 days after all applicable statutes of
limitations, including waivers and extensions, have expired with respect to the
matters addressed therein, (b) Sections 4.13, 4.14 and 4.15 shall survive until
the fifth anniversary of the Closing Date, and (c) Sections 4.1, 4.2, 4.3, and
4.9 shall survive the Closing Date.
13.2 Indemnity by Harris.
(a) Subject to the provisions of Section 13.1 relating to the survival
of representations and warranties and the other limitations contained herein,
from and after the Closing, Harris agrees to indemnify, defend and hold harmless
Buyer, Parent and their respective Affiliates, officers, directors, employees,
representatives, agents and stockholders (collectively, "Buyer Indemnitees")
against the net amount of all claims, losses, settlements, fines, liabilities,
damages, deficiencies, costs and expenses, including, without limitation, losses
resulting from the defense, settlement and/or compromise of a claim and/or
demand and/or assessment, reasonable attorneys', accountants' and expert
witnesses' fees, interest, penalties, costs and expenses of investigation, and
the costs and expenses of enforcing the indemnification provided hereunder,
suffered, sustained, incurred or required to be paid by any of Buyer Indemnitees
(after deduction of the amount of any insurance proceeds recoverable (less
premiums paid for such period) and net of any tax benefit actually realized)
(hereafter individually a "Loss" and collectively "Losses") and due to, based
upon, arising out of or relating to: (i) any Excluded Liability; (ii) any breach
of any representation or warranty or any inaccuracy of any representation made
by Harris in this Master Agreement or the Ancillary Agreements; (iii) any breach
of any covenant, agreement or obligation of Harris contained in this Master
Agreement or the Ancillary Agreements; and (iv) the failure to have obtained any
authorizations, consents, orders, permits, approvals or notifications required
under Environmental Laws prior to the Closing; (v) any of the Deferred Closings
which Losses would not have been incurred if such Deferred Closing had occurred
on the Closing Date; and (vi) the acquisition of assets of each of Harris S.A.
(Belgium), Harris Semiconductor GmbH (Germany) and Harris Semiconductor Design &
Sales Pte. Ltd. (Singapore) which Losses would not have been incurred if, in
lieu of such asset sale, a stock sale was consummated. Notwithstanding the
foregoing, damages shall constitute Losses for the purpose of clauses (i)
through (iv) of this Section 13.2 only to the extent of the direct damages
incurred (excluding consequential damages, whether or not foreseeable).
(b) Except as set forth below, Harris shall not be required to
indemnify Buyer Indemnitees with respect to any claim for indemnification
resulting from or arising out of matters
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described in Section 13.2(a)(ii) unless and until the aggregate amount of all
such claims against Buyer Indemnitees exceeds three percent (3%) of the Purchase
Price (the "Threshold") and then Buyer Indemnitees will be entitled to recover
Losses in excess of the Threshold. Claims thereafter may be asserted regardless
of amount; provided, however, that the foregoing limitation shall not apply to a
claim for indemnification to the extent such claim is based upon a breach of a
representation contained in Sections 4.1, 4.2, 4.3, 4.9 or 4.22 hereof; and
provided, further, that Harris's maximum liability to Buyer Indemnitees under
this Section 13.2 (not including indemnification with respect to Excluded
Liabilities, breaches of Section 7.2, breaches of representations contained in
Section 4.22, matters described in Section 13.2(a)(v) and (vi), and as set forth
in Sections 9.7 and 13.11) shall not exceed fifteen percent (15%) of the
Purchase Price in the aggregate.
(c) Notwithstanding anything to the contrary set forth in this Article
13, no limitation or condition on liability or indemnity shall apply to any
breach of a representation or warranty, if such breach of such representation or
warranty was untrue and the party making it had, at the time, actual knowledge
of such untruth.
13.3 Indemnity by Buyer and Parent.
(a) Subject to the provisions of Section 13.1 relating to the survival
of representations and warranties and the other limitations contained herein,
from and after the Closing, Buyer and Parent jointly and severally agree to
indemnify, defend and hold harmless Harris and its respective Affiliates,
officers, directors, employees, representatives, agents and stockholders
(collectively, "Seller Indemnitees") against the net amount of all claims,
settlements, fines, losses, liabilities, damages, deficiencies, costs and
expenses, including, without limitation, losses resulting from the defense,
settlement and/or compromise of a claim and/or demand and/or assessment,
reasonable attorneys', accountants' and expert witnesses' fees, interest,
penalties, costs and expenses of investigation, and the costs and expenses of
enforcing the indemnification provided hereunder, suffered, sustained, incurred
or required to be paid by any of Seller Indemnitees (after deduction of the
amount of any insurance proceeds recoverable (less premiums paid for such
period) and net of any tax benefit actually realized) (hereafter individually a
"Loss" and collectively "Losses") and due to, based upon, arising out of or
relating to: (i) all Assumed Liabilities; (ii) any breach of any representation
or warranty or any inaccuracy of any representation, made by Buyer or Parent in
this Master Agreement or the Ancillary Agreements; and (iii) any breach of any
covenant, agreement or obligation of Buyer and Parent contained in this Master
Agreement or the Ancillary Agreements. Notwithstanding the foregoing, damages
shall constitute Losses for the purpose of this Section 13.3 only to the extent
of the direct damages incurred (excluding consequential damages, whether or not
foreseeable).
13.4 General Indemnification Procedures.
(a) In the event that any party incurs or suffers any Losses with
respect to which indemnification may be sought by such party pursuant to this
Article 13, the party seeking indemnification (the "Indemnitee") must assert the
claim by giving written notice (a "Claim Notice") to the party from whom
indemnification is sought (the "Indemnifying Party"). The Claim
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Notice must state the nature, basis and amount (if known) of the claim in
reasonable detail based on the information available to the Indemnitee and, if
the Claim Notice is being given with respect to a third party claim, it must be
accompanied by a copy of any written notice of the third party claimant. If the
Claim Notice is being given by reason of any third party claim, it shall be
given in a timely manner but in no event more than 30 days after the filing or
other written assertion of any such claim against the Indemnitee, but the
failure of the Indemnitee to give the Claim Notice within such time period shall
not relieve the Indemnifying Party of any liability for indemnification under
this Article 13, except to the extent that the Indemnifying Party is prejudiced
thereby. If the amount of the claim is not known at the time the Claim Notice is
given, the Indemnitee shall also give notice of such amount to the Indemnifying
Party at such time as the amount of the claim is reasonably ascertainable. Each
Indemnifying Party to whom a Claim Notice is given shall respond to any
Indemnitee that has given a Claim Notice (a "Claim Response") within 30 days
(the "Response Period") after the date that the Claim Notice is received by
Indemnifying Party. Any Claim Response shall specify whether or not the
Indemnifying Party given the Claim Response disputes the claim described in the
Claim Notice in whole or in part. If any Indemnifying Party fails to give a
Claim Response within the Response Period, such Indemnifying Party shall be
deemed not to dispute the claim described in the related Claim Notice. If any
Indemnifying Party elects not to dispute a claim described in a Claim Notice,
whether by failing to give a timely Claim Response or otherwise, then such claim
shall be conclusively deemed to be an obligation of such Indemnifying Party.
Subject to the applicable limitations set forth in this Article 13, if any
Indemnifying Party shall be obligated to indemnify an Indemnitee hereunder, such
Indemnifying Party shall pay to such Indemnitee within 30 days after the last
day of the applicable Response Period (or at such later time as the amount is
ascertainable) the amount to which such Indemnitee shall be entitled. If there
shall be a dispute as to the amount or manner of indemnification under this
Agreement, the Indemnifying Party and the Indemnitee shall resolve such dispute
as provided in Section 6 of Exhibit B to this Master Agreement. If any
Indemnifying Party fails to pay all or any part of any indemnification
obligation on or before the later to occur of (x) 30 days after the last day of
the applicable Response Period, and (y) if the Claim Notice relates to Losses
that have not been liquidated as of the date of the Claim Notice, the date on
which all or any part of such Losses shall have become liquidated and
determined, then the Indemnifying Party shall also be obligated to pay to the
Indemnitee interest on the unpaid amount for each day during which the
obligation remains unpaid at an annual rate of ten percent.
(b) The Indemnitee shall provide to the Indemnifying Party on request
all information and documentation reasonably necessary to support and verify any
Losses that the Indemnitee believes give rise to the claim for indemnification
hereunder and shall give the Indemnifying Party reasonable access to all books,
records and personnel in the possession or under the control of the Indemnitee
that would have bearing on such claim.
(c) Except as hereinafter provided, in the case of third party claims
for which indemnification is sought, the Indemnifying Party shall have the
option: (x) to conduct any proceedings or negotiations in connection therewith,
(y) to take all other steps to settle or defend any such claim (provided that
the Indemnifying Party shall not settle any such claim without the consent of
the Indemnitee (which consent shall not be unreasonably withheld, it being
understood that it shall not be unreasonable for the Indemnitee to withhold its
consent from any settlement which (1) commits the Indemnitee to take, or to
forbear to take, any action, or (2) does not provide for a
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complete release of the Indemnitee by such third party)), and (z) to employ
counsel to contest any such claim or liability in the name of the Indemnitee or
otherwise. In any event, the Indemnitee shall be entitled to participate at its
own expense and by its own counsel (a "Voluntary Participation") in any
proceedings relating to any third party claim. The Indemnifying Party shall,
within 45 days of receipt of the Claim Notice, notify the Indemnitee of its
intention to assume the defense of the claim (a "Defense Notice"). Until the
Indemnitee has received the Defense Notice, the Indemnitee shall take reasonable
steps to defend (but may not settle) the claim. If the Indemnifying Party
declines to assume the defense of any such claim or fails to give a Defense
Notice within 45 days after receipt of the Claim Notice, the Indemnitee shall
defend against the claim but shall not settle such claim without the consent of
the Indemnifying Party (which consent shall not be unreasonably withheld). The
expenses of all proceedings, contests or lawsuits (other than those incurred in
a Voluntary Participation) with respect to claims as to which a party is
entitled to indemnification under this Article 13 shall represent indemnifiable
Losses under this Agreement. Regardless of which party shall assume the defense
of the claim, the parties shall cooperate fully with one another in connection
therewith. Notwithstanding the foregoing, the Indemnifying Party shall not be
entitled (except with the consent of the Indemnitee) to take any of the actions
referred to in clauses (x), (y) or (z) of the first sentence of this
subparagraph unless: (a) the third party claim involves principally monetary
damages; (b) the Indemnifying Party shall have expressly agreed in writing that,
as between the Indemnifying Party and the Indemnitee, the Indemnifying Party
shall be solely obligated to satisfy and discharge such third party claim; and
(c) the Indemnifying Party has the financial capacity to take over the defense
of such claim.
13.5 Environmental Procedures.
(a) Harris agrees to respond on Buyer's or the Transferred
Subsidiaries' behalf and defend Buyer Indemnitees with respect to Losses arising
from Environmental Liabilities, or, at Harris' option, reimburse Buyer's or the
Transferred Subsidiaries' for such Losses.
(b) With respect to any Environmental Liabilities for which Harris is
responsible to conduct Remediation under this Master Agreement on or about any
property owned, operated or leased by the Transferred Subsidiaries after the
Closing, Harris shall be responsible for such Remediation to meet the Minimum
Cleanup Standard. For purposes of this Master Agreement, the "Minimum Cleanup
Standard" shall mean the least stringent standard acceptable under all
Environmental Laws (as such laws are in effect upon the completion of the
Remediation) and all Governmental Authorities with jurisdiction or, if no such
standard has been adopted, promulgated or imposed by the applicable Governmental
Authority or by Environmental Laws (as such laws are in effect upon the
completion of the Remediation) as of the date such Remediation is being
conducted, the standard to which the parties, in good faith agree; provided,
however, that in no event shall the Minimum Cleanup Standard at or below a
standard for which (i) Buyer or the Transferred Subsidiaries would be required
to impose or implement controls or restrictions which would impair the use of
the affected property as used as of the Closing Date, (ii) for which additional
Remediation would be required in the future to achieve and maintain compliance
with Environmental Laws or to meet the requirements of Governmental Authorities,
as such Environmental Laws and requirements exist as of the date of the
completion of the Remediation; or (iii) which does not fully resolve any
liability of Buyer Indemnitees and the Transferred Subsidiaries with respect to
such matter; provided, further, that
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with respect to any Remediation at any property leased by the Transferred
Subsidiaries, the Minimum Cleanup Standard shall also meet the requirements of
the landlord/lessor of such property.
(c) Remediation conducted by Harris shall be conducted in a manner
which minimizes interference to the Transferred Subsidiaries after the Closing
Date, and if and to the extent various Remediation alternatives are available,
Harris shall implement or pay for the implementation, as the case may be, of
such Remediation which imposes the least interruption, interference or
disruption (taking into account the cost effectiveness, regulatory and legal
constraints) unless (i) the Buyer Indemnitees and the Transferred Subsidiaries
consent to a different alternative, or (ii) Harris indemnifies and reimburses
the Buyer and the Transferred Subsidiaries for all Losses arising from such
interruption, interference and disruption (including consequential damages
resulting therefrom).
(d) With respect to Remediation performed by Harris, Harris shall: (i)
diligently and expeditiously perform or cause to be performed such Remediation
to completion; (ii) provide Buyer and the Transferred Subsidiaries reasonable
prior notice of Harris' access requirements and obtain Buyer's consent before
commencing or performing any Remediation (which consent shall not be
unreasonably withheld); (iii) keep Buyer and the Transferred Subsidiaries
reasonably informed of the progress of the on-site activities and provide Buyer
and the Transferred Subsidiaries with copies of any results of sampling and
analytical data (including any status reports of work in progress or reports
required to be submitted to any Governmental Authorities in connection with
conducting the Remediation); (iv) provide Buyer and the Transferred Subsidiaries
a reasonable opportunity to review and comment on any submittal to Governmental
Authorities and consider in good faith Buyer's and the Transferred Subsidiaries'
reasonable comments which must be expeditiously provided (and Harris
acknowledges that any comments, which relate to the interruption, interference,
or disruption with the operation of the Business, damage to the Property, the
safety of personnel, or compliance with Environmental Laws shall be deemed
reasonable); (v) provide Buyer and the Transferred Subsidiaries with the
opportunity to observe all of the activities undertaken by or on behalf of
Harris in implementing the Remediation; (vi) provide reasonable advance notice
to Buyer and the Transferred Subsidiaries of any meetings with any Governmental
Authorities concerning the Remediation and permit Buyer and the Transferred
Subsidiaries may attend such meetings; (vii) comply with all applicable
Environmental Laws and other laws and Buyer's and the Transferred Subsidiaries'
reasonable health and safety requirements; and (viii) promptly upon completion
of any on-site activities, restore any adversely affected portions of the
property to its predisturbed condition such that Buyer and the Transferred
Subsidiaries can continue the operation of the Business in the manner in which
such Business was conducted prior to the commencement of the on-site activities.
(e) Harris shall indemnify, defend and hold harmless Buyer Indemnitees
and the Transferred Subsidiaries against any Losses asserted against or incurred
by the Buyer Indemnitees or the Transferred Subsidiaries arising out of or
relating to activities conducted by Harris or its employees, agents, contractors
and their subcontractors in connection with the performance of the Remediation
or the fulfillment of Harris' obligations with respect to Pre-Closing
Environmental Claims, and the Buyer and the Transferred Subsidiaries shall
indemnify
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and hold harmless Harris against any Losses to the extent arising out of or
relating to Buyer's or the Transferred Subsidiaries' interference with or
disruption of Harris' Remediation, or any Release caused by Buyer or any
Transferred Subsidiary after the Closing Date.
(f) With respect to any Remediation which commenced prior to the
Closing Date which is subject to any consent decree, administrative order or
other agreement with a Governmental Authority or other Person, Harris shall
remain the ordered and/or contracting party after the Closing. With respect to
the Palm Bay, Florida Facility, the parties agree that, without cost to Harris,
Buyer or Transferred Subsidiaries will continue to inspect and provide minor
maintenance at the same level as occurred prior to the Closing Date (provided
the cost to Buyer of such inspection and minor maintenance shall be de minimis)
and provide access for sampling events for Operable Unit 2 Remediation
activities in connection with the Harris Corporation National Priorities List
("NPL") Site, and Harris will continue to perform all other activities,
including all Remediation, sampling and analysis, and reporting those results to
any Governmental Authority (including, without limitation, the United States
Environmental Protection Agency). Harris agrees, without cost to Buyer or
Transferred Subsidiaries, to continue to provide treated groundwater from its
Operable Unit 1 Remediation activities with the Harris Corporation NPL Site, and
Buyer and Transferred Subsidiaries agree to accept such water for its production
process. Harris covenants and agrees that such water will be of a quality such
that it will be able to be used in the same manner as such water was used prior
to the Closing Date. Buyer and Transferred Subsidiaries acknowledge that the
volume of such water may decrease as the Remediation activities at Operable Unit
1 proceed and both parties agree not to change this arrangement without
providing the other party at least six (6) months' prior notice and agreeing to
appropriate alternate arrangements for such water.
13.6 Costs Related to Direct Claims. Notwithstanding anything in this
Article 13 to the contrary, except as otherwise may be ordered by a court of
competent jurisdiction, Buyer Indemnitees and Seller Indemnitees shall bear
their own costs, including counsel fees and expenses, incurred in connection
with direct claims against Buyer, Parent and Harris, respectively, hereunder
that are not based upon claims asserted by third parties.
13.7 Exclusivity. The right of each party hereto to assert indemnification
claims and receive indemnification payments pursuant to this Article 13 shall be
the sole and exclusive right and remedy against the other party exercisable by
such party after the Closing with respect to any breach by the other party
hereto of any representation, warranty or covenant in this Master Agreement or
any Ancillary Agreement or failure to pay or perform any Assumed Liability or
Excluded Liability, as applicable, provided, however, that neither this Section
13.7 nor Section 6 of Exhibit B to this Master Agreement shall prohibit the
maintenance of actions to compel specific performance of the parties' respective
covenants in this Master Agreement.
13.8 No Set-Off. Neither Buyer nor Seller shall have any right to set-off
any indemnification obligations that either may have under this Article 13
against any other obligations or amounts due to Buyer or Seller, as applicable,
including, without limitation, under any other provisions of this Master
Agreement or under any other Transaction Document.
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13.9 Retention of Records. From and after the date of this Master
Agreement, Buyer and Harris shall preserve all books, records and other
documents, materials and information ("Representation Records") relevant to the
representations, warranties and covenants set forth in this Master Agreement for
a period of three years following the date of this Master Agreement or for such
longer period as the rights of the parties hereunder may exist. After Buyer and
Harris are no longer obligated to retain the Representation Records pursuant to
this Section 13.9, Buyer or Harris, as applicable, shall give the other party
not less than thirty (30) days prior written notice before destroying any
Representation Records and, if the other party so requests, shall deliver such
Representation Records to the other party instead of destroying such
Representation Records.
13.10 Notice as to Representations. Without limiting any of the other
obligations of the respective parties hereunder, if at any time after the date
of this Master Agreement Buyer or Parent shall have any reason to believe that
any representation or warranty made by Harris hereunder may have been untrue,
Buyer or Parent, as the case may be, shall promptly provide Harris written
notice to that effect, indicating the basis for Buyer's or Parent's belief that
such representation or warranty may have been untrue. For purposes of this
Article 13, Harris shall not be deemed to have breached any representation or
warranty if Buyer or Parent, prior to the Closing Date, had actual knowledge of
the breach, or facts and circumstances constituting or resulting in a breach, of
such representation or warranty, and consummated, without written notice to
Harris of such breach and a reservation of its right, the purchase of the
Transferred Assets notwithstanding such knowledge.
13.11 Separate Indemnification for Taxes. Notwithstanding anything
contained in this Master Agreement to the contrary, indemnification for Tax
matters set forth in Section 9.7 shall be governed solely by the terms of
Section 9.7.2. To the extent any terms of this Article 13 and Section 9.7.2 are
deemed to be inconsistent with respect to any Tax matters, the terms of Section
9.7 shall govern such matter.
13.12 Indemnification Payments as Purchase Price Adjustment. Any payments
made by Buyer or Parent under this Article 13 shall be considered an increase to
the Purchase Price. Any payments made by Harris under this Article 13 shall be
considered a reduction of the Purchase Price.
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<PAGE>
ARTICLE 14
MISCELLANEOUS
14.1 Material Adverse Effect. Any adverse change, event or effect that is
proximately caused by conditions affecting the United States or international
economy generally shall not be taken into account in determining whether there
has been or would be a Material Adverse Effect on the Business or a Material
Adverse Effect on Buyer (unless such conditions adversely affect the Business
Entities or Buyer, as the case may be, in a materially disproportionate manner).
Any adverse change, event or effect that is proximately caused by any industry
in which Buyer or the Business Entities competes shall not be taken into account
in determining whether there has been or would be a Material Adverse Effect on
Buyer or Material Adverse Effect on the Business (unless such conditions
adversely affect the Business Entities or Buyer, as the case may be, in a
materially disproportionate manner). Any adverse change, event or effect that is
proximately caused by the announcement or pendency of the sale of the Business
and the Transferred Assets shall not be taken into account in determining
whether there has been or would be a Material Adverse Effect on Buyer or a
Material Adverse Effect on the Business. Any adverse change, event or effect
that is proximately caused by any breach by Buyer or the Business Entities of
any covenant or obligation set forth in this Master Agreement shall not be taken
into account in determining whether there has been or would be a Material
Adverse Effect on the Business or Material Adverse Effect on Buyer,
respectively.
14.2 Disclaimer of Projections, Etc. The Business Entities make no
representation or warranty to Buyer except as specifically made in this Master
Agreement and the Ancillary Agreements. In particular, the Business Entities
make no representation or warranty to Buyer with respect to the contents of the
Business Entity management presentations to Buyer or the data room made
available to Buyer, including the certainty or accuracy of any financial
projection or forecast delivered by or on behalf of any Business Entity to
Buyer. Buyer acknowledges that (a) there are uncertainties inherent in
attempting to make such projections and forecasts, (b) it is familiar with such
uncertainties, (c) it is taking full responsibility for making its own
evaluation of the adequacy and accuracy of all such projections and forecasts so
furnished to it, and (d) it shall have no claim against Sellers with respect
thereto.
14.3 Expenses. If the purchase of the Transferred Assets is consummated or
if this Master Agreement is terminated, Harris and Buyer shall pay their own
respective expenses and costs incidental to the preparation of this Master
Agreement, the performance and compliance with all agreements contained in this
Master Agreement to be performed or complied with by them and the consummation
of the transactions contemplated hereby, and none of such costs and expenses
shall be or become liabilities of the Transferred Subsidiaries or be considered
Assumed Liabilities.
14.4 Compliance with Bulk Sales Laws. The parties hereby expressly waive
compliance with any applicable bulk sales laws.
14.5 Inconsistencies. If there shall be any inconsistency between this
Master Agreement and any of the Transaction Documents other than the IP Transfer
Agreements, the
69
<PAGE>
provisions of this Master Agreement shall prevail. Nothing in any of the
Ancillary Documents (other than the IP Transfer Agreements) which involve any
agreement to convey, or the conveyance of, any of the Transferred Assets or any
agreement to assume, or the assumption of, any of the Assumed Liabilities, shall
be deemed to supercede, enlarge or modify any of the obligations, agreements,
covenants, or warranties of the Sellers contained in the Master Agreement.
ARTICLE 15
AGREEMENT CONVENTIONS
The Agreement Conventions set forth in Exhibit B to this Master Agreement
are incorporated herein by reference.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly caused this Master
Agreement to be executed as of the date first above written.
INTERSIL HOLDING CORPORATION
By: /s/ Gregory L. William
--------------------------------
Name: Gregory L. Williams
Title: CEO Intersil Holding Corp.
INTERSIL CORPORATION
By: /s/ Gregory L. Williams
---------------------------------
Name: Gregory L. Williams
Title: CEO
HARRIS CORPORATION
By: /s/ Ronald R. Spoehel
---------------------------------
Name: Ronald R. Spoehel
Title: Vice President
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EXHIBIT 2.02
AGREEMENT CONCERNING DEFERRED CLOSINGS
AGREEMENT, dated as of August 13, 1999, by and between Harris Corporation,
a Delaware corporation ("Harris") and Intersil Corporation, a Delaware
corporation ("Buyer"). Capitalized terms used but not defined herein shall have
the same meaning as specified in that certain Amended and Restated Master
Transaction Agreement (`Master Agreement") dated as of June 2, 1999, among
Harris, Buyer and Intersil Holding Corporation, a Delaware corporation.
WHEREAS, The Master Agreement provides for the sale by Sellers and the
purchase by Buyer of the Transferred Assets;
WHEREAS, Transfer of title to the Transferred Assets of Harris
Semiconductor GmbH (Germany), the Transferred Assets of Harris Semiconductor
S.A. (Belgium), the Transferred Assets of Harris Semiconductor Design and Sales
pte. Ltd. (Singapore), and the shares of stock of Harris Semiconductor (Taiwan)
Ltd. and Harris Semiconductor Y.H. (Korea), (the "Deferred Closing Assets") may
be delayed by the inability of the parties to obtain necessary governmental
approvals of or consents to such transfers by the Closing Date;
WHEREAS, The parties desire to proceed with the Closing and transfer
equitable ownership to the Deferred Closing Assets on the Closing Date and to
transfer legal title to the Deferred Closing Assets as soon as practicable
thereafter;
NOW, THEREFORE, in consideration of the mutual promises herein and in the
Master Agreement, the parties hereto agree as follows:
1. Transfer of Equitable Ownership of Deferred Closing Assets. Until such
time as such Deferred Closing Assets may be properly assigned to Buyer, such
Deferred Closing Assets shall be held by Sellers in trust for Buyer and the
covenants and obligations thereunder shall be performed by Buyer in the name of
Sellers and all benefits and obligations existing thereunder shall be for the
account of Buyer. During such period, Harris shall take or shall cause Sellers
to take, such action in its name or otherwise, as Buyer may reasonably request,
at Buyer's expense, so as to provide Buyer with the benefits of the Deferred
Closing Assets and to effect collection of money or other consideration to
become due and payable under the Deferred Closing Assets, and Harris shall
promptly pay, or shall cause Sellers to promptly pay, to Buyer all money or
other consideration received by them (or their Affiliates) in respect of all
Deferred Closing Assets. Following the Closing, Harris authorizes Buyer, to the
extent permitted by Applicable Law and the terms of the Deferred Closing Assets,
at Buyer's expense, to perform all of the obligations and receive all of the
benefits under the Deferred Closing Assets and appoints Buyer their
attorney-in-fact to act in their name on its behalf (and on behalf of its
Affiliates) with respect thereto.
2. No Transfer if Prohibited. Notwithstanding anything in this Agreement to
the contrary, this Agreement shall not constitute an agreement by Harris to
assign or delegate, or by Buyer to assume and agree to pay, perform or otherwise
discharge, any Deferred Closing Asset if an attempted assignment, delegation or
assumption thereof without the consent of a third Person (including, without
<PAGE>
limitation, any Governmental Authority) thereto would constitute a breach
thereof, unless and until such consent is obtained.
3. Transfer of Legal Title to Deferred Closing Assets. Harris and Buyer
shall use Best Efforts to obtain, as soon as practicable, all Governmental
Approvals necessary for the transfer of each of the Deferred Closing Assets, and
Harris shall transfer, or shall cause Sellers to transfer, legal title to each
of the Deferred Closing Assets to Buyer, or one or more Subsidiaries of Buyer,
as soon as practicable after the Closing Date, provided that Harris and Sellers
shall have completed the transfer of all of the Deferred Closing Assets within
180 days of the Closing Date. The date of transfer of legal title to a Deferred
Closing Asset is referred to herein as an "Actual Closing Date."
4. Delivery of Closing Documents. On each Actual Closing Date, instruments
conveying title to the applicable Deferred Closing Asset, reasonably
satisfactory in form and substance to Buyer, shall be delivered to Buyer, or to
one or more Subsidiaries of Buyer, as Buyer shall designate.
5. Purchase Price; Closing and Final Closing Balance Sheets.
Notwithstanding the existence of the Deferred Closing Assets, the portion of the
Purchase Price allocable to the Deferred Closing Assets shall be paid on the
Closing Date as provided in Section 3.13 of the Purchase Agreement.
6. Incorporation by Reference. The provisions of Exhibits A and B of the
Master Agreement are incorporated herein by reference.
IN WITNESS WHEREOF, Harris and Buyer have caused this
Agreement to be duly executed and delivered in their respective names, all as of
the day and year first above written.
HARRIS CORPORATION
By /s/ Ronald R. Spoehel
-----------------------
Name: Ronald R. Spoehel
Title: Vice President
INTERSIL CORPORATION
By /s/ Gregory L. Williams
-------------------------
Name: Gregory L. Williams
Title: CEO
EXHIBIT 2.03
TRANSITION SERVICES AGREEMENT
This TRANSITION SERVICES AGREEMENT ("Agreement") is entered into as of the
13th day of August, 1999, by and between Intersil Corporation, a Delaware
corporation ("Buyer"), and HARRIS CORPORATION, a Delaware corporation
("Harris"). Harris or Buyer may be referred to herein as a Party or the Parties,
as the case may require.
WITNESSETH:
WHEREAS, Buyer, Intersil Holding Corporation, a Delaware corporation
("Parent"), and Harris have entered into an Amended and Restated Master
Transaction Agreement dated as of June 2, 1999 (the "Master Agreement"),
pursuant to which Buyer and Parent have purchased and Harris has sold the
Business, as defined in the Master Agreement; and
WHEREAS, Buyer desires to purchase from Harris certain management
information and other services for use in connection with the operation of the
Business;
WHEREAS, on the terms and subject to the conditions set forth herein,
Harris is willing to provide, directly or indirectly, such services to Buyer;
WHEREAS, Harris desires to purchase from Buyer certain products and
services for use in connection with the operation of its Suppression Products
Business; and
WHEREAS, on the terms and subject to the conditions set forth herein, Buyer
is willing to provide, directly or indirectly, such services to Harris.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
hereinafter set forth, the Parties agree as follows:
1. Services.
1.1. Harris shall use commercially reasonable efforts to provide the
services identified on Exhibit A (the "Services") to Buyer on and after the
Closing Date to the same extent as such Services were provided to the Business
prior to the Closing Date.
1.2. Buyer may choose (a) not to use the Services or (b) to use the
Services for such period of time as Buyer may decide, not to exceed the time
period set forth on Exhibit A. Buyer may terminate the use of any Service at any
time upon thirty (30) days prior written notice to Harris.
1.3. Harris shall use commercially reasonable efforts to obtain, with
respect to its software licenses or other contracts, such modifications,
supplements or amendments as are required in order to provide the Services to
Buyer.
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1.4. Buyer shall make available to Harris all such Buyer equipment,
inventory, supplies and information as may be reasonably necessary for Harris to
perform Services under this Agreement. Harris agrees to use these Buyer assets
solely for the purposes contemplated hereby.
1.5. All purchases of Services shall be subject only to the terms and
conditions of this Agreement.
1.6. Harris shall determine, in consultation with the Buyer, both the
staffing required and particular personnel assigned to perform the Services,
including, but not limited to, clerical staff, technicians, professionals,
management persons, or otherwise.
1.7. Harris shall have no obligation to upgrade or improve the Services
beyond the level of Services provided to the Business immediately prior to the
Closing Date.
1.8. Harris shall provide such other services ("Other Services") upon such
terms as Harris and Buyer shall agree in writing.
2. Suppression Services and Products
2.1. Buyer agrees to sell to Harris for a period of twenty-four (24) months
the products listed on Exhibit B (the "Products"). Buyer also agrees to make
available to Harris the process technologies necessary to manufacturer the
"diode array" and "surgector" Products. It is understood by Buyer that Harris
may utilize such process technologies to either establish its own diode array
manufacturing capability or to secure a diode array supply from a third party
producer.
2.2. Buyer agrees to provide to Harris for a period of eighteen (18) months
the services listed on Exhibit C (the "Suppression Services"), except with
respect to those Suppression Services identified in paragraph 3 of Exhibit C
(the "Assembly Services"), which Buyer agrees to provide to Harris for a period
of twenty four (24) months.
2.3. Harris may choose not to utilize the Suppression Services or buy any
Products. Harris may terminate the use of any Suppression Service at any time
upon thirty (30) days prior written notice to Buyer.
2.4. All purchases of Suppression Services or Products shall be subject
only to the terms and conditions of this Agreement.
2.5. Buyer shall determine, in consultation with Harris, both the staffing
required and particular personnel assigned to perform the Suppression Services,
including, but not limited to, clerical staff, technicians, professionals,
management persons, or otherwise.
2.6. Buyer shall have no obligation to upgrade or improve the Suppression
Services or the Products beyond the level of Suppression Services and Products
provided to the Suppression Products Business immediately prior to the Closing
Date.
<PAGE>
2.7. Buyer shall provide such other services ("Other Buyer Services") upon
such terms as Harris and Buyer shall agree in writing.
3. Price.
3.1. In consideration for the Services, Buyer shall pay Harris the fully
allocated cost of providing such Services, plus, on all costs other than
third-party costs, five percent (5%). Included in such cost will be any
increased payments that Harris has to make to any licensor of software to Harris
in order to obtain the right to use such software to provide the Services to
Buyer.
3.2. In addition to the prices paid by Buyer hereunder, Buyer shall pay any
present or future sales, use, excise, or other similar taxes applicable to the
sale of Services or, if such sale is exempt from tax, Buyer shall furnish Harris
with a tax exempt certificate acceptable to the taxing authorities. The
foregoing shall not apply to any taxes imposed on Harris' income generated by
this Agreement. Buyer shall not be responsible for any income taxes for which
Harris is liable.
3.3. In consideration of the Products, Harris shall pay Buyer the fully
allocated cost of manufacturing such Products, plus, on all costs other than
third-party costs, five percent (5%).
3.4. In consideration of the Suppression Services, Harris shall pay Buyer
the fully allocated cost of providing such Suppression Services, plus, on all
costs other than third-party costs, five percent (5%).
3.5. In addition to the prices paid by Harris hereunder, Harris shall pay
any present or future sales, use, excise, or other similar taxes applicable to
the sale of Products or Suppression Services or, if such sale is exempt from
tax, Harris shall furnish Buyer with a tax exempt certificate acceptable to the
taxing authorities. The foregoing shall not apply to any taxes imposed on
Buyer's income generated by this Agreement. Harris shall not be responsible for
any income taxes for which Buyer is liable.
3.6. Payment for Services or for Suppression Services shall be billed at
the end of each Calendar month and shall be paid within thirty (30) days after
receipt of the invoice. Any payment not made within such thirty (30) day period
shall bear interest at the rate of one percent (1%) per month thereafter.
Payments for Products shall be in accordance with Buyer's ordinary and customary
practices for billing and collecting for the sale of products.
4. Limitation of Liability/Indemnification.
4.1. It is acknowledged by Buyer that Harris is not in the business of
providing the Services or any Other Services (collectively, the "Agreement
Services") and will not therefore warrant the performance of the Agreement
Services hereunder. In the event of an error or omission in the provision of an
Agreement Service which shall be established to be principally caused by Harris'
performance hereunder, Harris shall credit Buyer for any previously invoiced
charges in connection with such Agreement Service. While Harris shall have no
liability to Buyer for damages, the Parties shall attempt to make such further
adjustment as shall be equitable under the circumstances. Nevertheless, Harris
shall undertake to perform the Agreement Services hereunder for Buyer
substantially in the same manner as if it were
<PAGE>
performing such Agreement Services for a Harris business unit unless otherwise
agreed in writing. Harris' obligations to provide any Agreement Service
hereunder is conditioned upon its obtaining prior to the commencement of the
provision of such Agreement Services all necessary governmental licenses,
approvals, and permits required to perform such Agreement Service. Harris shall
use commercially reasonable efforts to obtain, prior to the Closing Date, all
such licenses, approvals, or permits, if any, as are necessary to render the
Agreement Services provided for herein.
4.2. Buyer agrees that none of the Harris Entities and their respective
directors, officers, agents, and employees (each, a "Harris Indemnified Person")
shall have any liability, whether direct or indirect, in contract or tort or
otherwise, to Buyer for or in connection with the Agreement Services rendered or
to be rendered by any Harris Indemnified Person pursuant to this Agreement, the
transactions contemplated hereby, or any Harris Indemnified Person's actions or
inactions in connection with any such Agreement Services or transactions, except
for damages which have resulted from such Harris Indemnified Person's gross
negligence or willful misconduct in connection with any such Agreement Services,
actions, or inactions. The sole remedy of Buyer for any claim relating to the
performance or nonperformance of the Agreement Services shall be a refund by
Harris to Buyer of any charges or fees paid for the applicable Agreement
Services. In addition, in no event shall either party be liable to the other for
special, punitive, incidental, or consequential damages arising out of this
Agreement. HARRIS MAKES no REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED,
AND HARRIS SPECIFICALLY DISCLAIMS ANY IMPLIED WARRANTIES WITH RESPECT TO THE
agreement SERVICES TO BE PROVIDED HEREUNDER.
4.3. Buyer agrees to indemnify and hold harmless each Harris Indemnified
Person from and against any damages in connection with the provision of the
Agreement Services; provided that Buyer will not be responsible for any damages
incurred by any Harris Indemnified Person that have resulted from such Harris
Indemnified Person's gross negligence or willful misconduct in connection with
any of the Agreement Services, actions, or inactions referred to above.
4.4. It is acknowledged by Harris that Buyer is not in the business of
providing the Suppression Services (except the Assembly Services) or any Other
Buyer Services (collectively, the "Buyer Services") and will not therefore
warrant the performance of the Buyer Services hereunder. In the event of an
error or omission in the provision of a Buyer Service which shall be established
to be principally caused by Buyer's performance hereunder, Buyer shall credit
Harris for any previously invoiced charges in connection with such Buyer
Service. While Buyer shall have no liability to Harris for damages, the Parties
shall attempt to make such further adjustment as shall be equitable under the
circumstances. Nevertheless, Buyer shall undertake to perform the Buyer Services
hereunder for Harris substantially in the same manner as if it were performing
such Buyer Services for itself unless otherwise agreed in writing. Buyer's
obligations to provide any Buyer Service hereunder is conditioned upon its
obtaining, prior to the commencement of the provision of such Buyer Services,
all necessary governmental licenses, approvals, and permits required to perform
such Buyer Service. To the extent not obtained prior to the Closing Date, Buyer
shall use commercially reasonable efforts to obtain after the Closing Date all
such licenses, approvals, or permits, if any, as are necessary to render the
Buyer Services.
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4.5. Harris agrees that Buyer and its directors, officers, agents, and
employees (each, a "Buyer Indemnified Person") shall have no liability, whether
direct or indirect, in contract or tort or otherwise, to Harris for or in
connection with the Buyer Services rendered or to be rendered by any Harris
Indemnified Person pursuant to this Agreement, the transactions contemplated
hereby, or any Harris Indemnified Person's actions or inactions in connection
with any such Buyer Services or transactions, except for damages which have
resulted from such Buyer Indemnified Person's gross negligence or willful
misconduct in connection with any such Buyer Services, actions, or inactions.
The sole remedy of Harris for any claim relating to the performance or
nonperformance of the Buyer Services shall be a refund by Buyer to Harris of any
charges or fees paid for the applicable Buyer Services. In addition, in no event
shall either party be liable to the other for special, punitive, incidental, or
consequential damages arising out of this Agreement. BUYER MAKES no
REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, AND buyer SPECIFICALLY
DISCLAIMS ANY IMPLIED WARRANTIES WITH RESPECT TO THE BUYER SERVICES TO BE
PROVIDED HEREUNDER.
4.6. Harris agrees to indemnify and hold harmless each Buyer Indemnified
Person from and against any damages in connection with the provision of the
Buyer Services; provided that Harris will not be responsible for any damages
incurred by any Buyer Indemnified Person that have resulted from such Buyer
Indemnified Person's gross negligence or willful misconduct in connection with
any of the Buyer Services, actions, or inactions referred to above.
5. Confidential Information.
Buyer and Harris acknowledge that, in connection with the provision of the
Agreement Services, the Buyer Services and the Products, they each have access
to, have received or will receive from each other tangible and intangible
property which is confidential and or proprietary to Harris or Buyer. Both
Parties agree that, as a material provision of this Agreement, they will
exercise all reasonable care to safeguard such property and prevent disclosure
or misuse of same. At any time requested by Buyer, Harris shall promptly return
all tangible property of Buyer and shall continue to treat as confidential for a
period of three (3) years after termination of this Agreement all intangibles
received from Buyer. At any time requested by Harris, Buyer shall promptly
return all tangible property of Harris and shall continue to treat as
confidential for a period of three (3) years after termination of this Agreement
all intangibles received from Harris. No Party shall knowingly publish or
disseminate to any third party any of any other Party's confidential
information. Each document in printed or electronic form or other media which
contains confidential information shall be stamped with a confidential legend.
Notwithstanding the other provisions of this Section of this Agreement,
nothing received by any of the Parties hereunder shall be construed as
confidential information which:
5.1. is published or otherwise made available to the public other than by
breach of this Agreement by a Party hereto; or
5.2. is rightfully received by one Party hereunder from a third Party not
obligated under this Agreement, and without confidential limitation; or
<PAGE>
5.3. is approved for release by the Party designating the information as
confidential information; or
5.4. is known to the Party receiving the confidential information prior to
its first receipt of the same from the other Party; or
5.5. is independently developed by the Party receiving the confidential
information; or
5.6. the receiving party reasonably believes (based upon legal opinion)
that it is required to be disclosed to comply with applicable law, rule or
regulation or court order or other compulsory process of a court or other
governmental body.
In the event that Section 5.6 is applicable, the receiving Party shall make
commercially reasonable efforts to notify the disclosing party, in writing, of
its intention to disclose allowing a reasonable period prior to such intended
disclosure, where the receiving Party reasonably believes that such notice can
be provided without violating applicable law, rule or regulation or court order
or other compulsory process of a court or other governmental body, so that the
disclosing Party may take such action as it deems appropriate to protect its
confidential information.
6. Use of Space.
6.1 For a period not to exceed 180 days from the Closing Date, any
Employees of the Business that are located in facilities of Harris that are not
being transferred to Buyer may remain in such locations. For the use of such
space, Buyer shall pay to Harris rent at the same rate as rent is being charged,
in accordance with Harris' internal accounting conventions, to the Harris
Semiconductor Sector for the use of such space immediately prior to the Closing
Date.
6.2 For a period not to extend beyond the earlier of (i) December 31, 1999
or (ii) the closing date of the sale of the Suppression Business, any employees
of Harris that work primarily in the Suppression Business and that are located
in the Transferred Facility in Palm Bay, Florida or the Transferred Facility in
Branchburg, NJ may remain in such locations (the "Suppression Space") at no
cost. If the sale of the Suppression Business occurs on or before December 31,
1999, the buyer of the Suppression Business may have its employees continue to
use the Suppression Space for a period not to exceed twelve (12) months from the
date of the closing of the sale of the Suppression Business. Such buyer shall
pay rent to Buyer for the use of such Suppression Space equal to Buyer's fully
allocated costs for such Suppression Space plus, on all costs other than third
party costs, five percent (5%).
6.3 For a period not to exceed beyond the earlier of (i) December 31, 1999
or (ii) the Closing Date of the sale of the Suppression Business, any equipment
owned by the Suppression Business and located in the Transferred Facility in
Kuala Lumpur, Malaysia may remain in such location (the "Suppression Equipment
Space") at no cost. If the sale of the Suppression Business occurs on or before
December 31, 1999, the Buyer of the Suppression Business may continue to
maintain such Suppression Equipment in the Suppression Equipment Space for a
period not to exceed twenty four (24) months from the date hereof. Such Buyer
shall pay rent to Buyer for the
<PAGE>
use of such Suppression Equipment Space equal to Buyer's fully allocated costs
for such Suppression Equipment Space plus, on all costs other than third party
costs, five percent (5%).
6.4 For a period not to exceed 180 days from the Closing Date, the
employees of Harris Corporation that are located in the Kuala Lumpur Transferred
Facility may remain in such location. For the use of such space, Harris shall
pay to Buyer rent at the same rate as rent is being charged, in accordance with
Harris' internal accounting conventions, to the Harris Semiconductor Sector for
the use of such space immediately prior to the Closing Date.
7. Term and Termination.
7.1. Except as otherwise herein provided or as otherwise agreed in writing
by the Parties, this Agreement shall have an initial term of twenty-four (24)
months from the date hereof, and shall continue thereafter unless and until
either Buyer or Harris elects in writing to terminate this Agreement by giving
the other party not less than thirty (30) days written notice prior to the
expiration of such initial term.
7.2. Either Party shall have the right to terminate this Agreement if the
other Party shall at any time default in performing any of its material
obligations hereunder and shall fail to remedy such default within the 30-day
period following receipt of written notice thereof from the other Party. Either
Party shall also have the right to terminate this Agreement immediately in the
event the other Party shall be adjudged bankrupt, become insolvent, make a
general assignment for the benefit of creditors, have receiver or trustee
appointed for the benefit of creditors generally, file a voluntary petition in
bankruptcy or initiate reorganization proceedings or take any step toward
liquidation. In the event of termination pursuant to this provision, the
non-defaulting Party will have all rights and remedies available to it under
applicable law, including, but not limited to, equitable relief.
7.3. After the initial term hereof, either Party may terminate this
Agreement by giving the other Party not less than thirty (30) days prior written
notice.
7.4. Other than as required by applicable law, upon termination of any
Service pursuant to Section 1.2, or upon expiration of or termination of this
Agreement in accordance with this Section 7, Harris will have no further
obligation to provide the terminated Service (or any Agreement Service, in the
case of termination of this Agreement), and Buyer will have no obligation to pay
any fees relating to such Service or make any other payments hereunder (if all
Agreement Services hereunder have been terminated); provided that,
notwithstanding such termination, (i) Buyer shall remain liable to Harris for
fees owed and payable in respect of Services provided prior to the effective
date of the termination and rent owed pursuant to Section 6 for utilization of
space prior to the effective date of termination, and (ii) the provisions of
Sections 4 and 5 shall survive any such termination.
7.5. Other than as required by applicable law, upon termination of any
Suppression Service pursuant to Section 2.3, or upon expiration of or
termination of this Agreement in accordance with this Section 7, Buyer will have
no further obligation to provide the terminated Suppression Service (or any
Product or Buyer Service, in the case of termination of this Agreement), and
Harris will have no obligation to pay any fees relating to such Suppression
<PAGE>
Service or make any other payments hereunder (if all Buyer Services and right to
acquire Products hereunder have been terminated); provided that, notwithstanding
such termination, (i) Harris shall remain liable to Buyer for fees owed and
payable in respect of Products or Suppression Services provided prior to the
effective date of the termination, and (ii) the provisions of Sections 4 and 5
shall survive any such termination.
7.6. With respect to termination of any Service or Suppression Service
under this Agreement, Harris and Buyer agree to cooperate in providing for an
orderly transition of such Service to Buyer, or Suppression Service to Harris,
or to a successor service provider. Buyer shall be entitled to purchase, at fair
market value at the time of such purchase, any asset that (i) is owned by
Harris, (ii) is identified on Exhibit D, and (iii) is used exclusively to
provide to Buyer one or more of the Services. Following the transfer of any such
asset to Buyer, Harris shall no longer have any obligation hereunder with
respect to the Service connected with such asset to the extent Harris used such
asset to provide such Service.
8. Relationship of the Parties.
Nothing contained herein shall constitute either Party the agent or legal
representative of the other. Neither Party shall have any right or authority to
assume or create any obligation or responsibility, express or implied, on behalf
of or in the name of the other, or to bind the other in any other manner.
9. Force Majeure and Work Stoppages.
No Party shall be liable in any manner for failure or delay upon
fulfillment of all or part of this Agreement, directly or indirectly owing to
any cause beyond its control, including, but not limited to, acts of God,
governmental orders or restriction, war, threat of war, warlike conditions,
fire, hostilities, sanctions, revolution, riot, looting, strike, lockout,
accident, interruption of transportation or inability to obtain necessary labor,
materials, or facilities.
10. No License.
Nothing contained in this Agreement shall be construed as granting, by
implication, estoppel or otherwise, any licenses or rights under any patents,
copyrights, works or other legally protectable proprietary rights (present or
future) of either Party hereto to the other Party.
11. Waivers.
The failure of a Party to exercise any of its rights under this agreement
on one occasion shall not waive such Party's right to exercise its rights on
another occasion.
12. Agreements and Conventions.
Except as otherwise specifically provided herein, the Agreement Conventions
set forth in Exhibit B to the Master Agreement are incorporated herein by
reference.
IN WITNESS WHEREOF, the parties have caused this Agreement to be signed by
their duly authorized representatives as of the date and year first above
written.
<PAGE>
HARRIS CORPORATION
By: /s/ Ronald R. Spoehel
----------------------------
Name: Ronald R. Spoehel
Title: Vice President
BUYER
By: /s/ Gregory L. Williams
----------------------------
Name: Gregory L. Williams
Title: CEO
<PAGE>
EXHIBIT A
TO
TRANSITION SERVICES AGREEMENT
Harris will provide the following Services to Buyer for a period not to
exceed the number of months from the Closing Date as specified next to the
indicated Service.
<TABLE>
<CAPTION>
Months from
Services Closing Date
- - -------- ------------
<S> <C>
1. NT operations and services, including database, layered services (e.g., Eight
WTS, file and print and Web service).
2. Messaging services (all services provided under Microsoft Exchange). Eight
3. Vax service for MES (Manufacturing Execution Systems) on VAX equipment. Ten
4. Mainframe - MVS operations and layered services, including WAN connections Eight
to PKS. In the event of a penalty resulting from discontinuation of
mainframe services, the penalty will be shared proportionately in
accordance with usage, e.g., presently Semiconductor's usage is 90% of the
total, therefore if terminated they would be responsible for 90% of the
termination costs. Such usage would be based upon the average monthly usage
during the six months preceding notice of such termination. As noted in the
PKS/Harris Agreement, a six-month prior notification for termination is
required. During this six-month period, the Buyer will continue to pay a
proportion of the minimum base monthly fee based upon the preceding six
month usage.
5. Computer job scheduling services. Eight
6. Computer help desk support. Eight
7. Account management, security. Eight
8. Disaster recovery facilities. Eighteen
9. Co-located UNIX computer services. Eight
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Months from
Services Closing Date
- - -------- ------------
<S> <C>
10. Telecommunications network, equipment and services monitoring. Eight
11. Voice Telecommunications services including PBX operations and metered Eight
voice service.
12. Other telecommunications services including dial-in computer access and Eight
remote authentication.
13. Treasury and cash management services. Twelve
14. Benefits interface to HSS payroll and human resources. Eight
15. Check and advice printing. Eight
16. Payroll services, e.g., W2 preparation and printing. Eight
17. DHCP/DNS/WINS services. Eight
18. Internet on/ramp. Eight
19. Internet firewall services. Eight
20. Offsite backup storage of computer files. Eight
21. Microsoft and PeopleSoft License Usage:
Microsoft: Harris will transfer the Microsoft software covered under the
Harris/Microsoft Select Enterprise Enrollment Agreement at cost in accordance
with the "Divestiture" clause.
PeopleSoft: As a result of a divestiture, the Divested Organization can continue
to use the software for a period of twelve months from notice of divestiture,
subject to the terms and conditions of the contract. Upon expiration of the
twelve months, the Divested Organization may (a) return/destroy the software, or
(b) acquire the software for 50% of then current list price, and negotiate the
annual maintenance fee going forward.
22. Assistance regarding the importation of goods in Europe Eight
23. Migration assistance from Harris to Buyer with respect to the foregoing Eight
services.
</TABLE>
<PAGE>
EXHIBIT B
TO
TRANSITION SERVICES AGREEMENT
SUPPRESSION PRODUCTS
<TABLE>
<CAPTION>
- - --------------------------------------------------------------------------------------
SURGECTORS
- - --------------------------------------------------------------------------------------
Harris Part Type Description
- - --------------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------------
<S> <C>
SGT03U13 PWR SURGECTOR 30V 130MA TO-202
- - --------------------------------------------------------------------------------------
SGT06U13 PWR SURGECTOR 60V 120MA TO-202
- - --------------------------------------------------------------------------------------
SGT10S10R3872 CUSTOM TYPE LUCENT TECH
- - --------------------------------------------------------------------------------------
SGT21B13 PWR BIDIRECTIONAL SURGECTOR 230V 130MA TO-
- - --------------------------------------------------------------------------------------
SGT23B13 PWR BIDIRECTIONAL SURGECTOR 230V 130MA TO-
- - --------------------------------------------------------------------------------------
SGT23B13A PWR BIDRIECTIONAL SURGECTOR 230V 130MA TO-
- - --------------------------------------------------------------------------------------
SGT23B13S2463 CUSTOM TYPE NOKIA
- - --------------------------------------------------------------------------------------
SGT23B13121 CUSTOM TYPE LUCENT TECH
- - --------------------------------------------------------------------------------------
SGT23U13 PWR SURGECTOR 230V 130MA TO-202
- - --------------------------------------------------------------------------------------
SGT27B13 PWR BIDIRECTIONAL SURGECTOR 270V 130MA TO-
- - --------------------------------------------------------------------------------------
SGT27B13A PWR BIDIRECTIONAL SURGECTOR 270V 130MA TO-
- - --------------------------------------------------------------------------------------
SGT27B27 PWR BIDIRECTIONAL SURGECTOR 270V 270MA TO-
- - --------------------------------------------------------------------------------------
SGT27B27A PWR BIDIRECTIONAL SURGECTOR 270V 270MA TO-
- - --------------------------------------------------------------------------------------
SGT27S10 PWR SURGECTOR 270V 100MA TO-202
- - --------------------------------------------------------------------------------------
SGT27S23 PWR SURGECTOR 270V 230MA TO 202
- - --------------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------------
DIODE ARRAYS
- - --------------------------------------------------------------------------------------
Harris Part Type Description
- - --------------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------------
SP720AB ELECTRONIC PROTECTION ARRAY, 16 SOIC
- - --------------------------------------------------------------------------------------
SP720ABS2527 SPECIAL PART NUMBER FOR INTEL
- - --------------------------------------------------------------------------------------
SP720ABT ELECTRONIC PROTECTION ARRAY, 16 SOIC, TAPE
- - --------------------------------------------------------------------------------------
SP720ABTR4249 ELECTRONIC PROTECTION ARRAY, 16 SOIC, TAPE
- - --------------------------------------------------------------------------------------
SP720ABT52527 SPECIAL PART NUMBER FOR INTEL
- - --------------------------------------------------------------------------------------
SP720ABTS5001 SELECTION OF SP720ABT FOR IBM
- - --------------------------------------------------------------------------------------
SP720AP ELECTRONIC PROTECTION ARRAY, 16 PDIP
- - --------------------------------------------------------------------------------------
SP720APS2501 CUSTOM TYPE TECO
- - --------------------------------------------------------------------------------------
SP720AW ELECTRONIC PROTECTION ARRAY FOR ESD & OVER
- - --------------------------------------------------------------------------------------
SP720AY PROTECTION ARRAY - DIE FORM
- - --------------------------------------------------------------------------------------
SP720MD ESD PROTECTION, MIL NON-COMPLIANT, 16 LEAD
- - --------------------------------------------------------------------------------------
SP720MD 8 ESP PROTECTION, MIL 883 NON-COMPLIANT, 16
- - --------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
- - --------------------------------------------------------------------------------------
<S> <C>
SP720MM ESD PROTECTION, MIL NON COMPLIANT, 20 CLCC
- - --------------------------------------------------------------------------------------
SP720MM-8 ESD PROTECTION, MIL 883 NON-COMPLIANT, 20
- - --------------------------------------------------------------------------------------
SP721AR ELECTRONIC PROTECTION ARRAY, 8 SOIC
- - --------------------------------------------------------------------------------------
SP721ABS2527 SPECIAL PART NUMBER FOR INTEL
- - --------------------------------------------------------------------------------------
SP721ABT ELECTRONIC PROTECTION ARRAY, 8 SOIC, TAPE
- - --------------------------------------------------------------------------------------
SP721ABTS2527 SPECIAL PART NUMBER FOR INTEL
- - --------------------------------------------------------------------------------------
SP721AP ELECTRONIC PROTECTION ARRAY, 8 PDIP
- - --------------------------------------------------------------------------------------
SP723AB ELECTRONIC PROTECTION ARRAY, 8 SOIC
- - --------------------------------------------------------------------------------------
SP723ABT ELECTRONIC PROTECTION ARRAY, 8 SOIC, TAPE
- - --------------------------------------------------------------------------------------
SP723ABTS2497 CUSTOM TYPE TELRAD DOCK TO STOCK
- - --------------------------------------------------------------------------------------
SP723AP ELECTRONIC PROPTECTION ARRAY, 8 PDIP
- - --------------------------------------------------------------------------------------
SP724AHT ESD/OVERVOLTAGE PROTECTION ARRAY SOT-23 TA
- - --------------------------------------------------------------------------------------
</TABLE>
<PAGE>
EXHIBIT C
TO
TRANSITION SERVICES AGREEMENT
SUPPRESSION SERVICES
Buyer shall provide Harris with the following services provided in the
ordinary course of business by Harris Semiconductor Sector to the Suppression
Business as of the Closing Date:
1. Management information services including order entry, impress,
workstream, hub, and other management information services provided in the
ordinary course of business by the Harris Semiconductor Sector to the
Suppression Products Business of Harris as of the Closing Date.
2. Sales services by Transferred Employees who, prior to the Closing Date,
were involved in sales of Suppression Products.
3. Any assembly and testing services provided by the Transferred Facility
in Kuala Lumpur, Malaysia in addition to those services required in order to
manufacture the Products.
<PAGE>
EXHIBIT D
TO
TRANSITION SERVICES AGREEMENT
1. All NT computing servers, associated hardware and equipment racks located on
any of the properties of Harris or in any of the Transferred Facilities,
currently supporting services to the Business including, but not limited to,
the following:
o NT Business Application Server
o NT Database
o Internet/Web Services
o Winframe
o Email/Exchange and Om Tool Fax
o Domain Control
o File and Print
o DHCP
2. All "Collocated UNIX" computing servers, associated hardware and equipment
racks located on any of the properties of Harris or in any of the
Transferred Facilities currently supporting services to the Business
including, but not limited to, the following:
o Impress Planning
o Midas
o Hub
3. All VMS computing servers, associated hardware and equipment racks located
in any of the properties of Harris or in any of the Transferred Facilities,
currently supporting services to the Business including, but not limited to,
the following:
o Workstream
o Development
4. All Telecommunications Network hardware located in any of the properties of
Harris or in any of the Transferred Facilities, currently supporting
services to the Business including, but not limited to, the following:
o Internet Server Connectivity Hardware - Foundry Server Iron - (Load
Balance between Web Servers)
o VMS Connectivity Hardware - Capricorn CISCO 7206 Router (Interface to
remote VMS Clusters and Findlay/Mountaintop WAN Connectivity); Foundry Net
Iron - Bid D NI - (Interface to Dundalk and DEV VMS Cluster)
<PAGE>
o MVS Connectivity Hardware - CNT Box (IP to SNA/T1 Channel Extender), Front
End Processor
o FDDI Connectivity Hardware - 3COM LANPlex 100 Mb IP/FDDI Hub
o GEIS EDI Connectivity Hardware
o Network General Sniffer Analyzer and associated Datacom switch
EXHIBIT 2.04
DATED THIS 13TH DAY OF AUGUST 1999
BETWEEN
HARRIS AIRPORT SYSTEMS (M) SDN BHD
AND
HARRIS SOLID STATE (MALAYSIA) SDN Bill)
("the Vendors")
AND
SAPPHIRE WORLD INVESTMENTS, INC.
("the Purchaser")
*************************************
SHARE SALE AGREEMENT
for 211,275,680 ordinary shares of RM1.00 each
in HARRIS ADVANCED TECHNOLOGY (MALAYSIA) SDN BHD
*************************************
MESSRS SHEARN DELAMORE & Co.
ADVOCATES & SOLICITORS
10TH FLOOR
WISMA HAMZAH KWONG HING
NO. 1 LEBOH AMPANY
50100 KUALA LUMPUR
<PAGE>
THIS AGREEMENT is made on August 13, 1999, between:
(1) HARRIS AIRPORT SYSTEMS (M) SDN BHD (Company No. 17068-A), a company
incorporated in Malaysia whose registered office is at 73 Lorong
Enggang, ULU Kiang Free Trade Zone, 54200 Kuala Lumpur, Malaysia
("HAS);
(2) HARRIS SOLID STATE (MALAYSIA) SDN BHD (Company No. 15798-U), a company
incorporated in Malaysia whose registered office is at 73 Lorong
Euggang, ULU Kiang Free Trade Zone, 54200 Kuala Lumpur, Malaysia
("HSSM"), of the one part (Collectively "the Vendors"); and
(3) SAPPHIRE WORLDWIDE INVESTMENTS, INC., a company incorporated in the
British Virgin Islands ("the Purchaser") of the other part.
WHEREAS
(1) Together the Vendors legally and beneficially own 211,275,680 fully
paid up shares of RM 1.00 each of Harris Advanced Technology Sdn. Bhd.,
a corporation existing under the laws of Malaysia, with its registered
office at 73 Lorong Enggang, ULU Kiang Free Trade Zone, 54200 Kuala
Lumpur, Malaysia ("HAT"), which shares comprise all of the shares of
HAT.
(2) The Vendors desire to sell to Purchaser and Purchaser desires to
purchase from the Vendors all of said 211,275,680 shares of HAT
registered in their respective names (such shares, "the HAT Equity
Interest").
IT IS HEREBY AGREED as follows:
1. Agreement and Purchase Price
1.1 Subject to the provisions of this Agreement, the Vendors shall sell to
the Purchaser and the Purchaser shall purchase from the Vendors the HAT
Equity Interest free from all claims, charges, liens and pledges and
other encumbrances together with all rights attached or accruing
thereto on the Closing Date.
1.2. On the Closing Date, Purchaser shall pay to the Vendors the aggregate
amount of USD 94,274,000 as consideration for the HAT Equity Interest.
1.3 On the Closing Date the following matters shall be given effect in the
order appearing below, subject to the completion of all of them:
1.3.1 Purchaser shall deliver by wire transfer the amount of USD
94,274,000 payable in the following manner:
(a) for the amount of USD 43,366,000 in favour of HAS;
and
(b) for the amount of USD 50,908,000 in favour of HSSM.
1
<PAGE>
1.3.2 the Vendors shall deliver to the Purchaser:
(a) properly executed instruments of transfer of the
shares comprising the HAT Equity Interest duly
executed by the Vendors in favour of the Purchaser or
such person(s) as it may direct accompanied by the
relevant original share certificates in respect of
the HAT Equity Interest;
(b) original letters of resignation (in the form set out
in Annex A hereto) of all the directors of HAT,
unless Purchaser shall otherwise request, with effect
from the Closing Date;
(c) a certified true copy of the resolution of the board
of directors of HAT appointing Gregory L. Williams,
James A. Urry and Gary E. Gist as directors of the
Company with effect from the Closing Date; and
(d) all the statutory and other books and records,
certificates of incorporation and common seals of the
Company.
2. Conditions Precedent
This Agreement is subject to:
(a) the approval of the Minisby of International Trade and
Industry ("MITI") to the sale by the Vendors to the Purchaser
of the HAT Equity Interest subject to terms and conditions
reasonably satisfactory to Purchaser.
(b) the approval of shareholders of each of the Vendors approving
the sale by the Vendors to the Purchaser of the HAT Equity
Interest.
(c) the approval of shareholders of the Purchaser approving the
purchase by the Purchaser from the Vendors of the HAT Equity
Interest.
(d) a certified true copy of the resolution of the board of
directors of HAT authorising the registration of the transfer
of HAT Equity Interest from HAS and HSSM to the Purchaser and
the issue of fresh certificates for the HAT Equity Interest in
favour of the Purchaser;
(e) copies, certified as true copies by the Vendors' solicitors,
of original issue documents of title of the properties held
under:
(i) HS(M) 2601 Lot 7666, Mukim of Hulu Kelang, District
of Gombak, Locality AU2, Ampang/Hulu Klang, State of
Selangor;
(ii) HS(M) 2603 Lot 7668, Mukini of Hulu Kelang, District
of Gombak, Locality AU2, Ampang/Hulu Kiang, State of
Selangor;
and
2
<PAGE>
(iii) PN 7128 Lot 7716, Mukim of Huiu Kelang, District of
Gombak, State of Selangor;
and known as No. 73, Jalen Enggang, Ulu Kelang Free
Trade Zone, 54200 Kuala Lumpur, Malaysia;
(f) a PDS-6 stamp duly adjudication form, Part II, which has been
completed by the company secretary of HAT, in respect of the
transfer of the HAT Equity Interest together with the latest
copy of the audited accounts of HAT;
3. Covenants
3.1 Each Vendor shall take all necessary corporate actions required by
Malaysian law to obtain approval by their respective board of directors
and the government of Malaysia for the transfer of the HAT Equity
Interest from the Vendors to the Purchaser and the registration of the
Purchaser as the Owner of the HAT Equity Interest in the registers of
HAT.
3.2 Purchaser shall take all necessary corporate actions required by the
laws of Malaysia and the British Virgin Islands to obtain approval by
the Purchaser board of directors and the government of Malaysia for the
transfer of the HAT Equity Interest from the Vendors to the Purchaser.
4. Assumption of Obligations
4.1 From and after the Closing Date, Purchaser shall assume any and all
obligations and liabilities of the Vendors, which obligations or
liabilities the Vendors are required to perform under the Articles of
Association of HAT or any contract entered into by HAT and accepted or
guaranteed by or concurred in, in writing, by the Vendors in order to
conduct the business of HAT. From and after the Closing Date Purchaser
may exercise any rights with respect to HAT which could have been
exercised prior to the Closing Date by the Vendors.
5. Limitation of Liabilities
5.1 IN NO EVENT SHALL ANY PARTY TO THIS AGREEMENT BE LIABLE TO ANY OTHER
PARTY OR TO ANY PARTY CLAIMING UNDER ANY OF THE PARTIES TO THIS
AGREEMENT, WHETHER AS A RESULT OF BREACH OF CONTRACT, WARRANTY, TORT
(INCLUDING NEGLIGENCE OR OTHERWISE), FAILURE OF A REMEDY TO ACCOMPLISH
ITS PURPOSE OR OTHERWISE, FOR SPECIAL, INCIDENTAL, OR CONSEQUENTIAL
DAMAGES.
6. Force Majeure
6.1 No party to this Agreement shall be liable in damages for any delay or
default in the performance of all or any of this Agreement, if such
delay or default is caused by conditions beyond its control, including
but not limited to: acts of the elements, fires, explosion, floods, or
3
<PAGE>
other casualties, governmental restrictions or orders, and inability to
obtain necessary government approvals.
7. Closing Date
7.1 The Closing Date of this Agreement shall occur promptly on such date as
the Vendors and the Purchaser shall agree, which date shall be after
the date on which the transfer of the HAT Equity Interest from the
Vendors to the Purchaser has been approved by the FTC and any other
relevant regulatory authorities in Malaysia.
8. Termination
8.1 This Agreement shall be terminated by the mutual consent of all the
parties, or upon the occurrence of one of the following events:
(a) A final decision of the government of Malaysia to prohibit the
transfer of the HAT Equity Interest from the Vendors to
Purchaser.
(b) Termination of the Master Transaction Agreement in accordance
with the terms thereof
9. Governing Law and Dispute Resolution
9.1 This Agreement shall be construed in accordance with and governed by
the laws of Malaysia as it applies to contracts to be performed
entirely within Malaysia.
9.2 In the event that any dispute arises between the parties pertaining to
the subject matter of this Agreement, and the parties, through the
senior management of Purchaser and Harris Corporation, the owner of the
shares of the Vendors, are unable to resolve such dispute within a
reasonable time through negotiations and mediation efforts by senior
executives of both parties, such dispute shall be resolved as set forth
in this Article 10.2.
(a) The procedures of this Article 10.2 may be initiated by a
written notice ("Dispute Notice") given by one party
("Claimant") to the other, but not before thirty (30) days
have passed during which the parties have been unable to reach
a resolution as described above. The Dispute Notice shall be
accompanied by (i) a statement of the Claimant describing the
dispute in reasonable detail and (ii) documentation, if any,
supporting the Claimant's position on the dispute. Within
twenty (20) days after the other party's ("Respondent")
receipt of the Dispute Notice and accompanying materials, the
parties shall submit the dispute to non-binding mediation in
the Washington, D.C. area under the rules of the American
Arbitration Association. All negotiations and mediation
procedures pursuant to this paragraph (a) shall be
confidential and treated as compromise and settlement
negotiations and shall not be admissible in any arbitration or
other proceeding.
(b) If the dispute is not resolved as provided in paragraph (a)
within sixty (60) days after the Respondent's receipt of the
Dispute Notice, the dispute shall be resolved by binding
arbitration. In the event the dispute is to be resolved
4
<PAGE>
pursuant to arbitration, each party shall appoint an
arbitrator within seventy-five (75) days after the
Respondent's receipt of the Dispute Notice, and the two
arbitrators so chosen shall promptly appoint a third
arbitrator. If either party fails to name an arbitrator as
aforesaid, such arbitrator shall be designated by the American
Arbitration Association in the Washington, D.C. area. If any
arbitrator becomes disabled, resigns or is otherwise unable to
discharge the arbitrator's duties, the arbitrator's successor
shall be appointed in the same manner as such arbitrator was
appointed.
(c) Except as otherwise provided in this Article 10.2, the
arbitration shall be conducted in accordance with the
Commercial Rules of the American Arbitration Association,
which shall be governed by the United States Arbitration Act.
(d) Any resolution reached through mediation and any award arising
out of arbitration (i) shall be binding and conclusive upon
the parties; (ii) shall be limited to a holding for or against
a party, and affording such monetary remedy as is deemed
equitable, just and within the scope of this Agreement; (iii)
may not include special, incidental, consequential or punitive
damages; (iv) may in appropriate circumstances include
injunctive relief; and (v) may be entered in court in
accordance with the United States Arbitration Act.
(e) Arbitration shall not be deemed a waiver of any right of
termination under this Agreement, and the arbitrator is not
empowered to act or make any award other than based solely on
the rights and obligations of the parties prior to termination
in accordance with this Agreement.
(f) The arbitrator may not limit, expand or otherwise modify the
terms of this Agreement.
(g) The laws of Malaysia shall apply to any mediation,
arbitration, or litigation arising under this Agreement.
(h) Each party shall bear its own expenses incurred in any
mediation, arbitration or litigation, but any expenses related
to the compensation and the costs of any mediator or
arbitrator shall be borne equally by the parties to the
dispute.
(i) A request by a party to a court for interim measures necessary
to preserve a party's rights and remedies for resolution
pursuant to this Article 10.2 shall not be deemed a waiver of
the obligation to mediate or of the agreement to arbitrate.
(j) The parties, their representatives, other participants and the
mediator or arbitrator shall hold the existence, content and
result of mediation or arbitration in confidence.
10. Amendment
10.1 No variation of this Agreement shall be valid unless it is in writing
and signed by or on behalf of each of the parties to it.
5
<PAGE>
11. Successors Bound
11.1 This Agreement shall be binding upon the parties hereto and their
respective successors in title and permitted assigns.
12. Notices
Unless otherwise specified herein, all notices, requests or other
communications to or upon each of the parties hereto or their
solicitors, shall be deemed to have been received it:
(a) in the case of notice delivered personally, on the date of
delivery; or
(b) in the case of notice by letter, three (3) Business Days after
the same is sent by prepaid registered post; or
(c) in the case of transmission by facsimile when the recipient's
facsimile number is shown on the sender's receipt of a
confirmed log print-out for the transmission regarding the
date, time and transmission of all pages;
and shall be addressed to the addresses of the parties hereto
hereinbefore mentioned or such other address any of the parties may
designate from time to time by written notice to the other party hereto
or the addresses of their solicitors.
13. Severability
13.1 In the event that any one or more of the provisions contained in this
Agreement shall for any reason be held to be unenforceable, illegal or
otherwise invalid in any respect under the law governing this Agreement
or its performance, such unenforceability, illegality or invalidity
shall not affect any other provisions of this Agreement and this
Agreement shall then be construed as if such unenforceable, illegal or
invalid provisions had never been contained herein.
14. Counterparts
14.1 This Agreement may be executed in one or more counterparts, each of
which shall be an original, but all of which shall constitute one
instrument.
15. Headings
15.1 The headings in this Agreement are for convenience only and shall have
no effect on the interpretation hereof.
16. Entire Agreement
16.1 The terms and conditions herein shall contain and constitute the entire
agreement between the parties, and shall supersede all previous
communications, either oral or written, between the parties with
respect to the subject matter hereof, and no agreement or
6
<PAGE>
understanding, varying, or modifying the same shall be binding upon any
other party unless in writing and signed by a duly authorized officer
or representative of each party.
7
<PAGE>
IN WITNESS WHEREOF this Agreement has been entered into by the parties
hereto on the day and year first above written.
Signed by Bryan R. Roub
/s/ Bryan R. Roub
- - ----------------------------------
for and on behalf of
HARRIS AIRPORT SYSTEMS (M) SDN BHD
in the presence of Rebecca L. Parman
/s/ Rebecca L. Parman
- - ---------------------
Witness
Signed by Bryan R. Roub
/s/ Bryan R. Roub
- - -------------------------------------
for and on behalf of
HARRIS SOLID STATE (MALAYSIA) SDN BHD
in the presence of Rebecca L. Parman
/s/ Rebecca L. Parman
- - ---------------------
Witness
Signed by Gregory L. Williams
/s/ Gregory L. Williams
- - ------------------------------------
for and on behalf of
SAPPHIRE WORLDWIDE INVESTMENTS, INC.
in the presence of:
/s/ Daniel J. Heneghan
- - ----------------------
Witness
EXHIBIT 2.05
Dated 13 August 1999
HARRIS SEMICONDUCTOR LIMITED
-and-
INTERSIL LIMITED
AGREEMENT FOR THE SALE AND PURCHASE OF
THE BUSINESS AND ASSETS OF
HARRIS SEMICONDUCTOR LIMITED
CROWELL & MORING
180 FLEET STREET
LONDON EC4A 2HD
- - --------------------------------------------------------------------------------
UK Asset Purchase Agreement
<PAGE>
INDEX
OPERATIVE PROVISIONS
1. Definitions and Interpretation...................................... 1
2. Agreement for Sale.................................................. 2
3. Liabilities......................................................... 2
4. Consent of Third Parties, Further Assurances........................ 2
5. Risk and Property................................................... 2
6. Closing............................................................. 3
7. Employees........................................................... 3
8. Notices............................................................. 4
9. Assignment.......................................................... 5
10. Survival of Certain Provisions...................................... 5
11. Entire Agreement.................................................... 5
12. Governing Law....................................................... 5
13. Dispute Resolution and Arbitration.................................. 5
- - ------------------------------------------------------------------------------
UK Asset Purchase Agreement
<PAGE>
THIS AGREEMENT is made this 13th day of August 1999
(1) Harris Semiconductor Limited (registered number 01701566) whose
registered office is at Eskdale Road, Winnersh, Triangle, Wokingham,
Berkshire RG11 5TS (the "Seller"); and
(2) Intersil Limited (registered number 3825991) whose registered office is
at Riverside Way, Watchmoor Park, Camberley, Surrey GU15 3YQ (the
"Purchaser");
(each a Party and together the Parties)
NOW IT IS AGREED as follows:
1 Definitions and Interpretation
1.1 In this Agreement unless the context otherwise requires:
Assets means the Transferred Assets of the Business to
be sold to the Purchaser pursuant to the Master
Transaction Agreement other than the shares and
interest of the Seller in Harris srl;
Business means the business of the marketing, sales and
distribution of semiconductor products in Europe
carried on by the Seller;
Business Day means any day, other than a Saturday or
Sunday or public holiday, on which banks are open
for business in London;
Closing Date means the date of the Agreement or such other
date as the parties may agree in writing;
Employees means the persons employed by the Seller as of
the date of this Agreement;
Liabilities means all the Assumed Liabilities of the Business
to be assumed by the Purchaser pursuant to the
Master Transaction Agreement;
Master means the Master Transaction Agreement made
Transaction between Harris Corporation, Intersil Corporation
Agreement and Intersil Holding Corporation and dated as of
2 June, 1999;
- - ------------------------------------------------------------------------------
Page 1
<PAGE>
Purchase Price means the aggregate consideration payable for the
Business and the Assets as set forth in Clause
2.2;
Regulations means the Transfer of Undertaking (Protection of
Employment) Regulations 1981 as amended from time
to time;
1.2 All other capitalized terms shall have the meaning set forth in Exhibit
A to the Master Transaction agreement.
2 Agreement for Sale
2.1 With effect from the Closing Date the Seller shall sell and assign and
the Purchaser shall purchase as provided in the Master Transaction
Agreement (1) the Business as a going concern and (2) all of the
Assets, and the Purchaser shall assume the Liabilities.
2.2 The purchase price for the sale of the Business and the Assets and the
assumption of the Liabilities shall be US$930,000 (exclusive of VAT, if
any).
2.3 The parties shall use all reasonable endeavours to procure that the
sale of the Business is deemed to be transfer of a business as a going
concern for the purpose of section 33 and schedule 2 paragraph 7(1)(a)
of the Value Added Tax Act 1983.
3 Liabilities
3.1 Nothing in this Agreement will make the Seller liable in respect of
anything done or omitted to be done by the Purchaser after the Closing
Date or in relation to the use of the Assets or the carrying on of the
Business by the Purchaser generally after the Closing Date other than
as may have been specifically assumed by it under this Agreement.
4 Consent of Third Parties, Further Assurances
4.1 Section 3.8 of the Master Transaction Agreement is incorporated into
this Agreement by reference, and, to the extent that it applies to the
Business, shall have effect as if the Parties were original parties to
the Master Transaction Agreement.
- - ------------------------------------------------------------------------------
Page 2
<PAGE>
5 Risk and Property
5.1 Risk in the Assets shall pass to the Purchaser at the Closing Date.
5.2 Subject to Clause 5, the property in and title to the Assets shall pass
to the Purchaser at the Closing Date and the obligations under the
Assumed Liabilities shall pass to the Purchaser at the Closing Date.
6 Closing
6.1 The sale and purchase of the Business and the Assets will be completed
immediately after the signing and exchange of this Agreement and the
Seller will deliver or cause to be delivered to the Purchaser, with
immediate effect:
(a) such of the Assets as are capable of being transferred by
delivery;
(b) such documents as may be necessary to vest title to such of
the Assets as are not capable of being transferred by delivery
in the Purchaser;
(c) subject to Clause 5 hereof, the written consent of any
mortgagee or other person whose consent is necessary for the
sale of any of the Assets; and
(d) such other resolutions and other documents as may be necessary
and customary for transactions of the type contemplated by the
Agreement.
6.2 Purchaser shall execute such documents as may be necessary to assume
the Liabilities.
6.3 The Purchaser shall pay to the Seller the Purchase Price.
7 Employees
7.1 The Seller and the Purchaser acknowledge and agree that, pursuant to
the Regulations, the contracts of employment between the Seller and the
Employees (save in so far as such contracts relate to any occupational
pension scheme) will have effect after Completion as
- - ------------------------------------------------------------------------------
Page 3
<PAGE>
if originally made between the Purchaser and the Employees. The
transfer of such contracts of employment will be subject to the
remaining provisions of this clause 7.
7.2 Upon or as soon as practicable after Closing, the Seller and the
Purchaser will make a joint announcement to the Employees in the agreed
terms regarding the transfer of their contracts of employment as
referred to in clause 7.1.
8 Notices
8.1 Any demand, notice or other communication given or made under or in
connection with this Agreement will be in writing in the English
language and may be hand-delivered (including delivery by courier
service), or sent by fax transmission as follows:
SELLER
------
Address: Eskdale Road
Winnersh, Wokingham,
Berkshire RG41 5TS
Fax: +44 1189 695805
Attention: David J. Smith
with a copy to:
Address: Harris Corporation
1025 West NASA Boulevard
Melbourne FL 32919
Fax +1 (407) 727 9222
Attention Corporate Secretary
PURCHASER
---------
Address: Riverside Way
Watchmoor Park
Camberley
Surrey GU15 3YQ
- - ------------------------------------------------------------------------------
Page 4
<PAGE>
Fax: +44 1276 682323
Attention: Company Secretary
Notices to either party may be given to such other address or number as
may be notified by that party from time to time for this purpose.
8.2 Unless the contrary shall be proved, notice shall be deemed to have
been given, (i) if by hand delivered during working hours on a working
day, when left at the relevant address, and otherwise on the next
working day after delivery, (ii) if by fax during working hours on a
working day, when transmitted, and otherwise on the next working day
after transmission, and (iii) if sent by prepaid first class post, on
the second working day after the date of the posting.
9 Assignment
9.1 This Agreement shall be binding upon and inure to the benefit of the
successors of the parties but is personal to them and may not be
assigned at law or in equity without the prior written consent of the
other.
10 Survival of Certain Provisions
10.1 Each of the obligations and undertakings entered by or on behalf of the
parties to this agreement shall survive and remain in full force and
effect notwithstanding Closing taking place.
- - ------------------------------------------------------------------------------
Page 5
<PAGE>
11 Entire Agreement
11.1 No variation of this Agreement or any of the documents entered into
pursuant to this Agreement shall be valid unless it is in writing and
signed by or on behalf of each of the parties.
11.2 Each Party confirms that this Agreement and the Master Purchase
Agreement together contain the entire agreement and understanding
between the Parties in relation to the subject matter of this
Agreement, that is cancels and supersedes all prior understandings,
arrangements or agreements, and that the Purchaser is not entering into
this Agreement in reliance upon any representation or warranty other
than those contained in the Master Transaction Agreement.
12 Governing Law
12.1 This Agreement shall be governed and construed in accordance with the
laws of England & Wales and the parties agree to submit to the
non-exclusive jurisdiction of the courts of England & Wales.
13 Dispute Resolution and Arbitration
13.1 The Provisions of Section 6 of Exhibit B to the Master Transaction
Agreement are incorporated by reference.
- - ------------------------------------------------------------------------------
Page 6
<PAGE>
IN WITNESS WHEREOF the parties have executed and delivered this Agreement with
legal and binding effect as of the date above first written.
HARRIS SEMICONDUCTOR LIMITED
By: /s/ D.S. Wasserman
------------------
Name: D.S. Wasserman
Title: Director
INTERSIL LIMITED
By: /s/ Gregory L. Williams
-----------------------
Name: Gregory L. Williams
Title: Director
- - ------------------------------------------------------------------------------
Page 7
EXHIBIT 2.06
Dated this 20th day of August 1999
Between
HARRIS SEMICONDUCTOR DESIGN & SALES PTE. LTD. (as Seller)
And
INTERSIL PTE LTD (as Purchaser)
- - --------------------------------------------------------------------------------
ASSET PURCHASE AGREEMENT
- - --------------------------------------------------------------------------------
File Name: APA-1
Alban Tay Mahtani & de Silva
39 Robinson Road
#07-01 Robinson Point
Singapore 06891
File: H330/Q99100118SDS/al
<PAGE>
Contents
Clause Headings Page
- - ------ -------- ----
1 Definitions and Interpretation 1
2 Agreement For Sale and Purchase 2
3 Liabilities 2
4 Assignment and Novation of Contracts 2
5 Risk and Property 2
6 Closing 3
7 Employees 3
8 Notices 3
9 Assignment 4
10 Survival of Certain Provisions 4
11 Entire Agreement 4
12 Law 5
13 Rules of Construction and Agreement Connections 5
<PAGE>
ASSET PURCHASE AGREEMENT
Date: 20th August 1999
Parties:
(1) HARRIS SEMICONDUCTOR DESIGN & SALES PTE. LTD. (registered number
199604625W) whose registered office is at No. 39 Robinson Road, #07-01
Robinson Point, Singapore 068911 (the "Seller"); and
(2) INTERSIL PTE LTD (registered number 199904787C) whose registered office is
at No. 39 Robinson Road, #07-01 Robinson Point, Singapore 068911 (the
"Purchaser");
Terms Agreed:
1. Definitions and Interpretation
In this Agreement unless the context otherwise requires:
"Assets" means the Transferred Assets of the Business to be sold to the
Purchaser pursuant to the Master Transaction Agreement.
"Business" means the business of the design, marketing, sales and
distribution of semiconductor products in Singapore carried on by the
Seller;
"Business Day" means any day, other than a Saturday or Sunday or public
holiday, on which banks are open for business in Singapore;
"Employees" means the persons employed by the Seller;
"Liabilities" means all the Assumed Liabilities of the Business to be
assumed by the Purchaser pursuant to the Master Purchase Agreement;
"Master Transaction Agreement" means the Amended and Restated Master
Transaction Agreement made between Harris Corporation, Intersil Corporation
and Intersil Holding Corporation and dated as of June 2, 1999;
"Purchase Price" means the aggregate consideration payable for the Business
and the Assets as set forth in Clause 2.2.
"Regulations" means the Employment Act as amended from time to time;
1.1. All other capitalized terms shall have the meaning set forth in Exhibit A
to the Master Transaction Agreement.
<PAGE>
2. Agreement For Sale and Purchase
2.1. With effect from the date hereof, the Seller hereby sells and assigns and
the Purchaser shall purchase and assume as provided in the Master
Transaction Agreement:
(a) the Business as a going concern;
(b) all of the Assets;
(c) all of the Liabilities.
2.2. The purchase price for the sale of the Business, the Assets and the
Liabilities shall be US$254,000 exclusive of goods and services tax, if
any.
2.3. The Purchaser and the Seller shall each be responsible for one-half of any
goods and services tax which may be chargeable on the sale and purchase of
the Business or any part of the Business.
2.4. It is intended that the Business shall be transferred to the Purchaser as a
going concern with effect from the date hereof, and that the provisions of
Section 34 of the Goods and Services Tax Act (Chapter 117A) of Singapore,
and the Goods and Services Tax (Excluded Transactions) Order (S103/94) made
thereunder, shall apply to such transfer and the sale, purchase and
assumption of the Business, Assets and Liabilities and that each party
shall use all reasonable endeavors to procure that the sale of the
Business, Assets and Liabilities is treated as neither a supply of goods
nor a supply of services under those provisions.
3. Liabilities
3.1. Nothing in this Agreement will make the Seller liable in respect of
anything done or omitted to be done by the Purchaser after the date hereof
or in relation to the use of the Assets or the carrying on of the Business
by the Purchaser generally after the date hereof other than as may have
been specifically assumed by it under this Agreement or as provided in the
Master Transaction Agreement.
4. Assignment and Novation of Contracts
4.1. Section 3.8 of the Master Transaction Agreement is incorporated herein by
reference.
5. Risk and Property
5.1. Risk in the Assets shall pass to the Purchaser as of the date hereof.
<PAGE>
6. Closing
6.1. The sale and purchase of the Business, the Assets and the Liabilities is
hereby completed as of the date hereof, and the Seller will deliver or
cause to be delivered to the Purchaser, with immediate effect:
(a) such of the Assets as are capable of being transferred by delivery;
(b) such documents as may be necessary to vest title to such of the Assets
as are not capable of being transferred by delivery in the Purchaser,
(including, if appropriate, the consent of any relevant third party to
a novation in favor of the Purchaser in each case in the agreed
terms); and
(c) subject to Section 4 hereof, the written consent of any mortgagee or
other person whose consent is necessary for the sale of any of the
Assets together with releases in a form reasonably satisfactory to the
Purchaser.
6.2. Purchaser shall execute such documents as may be necessary to purchase and
assume the Liabilities.
6.3. The Purchaser shall pay to the Seller the Purchase Price.
7. Employees
7.1. The Seller and the Purchaser acknowledge and agree that, pursuant to the
Regulations, the contracts of employment between the Seller and the
Employees will have the effect after the date hereof as if originally made
between the Purchaser and the Employees. The transfer of such contracts of
employment will be subject to the remaining provisions of this Clause 7.
7.2. Upon or as soon as practicable after the date hereof, the Seller and the
Purchaser will make a joint announcement to the Employees in the agreed
terms regarding the transfer of their contracts of employment as referred
to in Clause 7.1.
8. Notices
8.1. Any demand, notice other communication given or made or in connection with
this Agreement will be in writing in the English language and may be
hand-delivered (including delivery by courier service), or sent by fax
transmissions as follows:
SELLER: Harris Semiconductor Design & Sales Pet. Ltd.
Address: No. 1 Tannery Road, #09-01
CENCON
Singapore 347719
<PAGE>
Telephone: 748 4200
Facsimile: 748 0911
Attention: Woo Moon Yin
PURCHASER: Internal Pte Ltd
Address: No. 1 Tannery Road, #09-01
CENCON
Singapore 347719
Telephone: 748 4200
Facsimile: 748 0911
Attention: Sophia Ying Ying Soo-Tho
8.2. Notices to either party maybe given to such other address or number as may
be notified by that party from time to time for this purpose.
8.3. Unless the contrary shall be proved, notice shall be deemed to have been
given (i) if by hand delivery during working hours on a working day, when
left at the relevant address, and otherwise on the next working day after
delivery, (ii) if by fax during working hours on a working day, when
transmitted, and otherwise on the next working day after transmission, and
(iii) if sent by prepaid first class post, on the second working day after
the date of posting.
9. Assignment
This Agreement shall be binding upon and inure to the benefit of the
successors of the parties but is personal to them and may not be assigned
at law or in equity without the prior written consent of the other.
10. Survival of Certain Provisions
Each of the obligations and undertakings entered by or on behalf of the
parties to this Agreement shall survive and remain in full force and effect
after the date hereof.
11. Entire Agreement
No variation of the Agreement or any of the documents entered into pursuant
to this Agreement shall be valid unless it is in writing and signed by or
on behalf of each of the Parties.
<PAGE>
12. Law
This Agreement shall be governed and construed in accordance with the laws
of Singapore and the parties agree to submit to the non-exclusive
jurisdiction of the courts of Singapore.
13. Rules of Construction and Agreement Connections
Except for the provisions concerning governing law, the provisions of
Exhibits A and B of the Master Transaction Agreement are incorporated by
reference.
IN WITNESS WHEREOF the parties have executed and delivered this Agreement
with legal and binding effect as of the date above first written.
Signed by [illegible] )
for and on behalf of HARRIS )
SEMICONDUCTOR DESIGN & )
SALES PTE. LTD. In the presence )
of: /s/ Howard Rothman )
Signed by /s/ Larry W. Sims )
for and behalf of INTERSIL PTE )
LTD In the presence of: [illegible] )
EXHIBIT 2.07
PURCHASE AGREEMENT OF CORPORATE QUOTAS
OF A LIMITED LIABILITY COMPANY
This Purchase Agreement (hereinafter "Agreement") is made and entered into as of
the 13th day of August 1999.
by and between
Harris Semiconductor BV, a Dutch Corporation and Harris Semiconductor Limited,
an English Corporation (hereinafter referred to collectively as the "Sellers"
and each individually as a "Seller"),
and
Intersil Corporation, a Florida corporation with registered office located at
2401 Palm Bay Road NE, Palm Bay, Florida 32905, U.S.A. (hereinafter referred to
as "Buyer"),
WHEREAS
o Sellers are the holders of participations representing 100% of the
capital, having a par value of Lit. 20,000,000, of the company Harris
S.r.l., with registered offices in Cinisello Balsamo (MI), Viale
Fulvio Testi 126, Tax Code no. 05081450156, and an outstanding and
fully paid capital of Lit. 20,000,000, registered with the Companies
Registrar of Milan under no. MI149-25033 and no. 1132600 R.E.A.;
o Sellers desire to sell said participations to Buyer and Buyer desires
to purchase it;
Now therefore, the parties hereby agree as follows:
<PAGE>
1. Sellers agree to sell to Buyer, who agrees to purchase, the quota of Lit.
20,0000,000 fully paid, equal to 100% of the outstanding capital of Harris
S.r.l. ("Quota");
2. The purchase price is Lit. 149,994,480 and will be paid contemporaneously
with the execution of this Agreement
GENERAL CONDITIONS
1. Sellers grant any and all guarantees provided by law and declare that the
assigned capital participations:
o are of their exclusive property and freely transferrable;
o have not previously been transferred or pledged;
o are free of restrictions, charges and liens of any kind. Sellers also
declare that no prohibitions regarding the free assignability of their
quotas exist.
2. This sale becomes effective on August 13, 1999 and, as a consequence, Buyer
becomes entitled to any and all rights towards Harris S.r.l. previously
belonging to Sellers from such date;
3. This Agreement shall be deposited, together with a Notary deed, within the
terms provided by the law, in order to be registered with the Register of
Enterprises of Milan.
4. Pursuant to Section 2479 of the Italian Civil Code, the assignment of the
quotas shall be registered in the quotaholders ledger of Harris S.r.l.
within 30 days from the date of deposit at the Register of Enterprises of
this instrument, upon request of Buyer, following the submission of a copy
<PAGE>
of this instrument and of the notice of confirmation of the deposit.
5. Buyer shall bear all expenses and taxes relating to and deriving from the
registration of this Agreement. In order to comply with the tax on the
transfer of ownership of securities or other instruments, the parties
declare that they shall pay such tax in accordance with the provisions of
"Imposta di Bollo" (stamp duties) which require an application and
deduction of a corresponding amount of stamps. Such stamps shall be applied
to this agreement and related invoice issued pursuant to Section 21 of
Presidential Decree of the Republic N. 633 of October 26, 1972, and
subsequent amendments, pursuant to the provision of Law Decree N. 417 of
December 30, 1991 (Official Gazette of January 2, 1992) and the parties
request that the payment of the tax be effected in "a virtual manner" by
the competent Office of Registration at the moment in which this agreement
is registered.
6. This instrument is subject to a fixed registration tax pursuant to section
11 Tar. Part 1a attached to D.P.R. No. 131 dated April 26, 1986.
7. This Agreement has been construed in accordance with and is governed by the
laws of the Republic of Italy.
In witness thereof, the parties hereto have caused this Agreement to be executed
as of the day and year first above written.
<PAGE>
Harris Semiconductor BV
/s/ Richard L. Ballantyne
----------------------------------------
By: Richard L. Ballantyne
Title: VP, General Counsel and Secretary
Harris Semiconductor Limited
/s/ Richard L. Ballantyne
----------------------------------------
By: Richard L. Ballantyne
Title: VP, General Counsel and Secretary
Intersil Corporation
/s/ Daniel J. Heneghan
----------------------------------------
By: Daniel J. Heneghan
Title: VP, Secretary and Treasurer
EXHIBIT 2.08
Translated from French
ASSIGNMENTS OF SHARES
Between the undersigned:
- - - Harris Corporation, Inc., a Florida corporation having its principal office
at 1025 West Nasa Boulevard, Melbourne, Florida 32019, USA,
hereinafter sometimes called "Transferor"; and
- - - Intersil Corporation, a Delaware corporation having its principal office at
2401 Palm Bay Road NE, Palm Bay, Florida 32905, USA;
hereinafter sometimes called "Transferee",
it has been agreed as follows:
1. Assignments of shares
Harris Corporation hereby transfers to Intersil Corporation all of its
25,740 shares of Harris Semiconducteurs, Sarl, a French limited liability
company with a capital of 2,574,000 FRF, divided into 27,740 shares of a par
value of 100 FRF each, having its principal office at 34 Avenue de l'Europe,
Energy IV, Velizy 78941, France, recorded at the Registry of Commerce and
Companies of Versailles under number B 301 162 723.
2. Effective date - Dividends - Condition subsequent
The Transferee will be owner of the shares hereby transferred from the date
hereof. It is here recalled that by decisions of August 9, 1999, prior to the
present transfer, the earned surplus of Harris Semiconducteurs, Sarl, in the
amount of 4,813,716 FRF were distributed to the Transferor and there was paid to
the Transferor an advance against dividends of 1,000,000 FRF. These amounts will
definitely belong to the Transferor. The present transfer is agreed to be with
profits of the fiscal year ended June 30, 1999 detached, so that all the profits
of such prior fiscal year will be distributed to the Transferor upon approval of
the accounts of that fiscal year, less the 1,000,000 FRF advance already paid.
The distribution of these remaining profits, in the amount of 132,392 FRF, no
later than September 30, 1999, is a condition subsequent of the present
transfer.
<PAGE>
3. Price
The present transfer is granted and accepted for a price, for all 25,740
shares of Harris Semiconducteurs, Sarl, of US$ 246,000 United States dollars.)
This price, for the purpose of the registration and transfer tax referred
to in article 6, will be converted into French francs at the rate of the dollar
on the date hereof, as communicated by the Banque de France and published in the
Journal Officiel de la Republique Francaise.
4. Approval of Transferee
In accordance with article 10 of the articles of association of Harris
Semiconducteurs, Sarl, the Transferor declares insofar as may be necessary that
it approves the Transferee as a shareholder.
5. Declarations and warranties
Each party declares and warrants that it has full capacity to obligate
itself hereunder and, in particular, is not in cessation of payments, bankruptcy
or reorganization and has not made any composition with its creditors.
The Transferor declares and warrants:
- - - that it is the owner, free and clear of any lien, attachment or other
encumbrance, of all of the 25,740 shares transferred hereby;
- - - that it has the right to transfer the said shares, free and clear of any
promise to third parties and without need of any consent other than the
consent referred to in article 4 above, which is duly granted; and
- - - that Harris Semiconducteurs, Sarl, whose shares are transferred hereby, is
not in cessation of payments, reorganization or bankruptcy and has not made
any composition with its creditors.
6. Registration
The parties declare;
- that the present transfers are not governed by article 1655ter of the
General Tax Code relating to real property companies.
- that the company whose shares are transferred hereby is subject to
company income tax;
2
<PAGE>
- that the tax on the transfer of such shares is due based on the price
at the rate of 4.8% and payable by the Transferee upon the filing of
these presents with the French registration tax authorities, to be
done within one month from the date hereof.
7. Publication formalities
Notice of the present transfers of shares will be served upon Harris
Semiconducteurs, Sarl, unless one of its legal representatives acknowledges
receipt of such notice in writing.
Two originals of these presents will be filed with the Clerk of the
Commercial Court of Versailles.
8. Costs
The costs of registration, publication and other formalities hereof will be
borne by the Transferee.
The legal fees for drafting these presents will be borne by the Transferor.
Signed in Melbourne, Florida, USA, on August 13, 1999,
in six originals, including one for each party, one for the registration tax
authorities, one to be notified to Harris Semiconducteurs, Sarl and two for the
Clerk of the Commercial Court.
For Harris Corporation For Intersil Corporation
/s/ Ronald R. Spoehel /s/ Gregory L. Williams
- - --------------------- -------------------
Ronald R. Spoehel Gregory L. Williams
Vice President CEO
3
EXHIBIT 2.09
SHARE TRANSFER AGREEMENT
This Agreement is made and entered into this 1st day of August, 1999, by and
among,
Harris Corporation, a corporation duly organized and existing under the law of
the State of Delaware, USA, and having its principal office at 1025 West NASA
Boulevard, Melbourne, Florida 32919, USA, (hereinafter "Seller"); and
Intersil Corporation, a corporation duly organized and existing under the law of
the State of Delaware, USA, and having its principal office at 2401 Palm Bay
Road, N.E., Palm Bay, Florida 32905, USA (hereinafter "Purchaser").
WITNESSETH THAT:
WHEREAS, Seller owns 1665 shares in Harris Semiconductor YH, a corporation duly
organized and existing under the laws of Korea (hereinafter referred to as the
"Company"), each share having a par value of 10,000 Korean Won; and
WHEREAS, Seller desires to sell to Purchaser 1665 shares in the Company
("Shares") and Purchaser desires to purchase from Seller the Shares, all upon
the terms and conditions set forth below;
NOW, THEREFORE, Seller and Purchaser agree as follows:
Article 1. Sale of Shares
Seller hereby agrees to sell the Shares to Purchaser and Purchaser agrees
to purchase the same from Seller.
Article 2. Purchase Price
The purchase price of the Shares shall be 22,000 U.S. dollars.
Article 3. Filing of Report
Purchaser shall promptly file a report of the share acquisition
contemplated by this Agreement with the bank delegated by the Korean Ministry of
Finance and any further documents which may be necessary.
Article 4. Closing Date
The transactions contemplated by this Agreement shall be consummated on
August 13, 1999 at 30 Rockefeller Plaza, New York, New York, or at such other
time and place as the parties may mutually agree ("Closing Date"). On Closing
Date, the Shares (together with any and all certificates representing the
Shares) shall be transferred and delivered to Purchaser in exchange for payment
of the Purchase Price set forth in Article 2 hereof.
<PAGE>
Article 5. Effective Date
This Agreement shall come into force and effect on the date first written
above subject to the Korean Ministry of Finance's acceptance of the report of
transfer of Shares contemplated by this Agreement.
Article 6. Assignment of This Agreement
This Agreement and each and every covenant, term and condition herein is
binding upon and inures to the benefit of the parties hereto and their
respective successors and assigns, but neither party shall assign this Agreement
or any rights hereunder directly or indirectly without receiving the prior
written consent of the other party.
Article 7. Language
This Agreement is written in the English language and executed in two (2)
counterparts, each of which shall be deemed an original. The English language
text of this Agreement shalt prevail over any translation thereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their duly authorized representatives as of the day and year first above
written.
HARRIS CORPORATION INTERSIL CORPORATION
By: /s/ Ronald R. Spoehel By: /s/ Gregory L. Williams
------------------------------------ -----------------------------------
Name: Ronald R. Spoehel Name: Gregory L. Williams
Title: Vice President Title: CEO
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
Intersil Corporation, a corporation duly organized and existing under the laws
of the State of Delaware, USA, with its principal place of business at 2401 Palm
Bay Road, N.E., Palm Bay, Florida, USA (the "Corporation"), does hereby make,
constitute and appoint Mr. Kang Seok Jeon having his address at Seyang Bldg.,
223 Naeja-dong, Chongro-ku, Seoul, Korea as its true and lawful
Attorneys-in-fact with full power and authority to act, as herein described, in
the name and on behalf of the Corporation:
To act on behalf of the corporation in any and all matters arising in connection
with the acquisition from Harris Corporation, a corporation duly organized and
existing under the laws of the state of Delaware, USA, of certain shares in
Harris Semiconductor YH ("the Company"), including, without limitation,
preparing and executing documents, notices and reports; communicating and
negotiating with governmental bodies; obtaining necessary approvals and/or tax
report or certificate; and receiving, depositing and withdrawing funds; and To
engage in any and all acts, things, and acts, things, and activities which are
related to, incidental or conductive, directly or indirectly, to the attainment
of the foregoing objectives, including, but not limited to, obtaining the
notarization of any documents.
Granting the said Attorney-in-fact full power and authority to do everything
requisite, necessary and proper to be done in performing the above to all
intents and purposes as it might or could do if acting for itself with full
power of substitution and revocation, hereby ratifying and confirming all that
its said Attorney or his substitutes lawfully do or cause to be done by virtue
of this document for a period of one (1) year from the date hereof.
IN WITNESS WHEREOF, the Corporation has caused its corporate name to be
subscribed hereto by its authorized officer, and its corporate seal to be
affixed hereto this 30th day of July, 1999.
INTERSIL CORPORATION
By: /s/ Gregory L. Williams
------------------------------------
Name: Gregory L. Williams
Title: CEO
EXHIBIT 2.10
EQUITY PURCHASE AGREEMENT
This Equity Purchase Agreement ("Agreement") is entered into as of the 13th day
of August, 1999, by and between Harris Advanced Technology (Malaysia) Sdn. Bhd.,
a corporation existing under the laws of Malaysia, with a principal place of
business at No. 73 Lorong Enggang, Ulu Kelang Free Trade Zone, 54200 Kuala
Lumpur, Malaysia ("HAT"), and Harris Airport Systems (M) Sdn. Bhd., a
corporation existing under the laws of Malaysia, with its principal place of
business at No. 73 Lorong Enggang. Ulu Kelang, Free Trade Zone, 52400 Kuala
Lumpur, Malaysia ("HAS").
RECITALS
A. HAT is the owner of a 100% equity interest in Harris Semiconductor
(Suzhou) Co. Ltd., a foreign-owned enterprise under the laws of the People's
Republic of China, with its registered office at Lot 73 Lorong Enggang. Ulu
Kelang, Free Trade Zone, 52400 Kuala Lumpur, Malaysia (such company, "Suzhou
Harris," and such equity interest, the "Suzhou Equity Interest")
B. HAT and HAS are, directly or indirectly, wholly-owned subsidiaries of
Harris Corporation ("Harris"), and Harris desires to reorganize certain of its
operations, including the ownership of the Suzhou Equity Interest.
C. HAT desires to sell the Suzhou Equity Interest to HAS and HAS desires to
purchase the Suzhou Equity Interest from HAT.
NOW, THEREFORE, for, and in consideration of, the covenants, terms, and
conditions set forth herein, the parties agree as follows:
1. Purchase and Sale.
HAT agrees to sell, transfer and deliver to HAS, and HAS agrees to purchase
from HAT free of any lien, charge or encumbrance as of the Effective Date of
this Agreement, the Suzhou Equity Interest.
2. Consideration.
HAS shall pay HAT the amount of Malaysian Ringgit 19,000,000 as
compensation for the Suzhou Equity Interest.
3. Taxes.
HAS shall pay any and all stamp taxes, value added taxes, or other taxes,
if any, required to be paid on the transfer of equity, other than income taxes
on the gain or loss
<PAGE>
on the transfer of the Suzhou Equity Interest, if any, contemplated by this
transaction, whether such taxes are levied in Malaysia, the People's Republic of
China or the United States of America.
4. Covenants.
a. HAS shall take all necessary corporate actions required by Malaysian law
to obtain approval by the HAS Board of Directors and the governments of the
countries of Malaysia and the People's Republic of China for the transfer of the
Suzhou Equity Interest from HAT to HAS.
b. HAT shall take all necessary corporate actions required by Malaysian law
to obtain approval by the HAT Board of Directors and the governments of Malaysia
and the People's Republic of China for the transfer of the Suzhou Equity
Interest from HAT to HAS.
5. Legal Representatives.
a. The legal representative of HAS is Richard L. Ballantyne, Director, 1025
W. NASA Boulevard, Melbourne, Florida, U.S.A. Mr. Ballantyne is a citizen of the
United States of America.
b. The legal representative of HAT is Bryan R. Roub, Director, 1025 W. NASA
Boulevard, Melbourne, Florida, U.S.A. Mr. Roub is a citizen of the United States
of America.
6. Assumption of Obligations.
From and after the Effective Date, HAS shall assume any and all obligations
and liabilities of HAT, which obligations or liabilities HAT is required to
perform under the Articles of Association of Suzhou Harris or any contract
entered into by Suzhou Harris and accepted or guaranteed by or concurred in, in
writing, by HAT in order to conduct the business of Suzhou Harris. From and
after the Effective Date, HAS may exercise any rights with respect to Suzhou
Harris which could have been exercised prior to the Effective Date by HAT.
7. Limitation of Liabilities.
IN NO EVENT SHALL ANY PARTY TO THIS AGREEMENT BE LIABLE TO ANY OTHER PARTY,
OR TO ANY PARTY CLAIMING UNDER ANY OF THE PARTIES TO THIS AGREEMENT, WHETHER AS
A RESULT OF BREACH OF CONTRACT, WARRANTY, TORT (INCLUDING NEGLIGENCE OR
OTHERWISE), FAILURE OF A REMEDY TO ACCOMPLISH ITS PURPOSE OR OTHERWISE, FOR
SPECIAL, INCIDENTAL, OR CONSEQUENTIAL DAMAGES.
<PAGE>
8. Force Majeure.
No party to this Agreement shall be liable in damages for any delay or
default in the performance of all or any of this Agreement, if such delay or
default is caused by conditions beyond its control, including, but not limited
to: acts of the elements, fires, explosion, floods, or other casualties,
governmental restrictions or orders, and inability to obtain necessary
government approvals.
9. Effective Date.
This Agreement shall become effective (the "Effective Date") when (i) this
Agreement is approved by the relevant examination and approval authority of the
People's Republic of China (the "Authority") and (ii) the approval certificate
of Suzhou Harris which reflects the transfer of the Suzhou Equity Interest from
HAT to HAS is issued by the Authority.
10. Termination.
Before the Effective Date, this Agreement shall be terminated by the mutual
consent of all the parties, or upon the failure to obtain, within two years from
the date of this Agreement, the Authority's approval to this Agreement, or the
approval certificate of Suzhou Harris which reflects the transfer of the Suzhou
Equity Interest from HAT to HAS.
11. Remedies.
Any disputes between the parties to this Agreement shall not be submitted
to any judicial, arbitral, governmental or semi-governmental body, but shall be
decided by the Chairman of the Board and CEO of Harris, whose decision shall be
final.
12. Governing Law.
This Agreement shall be construed in accordance with the laws of the
People's Republic of China.
13. Headings.
The headings in this Agreement are for convenience only and shall have no
effect on the interpretation hereof.
14. Entire Agreement.
The terms and conditions herein shall contain and constitute the entire
agreement between the parties, and shall supersede all previous communications,
either oral or written, between the parties with respect to the subject matter
hereof, and no agreement or
<PAGE>
understanding, varying or modifying the same, shall be binding upon any other
party unless in writing and signed by a duly authorized officer or
representative of each party.
15. Governing Language.
This Agreement shall be executed in the Chinese and English languages. In
the event of a conflict between the Chinese and English language versions, the
Chinese language version shall prevail.
IN WITNESS WHEREOF the parties have hereto set their hand as of the date
first above written.
Harris Airport Systems Harris Advanced Technology
(M) Sdn. Bhd. (Malaysia) Sdn. Bhd.
by: /s/ Richard L. Ballantyne by: /s/ Bryan R. Roub
------------------------- ---------------------
Richard L. Ballantyne Bryan R. Roub
its: Director its: Director
EXHIBIT 2.11
AGREEMENT RE CHINA SUBSIDIARIES
This Agreement is made as of August 13, 1999, between Intersil Corporation,
a Delaware corporation ("Buyer"), and Harris Corporation, a Delaware corporation
("Harris").
R E C I T A L S
Parent, Buyer and Harris are parties to that certain Amended and Restated
Master Transaction Agreement dated as of June 2, 1999 (the "Master Agreement").
In accordance with Section 9.12 of the Master Agreement, Harris has caused
Harris Malaysia and HAS to enter into certain agreements attached hereto as
Exhibits A, B and C (the "China Subsidiaries Agreements"). Capitalized terms
used, but not defined, herein shall have the meanings set forth in the Master
Agreement.
NOW THEREFORE, in consideration of the mutual promises and covenants herein
contained, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
1. In accordance with the provisions of Section 9.12 of the Master
Agreement, Buyer hereby agrees that it will cause Harris Malaysia to perform its
undertakings in the China Subsidiaries Agreements even if such China
Subsidiaries Agreements are unenforceable in whole or in part under the laws of
Malaysia.
2. In accordance with the provisions of Section 9.12 of the Master
Agreement, Harris hereby agrees that it will cause HAS to perform its
undertakings in the China Subsidiaries Agreements even if such China
Subsidiaries Agreements are unenforceable in whole or in part under the laws of
Malaysia. Furthermore, consistent with the provisions of Section 9.12, HAS shall
be responsible for the payment of all Taxes associated with the transfers
contemplated in the China Subsidiaries Agreements notwithstanding any provision
to the contrary set forth therein.
3. The parties agree that this Agreement shall be considered a Transaction
Document and subject to Section 14.5 of the Master Agreement.
4. This Agreement shall be effective when executed by Buyer and Harris.
5. Exhibits A and B to the Master Agreement are incorporated herein by
reference.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
INTERSIL CORPORATION
By: /s/ Gregory L. Williams
-------------------------
Name: Gregory L. Williams
Title: CEO
HARRIS CORPORATION
By: /s/ Ronald R. Spoehel
-----------------------
Name: Ronald R. Spoehel
Title: Vice President
EXHIBIT 2.12
AGREEMENT RE ANSHAN JOINT VENTURE
This Agreement ("Agreement") is entered into as of the 13th day of August, 1999,
by and between Harris Advanced Technology (Malaysia) Sdn. Bhd., a corporation
existing under the laws of Malaysia, with a principal place of business at No.
73 Lorong Enggang, Ulu Kelang Free Trade Zone, 54200 Kuala Lumpur, Malaysia
("HAT"), and Harris Airport Systems (M) Sdn. Bhd., a corporation existing under
the laws of Malaysia, with its principal place of business at No. 73 Lorong
Enggang, Ulu Kelang, Free Trade Zone, 54200 Kuala Lumpur, Malaysia ("HAS").
RECITALS
A. HAT is the owner of a 49.5% equity interest in Anshan Harris Broadcast
Equipment Co. Ltd., a Sino-foreign equity joint venture under the laws of the
People's Republic of China, with its registered office at 175 Xingsheng Road,
Tiexi District, Anshan, Lianoning Province, People's Republic of China (such
company, "Anshan Harris," and such equity interest, the "Anshan Equity
Interest").
B. HAT and HAS are, directly or indirectly, wholly-owned subsidiaries of
Harris Corporation ("Harris") and Harris desires to reorganize certain of its
operations, including the ownership of the Anshan Equity Interest.
C. HAT and HAS have entered into an Equity Purchase Agreement dated July 5,
1999, (the "Purchase Agreement") pursuant to which HAT has agreed to sell the
Anshan Equity Interest to HAS.
D. HAS desires to transfer to HAT the economic benefits and obligations of
the Anshan Equity Interest as provided herein.
NOW, THEREFORE, for and in consideration of the covenants, terms, and
conditions set forth herein, the parties agree as follows:
1. Assignment of Net Proceeds.
HAT hereby transfers to HAS the right to any Net Proceeds realized by HAT
from the ownership of the Anshan Equity Interest or from the sale, rental or
other disposition to a third-party not affiliated with Harris of the Anshan
Equity Interest or any of the assets of Anshan Harris. No such sale shall take
place without the consent of HAS. HAT agrees to promptly transfer to HAS any
such Net Proceeds. For purposes of this Agreement, Net Proceeds shall mean the
proceeds arising from such ownership or from any such sale, rental or other
disposition net of all expenses and other liabilities associated with such
ownership, sale, rental or other disposition and net of all taxes, of whatever
type, including taxes imposed by the People's Republic of China and by the
Republic of Malaysia, in connection with such ownership, sale, rental or other
disposition and in connection with the distribution of any proceeds arising from
<PAGE>
such ownership or from any such sale, rental or other disposition to Harris
Malaysia and the further distribution to HAS.
2. Consideration.
a. HAS shall pay HAT the amount of Malaysian Ringgit 3,800,000 as
compensation for the transfer of the rights set forth herein including the right
to Net Proceeds as provided in Section 1 and the rights set forth in Section 4.
Such payment shall be made concurrently with the execution of this Agreement.
b. The Malaysian Ringgit 3,800,000 payment made by HAS to HAT pursuant to
Section 2.b. shall be considered a prepayment of and shall be credited against
the obligation to HAT under Article 2 of the Purchase Agreement.
3. Taxes.
HAS shall pay any and all stamp taxes, value added taxes, or other taxes,
if any, required to be paid on the transfer and assignment of the beneficial
ownership interests in and to the Anshan Equity Interest, other than income
taxes, if any, contemplated by this transaction, whether such taxes are levied
in Malaysia, the People's Republic of China or the United States of America.
4. Authority of HAS.
HAT hereby agrees to take such action with respect to its ownership of the
Anshan Equity Interest as HAS, in its sole discretion, shall direct, including,
without limitation, action with respect to the sale of the Anshan Equity
Interest, the selection or removal of officers, directors, or managers of Anshan
Harris, the acquisition, disposition or rental of any assets of Anshan Harris,
and any vote by HAT as the owner of the Anshan Equity Interest. If requested by
HAS, HAT agrees to cause the existing officers, directors and managers of Anshan
Harris which have been selected by HAT to resign and to replace them with
persons selected by HAS. HAT agrees not to take any action with respect to its
ownership of the Anshan Equity Interest except as directed by HAS. To the extent
permitted by applicable law, HAT hereby appoints HAS as HAT's exclusive agent
for purposes of exercising HAT's rights in the Anshan Equity Interest and with
respect to selling the Anshan Equity Interest or liquidating Anshan Harris, as
HAS shall, in its sole discretion determine. HAT shall cause Anshan Harris, to
the extent HAT is able to do so, to appoint HAS as Anshan Harris' exclusive
agent for purposes of selling or renting the assets of Anshan Harris to third
parties.
5. Indemnification.
HAS agrees to pay, and to indemnify, defend and hold harmless HAT, and any
direct or indirect owner of HAT, from all costs, losses, liabilities, claims and
expenses (excluding any loss of investment value in Anshan Harris) related to,
<PAGE>
or in any way resulting from, (i) the ownership or transfer by HAT of the Anshan
Equity Interest, or (ii) the ownership or operation or transfer by Anshan Harris
of its assets, including any taxes incurred by HAT in connection with such
ownership, and any contributions or payments HAT, or any direct or indirect
owner of HAT, is legally obligated to make in connection with such ownership,
provided that any taxes or other expenses or liabilities arising as a result of
the sale of Anshan Harris, or any assets thereof or the distribution of funds
from Anshan Harris as a result of liquidation or otherwise shall be paid, in the
first instance, from such proceeds or distributions.
6. Limitation of Liabilities.
IN NO EVENT SHALL ANY PARTY TO THIS AGREEMENT BE LIABLE TO ANY OTHER PARTY
OR TO ANY PARTY CLAIMING UNDER ANY OF THE PARTIES TO THIS AGREEMENT, WHETHER AS
A RESULT OF BREACH OF CONTRACT, WARRANTY, TORT (INCLUDING NEGLIGENCE OR
OTHERWISE), FAILURE OF A REMEDY TO ACCOMPLISH ITS PURPOSE OR OTHERWISE, FOR
SPECIAL, INCIDENTAL, OR CONSEQUENTIAL DAMAGES.
7. Remedies.
Any disputes between the parties to this Agreement shall not be submitted
to any judicial, arbitral, governmental or semi-governmental body, but shall be
decided in accordance with the provisions of Section 6 of Exhibit B of the
Master Transaction Agreement dated June 2, 1999, between Intersil Corporation,
Intersil Holding Corporation and Harris.
8. Governing Law.
This Agreement shall be construed in accordance with the laws of Malaysia.
9. Headings.
The headings in this Agreement are for convenience only and shall have no
effect on the interpretation hereof.
10. Counterparts.
This Agreement may be executed in several counterparts, each of which shall
be an original, but all of which shall constitute one instrument.
11. Entire Agreement.
The terms and conditions herein shall contain and constitute the entire
agreement between the parties, and shall supersede all previous communications,
either oral or written, between the parties with respect to the subject matter
hereof, and no agreement or understanding, varying or modifying the same, shall
<PAGE>
be binding upon any other party, unless in writing and signed by a duly
authorized officer or representative of each party.
IN WITNESS WHEREOF the parties have hereto set their hand as of the date
first above written.
Harris Airport Systems Harris Advanced Technology
(M) Sdn. Bhd. (Malaysia) Sdn. Bhd.
by: /s/ Richard L. Ballantyne by: Bryan R. Roub
--------------------------- -------------------
Name: Richard L. Ballantyne Name: Bryan R. Roub
Title: Director Title: Director
EXHIBIT 2.13
AGREEMENT RE GUANGZHOU JOINT VENTURE
This Agreement ("Agreement") is entered into as of the 13th day of August, 1999,
by and between Harris Advanced Technology (Malaysia) Sdn. Bhd., a corporation
existing under the laws of Malaysia, with a principal place of business at No.
73 Lorong Enggang, Ulu Kelang Free Trade Zone, 54200 Kuala Lumpur, Malaysia
("HAT"), and Harris Airport Systems (M) Sdn. Bhd., a corporation existing under
the laws of Malaysia, with its principal place of business at No. 73 Lorong
Enggang, Ulu Kelang, Free Trade Zone, 54200 Kuala Lumpur, Malaysia ("HAS").
RECITALS
A. HAT is the owner of a 41% equity interest in Guangzhou Harris
Telecommunications Company Ltd., a Sino-foreign equity joint venture under the
laws of the People's Republic of China, with its registered office at 181 Xin
Gang Road, West Guangzhou, Guangdong Province, People's Republic of China (such
company, "Guangzhou Harris," and such equity interest, the "Guangzhou Equity
Interest").
B. HAT and HAS are, directly or indirectly, wholly-owned subsidiaries of
Harris Corporation ("Harris"), and Harris desires to reorganize certain of its
operations, including the ownership of the Guangzhou Equity Interest.
C. HAT and HAS have entered into an Equity Purchase Agreement dated July 5,
1999 (the "Purchase Agreement"), pursuant to which HAT has agreed to sell the
Guangzhou Equity Interest to HAS.
D. HAS desires to transfer to HAT the economic benefits and obligations of
the Guangzhou Equity Interest as provided herein.
NOW, THEREFORE, for and in consideration of the covenants, terms, and
conditions set forth herein, the parties agree as follows:
1. Assignment of Net Proceeds.
HAT hereby transfers to HAS the right to any Net Proceeds realized by HAT
from the ownership of the Guangzhou Equity Interest or from the sale, rental or
other disposition to a third-party not affiliated with Harris of the Guangzhou
Equity Interest or any of the assets of Guangzhou Harris. No such sale shall
take place without the consent of HAS. HAT agrees to promptly transfer to HAS
any such Net Proceeds. For purposes of this Agreement, Net Proceeds shall mean
the proceeds arising from such ownership or from any such sale, rental or other
disposition net of all expenses and other liabilities associated with such
ownership, sale, rental or other disposition and net of all taxes, of whatever
type, including taxes imposed by the People's Republic of China and by the
Republic of Malaysia, in connection with such ownership, sale, rental or other
<PAGE>
disposition and in connection with the distribution of any proceeds arising from
such ownership or from any such sale, rental or other disposition to Harris
Malaysia and the further distribution to HAS.
2. Consideration.
a. HAS shall pay HAT the amount of Malaysian Ringgit 15,000,000 as
compensation for the transfer of the rights set forth herein, including the
right to Net Proceeds as provided in Section 1 and the rights set forth in
Section 4. Such payment shall be made concurrently with the execution of this
Agreement.
b. The Malaysian Ringgit 15,000,000 payment made by HAS to HAT pursuant to
Section 2.b. shall be considered a prepayment of and shall be credited against
the obligation to HAT under Article 2 of the Purchase Agreement.
3. Taxes.
HAS shall pay any and all stamp taxes, value added taxes, or other taxes,
if any, required to be paid on the transfer and assignment of the beneficial
ownership interests in and to the Guangzhou Equity Interest, other than income
taxes, if any, contemplated by this transaction, whether such taxes are levied
in Malaysia, the People's Republic of China or the United States of America.
4. Authority of HAS.
HAT hereby agrees to take such action with respect to its ownership of the
Guangzhou Equity Interest as HAS, in its sole discretion, shall direct,
including, without limitation, action with respect to the sale of the Guangzhou
Equity Interest, the selection or removal of officers, directors, or managers of
Guangzhou Harris, the acquisition, disposition or rental of any assets of
Guangzhou Harris, and any vote by HAT as the owner of the Guangzhou Equity
Interest. If requested by HAS, HAT agrees to cause the existing officers,
directors and managers of Guangzhou Harris which have been selected by HAT to
resign and to replace them with persons selected by HAS. HAT agrees not to take
any action with respect to its ownership of the Guangzhou Equity Interest except
as directed by HAS. To the extent permitted by applicable law, HAT hereby
appoints HAS as HAT's exclusive agent for purposes of exercising HAT's rights in
the Guangzhou Equity Interest and with respect to selling the Guangzhou Equity
Interest or liquidating Guangzhou Harris, as HAS shall, in its sole discretion,
determine. HAT shall cause Guangzhou Harris, to the extent HAT is able to do so,
to appoint HAS as Guangzhou Harris' exclusive agent for purposes of selling or
renting the assets of Guangzhou Harris to third parties.
<PAGE>
5. Indemnification.
HAS agrees to pay, and to indemnify, defend and hold harmless, HAT, and any
direct or indirect owner of HAT, from all costs, losses, liabilities, claims and
expenses (excluding any loss of investment value in Guangzhou Harris) related
to, or in any way resulting from, (i) the ownership or transfer by HAT of the
Guangzhou Equity Interest, or (ii) the ownership or operation or transfer by
Guangzhou Harris of its assets, including any taxes incurred by HAT in
connection with such ownership, and any contributions or payments HAT, or any
direct or indirect owner of HAT, is legally obligated to make in connection with
such ownership, provided that any taxes or other expenses or liabilities arising
as a result of the sale of Guangzhou Harris or any assets thereof, or the
distribution of funds from Guangzhou Harris as a result of liquidation or
otherwise, shall be paid, in the first instance, from such proceeds or
distributions.
6. Limitation of Liabilities.
IN NO EVENT SHALL ANY PARTY TO THIS AGREEMENT BE LIABLE TO ANY OTHER PARTY,
OR TO ANY PARTY CLAIMING UNDER ANY OF THE PARTIES TO THIS AGREEMENT, WHETHER AS
A RESULT OF BREACH OF CONTRACT, WARRANTY, TORT (INCLUDING NEGLIGENCE OR
OTHERWISE), FAILURE OF A REMEDY TO ACCOMPLISH ITS PURPOSE OR OTHERWISE, FOR
SPECIAL, INCIDENTAL, OR CONSEQUENTIAL DAMAGES.
7. Remedies.
Any disputes between the parties to this Agreement shall not be submitted
to any judicial, arbitral, governmental or semi-governmental body, but shall be
decided in accordance with the provisions of Section 6 of Exhibit B of the
Master Transaction Agreement dated June 2, 1999, among Intersil Corporation,
Intersil Holding Corporation and Harris.
8. Governing Law.
This Agreement shall be construed in accordance with the laws of Malaysia.
9. Headings.
The headings in this Agreement are for convenience only and shall have no
effect on the interpretation hereof.
<PAGE>
10. Counterparts.
This Agreement may be executed in several counterparts, each of which shall
be an original, but all of which shall constitute one instrument.
11. Entire Agreement.
The terms and conditions herein shall contain and constitute the entire
agreement between the parties, and shall supersede all previous communications,
either oral or written, between the parties with respect to the subject matter
hereof, and no agreement or understanding, varying or modifying the same, shall
be binding upon any other party unless in writing and signed by a duly
authorized officer or representative of each party.
IN WITNESS WHEREOF the parties have hereto set their hand as of the date
first above written.
Harris Airport Systems Harris Advanced Technology
(M) Sdn. Bhd. (Malaysia) Sdn. Bhd.
by: /s/ Richard L. Ballantyne by: /s/ Bryan R. Roub
--------------------------- -------------------
Name: Richard L. Ballantyne Name: Bryan R. Roub
Title: Director Title: Director
EXHIBIT 2.14
AGREEMENT RE SUZHOU HARRIS
This Agreement ("Agreement") is entered into as of the 13th day of August, 1999,
by and between Harris Advanced Technology (Malaysia) Sdn. Bhd., a corporation
existing under the laws of Malaysia, with a principal place of business at No.
73 Lorong Enggang, Ulu Kelang Free Trade Zone, 54200 Kuala Lumpur, Malaysia
("HAT"), and Harris Airport Systems (M) Sdn. Bhd., a corporation existing under
the laws of Malaysia, with its principal place of business at No. 73 Lorong
Enggang, Ulu Kelang, Free Trade Zone, 54200 Kuala Lumpur, Malaysia ("HAS").
RECITALS
A. HAT is the owner of a 100% equity interest in Harris Semiconductor
(Suzhou) Co. Ltd., a foreign-owned enterprise under the laws of the People's
Republic of China, with its registered office at Lot 73 Lorong Enggang, Ulu
Kelang Free Trade Zone, 54200 Kuala Lumpur, Malaysia People's Republic of China
(such company, "Suzhou Harris," and such equity interest, the "Suzhou Equity
Interest").
B. HAT and HAS are, directly or indirectly, wholly-owned subsidiaries of
Harris Corporation ("Harris"), and Harris desires to reorganize certain of its
operations, including the ownership of the Suzhou Equity Interest.
C. HAT and HAS have entered into an Equity Purchase Agreement dated August
__, 1999 (the "Purchase Agreement"), pursuant to which HAT has agreed to sell
the Suzhou Equity Interest to HAS.
D. HAS desires to transfer to HAT the economic benefits and obligations of
the Suzhou Equity Interest as provided herein.
NOW, THEREFORE, for and in consideration of the covenants, terms, and
conditions set forth herein, the parties agree as follows:
1. Assignment of Net Proceeds.
HAT hereby transfers to HAS the right to any Net Proceeds realized by HAT
from the ownership of the Suzhou Equity Interest, or from the sale, rental or
other disposition to a third-party not affiliated with Harris of the Suzhou
Equity Interest, or any of the assets of Suzhou Harris. No such sale shall take
place without the consent of HAS. HAT agrees to promptly transfer to HAS any
such Net Proceeds. For purposes of this Agreement, Net Proceeds shall mean the
proceeds arising from such ownership or from any such sale, rental or other
disposition net of all expenses and other liabilities associated with such
ownership, sale, rental or other disposition and net of all taxes, of whatever
type, including taxes imposed by the People's Republic of China and by the
Republic of Malaysia, in connection with such ownership, sale, rental or other
disposition and in connection with the distribution of any proceeds arising from
<PAGE>
such ownership or from any such sale, rental or other disposition to Harris
Malaysia and the further distribution to HAS.
2. Consideration.
a. HAS shall pay HAT the amount of Malaysian Ringgit 19,000,000 as
compensation for the transfer of the rights set forth herein including the right
to Net Proceeds as provided in Section 1 and the rights set forth in Section 4.
Such payment shall be made concurrently with the execution of this Agreement.
b. The Malaysian Ringgit 19,000,000 payment made by HAS to HAT pursuant to
Section 2.b. shall be considered a prepayment of and shall be credited against
the obligation to HAT under Article 2 of the Purchase Agreement.
3. Taxes.
HAS shall pay any and all stamp taxes, value added taxes, or other taxes,
if any, required to be paid on the transfer and assignment of the beneficial
ownership interests in and to the Suzhou Equity Interest, other than income
taxes, if any, contemplated by this transaction, whether such taxes are levied
in Malaysia, the People's Republic of China or the United States of America.
4. Authority of HAS.
HAT hereby agrees to take such action with respect to its ownership of the
Suzhou Equity Interest as HAS, in its sole discretion, shall direct including,
without limitation, action with respect to the sale of the Suzhou Equity
Interest, the selection or removal of officers, directors, or managers of Suzhou
Harris, the acquisition, disposition or rental of any assets of Suzhou Harris,
and any vote by HAT as the owner of the Suzhou Equity Interest. If requested by
HAS, HAT agrees to cause the existing officers, directors and managers of Suzhou
Harris which have been selected by HAT to resign and to replace them with
persons selected by HAS. HAT agrees not to take any action with respect to its
ownership of the Suzhou Equity Interest except as directed by HAS. To the extent
permitted by applicable law, HAT hereby appoints HAS as HAT's exclusive agent
for purposes of exercising HAT's rights in the Suzhou Equity Interest and with
respect to selling the Suzhou Equity Interest or liquidating Suzhou Harris, as
HAS shall, in its sole discretion, determine. HAT shall cause Suzhou Harris, to
the extent HAT is able to do so, to appoint HAS as Suzhou Harris' exclusive
agent for purposes of selling or renting the assets of Suzhou Harris to third
parties.
5. Indemnification.
HAS agrees to pay, and to indemnify, defend and hold harmless, HAT, and any
direct or indirect owner of HAT, from all costs, losses, liabilities, claims and
expenses (excluding any loss of investment value in Suzhou Harris) related to,
<PAGE>
or in any way resulting from, (i) the ownership or transfer by HAT of the Suzhou
Equity Interest, or (ii) the ownership or operation or transfer by Suzhou Harris
of its assets, including any taxes incurred by HAT in connection with such
ownership, and any contributions or payments HAT, or any direct or indirect
owner of HAT, is legally obligated to make in connection with such ownership,
provided that any taxes or other expenses or liabilities arising as a result of
the sale of Suzhou Harris, or any assets thereof, or the distribution of funds
from Suzhou Harris as a result of liquidation or otherwise, shall be paid, in
the first instance, from such proceeds or distributions.
6. Limitation of Liabilities.
IN NO EVENT SHALL ANY PARTY TO THIS AGREEMENT BE LIABLE TO ANY OTHER PARTY
OR TO ANY PARTY CLAIMING UNDER ANY OF THE PARTIES TO THIS AGREEMENT, WHETHER AS
A RESULT OF BREACH OF CONTRACT, WARRANTY, TORT (INCLUDING NEGLIGENCE OR
OTHERWISE), FAILURE OF A REMEDY TO ACCOMPLISH ITS PURPOSE OR OTHERWISE, FOR
SPECIAL, INCIDENTAL, OR CONSEQUENTIAL DAMAGES.
7. Remedies.
Any disputes between the parties to this Agreement shall not be submitted
to any judicial, arbitral, governmental or semi-governmental body, but shall be
decided in accordance with the provisions of Section 6 of Exhibit B of the
Master Transaction Agreement, dated June 2, 1999, among Intersil Corporation,
Intersil Holding Corporation and Harris.
8. Governing Law.
This Agreement shall be construed in accordance with the laws of Malaysia.
9. Headings.
The headings in this Agreement are for convenience only and shall have no
effect on the interpretation hereof.
10. Counterparts.
This Agreement may be executed in several counterparts, each of which shall
be an original, but all of which shall constitute one instrument.
11. Entire Agreement.
The terms and conditions herein shall contain and constitute the entire
agreement between the parties, and shall supersede all previous communications,
either oral or written, between the parties with respect to the subject matter
hereof, and no agreement or understanding, varying or modifying the same, shall
<PAGE>
be binding upon any other party unless in writing and signed by a duly
authorized officer or representative of each party.
IN WITNESS WHEREOF the parties have hereto set their hand as of the date
first above written.
Harris Airport Systems Harris Advanced Technology
(M) Sdn. Bhd. (Malaysia) Sdn. Bhd.
by: /s/ Richard L. Ballantye by: /s/ Bryan R. Roub
--------------------------- -------------------
Name: Richard L. Ballantyne Name: Bryan R. Roub
Title: Director Title: Director
EXHIBIT 2.15
INTELLECTUAL PROPERTY AGREEMENT
THIS INTELLECTUAL PROPERTY AGREEMENT (this "Agreement") is made as of the
13th day of August, 1999, among Harris Corporation ("Harris"), a Delaware
corporation, Harris Semiconductor Patents, Inc., a Delaware corporation
("HSPI"), and INTERSIL holding corporation, a Delaware corporation ("Parent").
WHEREAS, Harris, intersil corporation, a Delaware corporation ("Buyer"),
and Parent have entered into an Amended and Restated Master Transaction
Agreement dated as of June 2, 1999 (the "Master Agreement"), which provides for
the sale by Sellers (as defined in Exhibit A to the Master Agreement) and the
purchase by Buyer of certain of the assets used in the operations of the
Business (as defined in Exhibit A to the Master Agreement);
WHEREAS, certain of such assets constituting, and rights relating to,
intellectual property constitute an important component of the Business; and
WHEREAS, in connection with the transactions contemplated by the Master
Agreement, Buyer desires to acquire, or to acquire the right to use, certain of
the intellectual property, licenses, software, and technology of the Business,
and Harris has agreed to transfer or otherwise make available to Buyer such
intellectual property, licenses, software, and technology;
NOW, THEREFORE, in consideration of the mutual promises contained herein
and in the Master Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. Definitions and Rules of Construction. Exhibit A to the Master Agreement
is incorporated herein by reference.
2. Representations and Warranties of Harris. Harris represents and warrants
to Buyer as hereinafter set forth:
(a) To the Sellers' IP Knowledge, with the exception of Transition
Services Software and the Software and Technology listed in Schedule 2(a),
all of the Software and Technology, including that covered by Software
Licenses, material to the operation of the Business by the Business
Entities is made available to Buyer through the provisions of the
Transaction Documents.
(b) To the Sellers' IP Knowledge, Schedule 2(b) lists all registered
Copyrights and applications therefor which are specific to the Business.
(c) To the Sellers' IP Knowledge, Schedule 2(c) lists all Maskwork
Rights for current and proposed Products.
(d) To the Sellers' IP Knowledge, Schedule 2(d) lists all threatened
or pending third-party suits or notices thereof, all written or oral claims
or notices to which the Business Entities, or any one or more of them, is a
party or recipient, or potential suits or claim of which Sellers are aware
and which (i) relate to License Agreements or Software Licenses, or (ii)
<PAGE>
involve any claim by a third party that the manufacture, sale or use of any
product or process in connection with the Business infringes any copyright,
maskwork, or patent of a third party or involves the misappropriation of
any software, technology or trade secret of a third party.
(e) To the Sellers' IP Knowledge, except as set forth on Schedule
2(e), the Business Entities have not given any indemnification for
infringement of Intellectual Property as to any Products, equipment,
materials or supplies designed, manufactured, produced, used or sold by the
Business, except for indemnifications (i) granted in the ordinary course of
business in connection with the sale of Products and (ii) in the License
Agreements.
3. Buyer's Rights in Intangible Property.
(a) Sellers hereby assign to the Buyer their entire ownership, right,
title and interest in and to Intangible Property Rights Type 1. Upon
written request of Buyer, Sellers will, at Sellers' expense, use
commercially reasonable efforts to confirm and, to the extent appropriate,
to record the aforesaid assignment of such Intangible Property Rights
Type 1.
(b) Sellers hereby grant to Buyer a royalty-free, non-exclusive,
worldwide license to make, have made, use and sell Products under the
Intangible Property Rights Type 2, including the right, subject to any and
all pre-existing licenses granted by Sellers, to sublicense Software Type 2
and Technology Type 2 in connection with either (i) the sale of any part of
the Business by Buyer, or (ii) in connection with (x) technology licensing
activities pertaining to Products by Buyer with third parties, (y) custom
designing Products using the Business' CAD tools, or (z) supporting
customer foundry needs. Such transfer and sublicensing of Software Type 2
and Technology Type 2 is subject to the obligations of confidentiality set
forth in Section 12.
4. Transfer of Tangible Software and Technology.
(a) Sellers acknowledge and confirm that all of their ownership,
right, title and interest in and to Software Type 1 and Technology Type 1
is vested in Buyer. Certain of such Software Type 1 and Technology Type 1
may not presently reside in the Transferred Facilities. Upon the written
request of Buyer, and to the extent practical, Sellers will use
commercially reasonable efforts to deliver, or cause to be delivered, all
such non-resident Software Type 1 and Technology Type 1 to the Buyer or to
the appropriate location in the Transferred Facilities.
(b) Sellers have granted Buyer in Section 3(b) a royalty-free,
non-exclusive, worldwide license, without the right to sublicense except as
provided in Section 3(b), in and to Software Type 2 and Technology Type 2.
Certain of such Software Type 2 and Technology Type 2 may not presently
reside in the Transferred Facilities. Upon the written request of Buyer,
and to the extent practical, Sellers will use commercially reasonable
efforts to deliver, or cause to be delivered, copies, in executable form
(object code only) of such non-resident Software Type 2 and documentation
(to the extent available in written form on the Closing Date) describing
Technology Type 2 (such delivery to be at Buyer's expense).
(c) Upon written request of Buyer within 90 days after the Closing
Date, Sellers will provide Buyer a copy of the source code for any Software
Type 2 in Sellers' possession and of which Buyer did not have a copy of
<PAGE>
prior to the Closing Date. Buyer may make copies of such source code for
its own use and may make modifications or improvements, including
derivative Products, of any Software Type 2 for its own purposes.
(d) If Sellers have not retained copies of any object or source code
for, and documentation of, Software Type 2 or documentation of Technology
Type 2 following the Closing Date, Buyer will use commercially reasonable
efforts to deliver, or cause to be delivered, copies of all such
non-retained object or source code for, and documentation of, Software Type
2 and documentation of Technology Type 2 to Sellers or their designated
Subsidiaries upon Sellers' request, such delivery to be made at Sellers'
expense. With respect to all such copies, in whatever form, now or
hereafter held by or delivered to Sellers, it is agreed that the entire
ownership, right, title and interest in and to such copies is vested in
Sellers.
5. Licensed Software.
(a) With respect to Licensed Software Type 1, Sellers hereby agree, to
the extent that they are able to do so, to use commercially reasonable
efforts to take or to cause others to take, at Buyer's reasonable expense,
all actions necessary to assign, or, if not assignable to sublicense to the
extent they are able to do so, to Buyer the rights to use such Licensed
Software.
(b) With respect to Licensed Software Type 2, Sellers hereby agree, to
the extent they are able to do so, to use commercially reasonable efforts
to take, or cause others to take, at Buyer's reasonable expense, all
actions necessary to sublicense, to the extent they are able to do so, to
Buyer the rights to use such Licensed Software Type 2 to the extent such
Licensed Software Type 2 was used by the Business immediately prior to the
Closing Date.
(c) To the extent that Licensed Software assigned or sublicensed to
Buyer in Section 5(a) or Section 5(b) does not reside in the Transferred
Facilities as of the Closing Date, and to the extent that Sellers have a
right to do so, Sellers will use commercially reasonable efforts to deliver
or cause to be delivered such non-resident Licensed Software, to the extent
assigned or sublicensed, to Buyer promptly at the written request of Buyer
following the Closing Date.
6. Continuing Rights of Sellers.
(a) Subject to Paragraph (b) below, Sellers hereby reserve, and Buyer
hereby grants, to Sellers a royalty-free, worldwide, nonexclusive license
under Intangible Property Rights Type 1, to incorporate the Products and
other products manufactured by Buyer and sold to Sellers into other
products manufactured by Sellers to be sold to third parties under such
Intangible Property Rights Type 1.
(b) For the first five (5) years following the Closing Date, Sellers
shall practice the licenses reserved and granted in this Section 6 and its
rights with respect to Intangible Property Type 2, Software Type 2 and
Technology Type 2 as to which Buyer is granted a non-exclusive license in
Section 3(b) only in manners consistent with the provisions of Section 7.2
of the Master Agreement. After such five (5) year period, such license to,
and rights of, Sellers shall be unrestricted.
<PAGE>
7. Post-Closing Recording of Transfers. Upon the written request of Buyer,
Sellers will deliver to Buyer assignments, in form and substance reasonably
satisfactory to Buyer and its counsel, of the Copyright and Maskwork Rights
Registrations and applications therefor listed on Schedules 2(b) and (c) to
allow Buyer to record the transfer of the title to such Copyrights and Maskwork
Rights Registrations and applications therefor (i) in the United States in the
Library of Congress, and (ii) in appropriate offices of foreign jurisdictions.
8. Additional Transfers to Buyer. If it is determined after the Closing
Date that any of the Software, Software Licenses, Technology and Intangible
Property Rights intended to be transferred pursuant to this Agreement was not
transferred, as the sole remedy for such failure to transfer, Sellers agree to
make such transfer, to the extent Sellers had the right to do so as of the
Closing Date, upon discovery of such non-transfer by Sellers or upon the written
request of Buyer.
9. Reassignment or Return to Sellers. Buyer agrees that, upon Sellers'
reasonable request, and at Sellers' reasonable expense, Buyer and its
Subsidiaries shall reassign or return, as the case may be, to Sellers any
Software, Technology, Software Licenses or Intangible Property Rights that may
reside in the Transferred Facilities as of the Closing Date but are not,
pursuant to the Transaction Agreements, transferred, assigned, licensed or
sublicensed to Buyer, or that may have been inadvertently transferred or
delivered by Sellers to Buyer but should not have been so transferred or
delivered.
10. Assistance With Respect to Technology. Upon written request, Sellers or
Buyer, as the case may be, will provide reasonable engineering or technical
support not existing within the Business, at the cost of the requesting party.
Such costs shall be determined on a basis consistent with the determination of
costs under the Transition Services Agreement.
11. Effect of Agreement. No license rights under Patents, Trademarks or
trade names are granted or implied by this Agreement.
12. Confidentiality.
(a) Following the Closing, as to Technology Type 1 and Software Type 1
transferred and assigned hereunder, Sellers, and as to Technology Type 2
and Software Type 2, Buyer, shall (i) maintain the confidentiality of, and
(ii) not divulge, to any Person, all confidential or proprietary
information, except with the prior written consent of the other party or to
the extent that such information is required to be divulged by legal
process or as it may have otherwise become public information without
breach of this Agreement; provided, however, that Buyer, Sellers and their
Subsidiaries shall not be subject to the obligation of confidentiality for
information that (x) otherwise becomes lawfully available after the Closing
Date on a non-confidential basis from a third party who is not under an
obligation of confidentiality to the other party, (y) is or becomes
generally available to the public without breach of this Agreement, or (z)
is disclosed by a party having such obligation more than ten (10) years
after Closing.
(b) Each of the parties, in carrying out its obligations of
confidentiality set forth in this Section 12, shall follow those
procedures, and observe that standard of care, that such party follows and
observes with respect to its own confidential information and proprietary
<PAGE>
data that is not the subject matter of this Agreement but which is of
similar importance. However, any inadvertent disclosure, despite the
exercise of such a standard of care, shall not constitute a breach of this
Section 12.
13. Survival. The representations and warranties of Sellers in this
Agreement, including the Schedules hereto, shall survive until the fifth
anniversary of the Closing Date.
14. Indemnification.
(a) Harris shall indemnify, defend and hold harmless Buyer Indemnitees
against Losses due to, based upon, arising out of or relating to the
following matters:
(i) Claims of infringement, misappropriation or other breaches of
Patents, Intellectual Property or Intangible Property Rights owned by
third parties ("Infringement Claims") due to, based upon, arising out
of or related to the Business prior to the Closing Date that, pursuant
to Section 2(d) of the Patent Assignment and Services Agreement,
Section 2(d) of the Intellectual Property Agreement or other related
provisions of the IP Transfer Agreements, either (x) are listed on the
schedules to the IP Agreements or, (y) under the terms of the IP
Agreements, should have been listed on the schedules to the IP
Agreements and were not so listed;
(ii) Infringement Claims that third parties would not have been
entitled to assert against Buyer Indemnitees had one or more of the
License Agreements entered into by Business Entities, including, but
not limited to, those listed on Schedules 4-8 to the License
Assignment Agreement been assigned to Buyer on the Closing Date,
subject to the following limitations:
(w) Such indemnification, defense and hold harmless under Section 14
(a)(ii) shall apply only to (A) Infringement Claims asserted
within 36 months after the Closing Date and (B) to the extent
such Infringement Claims are based on Products in existence on
the Closing Date, or Products modified subsequent to the Closing
Date, provided that such modification does not give rise to the
infringement, and provided further that, with respect to any
modified Product, Buyer shall provide sufficient information to
Harris, including confidential and proprietary information
subject to a reasonable confidentiality undertaking by Harris, to
establish that such modification did not give rise to any such
infringement;
(x) Buyer and Parent shall make available Intellectual Property, in
existence on the Closing Date (plus any Intellectual Property
arising from Invention Disclosures transferred to Buyer or
Parent, as the case may be, on the Closing Date) as a defense to,
for assertion as counterclaims against, and in connection with
any settlement of, such Infringement Claim without cost to
<PAGE>
Harris. Any such settlement shall be for the shorter of (i) the
remaining life of any Intellectual Property that is asserted
against Buyer Indemnitees with particularity, identifying claim
elements against the accused Product, or (ii) the length of the
License Agreement (including surviving rights) entered into by a
Business Entity prior to the Closing Date that licensed such
Intellectual Property to such Business Entity;
(y) Harris shall not be required to indemnify Buyer Indemnitees with
respect to any Infringement Claim referred to in this Section
14(a)(ii) unless the aggregate amount of Losses related to such
Infringement Claims against Buyer Indemnitees has exceeded
$1,000,000, and then Buyer Indemnitees shall be entitled to
recover Losses on such claim in excess of such amount, provided,
however, that Harris' aggregate maximum liability to Buyer
Indemnitees under this Section 14(a)(ii) shall not exceed
$16,500,000, with Harris being obligated to indemnify Buyer
Indemnitees against all Losses in the aggregate covered by this
Section 14(a)(ii) between $1,000,000 and $10,000,000, and 50% of
such Losses in excess of $10,000,000 until such Losses exceed
$25,000,000. Any amounts paid under this Section 14(a)(ii) shall
not reduce Harris' liability under Article 13 of the Master
Agreement referred to in Section 13.2(b) thereof.
(z) Buyer and Parent shall use their Best Efforts to conduct the
Business following the Closing Date in a fashion that will not
encourage the assertion of claims giving rise to indemnity under
this Section 14(a)(ii).
(iii) Infringement Claims due to, based upon, arising out of or
relating to the Business prior to the Closing Date other than those of
Section 14(a)(i) and (ii), subject to the following limitations:
(w) Such indemnification, defense and hold harmless shall be limited
to Harris paying Buyer Indemnitees for the attorneys' fees
incurred in defending such Indemnification Claim asserted within
36 months after such closing Date as follows: the first $250,000
in the aggregate shall be deducted and Harris shall thereafter
pay one-half of the legal fees incurred by Business Indemnitees,
such payment not to exceed in the aggregate $2,500,000.
(b) Should Intel Corporation, or anyone claiming under, by or through
Intel Corporation, assert an Infringement Claim with respect to the subject
matter of the X86 agreements dated 1981 and 1987 between Harris Corporation
and Intel Corporation against Buyer Indemnitees for activities subsequent
to the Closing Date and for a period of 36 months thereafter, Harris shall
<PAGE>
pay the first $3 million of payments including Loss made to such claimant
in respect of such Infringement Claim.
(c) The indemnification provided for in this Section 14 shall not be
subject to the Threshold referred to in Section 13.2(b) of the Master
Agreement.
(d) The parties shall consider, in good faith, settlement of
Infringement Claims within the scope of this Section 14 by the use of other
than monetary consideration, including granting licenses to the third party
under their patents other than the patents assigned to Buyer and Parent
under the IP Agreements. If patents of any party other than such assigned
patents are involved in a settlement, the party contributing such other
patents shall receive reasonable compensation, to be negotiated, from the
other party for the benefit it derives from the settlement, taking into
account the indemnification obligations of Harris. The parties shall use
their Best Efforts to obtain a license for Buyer Indemnitees for the life
of the Intellectual Property asserted in the Infringement Claim.
(e) Buyer Indemnitees agree that upon their receipt of an Infringement
Claim giving rise to a claim of indemnity under this Section 14, including,
without limitation, receipt by Buyer Indemnitees of any notification,
communication, demand, assertion, claim action, judicial proceedings,
administrative proceedings or other proceeding by any third party, Buyer
Indemnitees will give written notice thereof to Harris. Except as expressly
provided herein, the indemnification provided for in this Section 14 shall
be subject to the procedures and provisions of Sections 13.4, 13.6 and 13.7
of the Master Agreement.
15. Agreement Conventions. Exhibit B to the Master Agreement is
incorporated herein by reference.
IN WITNESS WHEREOF, the parties each have caused this Agreement to be duly
executed by a duly authorized officer and delivered in its name and on its
behalf, all as of the day and year first above written.
HARRIS CORPORATION
By: /s/ Ronald R. Spoehel
-----------------------
Name: Ronald R. Spoehel
Title: Vice President
<PAGE>
HARRIS SEMICONDUCTOR PATENTS, INC.
By: /s/ Ronald R. Spoehel
-----------------------
Name: Ronald R. Spoehel
Title: Vice President
INTERSIL HOLDING CORPORATION
By: /s/ Gregory L. Williams
-------------------------
Name: Gregory L. Williams
Title: CEO
<PAGE>
Schedules to IP Agreement
2(a) Software and Technology Not Transferred or Requiring Third Party Consents
to Transfer
2(b) Registered Copyrights and Applications
2(c) Registered Maskwork Rights and Applications
2(d) Third Party Suits or Claims
2(e) Indemnification for Infringement
EXHIBIT 2.16
PATENT ASSIGNMENT AND SERVICES AGREEMENT
THIS PATENT ASSIGNMENT AND SERVICES AGREEMENT (this "Agreement") is made as
of the 13th day of August, 1999, among Harris Corporation ("Harris"), a Delaware
corporation, Harris Semiconductor Patents, Inc., a Delaware corporation, and
intersil holding Corporation, a Delaware corporation ("Parent").
WHEREAS, Harris, intersil Corporation, a Delaware corporation, and Parent
have entered into an Amended and Restated Master Transaction Agreement dated as
of June 2, 1999 (the "Master Agreement"), which provides for the sale by Sellers
(as defined in Exhibit A to the Master Agreement) and the purchase by Buyer of
certain of the assets used in the operations of the Business (as defined in
Exhibit A to the Master Agreement);
WHEREAS, certain assets constituting, and rights relating to, certain
patents constitute an important component of the Business; and
WHEREAS, in connection with the transactions contemplated by the Master
Agreement, Buyer desires to acquire, or to acquire the right to use, certain
patents and inventions of the Business, and Harris has agreed to transfer or
otherwise make available to Buyer such patents and inventions;
NOW, THEREFORE, in consideration of the mutual promises contained herein
and in the Master Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. Definitions and Rules of Construction. Exhibit A to the Master Agreement
is incorporated herein by reference.
2. Representations and Warranties of Harris. Harris represents and warrants
to Buyer as hereinafter set forth:
a) To the Sellers' IP Knowledge, Schedule 2(a) lists all Patents Type
1.
b) To the Sellers' IP Knowledge, Schedule 2(b) lists all Invention
Disclosures.
c) Except as set forth on Schedule 2(a) and/or 2(b), respectively, to
the Sellers' IP Knowledge, one or more of the Sellers has good and
transferable title to all Patents Type 1 and Invention Disclosures, subject
to pre-existing license rights, including License Agreements as set forth
in Schedule 2(a) and/or 2(b).
d) Schedules 2(a) and 2(b) list all threatened or pending third party
suits or notices thereof, written or oral claims or notices to which the
Business Entities, or any one or more of them, is a party or recipient, or
potential suits or claims of which Sellers, to Sellers' IP Knowledge, are
aware, and which relate to the validity or enforceability of a Patents
Type 1.
<PAGE>
3. Patent Transfers to Buyer. With the exception of the patents listed on
Schedule 3 (the "Retained Patents"), Sellers hereby transfer and assign to Buyer
all of Sellers' right, title and interest in and to Patents Type 1 and Invention
Disclosures, subject to pre-existing license rights, including License
Agreements; provided that Sellers have the exclusive right to grant
non-exclusive licenses, consistent with other license agreements entered into by
Sellers, in Patents Type 1 and Invention Disclosures to Winbond and Macronics
and their Affiliates with which Sellers are presently engaged in patent
infringement litigation.
4. Patent License to Buyer. Sellers hereby grant to Buyer a royalty-free,
worldwide, non-exclusive license under Patents Type 2 and Retained Patents to
make, have made, use, and sell Products, without the right to grant sublicenses.
5. Post-Closing Recording of Transfers Concerning Patents. Patents Type 1
are owned by either Harris or Harris Semiconductor Patents, Inc. ("HSPI"). The
record owners of Patents Type 1 owned by HSPI include HSPI's predecessors. At
Buyer's request, Sellers will, as soon as practicable, deliver to Buyer, in form
and substance reasonably satisfactory to Buyer, file and record, or cause to be
delivered, filed and recorded, (a) in the United States Patent and Trademark
Office, assignments to Buyer of the United States-issued patents and
applications therefor included in Patents Type 1 that are owned by Harris, and
(b) in the appropriate offices of foreign jurisdictions, assignments to Buyer,
or one or more of its designated Subsidiaries, of foreign-issued patents and
applications therefor included in Patents Type 1 that are owned by Harris. Such
assignments shall be in form and substance reasonably satisfactory to Buyer and
its counsel and shall be prepared, delivered, and filed for recordation as soon
as practicable. With respect to Patents and applications therefor owned by HSPI,
upon written request of Buyer, Sellers will provide reasonable assistance to
Buyer in contacting Sellers' predecessors with respect to initiating record
transfers of such Patents and applications. After Sellers' predecessors have
effected record transfers to Sellers, Sellers, upon written request and in the
manner described above, will effect record transfers to Buyer. Buyer shall
promptly reimburse Sellers for all out-of-pocket expenses, and Sellers'
predecessors for all out-of-pocket expenses and reasonable overhead charges, if
any, incurred under this Section 5.
6. Additional Transfers to Buyer. If it is determined after the Closing
Date that any of the Patents or Invention Disclosures intended to be licensed or
transferred pursuant to this Agreement were not transferred, as the sole remedy
for such failure to transfer, Sellers agree to make such transfer, to the extent
Sellers had the right to do so as of the Closing Date, upon discovery by Sellers
or the written request of Buyer.
7. Reassignment of Patents to Sellers. Buyer agrees that, upon Sellers'
reasonable written request, Buyer and its Subsidiaries shall reassign to Sellers
or their designated Subsidiaries any Patent that does not constitute Patents
Type 1 that may be or may have been inadvertently transferred by Sellers, or one
or more of their Subsidiaries, to Buyer, or one or more of its Subsidiaries.
8. Additional Agreements.
(a) In support of the patenting and utilization of Invention
Disclosures by Buyer or the Transferred Subsidiaries, Sellers agree, upon
the written request of Buyer, to make corresponding assignments to Buyer or
<PAGE>
such Subsidiaries as may be appropriate, of its rights and remedies against
the inventors thereof, or any of them, so far as relating to such
unpatented inventions and arising by operation of law, estoppel,
implication or express contract, including, without limitation, those
rights as expressed in contracts between Sellers and present and past
employees and consultants.
(b) Sellers represent that all rights in Patents and in Invention
Disclosures owned or held by Buyer or the Transferred Subsidiaries after
the Closing Date will be subject to the rights and licenses granted to
others in License Agreements in or to such Patents and Invention
Disclosures existing prior to the Closing Date.
(c) If the assignment of any invention or Patent, or the grant of any
non-assertion hereunder, would impose or result in any obligation of
Sellers to make any payments under Applicable Law or by reason of agreement
existing prior to the Closing Date, excepting only as such payment may be
required to be made to a Subsidiary of Sellers, but including any such
payments as may be due upon licensing (but not for Sellers' own use) to
inventors under the laws of any country, then and in such event the
assignment or non-assertion shall be effective as of the Closing Date, but
shall be subsequently rescindable by Sellers unless and until Buyer
undertakes by binding instrument in writing to make such payment in the
place and stead of Sellers. Sellers shall notify Buyer in writing at least
sixty (60) days in advance of any such obligation(s) to make payments which
are within its reasonable knowledge.
(d) Except for the express representations and warranties in this
Agreement or the Master Agreement, no warranty or representation is hereby
given or implied with respect to the validity of any Patent.
(e) Except as otherwise expressly provided herein, no obligation is
hereby assumed by Buyer or Sellers or their Subsidiaries to maintain,
prosecute, enforce or litigate, file, assert, or defend any Patent or
Patent to issue on an Invention Disclosure within the scope of this
Agreement.
(f) The rights transferred or granted to, or retained by, any party
under this Agreement may be transferred or granted to others by such party
together with the business to which such rights pertain, or pro tanto with
a sale of a part of that business; provided that such transfer or grant
shall not diminish or otherwise adversely affect the rights held or
retained by the party hereto not involved in such transfer.
(g) In the event that Buyer shall contemplate or commence any judicial
or administrative proceedings under any Patents Type 1 or Patents to issue
on Invention Disclosures, Sellers shall cooperate with Buyer in respect of
such proceeding or contemplated proceeding. Sellers' cooperation shall
include: providing relevant information and documents that are in Sellers'
possession, and making personnel available on reasonable request for
interview by counsel, and for deposition and trial testimony if reasonably
deemed necessary or desirable. Buyer shall reimburse Sellers for all of
Sellers' expenses.
<PAGE>
9. Patent-Related Services.
(a) On or prior to the date hereof, Sellers shall have provided to
Buyer as Schedule 9 to this Agreement a report listing all Patent dockets
and the names of attorneys, law firms or foreign patent agents, as the case
may be, currently assigned to the preparation and prosecution of all
pending patent applications that are Patents Type 1 and all Invention
Disclosures assigned for preparation and filing of patent applications in
the United States and foreign jurisdictions. Such report accurately
identifies (i) all United States applications for Patents Type 1 that have
foreign statutory bar dates (i.e., dates by which foreign or international
patent applications must be filed) (x) between the dates hereof and
September 30, 1999 and (y) on or after October 1, 1999 but before January
1, 2000, but which have not, as of the date hereof, been approved or
rejected by the Harris Semiconductor Sector for foreign filing, and (ii)
all maintenance fees (United States and foreign) on Patents Type 1 that are
due (x) between the date hereof and September 30, 1999 and (y) on or after
October 1, 1999 but before January 1, 2000. Sellers agree to cooperate with
Buyer, at Buyer's expense, to transfer such information to a database to be
operated by Buyer.
(b) Sellers have paid, or authorized payment at Sellers' expense, of
the maintenance fees referred to in Section 9(a)(ii) that are due between
the date hereof and September 30, 1999. Buyer shall be responsible for all
maintenance fees (United States and foreign) on Patents Type 1 that are due
on or after October 1, 1999.
(c) Sellers have notified the attorneys, law firms and foreign patent
agents identified on the list referred to in Section 9(a) of the
transactions contemplated by the Master Agreement and this Agreement,
including the assignment hereunder to Buyer to all Patents Type 1 and
Invention Disclosures.
(d) Effective upon the Closing Date, Buyer shall be responsible for
the preparation and prosecution of all Patents Type 1 and Invention
Disclosures with Governmental Authorities in the United States.
(e) Upon the written request of Buyer and at Buyer's expense, Sellers
will, through their foreign patent agents, provide communications to, and
receive communications from, foreign Governmental Authorities regarding
authorizations, patent filings and prosecution responses for a period of up
to ninety (90) days after the Closing Date.
(f) Buyer hereby grants to Sellers a power of attorney to act on
behalf of Buyer and to direct attorneys and agents on behalf of Buyer with
respect to preparation, filing, prosecution and maintenance, as the case
may be, for Patents Type 1 and Invention Disclosures for a period of ninety
(90) days after the Closing Date to the extent necessary or appropriate to
carry out the transition activities contemplated by this Section 9. This
power of attorney may be implemented by any of the patent counsel of Harris
Corporation or through the attorneys, law firms and foreign patent agents
retained by Seller including those persons or law firms expressly
identified on the list referred to in Section 9(a) such that those persons
and law firms are authorized to rely upon this power of attorney. Unless
there is insufficient time, prior to exercising a Power of Attorney, the
Buyer shall be given the opportunity to comment on any pending action and
such comments must be accepted by the Person exercising the Power of
Attorney.
<PAGE>
(g) Except as expressly provided in this Section 9, all patent
application filing costs, all prosecution costs for pending applications
and all maintenance costs for the Patents Type 1 and Invention Disclosures
shall be borne by Sellers if due or incurred prior to the Closing Date, and
shall be borne by Buyer if incurred after the Closing Date.
10. Assignment of Retained Patents. On the third anniversary of the Closing
Date, Sellers shall transfer and assign to Buyer all of Sellers' right title and
interest in and to the Retained Patents referred to in Section 3; provided that
if any of the Retained Patents are the subject of litigation at that time, then
such Retained Patents shall not be transferred or assigned until the conclusion
of such litigation either by settlement or a final, nonappealable judgment; and
provided further that, if at the time any Retained Patents are assigned to Buyer
there exists any binding obligations on the part of third parties to make
royalty or other payments with respect to such Retained Patents, then the right
to receive such payments shall be retained by Sellers.
11. Confidentiality.
a) For a period of three years following the Closing, as to Patents
Type 1 and Invention Disclosures transferred and assigned hereunder,
Sellers and their Subsidiaries shall, and, as to Patents Type 2 and related
information Buyer and its Subsidiaries shall, (i) maintain the
confidentiality of, and (ii) not divulge, to any person, entity or
governmental agency, any confidential or proprietary information concerning
the Patent Applications and Invention Disclosures and related information
except with the prior written consent of the owner thereof or to the extent
that such information is required to be divulged by legal process;
provided, however, that Buyer, Sellers and their Subsidiaries shall not be
subject to the obligation of confidentiality for information that (x)
otherwise becomes lawfully available after the Closing Date on a
nonconfidential basis from a third party who is not under an obligation of
confidentiality to the other party or its Subsidiaries or (y) is or becomes
generally available to the public without breach of this Agreement or (z)
is inadvertently disclosed despite the exercise of care as set forth in
Section 11(b) below and despite reasonable efforts to mitigate the effect
thereof.
b) Each of the parties, in carrying out its obligations of
confidentiality set forth in this Section 11, shall follow those
procedures, and observe that standard of care, that such party follows and
observes with respect to its other confidential information and proprietary
data that is not the subject matter of this Agreement.
12. Survival. The representations and warranties of Sellers set forth in
this Agreement, including the Schedules hereto, shall survive until the fifth
anniversary of the Closing Date.
13. Agreement Conventions. Exhibit B to the Master Agreement is
incorporated herein by reference.
IN WITNESS WHEREOF, the parties each have caused this Agreement to be duly
executed by a duly authorized officer and delivered in its name and on its
behalf, all as of the day and year first above written.
<PAGE>
HARRIS CORPORATION
By: /s/ Ronald R. Spoehel
-----------------------
Name: Ronald R. Spoehel
Title: Vice President
HARRIS SEMICONDUCTOR PATENTS, INC.
By: /s/ Ronald R. Spoehel
-----------------------
Name: Ronald R. Spoehel
Title: Vice President
INTERSIL HOLDING CORPORATION
By: /s/ Gregory L. Williams
-------------------------
Name: Gregory L. Williams
Title: CEO
<PAGE>
SCHEDULES
2(a) List of Patents Type 1
2(b) List of Invention Disclosures
3 List of Retained Patents
EXHIBIT 2.17
LICENSE ASSIGNMENT AGREEMENT
THIS LICENSE ASSIGNMENT AGREEMENT (this "Agreement"), is made this 13th day
of August, 1999, by and between HARRIS CORPORATION, a Delaware corporation
("Harris"), HARRIS SEMICONDUCTOR PATENTS, INC. ("HSPI"), a Delaware corporation,
and INTERSIL HOLDING CORPORATION, a Delaware corporation ("Parent").
WHEREAS, Harris, Intersil Corporation, a Delaware corporation, and Parent
have entered into an Amended and Restated Master Transaction Agreement dated as
of June 2, 1999 (the "Master Agreement"), which provides for the sale by Sellers
(as defined in Exhibit A to the Master Agreement) and the purchase by Buyer of
certain of the assets used in the operations of the Business (as defined in
Exhibit A to the Master Agreement);
WHEREAS, the Business has entered into certain patent and technology
licenses with third parties ("Third Parties") either through the Business
operations or by other components of the Business Entities on behalf of the
Business; and
WHEREAS, pursuant to the Master Agreement and the additional agreements
contemplated thereby, Buyer is to become the owner, either directly or through
its subsidiaries, of such patent and technology license agreements.
NOW THEREFORE, in consideration of the mutual promises contained herein and
in the Master Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:
1. Definitions and Rules of Construction. Exhibit A to the Master Agreement
is incorporated herein by reference.
2. Representations and Warranties of Harris.
(a) To the Sellers' IP Knowledge, except for the License Agreements
listed in Schedule 8 the lists of License Agreements in Schedules 1-6 list all
the License Agreements primarily used in the Business.
(b) To the Sellers' IP Knowledge, except for the License Agreements
listed in Schedule 8, Schedules 1-6 list all royalty bearing License Agreements
primarily used in the Business that have provided royalty revenue, if any, to
the Business as of the Closing Date.
(c) To the Sellers' IP Knowledge, except for the License Agreements
listed in Schedules 1-8 and licenses granted in connection with sales of
Products in the ordinary course of business, no other material License
Agreements pertaining to the Business have been entered into with Third Parties
by the Business Entities.
(d) To the Sellers' IP Knowledge, the License Agreements listed on
Schedules 1-3 do not require consent by the Third Party for assignment to Buyer,
nor will these License Agreements be subject to termination by the Third Party
when such assignment is made.
<PAGE>
(e) To the Sellers' IP Knowledge, the License Agreements listed on
Schedules 4-6 require consent from the Third Party for assignment to Buyer, are
not assignable, or terminate when assignment is made.
3. Identification of License Agreements.
(a) Schedules 1-3 list License Agreements primarily used in the Business
under which the rights and obligations of the Business Entities may be
transferred without the consent of a Third Party.
(b) Schedules 4-6 list License Agreements primarily used in the Business
under which the rights and obligations of the Business Entities may not be
transferred without the consent of a Third Party, are not assignable, or
terminate when assignment is made.
(c) Schedule 7 lists certain License Agreements relevant to the Business
as well as other products or operations of the Business Entities.
(d) Schedule 8 lists certain License Agreements primarily used in the
Business but which are being retained by Sellers (the "Retained License
Agreements").
4. Assignment of Agreements Not Requiring Third-Party Consents. Subject to
Section 2(d), Sellers hereby assign to Buyer their entire right, title, and
interest in and to the License Agreements listed on Schedules 1-3. If any of the
License Agreements listed in Schedules 1-3 are found to be not assignable to
Buyer and are material to the Business as conducted by Buyer, Harris will use
commercially reasonable efforts as requested by Buyer in writing to provide the
economic benefit of such License Agreements to Buyer, and upon doing such, shall
be deemed to have satisfied the requirements of Section 2(d) and this Section 4.
5. Assignment of Agreements Requiring Third Party Consents. If Buyer
determines in good faith that any of the License Agreements listed on Schedules
4-6 are material to the Business as conducted by Buyer, Harris will use
commercially reasonable efforts as requested by Buyer in writing to provide to
Buyer the economic benefit of such License Agreements in relation to the
Business, and upon doing such, shall be deemed to have satisfied the
requirements of this Section 5.
6. Royalty-Bearing Agreements Requiring Consent. Subject to Section 2(e),
Sellers hereby assign to Buyer, and agree to use commercially reasonable steps
necessary to effect such assignment, any revenue received under the License
Agreements listed on Schedule 4. If requested by Buyer, Sellers will use
commercially reasonable efforts to obtain the consent of the Third Parties to
such agreements to allow Sellers to assign all of their rights to royalties
thereunder to Buyer, and to make such assignment if such consent is obtained.
7. Schedule 7 License Agreements. No rights are transferred hereby to Buyer
under the License Agreements between Sellers and Third Parties listed in
Schedule 7, which are not specific to the Business.
8. Lemelson License Agreement. Notwithstanding anything herein to the
contrary, with respect to the License Agreement between Harris and Lemelson
Medical, Education &
<PAGE>
Research Foundation, Limited Partnership dated April 30, 1999, Harris agrees, at
Buyer's written request, to sublicense to Buyer such License Agreement to the
extent that (a) Harris is authorized to do so under such License Agreement and
(b) such License Agreement is relevant to the Business as of the Closing Date.
9. Subsequent Assignment to Buyer. If it is determined after the Closing
Date that one or more License Agreements owned by Sellers, but not included in
Schedules 1-6, were intended to be transferred to Buyer pursuant to this
Agreement but were not transferred, as the sole remedy for such failure to
transfer, Sellers agree to make such transfer to Buyer, to the extent Sellers
would otherwise be required to do so in accordance with the appropriate
classification of License Agreements in this Agreement, upon discovery by
Sellers or upon the written request of Buyer.
10. Assignment of Retained License Agreements. At such time as all
licensees under a Retained License Agreement have paid all amounts that are due,
or are to become due, to Sellers pursuant to such Retained License Agreement,
Sellers will assign to Buyer their entire right, title and interest in and to
such Retained License Agreement if such Retained License Agreement can be
transferred without the consent of a Third Party. If any such Retained License
Agreement is not so assignable and if Buyer determines in good faith that any
such nonassignable Retained License Agreement is material to the Business as
conducted by Buyer, Harris will use commercially reasonable efforts as requested
by Buyer to provide to Buyer the economic benefit of such nonassignable Retained
License Agreement in relation to the Business and, upon doing such, shall be
deemed to have satisfied the requirements of this Section 10 with respect to
such nonassigned Retained License Agreement.
11. Acceptance of Assignments; Assumption of Liabilities. Buyer hereby
accepts and agrees to accept any assignments or transfers effected under or as a
result of this Agreement, and to assume the Liabilities of Sellers relative to
each such License Agreement so assigned or transferred, provided that such
License Agreement is not the subject of a reassignment to Harris under
Section 12.
12. Reassignment to Sellers. Any License Agreement that may be
inadvertently transferred by Sellers to Buyer which License Agreement does not
relate to the Business shall be reassigned by Buyer to Harris or its designated
Subsidiary.
13. Survival. The representations and warranties of Sellers in this
Agreement, including the Schedules hereto, shall survive until the fifth
anniversary of the Closing Date.
14. Agreement Conventions. Exhibit B to the Master Agreement is
incorporated herein by reference.
IN WITNESS WHEREOF, the parties each have caused this Agreement to be duly
executed and delivered in its name and on its behalf, all as of the day and year
first above written.
<PAGE>
HARRIS CORPORATION
By: /s/ Ronald R. Spoehel
------------------------------
Name: Ronald R. Spoehel
Title: Vice President
HARRIS SEMICONDUCTOR PATENTS, INC.
By: /s/ Ronald R. Spoehel
------------------------------
Name: Ronald R. Spoehel
Title: Vice President
INTERSIL HOLDING CORPORATION
By: /s/ Gregory L. Williams
------------------------------
Name: Gregory L. Williams
Title: CEO
<PAGE>
Schedules to License Assignment Agreement
<TABLE>
<S> <C>
Schedule 1 Licenses to Third Parties Primarily Used in the Business Not Requiring Consent to Assign
Schedule 2 Licenses From Third Parties Primarily Used in the Business Not Requiring Consent to Assign
Schedule 3 Cross Licenses With Third Parties Primarily Used in the Business Not Requiring Consent to Assign
Schedule 4 Licenses to Third Parties Primarily Used in the Business Requiring Consent to Assign
Schedule 5 Licenses From Third Parties Primarily Used in the Business Requiring Consent to Assign
Schedule 6 Cross Licenses With Third Parties Primarily Used in the Business Requiring Consent to Assign
Schedule 7 Licenses Relevant to the Business and Other Harris Operations
Schedule 8 Licenses and Cross Licenses Primarily Used in the Business and Not Being Transferred
</TABLE>
EXHIBIT 2.18
HARRIS TRADEMARK LICENSE AGREEMENT
THIS HARRIS TRADEMARK LICENSE AGREEMENT ("Agreement") is made as of the
13th day of August, 1999, between Harris Corporation, a Delaware corporation,
and HAL Technologies, Inc., a Delaware corporation (collectively, "Licensor"),
and intersil Holding Corporation, a Delaware corporation ("Licensee").
WHEREAS, Licensor, Intersil Corporation, a Delaware corporation, and
Licensee have entered into an Amended and Restated Master Transaction Agreement
dated as of June 2, 1999 (the "Master Agreement"), which provides for the sale
by the Sellers (as defined in Exhibit A to the Master Agreement) and the
purchase by Licensee of certain of the assets used in the operations of the
Business (as defined in Exhibit A to the Master Agreement);
WHEREAS, Licensor owns (a) the trademark "Harris" in black letters and the
block "H" trademark as illustrated in Part 1 of Schedule A hereto and (b) the
trademark "Harris" with a stylized "A" as illustrated in Part 2 of Schedule A
(collectively, the "Licensed Trademarks"), and Licensor has registrations and
applications for registration related thereto;
WHEREAS, Licensor in its conduct of the Business has used the Licensed
Trademarks in numerous countries in connection with the manufacture, advertising
and sale of Products, which Products have enjoyed a commercial reputation of
high quality and reliability;
WHEREAS, Licensee desires to use the Licensed Trademarks in its conduct of
the Business and in the manufacture, advertising and sale of Products; and
WHEREAS, Licensor is willing to grant Licensee a license to use the
Trademarks pursuant to the terms and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual promises contained herein
and in the Master Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. Definitions and Rules of Construction. Exhibit A to the Master Agreement
is incorporated herein by reference.
2. Representations and Warranties of Licensor. Licensor represents and
warrants to Licensee, as follows:
(a) Licensor has the right to grant to Licensee the licenses and rights
in the Licensed Trademarks contemplated by and in accordance with the terms and
conditions of this Agreement.
(b) To Seller's IP Knowledge, no claims have been made by any third
party that use of any of the Licensed Trademarks infringes or otherwise violates
any trademark or other rights of such third party or that Licensor does not own
the trademark.
<PAGE>
3. License.
(a) Subject to Section 3(c) hereof, Licensor grants to Licensee a
non-exclusive, royalty-free license to use the Licensed Trademarks throughout
the world (the "Territory") as follows:
(i) on external packages of Products that are either: (1) in
inventory and acquired from Licensor or in the possession of Products
distributors as of the Closing Date and thereafter acquired by Licensee from
such Products distributors within eighteen (18) months from the Closing Date
with respect to trademarks illustrated by Part 1 of Schedule A hereof, or (2)
manufactured by or for (including manufacture by subcontractors) Licensee within
eighteen (18) months from the Closing Date with respect to trademarks
illustrated by Part 2 of Schedule A hereof. The license granted under this
Subsection (i) shall terminate when Licensee's inventory of all such Products is
exhausted;
(ii) on package materials, marketing, promotional and sales
literature, manuals, data sheets and other documentation ("Materials") for
Products that are either: (1) acquired from Licensor; or (2) prepared by or for
Licensee within one (1) year from the Closing Date with respect to trademarks
illustrated by Part 2 of Schedule A hereof. All such Materials prepared by or
for Licensee shall identify Licensee as the source of the Products, and all such
Materials acquired from Licensor shall, if distributed more than one year after
the Closing Date, identify Licensee as the source of the Products. The license
granted under this Subsection (ii) shall continue only until the inventory of
Products specified in Subsection (i) above is exhausted;
(iii) subject to Subsection (i) above with respect to external
packages, on maskworks originally acquired from Licensor as of the Closing Date
for so long as such maskworks are used in the normal course of Licensee's
conduct of the Business; and
(iv) on plastic molded packages for so long as they are made in the
normal course of the Licensees conduct of the Business on molding equipment
originally acquired from Licensor as of the Closing Date.
(b) Subject to Section 3(c) hereof, Licensor also grants to Licensee the
license to make, have made, use, sell, offer for sale and import Products using
the part number identifications used by Licensor in connection with Products
existing as of the Closing Date, including the right to use the letter "H" to
the extent that such letters are being used as of the Closing Date by Licensor
for part number identification of such existing Products. In addition, Licensee
may use the letter "H" in part number identifications for Products introduced
after the Closing Date if (i) such new Products constitute extensions to
Products existing as of the Closing Date, and (ii) the part number
identifications for such new Products are substantially similar in format to
those in use as of the Closing Date for existing Products within such series of
Products. Use of part number identifications in accordance with the foregoing,
and such use in marketing, promotional and sales literature, manuals, data
sheets and other documentation in connection with the Products, shall not be
deemed to conflict with any other provisions of this Agreement. The right
granted under this Section 3(b) shall terminate, on a part by part basis, when
Licensee no longer stocks, offers for sale, sells, imports, exports, distributes
or employs a third party to
<PAGE>
manufacture, sell or distribute a part. If the letter "H" is not included in the
part number for any Product, nothing in this Agreement shall be deemed to place
any limitation or restriction on the continued use by Licensee of such part
numbers. In the event that Licensee believes in good faith that a party is
improperly employing, without the authorization of Licensee, the letter "H" as
part of a Product part number identification, Licensee shall have the right, but
not the obligation, to bring a legal action against such party as Licensee's
sole expense employing attorneys chosen by Licensee. Licensor agrees to be
joined in such suits to the extent it is a necessary or indispensable party.
Licensee shall hold Licensor harmless for any Losses arising from any such legal
action. Any resulting damages recovered or settlement payments made shall be the
sole property of Licensee.
(c) The license and rights granted under Sections 3(a) and 3(b) hereof
are subject to the Products being produced in accordance with specifications and
standards that are either: (i) substantially the same as the specifications and
standards of Licensor that are in existence as of the Closing Date with respect
to Products; or (ii) substantially the same as the specifications and standards
of Licensee that are in existence as of the Closing Date with respect to its
products that are generally comparable to Products; or (iii) approved in writing
by Licensor prior to the marketing of the Products. Such approval shall not be
unreasonably withheld or delayed.
(d) The licenses and rights granted herein shall not include the right
to grant sublicenses to others, except that the licenses and rights granted
under this Section 3 may be extended to one or more of Licensee's Subsidiaries,
including the Transferred Subsidiaries, upon acceptance by any such Subsidiary
of all terms of this Agreement through execution by such Subsidiary of an
undertaking in the form of Schedule B hereto. Upon execution and delivery to
Licensor of such an undertaking, the term Licensee shall be deemed to include
such Subsidiary.
4. Ownership.
(a) Licensee agrees that it will not contest ownership or the validity
of the Licensed Trademarks. Licensee agrees that any and all rights that might
be acquired by its use of the Licensed Trademarks shall inure to the sole
benefit of Licensor.
(b) As long as the Licensed Trademarks are being used by Licensee
pursuant to this Agreement, Licensee agrees not to use or register in any
country any trademarks confusingly similar to the Licensed Trademarks. Whenever
the attention of Licensee is called by Licensor to any such confusion or
likelihood of confusion, Licensee agrees to take appropriate steps to remedy or
avoid such confusion. Nothing herein contained, however, shall be construed as
prohibiting or limiting Licensee from adopting or using non-confusing trademarks
in relation to Products.
5. Compliance.
(a) Licensee agrees to comply with rules set forth from time to time by
Licensor with respect to the appearance and manner of use of the Licensed
Trademarks which are reasonable in relation to Products. Any form of the use of
the Licensed Trademarks not specifically provided for by such rules shall be
adopted by Licensee only upon prior approval in
<PAGE>
writing by Licensor. Such approval shall not be unreasonably withheld or
delayed. Representative specimens showing the use of the Licensed Trademarks by
Licensee shall be sent to Licensor from time to time upon the reasonable request
by Licensor.
(b) Licensee will take reasonable steps to avoid endangering the
validity of the Licensed Trademarks, including complying with applicable laws or
regulations of all countries where the Products are sold. Licensee will execute
trademark registered user agreements submitted by Licensor to protect Licensor's
title and rights in the Licensed Trademarks.
(c) Any expenses incurred in: (i) obtaining and maintaining trademark
registrations when such registrations would not have been applied for or
maintained in the absence of Licensee's activities under this Agreement; (ii)
recording this Agreement; and (iii) obtaining the entry of Licensee as a
Registered or Authorized User of the Trademarks shall be borne by the Licensee.
6. Advertising. Licensee will endeavor to maintain the validity and
distinctiveness of the Licensed Trademarks so as to protect the goodwill
symbolized by the Licensed Trademarks. If requested by Licensor, Licensee will
include in advertising and marketing and sales brochures an appropriate legend
stating that the Licensed Trademarks are used under license from Licensor.
7. Quality Control.
(a) Licensee agrees to furnish, at no charge to Licensor, from time to
time as reasonably requested, representative samples of Products to which it
affixes the Licensed Trademarks. Licensor or its authorized representative shall
also have the right upon reasonable notice to conduct, during regular business
hours, an examination of Licensee's Products and of the plants and processes for
making such Products. Licensor shall execute a confidentiality agreement
concerning the portions of the plants and processes so inspected, such agreement
including provisions substantially similar to those set forth in the IP
Agreement.
(b) If, at any time, any existing Products made or assembled by or for
Licensee and bearing the Licensed Trademarks shall fail to conform to the
standards of quality required by the applicable specifications and standards,
Licensee shall promptly remove the Trademarks from such non-conforming Products
in its possession.
(c) Licensor shall be solely responsible for its out-of-pocket expenses
incurred in the performance of its quality control activities hereunder.
8. Information. Licensee agrees to supply to Licensor, at Licensor's
reasonable request, with information concerning sales, advertising, customers,
and dealers of Products on a country-by-country basis, as the need arises for
such information, for the sole purpose of aiding Licensor in the acquisition,
maintenance and renewal of trademark registrations of the Licensed Trademarks,
the recording of this Agreement, and the entry of the Licensee as a Registered
User of the Licensed Trademarks. At Licensee's request, Licensor shall execute a
confidentiality agreement concerning the information so supplied, such agreement
including provisions substantially similar to those set forth in the IP
Agreement. Any such information may be
<PAGE>
disclosed by the Licensor only to the extent that disclosure is reasonably
necessary for such purposes. Licensee may limit the information provided to
Licensor under this Section 8 to that information necessary for such purposes.
9. Tradename. Licensee shall not use any of the Licensed Trademarks as a
trade name, nor shall it authorize others to do so. The use of the trademark
"Harris" in the Licensee corporate identification logos illustrated by Schedule
C hereto shall not be deemed to be a trade name use.
10. Termination.
(a) The licenses and rights granted pursuant to this Agreement shall
terminate as provided in Section 3(a) and 3(b).
(b) In addition, Licensor shall have the right to terminate the licenses
and rights granted in this Agreement if Licensee shall, at any time, default in
performing any of the terms and conditions of this Agreement and shall fail to
remedy such default within sixty (60) days after receiving written notice
thereof from Licensor. Licensor may also terminate the licenses and rights
granted pursuant to this Agreement upon written notice to Licensee in the event
that Licensee shall: (i) be adjudged bankrupt; (ii) become insolvent; (iii) make
a general assignment for the benefit of creditors; (iv) have a receiver or
trustee appointed for the benefit of its creditors generally; (v) file a
voluntary petition in bankruptcy; (vi) initiate reorganization proceedings or
take any step toward liquidation (except in connection with a corporate
reorganization under which the business of Licensee is continued and performance
of all its obligations under this Agreement will continue); or (vii) lose or
have expropriated substantially all of its assets related to the Products.
(c) Upon the termination of one or more of the licenses and rights
granted pursuant to this Agreement, Licensee shall discontinue the use, covered
by the terminated license or right, of the Licensed Trademarks on Products and
in advertising, marketing literature, and directories proposed or published, and
thereafter Licensee shall no longer use or have the right to the Licensed
Trademarks or any variation or simulation thereof in connection with the
Products.
11. Infringement.
(a) Each party hereto shall promptly inform the other by written notice
of any infringements, or possible infringements, of the Licensed Trademarks in
connection with products similar to the Products and will make available to the
other party any relevant information in its possession.
(b) Subject to Section 3(b), any action for infringement of the Licensed
Trademarks against an alleged infringer shall be brought only by Licensor at its
sole option, and in any such action all costs incurred and recoveries made shall
be for the account of Licensor. Any such action shall be conducted with counsel
selected by Licensor.
12. Force Majeure. Licensee shall be relieved of its obligations hereunder
only in the event that an act of God or war prevents Licensee from complying
with such obligations, and only for so long as such event occurs.
<PAGE>
13. Maintenance of Trademark Rights. Licensor shall not be obligated to
maintain, prosecute, enforce, litigate, file, assert or defend any Licensed
Trademarks set forth in Part 1 of Schedule A.
14. Survival. The representations and warranties of Sellers in this
Agreement, including the Schedules hereto, shall survive until the fifth
anniversary of the Closing Date.
15. Agreement Conventions. Exhibit B to the Master Agreement is
incorporated herein by reference.
IN WITNESS WHEREOF, the parties each have caused this Agreement to be duly
executed by a duly authorized officer and delivered in its name and on its
behalf, all as of the day and year first above written.
HARRIS CORPORATION
By: /s/ Ronald R. Spoehel
----------------------------
Name: Ronald R. Spoehel
Title: Vice President
HAL TECHNOLOGIES, INC.
By: /s/ Ronald R. Spoehel
----------------------------
Name: Ronald R. Spoehel
Title: Vice President
INTERSIL HOLDING CORPORATION
By: /s/ Gregory L. Williams
----------------------------
Name: Gregory L. Williams
Title: CEO
<PAGE>
Schedule A
Licensed Trademarks
Schedule B
Form of Undertaking
Schedule C
Licensee Corporate Identification Logos
EXHIBIT 2.19
SECONDARY TRADEMARK ASSIGNMENT AND LICENSE AGREEMENT
THIS SECONDARY TRADEMARK ASSIGNMENT AND LICENSE AGREEMENT ("Agreement") is
made as of the 13th day of August, 1999, between HARRIS CORPORATION, a Delaware
corporation ("Harris"), and INTERSIL HOLDING CORPORATION, a Delaware corporation
("Parent").
WHEREAS, Harris, Intersil Corporation, a Delaware corporation, and Parent
have entered into an Amended and Restated Master Transaction Agreement dated as
of June 2, 1999 (the "Master Agreement"), which provides for the sale by the
Sellers (as defined in Exhibit A to the Master Agreement) and the purchase by
Buyer of certain of the assets used in the operations of the Business (as
defined in Exhibit A to the Master Agreement);
WHEREAS, the trademarks set forth in the attached Schedule A ("Trademarks")
have been or are being used by the Business with respect to Products and are
owned by Harris; and
WHEREAS, Buyer, as a part of its acquisition of the Transferred Assets,
desires to acquire all right, title, and interest in and to Trademarks, and
Harris is prepared to grant the same.
NOW, THEREFORE, in consideration of the mutual promises contained herein
and in the Master Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. Definitions and Rules of Construction. Exhibit A to the Master Agreement
is incorporated herein by reference.
2. Representations and Warranties of Harris. Harris represents and warrants
to Buyer as hereinafter set forth:
(a) To Sellers' IP Knowledge, Schedule A lists all Trademarks owned by
Harris that have been or are being used with respect to Products other than
those covered by the Harris Trademark License Agreements.
(b) To Sellers' IP Knowledge, Harris has good and transferable title
to all of the Trademarks, except as set forth in Schedule A.
(c) To Sellers' IP Knowledge, no third party has asserted any claim
with respect to the Trademarks, or has any ownership interest in said
Trademarks, which would prevent use of the Trademarks by Buyer with respect
to Products after the Closing Date, except as set forth in Schedule A.
3. Trademark Transfers to Buyer. Harris hereby transfers and assigns to
Buyer all of its entire right, title and interest in the Trademarks, or a
trademark with which a Trademark may have a likelihood of confusion or actual
confusion, and all the goodwill associated therewith, subject to any
restrictions arising out of exceptions noted in Schedule A. Buyer hereby grants
<PAGE>
to Harris and its Subsidiaries a worldwide, non-exclusive, royalty-free license
to use the Trademarks on existing data sheets, manuals, marketing, promotional
and sales literature and other documentation for a period of one (1) year from
the Closing Date.
4. Post-Closing Recording of Transfers Concerning Trademarks. Promptly
after the Closing Date, Harris, at its sole expense, will deliver to Buyer
assignments and other documents in form and substance reasonably satisfactory to
Buyer and its counsel concerning Trademarks to allow Buyer or its designated
Subsidiaries, at their sole expense, to record the transfer of Trademarks in the
United States Patent and Trademark Office and in appropriate offices of foreign
jurisdictions.
5. Further Assurances Concerning Trademarks. At any time and from time to
time after the Closing Date, Harris will upon the request of Buyer perform,
execute, acknowledge, and deliver all such further assignments, transfers,
conveyances, powers of attorney and confirmatory documents as may be reasonably
required by Buyer to effect or evidence the ownership of, transfer to, and
possession by Buyer of the Trademarks in accordance with this Agreement.
6. Unlisted Trademarks. Harris agrees to supplement Schedule A if any
additional trademarks are identified in the future which should have been
included in Schedule A, and Harris agrees to take with respect to such later
identified Trademarks all action required under this Agreement.
7. Reassignment of Trademarks to Harris. Buyer agrees that, upon Harris'
reasonable request, Buyer shall reassign to Harris any trademarks that were
inadvertently included in Schedule A or that may have been inadvertently
transferred by Harris to Buyer.
8. Additional Agreements.
(a) All trademark application filing costs, all prosecution costs for
pending applications and all maintenance costs for Trademark registrations
included in the Trademarks shall be borne by Harris, or its Subsidiaries,
if due or incurred prior to the Closing Date, and shall be borne by Buyer,
or its Subsidiaries, from and after the Closing Date.
(b) No warranty or representation is hereby given or implied with
respect to the validity of any Trademark, nor that any Trademark is or can
be used free and clear of any claim of third parties. Moreover, it is
understood that no rights in or to the Trademarks are herein transferred or
assigned with respect to use relative to products in fields unrelated to
the field of Products.
(c) Except as otherwise expressly provided herein, no obligation is
hereby assumed by Buyer or Harris to maintain, prosecute, enforce or
litigate, file, assert, or defend any of the Trademarks.
(d) In the event that Buyer shall contemplate or commence any judicial
or administrative proceedings under any Trademarks, Harris shall cooperate
with Buyer in respect to such proceeding or contemplated proceeding.
Harris' cooperation shall include providing relevant information and
documents that are in Harris' possession, making personnel available on
reasonable request for interview by counsel, and providing deposition and
<PAGE>
trial testimony if reasonably deemed necessary or desirable. Buyer shall
reimburse Harris for all of Harris' expenses.
9. Survival. The representations and warranties of Sellers in this
Agreement, including the Schedules hereto, shall survive until the fifth
anniversary of the Closing Date.
10. Agreement Conventions. Exhibit B to the Master Agreement is
incorporated herein by reference.
IN WITNESS WHEREOF, the parties each have caused this Agreement to be duly
executed by a duly authorized officer and delivered in its name and on its
behalf, all as of the day and year first above written.
HARRIS CORPORATION
By: /s/ Ronald R. Spoehel
-----------------------
Name: Ronald R. Spoehel
Title: Vice President
INTERSIL CORPORATION
By: /s/ Gregory L. Williams
-------------------------
Name: Gregory L. Williams
Title: CEO
<PAGE>
Schedule A
Trademarks Owned by Transferred Subsidiaries
<PAGE>
Schedule A
Trademarks Owned by Harris Corporation
Registered Trademarks
---------------
---------------
---------------
EXHIBIT 2.20
PRISM(R) INTELLECTUAL PROPERTY ASSIGNMENT
FOR VALUE RECEIVED, Intersil Holding Corporation, a Delaware Corporation
having a place of business at 2401 Palm Bay Road NE, Palm Bay, Florida 32905
(hereinafter "Holding") hereby assigns, transfers and sets over to Intersil
Corporation, a Delaware Corporation having a place of business at 2401 Palm Bay
Road NE, Palm Bay, Florida 32905 (hereinafter "Operating"), its entire right
title and interest in and to all of the "Prism(R) Intellectual Property."
The term "Prism(R) Intellectual Property" as used herein means all the
intellectually property relating to "Prism(R) Products", including, but not
limited to, each and every one of the patents, patent applications, invention
disclosures, copyrights, trademarks and mask works listed in Appendix A hereto,
as well as all applications for patent and any Letters Patent which may be
granted therefor, in the United States of America and all foreign countries, and
in and to any and all continuations-in-part, continuations, divisions,
substitutes, reissues, extensions, renewals, and reexaminations thereof and all
other applications for Letters Patent relating thereto which have been or shall
be filed in the United States, its territorial possessions and/or any foreign
countries, and all rights, together with all priority rights, under any of the
international conventions, unions, agreements, acts, and treaties, including all
future conventions, unions, agreements, acts, and treaties. Prism(R)
Intellectual Property also includes any and all "Prism(R) Know-How, trade
secrets and software relating to Prism(R) Products.
The term "Prism(R) Products" as used herein means those integrated
circuits, which in combination with other integrated circuits comprise a
wireless local area network chip set compliant with the IEEE Standard
802.11-1997 (approved June 26, 1997) and 802.11b high rate standard, (commonly
referred to as the Prism(R) I or Prism(R) II chip set) including all
improvements and derivatives thereof.
The term "Prism(R) Know-How" as used herein means technical information
(including copyrighted information) including, but not limited to: engineering
documentation, design and development records, software (in both source and
object code forms), algorithms, flow charts, design information, drawings,
specifications, schematics, test data, bills of material, data sheets,
manufacturing documentation, manufacturing drawings, instructions,
specifications, procedures, methods, standards documentation, tooling and
Page 1 of 2
<PAGE>
fixture drawings, process specifications, process instructions, quality and
reliability documentation, quality plans, test plans, test records, and
regulatory documentation, that is related to those integrated circuits (also
referred to as a chip set) comprising a wireless local area network system
compliant with the IEEE Standard 802.11-1997 (approved June 26, 1997). The
system includes integrated circuits for both the client device and the media
access controller, which provides connectivity to the wired network.
Holding hereby agrees to deliver to Operating such additional assignments,
in form and substance reasonably satisfactory to Operating and its counsel,
which may be necessary or desirable to record, both in the United States and in
foreign jurisdictions, the transfer to Operating of the title to various items
comprising the Prism(R) Intellectual Property, including, but not necessarily
limited to, the patents, patent applications, invention disclosures, copyrights,
trademarks and maskworks relating to the Prism(R) Products.
Holding hereby further agrees to cooperate with Operating in every way
possible to effectuate the purpose of this assignment.
Holding hereby covenants that it has the right to convey the entire
interest herein assigned, and that it has not executed and will not execute, any
agreement in conflict herewith.
IN WITNESS WHEREOF,
INTERSIL HOLDING CORPORATION
Date: 8/13/99 By: /s/ Gregory L. Williams
------- -----------------------
Gregory L. Williams
CEO
ATTEST
[SEAL]
/s/ Daniel J. Heneghan Date: 8/13/99
- - ---------------------- -------
Daniel J. Heneghan
Secretary
Page 2 of 2
<PAGE>
LIST OF PRISM MASKWORKS
There are no registered Prism maskworks.
APPENDIX A
Page 1
<PAGE>
LIST OF PRISM GRANTED PATENTS
AND PENDING PATENT APPLICATIONS
<TABLE>
<CAPTION>
- - --------------------------------------------------------------------------------------------
Case # SubCase Div Ref# Country Status Application # Filing Date
- - --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
H6384 SE-1265-WR CN Published 98103623.6 09-Jan-1998
- - --------------------------------------------------------------------------------------------
H6384 SE-1265-WR EP Pending 97403105.6 19-Dec-1997
- - --------------------------------------------------------------------------------------------
H6384 SE-1265-WR JP Published 1608/98 07-Jan-1998
- - --------------------------------------------------------------------------------------------
H6384 SE-1265-WR KR Pending 98-397 09-Jan-1998
- - --------------------------------------------------------------------------------------------
H6384 SE-1265-WR TW Pending 87100211 09-Jan-1998
- - --------------------------------------------------------------------------------------------
H6384 SE-1265-WR US Pending 08/781736 10-Jan-1997
- - --------------------------------------------------------------------------------------------
H6385 SE-1266-WR CN Published 98104209.0 08-Jan-1998
- - --------------------------------------------------------------------------------------------
H6385 SE-1266-WR EP Pending 97402955.5 05-Dec-1997
- - --------------------------------------------------------------------------------------------
H6385 SE-1266-WR JP Published 1607/98 07-Jan-1998
- - --------------------------------------------------------------------------------------------
H6385 SE-1266-WR KR Pending 98-396 09-Jan-1998
- - --------------------------------------------------------------------------------------------
H6385 SE-1266-WR TW Pending 87100212 09-Jan-1998
- - --------------------------------------------------------------------------------------------
H6385 SE-1266-WR US Granted 08/781334 10-Jan-1997
- - --------------------------------------------------------------------------------------------
H6388 SE-1301-WR CN Published 98105495.1 16-Mar-1998
- - --------------------------------------------------------------------------------------------
H6388 SE-1301-WR EP Unfiled
- - --------------------------------------------------------------------------------------------
H6388 SE-1301-WR JP Published 67463/98 17-Mar-1998
- - --------------------------------------------------------------------------------------------
H6388 SE-1301-WR KR Pending 98-9022 17-Mar-1998
- - --------------------------------------------------------------------------------------------
H6388 SE-1301-WR TW Pending 87102737 25-Feb-1998
- - --------------------------------------------------------------------------------------------
H6388 SE-1301-WR US Pending 08/819846 17-Mar-1997
- - --------------------------------------------------------------------------------------------
H6491 SE-1322-WR JP Pending 11-509050 01-Oct-1998
- - --------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- - ------------------------------------------------------------------------------------------------
Case # Patent # Issue Date Title
- - ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
H6384 INTERPOLATOR USING A PLURALITY OF POLYNOMINAL
EQUATIONS AND ASSOCIATED METHODS
- - ------------------------------------------------------------------------------------------------
H6384 INTERPOLATOR USING A PLURALITY OF POLYNOMINAL
EQUATIONS AND ASSOCIATED METHODS
- - ------------------------------------------------------------------------------------------------
H6384 INTERPOLATOR USING A PLURALITY OF POLYNOMINAL
EQUATIONS AND ASSOCIATED METHODS
- - ------------------------------------------------------------------------------------------------
H6384 INTERPOLATOR USING A PLURALITY OF POLYNOMINAL
EQUATIONS AND ASSOCIATED METHODS
- - ------------------------------------------------------------------------------------------------
H6384 INTERPOLATOR USING A PLURALITY OF POLYNOMINAL
EQUATIONS AND ASSOCIATED METHODS
- - ------------------------------------------------------------------------------------------------
H6384 INTERPOLATOR USING A PLURALITY OF POLYNOMINAL
EQUATIONS AND ASSOCIATED METHODS
- - ------------------------------------------------------------------------------------------------
H6385 RE-SAMPLING CIRCUIT AND ASSOCIATED METHOD
- - ------------------------------------------------------------------------------------------------
H6385 RE-SAMPLING CIRCUIT AND ASSOCIATED METHOD
- - ------------------------------------------------------------------------------------------------
H6385 RE-SAMPLING CIRCUIT AND ASSOCIATED METHOD
- - ------------------------------------------------------------------------------------------------
H6385 RE-SAMPLING CIRCUIT AND ASSOCIATED METHOD
- - ------------------------------------------------------------------------------------------------
H6385 RE-SAMPLING CIRCUIT AND ASSOCIATED METHOD
- - ------------------------------------------------------------------------------------------------
H6385 5764113 09-Jun-1998 RE-SAMPLING CIRCUIT AND ASSOCIATED METHOD
- - ------------------------------------------------------------------------------------------------
H6388 HIGH DATA RATE SPREAD SPECTRUM TRANSCEIVER AND
ASSOCIATED METHODS
- - ------------------------------------------------------------------------------------------------
H6388 HIGH DATA RATE SPREAD SPECTRUM TRANSCEIVER AND
ASSOCIATED METHODS
- - ------------------------------------------------------------------------------------------------
H6388 HIGH DATA RATE SPREAD SPECTRUM TRANSCEIVER AND
ASSOCIATED METHODS
- - ------------------------------------------------------------------------------------------------
H6388 HIGH DATA RATE SPREAD SPECTRUM TRANSCEIVER AND
ASSOCIATED METHODS
- - ------------------------------------------------------------------------------------------------
H6388 HIGH DATA RATE SPREAD SPECTRUM TRANSCEIVER AND
ASSOCIATED METHODS
- - ------------------------------------------------------------------------------------------------
H6388 HIGH DATA RATE SPREAD SPECTRUM TRANSCEIVER AND
ASSOCIATED METHODS
- - ------------------------------------------------------------------------------------------------
H6491 FREQUENCY DEPENDENT RESISTIVE ELEMENT
- - ------------------------------------------------------------------------------------------------
</TABLE>
Page 2
<PAGE>
<TABLE>
<CAPTION>
- - --------------------------------------------------------------------------------------------
Case # SubCase Div Ref# Country Status Application # Filing Date
- - --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
H6491 SE-1322-WR US Granted 08/941704 01-Oct-1997
- - --------------------------------------------------------------------------------------------
H6491 SE-1322-WR WO Pending 98/20699 01-Oct-1998
- - --------------------------------------------------------------------------------------------
H6491 A SE-1322-WR US Pending 09/246815 09-Feb-1999
- - --------------------------------------------------------------------------------------------
H6588 SE-1407-WR US Pending 09/231608 14-Jan-1999
- - --------------------------------------------------------------------------------------------
H6588 SE-1407-WR WO Pending 99/00851 14-Jan-1999
- - --------------------------------------------------------------------------------------------
H6696 SE-1453-WR US Pending 09/163802 30-Sep-1998
- - --------------------------------------------------------------------------------------------
H6756 SE-1492-WR US Pending 09/231184 14-Jan-1999
- - --------------------------------------------------------------------------------------------
H6756 SE-1492-WR WO Pending 99/00852 15-Jan-1999
- - --------------------------------------------------------------------------------------------
H6759 SE-1479-WR US Pending 09/342583 29-Jun-1999
- - --------------------------------------------------------------------------------------------
H6762 SE-1482-WR US Pending 09/266386 10-Mar-1999
- - --------------------------------------------------------------------------------------------
H6766 SE-1500-WR US Pending 09/231228 14-Jan-1999
- - --------------------------------------------------------------------------------------------
H6766 SE-1500-WR WO Pending 99/00940 15-Jan-1999
- - --------------------------------------------------------------------------------------------
H6770 SE-1488-WR US Pending 09/261981 04-Mar-1999
- - --------------------------------------------------------------------------------------------
H6839 SE-1531-WR CA Pending 2154889 27-Jan-1994
- - --------------------------------------------------------------------------------------------
H6839 SE-1531-WR EP Pending 0 681 767 29-Apr-1998
- - --------------------------------------------------------------------------------------------
H6839 SE-1531-WR US Granted 11361 29-Jan-1993
- - --------------------------------------------------------------------------------------------
H6840 SE-1532-WR CA Pending 2154897 27-Jan-1994
- - --------------------------------------------------------------------------------------------
H6840 SE-1532-WR EP Pending 94907352.2 27-Jan-1994
- - --------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- - ------------------------------------------------------------------------------------------------
Case # Patent # Issue Date Title
- - ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
H6491 5883565 16-Mar-1999 FREQUENCY DEPENDENT RESISTIVE ELEMENT
- - ------------------------------------------------------------------------------------------------
H6491 FREQUENCY DEPENDENT RESISTIVE ELEMENT
- - ------------------------------------------------------------------------------------------------
H6491 FREQUENCY DEPENDENT RESISTIVE ELEMENT
- - ------------------------------------------------------------------------------------------------
H6588 METHOD OF PERFORMING ANTENNA DIVERSITY IN SPREAD
SPECTRUM IN WIRELESS LOCAL AREA NETWORK
- - ------------------------------------------------------------------------------------------------
H6588 METHOD OF PERFORMING ANTENNA DIVERSITY IN SPREAD
SPECTRUM IN WIRELESS LOCAL AREA NETWORK
- - ------------------------------------------------------------------------------------------------
H6696 PULSED BEACON-BASED INTERFERENCE REDUCTION MECHANISM
FOR WIRELESS COMMUNICATION NETWORKS
- - ------------------------------------------------------------------------------------------------
H6756 WIRELESS LOCAL AREA NETWORK SPREAD SPECTRUM
TRANSCEIVER WITH MULTIPATH MITIGATION
- - ------------------------------------------------------------------------------------------------
H6756 WIRELESS LOCAL AREA NETWORK SPREAD SPECTRUM
TRANSCEIVER WITH MULTIPATH MITIGATION
- - ------------------------------------------------------------------------------------------------
H6759 RAKE RECEIVER WITH EMBEDDED DECISION FEEDBACK EQUALIZER
- - ------------------------------------------------------------------------------------------------
H6762 SUCCESSIVE APPROXIMATION CORRECTION OF DC OFFSET IN
FILTER-BUFFER BASEBAND PATH OF DATA RADIO
- - ------------------------------------------------------------------------------------------------
H6766 SPREAD SPECTRUM TRANSCEIVER FOR USE IN WIRELESS LOCAL
AREA NETWORK AND HAVING MULTIPATH MITIGATION
- - ------------------------------------------------------------------------------------------------
H6766 SPREAD SPECTRUM TRANSCEIVER FOR USE IN WIRELESS LOCAL
AREA NETWORK AND HAVING MULTIPATH MITIGATION
- - ------------------------------------------------------------------------------------------------
H6770 FEEDBACK-CONTROLLED LOW VOLTAGE CURRENT SINK/SOURCE
- - ------------------------------------------------------------------------------------------------
H6839 TECHNIQUE FOR BRIDGING LOCAL AREA NETWORKS HAVING
NON-UNIQUE NODE ADDRESSES
- - ------------------------------------------------------------------------------------------------
H6839 TECHNIQUE FOR BRIDGING LOCAL AREA NETWORKS HAVING
NON-UNIQUE NODE ADDRESSES
- - ------------------------------------------------------------------------------------------------
H6839 5331634 19-Jul-1994 TECHNIQUE FOR BRIDGING LOCAL AREA NETWORKS HAVING
NON-UNIQUE NODE ADDRESSES
- - ------------------------------------------------------------------------------------------------
H6840 MEDIUM ACCESS CONTROL PROTOCOL FORE WIRELESS NETWORK
- - ------------------------------------------------------------------------------------------------
H6840 MEDIUM ACCESS CONTROL PROTOCOL FORE WIRELESS NETWORK
- - ------------------------------------------------------------------------------------------------
</TABLE>
Page 3
<PAGE>
<TABLE>
<CAPTION>
- - --------------------------------------------------------------------------------------------
Case # SubCase Div Ref# Country Status Application # Filing Date
- - --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
H6840 SE-1532-WR US Granted 11415 29-Jan-1993
- - --------------------------------------------------------------------------------------------
H6841 SE-1533-WR US Granted 551476 01-Nov-1995
- - --------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- - ------------------------------------------------------------------------------------------------
Case # Patent # Issue Date Title
- - ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
H6840 5371734 06-Dec-1994 MEDIUM ACCESS CONTROL PROTOCOL FORE WIRELESS NETWORK
- - ------------------------------------------------------------------------------------------------
H6841 5736973 07-Apr-1998 INTEGRATED BACKLIGHT DISPLAY SYSTEM FOR A PERSONAL
DIGITAL ASSISTANT
- - ------------------------------------------------------------------------------------------------
</TABLE>
Page 4
<PAGE>
LIST OF PRISM TRADEMARKS
<TABLE>
<CAPTION>
- - --------------------------------------------------------------------------------
Trademark Country Status Application #
- - --------------------------------------------------------------------------------
<S> <C> <C> <C>
PRISM (AND DESIGN) US Registered 75/088186
- - --------------------------------------------------------------------------------
PRISM US Registered 75/230863
- - --------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- - ----------------------------------------------------------------------------------------------
Trademark Filing Date Registration # Registration Date
- - ----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
PRISM (AND DESIGN) 12-Apr-96 2108394 28-Oct-97
- - ----------------------------------------------------------------------------------------------
PRISM 24-Jan-97 2197112 20-Oct-98
- - ----------------------------------------------------------------------------------------------
</TABLE>
Page 1
<PAGE>
LIST OF PRISM INVENTION DISCLOSURES
<TABLE>
<CAPTION>
- - -----------------------------------------------------------------------------------------------------------------------------------
ClientRef Date Received Title
- - -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
SE-1529-WR 6/1/99 TECHNIQUE FOR TRACKING DC OFFSET AND TIMING DRIFT IN A FILTERED RANDOM DATA STREAM
- - -----------------------------------------------------------------------------------------------------------------------------------
SE-1527-WR 5/14/99 TECHNIQUE FOR A REDUCED COMPLEXITY CORRELATION PROCESSOR HAVING TWO BIT RESOLUTION WITH INPUT DITHERING
- - -----------------------------------------------------------------------------------------------------------------------------------
SE-1526-WR 5/14/99 CORRELATOR PROCESSING FOR ROBUST ACQUISITION
- - -----------------------------------------------------------------------------------------------------------------------------------
SE-1520-WR 4/6/99 DUAL CONVERSION SYNTHESIZER
- - -----------------------------------------------------------------------------------------------------------------------------------
SE-1519-WR 4/6/99 GFSK MODULATOR/DEMODULATOR SCHEME
- - -----------------------------------------------------------------------------------------------------------------------------------
SE-1510-WR 2/26/99 A METHOD TO VARY THE GAIN OF A COMMON EMITTER
- - -----------------------------------------------------------------------------------------------------------------------------------
SE-1489-WR 12/15/98 AN ULTRA LINEAR HIGH FREQUENCY TRANSCONDUCTOR STRUCTURE
- - -----------------------------------------------------------------------------------------------------------------------------------
SE-1481-WR 11/16/98 BIASED-CORRECTED RAKE RECEIVER FOR DIRECT SEQUENCE SPREAD SPECTRUM WAVEFORM
- - -----------------------------------------------------------------------------------------------------------------------------------
SE-1480-WR 11/16/98 CHANNEL IMPULSE RESPONSE ESTIMATION USING BARKER CODES FOR WIRELESS COMMUNICATIONS
- - -----------------------------------------------------------------------------------------------------------------------------------
SE-1454-WR 8/26/98 PROGRAMMABLE FILTERING MECHANISM TO ALLOW BANDWIDTH OVERLAP BETWEEN DIRECT SEQUENCE SPREAD SPECTRUM
- - -----------------------------------------------------------------------------------------------------------------------------------
SE-1444-WR 6/26/98 METHOD AND APPARATUS FOR DETERMINING THE BETTER OF TWO ANTENNAS TO USE IN A HIGH MULTIPATH ENVIRONMENT
- - -----------------------------------------------------------------------------------------------------------------------------------
SE-1417-WR 2/17/98 TRANSCEIVER INCLUDING REACTIVE TERMINATION FOR ENHANCED CROSS-MODULATION PERFORMANCE AND RELATED METHODS
- - -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Page 1
EXHIBIT 2.21
TAX SHARING AGREEMENT
AGREEMENT made as of August 13, 1999, by and among Intersil Holding
Corporation, a Delaware corporation ("Holding"), Intersil Corporation, a
Delaware corporation, and Choice Microsystems, Inc., a Kansas corporation (each
corporation other than Holding, a "Subsidiary"; and the Subsidiaries together,
the "Subsidiaries").
WHEREAS, Holding and the Subsidiaries join in the filing of a consolidated
federal income tax return for a group of affiliated companies of which Holding
is the common parent (the "Consolidated Group"); and
WHEREAS, the Consolidated Group wishes to establish a policy for the
sharing of federal income and certain state taxes; and
WHEREAS, the Consolidated Group wishes to establish procedures for making
payments or remitting funds due under this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants contained herein
and intending to be legally bound, each of the members of the Consolidated Group
agrees as follows:
I. SHARING OF CONSOLIDATED FEDERAL INCOME TAX
A. Liability. For each taxable period in which a Subsidiary is a member of
the Consolidated Group, such Subsidiary agrees to pay to Holding, for each
taxable year during the term of this Agreement, an amount equal to the greater
of:
1. the Separate Taxable Income (as defined below) of such Subsidiary
(but not less than 0) multiplied by the effective income tax rate under Section
11 of the Internal Revenue Code of 1986, as amended (the "Code"), or any
successor provision, applicable to the Separate Taxable Income of such
Subsidiary on a stand-alone basis, or
2. the Alternative Minimum Tax Liability (as defined below) of such
Subsidiary.
B. Loss Carryback. Holding agrees to pay a Subsidiary (or credit a
Subsidiary against other payments due from such Subsidiary hereunder) without
interest an amount equal to the reduction of such Subsidiary's payment
obligation for a taxable year under paragraph I. A. that results from the
application of a loss carryback to such taxable year in reduction of such
Subsidiary's Separate Taxable Income for such year.
C. Separate Taxable Income. For purposes of this Agreement, the Separate
Taxable Income of a Subsidiary for a taxable year shall be its taxable income
for such year determined as
<PAGE>
if such Subsidiary were not a member of the Consolidated Group and after
applying any loss carryback or carryforward to that year as provided in
paragraph I.F.
D. Alternative Minimum Tax Liability. For purposes of this Agreement, the
Alternative Minimum Tax Liability of a Subsidiary for a taxable year shall equal
the sum of the amount of tax imposed by Section 55(a) of the Code, or any
successor provision, and such Subsidiary's "regular tax" liability, as that term
is used in Section 55(a) of the Code. All determinations under this paragraph
I.D. shall be made as if such Subsidiary were not a member of the Consolidated
Group.
E. Subsequent Adjustments. In the event that the Separate Taxable Income or
Alternative Minimum Tax Liability of a Subsidiary is adjusted by reason of an
amended return, claim for refund, or examination by the Internal Revenue
Service, the amount due from such Subsidiary under paragraph I.A. shall be
recomputed using the adjusted Separate Taxable Income or Alternative Minimum Tax
Liability. Each Subsidiary agrees to pay to Holding any additional amount owed
including statutory interest at the rate applicable to underpayments of the
Consolidated Group, and Holding agrees to pay to each Subsidiary any overpayment
made by such Subsidiary including statutory interest at the rate applicable to
overpayments of the Consolidated Group.
F. Loss Year. In the event that a Subsidiary's Separate Taxable Income for
a taxable year is negative (the "Loss"), the Loss shall be carried back and
carried forward to prior and subsequent taxable years in the manner provided
under and subject to the limits contained in Section 172(b) of the Code, or any
successor provision (as in effect in the year in which the Loss arises). Such
loss carrybacks or carryforwards shall reduce, dollar for dollar, such
Subsidiary's Separate Taxable Income in the taxable year to which the Loss is
carried back or forward.
II. PAYMENT PROCEDURE
A. Current Year Tax Liability of Subsidiary. Payments to be made by a
Subsidiary to Holding pursuant to paragraph I.A. with respect to any taxable
year shall be made in installments, as set forth in this paragraph.
1. Quarterly Installments. Within two (2) business days before the date
each quarterly payment of the Consolidated Group's estimated tax is due, each
Subsidiary will pay to Holding an amount equal to the greater of (i) the product
of such Subsidiary's estimated Separate Taxable Income for the quarter (but not
less than 0) multiplied by the highest marginal corporate tax rate provided in
Section 11 of the Code, or successor provision, or (ii) one-fourth of such
Subsidiary's estimated Alternative Minimum Tax Liability for the taxable year.
2. Final Installment. Within five (5) business days after a Subsidiary
has received from Holding a final calculation of such Subsidiary's liability
under paragraph I.A., derived from the Consolidated Group's federal income tax
return for the relevant taxable year, such Subsidiary will pay to Holding the
excess, if any, of the Subsidiary's liability pursuant to
2
<PAGE>
paragraph I.A. over the sum of all payments with respect to such year made by
such Subsidiary pursuant to paragraph II.A.1. If the sum of the payments with
respect to such year made by such Subsidiary pursuant to paragraph II.A.1.
exceeds such Subsidiary's liability pursuant to paragraph I.A., then Holding
shall refund the difference to such Subsidiary within five (5) days or credit
such amount against any payment owned by such Subsidiary under paragraph II.A.1.
for a later taxable year.
B. Payment of Subsequent Adjustments. Payments to be made by a
Subsidiary to Holding pursuant to paragraph I.E. shall be made within thirty
(30) days after such Subsidiary has received from Holding a copy of the filed
amended return or an agreement in writing with the Internal Revenue Service
reflecting adjustments. Payments made by Holding to a Subsidiary pursuant to
paragraphs I.B. or I.E. shall be made (i) in the case of paragraph I.B. only,
within thirty (30) days after the filing of the consolidated return for the year
that includes a Loss that is carried back pursuant to paragraph I.F. and (ii) in
the case of paragraph I.E. only, within thirty (30) days after receipt by
Holding of a refund, or offset against adjustments of the Consolidated Group,
resulting from the filing of a return, an amended return, Form 1139 Corporation
Application for Tentative Refund, or agreement in writing with the Internal
Revenue Service reflecting adjustments.
III. STATE TAXES
A. To the extent appropriate, rules similar to the provisions of Sections I
and II of this Agreement shall be applied to the payment of state franchise or
income tax liabilities to which the Subsidiaries and Holding, and, if applicable
state law provides, Harris Semiconductor, LLC, Harris Semiconductor (Ohio), LLC
and Harris Semiconductor (Pennsylvania), LLC, are subject and which are required
to be determined on a unitary, combined or consolidated basis. In applying the
principles of Section I, the applicable state rules and limits on the use of
loss carrybacks and loss carryovers shall govern.
IV. TERM
A. This Agreement shall be effective as of the date first set forth above
and shall continue thereafter until the parties hereto terminate this Agreement
by mutual consent.
V. OTHER MATTERS
A. Method of Allocation. This Agreement shall have no effect on, and shall
not be affected by, the method of allocation of tax liability among members of
the Consolidated Group applicable to the Consolidated Group pursuant to Section
1552 of the Code.
B. Notices. All notices and other communications required or permitted
hereunder shall be in writing and shall be given by hand delivery, facsimile,
commercial courier service with guaranteed one-day delivery, or prepaid first
class mail to the following addresses:
3
<PAGE>
If to Holding:
Intersil Holding Corporation
2401 Palm Bay Road NE
Building 53 M/S 53/198
PalmBay, FL 32905
Attention: General Counsel
Fax: (407) 729-5392
If to Intersil Corporation:
Intersil Corporation
2401 Palm Bay Road NE
Building 53 M/S 53/198
PalmBay, FL 32905
Attention: General Counsel
Fax: (407) 729-5392
If to Choice Microsystems, Inc.
Choice Microsystems, Inc.
4242 Medical Drive, Suite 3100
San Antonio, TX 78229-5642
Attention: Bruce Hughes
Fax: (210) 614-8192
Phone: (210) 614-4096
C. Successors. This Agreement shall be binding on and inure to the benefit
of any successor, by merger, acquisition of assets or otherwise, to any of the
parties hereto (including but not limited to any successor of Holding or any
Subsidiary succeeding to their tax attributes under Section 381 of the Code) to
the same extent as if the successor had been an original party to this
Agreement.
D. Amendments. This Agreement shall not be modified, amended, supplemented
or terminated except in a writing executed by all parties hereto.
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E. Governing Law. This Agreement shall be governed by and interpreted in
accordance with the laws of the state of Delaware.
Intersil Holding Corporation
By: /s/ Daniel J. Heneghan
------------------------
Daniel J. Heneghan
Intersil Corporation
By: /s/ Daniel J. Heneghan
------------------------
Daniel J. Heneghan
Choice Microsystems, Inc.
By: /s/ Gregory L. Williams
------------------------
Gregory L. Williams
EXHIBIT 2.22
ROYALTY AGREEMENT
This Royalty Agreement (hereinafter "Agreement") is made as of the 13th day of
August 1999 (hereinafter the "Effective Date") by and between Harris
Corporation, a corporation duly organized under the laws of the State of
Delaware and having its principal place of business at 1025 West Nasa Boulevard;
Melbourne, Florida (hereinafter "Harris"), and Intersil Corporation, a
corporation duly organized under the laws of the State of Delaware and having
its principal place of business at 2401 Palm Bay Road NE.; Palm Bay, Florida
(hereinafter "Intersil").
RECITALS
WHEREAS, Harris, Intersil Corporation and Intersil Holding Corporation (Intersil
Corporation and Intersil Holding Corporation, collectively hereinafter "Buyer")
have entered into that certain Amended and Restated Master Transaction Agreement
dated as of June 2, 1999 (hereinafter "Master Agreement") that provides for the
sale by Sellers (as defined in Exhibit A to the Master Agreement) and the
purchase by Buyer of certain of the assets used in the operation of the Business
(as defined in Exhibit A to the Master Agreement);
WHEREAS, pursuant to Section 11.13 of the Master Agreement, Harris is to receive
a royalty based on the sale of certain products by Intersil;
NOW THEREFORE, in consideration of the mutual promises and covenants set forth
herein and in the Master Agreement, the parties agree as follows:
ARTICLE 1 REFERENCE TO THE MASTER AGREEMENT
The Definitions and Rules of Construction as set forth in Exhibit A to the
Master Agreement and the Agreement Conventions as set forth in Exhibit B to the
Master Agreement are incorporated herein by reference.
ARTICLE 2 DEFINITIONS
2.1 "International Territory" shall mean all countries and territories of the
world other than the United States of America, its possessions and territories.
2.2 "Prism(R) Product" means those integrated circuits, which in combination
with other integrated circuits comprise a wireless local area network chip set
compliant with the IEEE Standard 802.11-1997 (approved June 26, 1997) and
802.11b high rate standard (commonly referred to as the Prism(R) I or Prism(R)
II chip set) sold, leased, bartered, or exchanged by Intersil as of the
Effective Date including all non-substantial improvements and derivatives
thereof. The specific integrated circuits that comprise the Prism(R) I and
Prism(R) II chip sets are set forth in Exhibit A.
Any wireless local area network product designed or developed after the
Effective Date will not be considered an improvement to the Prism(R) Product and
will not be covered by this Agreement
<PAGE>
if; (a) it involves a substantial redesign of the Prism(R) Product thereby
providing substantial new functions or performing applications not contemplated
in the original design of the Prism(R) Product; or (b) it operates in a
substantially different manner or for a substantially different purpose than the
original Prism(R) Product.
No royalty payments will be due on: (a) product samples, (b) evaluation boards,
(c) products designed by and purchased from a third party and subsequently
resold by Intersil as a component of a chip set, (d) non-recurring engineering
funds received from a third party in return for the design, development or
modification of a product, and (e) the licensing of technology or software
related to the Prism(R) Products.
2.3 "Territory" shall mean all the countries and territories of the world.
2.4 "Total Sales Price" means Intersil's gross invoice price for the Prism(R)
Product packed for shipment without any deductions, except for the following
items, to the extent they are paid or allowed by Intersil:
(a) sales or turnover taxes on sales invoices;
(b) transportation charges and insurance on shipments to customers;
(c) trade or quantity discounts (but not cash discounts allowed to
customers and not agents' commissions); and
(d) credits allowed for Prism(R) Products returned or not accepted by
customers.
(i) If a Prism(R) Product is included as a component of another product
sold by Intersil, then Total Sales Price means the Total Sales Price of
such Prism(R) Product, as if separately sold in an arm's length transaction
or the most nearly comparable Prism(R) Product that has been or would be
sold in the ordinary course of business.
(ii) When Products are sold by Intersil to any Affiliate (as that term is
defined by the Securities Act of 1933, as amended), or when Prism(R)
Products are bartered or exchanged for goods or services, then Total Sales
Price shall be the Total Sales Price at which comparable Prism(R) Products
have been or would be sold in the ordinary course of business.
(iii) In the event that two or more integrated circuits are combined into a
single integrated circuit package ("Combined Product"), and sold (or
leased, bartered, or exchanged) as a component of a Prism(R) Product, then
the amount of royalty payable on the combined product will be
proportionally reduced in five (5%) percent increments to correspond to the
die area of the royalty-bearing integrated circuit die as a percentage of
the total combined die area.
2.5 "United States Territory" shall mean the United States of America, its
possessions and territories.
<PAGE>
ARTICLE 3 ROYALTIES
Intersil shall pay to Harris a royalty of 2% of the Total Sales Price for each
Prism(R) Product sold, leased, bartered, or exchanged by Intersil from the
Closing Date (as defined in the Master Agreement) until the fifth (5th)
anniversary of the Closing Date. No royalty shall be due Harris for any Prism(R)
Product sold, leased, bartered, or exchanged prior to or following this period.
A Prism(R) Product shall be considered sold on the date of shipment or the date
of an invoice, whichever is earlier. A Prism Product shall be considered
bartered or exchanged on the date of shipment. Only one royalty shall be due for
each Prism(R) Product. This royalty obligation shall continue upon sale of
substantially all of the Prism(R) Product business to a third party or upon an
Initial Public Offering of Intersil.
ARTICLE 4 LIMITATION OF DAMAGES
4.1 Limitation of Liability
HARRIS SHALL NOT BE LIABLE TO INTERSIL OR ANY THIRD PARTY, WHETHER IN CONTRACT,
TORT (INCLUDING NEGLIGENCE AND STRICT LIABILITY) OR OTHERWISE, FOR ANY INDIRECT,
SPECIAL OR CONSEQUENTIAL DAMAGES OF ANY KIND, INCLUDING, BUT NOT LIMITED TO,
LOSS OF ANTICIPATED PROFITS, EVEN IF HARRIS HAS BEEN ADVISED OF THE POSSIBILITY
OF SUCH POTENTIAL LOSS OR DAMAGE.
4.2 Maximum Liability
Harris' maximum liability for damages rising out of this Agreement shall be
limited to the payments made by Intersil hereunder. In the event of conflict
between this Paragraph 4.2 and any other provisions of this Agreement, than this
Paragraph 4.2 shall govern. This Article 4 and all other paragraphs hereunder
providing Harris with protection against liability shall survive the expiration,
termination, or cancellation of this Agreement.
ARTICLE 5 TERM
This Agreement shall take effect as of the Effective Date and shall continue
until all royalties have been paid in accord with Article 3.
ARTICLE 6 SALES RECORDS
6.1 Records
Intersil shall keep, and shall cause Intersil Affiliates to keep, full, clear
and accurate records with respect to Prism(R) Product sales sufficient to permit
determination of the royalties due hereunder.
<PAGE>
6.2 Quarterly Reports
Within forty-five (45) days after the end of each calendar quarter ending on
March 31st, June 30th, September 30th and December 31st, commencing with the
quarter in which the Effective Date occurs and continuing thereafter until all
royalties payable hereunder shall have been reported and paid, Intersil shall
furnish to Harris a statement, in a form similar to that of Exhibit B, showing
all said Prism(R) Product that was sold, leased, bartered, or exchanged during
such quarter, and the amount of royalties payable thereon. If no Prism(R)
Product has been sold, leased, bartered, or exchanged that shall be shown on
such statement. If royalties are due as a result of calculations under Paragraph
2.4 (i)-(iii), then Intersil shall provide the method of calculation, along with
reasonable supporting documentation, for the royalty due on the Combined
Product.
6.3 Audit of Records
Harris shall have the right to audit the Intersil books and records related to
Prism(R) Products at Harris' expense, by an independent auditor. Said audit
shall be conducted during normal business hours with 5 days written advance
notice provided by Harris. The designated auditor shall retain in confidence the
information in the books of account and shall report to Harris only the accuracy
or inaccuracy of the reports rendered to Harris. If such audit discloses that
the amounts paid to Harris were understated by more than 5% in any quarter, then
Intersil shall reimburse Harris for the cost of the audit and pay the amount of
such understated royalties.
6.4 Late Payments
For any late payment, Intersil shall pay Harris interest at the prime rate. The
prime rate will be as established by Chemical Bank, N.A. on the date the payment
was due.
ARTICLE 7 PAYMENT OF ROYALTY
7.1 Intersil shall pay all the royalty due under this Agreement for the sales,
leases, barters, or exchanges of Prism(R) Product for each calendar quarter
within forty-five (45) days after the end of such calendar quarter.
7.2 All royalty due hereunder shall be paid in United States funds. For purposes
of computing the Total Sales Price and royalty on sales in the International
Territory, the Total Sales Price of the Prism(R) Product bearing royalty
hereunder shall first be determined in the local currency of the country in
which sold and then converted into its equivalent in United States funds at the
bank buying rate for such local currency, as published by Chemical Bank, N.A.
for the last business day of each accounting period.
7.3 Any sum required under the laws of any governmental authority to be withheld
by Intersil, its Subsidiaries or Licensees from payment for the account of
Harris shall be promptly paid by Intersil for and on behalf of Harris to the
appropriate tax or other governmental authority and Intersil shall furnish
Harris with copies of official tax receipts or other appropriate evidence
<PAGE>
issued by the appropriate tax or other governmental authorities to enable Harris
to support a claim for tax or other credit or refund in respect of any sum so
withheld.
ARTICLE 9 APPLICABLE LAW
This Agreement shall be governed by and interpreted under the laws of the
State of New York and the New York courts, without regard to choice of laws.
ARTICLE 10 ENTIRE UNDERSTANDING
This Agreement sets forth the entire understanding between Seller and
Intersil pertaining to its subject matter and supersedes and replaces all prior
oral or written agreements between Seller and Intersil pertaining to such
subject matter.
ARTICLE 11 AMENDMENT
This Agreement may not be amended, supplemented or otherwise modified
except by an instrument in writing signed by both parties.
ARTICLE 12 DISPUTE RESOLUTION AND ARBITRATION
Subject only to Section 13.7 of the Master Agreement, in the event that any
dispute arises between the parties pertaining to this subject matter of this
Agreement, and the parties, through the senior management of Harris and
Intersil, are unable to resolve such dispute within a reasonable time through
negotiations and mediation efforts by senior executives of both parties, such
dispute shall be resolved as set forth in Section 6(a-j) of Exhibit B of the
Master Agreement, which Section 6(a-j) is incorporated herein by reference.
<PAGE>
ARTICLE 13 NOTICES
Any notice required or permitted hereunder shall be given in writing by
personal delivery or by registered or certified mail, return receipt requested,
postage prepaid, and, if sent by mail, shall be effective upon delivery to the
following addresses
Corporate Secretary
Harris Corporation
1025 West Nasa Boulevard
Melbourne, Florida 32919
General Counsel
Intersil Corporation
2401 Palm Bay Road NE
Palm Bay, Florida 32905
Agreed to:
HARRIS CORPORATION INTERSIL CORPORATION
Signature: /s/ Ronald R. Spoehel Signature: /s/ Gregory L. Williams
--------------------- -----------------------
Name: Ronald R. Spoehel Name: Gregory L. Williams
-------------------------- ----------------------------
Title: Vice President Title: CEO
------------------------- ---------------------------
Date: 8/13/99 Date: 8/13/99
-------------------------- ----------------------------
EXHIBIT 2.23
OPTION AGREEMENT
This OPTION AGREEMENT (this "Agreement"), dated as of the 13th day of
August, 1999, by and between INTERSIL CORPORATION, a corporation organized under
the laws of Delaware ("INTERSIL"), and INTERSIL PRISM, LLC, a limited liability
company organized under the laws of the State of Delaware (the "OPTIONEE").
BACKGROUND
INTERSIL is acquiring from Harris (as defined below) and will own a certain
business that is engaged in the definition, design, development, manufacture and
sale of semiconductor solutions for the high-speed wireless local area
networking market (the "Prism Business"). OPTIONEE desires to obtain an option
from INTERSIL to acquire certain assets relating to the Prism Business. INTERSIL
desires to grant to OPTIONEE an option to acquire the Transferred Prism Assets
(as defined below)and assume the Assumed Liabilities in connection therewith, on
the terms and conditions set forth below.
NOW, THEREFORE, in consideration of the respective covenants,
representations, warranties and agreements set forth herein, the parties hereto
agree as follows:
ARTICLE I
DEFINITIONS
1.1 "Affiliate" means, as to any Person any other Person that directly, or
indirectly, through one or more intermediaries, is in control of, is controlled
by or is under common control with such Person. For purposes of this definition,
"control" of a Person and, with correlative meanings, the terms "controlled by"
and "under common control with" means, directly or indirectly, the power to
direct or cause the direction of the management or policies of a Person, whether
through the ownership of voting securities, by contract, resolution, regulation
or otherwise.
1.2 "Assumed Liabilities" shall mean the liabilities of the Prism Business
relating to the Transferred Prism Assets (to be identified by OPTIONEE) that
OPTIONEE will assume at the closing of the Definitive Agreement.
1.3 "Base Price" shall mean that portion of the purchase price paid under
the MTA (as hereinafter defined) allocable to the Transferred Prism Assets,
subject to written verification from INTERSIL within thirty (30) calendar days
after completion of final verification pursuant to Section 3.3 (and any other
relevant provision) of the MTA of the Transferred Prism Assets as of the
Effective Date plus the amount of capital expenditures and research and
development expenses incurred by INTERSIL that are primarily related to the
Transferred Prism Assets incurred by INTERSIL from and after the Effective Date
until the closing of the Definitive Agreement.
<PAGE>
1.4 "Best Efforts" shall mean that the obligated party makes a diligent,
commercially reasonable and good faith effort to accomplish the applicable
objective. Such obligation, however, shall 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 that 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 not an
indication that the obligated party did not in fact utilize its Best Efforts in
attempting to accomplish the objective.
1.5 "Business Day" shall mean a day which is not a Saturday, Sunday or a
statutory or civic holiday in the State of New York or any other day on which
the principal offices of either INTERSIL or OPTIONEE are closed or become closed
prior to 2:00 p.m. local time whether in accordance with established company
policy or as a result of unanticipated events including adverse weather
conditions.
1.6 "Definitive Agreement" shall have the meaning set forth in Section 3.1.
1.7 "Effective Date" shall mean the date first above written.
1.8 "Excluded Assets" shall mean the types of assets described on SCHEDULE
2 to this Agreement.
1.9 "Extension Payment" shall have the meaning set forth in Section 2.2 of
this Agreement.
1.10 "Harris" shall mean Harris Corporation, a Delaware corporation and a
party to the MTA.
1.11 "Holding" shall mean Intersil Holding Corporation, formerly known as
HSS Holding Corporation, a Delaware Corporation of which INTERSIL is a
wholly-owned subsidiary.
1.12 "HSR Act" shall have the meaning set forth in Section 2.2 of this
Agreement.
1.13 "Indenture" shall have the meaning set forth in Section 3.1(b) of this
Agreement.
1.14 "Improvement" shall mean, with respect to a product or technology, all
discoveries and modifications relating thereto, whether or not patentable,
including, without limitation, any enhancements in the formulation, ingredients,
preparation, presentation, means of delivery or packaging thereof.
1.15 "Licensed Technology" shall mean the manifestation in tangible or
physical form of all types of technical information and data including, but not
limited to, inventions, works of authorship, know-how; product definitions and
designs; research and development, engineering, manufacturing, assembly,
process, test, quality control, procurement, and service specifications
2
<PAGE>
procedures, standards, and reports, maskworks; blueprints; drawings; material
specifications, procedures, standards and lists; catalogs; technical information
and data relating to marketing and sales activities; and formulae, in each case
that is owned by or licensed to INTERSIL or any of its Affiliates and is
primarily related to the Prism Business or the Prism Assets.
1.16 "INTERSIL" shall mean Intersil Corporation.
1.17 "Mask" or "Mask Set" shall mean an individual photolithographic plate,
with a corresponding pelllicle, capable or being used to manufacture one level
or layer of an integrated circuit wafer or set thereof capable of being used to
manufacture an integrated circuit wafer.
1.18 "Option" shall have the meaning set forth in Section 2.1 of this
Agreement.
1.19 "Option Payment" shall have the meaning set forth in Section 2.1 of
this Agreement.
1.20 "OPTIONEE" has the meaning set forth in the introductory paragraph of
this Agreement.
1.21 "Option Period" shall mean the eighteen (18) month period from the
Effective Date, as the same may be extended pursuant to Section 2.2 of this
Agreement.
1.22 "Person" shall mean an individual, sole proprietorship, partnership,
limited partnership, limited liability partnership, corporation, limited
liability company, business trust, joint stock company, trust, unincorporated
association, joint venture or other similar entity or organization, including,
without limitation, a government or political subdivision, department or agency
of a government.
1.23 "Preferred Stock" shall mean Holding's 12% Cumulative Compounding
Preferred Stock, stated value $1,000.00 per share.
1.24 "Prism Business" shall have the meaning set forth in the Background
paragraph to this Agreement.
1.25 "Prism Assumed Contracts" shall mean, collectively, all obligations
under any legally binding agreement, contract, contractual rights, commitments,
purchase orders, licenses, leases, warranty rights, sales orders and other
instruments or arrangements (other than Excluded Assets) (a) by which the
Transferred Prism Assets are bound as of the Effective Date in relation to the
conduct of the Prism Business, and (b) that arise from the conduct of the Prism
Business between the Effective Date and the closing of the Definitive Agreement
to the extent that such obligations primarily relate to the Transferred Prism
Assets or the Assumed Liabilities.
1.26 "Prism Intellectual Property" shall mean the Prism Patents, any and
all United States and foreign any and all United States and foreign copyright
registrations and applications therefor and unregistered copyrights, any and all
United States and foreign maskwork registrations and applications therefor
covering Masks or Mask Sets used in the manufacture of the Products, in any
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<PAGE>
way relating, directly or indirectly, to the Prism Business any and all
developments related thereto or arising in connection therewith.
1.27 "Prism Inventory" shall mean raw materials, work in process, finished
goods, packaging materials, labels and supplies associated with or related to
the Products or the Transferred Prism Assets.
1.28 "Prism Patents" shall mean any and all issued patents and patent
applications, including United States and foreign patents and patent
applications therefor, petty patents, patents of importation, divisions,
reissues, continuations, continuations-in-part, renewals, and extensions of any
of the foregoing; certificates of addition and utility models and utility model
applications, in which INTERSIL or any of its Affiliates has an ownership or
licensable interest as of the Effective Date or acquires such interest during
the term of this Agreement, and which relate in any manner to the Prism Assets
or the Prism Business. A list of the Prism Patents as of the Effective Date is
attached as SCHEDULE 3 hereto.
1.29 "Prism Subsidiary" shall mean Choice Microsystems, Inc., a Kansas
corporation, of which INTERSIL owns all of the capital stock, including any
successor thereto.
1.30 "Prism Subsidiary Stock" shall mean all of the capital stock of the
Prism Subsidiary.
1.31 "Product" shall mean any and all products of the Prism Business
relating to the Transferred Prism Assets produced as of the Effective Date or
after the Effective Date and on or prior to the closing of the Definitive
Agreement by INTERSIL or its Affiliates, (including the Prism Subsidiary)
including without limitation, discreet semiconductor devices, integrated
circuits and hybrid products, that utilize or embody any of the Licensed
Technology, whether or not in combination with other technologies.
1.32 "Purchase Price" shall have the meaning set forth in Section 4.3 of
this Agreement.
1.33 "Senior Sub Notes" shall have the meaning set forth in Section 3.1(b)
of this Agreement.
1.34 "Senior Sub Notes Consent" shall have the meaning set forth in Section
3.1(b) of this Agreement.
1.35 "Subsidiary" shall mean and refers to any corporation, association or
business entity of which more than fifty percent (50%) of the issued and
outstanding shares of capital stock or equity interest is owned or controlled,
directly or indirectly, by INTERSIL and in which INTERSIL has the power,
directly or indirectly, to elect a majority of the directors.
1.36 "Transferred Prism Assets" shall mean the types of assets described on
SCHEDULE 1 hereto, including without limitation, the Prism Intellectual
Property, the Licensed Technology and any Improvements thereto arising during
the term of this Agreement, the Subsidiary Stock of Prism Subsidiary, the Prism
Inventory, Prism Assumed Contracts, and the Products that as of the
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<PAGE>
Effective Date are principally located at INTERSIL's facilities in Palm Bay,
Florida, but shall not include the Excluded Assets, of the types set forth in
SCHEDULE 2.
ARTICLE II
OPTION GRANT
2.1 Grant of Option. In consideration of the payment made by OPTIONEE
pursuant to Section 5.1 hereof, INTERSIL hereby grants to OPTIONEE an exclusive,
irrevocable option to purchase and acquire, during the Option Period, the
Transferred Prism Assets, as OPTIONEE may determine, in its sole discretion (the
"Option").
2.2 Extension of the Option Period. OPTIONEE may extend the Option Period,
in its sole discretion, for an additional eighteen (18) months, by written
notice to INTERSIL; provided, however, that the Option Period shall be extended
automatically, without payment of any fee, including the Extension Payment, for
periods equal to (a) the duration of any delays in the completion by INTERSIL of
its obligations under Section 3.1(b), and (b) the duration of any waiting period
under the Hart-Scott-Rodino Antitrust Improvement Act of 1976, as amended (the
"HSR Act"), that may be applicable to the transactions contemplated in this
Agreement or any other approval required or necessary from any Federal, State,
local or foreign governmental authority as described in Section 5.4 hereof.
2.3 Disclosures by INTERSIL. During the Option Period, INTERSIL agrees not
to (a) provide to any third party any non-public information relating to the
Prism Assets or the Prism Business, (b) license or permit any third party to use
any Licensed Technology, or (c) solicit or accept any offer from any third party
to negotiate or otherwise discuss the possible acquisition, directly or
indirectly, by such third party of the Prism business.
2.4 Ownership of Intellectual Property. As between the parties hereto,
INTERSIL shall own all right, title and interest in and to the Licensed
Technology and the Prism Intellectual Property unless and until the closing of
the Definitive Agreement.
ARTICLE III
EXERCISE; DEFINITIVE AGREEMENT
3.1 Exercise of the Option.
(a) During the Option Period or any extension thereof, OPTIONEE may
exercise the Option at any time by providing written notice thereof to INTERSIL.
(b) Upon receipt of OPTIONEE's notice of exercise, INTERSIL shall (i)
promptly, and in no event later than twenty (20) Business Days thereafter,
commence solicitation of the necessary and appropriate consents, waivers and
approvals to the sale of the Transferred Prism Assets, as contemplated herein
from (X) the banks under the Credit Facility (as hereinafter defined), (Y) the
holders of INTERSIL's 13 1/4% Senior Subordinated Notes due 2009 (the "Senior
Sub Notes") in accordance with the Indenture dated as of August 13, 1999 (the
"Indenture"), and
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(Z) any Federal, state, local or foreign governmental authority or third parties
under any contracts, where the failure to do so would have, in the aggregate, a
material adverse effect on INTERSIL; and (ii) use its Best Efforts to obtain the
requisite consents, waivers and/or approvals from (X) the banks under the Credit
Facility (the "Bank Consent"), (Y) the holders of the Senior Sub Notes as may be
required under the terms of the Indenture (the "Senior Sub Notes Consent"), and
(Z) any Federal, state, local or foreign governmental authority or third parties
under any contracts ( the "Other Material Consents" and together with the Bank
Consent and the Senior Sub Notes Consent, collectively the "Consents"), in order
to permit the sale of the Transferred Prism Assets to OPTIONEE to be consummated
as contemplated herein.
3.2 Definitive Agreement.
(a) Immediately following OPTIONEE'S notification of exercise of the
Option, the parties shall negotiate in good faith a definitive agreement for the
acquisition of the Transferred Prism Assets and the assumption of the Assumed
Liabilities by OPTIONEE from INTERSIL, which agreement shall include, without
limitation the terms, conditions, provisions, representations, warranties,
covenants, agreements and indemnities customarily found in such agreements (the
"Definitive Agreement"), as the same may be modified as contemplated in Section
3.2(d) hereof. INTERSIL shall deliver to OPTIONEE such other instruments of
assignment, conveyance or transfer or other documents of further assurance as
OPTIONEE may reasonably request in connection with consummation of the
Definitive Agreement and the transactions contemplated thereby.
(b) If the OPTIONEE elects to exercise the Option, and the parties,
after good faith negotiations, are unable to agree on the terms and conditions
of the Definitive Agreement ninety (90) calendar days after the later to occur
of (i) expiration of the HSR Act waiting period or (ii) receipt of the Senior
Notes Consent then either party may submit the matter to arbitration in
accordance with Section 7.4. For a period of one year after the end of the
Option Period, INTERSIL may not enter into an agreement with a third party with
respect to the sale of the Prism Assets and/or the Prism Business on more
favorable terms than those last offered to OPTIONEE by INTERSIL, without the
prior written consent of OPTIONEE.
(c) OPTIONEE shall be entitled to conduct a comprehensive due diligence
investigation of the Transferred Prism Assets the Assumed Liabilities and the
Prism Business, as OPTIONEE in its sole discretion deems advisable, and the
closing of the Definitive Agreement shall be conditioned upon, among other
things, OPTIONEE's complete satisfaction with the results of such due diligence.
(d) INTERSIL, Holding and Harris are parties to a certain Master
Transaction Agreement dated as of June 2, 1999, as amended (the "MTA"), pursuant
to which INTERSIL and Holding have agreed to purchase and acquire from Harris,
certain assets comprising the Harris Semiconductor Sector (as defined in the
MTA), including the Prism Business and Prism Assets, and assume certain
liabilities with respect thereto. Subject to the additional terms and provisions
of this Agreement, the rights and protections set forth in the Definitive
Agreement shall be no less than and the obligations and liabilities shall be no
more, with respect to the Prism Assets and the
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<PAGE>
Assumed Liabilities, on the one hand, than they are with respect to the
remaining assets, liabilities and businesses of Harris acquired pursuant to the
MTA by INTERSIL and Holding, on the other hand (including with respect to
post-closing covenants of Harris in the MTA by INTERSIL and Holding, such as
employee benefit matters, if any); except that (i) the dollar amounts and
limitations for indemnification referred to in Section 13.2 of the MTA shall be
adjusted proportionately to reflect the difference in dollar value between the
transaction contemplated herein and the transactions contemplated in the MTA,
and (ii) INTERSIL shall have no conditions to closing of the Definitive
Agreement other than (Y) the expiration of the waiting periods and/or clearances
under the HSR Act, and (Z) the receipt of the Consents referred to in Section
3.1(b)(i) hereof. INTERSIL hereby acknowledges and agrees and shall use its Best
Efforts to obtain the acknowledgment and agreement of Holding and Harris in the
Definitive Agreement, that OPTIONEE shall have all rights of INTERSIL and
Holding with respect to the indemnification by Harris, to the extent related to
the Transferred Prism Assets, the Prism Business and/or the Assumed Liabilities,
as if OPTIONEE were a party to the MTA.
ARTICLE IV
COMPENSATION
4.1 Option Payment. In consideration of the option granted by INTERSIL in
Section 2.1, OPTIONEE shall pay INTERSIL, by wire transfer of immediately
available funds to an account designated in writing by INTERSIL, the sum of One
Million Dollars (US $1,000,000.00) (the "Option Payment") upon the execution of
this Agreement.
4.2 Extension Payment. In consideration of the extension of the Option
Period contemplated in Section 2.2, if exercised, OPTIONEE shall pay INTERSIL
the sum of Two Million Dollars (US $2,000,000.00) (the "Extension Payment"),
within five (5) Business Days after the written notice by OPTIONEE of its intent
to extend the Option Period. OPTIONEE may pay the Extension Payment as it may
elect by (a) wire transfer of the Extension Payment in immediately available
funds to an account designated in writing by INTERSIL; (b) delivery to INTERSIL
of a full recourse promissory note made by OPTIONEE in favor of INTERSIL, in the
principal amount of the Extension Payment (the "Note"), which Note shall bear
interest at the rate of ten percent (10%) per annum, compounded quarterly,
payable at maturity, and shall have a term of one (1) year from the date of
issuance; (c) delivery of other non-cash consideration or property with a fair
market value equal to the amount of the Extension Payment, including without
limitation shares of the Preferred Stock with an aggregate stated value equal to
the Extension Payment subject to INTERSIL's approval; or (d) any combination of
the foregoing.
4.3 Purchase Price. In the event that OPTIONEE exercises the Option, the
purchase price payable by OPTIONEE at the closing of the Definitive Agreement
shall be the Base Price increased by an interest factor of ten percent (10%) per
annum, compounded quarterly, from the Effective Date until the closing of the
Definitive Agreement (the "Purchase Price").
7
<PAGE>
ARTICLE V
REPRESENTATIONS AND WARRANTIES; COVENANTS
5.1 General Representations and Warranties. Each party represents and
warrants to the other party as follows: (a) it is a duly organized and validly
existing corporation or limited liability company under the laws of its
jurisdiction of organization; (b) it has full power and authority, corporate or
otherwise and has taken all corporate or other action necessary to enter into
and perform this Agreement; (c) the execution and delivery of this Agreement and
the transactions contemplated herein do not violate, conflict with, or
constitute a default under its certificate of incorporation or similar
organizational document, its bylaws, or the terms or provisions of any material
agreement or other instrument to which it is a party or by which it is bound, or
any order, award, judgment or decree to which it is a party or by which it is
bound; and (d) this Agreement is its legal, valid and binding obligation,
enforceable in accordance with the terms and conditions hereof.
5.2 INTERSIL Representations and Warranties. INTERSIL represents and
warrants to OPTIONEE that (a) it owns all right, title, and interest in and to
the Transferred Prism Assets; (b) the Transferred Prism Assets are free and
clear of any liens, charges and encumbrances, except liens and security
interests granted by INTERSIL in favor of Credit Suisse First Boston, as
administrative agent for the banks under a certain credit agreement to secure
borrowing by INTERSIL (the "Credit Facility"); (c) the rights granted to
OPTIONEE in Section 2.1 are valid and enforceable, and INTERSIL has not made any
inconsistent grants of rights to any other person; (d) there have been no
judgments or settlements relating to the Transferred Prism Assets, and there are
no claims pending or threatened relating thereto; (e) INTERSIL is not aware,
after due inquiry, of any infringement of its rights in the Licensed Technology;
and (f) the exercise by OPTIONEE of its rights under this Agreement will not
infringe any patents, copyrights, masks, maskworks, trade secrets or other
proprietary rights of any third party.
5.3 HSR Act Filing; Other Governmental Filings and Approvals.
(a) Within ten (10) Business Days after the date of OPTIONEE's notice
to exercise the Option and pursuant to the applicable requirements of the HSR
Act, and the rules and regulations thereunder, the parties shall cause to be
filed with the Federal Trade Commission and the Antitrust Division of the United
States Department of Justice all requisite documents and notifications in
connection with transactions contemplated by this Agreement. Each of the parties
shall diligently and expeditiously comply with the HSR Act in connection with
securing all necessary approvals or waivers thereunder and shall use its
reasonable Best Efforts to obtain early termination of the applicable waiting
period.
(b) The parties shall cooperate with one another (i) in determining
whether any other action by or in respect of, or filing with any Federal, state,
local or foreign governmental authority is required, or any actions, consents,
approvals or waivers are required to be obtained from parties to any of the
Prism Assumed Contracts, in connection with the consummation of the transactions
contemplated upon the exercise of the Option and the closing of the Definitive
Agreement, and (ii) in taking such actions or making any such filings, in
furnishing such information as may be required in connection therewith, and in
seeking timely to obtain such actions, consents, approvals and waivers.
8
<PAGE>
5.4 Further Assurances; Cooperation.
(a) The parties will use their respective Best Efforts (a) to obtain
prior to the earlier of the date required (if so required) or the closing date
of the Definitive Agreement, all authorizations, consents, permits or approvals
of, or notices to, or filings, registrations or qualifications with any Federal,
state, local or foreign governmental authority and any other Person or entity
that are required on their respective parts, for the consummation of the
transactions contemplated upon exercise of the Option; (b) to defend, consistent
with applicable principles and requirements of law, any lawsuit or other legal
proceeding, whether judicial or administrative, whether brought derivatively or
on behalf of third Persons ( including any Federal, state, local or foreign
governmental authority) challenging this Agreement, the grant of the Option by
INTERSIL, the exercise of the Option, the Definitive Agreement and any of the
transactions contemplated herein or therein; (c) to reasonably assist each other
as necessary with respect to the determination of contract or order close-outs
or other issues that affect the Prism Assumed Contracts, to notify OPTIONEE of
any additional disallowances or potential adverse audit findings, and to consult
and reach agreement with respect to advanced coordination of negotiating
positions, offers of compromise, or final agreements or settlements, all such
cooperation to be without charge to the parties to this Agreement; and (d) to
furnish the other parties such information and assistance as may be reasonably
requested in connection with any of the foregoing.
(b) Each party shall execute such other instruments, give such further
assurances and perform such acts which are or may become necessary or
appropriate to effectuate and carry out the provisions of this Agreement.
Subject to the terms and conditions of this Agreement, each party agrees, from
the Effective Date and, in the event that the Option is exercised, continuing
after the closing of the Definitive Agreement to use all commercially reasonable
efforts to take, or cause to be taken, all actions and to do, or cause to be
done, all things necessary to consummate the transactions contemplated in this
Agreement, including the execution and delivery of any further instruments or
documents of any kind that are reasonably requested by a party or its counsel to
any party signatory hereto in order to evidence or facilitate the consummation
of the transactions contemplated hereby.
5.5 Confidentiality. OPTIONEE and INTERSIL agree that all information
relating to the Prism Business, the Prism Assets, the Licensed Technology, the
terms of this Agreement, or any activities conducted in connection with or
pursuant to this Agreement and disclosed by either party in accordance with this
Agreement shall be used by the receiving party only for the purposes
contemplated by this Agreement and the Definitive Agreement and shall be
maintained by the receiving party in secrecy, and the receiving party shall use
all reasonable diligence to prevent disclosure thereof; provided, however, that
the receiving party may disclose such information to its own employees and, in
the case of OPTIONEE, the employees of its Affiliates, to the extent necessary
or appropriate in connection with the performance of their respective duties.
OPTIONEE's and INTERSIL's obligations under this Section 5.6 shall survive for a
period of five (5) years from the later to occur of the expiration or
termination of this Agreement or until the closing of the Definitive Agreement.
The parties shall not have any obligation of confidentiality with respect to any
information that is: (a) in the public domain, other than by a breach of this
9
<PAGE>
Agreement on the part of the receiving party; (b) rightfully received from a
third party without any obligation of confidentiality; (c) rightfully known to
the receiving party without any limitation on use or disclosure, prior to its
receipt from the disclosing party as documented by written records; (d)
generally made available to third parties by the disclosing party without
restriction on disclosure; or (e) independently developed by the receiving
party, as documented by written records. Any and all information received by
either party from the other shall be promptly returned to the disclosing party
by the receiving party upon the termination or expiration of this Agreement,
except that the receiving party may retain such copies as it may require for
record purposes and the exercise of its surviving rights under this Agreement
and the Definitive Agreement.
ARTICLE VI
PARTICIPATION RIGHTS
6.1 Participation Rights. In connection with OPTIONEE's exercise of the
Option, OPTIONEE shall offer each Warrant Holder (as hereinafter defined) an
opportunity to purchase a membership interest in OPTIONEE on a pro rata basis,
on terms set forth in this Article VI (the "Participation Right"). As used in
this Article VI, "Warrant Holder" shall mean (i) any holder of warrants to
purchase Holding's Class A Common Stock, par value $.01 per share (the "Common
Stock"), issued in connection with the original issuance and sale of Holding's
Senior Sub Notes (the "Note Warrants"), and (ii) the Stock Purchase Warrant for
Common Stock issued to Citicorp Mezzanine Partners, L.P. including for this
purpose any shares held upon exercise of such warrants into shares of Common
Stock (the "CMP Warrants" and together with the Note Warrants, the "Warrants"),
prior to the exercise date of the Option by OPTIONEE.
6.2 Notice of Option Exercise. OPTIONEE shall notify, within ten (10)
Business Days of the date that OPTIONEE has exercised the Option (the
"Participation Trigger Notice") each Warrant Holder. The Participation Trigger
Notice shall specify:
(a) that OPTIONEE has exercised the Option;
(b) the Warrant Holder's proportional membership interest in OPTIONEE,
assuming for this purpose that all Warrant Holders had exercised their
Participation Rights;
(c) the estimated amount of the down payment for the membership
interest based on the Warrant Holder's pro-rata share of (i) the Option Payment,
(ii) the Extension Payment, if applicable and (iii) any other capital
contributions made to OPTIONEE by members of OPTIONEE prior to the exercise of
the Option, assuming for this purpose that all Warrant Holders had exercised
their Participation Rights; and
(d) a good faith estimate of the Purchase Price.
6.3 Participation Notice. Each Warrant Holder may exercise such Warrant
Holder's Participation Right by delivery of a written notice (the "Participation
Notice") to OPTIONEE
10
<PAGE>
within ten (10) Business Days (the "Participation Period") of the date of
OPTIONEE's Option Trigger Notice. The Participation Notice shall evidence the
Warrant Holder's irrevocable election to purchase a membership interest in
OPTIONEE. If OPTIONEE does not receive a Participation Notice from a particular
Warrant Holder during the Participation Period referred to above, OPTIONEE shall
have no further obligation or liability to said Warrant Holder in respect of the
Participation Right contemplated herein. Thereafter, OPTIONEE shall provide each
Warrant Holder who has paid the Down Payment ("Member Holder") with
documentation reflecting such Warrant Holder's membership interest in OPTIONEE.
6.4 Payments for Membership Interest.
(a) Promptly after expiration of the Participation Period, OPTIONEE
shall notify, in writing (the "Down Payment Notice"), each Warrant Holder that
has elected to exercise such Warrant Holder's Participation Right in accordance
with Section 6.3, of the actual amount of the down payment (the "Down Payment")
for the membership interest to be acquired, which shall be calculated based upon
the Warrant Holder's membership interest in OPTIONEE in proportion to all
membership interests in OPTIONEE, together with wire transfer instructions.
Warrant Holders shall have ten (10) Business Days from the date of the Down
Payment Notice to pay the Down Payment to OPTIONEE.
(b) No less than ten (10) Business Days prior to the projected date for
closing the Definitive Agreement, OPTIONEE shall notify, in writing (the
"Closing Notice") , each Member Holder of the amount of the closing payment (the
"Closing Payment") in respect of such Member Holder's membership interest in
OPTIONEE, which shall be a percentage of the Purchase Price equal to such Member
Holder's membership interest in OPTIONEE in proportion to all membership
interests in OPTIONEE.
(c) Each Member Holder shall be required to remit the Closing Payment
by wire transfer of immediately available funds to OPTIONEE no later than one
(1) Business Day prior to the date specified for closing of the Definitive
Agreement in the Closing Notice. Failure of any Member Holder to make the
Closing Payment as prescribed in clause (b) above shall result in an adjustment
of such Member Holder's membership interest in OPTIONEE.
6.5 Other Participation Rights. Nothing in this Article VI shall prohibit
OPTIONEE from (a) selling membership interests to other Persons, or (b) granting
in the future membership participation rights to other Persons (including other
holders of Common Stock); and in each such instance, such Persons will (a) have
substantially the same opportunity to participate as provided to the Warrant
Holders, and (b) be included in the calculation of the pro rata basis upon which
Warrant Holders may participate.
6.6 Termination. The obligations of OPTIONEE set forth in this Article VI,
with respect to any individual Warrant Holder shall terminate upon the earliest
of (i) the date that said Warrant Holder disposes of ownership interest in the
Warrant or the shares of Common Stock issued upon exercise of the Warrant , (ii)
the failure of the Warrant Holder to provide the
11
<PAGE>
Participation Notice required pursuant to Section 6.3, or (iii) the expiration
of the Option Period without OPTIONEE's exercise of the Option.
ARTICLE VII
MISCELLANEOUS
7.1 Term and Termination.
(a) This Agreement shall take effect upon the Effective Date and, unless
earlier terminated pursuant to Section 7.1(b), shall expire, as the case may be,
(i) upon the end of the Option Period as the same may be extended pursuant to
Section 2.2 hereof, in the event that OPTIONEE shall not exercise the Option,
(ii) upon the execution of the Definitive Agreement, (iii) upon the thirty-first
day after the end of the Option Period, in the event that (X) OPTIONEE exercises
the Option, (Y) the parties fail to enter into a Definitive Agreement by the end
of the Option Period, and (Z) neither party initiates an arbitration pursuant to
Section 8.4 within thirty (30) calendar days after the end of the Option Period,
or (iv) upon the conclusion of the implementation by the parties of the results
of arbitration proceedings, in the event that an arbitration shall be commenced
pursuant to Section 7.4.
(b) OPTIONEE may terminate this Agreement at any time, in its sole
discretion, upon written notice to INTERSIL.
7.2 Governing Law. The interpretation and construction of this Agreement,
and all matters relating hereto, shall be governed by the laws of the State of
New York, USA, without reference to principles of conflicts of laws.
7.3 Waiver. Each party shall have the right at all times to enforce the
provisions of this Agreement in strict accordance with the terms hereof
notwithstanding any conduct or custom on its part in refraining from doing so at
any time. The failure of any party at any time to enforce its rights hereunder
strictly in accordance with the same shall not be construed as having created a
custom contrary to the specific provisions hereof or as having in any way
modified or waived the same.
7.4 Arbitration.
(a) Disputes under this Agreement (other than specific enforcement of
obligations of confidentiality) shall be settled by arbitration by a board of
arbitrators consisting of an arbitrator appointed by OPTIONEE, an arbitrator
appointed by INTERSIL and a third arbitrator chosen by the mutual agreement of
the arbitrators appointed by OPTIONEE and INTERSIL. Arbitration may be commenced
at any time by either party hereto giving written notice to the other party that
a dispute has been referred to arbitration. In the event that either party shall
so notify the other party, then each party shall appoint its arbitrator, and
such arbitrators shall use reasonable efforts to agree as to the selection of
the third arbitrator, within thirty (30) calendar days after their appointment.
If the arbitrators cannot agree on the third arbitrator within such thirty (30)
day period, the third
12
<PAGE>
arbitrator shall be appointed in accordance with the then-current Commercial
Arbitration Rules of the American Arbitration Association.
(b) In the event of an arbitration pursuant to Section 4.2, the
arbitrators shall determine, as to each disputed term of the Definitive
Agreement, which party's proposal is the more reasonable, in light of customary
practice in the industry, the relative contributions of OPTIONEE and the
INTERSIL to the development of the Licensed Technology with respect to the
Covered Indication(s), the extent of the market for the Products in the
Territory, the competitive advantages that the Products are expected to achieve,
and such other factors as the arbitrators may consider reasonable in the
circumstances. Upon completion of such arbitration, the parties shall enter into
a Definitive Agreement incorporating the non-disputed terms and, as to each
disputed term, the proposal of OPTIONEE or INTERSIL, as the case may be, that
the arbitrators determined to be the more reasonable.
(c) Arbitration proceedings pursuant to this Section 8.4 shall be held
in New York, New York and shall be conducted in the English language and in
accordance with the then-current Commercial Arbitration Rules of the American
Arbitration Association. The provision for arbitration shall be specifically
enforceable by the parties and the decision of the arbitrators in accordance
herewith shall be final and binding and there shall be no right of appeal
therefrom.
(d) Each party shall pay its own expenses of arbitration and the
expenses of the arbitrators shall be equally shared; provided, however, that if
in the opinion of the arbitrators any claim asserted in connection therewith or
any defense or objection thereto was unreasonable, the arbitrators may assess,
as part of their award, all or any part of the arbitration expenses of the other
party (including reasonable attorneys' fees) and of the arbitrators against the
party raising such unreasonable claim, defense or objection.
7.5 Notices. Any notice, request, demand, waiver, consent, approval or
other communication which is required or permitted hereunder shall be in writing
in English and shall be deemed given only if delivered personally or sent by a
telegram or telecopier (with transmission confirmed) or by registered or
certified mail, return receipt requested and postage prepaid, or by Federal
Express or an equivalent delivery service, addressed to the parties at their
respective addresses as have been provided previously by the parties hereto to
such other addresses of which notice of change shall have been duly given. Such
notice, request, demand, waiver, consent, approval or other communication shall
be deemed to have been given as of the date so delivered, telegraphed, or
telecopied, or on the tenth day after deposit in the mail, or on the second day
after the deposit with Federal Express or an equivalent delivery service.
7.6 Amendment and Modification. This Agreement may be amended or modified,
provided that such amendment or modification is set forth in a writing executed
by the parties hereto; provided, however, that any and all provisions of Article
VII of this Agreement, which are for the express benefit of the Warrant Holders,
cannot be amended, modified or waived unless holders of a majority of the Note
Warrants (or shares of Common Stock issued upon exercise of such Note Warrants)
and a holders of a majority of the CMP Warrants (or shares of Common Stock
issued upon exercise of such CMP Warrants), also execute such amendment or
waiver. No
13
<PAGE>
course of dealing between or among any Persons having any interest in
this Agreement will be deemed effective to modify, amend or discharge any part
of this Agreement or any rights or obligations of any person under or by reason
of this Agreement.
7.7 Binding Effect; Assignment. This Agreement shall inure to the benefit
of and be binding upon the parties and their respective successors and permitted
assigns. INTERSIL shall not assign this Agreement or any of its rights or
obligations hereunder without the prior written consent of OPTIONEE. OPTIONEE
may assign this Agreement, in whole or in part, or any of its rights or
obligations hereunder to any other Person; provided, that the proposed assignee
or transferee of OPTIONEE shall join in this Agreement and agree to be bound by
the terms hereof as though an original party hereto.
7.8 Survival. The respective rights and obligations of the parties
hereunder shall survive the termination or expiration of this Agreement to the
extent necessary to the intended preservation of such rights and obligations.
7.9 Schedules. All Schedules referred to herein are intended to be, and
hereby are, specifically incorporated herein and made a part of this Agreement.
7.10 Counterparts. This Agreement may be executed in one or more
counterpart copies, each of which shall be deemed an original and all of which
taken together shall be deemed to constitute one and the same instrument. This
Agreement shall become binding when each party shall have executed and delivered
one or more counterparts.
7.11 Press Releases. Except as required by applicable law, the parties
shall not give notice to any third party or otherwise make any public statement
or releases concerning this Agreement or the transactions contemplated hereby
without obtaining the prior written consent of the other parties to this
Agreement as to the contents and manner of presentation and publication thereof,
which consent shall not be unreasonably withheld.
7.12 Severability. If any one or more provisions of this Agreement (other
than Sections 2.2 and 2.3) shall be held to be invalid, illegal or
unenforceable, the validity, legality or enforceability of the remaining
provisions hereof shall not in any way be affected or impaired thereby. To the
extent permitted by applicable law, each party waives any provision of law,
which renders any provision of this Agreement invalid, illegal or unenforceable
in any respect. In the event any provision shall be held invalid, illegal or
unenforceable, the parties shall use their best efforts to substitute a valid,
legal and enforceable provision which, insofar as practical, implements the
purposes hereof.
7.13 Third Party Beneficiary. The parties acknowledge and agree that each
of the Warrant Holders shall be a third party beneficiary of this Agreement to
the extent provided for in Article VII and as such, the Warrant Holders shall be
entitled to enforce the provisions of Article VII of this Agreement to the full
extent provided hereunder.
14
<PAGE>
7.14 Headings. The article and section headings herein are for reference
purposes only and shall not affect the meaning or interpretation hereof.
7.15 Entire Agreement. This Agreement constitutes the entire agreement
between the parties with respect to the subject matter hereof and all prior
agreements with respect thereto are superseded hereby and each party confirms
that it is not relying on any representations or warranties of the other parties
except as specifically set forth herein. No amendment or modifications hereof
shall be binding upon the parties unless in writing and duly executed by
authorized representatives of the parties.
15
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their officers thereunto duly authorized as of the Effective Date.
INTERSIL CORPORATION
By: /s/ Daniel J. Heneghan
Name: Daniel J. Heneghan
Title: Vice President
INTERSIL PRISM, LLC
By: /s/ Gregory L. Williams
Name: Daniel J. Heneghan
Title: CEO
<PAGE>
SCHEDULE 1
TRANSFERRED PRISM ASSETS
Categories and Types
1. Prism Patents
2. Licensed Technology and Improvements
3. Prism Intellectual Property
4. Prism Assumed Contracts
5. Prism Inventory
6. Subsidiary Stock
7. Products
<PAGE>
SCHEDULE 2
EXCLUDED ASSETS
**[MANUFACUTRING FACILITIES AND EQUIPMENT]**
<PAGE>
SCHEDULE 3
PRISM PATENTS
(as of the Effective Date)
<PAGE>
SOURCES:
Equity
CVC 79.4
Stout 0.1
CSFB 1.5
---------
Sterling 81.0
Harris -
Management
---------
81.0
Debt
CMP 30.0
CSFB (bonds) 194.0
CSFB (banks) 212.0
---------
436.0
=========
517.0
=========
USES:
Harris
Patents 4.2
Wachovia 504.8
=========
509.0
=========
Left at Intersil 8.0
(2.0) Cash to Intersil from Harris
(6.0) Remaining Expense $
---------
1
<PAGE>
LIST OF PRISM GRANTED PATENTS
AND PENDING PATENT APPLICATIONS
<TABLE>
<CAPTION>
- - ---------------------------------------------------------------------------------------------------------------------
Case# SubCase Div Ref # Country Status Application # Filing Date Patent # Issue Date
- - ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <S> <C> <C> <C>
H6384 SE-1265-WR CN Published 98103623.6 09-Jan-1998
- - ---------------------------------------------------------------------------------------------------------------------
H6384 SE-1265-WR EP Pending 97403105.6 19-Dec-1997
- - ---------------------------------------------------------------------------------------------------------------------
H6384 SE-1265-WR JP Published 1608/98 07-Jan-1998
- - ---------------------------------------------------------------------------------------------------------------------
H6384 SE-1265-WR KR Pending 98-397 09-Jan-1998
- - ---------------------------------------------------------------------------------------------------------------------
H6384 SE-1265-WR TW Pending 87100211 09-Jan-1998
- - ---------------------------------------------------------------------------------------------------------------------
H6384 SE-1265-WR US Pending 08/781736 10-Jan-1997
- - ---------------------------------------------------------------------------------------------------------------------
H6385 SE-1266-WR CN Published 98104209.0 08-Jan-1998
- - ---------------------------------------------------------------------------------------------------------------------
H6385 SE-1266-WR EP Pending 97402955.5 05-Dec-1997
- - ---------------------------------------------------------------------------------------------------------------------
H6385 SE-1266-WR JP Published 1607/98 07-Jan-1998
- - ---------------------------------------------------------------------------------------------------------------------
H6385 SE-1266-WR KR Pending 98-396 09-Jan-1998
- - ---------------------------------------------------------------------------------------------------------------------
H6385 SE-1266-WR TW Pending 87100212 09-Jan-1998
- - ---------------------------------------------------------------------------------------------------------------------
H6385 SE-1266-WR US Granted 08/781334 10-Jan-1997 5764113 09-Jun-1998
- - ---------------------------------------------------------------------------------------------------------------------
<CAPTION>
- - ------------------------------------
Title
- - ------------------------------------
<C>
INTERPOLATOR USING A PLURALITY OF
POLYNOMINAL EQUATIONS AND
ASSOCIATED METHODS
- - ------------------------------------
INTERPOLATOR USING A
PLURALITY OF POLYNOMINAL EQUATIONS AND
ASSOCIATED METHODS
- - ------------------------------------
INTERPOLATOR USING A PLURALITY OF
POLYNOMINAL EQUATIONS AND
ASSOCIATED METHODS
- - ------------------------------------
INTERPOLATOR USING A PLURALITY OF
POLYNOMINAL EQUATIONS AND
ASSOCIATED METHODS
- - ------------------------------------
INTERPOLATOR USING A PLURALITY OF
POLYNOMINAL EQUATIONS AND
ASSOCIATED METHODS
- - ------------------------------------
INTERPOLATOR USING A PLURALITY OF
POLYNOMINAL EQUATIONS AND
ASSOCIATED METHODS
- - ------------------------------------
RE-SAMPLING CIRCUIT AND ASSOCIATED
METHOD
- - ------------------------------------
RE-SAMPLING CIRCUIT AND ASSOCIATED
METHOD
- - ------------------------------------
RE-SAMPLING CIRCUIT AND ASSOCIATED
METHOD
- - ------------------------------------
RE-SAMPLING CIRCUIT AND ASSOCIATED
METHOD
- - ------------------------------------
RE-SAMPLING CIRCUIT AND ASSOCIATED
METHOD
- - ------------------------------------
RE-SAMPLING CIRCUIT AND ASSOCIATED
METHOD
- - ------------------------------------
</TABLE>
1
<PAGE>
<TABLE>
<CAPTION>
- - ---------------------------------------------------------------------------------------------------------------------
Case# SubCase Div Ref # Country Status Application # Filing Date Patent # Issue Date
- - ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <S> <C> <C> <C>
H6388 SE-1301-WR CN Published 98105495.1 16-Mar-1998
- - ---------------------------------------------------------------------------------------------------------------------
H6388 SE-1301-WR EP Unfiled
- - ---------------------------------------------------------------------------------------------------------------------
H6388 SE-1301-WR JP Published 67463/98 17-Mar-1998
- - ---------------------------------------------------------------------------------------------------------------------
H6388 SE-1301-WR KR Pending 98-9022 17-Mar-1998
- - ---------------------------------------------------------------------------------------------------------------------
H6388 SE-1301-WR TW Pending 87102737 25-Feb-1998
- - ---------------------------------------------------------------------------------------------------------------------
H6388 SE-1301-WR US Pending 08/819846 17-Mar-1997
- - ---------------------------------------------------------------------------------------------------------------------
H6491 SE-1322-WR JP Pending 11-509050 01-Oct-1998
- - ---------------------------------------------------------------------------------------------------------------------
H6491 SE-1322-WR US Granted 08/941704 01-Oct-1997 5883565 16-Mar-1999
- - ---------------------------------------------------------------------------------------------------------------------
H6491 SE-1322-WR WO Pending 98/20699 01-Oct-1998
- - ---------------------------------------------------------------------------------------------------------------------
H6491 A SE-1322-WR US Pending 09/246815 09-Feb-1999
- - ---------------------------------------------------------------------------------------------------------------------
H6588 SE-1407-WR US Pending 09/231608 14-Jan-1999
- - ---------------------------------------------------------------------------------------------------------------------
H6588 SE-1407-WR WO Pending 99/00851 14-Jan-1999
- - ---------------------------------------------------------------------------------------------------------------------
H6696 SE-1453-WR US Pending 09/163802 30-Sep-1998
- - ---------------------------------------------------------------------------------------------------------------------
H6756 SE-1492-WR US Pending 09/231184 14-Jan-1999
- - ---------------------------------------------------------------------------------------------------------------------
<CAPTION>
- - ------------------------------------
Title
- - ------------------------------------
<C>
HIGH DATA RATE SPREAD SPECTRUM
TRANSCEIVER AND ASSOCIATED METHODS
- - ------------------------------------
HIGH DATA RATE SPREAD SPECTRUM
TRANSCEIVER AND ASSOCIATED METHODS
- - ------------------------------------
HIGH DATA RATE SPREAD SPECTRUM
TRANSCEIVER AND ASSOCIATED METHODS
- - ------------------------------------
HIGH DATA RATE SPREAD SPECTRUM
TRANSCEIVER AND ASSOCIATED METHODS
- - ------------------------------------
HIGH DATA RATE SPREAD SPECTRUM
TRANSCEIVER AND ASSOCIATED METHODS
- - ------------------------------------
HIGH DATA RATE SPREAD SPECTRUM
TRANSCEIVER AND ASSOCIATED METHODS
- - ------------------------------------
FREQUENCY DEPENDENT RESISTIVE
ELEMENT
- - ------------------------------------
FREQUENCY DEPENDENT RESISTIVE
ELEMENT
- - ------------------------------------
FREQUENCY DEPENDENT RESISTIVE
ELEMENT
- - ------------------------------------
FREQUENCY DEPENDENT RESISTIVE
ELEMENT
- - ------------------------------------
METHOD OF PERFORMING ANTENNA
DIVERSITY IN SPREAD SPECTRUM IN
WIRELESS LOCAL AREA NETWORK
- - ------------------------------------
METHOD OF PERFORMING ANTENNA
DIVERSITY IN SPREAD SPECTRUM IN
WIRELESS LOCAL AREA NETWORK
- - ------------------------------------
PULSED BEACON-BASED INTERFERENCE
REDUCTION MECHANISM FOR WIRELESS
COMMUNICATION NETWORKS
- - ------------------------------------
WIRELESS LOCAL AREA NETWORK SPREAD
SPECTRUM TRANSCEIVER WITH
MULTIPATH MITIGATION
- - ------------------------------------
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
- - ---------------------------------------------------------------------------------------------------------------------
Case# SubCase Div Ref # Country Status Application # Filing Date Patent # Issue Date
- - ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <S> <C> <C> <C>
H6756 SE-1492-WR WO Pending 99/00852 15-Jan-1999
- - ---------------------------------------------------------------------------------------------------------------------
H6759 SE-1479-WR US Pending 09/342583 29-Jun-1999
- - ---------------------------------------------------------------------------------------------------------------------
H6762 SE-1482-WR US Pending 09/266386 10-Mar-1999
- - ---------------------------------------------------------------------------------------------------------------------
H6766 SE-1500-WR US Pending 09/231228 14-Jan-1999
- - ---------------------------------------------------------------------------------------------------------------------
H6766 SE-1500-WR WO Pending 99/00940 15-Jan-1999
- - ---------------------------------------------------------------------------------------------------------------------
H6770 SE-1488-WR US Pending 09/261981 04-Mar-1999
- - ---------------------------------------------------------------------------------------------------------------------
H6839 SE-1531-WR CA Pending 2154889 27-Jan-1994
- - ---------------------------------------------------------------------------------------------------------------------
H6839 SE-1531-WR EP Pending 0 681 767 29-Apr-1998
- - ---------------------------------------------------------------------------------------------------------------------
H6839 SE-1531-WR US Granted 11361 29-Jan-1993 5331634 19-Jul-1994
- - ---------------------------------------------------------------------------------------------------------------------
H6840 SE-1532-WR CA Pending 2154897 27-Jan-1994
- - ---------------------------------------------------------------------------------------------------------------------
H6840 SE-1532-WR EP Pending 94907352.2 27-Jan-1994
- - ---------------------------------------------------------------------------------------------------------------------
<CAPTION>
- - ------------------------------------
Title
- - ------------------------------------
<C>
WIRELESS LOCAL AREA NETWORK SPREAD
SPECTRUM TRANSCEIVER WITH
MULTIPATH MITIGATION
- - ------------------------------------
RAKE RECEIVER WITH EMBEDDED
DECISION FEEDBACK EQUALIZER
- - ------------------------------------
SUCCESSIVE APPROXIMATION
CORRECTION OF DC OFFSET IN
FILTER-BUFFER BASEBAND PATH OF
DATA RADIO
- - ------------------------------------
SPREAD SPECTRUM TRANSCEIVER FOR
USE IN WIRELESS LOCAL AREA NETWORK
AND HAVING MULTIPATH MITIGATION
- - ------------------------------------
SPREAD SPECTRUM TRANSCEIVER FOR
USE IN WIRELESS LOCAL AREA NETWORK
AND HAVING MULTIPATH MITIGATION
- - ------------------------------------
FEEDBACK-CONTROLLED LOW VOLTAGE
CURRENT SINK/SOURCE
- - ------------------------------------
TECHNIQUE FOR BRIDGING LOCAL AREA
NETWORKS HAVING NON-UNIQUE NODE
ADDRESSES
- - ------------------------------------
TECHNIQUE FOR BRIDGING LOCAL AREA
NETWORKS HAVING NON-UNIQUE NODE
ADDRESSES
- - ------------------------------------
TECHNIQUE FOR BRIDGING LOCAL AREA
NETWORKS HAVING NON-UNIQUE NODE
ADDRESSES
- - ------------------------------------
MEDIUM ACCESS CONTROL PROTOCOL
FORE WIRELESS NETWORK
- - ------------------------------------
MEDIUM ACCESS CONTROL PROTOCOL
FORE WIRELESS NETWORK
- - ------------------------------------
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
- - ---------------------------------------------------------------------------------------------------------------------
Case# SubCase Div Ref # Country Status Application # Filing Date Patent # Issue Date
- - ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <S> <C> <C> <C>
H6840 SE-1532-WR US Granted 11415 29-Jan-1993 5371734 06-Dec-1994
- - ---------------------------------------------------------------------------------------------------------------------
H6841 SE-1533-WR US Granted 551476 01-Nov-1995 5736973 07-Apr-1998
- - ---------------------------------------------------------------------------------------------------------------------
<CAPTION>
- - ------------------------------------
Title
- - ------------------------------------
<C>
MEDIUM ACCESS CONTROL PROTOCOL
FORE WIRELESS NETWORK
- - ------------------------------------
INTEGRATED BACKLIGHT DISPLAY
SYSTEM FOR A PERSONAL DIGITAL
ASSISTANT
- - ------------------------------------
</TABLE>
4
EXHIBIT 3.01
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
INTERSIL HOLDING CORPORATION
-----------------------
Intersil Holding Corporation, a corporation organized and existing under
and by virtue of the General Corporation Law of the State of Delaware (the
"Company"), DOES HEREBY CERTIFY:
FIRST: That by written consent of all of the directors, a resolution was
duly adopted setting forth a proposed amendment to the Certificate of
Incorporation of the Company. The resolution setting forth the amendment is
as follows:
RESOLVED, that Annex A (as referenced in Article 4, Section B6) of the
Certificate of Incorporation of the Company be amended and replaced in
its entirety so that the same as amended would read as attached hereto
as Exhibit A.
SECOND: That the Company has not received any payment for any of its stock.
THIRD: That said amendment was duly adopted in accordance with the
provisions of Section 241 of the General Corporation Law of the State
of Delaware.
IN WITNESS WHEREOF, the Company has caused this Certificate to be executed
by Gregory L. Williams, its Chief Executive Officer, this 13th day of August,
1999.
INTERSIL HOLDING CORPORATION
By: /s/ Gregory L. Williams
-----------------------------------
Name: Gregory L. Williams
Title: Chief Executive Officer
<PAGE>
Annex A
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT
BE TRANSFERRED WITHOUT REGISTRATION UNDER THE SECURITIES ACT OR ANY APPLICABLE
STATE SECURITIES LAWS OR AN OPINION OF COUNSEL, SATISFACTORY TO THE COMPANY,
THAT SUCH REGISTRATION IS NOT REQUIRED.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE ALSO SUBJECT TO THE TERMS AND
CONDITIONS OF A SECURITIES PURCHASE AND HOLDERS AGREEMENT BY AND AMONG THE
COMPANY AND THE HOLDERS SPECIFIED THEREIN, A COPY OF WHICH AGREEMENT IS ON FILE
AT THE PRINCIPAL OFFICE OF THE COMPANY. THE SALE, TRANSFER OR OTHER DISPOSITION
OF THE SECURITIES IS SUBJECT TO THE TERMS OF SUCH AGREEMENT AND THE SECURITIES
ARE TRANSFERABLE ONLY UPON PROOF OF COMPLIANCE THEREWITH.
No. ____
PAYMENTS UNDER THIS NOTE ARE SUBJECT TO
THE SUBORDINATION PROVISIONS OF SECTION 7 HEREOF
INTERSIL HOLDING CORPORATION
12% JUNIOR SUBORDINATED DEBENTURES DUE JUNE 30, 2011
INTERSIL HOLDING CORPORATION, a Delaware corporation (the "Corporation",
which term includes any successor corporation), for value received, hereby
promises to pay to _______________, a _______________, or its successors or
permitted assigns ("Holder"), the principal sum of _______________ on June 30,
2011, and to pay interest on the unpaid balance of the principal amount of this
Note at the rate of 12% per annum. This Note will accrue interest annually for
the periods ending June 30 of each calendar year commencing ________, ______
(each date of payment being an "Interest Payment Date"). Interest on this Note
will accrue from the most recent date to which interest has been paid or accrued
as provided in the preceding sentence or, if no interest has been paid, from the
issuance date hereof. Interest will be computed on the basis of a 365-day year
for the actual days elapsed. This Note may be prepaid at any time in whole or in
part without premium, penalty or discount. All permitted prepayments in respect
of this Note shall be applied first to accrued interest on the principal amount
prepaid which interest has not been added to the principal amount, and then to
principal outstanding hereunder.
This Note shall be binding upon the successors and assigns of the
Corporation and shall inure to the benefit of the successors and permitted
assigns of the Holder. The Holder may
<PAGE>
assign, transfer or dispose of its rights with respect to this Note only
upon registration of this Note under the Securities Act, and any applicable
state securities laws, or pursuant to an exemption from such registration.
1. Method of Payment
The Holder shall note any payment of principal on the Note, but the
obligation of the Corporation shall be reduced by such payment notwithstanding
any failure by Holder to note such payment. The Corporation will pay principal
and interest in money of the United States of America that at the time of
payment is legal tender for payment of public and private debts (payment may be
made by check payable in such money). All interest due on any Interest Payment
Date prior to the Maturity Date shall be deemed to be paid by such amount being
added to the outstanding principal amount on the Interest Payment Date therefor
and shall accrue interest as a portion of the principal amount of this Note from
such Interest Payment Date to the maximum extent permitted by law.
2. Maturity Date
This Note shall be repaid in full on June 30, 2011 (the "Maturity
Date")(1).
3. Defined Terms
(a) "Acceleration Notice" shall have the meaning set forth in Section
8(b).
(b) "Agent" shall have the meaning set forth in Section 7(a).
(c) "Bank Debt" shall have the meaning set forth in Section 7(a).
(d) "Bankruptcy Law" shall mean Title 11, U.S. Code or any similar
federal or state law for the relief of debtors.
(e) "Capital Stock" shall mean (i) in the case of a corporation,
corporate stock, (ii) in the case of an association or business entity, any
and all shares, interests, participations, rights or other equivalents (however
designated) of corporate stock, (iii) in the case of a partnership or limited
liability company, partnership or membership interests (whether general or
limited) and (iv) any other interest or participation that confers on a Person
the right to receive a share of the profits and losses of, or distributions of
assets of, the issuing Person.
(f) "Change in Control" shall have the meaning set forth in
Section 4(b).
(g) "Citigroup" shall mean Citigroup Inc., a Delaware corporation, or
any successor thereto by merger or consolidation.
(h) "Continuing Director" shall have the meaning set forth in
Section 4(b).
- - --------------
(1) The Board of Directors in its discretion shall have the power to set the
Maturity Date on or after June 30, 2011, but in no event earlier than one year
after the Maturity Date under the PIK Indenture and later than June 30, 2020.
2
<PAGE>
(i) "Corporation" shall have the meaning set forth in the first
paragraph of this Note.
(j) "Credit Agreement" shall have the meaning set forth in Section 7(b).
(k) "Custodian" means any receiver, trustee, assignee, liquidator,
sequestrator or similar official under any Bankruptcy Law or in connection
with any insolvency proceeding.
(l) "CVC" means Citicorp Venture Capital Ltd., a New York corporation,
or any successor thereto by merger or consolidation.
(m) "Equity Swap" shall have the meaning set forth in Section 5(g).
(n) "Event of Default" shall have the meaning set forth in Section 8(a).
(o) "Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.
(p) "Holder" shall have the meaning set forth in the first paragraph of
this and, for purposes of Section 7, as set forth in Section 7.
(q) "HSS Operating Corporation" shall mean HSS Operating Corporation, a
Delaware corporation, and wholly-owned subsidiary of the Corporation.
(r) "Indebtedness" shall have the meaning set forth in Section 7(a).
(s) "Insolvency Proceeding" shall have the meaning set forth in
Section 7(j).
(t) "Interest Payment Date" shall have the meaning set forth in the
first paragraph of this Note.
(u) "Junior Indebtedness" shall have the meaning set forth in
Section 5(g)(iv).
(v) "Lenders" shall have the meaning set forth in Section 7(a).
(w) "Loan Parties" shall have the meaning set forth in Section 7(a).
(x) "Majority Holders" shall have the meaning set forth in Section 8(b).
(y) "Maturity Date" shall have the meaning set forth in Section 2.
(z) "Non-payment Default" shall have the meaning set forth in
Section 7(a).
(aa) "Payment Blockage Period" shall have the meaning set forth in
Section 7(c)(iii).
(bb) "Payment Default" shall have the meaning set forth in Section 7(a).
3
<PAGE>
(cc) "Person" shall mean any individual, partnership, corporation,
trust or unincorporated organization or a government or agency or political
subdivision thereof.
(dd) "PIK Indenture" means the Indenture dated __________, 1999 between
the Corporation and the PIK Trustee relating to the PIK Notes.
(ee) "PIK Notes" means the PIK Notes issued under the PIK Indenture as
it may hereafter be amended, extended, supplemented, increased, renewed,
refunded, replaced, refinanced or otherwise modified from time to time, whether
for principal, interest, premium, fees, expenses, indemnities or otherwise.
(ff) "PIK Trustee" means _____________, a _________________, as trustee
under the PIK Indenture until a successor replaces it and, thereafter,
means the successor.
(gg) "Redemption Price" shall have the meaning set forth in
Section 4(a).
(hh) "Representative" shall mean (i) the Agent for so long as the Bank
Debt is outstanding, (ii) at such time as the Bank Debt is no longer
outstanding, the Senior Trustee, for so long as the Senior Subordinated Notes
are outstanding, (iii) the PIK Trustee, for so long as the PIK Notes are
outstanding and (iv) at such time as the Bank Debt and obligations under the
Senior Subordinated Notes and the PIK Notes are no longer outstanding, the
representative selected by holders of more than 50% of the Senior Debt of the
applicable Senior Creditor.
(ii) "SEC" shall mean the Securities and Exchange Commission.
(jj) "Securities Act" shall mean the Securities Act of 1933, as amended.
(kk) "Senior Creditors" shall have the meaning set forth in Section
7(a).
(ll) "Senior Debt" shall have the meaning set forth in Section 7(a).
(mm) "Senior Default" shall have the meaning set forth in Section 7(a).
(nn) "Senior Indenture" shall have the meaning set forth in Section
7(a).
(oo) "Senior Loan Documents" shall have the meaning set forth in Section
7(a).
(pp) "Senior Subordinated Notes" shall have the meaning set forth in
Section 7(a).
(qq) "Senior Trustee" shall have the meaning set forth in Section 7(a).
(rr) "Series A Preferred" shall mean the Corporation's 12% Series A
Cumulative Compounding Preferred Stock.
(ss) "Significant Subsidiary" shall have the meaning set forth in
Section 7(a).
(tt) "Sterling" shall mean Sterling Holding Company, LLC, a Delaware
limited liability company.
4
<PAGE>
(uu) "Stockholders Agreement" shall mean the Securities Purchase and
Holders Agreement dated as of August 13, 1999, by and among the Corporation,
Sterling, Citicorp Mezzanine Partners, L.P., Manatee Investment Corporation and
the Management Investors.
(vv) "Subordinated Debt" shall have the meaning set forth in Section
7(a).
(ww) "Subsidiary" shall have the meaning set forth in Section 7(a).
(xx) "voting stock" of any Person as of any date means the Capital Stock
of such Person that is at the time entitled to vote in the election of the Board
of Directors of such Person.
(yy) "Wholly Owned Subsidiary" shall have the meaning defined in the
Indenture.
4. Redemption
(a) Optional Redemption. The Corporation may, at any time and from time
to time, redeem this Note, in whole or in part, at a redemption price equal to
the principal amount being redeemed plus accrued and unpaid interest, if any, to
the date of redemption (the "Redemption Price").
(b) Change in Control. Upon the occurrence of a Change in Control, the
Corporation shall, upon the expiration of any offer to purchase or repayment or
redemption of any Senior Debt required as a result of such Change in Control,
redeem this Note in full at the Redemption Price. For purposes of this Section
4, the term "Change in Control" shall mean (i) prior to the first Public Equity
Offering, the Permitted Holders cease to be the "beneficial owner" (as defined
in Rules 13d-3 and 13d-5 under the Exchange Act), directly or indirectly, of a
majority in the aggregate of the total voting power of the voting stock of the
Corporation, whether as a result of issuance of securities of the Corporation,
any merger, consolidation, liquidation or dissolution of the Corporation, any
direct or indirect transfer of securities by the Permitted Holders or otherwise
(for purposes of this clause (i) and clauses (iii) and (v) below, the Permitted
Holders shall be deemed to beneficially own any voting stock of any entity held
by any other entity (the "parent entity") so long as the Permitted Holders
beneficially own (as so defined), directly or indirectly, in the aggregate a
majority of the voting power of the voting stock of the parent entity; provided,
however, that notwithstanding the foregoing CVC shall be deemed to beneficially
own a majority of the voting power of the voting stock of Sterling (or any
successor) so long as CVC, employees, officers and directors of CVC and
companies, partnerships and other entities at least a majority of the equity in
which is held in the aggregate by CVC and its employees, officers and directors
hold in the aggregate no less than a majority of the economic interests in
Sterling (or such successor)), or (ii) all or substantially all of the assets of
the Corporation and its Subsidiaries (taken as a whole) shall be transferred or
leased to any Person or group of Persons, or (iii) the Corporation shall cease
to own 100% of the outstanding capital stock of HSS Operating Corporation, or
(iv) a majority of the members of the Board of Directors of the Corporation
cease to be Continuing Directors, or (v) after a Public Equity Offering, any
"person" (as such term is used in Sections 13(d) and 14(d) of the Exchange Act),
other than one or more Permitted Holders, is or becomes the beneficial owner (as
defined in clause (i) above, except that for purposes of this clause (v) such
person shall be deemed to have "beneficial ownership" of all shares that any
such person has the right to acquire, whether
5
<PAGE>
such right is exercisable immediately or only after the passage of time),
directly or indirectly, of more than the greater of 35% of the aggregate voting
common stock of the Corporation then outstanding or the total voting power of
the voting stock of the Corporation then held by CVC and its Permitted
Transferees (as defined in the Stockholders Agreement). As used herein, (1) the
term "Permitted Holders" shall mean (i) CVC, (ii) any officer, employee or
director of CVC or any trust, partnership or other entity established solely for
the benefit of such officers, employees or directors, (iii) any officer,
employee or director of the Corporation, HSS Operating Corporation or any
Subsidiary or any trust, partnership or other entity established solely for the
benefit of such officers, employees or directors, and (iv) in the case of any
individual, any Permitted Transferee of such individual (as defined in the
Stockholders Agreement), except a Permitted Transferee by virtue of Section
3.4(b)(iv) thereof; provided, however, that in no event shall individuals
collectively be deemed to be "Permitted Holders" with respect to more than 30%
of the total voting power of the Corporation, (2) the term "Public Equity
Offering" shall mean a primary public offering of Capital Stock (or securities
convertible into or exchangeable for Capital Stock) of the Corporation, HSS
Operating Corporation, any direct or indirect parent of the Corporation (except
CVC or any direct or indirect parent of CVC) (each, a "Parent") or any
Subsidiary pursuant to an effective registration statement filed under the
Securities Act other than a registration statement filed on Form S-8 or any
successor form and other than any registration statement filed in connection
with any issuance of Capital Stock (or securities convertible into or
exchangeable for Capital Stock) in connection with the original issuance of the
Senior Subordinated Notes and (3) "Continuing Director" means any member of the
Board of Directors who (i) was a member of such Board of Directors on the date
hereof, or (ii) was nominated for election or elected to the Board of Directors
with, or whose election to the Board of Directors was approved by, the
affirmative vote of a majority of the Continuing Directors who were members of
such Board of Directors at the time of such nomination or election, or (iii)
became a member of the Board of Directors pursuant to the Stockholders
Agreement.
(c) Restricted Payments. The Corporation shall redeem this Note in full
to the extent then outstanding immediately upon any violation of Section 5(g).
(d) Limitations on Redemption Obligations. Anything in this Section 4 to
the contrary notwithstanding, the Corporation shall not be obligated to redeem
all or any portion of the Note to the extent the Corporation is prohibited from
doing so by the terms of any Senior Debt outstanding at the time of the
occurrence of the event giving rise to such requirement to redeem.
(e) Interest on Securities Called for Redemption. On and after the
redemption date, interest will cease to accrue on the Note or portion thereof
called for redemption.
5. Covenants; Representations
(a) Payment of Note. The Corporation shall pay the principal of and
interest on this Note on the dates and in the manner provided in this Note.
(b) SEC Reports. The Corporation shall deliver to the Holder promptly
(and in any event within 5 days after it files them with the SEC), copies of the
annual reports, quarterly reports and other periodic reports which the
Corporation may be required to file with the SEC pursuant to Section 13, 14 or
15(d) of the Exchange Act.
6
<PAGE>
To the extent that the Corporation is required to prepare and deliver
any periodic reports to the holders of Senior Debt or to CVC or Sterling, the
Corporation shall deliver copies of such reports to the Holder, at the same time
the Corporation is required to deliver such reports to the holders of the Senior
Debt or to CVC or Sterling, as applicable. The Corporation shall, upon
reasonable notice, provide officers, employees and representatives of Holder and
the proposed transferees with reasonable access to the Corporation's premises,
properties, books, records and personnel as may reasonably be requested in
connection with a potential transfer of the Note or any portion thereof.
(c) Preservation of Corporate Existence; etc. Subject to Section 11, the
Corporation will do or cause to be done all things necessary to preserve and
keep in full force and effect the corporate existence and the material rights
(charter and statutory) and franchises of the Corporation and of HSS Operating
Corporation; provided, however, that the Corporation shall not be required to
preserve or cause to be preserved any such material right or franchise if the
board of directors of the Corporation shall determine that the preservation
thereof is no longer desirable in the conduct of the business of the Corporation
and that the loss thereof is not, and will not be, adverse in any material
respect to the Holder.
(d) Payment of Taxes, Assessment, Charges and Claims. The Corporation
will and will cause the Subsidiaries to duly pay or discharge or cause to be
paid or discharged the following before they shall become delinquent: (i) all
material taxes, assessments and governmental charges levied or imposed upon the
Corporation or any of the Subsidiaries or upon the income, profit or property of
the Corporation or any of the Subsidiaries, and (ii) all material lawful claims
for labor, materials and supplies which, if unpaid, might by law become a
material lien upon the property of the Corporation or any of the Subsidiaries;
provided, however, that the Corporation or any of the Subsidiaries shall not be
required to pay or discharge or cause to be paid or discharged (but shall make
adequate provision for) any such tax, assessment, charge or claim whose amount,
applicability or validity is being contested in good faith by appropriate
proceedings and for which adequate provision has been made.
(e) Waiver of Stay, Extension or Usury Laws. The Corporation covenants
(to the extent that it may lawfully do so) that it shall not at any time insist
upon, or plead, or in any manner whatsoever claim, and shall resist any and all
efforts to be compelled to take the benefit or advantage of, any stay or
extension law or any usury law or other law which would prohibit or forgive the
Corporation from paying all or any portion of the principal of and/or interest
on this Note as contemplated herein, wherever enacted, now or at any time
hereafter in force, or which may affect the covenants or the performance of this
Note; and (to the extent that it may lawfully do so) the Corporation hereby
expressly waives all benefit or advantage of any such law and covenants that it
shall not hinder, delay or impede the execution of any power herein granted to
the Holder but shall suffer and permit the execution of every such power as
though no such law had been enacted.
(f) Compliance with Laws. The Corporation will, and will cause the
Subsidiaries to, comply in all material respects with all applicable statutes,
regulations, orders and restrictions of the United States, any state,
municipality or other governmental division thereof, and agencies and
instrumentalities of the foregoing, in respect of the conduct of its and their
businesses and the ownership of its and their properties (including, without
limitation, applicable statutes,
7
<PAGE>
regulations, orders and restrictions relating to equal employment
opportunities and environmental standards and controls), except such as are
being contested in good faith.
(g) Limitation on Restricted Payments.
(i) The Corporation (A) shall not effect the declaration, payment or
setting apart for payment of any dividend on any part of the Corporation's
capital stock or any cash interest payment on any Junior Indebtedness or effect
or make any payment on account of or set apart for payment money for a sinking
or other similar fund for, the purchase, prepayment, redemption or other
retirement of, any of the Corporation's capital stock (or any rights, warrants
or options to purchase or acquire any such capital stock) or Junior
Indebtedness, or make any distribution of any nature whatsoever in respect of
any thereof, either directly or indirectly, and whether in cash, or other
obligations of the Corporation or other property (except dividends or
distributions payable solely in shares, rights, warrants or options of capital
stock and except dividends or distributions payable solely to the Corporation or
its Wholly Owned Subsidiaries), (B) shall not make any payment of cash interest
on Indebtedness that is pari passu with this Note at any time when the payment
of cash interest on this Note is prohibited by the terms of any Senior Debt, and
shall not make any payment of non-cash interest on such pari passu Indebtedness
at any time when the payment of non-cash interest on the Notes is prohibited by
the terms of any Senior Debt, (C) shall not voluntarily prepay any Indebtedness
that is pari passu with this Note, (D) shall not permit a Subsidiary or any
other corporation or other entity directly or indirectly controlled by the
Corporation to purchase, redeem or otherwise acquire any of the Corporation's
capital stock or Junior Indebtedness or any Indebtedness that is pari passu with
this Note and (E) shall not permit any Subsidiary that is not a Wholly Owned
Subsidiary to make any payment or distribution in respect of the capital stock
of such Subsidiary that the Corporation would be prohibited from making in
respect of the capital stock of the Corporation. The provisions of this Section
5(g) shall not prohibit (x) the repurchase of securities of the Corporation from
employees, former employees, directors or former directors of the Corporation or
any Subsidiary (or permitted transferees of such individuals) pursuant to the
terms of Article VII of the Stockholders Agreement; provided, further, however,
that the aggregate amount of such repurchases shall not exceed the sum of (1)
$[ ] and (2) the aggregate amount of cash received by the Corporation after the
date hereof from the sale of such securities to, or the exercise of options to
purchase such securities by, employees or directors of the Corporation or any
Subsidiary, (y) the exchange of the Series A Preferred for Junior Indebtedness
pursuant to the terms thereof, or (z) the retirement, redemption or exchange of
Junior Indebtedness or Series A Preferred with or for shares of capital stock of
the Corporation (an "Equity Swap").
(ii) The Corporation will not permit any Subsidiary to effect the
declaration, payment or setting apart for payment of any dividend on any part of
such Subsidiary's capital stock (other than dividends or distributions in such
Subsidiary's Capital Stock) except for payments of any dividend to the
Corporation or a Wholly Owned Subsidiary.
(iii) None of the Corporation's Junior Indebtedness or Capital Stock
shall provide for the mandatory payment of principal by way of redemption,
sinking fund or otherwise (including, without limitation, at the option of the
holder thereof) and the Corporation will make no optional payment with respect
thereto, prior to the payment of all principal of and interest on this
8
<PAGE>
Note (including accrued but unpaid interest), except that nothing herein
shall prohibit any Equity Swap.
(iv) "Junior Indebtedness" means any Indebtedness of the Corporation
whether outstanding on the date hereof or incurred thereafter, that is
subordinated in right of payment to this Note either by its terms or by
operation of law.
(h) Limitation on Payment Restrictions.
Except as set forth herein, the Corporation will not, and will not
permit any of the Subsidiaries to, directly or indirectly, create or otherwise
cause or suffer to exist or become effective any encumbrance or restriction
(other than this Note) on the ability of any Subsidiary to (i) pay dividends or
make any other distribution on its capital stock or any other interests or
participation in, or measured by, its profits, owned by the Corporation or any
Subsidiary of the Corporation, or pay any Indebtedness owed to, the Corporation
or a Subsidiary of the Corporation, (ii) make loans or advances to the
Corporation or (iii) transfer any of its properties or assets to the
Corporation, except for such encumbrances or restrictions existing under or by
reason of (A) applicable law, (B) Senior Debt or (C) Indebtedness existing on
the date hereof.
6. Due Authorization, etc.
The Corporation hereby represents to the Holder that (i) the Corporation
is a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware, (ii) the Corporation has all requisite corporate
power and corporate authority to execute and deliver this Note and to carry out
the terms hereof, (iii) the Corporation has duly authorized the execution,
delivery and performance of this Note and (iv) the execution, delivery and
performance of this Note do not (a) violate any provision of the certificate of
incorporation or by-laws of the Corporation, or (b) violate any statute, rule or
regulation of any governmental authority to which the Corporation is subject.
This Note represents the valid and binding obligation of the Corporation,
enforceable against the Corporation in accordance with its terms.
7. Subordination
(a) Definitions. The following terms have the following meanings:
"Agent" means [ ], as administrative agent for the Lenders party to the
Credit Agreement, any successor agent and any agent for the Lenders with respect
to any amendment, extension, supplement, increase, renewal, refunding,
replacement, refinancing (including successive refinancings) or other
modification of the Bank Debt. If no such agent exists, "Agent" shall mean the
holders of a majority of the outstanding Bank Debt.
"Bank Debt" means all obligations of the Subsidiaries (and the
Corporation as guarantor thereunder) now or hereafter existing (a) under the
Credit Agreement as it may hereafter be amended, extended, supplemented,
increased, renewed, refunded, replaced, refinanced (including successive
refinancings) or otherwise modified from time to time, whether for principal,
interest, premium, reimbursement of amounts drawn under letters of credit issued
pursuant to the Credit Agreement, fees, expenses, indemnities or otherwise and
(b) under any of the Senior Loan Documents, as they may hereafter be amended,
extended, supplemented, increased, renewed,
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refunded, replaced, refinanced (including successive refinancings) or
otherwise modified from time to time.
"CMP Debt" means all obligations of the Corporation and the Subsidiaries
now or hereafter existing (a) under the CMP Subordinated Credit Agreement as it
may hereafter be amended, extended, supplemented, increased, renewed, refunded,
replaced, refinanced (including successive refinancings) or otherwise modified
from time to time, whether for principal, interest, premium, reimbursement of
amounts drawn under letters of credit issued pursuant to the CMP Subordinated
Credit Agreement, fees, expenses, indemnities or otherwise and (b) under any of
the CMP Loan Documents, as they may hereafter be amended, extended,
supplemented, increased, renewed, refunded, replaced, refinanced (including
successive refinancings) or otherwise modified from time to time.
"CMP Loan Documents" means all Loan Documents (as defined in the CMP
Subordinated Credit Agreement).
"Credit Agreement" means the Credit Agreement dated as of [ ] among the
Corporation, as borrower, other Lenders thereto, the Agent and [ ], as lead
arranger, as such Agreement may hereafter be amended, extended, supplemented,
increased, renewed, refunded, replaced, refinanced (including successive
refinancings) or otherwise modified.
"Holder" as used in this Section 7 means a holder or owner of this Note
and any other holder or owner of Subordinated Debt.
"Indebtedness" means, without duplication, with respect to any person,
(a) the principal of and premium (if any) in respect of all indebtedness of such
person for borrowed money, (b) the principal of and premium (if any) in respect
of all obligations of such person evidenced by notes, bonds, debentures or other
similar instruments, (c) all indebtedness created or arising under any
conditional sale or other title retention agreement with respect to property
acquired by such person (even though the rights and remedies of the seller or
lender under such agreement in the event of default are limited to repossession
or sale of such property), (d) all obligations of such person as lessee under
leases that have been or should be, in accordance with generally accepted
accounting principles, recorded as capital leases, (e) all obligations,
contingent or otherwise, of such person under acceptance, letter of credit or
similar facilities, (f) all indebtedness of the type referred to in clauses (a)
through (e) above guaranteed directly or indirectly in any manner by such
person, or in effect guaranteed directly or indirectly by such person through an
agreement (1) to pay or purchase such indebtedness or to advance or supply funds
for the payment or purchase of such indebtedness, (2) to purchase, sell or lease
(as lessee or lessor) property, or to purchase or sell services, primarily for
the purpose of enabling the debtor to make payment of such indebtedness or to
assure the holder of such indebtedness against loss, (3) to supply funds to or
in any other manner invest in the debtor (including any agreement to pay for
property or services irrespective of whether such property is received or such
services are rendered) or (4) otherwise to assure a creditor against loss, and
(i) all indebtedness of the type referred to in clauses (a) through (e) above
secured by (or for which the holder of such indebtedness has an existing right,
contingent or otherwise, to be secured by) any lien on property (including,
without limitation, accounts and contract rights) owned by such person, even
though such person has not assumed or become liable for the payment of such
indebtedness, but excluding trade and other accounts payable in the ordinary
course of business in
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accordance with customary trade terms and which are not overdue for more
than 90 days, or as to which a dispute exists and adequate reserves in
conformity with generally accepted accounting principles have been established
on the books of such person.
"Lenders" means the [Lenders] as defined in the Credit Agreement.
"Loan Parties" shall mean the Corporation and any Subsidiary which is an
obligor under the Credit Agreement or the Senior Subordinated Notes.
"Non-payment Default" means any default or event of default (other than
a Payment Default) under any agreement or instrument relating to Senior Debt.
For purposes of the immediately preceding sentence, an "event of default" shall
exist when as a result thereof the holders of the pertinent Senior Debt are then
permitted (whether or not with the requirement that notice be given) to cause
such Senior Debt to become due prior to its scheduled maturity.
"Payment Default" means any default in the payment of principal of,
premium, if any, interest on, or other amounts payable on, or in connection
with, Senior Debt, irrespective of whether such default in payment results from
a failure to pay any amount when originally scheduled to be paid or upon
acceleration or otherwise.
"Senior Creditors" means (i) the Lenders and the Agent under the Senior
Loan Documents until the Bank Debt (including all refinancings and successive
refinancings thereof) has been finally and indefeasibly paid in full, (ii)
thereafter, the holders of the Senior Subordinated Notes until they have been
finally and indefeasibly paid in full, (iii) thereafter the holders of the PIK
Notes and (iv) thereafter, the holders of other Senior Debt on a pro rata basis.
"Senior Debt" means (a) all Indebtedness of the Corporation and the
Subsidiaries, including principal, premium, if any, and interest on such
Indebtedness, whether outstanding on the date hereof or thereafter created,
incurred or assumed, except for Indebtedness which is expressly by its terms or
the terms of the instrument creating or evidencing such Indebtedness made equal
in right of payment with this Note or subordinate in right of payment to this
Note, including, without limitation, Indebtedness under the Subordinated Credit
Agreement, dated as of August ___, 1999, by and between the Corporation and
Citicorp Mezzanine Partners, L.P., a Delaware limited partnership (the "CMP
Subordinated Credit Agreement"), (b) all other amounts due on or in connection
with such Indebtedness, including all charges, fees, indemnities, and expenses
(including reasonable fees and expenses of counsel), (c) all post petition
interest with respect to such Indebtedness, (d) all amendments, extensions,
supplements, increases, renewals, refundings, replacements, refinancings,
modifications and deferrals of the Indebtedness referred to in clauses (a), (b)
and (c) above, and shall include without limiting the foregoing the Bank Debt,
the Senior Subordinated Notes, the PIK Notes and all guaranties thereof by the
Corporation. Notwithstanding the foregoing, Senior Debt shall not include (i)
any Indebtedness of the Corporation to any Subsidiary of the Corporation, (ii)
any Indebtedness of the Corporation which, by its terms or the terms of any
instrument creating or evidencing it (including the terms of any instrument
amending, extending, supplementing, renewing, increasing, refunding, replacing,
refinancing, modifying or deferring the same) is expressly made pari passu with
or expressly subordinate in right of payment to this Note, (iii) Indebtedness to
any employee of the Corporation; (iv) any liability for taxes; (v) amounts
payable to trade creditors for goods and services provided in the ordinary
course of
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business; (vi) that portion of any Indebtedness which at the time of incurrence,
creation or assumption is incurred, created or assumed in violation of
the Senior Indenture (as in effect on the date of issuance of the Senior
Subordinated Notes and irrespective of whether any Indebtedness is then
outstanding thereunder); or (vii) Indebtedness under the Senior Subordinated
Notes (or the terms of any instrument amending, extending, supplementing,
renewing, increasing, refunding, replacing, refinancing, modifying or deferring
the same) in excess of the principal amount outstanding on the date of original
issuance of the Senior Subordinated Notes plus any interest thereon or other
Indebtedness in respect thereof.
"Senior Default" means a Payment Default or a Non-payment Default.
"Senior Indenture" means the Indenture dated [ ] between HSS
Operating Corporation and [ ], as trustee, with respect to HSS Operating
Corporation's ___% Senior Subordinated Notes Due [ ].
"Senior Loan Documents" means all Loan Documents (as defined in the
Credit Agreement).
"Senior Subordinated Notes" means all obligations of HSS Operating
Corporation, the Subsidiary Guarantors and the Corporation, as guarantor, now or
hereafter existing under the Indenture as it may hereafter be amended, extended,
supplemented, increased, renewed, refunded, replaced, refinanced or otherwise
modified from time to time, whether for principal, interest, premium, fees,
expenses, indemnities or otherwise.
"Senior Trustee" means [ ], as trustee under the Senior Indenture,
or any successor thereto.
"Significant Subsidiary" means any Subsidiary of the Corporation that
would be a "significant subsidiary" as defined in Rule 1.02(w) of Regulation S-X
promulgated pursuant to the Securities Act.
"Subordinated Debt" means (a) all obligations of the Corporation now or
hereafter existing under or with respect to this Note (whether created directly
or acquired by assignment or otherwise), as it may hereafter be amended,
extended, supplemented or otherwise modified from time to time, whether for
principal, interest (including, without limitation, post petition interest),
fees, expenses, indemnities, reimbursements, damages, liabilities or otherwise,
and (b) all obligations of any of the Loan Parties in respect of (i) any
Indebtedness (but in no event constituting Bank Debt) incurred by any of the
Loan Parties to amend, extend, supplement, increase, renew, refund, replace,
refinance or otherwise modify, in whole or in part, the Subordinated Debt,
including interest and premium on any such Indebtedness, (ii) any loan or credit
agreement entered into by any of the Loan Parties in connection with any such
Indebtedness, as such agreement may be amended, extended, supplemented or
otherwise modified from time to time, and (iii) all other amounts payable in
respect of any such Indebtedness or agreement, including, without limitation,
amounts payable (A) in respect of any indemnity and (B) in respect of any breach
of a representation or a warranty.
"Subsidiary" means any corporation more than 50% of the outstanding
voting power of the Capital Stock of which is owned or controlled, directly or
indirectly, by the Corporation.
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(b) Subordinated Debt Subordinated to Senior Debt. The Corporation, for
itself and its successors, and each Holder, by its acceptance thereof, agrees
that the Subordinated Debt is and shall be subordinated in right of payment, to
the extent and in the manner provided in this Section 7, to the prior payment in
full of all Senior Debt. For the purposes of this Note, Senior Debt shall be
deemed not to have been paid in full until the holders or owners of the Senior
Debt shall have received payment of all Senior Debt in cash and as long as any
lender shall have any obligation under the Senior Loan Documents, the Senior
Indenture, the CMP Subordinated Credit Agreement, the PIK Indenture or other
agreement or instrument evidencing any obligations under any Senior Debt. This
Section 7 shall constitute a continuing offer to all persons who, in reliance
upon such provisions, become holders of, or continue to hold, Senior Debt, and
such provisions are made for the benefit of the holders of Senior Debt, and such
holders are made obligees hereunder and any one or more of them may enforce such
provisions.
(c) No Payment on Subordinated Debt in Certain Circumstances.
(i) Upon the maturity of all or any part of any Senior Debt by lapse
of time, acceleration (unless waived in writing) or otherwise, all
Senior Debt then due shall first be paid in full, or such payment duly provided
for, in cash or cash equivalents in a manner satisfactory to the holders of such
Senior Debt, before any payment is made on account of the Subordinated Debt, and
until the Senior Debt is paid in full, any distribution to which the Holder
would be entitled but for this Section 7 shall be made to holders of Senior Debt
as their interests may appear.
(ii) In the event that any Payment Default shall have occurred and be
continuing, unless and until such default shall have been cured or waived in
writing, then no payment (including any payment which may be payable by reason
of the payment of any other indebtedness of the Corporation being subordinated
to payment of the Subordinated Debt) shall be made by or on behalf of the
Corporation for or on account of any Subordinated Debt, and the Holder shall not
take or receive from the Corporation or any Subsidiary, directly or indirectly,
in cash or other property, or by set-off or in any other manner, including,
without limitation, from or by way of collateral, payment of all or any of the
Subordinated Debt. The Holder shall immediately deliver to the Representative
any monies, securities or other property paid in violation of the preceding
sentence and received by the Holder or its equivalent in cash, with proper
endorsement or assignment if necessary, and prior to such delivery shall hold in
trust, such monies, securities or other properties solely as trustee for and for
the benefit of the Senior Creditors as set forth in this sentence.
(iii) Upon written notice from the Representative to the Corporation
(which shall give prompt notice to the Holder) of a Non-payment Default and if
such Non-payment Default shall not have been cured or waived in writing, no
payment (including any payment which may be payable by reason of the payment of
any other Indebtedness of the Corporation being subordinated to payment of the
Subordinated Debt) shall be made by or on behalf of the Corporation for or on
account of any Subordinated Debt, and the Holder shall not take or receive from
the Corporation, directly or indirectly, in cash or other property or by set-off
or in any other manner, including, without limitation, from or by way of
collateral, payment of all or any of the Subordinated Debt, during the period
(the "Payment Blockage Period") commencing on the date of receipt by the
Corporation of such notice and ending (unless earlier terminated by notice from
the Representative to the Corporation, which shall give prompt notice to the
Holder), on the earlier of
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(A) the date when all Non-payment Defaults shall have been cured or waived in
writing, (B) the date an Event of Default occurs under Section 8(a)(ii) or
8(a)(iii), and (C) the date on which the Bank Debt, CMP Debt, or Senior
Subordinated Notes are accelerated and declared immediately due and payable.
(iv) Nothing contained in this Section 7 will limit the right of the
Holder to take any action to accelerate the maturity of the securities pursuant
to Section 8 or to pursue, subject to Section 8, any rights or remedies
hereunder; provided that so long as any Senior Debt remains outstanding the
Holder shall take no such action during the period (the "Remedies Blockage
Period") commencing upon any Event of Default hereunder until the earlier of (A)
the date when all Events of Default hereunder shall have been cured or waived in
writing, (B) the date an Event of Default occurs under Section 8(a)(ii) or
8(a)(iii), and (C) the date on which the Bank Debt, CMP Debt, Senior
Subordinated Notes or PIK Notes are accelerated and declared immediately due and
payable; provided, further, that in the event that any Subordinated Debt is
declared due and payable before its stated maturity, the holders of all Senior
Debt shall be entitled to receive final and indefeasible payment in full of all
amounts due or to become due (whether or not accelerated) on or in respect of
all Senior Debt before the Holder is entitled to receive any payment (including
any payment which may be payable by reason of the payment of any other
Indebtedness of the Corporation being subordinated to the payment of the
Subordinated Debt) by the Corporation on account of the Subordinated Debt. The
Holder shall immediately deliver to the Representative any monies, securities or
other property received by the Holder or its equivalent in cash, with proper
endorsement or assignment if necessary, and prior to such delivery shall hold in
trust, such monies, securities or other properties solely as trustee for and for
the benefit of the Senior Creditors as set forth in this sentence.
(v) Nothing contained in this Section 7 shall prevent interest from
accruing to this Note as provided above until this Note is paid in full.
(d) Subordinated Debt Subordinated to Prior Payment of All Senior Debt
on Dissolution. Upon any payment or distribution of all or any of the assets or
securities of the Corporation of any kind or character upon any dissolution,
winding up, liquidation, reorganization, arrangement, adjustment, protection,
relief or other similar case or proceeding under any federal or state bankruptcy
or similar law (whether voluntary or involuntary, in bankruptcy, insolvency,
receivership, arrangement, reorganization or relief proceedings or upon any
assignment for the benefit of creditors or any marshaling of the assets and
liabilities of the Corporation or otherwise):
(i) all Senior Debt shall first be entitled to be paid in full before
the Holder is entitled to receive any payment on account of the Subordinated
Debt; and
(ii) any payment or distribution in respect of the Subordinated Debt
to which the Holder would be entitled except for the provisions of this
Section 7 (including any payment that may be payable by reason of any other
Indebtedness of the Corporation being subordinated to the payment of the
Subordinated Debt), shall be paid by the Corporation, the liquidating trustee or
agent or other person making such payment or distribution directly to the Agent
(in the case of the Bank Debt) or to the holders of the other Senior Debt or
their Representative or to the trustee under any indenture or other agreement
(if any) pursuant to which Senior Debt may have been issued, as the case may be,
for application to (in the case of cash), or as
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collateral (in the case of non-cash property or securities) for, the
payment or prepayment in full of all Senior Debt remaining unpaid, after giving
effect to any concurrent payment or distribution (in the case of cash) to the
holders of such Senior Debt.
(e) Holder to be Subrogated to Rights of Holders of Senior Debt. Upon
final and indefeasible payment in full of all Senior Debt, the Holder shall be
subrogated to the rights of the holders of Senior Debt to receive payments or
distributions of assets of the Corporation applicable to the Senior Debt until
all Subordinated Debt shall be paid in full, and for the purpose of such
subrogation no such payments or distributions to the holders of Senior Debt by
or on behalf of the Corporation or by or on behalf of the Holder by virtue of
this Section 7 which otherwise would have been made to the Holder shall, as
among the Corporation, its creditors other than the holders of Senior Debt and
the Holder, be deemed to be payment by the Corporation to or on account of the
Senior Debt, it being understood that the provisions of this Section 7(e) are
and are intended solely for the purpose of defining the relative rights of the
Holder, on the one hand, and the holders of Senior Debt, on the other hand.
If any payment or distribution to which the Holder would otherwise have
been entitled but for the provisions of this Section 7 shall have been applied,
pursuant to the provisions of this Section 7, to the payment of all amounts
payable under the Senior Debt, then and in such case, the Holder shall be
entitled to receive from the holders of such Senior Debt at the time outstanding
any payments or distributions received by such holders of Senior Debt in excess
of the amount sufficient to pay holders of Senior Debt all amounts payable under
or in respect of the Senior Debt in full unless the holders of Senior Debt are
otherwise directed by a court of competent jurisdiction.
(f) Subordination Rights Not Impaired by Acts or Omissions of the
Corporation or Holders of Senior Debt. The Corporation agrees that it will not
make any payment of any Subordinated Debt, or take any other action, in
contravention of the provisions of this Section 7, and no right of any present
or future holders of any Senior Debt to enforce subordination as provided herein
shall at any time in any way be prejudiced or impaired by any act or failure to
act on the part of the Corporation or by any act or failure to act, in good
faith, by any such holder, or by any noncompliance by the Corporation with the
terms of this Note, regardless of any knowledge thereof which any such holder
may have or with which any such holder may be otherwise charged. The holders of
Senior Debt may amend, extend, supplement, increase, renew, refund, replace,
refinance, restructure or otherwise modify the terms of the Senior Debt or any
instrument or agreement evidencing or governing the same or any security
therefor and release, sell or exchange any security therefor and otherwise deal
freely with any Loan Party, all without affecting the liabilities and
obligations of the Corporation and the Holder hereunder.
(g) In Furtherance of Subordination.
(i) All payments or distributions upon or with respect to the
Subordinated Debt which are received by the Holder contrary to the provisions of
this Section 7 shall be received and held by such Holder, in trust for the
benefit of, shall be segregated from other funds and property held by such
Holder for and shall be paid immediately over and delivered to the
Representative of Senior Creditors in the same form as so received (with any
necessary endorsement), for application (in the case of cash) to, or as
collateral (in the case of non-cash property or securities) for, the payment or
prepayment in full of all Senior Debt of the Senior
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Creditors remaining unpaid, after giving effect to any concurrent payment or
distribution (in the case of cash) to the holders of Senior Debt and
shall be applied (A) first to the final and indefeasible payment in full of all
Bank Debt, (B) next to the final and indefeasible payment in full of the Senior
Subordinated Notes, (C) next to the final and indefeasible payment in full of
all CMP Debt, (D) next to the payment of any other Senior Debt (as defined in
the PIK Indenture) on a pro rata basis, (E) next to the final and indefeasible
payment in full of the PIK Notes and other Indebtedness which is pari passu with
the PIK Notes, and (F) finally to the payment of any other Senior Debt on a pro
rata basis.
(ii) The Corporation shall give prompt written notice to the Holder
of any Senior Default under any Senior Debt or under any agreement pursuant to
which Senior Debt may have been issued or of any dissolution, winding up,
liquidation, reorganization or other event described in Section 7(d)
relating to the Corporation; provided that, except as set forth in Section 7(i),
the failure to give any such notice shall in no way affect the obligations of
the Holder under, or the terms of subordination set forth in, this Section 7.
(iii) The Agent or the holders of Senior Debt (including the
Trustee), as the case may be, are hereby authorized to demand specific
performance of the provisions of this Section 7, whether or not the Corporation
shall have complied with any of the provisions hereof applicable to it, at any
time when the Corporation or the Holder, as the case may be, shall have failed
to comply with any of the provisions of this Section 7 applicable to it. The
Holder hereby irrevocably waives any defense based on the adequacy of a remedy
at law that might be asserted as a bar to such remedy of specific performance.
The Holder hereby acknowledges that the provisions of this Section 7 are
intended to be enforceable at all times, whether before or after the
commencement of a proceeding referred to in Section 7(d).
(h) Obligations of Corporation Unconditional. Nothing contained in this
Section 7 is intended to or shall impair, as between the Corporation and the
Holder, the obligations of the Corporation, which are absolute and
unconditional, to pay to the Holder the principal of, premium, if any, on and
interest on this Note as and when the same shall become due and payable in
accordance with its terms or is intended to or shall affect the relative rights
of the Holder and creditors of the Corporation other than the holders of the
Senior Debt, and, except as otherwise expressly provided herein, nothing
contained herein shall prevent the Holder from exercising all remedies otherwise
permitted by applicable law upon Default, subject to the rights, if any, under
this Section 7 of the holders of such Senior Debt in respect of cash, property,
security or securities of the Corporation received upon the exercise of any such
remedy. Nothing contained in this Section 7 or in this Note shall, except during
the pendency of any dissolution, winding-up, liquidation, reorganization,
recapitalization or readjustment of the Corporation, affect the obligation of
the Corporation to make, or prevent the Corporation from making, at any time
(except under the circumstances described in Section 7(c)) payment of principal
of or interest on this Note.
The failure to make a payment on account of principal of, premium, if
any, on or interest on this Note by reason of any provision of this Section 7
shall not be construed as preventing the occurrence of an Event of Default under
Section 8.
Upon any payment or distribution of assets of the Corporation referred
to in this Section 7, the Holder shall be entitled to rely upon any unstayed,
final, nonappealable order or
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decree made by any court of competent jurisdiction or upon any certificate of
any agent or other person for the purpose of ascertaining the persons
entitled to participate in any distribution, the holders of the Senior Debt and
other Indebtedness of the Corporation, the amount thereof or payable thereon,
the amount or amounts paid or distributed thereon and all other facts pertinent
thereto or to this Section 7.
(i) Holder Entitled to Assume Payments Not Prohibited in Absence of
Notice. The Holder shall not at any time be charged with the knowledge of the
existence of any facts which would prohibit the making of any payment to such
Holder, unless and until the Holder shall have received written notice thereof
from the Corporation or one or more holders of Senior Debt or from the Agent or
Representative therefor; and, prior to the receipt of any such written notice
(and absent actual notice to the contrary on the part of the Holder), the Holder
shall be entitled to assume conclusively that no such facts exist. Nothing
contained in this Section 7 shall limit the right of the holders of Senior Debt
to recover payments as contemplated elsewhere in this Section 7. The Holder
shall be entitled to rely on the delivery to it of, and upon such delivery will
be charged with knowledge of the existence of, a written notice by a person
representing himself or itself to be a holder of such Senior Debt (or a trustee
on behalf of, or other representative of, such holder) to establish that such
notice has been given by a holder of such Senior Debt or a trustee on behalf of
any such holder.
(j) Rights in Insolvency Proceedings. The Holder irrevocably
authorizes and empowers the Representative of the Senior Creditors in any
proceeding defined in Section 8(a) (ii) or (iii) (an "Insolvency Proceeding")
involving or relating to the Subordinated Debt to file a proof of claim
on behalf of the Holder with respect to the Subordinated Debt if the Holder
fails to file proof of its claims prior to 30 days before the expiration of the
time period during which such claims must be submitted to accept and receive any
payment or distribution which may be payable or deliverable at any time upon or
in respect of the Subordinated Debt in an amount not in excess of the Agent's
portion of the Senior Debt then outstanding and to take such other action as may
be reasonably necessary to effectuate the foregoing. The Holder shall provide to
the Agent all information and documents reasonably necessary to present claims
or seek enforcement as aforesaid. The Holder agrees that even though it shall
retain the right to vote its claims and otherwise act in any such Insolvency
Proceedings relative to the Corporation (including, without limitation, the
right to vote to accept or reject any plan of partial or complete liquidation,
reorganization, arrangement, composition or extension), the Holder shall not
take any action or vote in any way so as to contest (i) the validity or the
enforceability of the Credit Agreement, the Senior Loan Documents or the liens
and security interests to the extent granted to the Agent by the Corporation
with respect to the Bank Debt, (ii) the validity or enforceability of the Senior
Indenture or the PIK Indenture, (iii) the validity or the enforceability of the
CMP Subordinated Credit Agreement or the CMP Loan Documents, (iv) the rights of
the Lenders established in the Credit Agreement, the Senior Loan Documents, the
CMP Subordinated Credit Agreement, the CMP Loan Documents or any security
documents with respect to such liens and security interests, or (v) the validity
or enforceability of terms of subordination set forth herein or any agreement or
instrument to the extent evidencing or relating to the Senior Debt. The holders
of Senior Debt agree that as a condition to Holder's obligations in this
paragraph, while they shall retain the right to vote the Senior Debt and
otherwise act in any such reorganization proceeding relative to the Corporation
(including, without limitation, the right to vote or accept or reject any plan
of partial or complete liquidation, reorganization, arrangement, composition or
extension), they shall not take any action or vote in any way so as to
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contest the enforceability of this Note or any other agreement or instrument to
the extent evidencing or relating to the Subordinated Debt.
(k) Waiver of Consolidation. Each holder of this Note agrees that it
will not at any time insist upon, plead, or in any manner whatsoever, seek the
entry of any order or judgment, or take the benefit or advantage of, any
substantive consolidation, piercing of the corporate veil or any other order or
judgment that causes an effective combination of the assets and liabilities of
the Corporation and any other individual, corporation, partnership or joint
venture in any Insolvency Proceeding.
(l) Miscellaneous.
(i) The Holder and the Corporation each will, at the Corporation's
expense and at any time and from time to time, promptly execute and deliver all
further instruments and documents, and take all further action that may be
reasonably necessary or desirable, or that the Agent or any Representative of
the Senior Creditors may reasonably request, in order to protect any right or
interest granted or purported to be granted by the provisions of this Section 7
or to enable the Agent to exercise and enforce its rights and remedies
hereunder.
(ii) All rights and interests under this Section 7 of the holders of
the Bank Debt, CMP Debt, the Agent or the holders of the Senior Subordinated
Notes, the PIK Notes and any other holder of Senior Debt, and all agreements and
obligations of the Holder and the Corporation under this Section 7, shall remain
in full force and effect irrespective of:
(a) any lack of validity or enforceability of any Senior Loan
Document or any CMP Loan Documents or any other agreement or instrument
relating thereto or to any Senior Debt;
(b) any amendment, extension, renewal, increase, supplement,
refunding, replacement, refinancing or other modification in the time,
manner or place of payment of, or in any other term of, all or any of the Bank
Debt, CMP Debt, the Senior Subordinated Notes, the PIK Notes or any other Senior
Debt, or any other amendment, extension, renewal or waiver of or any consent to
any departure from any Senior Loan Document or any CMP Loan Document or any
other agreement or instrument relating thereto or to any other Senior Debt,
including, without limitation, any increase in obligations resulting from the
extension of additional credit to any Loan Party or any of its subsidiaries or
otherwise (provided that nothing in this paragraph shall operate to make any
Indebtedness that would not otherwise qualify as Senior Debt so qualify).
(c) any taking, exchange, release or non-perfection of any other
collateral, or any taking, release or amendment or waiver of or consent to
departure from any guaranty, for all or any of the Bank Debt, CMP Debt, the
Senior Subordinated Notes, the PIK Notes or any other Senior Debt;
(d) any manner of application of collateral, or proceeds thereof,
to all or any of the Bank Debt, CMP Debt, or any other Senior Debt, or
any manner of sale or other disposition of any collateral for all or any of the
Bank Debt, CMP Debt, or any other Senior Debt, or any other assets of any Loan
Party or any of its subsidiaries;
18
<PAGE>
(e) any change, restructuring or termination of the corporate
structure or existence of any Loan Party or any of its subsidiaries; or
(f) any other circumstance which might otherwise constitute a
defense available to, or a discharge of, any Loan Party or a
subordinated creditor.
(iii) The provisions of this Section 7 shall continue to be effective
or be reinstated, as the case may be, if at any time any payment of any
Senior Debt is rescinded or must otherwise be returned by the Agent, any holder
of Bank Debt, CMP Debt, any holder of the Senior Subordinated Notes, any holder
of the PIK Notes or any other holder of Senior Debt upon the insolvency,
bankruptcy or reorganization of any Loan Party or otherwise, all as though such
payment had not been made.
(iv) The Holder and the Corporation each hereby waives (to the extent
each may lawfully do so) promptness, diligence, notice of acceptance and any
other notice with respect to any of the Senior Debt and this Section 7 and any
requirement that the Agent, any holder of Bank Debt, CMP Debt, or any other
holder of Senior Debt protect, secure, perfect or insure any security interest
or lien or any property subject thereto or exhaust any right or take any action
against the Corporation or any other person or entity or any collateral.
(v) No failure on the part of the Agent, any holder of Bank Debt,
CMP Debt, any holder of the Senior Subordinated Notes, any holder of the
PIK Notes or any other holder of Senior Debt to exercise, and no delay in
exercising, any right hereunder shall operate as a waiver thereof; nor shall any
single or partial exercise of any right hereunder preclude any other or further
exercise thereof or the exercise of any other right. The remedies hereunder
provided are cumulative and not exclusive of any remedies provided by law.
(vi) The provisions of this Section 7 constitute a continuing
agreement and shall (A) remain in full force and effect until all Senior
Debt shall have been finally and indefeasibly paid in full, (B) be binding upon
the Holder and the Corporation and their successors and assigns, and (C) inure
to the benefit of and be enforceable by any holders of Bank Debt, CMP Debt, the
Agent, the Trustee, any holder of the Senior Subordinated Notes, any holder of
the PIK Notes, any other holder of Senior Debt and their successors, transferees
and assigns.
8. Events of Default
(a) An "Event of Default" occurs if:
(i) the Corporation defaults in the payment of the principal or
interest of this Note when the same becomes due and payable at maturity,
upon acceleration, or otherwise, whether or not such payment shall be prohibited
by the provisions of Section 7;
(ii) the Corporation or any Significant Subsidiary, pursuant to or
within the meaning of any Bankruptcy Law:
(a) commences a voluntary case or proceeding,
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(b) consents to the entry of an order for relief against it in an
involuntary case or proceeding,
(c) consents to the appointment of a Custodian of it or for all or
substantially all of its property, or
(d) makes a general assignment for the benefit of its creditors;
(iii) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:
(a) is for relief against the Corporation or any Significant
Subsidiary in an involuntary case or proceeding,
(b) appoints a Custodian of the Corporation or any Significant
Subsidiary or for all or substantially all of its property, or
(c) orders the liquidation of the Corporation or any Significant
Subsidiary;
and in the case of (a) above the order or decree remains unstayed and in effect
for 60 days;
(iv) the Corporation fails to observe or perform any material
covenant, condition or agreement required on its part to be observed or
performed pursuant to Section 5, such failure continues for a period of thirty
days after notice from Holder and notice of such failure shall have been given
to the Representative (which notice may be given by the Corporation or the
Holder); or
(v) the Corporation fails to pay any Indebtedness of the Corporation
within any applicable grace period after final maturity or any such Indebtedness
is accelerated by the holders thereof because of a default and the total amount
of such Indebtedness unpaid or accelerated exceeds $10 million and such failure
continues for 10 days after notice.
(b) Acceleration. Subject to the provisions of Section 7, if an Event of
Default (other than an Event of Default with respect to the Corporation
specified in clause (a)(ii) or (iii) of Section 8) occurs and is continuing, the
Holders of 25% or more of the outstanding amount of the Corporation's 12% Junior
Subordinated Debentures Due June 30, 2011, by written notice to the Corporation
(an "Acceleration Notice"), may declare the unpaid principal of and accrued
interest on this Note to be immediately due and payable. Upon such declaration,
if there is at such time any Senior Debt outstanding, the principal, premium, if
any, and interest shall be due and payable upon the first to occur of an
acceleration under the Senior Loan Documents or the Senior Indenture and the PIK
Indenture or the CMP Loan Documents or thirty days after receipt by the Agent
(or any Representative of which the holder of this Note has received notice if
the Bank Debt or the CMP Debt is not then outstanding) of such Acceleration
Notice given hereunder and there has been no cure by such 30th day. If an Event
of Default specified in clause (a)(ii) or (iii) of Section 8 occurs with respect
to the Corporation, all principal of and interest on this Note outstanding shall
ipso facto become and be immediately due and payable without any declaration or
other act on the part of the Holder. The Holders of 50% or more of the
outstanding amount of the Corporation's 12% Junior
20
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Subordinated Debentures Due June 30, 2011 (the "Majority Holders") by written
notice to the Corporation may rescind an acceleration and its consequences if
(i) all existing Events of Default, other than the nonpayment of principal of
or interest on this Note which has become due solely because of the
acceleration, have been cured or waived and (ii) the rescission would not
conflict with any judgment or decree of a court of competent jurisdiction. Any
amounts received by Holder in connection with any action taken pursuant to this
Section 8(b) shall be subject to the provisions of Section 7.
(c) Other Remedies. Subject to the provisions of Section 7, if an Event
of Default occurs and is continuing, the Majority Holders may pursue any
available remedy by proceeding at law or in equity to collect the payment of
principal of or interest on this Note or to enforce the performance of any
provision of this Note.
A delay or omission by the Holder in exercising any right or remedy
accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. No remedy is
exclusive of any other remedy. All remedies are cumulative to the extent
permitted by law.
(d) Waiver of Past Defaults. Subject to Section 8(b), the Majority
Holders may waive an existing Default or Event of Default and its consequences.
Upon any such waiver, such Default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured for every purpose
of this Note; but no such waiver shall extend to any subsequent or other Default
or impair any right consequent thereon.
9. Amendment and Waiver
(a) Consent Required. Any term, covenant, agreement or condition of this
Note may, with the consent of the Corporation, be amended or compliance
therewith may be waived (either generally or in a particular instance and either
retroactively or prospectively), if the Corporation shall have obtained the
consent in writing of the Majority Holders; provided that without the written
consent of the holders of all of the Notes then outstanding, no such waiver,
modification, alteration or amendment shall be effective (i) which will change
the time of payment of the principal of or the interest on any Note or reduce
the principal amount thereof, or (ii) which will change the percentage of
holders of the Notes required to consent to any such amendment, alteration or
modification, or (iii) which will change any of the provisions of Section 8(b),
Section 8(c), Section 8(d) or this Section 9. This Note may not be amended
without the consent in writing of the Agent and the Senior Trustee and the PIK
Trustee and CMP, so long as the Bank Debt, the Senior Subordinated Notes and the
PIK Notes and the CMP Debt are outstanding, respectively.
For the purpose of determining whether holders of the requisite
principal amount of Notes have made or concurred in any waiver, consent,
approval, notice or other communication under this Note, Notes held in the name
of, or owned beneficially by, the Corporation or any Subsidiary shall not be
deemed outstanding.
(b) Effect of Amendment or Waiver. Any amendment or waiver shall apply
equally to all of the holders of the Notes and shall be binding upon them, upon
each future holder of any Note and upon the Corporation, whether or not such
Note shall have been marked to indicate
21
<PAGE>
such amendment or waiver. No such amendment or waiver shall extend to or
affect any obligation not expressly amended or waived or impair any right
consequent thereon.
10. No Setoff. The rights of the Holder to receive payment hereunder
shall be absolute and not subject to any setoff or similar right.
11. When Corporation May Merge, etc.
(a) The Corporation shall not consolidate with or merge with or into, or
convey, transfer or lease, in one transaction or a series of transaction, all or
substantially all its assets to, any Person, unless:
(i) the resulting, surviving or transferee Person (the "Successor
Company") shall be a Person organized and existing under the laws of the United
States of America, any State thereof or the District of Columbia and the
Successor Company (if not the Corporation) shall expressly assume, all the
obligations of the Corporation hereunder;
(ii) immediately after giving effect to such transaction (and
treating any Indebtedness which becomes an obligation of the Successor
Company or any Subsidiary as a result of such transaction as having been
incurred by the Successor Company or such Subsidiary at the time of such
transaction), no Default shall have occurred and be continuing;
(iii) such transaction shall be permitted by the Senior Indenture if
any Senior Debt under the Senior Indenture is then outstanding, and by
the PIK Indenture of any Indebtedness under the PIK Indenture is then
outstanding;
(iv) the Corporation shall have delivered to the Holder an officers'
certificate and an opinion of counsel, each stating that such consolidation,
merger or transfer comply with this Note.
The Successor Company shall be the successor to the Corporation and
shall succeed to, and be substituted for, and may exercise every right and power
of, the Corporation under this Note, but the predecessor Corporation in the case
of a conveyance, transfer or lease shall not be released from the obligation to
pay the principal of and interest on this Note.
(b) The Corporation shall not permit any Significant Subsidiary to
consolidate with or merge with or into, or convey, transfer or lease, in one
transaction or series of transaction, all or substantially all of its assets to
any Person unless: (i) the resulting, surviving or transferee Person (if not
such Significant Subsidiary) shall be a Person organized and existing under the
laws of the jurisdiction under which such Significant Subsidiary was organized
or under the laws of the United States of America, or any State thereof or the
District of Columbia; (ii) immediately after giving effect to such transaction
or transactions on a pro forma basis (and treating any Indebtedness which
becomes an obligation of the resulting, surviving or transferee Person as a
result of such transaction as having been issued by such Person at the time of
such transaction), no Default shall have occurred and be continuing; and (iii)
the Corporation delivers to the Holder an officers' certificate and an opinion
of counsel, each stating that such consolidation, merger or transfer complies
with this Note. The provisions of clauses (i) and (ii) above shall not apply to
any one or more
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<PAGE>
transactions which constitute an Asset Disposition as defined in the Senior
Indenture if the Corporation has complied with the applicable provisions
of Section [___] of the Senior Indenture.
12. Denominations; Transfer and Exchange
When this Note is presented to the Corporation with a request to
register the transfer, the Corporation shall register a transfer as requested,
if the requirements for such transfer are met; provided, however, that if this
Note is presented or surrendered for registration of transfer or exchange it
shall be duly endorsed or be accompanied by a written instrument of transfer in
form satisfactory to the Corporation duly executed by the Holder or his attorney
duly authorized in writing. The Corporation may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
relation thereto.
13. Replacement Note
If a mutilated Note is surrendered to the Corporation or if the Holder
of this Note presents evidence to the reasonable satisfaction of the Corporation
that this Note has been lost, destroyed or wrongfully taken, the Corporation
shall issue a replacement Note of like tenor if the requirements of the
Corporation for such transactions are met. An indemnity bond may be required
that is sufficient in the reasonable judgment of the Corporation to protect the
Corporation from any loss which it may suffer. The Corporation may charge for
its expenses in replacing this Note.
14. No Recourse Against Others
No director, officer, employee or stockholder, as such, of the
Corporation shall have any liability for any obligations of the Corporation
under this Note or for any claim based on, in respect or by reason of, such
obligations or their creation. The Holder by accepting this Note waives and
releases all such liability. This waiver and release are part of the
consideration for the issue of this Note.
15. Notice
All notices, requests, consents and demands shall be made in writing and
shall be given by registered or certified mail postage prepaid to the following
addresses: if to the Corporation, to it at Intersil Holding Corporation [ ],
with required copies to: Sterling Holding Company, LLC [ ], to Dechert Price &
Rhoads, 4000 Bell Atlantic Tower, 1717 Arch Street, Philadelphia, Pennsylvania
19103, Attention: G. Daniel O'Donnell, Telecopy: (215) 994-2222 or to such other
address as may be furnished in writing to the Holder; and if to the Holder, to
it at its address listed on the transfer books of the Corporation. Unless
otherwise indicated herein, notices hereunder shall be effective when delivered,
if delivered personally, or, if sent by mail, when sent.
Any notices given by the Representative to Holder hereunder may be made
by Representative by delivery as set forth above to the address for Holder set
forth above or such other address of which Holder shall give notice to
Representative. Any notices given by the Corporation or Holder to Representative
hereunder may be made by delivery as set forth above to the following address or
such other address of which Representative shall give notice to the party
delivering such notice: _____________________________________________________.
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16. Governing Law
This Note shall be deemed a contract under, and shall be governed and
construed in accordance with, the laws of the State of New York without giving
effect to principles of conflicts of laws.
17. Successors, etc.; Entire Agreement
This Note shall be binding upon and shall inure to the benefit of and be
enforceable by the respective successors and assigns of the Corporation and the
registered Holder thereof.
18. Headings
The section headings of this Note are for convenience only and shall not
affect the meaning or interpretation of this Note or any provision hereof.
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<PAGE>
IN WITNESS WHEREOF, the Corporation has caused this Note to be executed
by its duly authorized officer.
Dated: ______________, ____
INTERSIL HOLDING CORPORATION
By:
-------------------------
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CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
INTERSIL HOLDING CORPORATION
(Before Receipt of Payment for Stock)
-----------------------
Intersil Holding Corporation, a corporation organized and existing under
and by virtue of the General Corporation Law of the State of Delaware (the
"Company"), DOES HEREBY CERTIFY:
FIRST: That by written consent of a majority of the directors, a resolution
was duly adopted setting forth a proposed amendment to the Certificate of
Incorporation of the Company. The resolution setting forth the amendment is
as follows:
RESOLVED, that the first paragraph of Article 4 of the Certificate of
Incorporation of the Company be amended in its entirety so that the
same as amended would read as follows:
4. Authorized Capital. The aggregate number of shares of stock which
the Corporation shall have authority to issue is 252,000,000 shares,
divided into three (3) classes consisting of 2,000,000 shares of
Preferred Stock, par value $.01 per share ("Preferred Stock");
125,000,000 shares of Class A Common Stock, par value $.01 per share
("Class A Common Stock"); and 125,000,000 shares of Class B Common
Stock, par value $.01 per share ("Class B Common Stock"). Class A
Common Stock and Class B Common Stock are hereinafter sometimes
collectively referred to as "Common Stock."
SECOND: That the Company has not received any payment for any of its stock.
THIRD: That said amendment was duly adopted in accordance with the
provisions of Section 241 of the General Corporation Law of the State of
Delaware.
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<PAGE>
IN WITNESS WHEREOF, the Company has caused this Certificate to be executed
by Gregory L. Williams, its Chief Executive Officer, this 30th day of July,
1999.
INTERSIL HOLDING CORPORATION
By: /s/ Gregory L. Williams
---------------------------------
Name: Gregory L. Williams
Title: Chief Executive Officer
<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
HSS HOLDING CORPORATION
(Before Receipt of Payment for Stock)
-----------------------
HSS Holding Corporation, a corporation organized and existing under and by
virtue of the General Corporation Law of the State of Delaware (the "Company"),
DOES HEREBY CERTIFY:
FIRST: That by written consent of a majority of the directors, a resolution
was duly adopted setting forth a proposed amendment to the Certificate of
Incorporation of the Company. The resolution setting forth the amendment is
as follows:
RESOLVED, that Article 1 of the Certificate of Incorporation of the
Company be amended so that the same as amended would read as follows:
1. Name. The name of the Corporation is Intersil Holding Corporation.
SECOND: That the Company has not received any payment for any of its stock.
THIRD: That said amendment was duly adopted in accordance with the
provisions of Section 241 of the General Corporation Law of the State of
Delaware.
IN WITNESS WHEREOF, the Company has caused this Certificate to be executed
by James A. Urry, its Vice President, this 15th day of July, 1999.
HSS HOLDING CORPORATION
By: /s/ James A. Urry
------------------------------
Name: James A. Urry
Title: Vice President
<PAGE>
CERTIFICATE OF INCORPORATION
OF
HSS HOLDING CORPORATION
1. Name. The name of the Corporation is HSS Holding Corporation.
2. Registered Office and Agent. The address of the Corporation's registered
office in the State of Delaware is 1209 Orange Street, in the City of
Wilmington, County of New Castle, DE 19801. The name of the Corporation's
registered agent at such address is The Corporation Trust Company.
3. Purpose. The purposes for which the Corporation is formed are to engage
in any lawful act or activity for which corporations may be organized under the
General Corporation Law of Delaware and to possess and exercise all of the
powers and privileges granted by such law and any other law of Delaware.
4. Authorized Capital. The aggregate number of shares of stock which the
Corporation shall have authority to issue is 32,000,000 shares, divided into
three (3) classes consisting of 2,000,000 shares of Preferred Stock, par value
$.01 per share ("Preferred Stock"); 15,000,000 shares of Class A Common Stock,
par value $.01 per share ("Class A Common Stock"); and 15,000,000 shares of
Class B Common Stock, par value $.01 per share ("Class B Common Stock"). Class A
Common Stock and Class B Common Stock are hereinafter sometimes collectively
referred to as "Common Stock."
The following is a statement of the designations, preferences,
qualifications, limitations, restrictions and the special or relative rights
granted to or imposed upon the shares of each such class and upon the shares of
the first series of Preferred Stock.
A. PREFERRED STOCK
1. Issue in Series. Preferred Stock may be issued from time to time in
one or more series, each such series to have the terms stated herein and in
the resolution of the Board of Directors of the Corporation providing for
its issue. All shares of any one series of Preferred Stock will be
identical, but shares of different series of Preferred Stock need not be
identical or rank equally except insofar as provided by law or herein.
2. Creation of Series. In addition to the 12% Series A Cumulative
Compounding Preferred Stock ("Series A Preferred Stock") provided for
herein, the Board of Directors will have the authority to adopt amendments
to these Articles to cause to be created one or more series of Preferred
Stock, and to determine and fix with respect to each series prior to the
issuance of the series to which such resolution relates:
a. The distinctive designation of the series and the number of
shares which will constitute the series, which number may be increased
or
<PAGE>
decreased (but not below the number of shares then outstanding) from
time to time by action of the Board of Directors;
b. The dividend rate and the times of payment of dividends on the
shares of the series, whether dividends will be cumulative, and if so,
from what date or dates;
c. The price or prices at which, and the terms and conditions on
which, the shares of the series may be redeemed at the option of the
Corporation;
d. Whether or not the shares of the series will be entitled to
the benefit of a retirement or sinking fund to be applied to the
purchase or redemption of such shares and, if so entitled, the amount
of such fund and the terms and provisions relative to the operation
thereof;
e. Whether or not the shares of the series will be convertible
into, or exchangeable for, any other shares of stock of the
Corporation or other securities, and if so convertible or
exchangeable, the conversion price or prices, or the rates of
exchange, and any adjustments thereof, at which such conversion or
exchange may be made, and any other terms and conditions of such
conversion or exchange;
f. The rights of the shares of the series in the event of
voluntary or involuntary liquidation, dissolution or winding up of the
Corporation;
g. Whether or not the shares of the series will have priority
over or be on a parity with or be junior to the shares of any other
series or class in any respect or will be entitled to the benefit of
limitations restricting the issuance of shares of any other series or
class having priority over or being on a parity with the shares of
such series in any respect, or restricting the payment of dividends on
or the making of other distributions in respect of shares of any other
series or class ranking junior to the shares of the series as to
dividends or assets, or restricting the purchase or redemption of the
shares of any such junior series or class, and the terms of any such
restriction;
h. Whether the series will have voting rights, in addition to any
voting rights provided by law, and, if so, the terms of such voting
rights; and
i. Any other preferences, qualifications, privileges, options and
other relative or special rights and limitations of that series.
3. Dividends. Holders of Preferred Stock shall be entitled to receive,
when and as declared by the Board of Directors, out of funds legally
available for the payment thereof, dividends at the rates fixed by the
Board of Directors for the
2
<PAGE>
respective series, and no more, before any dividends shall be declared and
paid, or set apart for payment, on Common Stock with respect to the same
dividend period.
4. Preference on Liquidation. In the event of the voluntary or
involuntary liquidation, dissolution or winding up of the Corporation,
holders of each series of Preferred Stock will be entitled to receive the
amount fixed for such series plus, in the case of any series on which
dividends will have been determined by the Board of Directors to be
cumulative, an amount equal to all dividends accumulated and unpaid thereon
to the date of final distribution whether or not earned or declared before
any distribution shall be paid, or set aside for payment, to holders of
Common Stock. If the assets of the Corporation are not sufficient to pay
such amounts in full, holders of all shares of Preferred Stock will
participate in the distribution of assets ratably in proportion to the full
amounts to which they are entitled or in such order or priority, if any, as
will have been fixed in the resolution or resolutions providing for the
issue of the series of Preferred Stock. Neither the merger nor
consolidation of the Corporation into or with any other corporation, nor a
sale, transfer or lease of all or part of its assets, will be deemed a
liquidation, dissolution or winding up of the corporation within the
meaning of this paragraph except to the extent specifically provided for
herein.
5. Redemption. The Corporation, at the option of the Board of
Directors, may redeem all or part of the shares of any series of Preferred
Stock on the terms and conditions fixed for such series.
6. Voting Rights. Except as otherwise required by law, as otherwise
provided herein or as otherwise determined by the Board of Directors as to
the shares of any series of Preferred Stock prior to the issuance of any
such shares, the holders of Preferred Stock shall have no voting rights and
shall not be entitled to any notice of meeting of stockholders.
B. 12% SERIES A CUMULATIVE COMPOUNDING PREFERRED STOCK
1. Designation; Number of Shares. The first series of Preferred Shares
shall be designated as 12% Series A Cumulative Compounding Preferred Stock
("Series A Preferred Stock"), and the number of shares which shall
constitute such series shall be 1,000,000. The par value of the Series A
Preferred Stock shall be $.01 per share.
2. Accrual and Payment of Dividends.
a. The holders of Series A Preferred Stock shall be entitled to
receive, when, as and if declared by the Board of Directors out of funds of
the Corporation legally available therefor, cumulative cash dividends at
the rate of $120 per share per annum.
3
<PAGE>
Dividends on the Series A Preferred Stock shall be payable in annual
installments in arrears commencing June 30, 2000 and thereafter on the
thirtieth day of June (unless such day is not a business day in which event
on the last preceding business day) in each such year (hereinafter referred
to as a "Dividend Accrual Date"), except that the dividend payment payable
on June 30, 2000 shall be calculated from the date of original issuance
through June 30, 2000. Each such dividend on Series A Preferred Stock when
paid shall be payable to holders of record as they appear on the stock
books of the Corporation on the date established by the Board of Directors
of the Corporation as the record date for the payment of such dividend
(which record date shall not precede the date upon which the resolution
fixing such record date is adopted and which record date shall be not more
than sixty days prior to such action). If no record date is fixed, the
record date for determining holders for such purpose shall be at the close
of business on the date on which the Board of Directors adopts the
resolution relating to such dividend payment. Dividends with respect to any
shares of Series A Preferred Stock shall accrue (whether or not earned or
declared) from the date of issuance of such shares.
b. Dividends on the Series A Preferred Stock shall be cumulative,
whether or not earned or declared, so that if at any time full cumulative
dividends at the rate aforesaid on all Series A Preferred Stock then
outstanding to the end of the annual dividend period next preceding such
time shall not have been paid, the amount of the deficiency shall be paid
before any sum shall be set aside for or applied by the Corporation to the
purchase, redemption or other acquisition for value of any Junior Shares
(as such term is defined in Section 4.B(9)) (either pursuant to any
applicable sinking fund requirement or otherwise) or any dividend or other
distribution shall be paid or declared and set apart for payment on any
Junior Shares (other than a dividend payable in Junior Shares); provided,
however, that the foregoing shall not prohibit the Corporation from
repurchasing Junior Shares from a former employee of the Corporation (or a
subsidiary of the Corporation) where such repurchase arises from the
Corporation's option to repurchase such shares upon the termination of such
employee's employment with the Corporation (or a subsidiary) pursuant to a
written agreement between the Corporation and such employee. Accrued
dividends on the Series A Preferred Stock if not paid on the first or any
subsequent Dividend Accrual Date following accrual shall thereafter accrue
additional dividends in respect thereof (the "Additional Dividends"),
compounded annually, at the rate of 12% per annum.
c. When dividends are not paid in full upon the Series A Preferred
Stock and any other stock ranking on a parity as to dividends with the
Series A Preferred Stock, all dividends paid upon Series A Preferred Stock
and any other Shares ranking on a parity as to dividends
4
<PAGE>
with the Series A Preferred Stock shall be paid pro rata so that in all
cases the amount of dividends paid per share of Series A Preferred Stock
and such other Shares shall bear the same ratio that accrued dividends per
share on the Series A Preferred Stock and such other shares bear to each
other. Except as provided in the preceding sentence, unless full cumulative
dividends on the Series A Preferred Stock have been paid, no dividends
shall be declared or paid or set aside for payment upon any other shares of
the Corporation ranking on a parity with the Series A Preferred Stock as to
dividends.
d. An annual dividend period shall commence on the day following a
Dividend Accrual Date and shall end on the next succeeding Dividend Accrual
Date.
3. Preference on Liquidation.
a. In the event that the Corporation shall be liquidated, dissolved or
wound up, whether voluntarily or involuntarily, after all creditors of the
Corporation shall have been paid in full, the holders of the Series A
Preferred Stock shall be entitled to receive, out of the assets of the
Corporation legally available for distribution to its shareholders, whether
from capital, surplus or earnings, before any amount shall be paid to the
holders of any Junior Shares, an amount equal to $1,000 in cash per share
plus an amount equal to full cumulative dividends (whether or not earned or
declared) accrued and unpaid thereon (including Additional Dividends) to
the date of final distribution, and no more. If upon any liquidation,
dissolution or winding up of the Corporation, the net assets of the
Corporation shall be insufficient to pay the holders of all outstanding
Series A Preferred Stock and of any shares ranking on a parity with the
Series A Preferred Stock the full amounts to which they respectively shall
be entitled, such assets, or the proceeds thereof, shall be distributed
ratably among the holders of the Series A Preferred Stock and of any shares
of stock ranking on a parity with the Series A Preferred Stock. Holders of
Series A Preferred Stock shall not be entitled, upon the liquidation,
dissolution or winding up of the Corporation, to receive any amounts with
respect to such shares other than the amounts referred to in this Section
4.B(3)(a).
b. Neither the purchase nor redemption by the Corporation of any
shares of any class in any manner permitted by these Articles or any
amendment hereof, nor the merger or consolidation of the Corporation with
or into any other corporation or corporations, nor a sale, transfer or
lease of all or substantially all of the Corporation's assets shall be
deemed to be a liquidation, dissolution or winding up of the Corporation
for the purposes of this Section 4.B(3); provided, however, that any
consolidation or merger of the Corporation in which the Corporation is not
the surviving entity shall be deemed to be a liquidation, dissolution or
winding up of the
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affairs of the Corporation within the meaning of this Section 4.B(3) if,
(A) in connection therewith, the holders of Common Shares of the
Corporation receive as consideration, whether in whole or in part, for such
Common Shares (1) cash, (2) notes, debentures or other evidences of
indebtedness or obligations to pay cash or (3) preferred stock of the
surviving entity (whether or not the surviving entity is the Corporation)
which ranks on a parity with or senior to the preferred shares received by
holders of the Series A Preferred Stock with respect to liquidation or
dividends or (B) the holders of the Series A Preferred Stock do not receive
preferred shares of the surviving entity with rights, powers and
preferences equal to (or more favorable to the holders than) the rights,
powers and preferences of the Series A Preferred Stock.
4. Redemption.
a. All outstanding shares of Series A Preferred Stock shall be
redeemed from funds legally available therefor on June 30, 2011 (the
"Mandatory Redemption Date"), at a price per share equal to $1,000 plus an
amount per share equal to full cumulative dividends (whether or not earned
or declared) accrued and unpaid thereon (including Additional Dividends) to
the Mandatory Redemption Date.
b. The Series A Preferred Stock may be redeemed from funds legally
available therefor, in whole or in part, at the election of the
Corporation, expressed by resolution of the Board of Directors, at any time
and from time to time at a price per share equal to $1,000 plus an amount
per share equal to full cumulative dividends (whether or not earned or
declared) accrued and unpaid thereon (including Additional Dividends) to
the date of redemption.
c. The aggregate amount of the redemption price pursuant to Section
4.B(4)(a) or (b) is hereinafter referred to as the "Series A Redemption
Price" with respect to such redemption. The Mandatory Redemption Date and
the date of any redemption pursuant to Section 4.B(4)(b) are each
hereinafter referred to individually as a "Redemption Date."
5. Redemption Procedure.
a. A redemption pursuant to Section 4.B(4) shall be accomplished in
the manner and with the effect as set forth in this Section 4.B(5).
b. Notice of the redemption of Series A Preferred Stock pursuant to
Section 4.B(4) shall be given by mail not less than ten (10) days prior to
the Redemption Date. If less than all the outstanding Series A Preferred
Stock is to be redeemed,
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the selection of shares for redemption shall be made pro rata and the
notice of redemption to a holder shall state the number of Series A
Preferred Stock of such holder to be redeemed. The amount of the Series A
Redemption Price shall be deposited on or before the Redemption Date in
trust for the account of the holders of Series A Preferred Stock entitled
thereto with a bank or trust company in good standing doing business in the
State of New York and having capital and surplus of at least $100,000,000
(the date of such deposit being hereinafter in this Section 4.B(5) referred
to as the "date of deposit").
c. Notice of the date on which, and the name and address of the bank
or trust company with which, the deposit has been or will be made shall be
included in the notice of redemption. On and after the Redemption Date
(unless default shall be made by the Corporation in providing money for the
payment of the Series A Redemption Price pursuant to the notice of
redemption), or if the Corporation shall make such deposit on or before the
date specified therefor in the notice of redemption, then on and after the
date of deposit (provided notice of redemption has been duly given), all
dividends on the Series A Preferred Stock so called for redemption shall
cease to accrue and, notwithstanding that any certificate for Series A
Preferred Stock is not surrendered for cancellation, the shares represented
thereby shall no longer be deemed outstanding and all rights of the holders
thereof as shareholders of the Corporation with respect to such shares
shall cease and terminate, except the right to receive the Series A
Redemption Price as hereinafter provided.
d. At any time on or after the Redemption Date, or if the Corporation
shall deposit the money for such redemption prior to the Redemption Date,
then at any time on or after the date of deposit, which time shall be
specified by the Corporation in the notice of redemption and which shall
not be later than the Redemption Date, the holders of record of the Series
A Preferred Stock to be redeemed shall be entitled to receive the Series A
Redemption Price upon actual delivery to the bank or trust company with
which such deposit shall be made of certificates for the shares to be
redeemed, such certificates, if required, to be duly endorsed in blank or
accompanied by proper instruments of assignment and transfer duly endorsed
in blank. The making of such deposit with any such bank or trust company
shall not relieve the Corporation of liability for payment of the Series A
Redemption Price.
e. Any money so deposited which shall remain unclaimed by the holders
of such Series A Preferred Stock at the end of two (2) years after the
Redemption Date shall be paid by such bank or trust company to the
Corporation, which shall thereafter, to the extent of the money so repaid,
be liable for the payment of the Series A Redemption Price. Any interest
accrued on money so deposited shall be paid to the Corporation from time to
time.
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6. Optional Exchange. The Series A Preferred Stock may be exchanged,
at the Corporation's option at any time and from time to time, in whole or
in part, for junior subordinated debentures to be issued by the Corporation
in substantially the form attached as Annex A hereto ("Exchange
Debentures") at the rate of $1,000 per share plus an amount per share equal
to full cumulative dividends (whether or not earned or declared) accrued
and unpaid thereon (including all dividends which have accrued since the
most recent Dividend Accrual Date) to the date established by the Board of
Directors for such exchange (the Exchange Date") (the aggregate of such
amounts is hereinafter referred to as the "Exchange Amount"). The Exchange
Debentures shall bear interest at a rate equal to the lesser of 12% and the
maximum interest rate permitted to be deducted as accrued under the
relevant provisions of the Internal Revenue Code of 1986 and the rules and
regulations promulgated thereunder in effect on the Exchange Date. If less
than all the shares of Series A Preferred Stock is to be exchanged, the
selection of shares to be exchanged shall be pro rata. The election of the
Corporation to exchange the shares of Series A Preferred Stock for Exchange
Debentures pursuant to this Section 4.B(6) must be made by the affirmative
vote of at least eighty percent (80%) of all the directors of the
Corporation then in office.
7. Exchange Procedure
a. Any exchange pursuant to Section 4.B(6) shall be accomplished in
the manner and with the effect as set forth in this Section 4.B(7).
b. Notice of the exchange of Series A Preferred Stock pursuant to
Section 4.B(6) shall be given by first class mail to each holder of record
on the record date for such exchange at such holder's address as the same
appears on the stock register of the Corporation not less than ten (10)
days and not more than sixty (60) days prior to the Exchange Date. Each
such notice shall state: (A) the Exchange Date, (B) the place or places
where certificates for such shares of Series A Preferred Stock are to be
surrendered for exchange into the Exchange Debentures, (C) that dividends
on the Series A Preferred Stock to be exchanged will cease to accrue on
such Exchange Date and (D) if less than all the shares of Series A
Preferred Stock is to be exchanged the number of shares of the holder to be
exchanged. The form of the Exchange Debentures may not be amended or
supplemented before the Exchange Date without the affirmative vote or
consent of the holders of a majority of the outstanding shares of Series A
Preferred Stock, except for those changes which would not adversely affect
the legal rights of the holders.
c. On and after the Exchange Date, all dividends on the Series A
Preferred Stock so called for exchange shall cease to accrue and,
notwithstanding that any certificate for shares of Series A Preferred Stock
is not surrendered for cancellation, the shares represented thereby shall
no
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longer be deemed outstanding and all rights of the holders thereof as
stockholders of the Corporation shall cease and terminate, except the right
to receive the Exchange Debentures as herein provided.
d. At any time on or after the Exchange Date, the holders of record of
the Series A Preferred Stock to be exchanged shall be entitled to receive
the amount of Exchange Debentures set forth herein upon actual delivery to
the Corporation of certificates for the shares to be exchanged, such
certificates, if required, to be duly endorsed in blank or accompanied by
proper instruments of assignment and transfer duly endorsed in blank. The
person or persons entitled to receive the Exchange Debentures issuable upon
exchange shall be treated for all purposes as the registered holder or
holders of such Exchange Debentures.
e. The Corporation shall not be required to honor any request to
register a transfer or exchange of the Series A Preferred Stock for the
fifteen (15) days prior to the Exchange Date. The Corporation will cause
the Exchange Debentures to be authenticated on the Exchange Date.
8. Voting. Except as required by law and except for any voting by the
holders of the Series A Preferred Stock as part of a separate class or series
pursuant to Section 4.B(7) hereunder or any other provision of these Articles,
no holder of Series A Preferred Stock, as such holder, shall be entitled to vote
on any matter submitted to a vote of shareholders. On any matters on which the
holders of the Series A Preferred Stock shall be entitled to vote, they shall be
entitled to one vote for each share held. Except as otherwise required by law or
as otherwise provided herein, the holders of Series A Preferred Stock shall not
be entitled to notice of any meeting of shareholders.
9. Other Rights. Without the written consent of the holders of a majority
of the outstanding shares of Series A Preferred Stock or the vote of the holders
of a majority of the outstanding shares of Series A Preferred Stock at a meeting
of the holders of Series A Preferred Stock called for such purpose, the
Corporation shall not (i) exchange the shares of Series A Preferred Stock for
Exchange Debentures pursuant to Section 4.B(6), (ii) create, authorize or issue
any other class or series of stock entitled to a preference prior to Series A
Preferred Stock upon any dividend or distribution or any liquidation,
distribution of assets, dissolution or winding up of the Corporation, or
increase the authorized amount of any such other class or series, or (iii)
amend, alter or repeal any provision of the Corporation's Certificate of
Incorporation so as to adversely affect the relative rights and preferences of
the Series A Preferred Stock; provided however, that any such amendment that
changes the dividend payable on the Series A Preferred Stock shall require the
affirmative vote of the holder of each share of Series A Preferred Stock at a
meeting of such holders called for such purpose or the written consent of the
holder of each such share of Series A Preferred Stock.
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10. Acknowledgment. Each holder of Series A Preferred Stock, by acceptance
thereof, acknowledges and agrees that payments of dividends, interest, premium
and principal on, and redemption and repurchase of, such securities by the
Corporation are subject to restrictions contained in certain credit and
financing agreements of the Corporation.
11. Definitions. The following terms, when used in this Section 4.B, shall
have the meanings set forth below:
a. As used herein, the amount of dividends "accrued" on any share of
Series A Preferred Stock as at any date shall be calculated as the amount
of any unpaid dividends accumulated thereon to and including the last
preceding Dividend Accrual Date with respect to which dividends have not
been paid, whether or not earned or declared (including the amount of any
dividends accumulated on any share of Series A Preferred Stock from the
preceding Dividend Accrual Date in the event of an optional redemption
pursuant to Section 4.B(4)(b) or in the event of an exchange pursuant to
Section 4.B(6)).
b. "corporation" shall mean a corporation, partnership, business
trust, unincorporated organization, association, limited liability company
or joint stock company.
c. "Junior Shares" shall mean any series or class of the capital stock
of the Corporation now or hereafter authorized or issued by the
Corporation, including any series or class of preferred shares, ranking
junior to the Series A Preferred Stock with respect to dividends or
distributions or upon the liquidation, distribution of assets, dissolution
or winding-up of the Corporation, including without limitation the Common
Shares.
d. "person" shall mean an individual, a corporation, partnership,
trust, organization, association, government or any department or agency
thereof, or any other individual or entity.
C. CLASS A AND CLASS B COMMON STOCK
Except as otherwise provided herein, all shares of Class A Common Stock and
Class B Common Stock will be identical and will entitle the holders thereof to
the same rights and privileges.
1. Dividends. Holders of Common Stock will be entitled to receive such
dividends as may be declared by the Board of Directors, provided that if
dividends are declared which are payable in shares of Class A Common Stock or
Class B Common Stock, dividends will be declared which are payable at the same
rate on each class of Common Stock and the dividends payable in shares of Class
A Common Stock will be payable to holders of Class A Common Stock and the
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dividends payable in shares of Class B Common Stock will be payable to holders
of Class B Common Stock.
2. Conversion. Each record holder of Class A Common Stock will be entitled
to convert any or all of such holder's Class A Common Stock into the same number
of shares of Class B Common Stock and each record holder of Class B Common Stock
will be entitled to convert any or all of the shares of such holder's Class B
Common Stock into the same number of shares of Class A Common Stock; provided,
however, that at the time of conversion of shares of Class B Common Stock into
shares of Class A Common Stock such holder would be permitted, pursuant to
applicable law, to hold the total number of shares of Class A Common Stock which
such holder would hold after giving effect to such conversion; and provided,
further, that the determination of a holder of Class B Common Stock that such
holder is permitted pursuant to applicable law to convert Class B Common Stock
into Class A Common Stock pursuant to this Section 2 shall be final and binding
upon the Company.
Each conversion of shares of one class of Common Stock into shares of
another class of Common Stock will be effected by the surrender of the
certificate or certificates representing the shares to be converted at the
principal office of the Corporation at any time during normal business hours,
together with a written notice by the holder of such shares stating the number
of shares that any such holder desires to convert into the other class of Common
Stock. Such conversion will be deemed to have been effected as of the close of
business on the date on which such certificate or certificates have been
surrendered and such notice has been received by the Corporation, and at such
time the rights of any such holder with respect to the converted class of Common
Stock will cease and the person or persons in whose name or names the
certificate or certificates for shares of the other class of Common Stock are to
be issued upon such conversion will be deemed to have become the holder or
holders of record of the shares of such other class of Common Stock represented
thereby.
Promptly after such surrender and the receipt by the Corporation of the
written notice from the holder hereinbefore referred to, the Corporation will
issue and deliver in accordance with the surrendering holder's instructions the
certificate or certificates for the other class of Common Stock issuable upon
such conversion and a certificate representing any shares of Common Stock which
were represented by the certificate or certificates delivered to the Corporation
in connection with such conversion but which were not converted. The issuance of
certificates for the other class of Common Stock upon conversion will be made
without charge to the holder or holders of such shares for any issuance tax
(except stock transfer taxes) in respect thereof or other cost incurred by the
Corporation in connection with such conversion.
3. Transfers. The Corporation will not close its books against the transfer
of any share of Common Stock, or of any share of Common Stock issued or issuable
upon conversion of shares of the other class of Common Stock, in any
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<PAGE>
manner that would interfere with the timely conversion of such shares of Common
Stock.
4. Subdivision and Combinations of Shares. If the Corporation in any manner
subdivides or combines the outstanding shares of any class of Common Stock, the
outstanding shares of the other class of Common Stock will be proportionately
subdivided or combined.
5. Reservation of Shares for Conversion. So long as any shares of any class
of Common Stock are outstanding, the Corporation will at all times reserve and
keep available out of its authorized but unissued shares of Class A Common Stock
and Class B Common Stock (or any shares of Class A Common Stock or Class B
Common Stock which are held as treasury shares), the number of shares sufficient
for issuance upon conversion.
6. Distribution of Assets. In the event of the voluntary or involuntary
liquidation, dissolution or winding up of the Corporation, holders of Common
Stock will be entitled to receive all of the remaining assets of the Corporation
available for distribution to its stockholders after all amounts to which the
holders of Preferred Stock are entitled have been paid or set aside in cash for
payment.
7. Voting Rights. The holders of Class A Common Stock shall have the
general right to vote for all purposes as provided by law. Each holder of Class
A Common Stock shall be entitled at all elections of directors to as many votes
as shall equal the number of votes which such holder would be entitled to cast
for the election of directors with respect to his shares of stock multiplied by
the number of directors to be elected, and such holder may cast all of such
votes for a single director or may distribute them among the number to be voted
for, or for any two or more of them as he may see fit, and to one vote for each
share upon all other matters. Except as otherwise required by law, the holders
of Class B Common Stock shall have no voting rights.
8. Merger, etc. In connection with any merger, consolidation, or
recapitalization in which holders of Class A Common Stock generally receive, or
are given the opportunity to receive, consideration for their shares (a) all
holders of Class B Common Stock shall be given the opportunity to receive the
same form of consideration for their shares as is received by holders of Class A
Common Stock and (b) holders of Class B Common Stock shall be entitled to
receive the same amount of consideration per share as received by holders of
Class A Common Stock.
5. Incorporator. The name and mailing address of the incorporator are
Marian T. Ryan, 4000 Bell Atlantic Tower, 1717 Arch Street, Philadelphia,
Pennsylvania 19103-2793.
6. Bylaws. The board of directors of the Corporation is authorized to
adopt, amend or repeal the bylaws of the Corporation, except as otherwise
specifically provided therein.
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7. Elections of Directors. Elections of directors need not be by written
ballot unless the bylaws of the Corporation shall so provide.
8. Right to Amend. The Corporation reserves the right to amend any
provision contained in this Certificate as the same may from time to time be in
effect in the manner now or hereafter prescribed by law, and all rights
conferred on stockholders or others hereunder are subject to such reservation.
9. Limitation on Liability. The directors of the Corporation shall be
entitled to the benefits of all limitations on the liability of directors
generally that are now or hereafter become available under the General
Corporation Law of Delaware. Without limiting the generality of the foregoing,
no director of the Corporation shall be liable to the Corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except for liability (i) for any breach of the director's duty of loyalty to the
Corporation or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii) under
Section 174 of the Delaware General Corporation Law, or (iv) for any transaction
from which the director derived an improper personal benefit. Any repeal or
modification of this Section 8 shall be prospective only, and shall not affect,
to the detriment of any director, any limitation on the personal liability of a
director of the Corporation existing at the time of such repeal or modification.
ANNEX A IS ATTACHED HERETO.
Dated: June 2, 1999
/s/ Marian T. Ryan
---------------------------------------
Marian T. Ryan, Incorporator
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Exhibit I
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT
BE TRANSFERRED WITHOUT REGISTRATION UNDER THE SECURITIES ACT OR ANY APPLICABLE
STATE SECURITIES LAWS OR AN OPINION OF COUNSEL, SATISFACTORY TO THE COMPANY,
THAT SUCH REGISTRATION IS NOT REQUIRED.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE ALSO SUBJECT TO THE TERMS AND
CONDITIONS OF A SECURITIES PURCHASE AND HOLDERS AGREEMENT BY AND AMONG THE
COMPANY AND THE HOLDERS SPECIFIED THEREIN, A COPY OF WHICH AGREEMENT IS ON FILE
AT THE PRINCIPAL OFFICE OF THE COMPANY. THE SALE, TRANSFER OR OTHER DISPOSITION
OF THE SECURITIES IS SUBJECT TO THE TERMS OF SUCH AGREEMENT AND THE SECURITIES
ARE TRANSFERABLE ONLY UPON PROOF OF COMPLIANCE THEREWITH.
No. ____
PAYMENTS UNDER THIS NOTE ARE SUBJECT TO
THE SUBORDINATION PROVISIONS OF SECTION 7 HEREOF
HSS HOLDING CORPORATION
12% JUNIOR SUBORDINATED DEBENTURES DUE JUNE 30, 2011
HSS HOLDING CORPORATION, a Delaware corporation (the "Corporation", which
term includes any successor corporation), for value received, hereby promises to
pay to _______________, a _______________, or its successors or permitted
assigns ("Holder"), the principal sum of _______________ on June 30, 2011, and
to pay interest on the unpaid balance of the principal amount of this Note at
the rate of 12% per annum. This Note will accrue interest annually for the
periods ending June 30 of each calendar year commencing ________, ______ (each
date of payment being an "Interest Payment Date"). Interest on this Note will
accrue from the most recent date to which interest has been paid or accrued as
provided in the preceding sentence or, if no interest has been paid, from the
issuance date hereof. Interest will be computed on the basis of a 365-day year
for the actual days elapsed. This Note may be prepaid at any time in whole or in
part without premium, penalty or discount. All permitted prepayments in respect
of this Note shall be applied first to accrued interest on the principal amount
prepaid which interest has not been added to the principal amount, and then to
principal outstanding hereunder.
This Note shall be binding upon the successors and assigns of the
Corporation and shall inure to the benefit of the successors and permitted
assigns of the Holder. The Holder may
<PAGE>
assign, transfer or dispose of its rights with respect to this Note only
upon registration of this Note under the Securities Act, and any applicable
state securities laws, or pursuant to an exemption from such registration.
1. Method of Payment
The Holder shall note any payment of principal on the Note, but the
obligation of the Corporation shall be reduced by such payment notwithstanding
any failure by Holder to note such payment. The Corporation will pay principal
and interest in money of the United States of America that at the time of
payment is legal tender for payment of public and private debts (payment may be
made by check payable in such money). All interest due on any Interest Payment
Date prior to the Maturity Date shall be deemed to be paid by such amount being
added to the outstanding principal amount on the Interest Payment Date therefor
and shall accrue interest as a portion of the principal amount of this Note from
such Interest Payment Date to the maximum extent permitted by law.
2. Maturity Date
This Note shall be repaid in full on June 30, 2011 (the "Maturity Date")1.
3. Defined Terms
(a) "Acceleration Notice" shall have the meaning set forth in
Section 8(b).
(b) "Agent" shall have the meaning set forth in Section 7(a).
(c) "Bank Debt" shall have the meaning set forth in Section 7(a).
(d) "Bankruptcy Law" shall mean Title 11, U.S. Code or any similar
federal or state law for the relief of debtors.
(e) "Capital Stock" shall mean (i) in the case of a corporation,
corporate stock, (ii) in the case of an association or business entity, any
and all shares, interests, participations, rights or other equivalents (however
designated) of corporate stock, (iii) in the case of a partnership or limited
liability company, partnership or membership interests (whether general or
limited) and (iv) any other interest or participation that confers on a Person
the right to receive a share of the profits and losses of, or distributions of
assets of, the issuing Person.
(f) "Change in Control" shall have the meaning set forth in
Section 4(b).
(g) "Citigroup" shall mean Citigroup Inc., a Delaware corporation, or
any successor thereto by merger or consolidation.
(h) "Continuing Director" shall have the meaning set forth in
Section 4(b).
- - ---------------
1 The Board of Directors in its discretion shall have the power to set the
Maturity Date on or after June 30, 2011, but in no event earlier than one
year after the Maturity Date under the PIK Indenture and later than June 30,
2000.
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(i) "Corporation" shall have the meaning set forth in the first
paragraph of this Note.
(j) "Credit Agreement" shall have the meaning set forth in Section 7(b).
(k) "Custodian" means any receiver, trustee, assignee, liquidator,
sequestrator or similar official under any Bankruptcy Law or in connection with
any insolvency proceeding.
(l) "CVC" means Citicorp Venture Capital Ltd., a New York corporation,
or any successor thereto by merger or consolidation.
(m) "Equity Swap" shall have the meaning set forth in Section 5(g).
(n) "Event of Default" shall have the meaning set forth in Section 8(a).
(o) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(p) "Holder" shall have the meaning set forth in the first paragraph of
this Note and, for purposes of Section 7, as set forth in Section 7.
(q) "HSS Operating Corporation" shall mean HSS Operating Corporation, a
Delaware corporation, and wholly-owned subsidiary of the Corporation.
(r) "Indebtedness" shall have the meaning set forth in Section 7(a).
(s) "Insolvency Proceeding" shall have the meaning set forth in Section
7(j).
(t) "Interest Payment Date" shall have the meaning set forth in the
first paragraph of this Note.
(u) "Junior Indebtedness" shall have the meaning set forth in Section
5(g)(iv).
(v) "Lenders" shall have the meaning set forth in Section 7(a).
(w) "Loan Parties" shall have the meaning set forth in Section 7(a).
(x) "Majority Holders" shall have the meaning set forth in Section 8(b).
(y) "Maturity Date" shall have the meaning set forth in Section 2.
(z) "Non-payment Default" shall have the meaning set forth in Section
7(a).
(aa) "Payment Blockage Period" shall have the meaning set forth in
Section 7(c)(iii).
(bb) "Payment Default" shall have the meaning set forth in Section 7(a).
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<PAGE>
(cc) "Person" shall mean any individual, partnership, corporation, trust
or unincorporated organization or a government or agency or political
subdivision thereof.
(dd) "PIK Indenture" means the Indenture dated __________, 1999 between
the Corporation and the PIK Trustee relating to the PIK Notes.
(ee) "PIK Notes" means the PIK Notes issued under the PIK Indenture as
it may hereafter be amended, extended, supplemented, increased, renewed,
refunded, replaced, refinanced or otherwise modified from time to time, whether
for principal, interest, premium, fees, expenses, indemnities or otherwise.
(ff) "PIK Trustee" means _____________, a _________________, as trustee
under the PIK Indenture until a successor replaces it and, thereafter, means the
successor.
(gg) "Redemption Price" shall have the meaning set forth in Section
4(a).
(hh) "Representative" shall mean (i) the Agent for so long as the Bank
Debt is outstanding, (ii) at such time as the Bank Debt is no longer
outstanding, the Senior Trustee, for so long as the Senior Subordinated Notes
are outstanding, (iii) the PIK Trustee, for so long as the PIK Notes are
outstanding and (iv) at such time as the Bank Debt and obligations under the
Senior Subordinated Notes and the PIK Notes are no longer outstanding, the
representative selected by holders of more than 50% of the Senior Debt of the
applicable Senior Creditor.
(ii) "SEC" shall mean the Securities and Exchange Commission.
(jj) "Securities Act" shall mean the Securities Act of 1933, as amended.
(kk) "Senior Creditors" shall have the meaning set forth in Section
7(a).
(ll) "Senior Debt" shall have the meaning set forth in Section 7(a).
(mm) "Senior Default" shall have the meaning set forth in Section 7(a).
(nn) "Senior Indenture" shall have the meaning set forth in Section
7(a).
(oo) "Senior Loan Documents" shall have the meaning set forth in Section
7(a).
(pp) "Senior Subordinated Notes" shall have the meaning set forth in
Section 7(a).
(qq) "Senior Trustee" shall have the meaning set forth in Section 7(a).
(rr) "Series A Preferred" shall mean the Corporation's 12% Series A
Cumulative Compounding Preferred Stock.
(ss) "Significant Subsidiary" shall have the meaning set forth in
Section 7(a).
(tt) "Sterling" shall mean Sterling Holding Company, LLC, a Delaware
limited liability company.
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<PAGE>
(uu) "Stockholders Agreement" shall mean the Securities Purchase and
Holders Agreement dated as of [ ], by and among the Corporation, Sterling,
Harris Corporation and the Management Investors.
(vv) "Subordinated Debt" shall have the meaning set forth in Section
7(a).
(ww) "Subsidiary" shall have the meaning set forth in Section 7(a).
(xx) "voting stock" of any Person as of any date means the Capital Stock
of such Person that is at the time entitled to vote in the election of the Board
of Directors of such Person.
(yy) "Wholly Owned Subsidiary" shall have the meaning defined in the
Indenture.
4. Redemption
(a) Optional Redemption. The Corporation may, at any time and from time
to time, redeem this Note, in whole or in part, at a redemption price equal to
the principal amount being redeemed plus accrued and unpaid interest, if any, to
the date of redemption (the "Redemption Price").
(b) Change in Control. Upon the occurrence of a Change in Control, the
Corporation shall, upon the expiration of any offer to purchase or repayment or
redemption of any Senior Debt required as a result of such Change in Control,
redeem this Note in full at the Redemption Price. For purposes of this Section
4, the term "Change in Control" shall mean (i) prior to the first Public Equity
Offering, the Permitted Holders cease to be the "beneficial owner" (as defined
in Rules 13d-3 and 13d-5 under the Exchange Act), directly or indirectly, of a
majority in the aggregate of the total voting power of the voting stock of the
Corporation, whether as a result of issuance of securities of the Corporation,
any merger, consolidation, liquidation or dissolution of the Corporation, any
direct or indirect transfer of securities by the Permitted Holders or otherwise
(for purposes of this clause (i) and clauses (iii) and (v) below, the Permitted
Holders shall be deemed to beneficially own any voting stock of any entity held
by any other entity (the "parent entity") so long as the Permitted Holders
beneficially own (as so defined), directly or indirectly, in the aggregate a
majority of the voting power of the voting stock of the parent entity; provided,
however, that notwithstanding the foregoing CVC shall be deemed to beneficially
own a majority of the voting power of the voting stock of Sterling (or any
successor) so long as CVC, employees, officers and directors of CVC and
companies, partnerships and other entities at least a majority of the equity in
which is held in the aggregate by CVC and its employees, officers and directors
hold in the aggregate no less than a majority of the economic interests in
Sterling (or such successor)), or (ii) all or substantially all of the assets of
the Corporation and its Subsidiaries (taken as a whole) shall be transferred or
leased to any Person or group of Persons, or (iii) the Corporation shall cease
to own 100% of the outstanding capital stock of HSS Operating Corporation, or
(iv) a majority of the members of the Board of Directors of the Corporation
cease to be Continuing Directors, or (v) after a Public Equity Offering, any
"person" (as such term is used in Sections 13(d) and 14(d) of the Exchange Act),
other than one or more Permitted Holders, is or becomes the beneficial owner (as
defined in clause (i) above, except that for purposes of this clause (v) such
person shall be deemed to have "beneficial ownership" of all shares that any
such person has the right to acquire, whether
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such right is exercisable immediately or only after the passage of
time), directly or indirectly, of more than the greater of 35% of the aggregate
voting common stock of the Corporation then outstanding or the total voting
power of the voting stock of the Corporation then held by CVC and its Permitted
Transferees (as defined in the Stockholders Agreement). As used herein, (1) the
term "Permitted Holders" shall mean (i) CVC, (ii) any officer, employee or
director of CVC or any trust, partnership or other entity established solely for
the benefit of such officers, employees or directors, (iii) any officer,
employee or director of the Corporation, HSS Operating Corporation or any
Subsidiary or any trust, partnership or other entity established solely for the
benefit of such officers, employees or directors, and (iv) in the case of any
individual, any Permitted Transferee of such individual (as defined in the
Stockholders Agreement), except a Permitted Transferee by virtue of Section
3.4(b)(iv) thereof; provided, however, that in no event shall individuals
collectively be deemed to be "Permitted Holders" with respect to more than 30%
of the total voting power of the Corporation, (2) the term "Public Equity
Offering" shall mean a primary public offering of Capital Stock (or securities
convertible into or exchangeable for Capital Stock) of the Corporation, HSS
Operating Corporation, any direct or indirect parent of the Corporation (except
CVC or any direct or indirect parent of CVC) (each, a "Parent") or any
Subsidiary pursuant to an effective registration statement filed under the
Securities Act other than a registration statement filed on Form S-8 or any
successor form and other than any registration statement filed in connection
with any issuance of Capital Stock (or securities convertible into or
exchangeable for Capital Stock) in connection with the original issuance of the
Senior Subordinated Notes and (3) "Continuing Director" means any member of the
Board of Directors who (i) was a member of such Board of Directors on the date
hereof, or (ii) was nominated for election or elected to the Board of Directors
with, or whose election to the Board of Directors was approved by, the
affirmative vote of a majority of the Continuing Directors who were members of
such Board of Directors at the time of such nomination or election, or (iii)
became a member of the Board of Directors pursuant to the Stockholders
Agreement.
(c) Restricted Payments. The Corporation shall redeem this Note in full
to the extent then outstanding immediately upon any violation of Section 5(g).
(d) Limitations on Redemption Obligations. Anything in this Section 4 to
the contrary notwithstanding, the Corporation shall not be obligated to redeem
all or any portion of the Note to the extent the Corporation is prohibited from
doing so by the terms of any Senior Debt outstanding at the time of the
occurrence of the event giving rise to such requirement to redeem.
(e) Interest on Securities Called for Redemption. On and after the
redemption date, interest will cease to accrue on the Note or portion thereof
called for redemption.
5. Covenants; Representations
(a) Payment of Note. The Corporation shall pay the principal of and
interest on this Note on the dates and in the manner provided in this Note.
(b) SEC Reports. The Corporation shall deliver to the Holder promptly
(and in any event within 5 days after it files them with the SEC), copies of the
annual reports, quarterly reports and other periodic reports which the
Corporation may be required to file with the SEC pursuant to Section 13, 14 or
15(d) of the Exchange Act.
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To the extent that the Corporation is required to prepare and deliver
any periodic reports to the holders of Senior Debt or to CVC or Sterling, the
Corporation shall deliver copies of such reports to the Holder, at the same time
the Corporation is required to deliver such reports to the holders of the Senior
Debt or to CVC or Sterling, as applicable. The Corporation shall, upon
reasonable notice, provide officers, employees and representatives of Holder and
the proposed transferees with reasonable access to the Corporation's premises,
properties, books, records and personnel as may reasonably be requested in
connection with a potential transfer of the Note or any portion thereof.
(c) Preservation of Corporate Existence; etc. Subject to Section 11, the
Corporation will do or cause to be done all things necessary to preserve and
keep in full force and effect the corporate existence and the material rights
(charter and statutory) and franchises of the Corporation and of HSS Operating
Corporation; provided, however, that the Corporation shall not be required to
preserve or cause to be preserved any such material right or franchise if the
board of directors of the Corporation shall determine that the preservation
thereof is no longer desirable in the conduct of the business of the Corporation
and that the loss thereof is not, and will not be, adverse in any material
respect to the Holder.
(d) Payment of Taxes, Assessment, Charges and Claims. The Corporation
will and will cause the Subsidiaries to duly pay or discharge or cause to be
paid or discharged the following before they shall become delinquent: (i) all
material taxes, assessments and governmental charges levied or imposed upon the
Corporation or any of the Subsidiaries or upon the income, profit or property of
the Corporation or any of the Subsidiaries, and (ii) all material lawful claims
for labor, materials and supplies which, if unpaid, might by law become a
material lien upon the property of the Corporation or any of the Subsidiaries;
provided, however, that the Corporation or any of the Subsidiaries shall not be
required to pay or discharge or cause to be paid or discharged (but shall make
adequate provision for) any such tax, assessment, charge or claim whose amount,
applicability or validity is being contested in good faith by appropriate
proceedings and for which adequate provision has been made.
(e) Waiver of Stay, Extension or Usury Laws. The Corporation covenants
(to the extent that it may lawfully do so) that it shall not at any time insist
upon, or plead, or in any manner whatsoever claim, and shall resist any and all
efforts to be compelled to take the benefit or advantage of, any stay or
extension law or any usury law or other law which would prohibit or forgive the
Corporation from paying all or any portion of the principal of and/or interest
on this Note as contemplated herein, wherever enacted, now or at any time
hereafter in force, or which may affect the covenants or the performance of this
Note; and (to the extent that it may lawfully do so) the Corporation hereby
expressly waives all benefit or advantage of any such law and covenants that it
shall not hinder, delay or impede the execution of any power herein granted to
the Holder but shall suffer and permit the execution of every such power as
though no such law had been enacted.
(f) Compliance with Laws. The Corporation will, and will cause the
Subsidiaries to, comply in all material respects with all applicable statutes,
regulations, orders and restrictions of the United States, any state,
municipality or other governmental division thereof, and agencies and
instrumentalities of the foregoing, in respect of the conduct of its and their
businesses and the ownership of its and their properties (including, without
limitation, applicable statutes,
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regulations, orders and restrictions relating to equal employment opportunities
and environmental standards and controls), except such as are being contested
in good faith.
(g) Limitation on Restricted Payments.
(i) The Corporation (A) shall not effect the declaration, payment or
setting apart for payment of any dividend on any part of the Corporation's
capital stock or any cash interest payment on any Junior Indebtedness or effect
or make any payment on account of or set apart for payment money for a sinking
or other similar fund for, the purchase, prepayment, redemption or other
retirement of, any of the Corporation's capital stock (or any rights, warrants
or options to purchase or acquire any such capital stock) or Junior
Indebtedness, or make any distribution of any nature whatsoever in respect of
any thereof, either directly or indirectly, and whether in cash, or other
obligations of the Corporation or other property (except dividends or
distributions payable solely in shares, rights, warrants or options of capital
stock and except dividends or distributions payable solely to the Corporation or
its Wholly Owned Subsidiaries), (B) shall not make any payment of cash interest
on Indebtedness that is pari passu with this Note at any time when the payment
of cash interest on this Note is prohibited by the terms of any Senior Debt, and
shall not make any payment of non-cash interest on such pari passu Indebtedness
at any time when the payment of non-cash interest on the Notes is prohibited by
the terms of any Senior Debt, (C) shall not voluntarily prepay any Indebtedness
that is pari passu with this Note, (D) shall not permit a Subsidiary or any
other corporation or other entity directly or indirectly controlled by the
Corporation to purchase, redeem or otherwise acquire any of the Corporation's
capital stock or Junior Indebtedness or any Indebtedness that is pari passu with
this Note and (E) shall not permit any Subsidiary that is not a Wholly Owned
Subsidiary to make any payment or distribution in respect of the capital stock
of such Subsidiary that the Corporation would be prohibited from making in
respect of the capital stock of the Corporation. The provisions of this Section
5(g) shall not prohibit (x) the repurchase of securities of the Corporation from
employees, former employees, directors or former directors of the Corporation or
any Subsidiary (or permitted transferees of such individuals) pursuant to the
terms of Article VII of the Stockholders Agreement; provided, further, however,
that the aggregate amount of such repurchases shall not exceed the sum of (1) $[
] and (2) the aggregate amount of cash received by the Corporation after the
date hereof from the sale of such securities to, or the exercise of options to
purchase such securities by, employees or directors of the Corporation or any
Subsidiary, (y) the exchange of the Series A Preferred for Junior Indebtedness
pursuant to the terms thereof, or (z) the retirement, redemption or exchange of
Junior Indebtedness or Series A Preferred with or for shares of capital stock of
the Corporation (an "Equity Swap").
(ii) The Corporation will not permit any Subsidiary to effect the
declaration, payment or setting apart for payment of any dividend on any part of
such Subsidiary's capital stock (other than dividends or distributions in such
Subsidiary's Capital Stock) except for payments of any dividend to the
Corporation or a Wholly Owned Subsidiary.
(iii) None of the Corporation's Junior Indebtedness or Capital Stock
shall provide for the mandatory payment of principal by way of redemption,
sinking fund or otherwise (including, without limitation, at the option of the
holder thereof) and the Corporation will make no optional payment with respect
thereto, prior to the payment of all principal of and interest on this
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Note (including accrued but unpaid interest), except that nothing herein
shall prohibit any Equity Swap.
(iv) "Junior Indebtedness" means any Indebtedness of the Corporation
whether outstanding on the date hereof or incurred thereafter, that is
subordinated in right of payment to this Note either by its terms or by
operation of law.
(h) Limitation on Payment Restrictions.
Except as set forth herein, the Corporation will not, and will not
permit any of the Subsidiaries to, directly or indirectly, create or otherwise
cause or suffer to exist or become effective any encumbrance or restriction
(other than this Note) on the ability of any Subsidiary to (i) pay dividends or
make any other distribution on its capital stock or any other interests or
participation in, or measured by, its profits, owned by the Corporation or any
Subsidiary of the Corporation, or pay any Indebtedness owed to, the Corporation
or a Subsidiary of the Corporation, (ii) make loans or advances to the
Corporation or (iii) transfer any of its properties or assets to the
Corporation, except for such encumbrances or restrictions existing under or by
reason of (A) applicable law, (B) Senior Debt or (C) Indebtedness existing on
the date hereof.
6. Due Authorization, etc.
The Corporation hereby represents to the Holder that (i) the
Corporation is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware, (ii) the Corporation has all
requisite corporate power and corporate authority to execute and deliver this
Note and to carry out the terms hereof, (iii) the Corporation has duly
authorized the execution, delivery and performance of this Note and (iv) the
execution, delivery and performance of this Note do not (a) violate any
provision of the certificate of incorporation or by-laws of the Corporation, or
(b) violate any statute, rule or regulation of any governmental authority to
which the Corporation is subject. This Note represents the valid and binding
obligation of the Corporation, enforceable against the Corporation in accordance
with its terms.
7. Subordination
(a) Definitions. The following terms have the following meanings:
"Agent" means [ ], as administrative agent for the Lenders party
to the Credit Agreement, any successor agent and any agent for the Lenders
with respect to any amendment, extension, supplement, increase, renewal,
refunding, replacement, refinancing (including successive refinancings) or other
modification of the Bank Debt. If no such agent exists, "Agent" shall mean the
holders of a majority of the outstanding Bank Debt.
"Bank Debt" means all obligations of the Subsidiaries (and the
Corporation as guarantor thereunder) now or hereafter existing (a) under the
Credit Agreement as it may hereafter be amended, extended, supplemented,
increased, renewed, refunded, replaced, refinanced (including successive
refinancings) or otherwise modified from time to time, whether for principal,
interest, premium, reimbursement of amounts drawn under letters of credit issued
pursuant to the Credit Agreement, fees, expenses, indemnities or otherwise and
(b) under any of the Senior Loan Documents, as they may hereafter be amended,
extended, supplemented, increased, renewed,
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refunded, replaced, refinanced (including successive refinancings) or
otherwise modified from time to time.
"Credit Agreement" means the Credit Agreement dated as of [ ] among the
Corporation, as borrower, other Lenders thereto, the Agent and [ ], as lead
arranger, as such Agreement may hereafter be amended, extended, supplemented,
increased, renewed, refunded, replaced, refinanced (including successive
refinancings) or otherwise modified.
"Holder" as used in this Section 7 means a holder or owner of this Note
and any other holder or owner of Subordinated Debt.
"Indebtedness" means, without duplication, with respect to any person,
(a) the principal of and premium (if any) in respect of all indebtedness of such
person for borrowed money, (b) the principal of and premium (if any) in respect
of all obligations of such person evidenced by notes, bonds, debentures or other
similar instruments, (c) all indebtedness created or arising under any
conditional sale or other title retention agreement with respect to property
acquired by such person (even though the rights and remedies of the seller or
lender under such agreement in the event of default are limited to repossession
or sale of such property), (d) all obligations of such person as lessee under
leases that have been or should be, in accordance with generally accepted
accounting principles, recorded as capital leases, (e) all obligations,
contingent or otherwise, of such person under acceptance, letter of credit or
similar facilities, (f) all indebtedness of the type referred to in clauses (a)
through (e) above guaranteed directly or indirectly in any manner by such
person, or in effect guaranteed directly or indirectly by such person through an
agreement (1) to pay or purchase such indebtedness or to advance or supply funds
for the payment or purchase of such indebtedness, (2) to purchase, sell or lease
(as lessee or lessor) property, or to purchase or sell services, primarily for
the purpose of enabling the debtor to make payment of such indebtedness or to
assure the holder of such indebtedness against loss, (3) to supply funds to or
in any other manner invest in the debtor (including any agreement to pay for
property or services irrespective of whether such property is received or such
services are rendered) or (4) otherwise to assure a creditor against loss, and
(i) all indebtedness of the type referred to in clauses (a) through (e) above
secured by (or for which the holder of such indebtedness has an existing right,
contingent or otherwise, to be secured by) any lien on property (including,
without limitation, accounts and contract rights) owned by such person, even
though such person has not assumed or become liable for the payment of such
indebtedness, but excluding trade and other accounts payable in the ordinary
course of business in accordance with customary trade terms and which are not
overdue for more than 90 days, or as to which a dispute exists and adequate
reserves in conformity with generally accepted accounting principles have been
established on the books of such person.
"Lenders" means the [Lenders] as defined in the Credit Agreement.
"Loan Parties" shall mean the Corporation and any Subsidiary which is an
obligor under the Credit Agreement or the Senior Subordinated Notes.
"Non-payment Default" means any default or event of default (other than
a Payment Default) under any agreement or instrument relating to Senior Debt.
For purposes of the immediately preceding sentence, an "event of default" shall
exist when as a result thereof the
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holders of the pertinent Senior Debt are then permitted (whether or not
with the requirement that notice be given) to cause such Senior Debt to become
due prior to its scheduled maturity.
"Payment Default" means any default in the payment of principal of,
premium, if any, interest on, or other amounts payable on, or in connection
with, Senior Debt, irrespective of whether such default in payment results from
a failure to pay any amount when originally scheduled to be paid or upon
acceleration or otherwise.
"Senior Creditors" means (i) the Lenders and the Agent under the Senior
Loan Documents until the Bank Debt (including all refinancings and successive
refinancings thereof) has been finally and indefeasibly paid in full, (ii)
thereafter, the holders of the Senior Subordinated Notes until they have been
finally and indefeasibly paid in full, (iii) thereafter the holders of the PIK
Notes and (iv) thereafter, the holders of other Senior Debt on a pro rata basis.
"Senior Debt" means (a) all Indebtedness of the Corporation and the
Subsidiaries, including principal, premium, if any, and interest on such
Indebtedness, whether outstanding on the date hereof or thereafter created,
incurred or assumed, except for Indebtedness which is expressly by its terms or
the terms of the instrument creating or evidencing such Indebtedness made equal
in right of payment with this Note or subordinate in right of payment to this
Note, (b) all other amounts due on or in connection with such Indebtedness,
including all charges, fees, indemnities, and expenses (including reasonable
fees and expenses of counsel), (c) all post petition interest with respect to
such Indebtedness, (d) all amendments, extensions, supplements, increases,
renewals, refundings, replacements, refinancings, modifications and deferrals of
the Indebtedness referred to in clauses (a), (b) and (c) above, and shall
include without limiting the foregoing the Bank Debt, the Senior Subordinated
Notes, the PIK Notes and all guaranties thereof by the Corporation.
Notwithstanding the foregoing, Senior Debt shall not include (i) any
Indebtedness of the Corporation to any Subsidiary of the Corporation, (ii) any
Indebtedness of the Corporation which, by its terms or the terms of any
instrument creating or evidencing it (including the terms of any instrument
amending, extending, supplementing, renewing, increasing, refunding, replacing,
refinancing, modifying or deferring the same) is expressly made pari passu with
or expressly subordinate in right of payment to this Note, (iii) Indebtedness to
any employee of the Corporation; (iv) any liability for taxes; (v) amounts
payable to trade creditors for goods and services provided in the ordinary
course of business; (vi) that portion of any Indebtedness which at the time of
incurrence, creation or assumption is incurred, created or assumed in violation
of the Senior Indenture (as in effect on the date of issuance of the Senior
Subordinated Notes and irrespective of whether any Indebtedness is then
outstanding thereunder); or (vii) Indebtedness under the Senior Subordinated
Notes (or the terms of any instrument amending, extending, supplementing,
renewing, increasing, refunding, replacing, refinancing, modifying or deferring
the same) in excess of the principal amount outstanding on the date of original
issuance of the Senior Subordinated Notes plus any interest thereon or other
Indebtedness in respect thereof.
"Senior Default" means a Payment Default or a Non-payment Default.
"Senior Indenture" means the Indenture dated [ ] between HSS
Operating Corporation and [ ], as trustee, with respect to HSS Operating
Corporation's ___% Senior Subordinated Notes Due [ ].
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"Senior Loan Documents" means all Loan Documents (as defined in the
Credit Agreement).
"Senior Subordinated Notes" means all obligations of HSS Operating
Corporation, the Subsidiary Guarantors and the Corporation, as guarantor, now or
hereafter existing under the Indenture as it may hereafter be amended, extended,
supplemented, increased, renewed, refunded, replaced, refinanced or otherwise
modified from time to time, whether for principal, interest, premium, fees,
expenses, indemnities or otherwise.
"Senior Trustee" means [ ], as trustee under the Senior Indenture,
or any successor thereto.
"Significant Subsidiary" means any Subsidiary of the Corporation that
would be a "significant subsidiary" as defined in Rule 1.02(w) of Regulation S-X
promulgated pursuant to the Securities Act.
"Subordinated Debt" means (a) all obligations of the Corporation now or
hereafter existing under or with respect to this Note (whether created directly
or acquired by assignment or otherwise), as it may hereafter be amended,
extended, supplemented or otherwise modified from time to time, whether for
principal, interest (including, without limitation, post petition interest),
fees, expenses, indemnities, reimbursements, damages, liabilities or otherwise,
and (b) all obligations of any of the Loan Parties in respect of (i) any
Indebtedness (but in no event constituting Bank Debt) incurred by any of the
Loan Parties to amend, extend, supplement, increase, renew, refund, replace,
refinance or otherwise modify, in whole or in part, the Subordinated Debt,
including interest and premium on any such Indebtedness, (ii) any loan or credit
agreement entered into by any of the Loan Parties in connection with any such
Indebtedness, as such agreement may be amended, extended, supplemented or
otherwise modified from time to time, and (iii) all other amounts payable in
respect of any such Indebtedness or agreement, including, without limitation,
amounts payable (A) in respect of any indemnity and (B) in respect of any breach
of a representation or a warranty.
"Subsidiary" means any corporation more than 50% of the outstanding
voting power of the Capital Stock of which is owned or controlled, directly or
indirectly, by the Corporation.
(b) Subordinated Debt Subordinated to Senior Debt. The Corporation, for
itself and its successors, and each Holder, by its acceptance thereof, agrees
that the Subordinated Debt is and shall be subordinated in right of payment, to
the extent and in the manner provided in this Section 7, to the prior payment in
full of all Senior Debt. For the purposes of this Note, Senior Debt shall be
deemed not to have been paid in full until the holders or owners of the Senior
Debt shall have received payment of all Senior Debt in cash and as long as any
lender shall have any obligation under the Senior Loan Documents, the Senior
Indenture, the PIK Indenture or other agreement or instrument evidencing any
obligations under any Senior Debt. This Section 7 shall constitute a continuing
offer to all persons who, in reliance upon such provisions, become holders of,
or continue to hold, Senior Debt, and such provisions are made for the benefit
of the holders of Senior Debt, and such holders are made obligees hereunder and
any one or more of them may enforce such provisions.
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(c) No Payment on Subordinated Debt in Certain Circumstances.
(i) Upon the maturity of all or any part of any Senior Debt by lapse
of time, acceleration (unless waived in writing) or otherwise, all Senior Debt
then due shall first be paid in full, or such payment duly provided for,
in cash or cash equivalents in a manner satisfactory to the holders of such
Senior Debt, before any payment is made on account of the Subordinated Debt, and
until the Senior Debt is paid in full, any distribution to which the Holder
would be entitled but for this Section 7 shall be made to holders of Senior Debt
as their interests may appear.
(ii) In the event that any Payment Default shall have occurred and be
continuing, unless and until such default shall have been cured or waived in
writing, then no payment (including any payment which may be payable by reason
of the payment of any other indebtedness of the Corporation being subordinated
to payment of the Subordinated Debt) shall be made by or on behalf of the
Corporation for or on account of any Subordinated Debt, and the Holder shall not
take or receive from the Corporation or any Subsidiary, directly or indirectly,
in cash or other property, or by set-off or in any other manner, including,
without limitation, from or by way of collateral, payment of all or any of the
Subordinated Debt. The Holder shall immediately deliver to the Representative
any monies, securities or other property paid in violation of the preceding
sentence and received by the Holder or its equivalent in cash, with proper
endorsement or assignment if necessary, and prior to such delivery shall hold in
trust, such monies, securities or other properties solely as trustee for and for
the benefit of the Senior Creditors as set forth in this sentence.
(iii) Upon written notice from the Representative to the Corporation
(which shall give prompt notice to the Holder) of a Non-payment Default and if
such Non-payment Default shall not have been cured or waived in writing, no
payment (including any payment which may be payable by reason of the payment of
any other Indebtedness of the Corporation being subordinated to payment of the
Subordinated Debt) shall be made by or on behalf of the Corporation for or on
account of any Subordinated Debt, and the Holder shall not take or receive from
the Corporation, directly or indirectly, in cash or other property or by set-off
or in any other manner, including, without limitation, from or by way of
collateral, payment of all or any of the Subordinated Debt, during the period
(the "Payment Blockage Period") commencing on the date of receipt by the
Corporation of such notice and ending (unless earlier terminated by notice from
the Representative to the Corporation, which shall give prompt notice to the
Holder), on the earlier of (A) the date when all Non-payment Defaults shall have
been cured or waived in writing, (B) the date an Event of Default occurs under
Section 8(a)(ii) or 8(a)(iii), and (C) the date on which the Bank Debt or Senior
Subordinated Notes are accelerated and declared immediately due and payable.
(iv) Nothing contained in this Section 7 will limit the right of the
Holder to take any action to accelerate the maturity of the securities pursuant
to Section 8 or to pursue, subject to Section 8, any rights or remedies
hereunder; provided that so long as any Senior Debt remains outstanding the
Holder shall take no such action during the period (the "Remedies Blockage
Period") commencing upon any Event of Default hereunder until the earlier of (A)
the date when all Events of Default hereunder shall have been cured or waived in
writing, (B) the date an Event of Default occurs under Section 8(a)(ii) or
8(a)(iii), and (C) the date on which the Bank Debt, Senior Subordinated Notes or
PIK Notes are accelerated and declared immediately due and
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payable; provided, further, that in the event that any Subordinated Debt
is declared due and payable before its stated maturity, the holders of all
Senior Debt shall be entitled to receive final and indefeasible payment in full
of all amounts due or to become due (whether or not accelerated) on or in
respect of all Senior Debt before the Holder is entitled to receive any payment
(including any payment which may be payable by reason of the payment of any
other Indebtedness of the Corporation being subordinated to the payment of the
Subordinated Debt) by the Corporation on account of the Subordinated Debt. The
Holder shall immediately deliver to the Representative any monies, securities or
other property received by the Holder or its equivalent in cash, with proper
endorsement or assignment if necessary, and prior to such delivery shall hold in
trust, such monies, securities or other properties solely as trustee for and for
the benefit of the Senior Creditors as set forth in this sentence.
(v) Nothing contained in this Section 7 shall prevent interest from
accruing to this Note as provided above until this Note is paid in full.
(d) Subordinated Debt Subordinated to Prior Payment of All Senior Debt
on Dissolution. Upon any payment or distribution of all or any of the assets or
securities of the Corporation of any kind or character upon any dissolution,
winding up, liquidation, reorganization, arrangement, adjustment, protection,
relief or other similar case or proceeding under any federal or state bankruptcy
or similar law (whether voluntary or involuntary, in bankruptcy, insolvency,
receivership, arrangement, reorganization or relief proceedings or upon any
assignment for the benefit of creditors or any marshaling of the assets and
liabilities of the Corporation or otherwise):
(i) all Senior Debt shall first be entitled to be paid in full before
the Holder is entitled to receive any payment on account of the Subordinated
Debt; and
(ii) any payment or distribution in respect of the Subordinated Debt
to which the Holder would be entitled except for the provisions of this
Section 7 (including any payment that may be payable by reason of any other
Indebtedness of the Corporation being subordinated to the payment of the
Subordinated Debt), shall be paid by the Corporation, the liquidating trustee or
agent or other person making such payment or distribution directly to the Agent
(in the case of the Bank Debt) or to the holders of the other Senior Debt or
their Representative or to the trustee under any indenture or other agreement
(if any) pursuant to which Senior Debt may have been issued, as the case may be,
for application to (in the case of cash), or as collateral (in the case of
non-cash property or securities) for, the payment or prepayment in full of all
Senior Debt remaining unpaid, after giving effect to any concurrent payment or
distribution (in the case of cash) to the holders of such Senior Debt.
(e) Holder to be Subrogated to Rights of Holders of Senior Debt. Upon
final and indefeasible payment in full of all Senior Debt, the Holder shall be
subrogated to the rights of the holders of Senior Debt to receive payments or
distributions of assets of the Corporation applicable to the Senior Debt until
all Subordinated Debt shall be paid in full, and for the purpose of such
subrogation no such payments or distributions to the holders of Senior Debt by
or on behalf of the Corporation or by or on behalf of the Holder by virtue of
this Section 7 which otherwise would have been made to the Holder shall, as
among the Corporation, its creditors other than the holders of Senior Debt and
the Holder, be deemed to be payment by the Corporation to or on account of the
Senior Debt, it being understood that the provisions of this Section 7(e) are
and are intended solely
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for the purpose of defining the relative rights of the Holder, on the one hand,
and the holders of Senior Debt, on the other hand.
If any payment or distribution to which the Holder would otherwise have
been entitled but for the provisions of this Section 7 shall have been applied,
pursuant to the provisions of this Section 7, to the payment of all amounts
payable under the Senior Debt, then and in such case, the Holder shall be
entitled to receive from the holders of such Senior Debt at the time outstanding
any payments or distributions received by such holders of Senior Debt in excess
of the amount sufficient to pay holders of Senior Debt all amounts payable under
or in respect of the Senior Debt in full unless the holders of Senior Debt are
otherwise directed by a court of competent jurisdiction.
(f) Subordination Rights Not Impaired by Acts or Omissions of the
Corporation or Holders of Senior Debt. The Corporation agrees that it will not
make any payment of any Subordinated Debt, or take any other action, in
contravention of the provisions of this Section 7, and no right of any present
or future holders of any Senior Debt to enforce subordination as provided herein
shall at any time in any way be prejudiced or impaired by any act or failure to
act on the part of the Corporation or by any act or failure to act, in good
faith, by any such holder, or by any noncompliance by the Corporation with the
terms of this Note, regardless of any knowledge thereof which any such holder
may have or with which any such holder may be otherwise charged. The holders of
Senior Debt may amend, extend, supplement, increase, renew, refund, replace,
refinance, restructure or otherwise modify the terms of the Senior Debt or any
instrument or agreement evidencing or governing the same or any security
therefor and release, sell or exchange any security therefor and otherwise deal
freely with any Loan Party, all without affecting the liabilities and
obligations of the Corporation and the Holder hereunder.
(g) In Furtherance of Subordination.
(i) All payments or distributions upon or with respect to the
Subordinated Debt which are received by the Holder contrary to the provisions of
this Section 7 shall be received and held by such Holder, in trust for the
benefit of, shall be segregated from other funds and property held by such
Holder for and shall be paid immediately over and delivered to the
Representative of Senior Creditors in the same form as so received (with any
necessary endorsement), for application (in the case of cash) to, or as
collateral (in the case of non-cash property or securities) for, the payment or
prepayment in full of all Senior Debt of the Senior Creditors remaining unpaid,
after giving effect to any concurrent payment or distribution (in the case of
cash) to the holders of Senior Debt and shall be applied (A) first to the final
and indefeasible payment in full of all Bank Debt, (B) next to the final and
indefeasible payment in full of the Senior Subordinated Notes, (C) next to the
payment of any other Senior Debt (as defined in the PIK Indenture) on a pro rata
basis, (D) next to the final and indefeasible payment in full of the PIK Notes
and other Indebtedness which is pari passu with the PIK Notes, and (E) finally
to the payment of any other Senior Debt on a pro rata basis.
(ii) The Corporation shall give prompt written notice to the Holder
of any Senior Default under any Senior Debt or under any agreement pursuant to
which Senior Debt may have been issued or of any dissolution, winding up,
liquidation, reorganization or other event described in Section 7(d) relating to
the Corporation; provided that, except as set forth in Section
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7(i), the failure to give any such notice shall in no way affect the
obligations of the Holder under, or the terms of subordination set forth in,
this Section 7.
(iii) The Agent or the holders of Senior Debt (including the
Trustee), as the case may be, are hereby authorized to demand specific
performance of the provisions of this Section 7, whether or not the Corporation
shall have complied with any of the provisions hereof applicable to it, at any
time when the Corporation or the Holder, as the case may be, shall have failed
to comply with any of the provisions of this Section 7 applicable to it. The
Holder hereby irrevocably waives any defense based on the adequacy of a remedy
at law that might be asserted as a bar to such remedy of specific performance.
The Holder hereby acknowledges that the provisions of this Section 7 are
intended to be enforceable at all times, whether before or after the
commencement of a proceeding referred to in Section 7(d).
(h) Obligations of Corporation Unconditional. Nothing contained in this
Section 7 is intended to or shall impair, as between the Corporation and the
Holder, the obligations of the Corporation, which are absolute and
unconditional, to pay to the Holder the principal of, premium, if any, on and
interest on this Note as and when the same shall become due and payable in
accordance with its terms or is intended to or shall affect the relative rights
of the Holder and creditors of the Corporation other than the holders of the
Senior Debt, and, except as otherwise expressly provided herein, nothing
contained herein shall prevent the Holder from exercising all remedies otherwise
permitted by applicable law upon Default, subject to the rights, if any, under
this Section 7 of the holders of such Senior Debt in respect of cash, property,
security or securities of the Corporation received upon the exercise of any such
remedy. Nothing contained in this Section 7 or in this Note shall, except during
the pendency of any dissolution, winding-up, liquidation, reorganization,
recapitalization or readjustment of the Corporation, affect the obligation of
the Corporation to make, or prevent the Corporation from making, at any time
(except under the circumstances described in Section 7(c)) payment of principal
of or interest on this Note.
The failure to make a payment on account of principal of, premium, if
any, on or interest on this Note by reason of any provision of this Section 7
shall not be construed as preventing the occurrence of an Event of Default under
Section 8.
Upon any payment or distribution of assets of the Corporation referred
to in this Section 7, the Holder shall be entitled to rely upon any unstayed,
final, nonappealable order or decree made by any court of competent jurisdiction
or upon any certificate of any agent or other person for the purpose of
ascertaining the persons entitled to participate in any distribution, the
holders of the Senior Debt and other Indebtedness of the Corporation, the amount
thereof or payable thereon, the amount or amounts paid or distributed thereon
and all other facts pertinent thereto or to this Section 7.
(i) Holder Entitled to Assume Payments Not Prohibited in Absence of
Notice. The Holder shall not at any time be charged with the knowledge of the
existence of any facts which would prohibit the making of any payment to such
Holder, unless and until the Holder shall have received written notice thereof
from the Corporation or one or more holders of Senior Debt or from the Agent or
Representative therefor; and, prior to the receipt of any such written notice
(and absent actual notice to the contrary on the part of the Holder), the Holder
shall be entitled to assume conclusively that no such facts exist. Nothing
contained in this Section 7 shall limit the right of the
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<PAGE>
holders of Senior Debt to recover payments as contemplated elsewhere in
this Section 7. The Holder shall be entitled to rely on the delivery to it of,
and upon such delivery will be charged with knowledge of the existence of, a
written notice by a person representing himself or itself to be a holder of such
Senior Debt (or a trustee on behalf of, or other representative of, such holder)
to establish that such notice has been given by a holder of such Senior Debt or
a trustee on behalf of any such holder.
(j) Rights in Insolvency Proceedings. The Holder irrevocably authorizes
and empowers the Representative of the Senior Creditors in any proceeding
defined in Section 8(a) (ii) or (iii) (an "Insolvency Proceeding") involving or
relating to the Subordinated Debt to file a proof of claim on behalf of the
Holder with respect to the Subordinated Debt if the Holder fails to file proof
of its claims prior to 30 days before the expiration of the time period during
which such claims must be submitted to accept and receive any payment or
distribution which may be payable or deliverable at any time upon or in respect
of the Subordinated Debt in an amount not in excess of the Agent's portion of
the Senior Debt then outstanding and to take such other action as may be
reasonably necessary to effectuate the foregoing. The Holder shall provide to
the Agent all information and documents reasonably necessary to present claims
or seek enforcement as aforesaid. The Holder agrees that even though it shall
retain the right to vote its claims and otherwise act in any such Insolvency
Proceedings relative to the Corporation (including, without limitation, the
right to vote to accept or reject any plan of partial or complete liquidation,
reorganization, arrangement, composition or extension), the Holder shall not
take any action or vote in any way so as to contest (i) the validity or the
enforceability of the Credit Agreement, the Senior Loan Documents or the liens
and security interests to the extent granted to the Agent by the Corporation
with respect to the Bank Debt, (ii) the validity or enforceability of the Senior
Indenture or the PIK Indenture, (iii) the rights of the Lenders established in
the Credit Agreement, the Senior Loan Documents or any security documents with
respect to such liens and security interests, or (iv) the validity or
enforceability of terms of subordination set forth herein or any agreement or
instrument to the extent evidencing or relating to the Senior Debt. The holders
of Senior Debt agree that as a condition to Holder's obligations in this
paragraph, while they shall retain the right to vote the Senior Debt and
otherwise act in any such reorganization proceeding relative to the Corporation
(including, without limitation, the right to vote or accept or reject any plan
of partial or complete liquidation, reorganization, arrangement, composition or
extension), they shall not take any action or vote in any way so as to contest
the enforceability of this Note or any other agreement or instrument to the
extent evidencing or relating to the Subordinated Debt.
(k) Waiver of Consolidation. Each holder of this Note agrees that it
will not at any time insist upon, plead, or in any manner whatsoever, seek the
entry of any order or judgment, or take the benefit or advantage of, any
substantive consolidation, piercing of the corporate veil or any other order or
judgment that causes an effective combination of the assets and liabilities of
the Corporation and any other individual, corporation, partnership or joint
venture in any Insolvency Proceeding.
(l) Miscellaneous.
(i) The Holder and the Corporation each will, at the Corporation's
expense and at any time and from time to time, promptly execute and deliver all
further instruments and documents, and take all further action that may be
reasonably necessary or desirable, or that the
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Agent or any Representative of the Senior Creditors may reasonably request, in
order to protect any right or interest granted or purported to be granted by
the provisions of this Section 7 or to enable the Agent to exercise and enforce
its rights and remedies hereunder.
(ii) All rights and interests under this Section 7 of the holders of
the Bank Debt, the Agent or the holders of the Senior Subordinated
Notes, the PIK Notes and any other holder of Senior Debt, and all agreements and
obligations of the Holder and the Corporation under this Section 7, shall remain
in full force and effect irrespective of:
(a) any lack of validity or enforceability of any Senior Loan
Document or any other agreement or instrument relating thereto or to any
Senior Debt;
(b) any amendment, extension, renewal, increase, supplement,
refunding, replacement, refinancing or other modification in the time,
manner or place of payment of, or in any other term of, all or any of the Bank
Debt, the Senior Subordinated Notes, the PIK Notes or any other Senior Debt, or
any other amendment, extension, renewal or waiver of or any consent to any
departure from any Senior Loan Document or any other agreement or instrument
relating thereto or to any other Senior Debt, including, without limitation, any
increase in obligations resulting from the extension of additional credit to any
Loan Party or any of its subsidiaries or otherwise (provided that nothing in
this paragraph shall operate to make any Indebtedness that would not otherwise
qualify as Senior Debt so qualify).
(c) any taking, exchange, release or non-perfection of any other
collateral, or any taking, release or amendment or waiver of or consent
to departure from any guaranty, for all or any of the Bank Debt, the Senior
Subordinated Notes, the PIK Notes or any other Senior Debt;
(d) any manner of application of collateral, or proceeds thereof,
to all or any of the Bank Debt or any other Senior Debt, or any manner
of sale or other disposition of any collateral for all or any of the Bank Debt
or any other Senior Debt, or any other assets of any Loan Party or any of its
subsidiaries;
(e) any change, restructuring or termination of the corporate
structure or existence of any Loan Party or any of its subsidiaries; or
(f) any other circumstance which might otherwise constitute a
defense available to, or a discharge of, any Loan Party or a subordinated
creditor.
(iii) The provisions of this Section 7 shall continue to be effective
or be reinstated, as the case may be, if at any time any payment of any
Senior Debt is rescinded or must otherwise be returned by the Agent, any holder
of Bank Debt, any holder of the Senior Subordinated Notes, any holder of the PIK
Notes or any other holder of Senior Debt upon the insolvency, bankruptcy or
reorganization of any Loan Party or otherwise, all as though such payment had
not been made.
(iv) The Holder and the Corporation each hereby waives (to the extent
each may lawfully do so) promptness, diligence, notice of acceptance and any
other notice with respect to any of the Senior Debt and this Section 7 and any
requirement that the Agent, any holder
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of Bank Debt or any other holder of Senior Debt protect, secure, perfect
or insure any security interest or lien or any property subject thereto or
exhaust any right or take any action against the Corporation or any other person
or entity or any collateral.
(v) No failure on the part of the Agent, any holder of Bank Debt, any
holder of the Senior Subordinated Notes, any holder of the PIK Notes or any
other holder of Senior Debt to exercise, and no delay in exercising, any right
hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise of any right hereunder preclude any other or further exercise thereof
or the exercise of any other right. The remedies hereunder provided are
cumulative and not exclusive of any remedies provided by law.
(vi) The provisions of this Section 7 constitute a continuing
agreement and shall (A) remain in full force and effect until all Senior
Debt shall have been finally and indefeasibly paid in full, (B) be binding upon
the Holder and the Corporation and their successors and assigns, and (C) inure
to the benefit of and be enforceable by any holders of Bank Debt, the Agent, the
Trustee, any holder of the Senior Subordinated Notes, any holder of the PIK
Notes, any other holder of Senior Debt and their successors, transferees and
assigns.
8. Events of Default
(a) An "Event of Default" occurs if:
(i) the Corporation defaults in the payment of the principal or
interest of this Note when the same becomes due and payable at maturity,
upon acceleration, or otherwise, whether or not such payment shall be prohibited
by the provisions of Section 7;
(ii) the Corporation or any Significant Subsidiary, pursuant to or
within the meaning of any Bankruptcy Law:
(a) commences a voluntary case or proceeding,
(b) consents to the entry of an order for relief against it in an
involuntary case or proceeding,
(c) consents to the appointment of a Custodian of it or for all or
substantially all of its property, or
(d) makes a general assignment for the benefit of its creditors;
(iii) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:
(a) is for relief against the Corporation or any Significant
Subsidiary in an involuntary case or proceeding,
(b) appoints a Custodian of the Corporation or any Significant
Subsidiary or for all or substantially all of its property, or
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(c) orders the liquidation of the Corporation or any Significant
Subsidiary;
and in the case of (a) above the order or decree remains unstayed and in effect
for 60 days;
(iv) the Corporation fails to observe or perform any material
covenant, condition or agreement required on its part to be observed or
performed pursuant to Section 5, such failure continues for a period of thirty
days after notice from Holder and notice of such failure shall have been given
to the Representative (which notice may be given by the Corporation or the
Holder); or
(v) the Corporation fails to pay any Indebtedness of the Corporation
within any applicable grace period after final maturity or any such Indebtedness
is accelerated by the holders thereof because of a default and the total amount
of such Indebtedness unpaid or accelerated exceeds $10 million and such failure
continues for 10 days after notice.
(b) Acceleration. Subject to the provisions of Section 7, if an Event of
Default (other than an Event of Default with respect to the Corporation
specified in clause (a)(ii) or (iii) of Section 8) occurs and is continuing, the
Holders of 25% or more of the outstanding amount of the Corporation's 12% Junior
Subordinated Debentures Due June 30, 2011, by written notice to the Corporation
(an "Acceleration Notice"), may declare the unpaid principal of and accrued
interest on this Note to be immediately due and payable. Upon such declaration,
if there is at such time any Senior Debt outstanding, the principal, premium, if
any, and interest shall be due and payable upon the first to occur of an
acceleration under the Senior Loan Documents or the Senior Indenture and the PIK
Indenture or thirty days after receipt by the Agent (or any Representative of
which the holder of this Note has received notice if the Bank Debt is not then
outstanding) of such Acceleration Notice given hereunder and there has been no
cure by such 30th day. If an Event of Default specified in clause (a)(ii) or
(iii) of Section 8 occurs with respect to the Corporation, all principal of and
interest on this Note outstanding shall ipso facto become and be immediately due
and payable without any declaration or other act on the part of the Holder. The
Holders of 50% or more of the outstanding amount of the Corporation's 12% Junior
Subordinated Debentures Due June 30, 2011 (the "Majority Holders") by written
notice to the Corporation may rescind an acceleration and its consequences if
(i) all existing Events of Default, other than the nonpayment of principal of or
interest on this Note which has become due solely because of the acceleration,
have been cured or waived and (ii) the rescission would not conflict with any
judgment or decree of a court of competent jurisdiction. Any amounts received by
Holder in connection with any action taken pursuant to this Section 8(b) shall
be subject to the provisions of Section 7.
(c) Other Remedies. Subject to the provisions of Section 7, if an Event
of Default occurs and is continuing, the Majority Holders may pursue any
available remedy by proceeding at law or in equity to collect the payment of
principal of or interest on this Note or to enforce the performance of any
provision of this Note.
A delay or omission by the Holder in exercising any right or remedy
accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. No remedy is
exclusive of any other remedy. All remedies are cumulative to the extent
permitted by law.
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(d) Waiver of Past Defaults. Subject to Section 8(b), the Majority
Holders may waive an existing Default or Event of Default and its consequences.
Upon any such waiver, such Default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured for every purpose
of this Note; but no such waiver shall extend to any subsequent or other Default
or impair any right consequent thereon.
9. Amendment and Waiver
(a) Consent Required. Any term, covenant, agreement or condition of this
Note may, with the consent of the Corporation, be amended or compliance
therewith may be waived (either generally or in a particular instance and either
retroactively or prospectively), if the Corporation shall have obtained the
consent in writing of the Majority Holders; provided that without the written
consent of the holders of all of the Notes then outstanding, no such waiver,
modification, alteration or amendment shall be effective (i) which will change
the time of payment of the principal of or the interest on any Note or reduce
the principal amount thereof, or (ii) which will change the percentage of
holders of the Notes required to consent to any such amendment, alteration or
modification, or (iii) which will change any of the provisions of Section 8(b),
Section 8(c), Section 8(d) or this Section 9. This Note may not be amended
without the consent in writing of the Agent and the Senior Trustee and the PIK
Trustee, so long as the Bank Debt, the Senior Subordinated Notes and the PIK
Notes are outstanding, respectively.
For the purpose of determining whether holders of the requisite
principal amount of Notes have made or concurred in any waiver, consent,
approval, notice or other communication under this Note, Notes held in the name
of, or owned beneficially by, the Corporation or any Subsidiary shall not be
deemed outstanding.
(b) Effect of Amendment or Waiver. Any amendment or waiver shall apply
equally to all of the holders of the Notes and shall be binding upon them, upon
each future holder of any Note and upon the Corporation, whether or not such
Note shall have been marked to indicate such amendment or waiver. No such
amendment or waiver shall extend to or affect any obligation not expressly
amended or waived or impair any right consequent thereon.
10. No Setoff. The rights of the Holder to receive payment hereunder
shall be absolute and not subject to any setoff or similar right.
11. When Corporation May Merge, etc.
(a) The Corporation shall not consolidate with or merge with or into, or
convey, transfer or lease, in one transaction or a series of transaction, all or
substantially all its assets to, any Person, unless:
(i) the resulting, surviving or transferee Person (the "Successor
Company") shall be a Person organized and existing under the laws of the United
States of America, any State thereof or the District of Columbia and the
Successor Company (if not the Corporation) shall expressly assume, all the
obligations of the Corporation hereunder;
(ii) immediately after giving effect to such transaction (and
treating any Indebtedness which becomes an obligation of the Successor
Company or any Subsidiary as a result
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of such transaction as having been incurred by the Successor Company or
such Subsidiary at the time of such transaction), no Default shall have occurred
and be continuing;
(iii) such transaction shall be permitted by the Senior Indenture if
any Senior Debt under the Senior Indenture is then outstanding, and by
the PIK Indenture of any Indebtedness under the PIK Indenture is then
outstanding;
(iv) the Corporation shall have delivered to the Holder an officers'
certificate and an opinion of counsel, each stating that such consolidation,
merger or transfer comply with this Note.
The Successor Company shall be the successor to the Corporation and
shall succeed to, and be substituted for, and may exercise every right and power
of, the Corporation under this Note, but the predecessor Corporation in the case
of a conveyance, transfer or lease shall not be released from the obligation to
pay the principal of and interest on this Note.
(b) The Corporation shall not permit any Significant Subsidiary to
consolidate with or merge with or into, or convey, transfer or lease, in one
transaction or series of transaction, all or substantially all of its assets to
any Person unless: (i) the resulting, surviving or transferee Person (if not
such Significant Subsidiary) shall be a Person organized and existing under the
laws of the jurisdiction under which such Significant Subsidiary was organized
or under the laws of the United States of America, or any State thereof or the
District of Columbia; (ii) immediately after giving effect to such transaction
or transactions on a pro forma basis (and treating any Indebtedness which
becomes an obligation of the resulting, surviving or transferee Person as a
result of such transaction as having been issued by such Person at the time of
such transaction), no Default shall have occurred and be continuing; and (iii)
the Corporation delivers to the Holder an officers' certificate and an opinion
of counsel, each stating that such consolidation, merger or transfer complies
with this Note. The provisions of clauses (i) and (ii) above shall not apply to
any one or more transactions which constitute an Asset Disposition as defined in
the Senior Indenture if the Corporation has complied with the applicable
provisions of Section [___] of the Senior Indenture.
12. Denominations; Transfer and Exchange
When this Note is presented to the Corporation with a request to
register the transfer, the Corporation shall register a transfer as requested,
if the requirements for such transfer are met; provided, however, that if this
Note is presented or surrendered for registration of transfer or exchange it
shall be duly endorsed or be accompanied by a written instrument of transfer in
form satisfactory to the Corporation duly executed by the Holder or his attorney
duly authorized in writing. The Corporation may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
relation thereto.
13. Replacement Note
If a mutilated Note is surrendered to the Corporation or if the Holder
of this Note presents evidence to the reasonable satisfaction of the Corporation
that this Note has been lost, destroyed or wrongfully taken, the Corporation
shall issue a replacement Note of like tenor if the requirements of the
Corporation for such transactions are met. An indemnity bond may be required
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that is sufficient in the reasonable judgment of the Corporation to protect the
Corporation from any loss which it may suffer. The Corporation may charge for
its expenses in replacing this Note.
14. No Recourse Against Others
No director, officer, employee or stockholder, as such, of the
Corporation shall have any liability for any obligations of the Corporation
under this Note or for any claim based on, in respect or by reason of, such
obligations or their creation. The Holder by accepting this Note waives and
releases all such liability. This waiver and release are part of the
consideration for the issue of this Note.
15. Notice
All notices, requests, consents and demands shall be made in writing and
shall be given by registered or certified mail postage prepaid to the following
addresses: if to the Corporation, to it at HSS Holding Corporation [ ], with
required copies to: Sterling Holding Company, LLC [ ], to Dechert Price &
Rhoads, 4000 Bell Atlantic Tower, 1717 Arch Street, Philadelphia, Pennsylvania
19103, Attention: G. Daniel O'Donnell, Telecopy: (215) 994-2222 or to such other
address as may be furnished in writing to the Holder; and if to the Holder, to
it at its address listed on the transfer books of the Corporation. Unless
otherwise indicated herein, notices hereunder shall be effective when delivered,
if delivered personally, or, if sent by mail, when sent.
Any notices given by the Representative to Holder hereunder may be made
by Representative by delivery as set forth above to the address for Holder set
forth above or such other address of which Holder shall give notice to
Representative. Any notices given by the Corporation or Holder to Representative
hereunder may be made by delivery as set forth above to the following address or
such other address of which Representative shall give notice to the party
delivering such notice: _____________________________________________________.
16. Governing Law
This Note shall be deemed a contract under, and shall be governed and
construed in accordance with, the laws of the State of New York without giving
effect to principles of conflicts of laws.
17. Successors, etc.; Entire Agreement
This Note shall be binding upon and shall inure to the benefit of and be
enforceable by the respective successors and assigns of the Corporation and the
registered Holder thereof.
18. Headings
The section headings of this Note are for convenience only and shall not
affect the meaning or interpretation of this Note or any provision hereof.
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IN WITNESS WHEREOF, the Corporation has caused this Note to be executed
by its duly authorized officer.
Dated: ______________, ____
HSS HOLDING CORPORATION
By:
-----------------------------
EXHIBIT 3.02
BYLAWS
OF
INTERSIL HOLDING CORPORATION
ARTICLE I
STOCKHOLDERS
1.1 Meetings.
1.1.1 Place. Meetings of the stockholders shall be held at such place as
may be designated by the board of directors.
1.1.2 Annual Meeting. An annual meeting of the stockholders for the
election of directors and for other business shall be held on such date and at
such time as may be fixed by the board of directors.
1.1.3 Special Meetings. Special meetings of the stockholders may be called
at any time by the chief executive officer, or the board of directors, or the
holders of a majority of the outstanding shares of stock of the Company entitled
to vote at the meeting.
1.1.4 Quorum. The presence, in person or by proxy, of the holders of a
majority of the outstanding shares of stock of the Company entitled to vote on a
particular matter shall constitute a quorum for the purpose of considering such
matter.
1.1.5 Voting Rights. Except as otherwise provided herein, in the
certificate of incorporation or by law, every stockholder shall have the right
at every meeting of stockholders to one vote for every share standing in the
name of such stockholder on the books of the Company which is entitled to vote
at such meeting. Every stockholder may vote either in person or by proxy.
ARTICLE II
DIRECTORS
2.1 Number and Term. The board of directors shall have authority to (i)
determine the number of directors to constitute the board and (ii) fix the terms
of office of the directors.
2.2 Meetings.
2.2.1 Place. Meetings of the board of directors shall be held at such place
as may be designated by the board or in the notice of the meeting.
<PAGE>
2.2.2 Regular Meetings. Regular meetings of the board of directors shall be
held at such times as the board may designate. Notice of regular meetings need
not be given.
2.2.3 Special Meetings. Special meetings of the board may be called by
direction of the chief executive officer or any two members of the board on
three days' notice to each director, either personally or by mail, telegram or
facsimile transmission.
2.2.4 Quorum. A majority of all the directors in office shall constitute a
quorum for the transaction of business at any meeting.
2.2.5 Voting. Except as otherwise provided herein, in the certificate of
incorporation or by law, the vote of a majority of the directors present at any
meeting at which a quorum is present shall constitute the act of the board of
directors.
2.2.6 Committees. The board of directors may, by resolution adopted by a
majority of the whole board, designate one or more committees, each committee to
consist of one or more directors and such alternate members (also directors) as
may be designated by the board. Unless otherwise provided herein, in the absence
or disqualification of any member of a committee, the member or members thereof
present at any meeting and not disqualified from voting, whether or not such
member or members constitute a quorum, may unanimously appoint another director
to act at the meeting in the place of any such absent or disqualified member.
Except as otherwise provided herein, in the certificate of incorporation or by
law, any such committee shall have and may exercise the powers of the full board
of directors to the extent provided in the resolution of the board directing the
committee.
ARTICLE III
OFFICERS
3.1 Election. At its first meeting after each annual meeting of the
stockholders, the board of directors shall elect a chief executive officer or
president, treasurer, secretary and such other officers as it deems advisable.
3.2 Authority, Duties and Compensation. The officers shall have such authority,
perform such duties and serve for such compensation as may be determined by
resolution of the board of directors. Except as otherwise provided by board
resolution, (i) the chief executive officer shall be the president of the
Company, shall have general supervision over the business and operations of the
Company, may perform any act and execute any instrument for the conduct of such
business and operations and shall preside at all meetings of the board and
stockholders, (ii) the other officers shall have the duties customarily related
to their respective offices, and (iii) any vice president, or vice presidents in
the order determined by the board, shall in the absence of the chief executive
officer, have the authority and perform the duties of the chief executive
officer.
2
<PAGE>
ARTICLE IV
INDEMNIFICATION
4.1 Right to Indemnification. The Company shall indemnify any person who was or
is party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (a "proceeding"), by reason of the fact that such person is or was
a director or officer of the Company or a constituent corporation absorbed in a
consolidation or merger, or is or was serving at the request of the Company or a
constituent corporation absorbed in a consolidation or merger, as a director or
officer of another corporation, partnership, joint venture, trust or other
enterprise, or is or was a director or officer of the Company serving at its
request as an administrator, trustee or other fiduciary of one or more of the
employee benefit plans of the Company or other enterprise, against expenses
(including attorneys' fees), liability and loss actually and reasonably incurred
or suffered by such person in connection with such proceeding, whether or not
the indemnified liability arises or arose from any threatened, pending or
completed proceeding by or in the right of the Company, except to the extent
that such indemnification is prohibited by applicable law.
4.2 Advance of Expenses. Expenses incurred by a director or officer of the
Company in defending a proceeding shall be paid by the Company in advance of the
final disposition of such proceeding subject to the provisions of any applicable
statute.
4.3 Procedure for Determining Permissibility. To determine whether any
indemnification or advance of expenses under this Article IV is permissible, the
board of directors by a majority vote of a quorum consisting of directors not
parties to such proceeding may, and on request of any person seeking
indemnification or advance of expenses shall be required to, determine in each
case whether the applicable standards in any applicable statute have been met,
or such determination shall be made by independent legal counsel if such quorum
is not obtainable, or, even if obtainable, a majority vote of a quorum of
disinterested directors so directs, provided that, if there has been a change in
control of the Company between the time of the action or failure to act giving
rise to the claim for indemnification or advance of expenses and the time such
claim is made, at the option of the person seeking indemnification or advance of
expenses, the permissibility of indemnification or advance of expenses shall be
determined by independent legal counsel. The reasonable expenses of any director
or officer in prosecuting a successful claim for indemnification, and the fees
and expenses of any special legal counsel engaged to determine permissibility of
indemnification or advance of expenses, shall be borne by the Company.
4.4 Contractual Obligation. The obligations of the Company to indemnify a
director or officer under this Article IV, including the duty to advance
expenses, shall be considered a contract between the Company and such director
or officer, and no modification or repeal of any provision of this Article IV
shall affect, to the detriment of the director or officer, such obligations of
the Company in connection with a claim based on any act or failure to act
occurring before such modification or repeal.
3
<PAGE>
4.5 Indemnification Not Exclusive; Inuring of Benefit. The indemnification and
advance of expenses provided by this Article IV shall not be deemed exclusive of
any other right to which one indemnified may be entitled under any statute,
provision of the Certificate of Incorporation, these bylaws, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in such
person's official capacity and as to action in another capacity while holding
such office, and shall inure to the benefit of the heirs, executors and
administrators of any such person.
4.6 Insurance and Other Indemnification. The board of directors shall have the
power to (i) authorize the Company to purchase and maintain, at the Company's
expense, insurance on behalf of the Company and on behalf of others to the
extent that power to do so has not been prohibited by statute, (ii) create any
fund of any nature, whether or not under the control of a trustee, or otherwise
secure any of its indemnification obligations, and (iii) give other
indemnification to the extent permitted by statute.
ARTICLE V
TRANSFER OF SHARE CERTIFICATES
Transfers of share certificates and the shares represented thereby shall be
made on the books of the Company only by the registered holder or by duly
authorized attorney. Transfers shall be made only on surrender of the share
certificate or certificates.
ARTICLE VI
AMENDMENTS
These bylaws may be amended or repealed at any regular or special meeting
of the board of directors by vote of a majority of all directors in office or at
any annual or special meeting of stockholders by vote of holders of a majority
of the outstanding stock entitled to vote. Notice of any such annual or special
meeting of stockholders shall set forth the proposed change or a summary
thereof.
4
EXHIBIT 4.02
EXECUTION COPY
INTERSIL CORPORATION
200,000 Units
consisting of
$200,000,000 Principal Amount of
13 1/4% Senior Subordinated Notes Due 2009 of Intersil Corporation
and Warrants to Purchase
5,555,560 Shares of Class A Common Stock of Intersil Holding Corporation
PURCHASE AGREEMENT
August 6, 1999
Credit Suisse First Boston Corporation
J.P. Morgan Securities Inc.
Salomon Smith Barney Inc.
c/o Credit Suisse First Boston Corporation
Eleven Madison Avenue
New York, NY 10010-3629
Ladies and Gentlemen:
1. Introductory. Intersil Corporation, a Delaware corporation (the
"Company") and Intersil Holding Corporation, a Delaware corporation ("Intersil
Holding" and, together with the Company, the "Issuers"), propose, subject to the
terms and conditions stated herein, to issue and sell to the several initial
purchasers named in Schedule A hereto (the "Initial Purchasers") 200,000 units
(the "Units"), each Unit consisting of one of the Company's 13 1/4% Senior
Subordinated Notes Due 2009 in a principal amount of $1,000 (the "Notes") and
one Warrant (each a "Warrant") to purchase 27.7778 shares of Class A common
stock, par value $0.01 per share, of Intersil Holding. The Notes will be
unconditionally guaranteed (each, a "Guaranty") on a senior subordinated basis
by each of Intersil Holding and the Company's subsidiaries listed on Schedule B
hereto (the "Subsidiary Guarantors" and, together with Intersil Holding, the
"Guarantors"). The Notes will also be guaranteed by each existing and
subsequently organized domestic subsidiary of the Company that becomes a
guarantor pursuant to the Indenture (as defined). The Notes will be issued under
an indenture dated as of August 13, 1999 (the "Indenture"), among the Company,
the Guarantors and United States Trust Company of New York, as trustee (the
"Trustee"). The Warrants will be issued under a warrant agreement dated as of
August 13, 1999 (the "Warrant Agreement"), between Intersil Holding and United
States Trust Company of New York, as warrant agent (the "Warrant Agent"). The
Notes and the Guaranties are together referred to as the "Offered Notes". The
Units, the Offered Notes and the Warrants are collectively referred to herein as
the "Offered Securities". The United States Securities Act of 1933 is herein
referred to as the "Securities Act".
Pursuant to the Master Transaction Agreement dated June 2, 1999 (the
"Master Transaction Agreement") among Harris Corporation ("Harris"), Intersil
Holding and the Company, the following transactions (collectively, the
"Transactions") will occur concurrently with the consummation of the offering of
the Units (the "Offering"): (i) Harris will transfer to the Company and Intersil
Holding selected portions of the assets and certain of the liabilities of the
Harris semiconductor business in exchange for (a) $520.0 million in cash and (b)
a subordinated pay-in-kind promissory note of Intersil Holding in the principal
amount of $90.0 million; (ii) Harris will pay about
<PAGE>
2
$9.0 million in cash to Intersil Holding to purchase shares of its 12% Series A
Cumulative Compounding Preferred Stock and common stock (the "Holdings Preferred
Stock" and the "Holdings Common Stock", respectively); (iii) Intersil Holding
will sell to (a) Sterling Holding Company, LLC ("Sterling") shares of its
Holdings Preferred Stock and Holdings Common Stock and (b) senior management,
other key employees and certain other investors shares of Holdings Common Stock,
for a total of about $81.0 million in cash; (iv) Intersil Holding will
contribute cash in the amount of $90.0 million to the Company's capital as well
as certain assets with a fair market value of about $90.0 million; (v) Citicorp
Mezzanine Partners, L.P. ("Citicorp") will contribute $30.0 million in cash to
Intersil Holding in exchange for 13.5% subordinated pay-in-kind notes due 2010
of Intersil Holding and a warrant to purchase about 5.6 million shares of Class
A Holdings Common Stock; (vi) Intersil Holding will contribute cash in the
amount of $30.0 million received from Citicorp to the Company; and (vii) the
Company will borrow $220.0 million under a credit agreement and related
documentation among the Company, certain lenders parties thereto, and Credit
Suisse First Boston, Salomon Smith Barney Inc. and Morgan Guaranty Trust Company
of New York, as agents (the "Credit Agreement"), and receive the net proceeds
from the issuance of the Offered Securities.
Holders (including subsequent transferees) of the Notes will be entitled to
the benefit of a Registration Rights Agreement of even date herewith (the
"Registration Rights Agreement"), among the Company, the Guarantors and the
Initial Purchasers, pursuant to which the Company and the Guarantors will be
obligated to file with the Securities and Exchange Commission (the "Commission")
(i) a registration statement (the "Exchange Offer Registration Statement") under
the Securities Act registering an issue of senior subordinated notes of the
Company guaranteed by the Guarantors (the "Exchange Securities") which shall be
identical in all material respects to the Offered Notes (except that the
Exchange Securities will not contain terms with respect to transfer
restrictions) to be offered in exchange for the Offered Notes (the "Registered
Exchange Offer")and (ii) under certain circumstances specified in the
Registration Rights Agreement, a shelf registration statement pursuant to Rule
415 under the Securities Act.
This Agreement, the Indenture, the Registration Rights Agreement and the
Warrant Agreement are referred to herein collectively as the "Operative
Documents". The agreements relating to the Transactions are referred to herein
collectively as the "Transaction Documents".
The Issuers and the Guarantors jointly and severally agree with the Initial
Purchasers as follows:
2. Representations and Warranties of the Issuers and the Guarantors. As
used in this Section 2 only, references to the "Company", "Intersil Holding",
the "Issuers" or "its subsidiaries" shall mean the Company, Intersil Holding,
the Issuers or their subsidiaries, prior to the consummation of the
Transactions, and shall mean the Company, Intersil Holding, the Issuers or their
subsidiaries, including the purchased assets and the assumed liabilities of the
semiconductor business of Harris, effective upon the consummation of the
Transactions. The Issuers and the Subsidiary Guarantors jointly and severally
represent and warrant to, and agree with, the Initial Purchasers that:
(a) A confidential preliminary offering circular, dated July 21, 1999 (the
"Preliminary Offering Circular"), and a confidential
<PAGE>
3
offering circular, of even date herewith (the "Offering Circular") relating to
the Offered Securities to be offered by the Initial Purchasers have been
prepared by the Issuers. Such Preliminary Offering Circular and Offering
Circular, as supplemented as of the date of this Agreement, are hereinafter
collectively referred to as the "Offering Documents". As of their respective
dates and, in the case of the Offering Circular, as of the date of this
Agreement, no Offering Document includes any untrue statement of a material fact
or omits to state any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. The preceding sentence does not apply to statements in or omissions
from an Offering Document based upon written information furnished to the
Issuers by any Initial Purchaser through Credit Suisse First Boston Corporation
("CSFBC") specifically for use therein, it being understood and agreed that the
only such information is that described as such in Section 7(b) hereof. The
written information furnished by either of the Issuers and expressly identified
as the information required to be delivered to holders and prospective
purchasers of the Offered Securities pursuant to Section 4.02 of the Indenture
and in accordance with Rule 144A(d)(4) under the Securities Act (the "Additional
Issuer Information") does not include any untrue statement of a material fact or
omit to state any material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading. The
preceding sentence does not apply to statements in or omissions from the
Offering Documents based upon written information furnished to the Issuers by
any Initial Purchaser through CSFBC specifically for use therein, it being
understood and agreed that the only such information is that described as such
in Section 7(b) hereof.
(b) Each of the Issuers has been duly incorporated and is an existing
corporation in good standing under the laws of the State of Delaware, with the
corporate power and authority to own its properties and conduct its business as
described in the Offering Documents; and each of the Issuers is duly qualified
to do business as a foreign corporation and is in good standing in all other
jurisdictions in which its ownership or lease of property or the conduct of its
business requires such qualification, except to the extent that the failure to
so qualify or be in good standing would not have a material adverse effect on
the business, assets, operations, properties, financial condition, liabilities
or prospects of Intersil Holding, the Company and its subsidiaries taken as a
whole, or would not materially and adversely affect the ability of either of the
Issuers or any of the Subsidiary Guarantors to perform its obligations under the
Operative Documents and the Transaction Documents (a "Material Adverse Effect").
(c) Each of the Company's subsidiaries has been duly incorporated or formed
and is an existing corporation or limited liability company, as the case may be,
in good standing under the laws of the jurisdiction of its incorporation or
formation, with corporate or limited liability company power and authority to
own its properties and conduct its business as described in the Offering
Documents; each of the Company's subsidiaries is duly qualified to do business
as a foreign corporation or limited liability company in good standing in all
other jurisdictions in which its ownership or lease of property or the conduct
of its business requires such qualification except to the extent that the
failure to so qualify or be in good standing would not have Material Adverse
Effect;
<PAGE>
4
(d) All of the issued and outstanding capital stock of the Issuers and each
of their subsidiaries that are corporations has been duly authorized and validly
issued and is fully paid and nonassessable; and the capital stock of each of the
Issuers and each of their subsidiaries that are corporations, owned directly or
indirectly, is owned free from liens, encumbrances and defects except liens and
encumbrances arising under or not prohibited by the Credit Agreement.
(e) As of the date hereof, the Company does not, and after giving effect to
the consummation of the Transactions the Company will not, have any significant
subsidiaries (as defined in Regulation S-X promulgated under the Securities Act)
other than the subsidiaries listed in Schedule B hereto and the Company's wholly
owned Malaysian subsidiary. As of the date hereof, Intersil Holding has no
direct subsidiaries other than the Company.
(f) The Offered Notes have been duly authorized by the Company and Intersil
Holding; as of the Closing Date (as hereinafter defined), each Guaranty will
have been duly authorized by the respective Subsidiary Guarantor; and the
Indenture has been duly authorized by the Company and Intersil Holding and as of
the Closing Date (as hereinafter defined), each of the Subsidiary Guarantors.
When the Offered Notes are delivered and paid for and authenticated by the
Trustee in accordance with the terms of this Agreement and the Indenture on the
Closing Date (as hereinafter defined): (i) such Offered Notes will have been
duly executed, authenticated, issued and delivered by the Company and each
Guarantor, will constitute valid and legally binding obligations of the Company
and each Guarantor, enforceable against the Company and each Guarantor in
accordance with their terms, subject, as to enforcement of remedies, to
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors' rights generally, and will conform in all material respects to the
description thereof contained in the Offering Documents; and (ii) the Indenture
will have been duly executed and delivered by the Company and each of the
Guarantors, will constitute a valid and legally binding obligation of the
Company and each of the Guarantors, enforceable in accordance with its terms,
subject, as to enforcement of remedies, to bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights
generally, and will conform in all material respects to the description thereof
contained in the Offering Documents.
(g) The Units have been authorized by the Issuers. When Units are delivered
and paid for in accordance with the terms of this Agreement on the Closing Date
(as hereinafter defined), the Units will constitute valid and legally binding
obligations of the Issuers, enforceable against the Issuers in accordance with
their terms, subject, as to enforcement of remedies, to bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights
generally, and will conform in all material respects to the description thereof
contained in the Offering Documents.
(h) The Warrants delivered on the Closing Date (as defined hereinafter) are
convertible into shares of Class A Holdings Common Stock in accordance with the
terms of the Warrant Agreement; the shares of Class A Holdings Common Stock
initially issuable upon exercise of the Warrants have been duly authorized and
reserved for issuance upon such exercise and, when issued upon such exercise,
will be validly issued, fully paid and nonassessable; the outstanding shares of
Class A Holdings Common Stock have been duly authorized and validly issued, are
fully paid and nonassessable and conform in all material respects to the
<PAGE>
5
description thereof contained in the Offering Circular; and the stockholders of
Intersil Holding have no preemptive rights with respect to the Warrants or the
shares of Class A Holdings Common Stock, except as disclosed in the Offering
Circular;
(i) The Warrant Agreement has been duly authorized by Intersil Holding; and
when the Warrants are delivered and paid for pursuant to this Agreement on the
Closing Date, the Warrant Agreement will have been duly executed and delivered
by Intersil Holding, such Warrants will conform in all material respects to the
description thereof contained in the Offering Documents and the Warrant
Agreement and the Warrants will constitute valid and legally binding obligations
of Intersil Holding, enforceable in accordance with their terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors' rights
generally and to general equity principles.
(j) The Registration Rights Agreement has been duly authorized, executed
and delivered by the Company and Intersil Holding and, as of the Closing Date,
will have been duly authorized, executed and delivered by each of the Subsidiary
Guarantors and conforms in all material respects to the description thereof
contained in the Offering Documents. The Registration Rights Agreement
constitutes a valid and legally binding obligation of the Company and Intersil
Holding and, when executed and delivered by the Subsidiary Guarantors on the
Closing Date (as defined hereinafter), each of the Subsidiary Guarantors and is
enforceable in accordance with its terms, subject, as to enforcement of
remedies, to bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' rights generally, general equitable principles and the
discretion of courts in granting equitable remedies and except that any rights
to indemnity and contribution may be limited by Federal and state securities
laws and public policy considerations.
(k) Except as contemplated by this Agreement or disclosed in the Offering
Documents, there is no broker, finder or other party engaged by either of the
Issuers or any of their affiliates that is entitled to receive from either of
the Issuers, any of the Company's subsidiaries or the Initial Purchasers any
brokerage or finder's fee or other like payment as a result of the transactions
contemplated by this Agreement.
(l) Assuming the accuracy of the representations and warranties of the
Initial Purchasers contained in Section 4 of this Agreement, no consent,
approval, authorization or order of, or filing with, any governmental agency or
body or any court is required for the performance by any of the Issuers or the
Guarantors of its obligations under the Operative Documents or in connection
with the issuance and sale of the Offered Securities by the Issuers, except as
may be required under the Securities Act and the Rules and Regulations of the
Commission thereunder with respect to the Registration Rights Agreement and the
transactions contemplated thereunder and such as may be required by state
securities or blue sky laws in connection with the offer and sale of the Offered
Securities.
(m) The execution, delivery and performance by each of Sterling, the
Issuers and the Guarantors of the Operative Documents and the Transaction
Documents (to the extent a party thereto) and the issuance and sale of the
Offered Securities by the Issuers and compliance with the terms and provisions
of the foregoing will not (i) result in a violation of any of the terms and
provisions of any
<PAGE>
6
material statute, rule or regulation, domestic or foreign, applicable to
Sterling, Intersil Holding, the Company or any subsidiary of the Company or any
order of any governmental agency or body or any court, domestic or foreign,
having jurisdiction over Sterling, Intersil Holding, the Company or any
subsidiary of the Company or any of their properties; (ii) result in a breach or
violation of any of the terms or provisions of, or constitute a default under,
any agreement or instrument relating to borrowed money to which Sterling,
Intersil Holding, the Company or any such subsidiary is a party or by which
Sterling, Intersil Holding, the Company or any such subsidiary is bound or to
which any of the properties of Sterling, Intersil Holding, the Company or any
such subsidiary is subject or any other agreement or instrument to which
Sterling, Intersil Holding, the Company or any such subsidiary is a party or by
which Sterling, Intersil Holding, the Company or any such subsidiary is bound or
to which any of the properties of Sterling, Intersil Holding, the Company or any
such subsidiary is subject; or (iii) result in a violation of the charter or
by-laws of Sterling, Intersil Holding, the Company or any subsidiary of the
Company. The Issuers and each of the Guarantors have the power and authority to
authorize, issue and sell the Offered Securities as contemplated by this
Agreement.
(n) Each of the Transaction Documents (i) has been duly authorized by
Sterling, Intersil Holding and the Company (to the extent a party thereto), (ii)
as of the Closing Date (as hereinafter defined), will have been executed and
delivered by Sterling, the Company and Intersil Holding (to the extent a party
thereto) and, to the knowledge of the Company and the Guarantors, each of the
other parties thereto and authorized, executed and delivered by each of the
Subsidiary Guarantors (to the extent a party thereto) and (iii) conforms in all
material respects to the description thereof contained in the Offering
Documents. Each of the Transaction Documents will, when so executed, constitute
a valid and legally binding obligation of Sterling, Intersil Holding, the
Company and each of the Subsidiary Guarantors, as the case may be, and will be
enforceable in accordance with its terms, subject, as to enforcement of
remedies, to bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' rights generally and general equitable principles.
(o) To the knowledge of the Issuers and the Subsidiary Guarantors, the
execution, delivery and performance by each of the other parties to any
Transaction Document and compliance with the terms and provisions of any such
Transaction Document will not (i) result in a violation of the terms and
provisions of any material statute, rule or regulation, domestic or foreign,
applicable to any such party or any order of any governmental agency or body or
any court, domestic or foreign, having jurisdiction over any such party or any
of their respective properties; (ii) result in a breach or violation of any of
the terms or provisions of, or constitute a default under, any agreement or
instrument relating to borrowed money to which any such party is a party or by
which any such party is bound or to which the properties of any such party is
subject or any other agreement or instrument known to the Company to which any
such party is a party or by which their respective properties are bound or
subject except, in the case of any such other agreement or instrument, where
such breach, violation or default would not have a Material Adverse Effect; or
(iii) result in a violation of any of the terms and provisions of the charter or
bylaws of any such party.
<PAGE>
7
(p) This Agreement has been duly authorized, executed and delivered by the
Issuers, and as of the Closing Date, will be duly authorized, executed and
delivered by each of the Subsidiary Guarantors.
(q) Except as disclosed in the Offering Documents, Intersil Holding, the
Company and its subsidiaries have good and marketable title to all real
properties and all other properties and assets owned by them and necessary to
conduct the business now operated by them, in each case free from liens,
encumbrances and defects that would materially affect the value thereof or
materially interfere with the use made or to be made thereof by them; and except
as disclosed in the Offering Documents, Intersil Holding, the Company and its
subsidiaries hold any leased real or personal property necessary to the conduct
of the business now operated by them under valid and enforceable leases with no
exceptions that would materially interfere with the use made or to be made
thereof by them.
(r) Intersil Holding, the Company and its subsidiaries possess all material
certificates, authorities or permits issued by appropriate governmental agencies
or bodies necessary to conduct the business now operated by them and have not
received any notice of proceedings relating to the revocation or modification of
any such certificate, authority or permit.
(s) No material labor dispute with the employees of Intersil Holding, the
Company or any of its subsidiaries exists or, to the knowledge of the Issuers,
is imminent.
(t) Except as disclosed in the Offering Documents, Intersil Holding, the
Company and its subsidiaries own, possess or can acquire on reasonable terms the
trademarks, trade names and other rights to inventions, know-how, patents,
copyrights, confidential information and other intellectual property
(collectively, "intellectual property rights") necessary to conduct the business
now operated by them and have not received any notice of infringement of or
conflict with asserted rights of others.
(u) Except as disclosed in the Offering Documents, neither Intersil Holding
nor the Company or any of its subsidiaries (i) is in violation of any statute,
any rule, regulation, decision or order of any governmental agency or body or
any court, domestic or foreign, relating to the use, disposal or release of
hazardous or toxic substances or relating to the protection or restoration of
the environment or human exposure to hazardous or toxic substances
(collectively, "environmental laws"), (ii) owns or operates any real property
which to the actual knowledge of any such party is contaminated with any
substance that is subject to any environmental laws, (iii) is in receipt of any
written notice which asserts liability for any off-site disposal or
contamination pursuant to any environmental laws, or (iv) is in receipt of any
written notice which asserts a claim against any such party which relates to any
environmental laws, which violation, contamination, liability or claim referred
to in clauses (i), (ii), (iii) or (iv) would individually or in the aggregate
have a Material Adverse Effect; and the Issuers are not aware of any pending
investigation which might lead to such a claim except for any such claim that
would not have a Material Adverse Effect.
(v) Except as disclosed in the Offering Documents, there are no actions,
suits or proceedings pending against any of Intersil Holding, the Company, any
of its subsidiaries or any of their respective
<PAGE>
8
properties that are reasonably likely to have, individually or in the aggregate,
a Material Adverse Effect; and, to either of the Issuer's knowledge, no such
actions, suits or proceedings are threatened.
(w) The consolidated financial statements with respect to the Company
included in the Offering Documents present fairly the consolidated financial
position of the Company and its consolidated subsidiaries as of the dates shown
and their results of operations and cash flows for the periods shown, and such
consolidated financial statements have been prepared in conformity with the
generally accepted accounting principles in the United States applied on a
consistent basis; the unaudited pro forma consolidated financial statements
included in the Offering Documents comply as to form in all material respects
with generally accepted accounting principles and (A) management of the Issuers
believes the assumptions underlying the pro forma and supplemental adjustments
are reasonable, (B) such adjustments have been properly applied to the
historical amounts in the compilation of such statements and (C) such statements
fairly present, with respect to the Company and its subsidiaries, the combined
pro forma financial position and results of operations and the other information
purported to be shown therein at the respective dates or for the respective
periods therein specified.
(x) Except as disclosed in the Offering Documents, since the date of the
latest audited consolidated financial statements of the Company included in the
Offering Documents, there has been no material adverse change nor any
development or event involving a prospective material adverse change in the
business, assets, operations, properties, financial condition, liabilities or
prospects of the Company and its subsidiaries taken as a whole.
(y) Except as disclosed in the Offering Documents, since the date of the
latest audited consolidated financial statements included in the Offering
Documents, to the Company's knowledge, there has been no material adverse change
nor any development or event involving a prospective material adverse change in
the business, assets, operations, properties, financial condition, liabilities
or prospects of the Company and its subsidiaries taken as a whole, and, except
as disclosed in or contemplated by the Offering Documents, there has been no
dividend or distribution of any kind declared, paid or made by the on any class
of its capital stock.
(z) None of the Issuers or Subsidiary Guarantors is an open-end investment
company, unit investment trust or face-amount certificate company that is or is
required to be registered under Section 8 of the United States Investment
Company Act of 1940 (the "Investment Company Act"), or a closed-end investment
company required to be registered, but not registered, thereunder; and neither
of the Issuers nor any of the Subsidiary Guarantors is or, after giving effect
to the offering and sale of the Offered Securities and the application of the
proceeds thereof as described in the Offering Documents, will be an "investment
company" as defined in the Investment Company Act.
(aa) No securities of the same class (within the meaning of Rule 144A(d)(3)
under the Securities Act) as the Offered Securities are listed on any national
securities exchange registered under Section 6 of the United States Securities
Exchange Act of 1934 (the "Exchange Act") or quoted in a U.S. automated
interdealer quotation system.
<PAGE>
9
(bb) Assuming the accuracy of the representations and warranties of the
Initial Purchasers in Section 4 hereof, the offer and sale of Offered Securities
in the manner contemplated by this Agreement will be exempt from the
registration requirements of the Securities Act; and it is not necessary to
qualify an indenture in respect of the Offered Notes under the United States
Trust Indenture Act of 1939, as amended (the "Trust Indenture Act").
(cc) None of the Issuers, the Subsidiary Guarantors, any of their
affiliates, or any person acting on its or their behalf (i) has, within the
six-month period prior to the date hereof, offered or sold in the United States
or to any U.S. person (as such terms are defined in Regulation S under the
Securities Act) the Offered Securities or any security of the same class or
series as the Offered Securities or (ii) has offered or will offer or sell the
Offered Securities (A) in the United States by means of any form of general
solicitation or general advertising within the meaning of Rule 502(c) under the
Securities Act or (B) with respect to any such securities sold in reliance on
Rule 903 of Regulation S under the Securities Act, by means of any directed
selling efforts within the meaning of Rule 902(b) of Regulation S. The Issuers,
the Subsidiary Guarantors, their affiliates and any person acting on any of
their behalf (other than the Initial Purchasers) have complied and will comply
with the offering restrictions requirement of Regulation S. None of the Issuers
or the Subsidiary Guarantors has entered or will enter into any contractual
arrangement with respect to the distribution of the Offered Securities except
for this Agreement.
(dd) Neither the Company nor any of its affiliates has any current plans to
reincorporate or incorporate any of Harris Semiconductor, Inc., Harris
Semiconductor (Ohio), Inc. or Harris Semiconductor (Pennsylvania), Inc.
3. Purchase, Sale and Delivery of the Offered Securities. On the basis of
the representations, warranties and agreements herein contained, but subject to
the terms and conditions herein set forth, the Issuers agree to sell to the
Initial Purchasers, and the Initial Purchasers agree, severally and not jointly,
to purchase from the Issuers, at a purchase price of $970.00 per Unit plus
accrued interest (if any) from August 13, 1999 to the Closing Date (as
hereinafter defined), the respective number of Units set forth opposite the
names of the Purchasers on Schedule A hereto.
The Issuers will deliver against payment of the purchase price the Offered
Securities in the form of one or more permanent global Securities in definitive
form (the "Global Securities") deposited with the Trustee as custodian for The
Depository Trust Company ("DTC") and registered in the name of Cede & Co., as
nominee for DTC. Interests in any permanent Global Securities will be held only
in book-entry form through DTC, except in the limited circumstances described in
the Offering Documents. Payment for the Offered Securities shall be made by the
Initial Purchasers in Federal (same-day) funds by wire transfer to an account
previously designated to CSFBC by the Issuers at a bank acceptable to CSFBC at
the office of Cravath, Swaine & Moore at 10:00 a.m. (New York time), August 13,
1999, or at such other time not later than seven full business days thereafter
as CSFBC and the Issuers determine, such time being herein referred to as the
"Closing Date", against delivery to the Trustee as custodian for DTC of the
Global Securities representing all of the Offered Securities. The Global
Securities will be made available for checking at the above office of
<PAGE>
10
Cravath, Swaine & Moore not later than 1 p.m. on the business day prior
to the Closing Date.
4. Representations by the Initial Purchasers; Resale by the Initial
Purchasers. (a) Each Initial Purchaser severally represents and warrants to the
Issuers that it is an "accredited investor" within the meaning of Regulation D
under the Securities Act.
(b) Each Initial Purchaser severally acknowledges that the Offered
Securities have not been registered under the Securities Act and may not be
offered or sold within the United States or to, or for the account or benefit
of, U.S. persons except in accordance with Regulation S or pursuant to an
exemption from the registration requirements of the Securities Act. Each Initial
Purchaser severally represents and agrees that it has offered and sold the
Offered Securities and will offer and sell the Offered Securities only in
accordance with Rule 903 or Rule 144A under the Securities Act ("Rule 144A").
Accordingly, neither any Initial Purchaser nor its affiliates, nor any persons
acting on its or their behalf, have engaged or will engage in any directed
selling efforts with respect to the Offered Securities, and each Initial
Purchaser, its affiliates and all persons acting on its or their behalf have
complied and will comply with the offering restrictions requirement of
Regulation S. Unless otherwise defined herein, terms used in this subsection (b)
have the meanings given to them by Regulation S.
(c) Each Initial Purchaser severally represents, warrants and agrees that
it and each of its affiliates has not entered and will not enter into any
contractual arrangement with respect to the distribution of the Offered
Securities except for any such arrangements with the other Purchasers or
affiliates of the other Purchasers or with the prior written consent of the
Issuers.
(d) Each Initial Purchaser severally agrees that it and each of its
affiliates or any one acting on its behalf will not offer or sell the Offered
Securities purchased hereby in the United States by means of any form of general
solicitation or general advertising within the meaning of Rule 502(c) under the
Securities Act, including but not limited to (i) any advertisement, article,
notice or other communication published in any newspaper, magazine or similar
media or broadcast over television or radio, or (ii) any seminar or meeting
whose attendees have been invited by any general solicitation or general
advertising. Each Initial Purchaser severally agrees, with respect to resales
made in reliance on Rule 144A of any of the Offered Securities, to deliver
either with the confirmation of such resale or otherwise prior to settlement of
such resale a notice to the effect that the resale of such Offered Securities
has been made in reliance upon the exemption from the registration requirements
of the Securities Act provided by Rule 144A.
(e) Each of the Initial Purchasers severally represents, warrants and
agrees that (i) it has not offered or sold, and prior to the date six months
after the date of issue of the Offered Securities will not offer or sell, any
Offered Securities to persons in the United Kingdom except to persons whose
ordinary activities involve them in acquiring, holding, managing or disposing of
investments (as principal or agent) for the purposes of their businesses or
otherwise in circumstances which have not resulted and will not result in an
offer to the public in the United Kingdom within the meaning of the Public
Offers of Securities Regulations 1995; (ii) it has complied and will comply with
all applicable provisions of the Public Offers of Securities
<PAGE>
11
Regulations 1995 and the Financial Services Act 1986 with respect to anything
done by it in relation to the Offered Securities in, from or otherwise involving
the United Kingdom; and (iii) it has only issued or passed on, and will only
issue or pass on to any person, in the United Kingdom, any document received by
it in connection with the issuance of the Offered Securities to a person who is
of a kind described in Article 11(3) of the Financial Services Act 1986
(Investment Advertisements) (Exemptions) Order 1996 or is a person to whom such
document may otherwise lawfully be issued or passed on.
(f) Each Initial Purchaser represents and agrees that (i) it has not
solicited, and will not solicit, offers to purchase any of the Offered
Securities from, (ii) it has not sold, and will not sell, any of the Offered
Securities to, and (iii) it has not distributed, and will not distribute, the
Offering Documents to, any person or entity in any jurisdiction outside of the
United States except, in each case, in compliance in all material respects with
all applicable laws. For the purpose of this Agreement, "United States" means
the United States of America, its territories, its possessions and other areas
subject to its jurisdiction.
5. Certain Agreements of the Issuers. The Issuers agree with the Initial
Purchasers that:
(a) The Issuers will advise CSFBC promptly of any proposal to amend or
supplement the Offering Documents and will not effect such amendment or
supplementation without CSFBC's consent, which consent shall not be unreasonably
withheld. If, at any time prior to the completion of the resale of the Offered
Securities by the Initial Purchasers and prior to the completion of the
Registered Exchange Offer, any event occurs as a result of which the Offering
Documents as then amended or supplemented would include an untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, the Issuers promptly will notify CSFBC of such event and
promptly will prepare, at its own expense, an amendment or supplement which will
correct such statement or omission. Neither CSFBC's consent to, nor any Initial
Purchaser's delivery to offerees or investors of, any such amendment or
supplement shall constitute a waiver of any of the conditions set forth in
Section 6.
(b) The Issuers will furnish to CSFBC copies of the Offering Documents and
all amendments and supplements to such documents, in each case as soon as
available and in such quantities as CSFBC reasonably requests, and the Issuers
will furnish to CSFBC on the date hereof three copies of the Offering Documents
signed by a duly authorized officer of each of the Issuers, one of which will
include the independent accountants' reports included in or requested in
connection with the Offering Circular manually signed by such independent
accountants. At any time when the Issuers are not subject to Section 13 or 15(d)
of the Exchange Act, for so long as any Offered Securities are outstanding, the
Issuers will promptly furnish or cause to be furnished to CSFBC (and, upon
request, to each of the other Initial Purchasers) and, upon request of holders
and prospective purchasers of the Offered Securities, to such holders and
purchasers, a reasonable number of copies of the information required to be
delivered to holders and prospective purchasers of the Offered Securities
pursuant to Rule 144A(d)(4) under the Securities Act (or any successor provision
thereto) in order to permit compliance with Rule 144A in connection with resales
by such holders of the Offered Securities. The Issuers will pay
<PAGE>
12
the expenses of printing and distributing to the Initial Purchasers all
such documents.
(c) The Issuers will arrange, in cooperation with the Initial Purchasers
and their counsel, for the qualification of the Offered Securities for sale and
the determination of their eligibility for investment under the laws of such
jurisdictions in the United States and Canada as CSFBC designates and will
continue such qualifications in effect so long as required to complete the
resale of the Offered Securities by the Initial Purchasers; provided, however,
that the Issuers will not be required to qualify as a foreign corporation or to
file a general consent to service of process in any such jurisdiction.
(d) During the period of three years after the Closing Date, the Issuers
will furnish to CSFBC and, upon request, to each of the other Initial
Purchasers, as soon as practicable after the end of each fiscal year, a copy of
its annual report to shareholders for such year, if any such report is prepared
and circulated; and the Issuers will furnish to CSFBC and, upon request, to each
of the other Initial Purchasers (i) as soon as available, a copy of any reports,
notices or communications sent to securityholders generally, including if
applicable a copy of each report and any definitive proxy statement of either of
the Issuers filed with the Commission under the Exchange Act, and (ii) from time
to time, such other information concerning the Issuers as CSFBC may reasonably
request.
(e) During the period of two years after the Closing Date or, if earlier,
until such time as the Offered Securities are no longer restricted securities
(as defined in Rule 144 under the Securities Act), the Issuers will, upon
request, furnish to CSFBC, each of the other Initial Purchasers and any holder
of Offered Securities a copy of the restrictions on transfer applicable to the
Offered Securities.
(f) During the period of two years after the Closing Date or, if earlier,
until such time as the Offered Securities are no longer restricted securities
(as defined in Rule 144 under the Securities Act), the Issuers will not, and
will not permit any of their affiliates (as defined in Rule 144 under the
Securities Act) to, resell any of the Offered Securities that have been
reacquired by any of them.
(g) During the period of two years after the Closing Date or, if earlier,
until such time as the Offered Securities are no longer restricted securities
(as defined in Rule 144 under the Securities Act), neither of the Issuers will
be or become an open-end investment company, unit investment trust or
face-amount certificate company that is or is required to be registered under
Section 8 of the Investment Company Act or is, or will be or become, a
closed-end investment company required to be registered, but not registered,
under the Investment Company Act.
(h) The Issuers will pay all expenses incidental to the performance of its
obligations under the Operative Documents, including (i) the fees and expenses
of the Trustee and its professional advisers; (ii) all expenses in connection
with the execution, issue, authentication, packaging and initial delivery of the
Offered Securities and, as applicable, the Exchange Securities, the preparation
and printing of the Offered Securities, the Offering Documents and amendments
and supplements thereto, and any other document relating to the issuance, offer,
sale and delivery of the Offered Securities and, as applicable, the Exchange
Securities; (iii) the cost of qualifying the Offered Securities for trading in
The PortalSM Market ("PORTAL") of the
<PAGE>
13
Nasdaq Stock Market, Inc. and any expenses incidental thereto; and (iv) the cost
of any advertising approved by the Company in connection with the issuance of
the Offered Securities. The Company will also pay or reimburse the Initial
Purchasers (to the extent incurred by the Initial Purchasers) for any reasonable
expenses (including the reasonable fees and disbursements of counsel) incurred
in connection with qualification of the Offered Securities or the Exchange
Securities for sale under the laws of such jurisdictions in the United States
and Canada as CSFBC designates and the printing of memoranda relating thereto,
for any fees charged by investment rating agencies for the rating of the Offered
Securities or the Exchange Securities, for all travel expenses of the Company's
officers and employees and any other expenses of the Company in connection with
attending or hosting meetings with prospective purchasers of the Offered
Securities from the Initial Purchasers and for expenses incurred in distributing
the Offering Documents (including any amendments and supplements thereto).
(i) In connection with the offering, until CSFBC shall have notified the
Issuers and the other Initial Purchasers of the completion of the resale of the
Offered Securities, neither of the Issuers nor any of their affiliates has or
will, either alone or with one or more other persons, bid for or purchase for
any account in which it or any of its affiliates has a beneficial interest any
Offered Securities or attempt to induce any person to purchase any Offered
Securities; and neither of the Issuers nor any of their affiliates will make
bids or purchases for the purpose of creating actual, or apparent, active
trading in, or of raising the price of, the Offered Securities.
(j) For a period of 90 days after the date of the Offering Circular,
neither the Issuers nor any of their subsidiaries will offer, sell, contract to
sell, pledge or otherwise dispose of, directly or indirectly, any United States
dollar-denominated debt securities issued or guaranteed by Intersil Holding, the
Company or any of its subsidiaries in any transaction involving a public
offering or a private placement in connection with intended resale under Rule
144A under the Securities Act and having a maturity of more than three years
from the date of issue or publicly disclose the intention to make any such
offer, sale, pledge or disposal, without the prior written consent of CSFBC.
Neither Intersil Holding, the Company nor any of its subsidiaries will at any
time offer, sell, contract to sell, pledge or otherwise dispose of, directly or
indirectly, any securities under circumstances where such offer, sale, pledge,
contract or disposition would cause the exemption afforded by Section 4(2) of
the Securities Act or the safe harbor of Regulation S thereunder to cease to be
applicable to the offer and sale of the Offered Securities.
(k) The Issuers will apply the net proceeds of the offering and the sale of
the Offered Securities in the manner set forth in the Offering Documents under
the caption "Use of Proceeds".
(l) The Issuers will use their best efforts in cooperation with the Initial
Purchasers to cause the Offered Securities to be eligible for the PORTAL trading
system of the National Association of Securities Dealers, Inc.
(m) The Issuers will cause each Offered Security to bear the legend set
forth in the form of the Note attached as Exhibit 1 to the Rule 144A/Regulation
S Appendix to the Indenture and/or the form of the Warrant attached as Exhibit A
to the Warrant Agreement, as the case may be, until such legend shall no longer
be necessary or advisable
<PAGE>
14
because the Offered Securities are no longer subject to the restrictions
on transfer described therein.
(n) On the Closing Date, the Initial Purchasers shall receive one or more
counterparts of the Purchase Agreement and the Registration Rights Agreement
which shall have been duly executed and delivered by duly authorized officers of
each of the Subsidiary Guarantors.
6. Conditions of the Obligations of the Initial Purchasers. The obligations
of the Initial Purchasers to purchase and pay for the Offered Securities will be
subject to the accuracy of the representations and warranties on the part of the
Issuers herein, to the accuracy, in all material respects, of the statements of
officers of the Issuers made pursuant to the provisions hereof, to the
performance, in all material respects, by the Issuers of its obligations
hereunder and to the following additional conditions precedent:
(a) The Purchasers shall have received a letter, dated the date of this
Agreement, of Ernst & Young LLP confirming that they are independent public
accountants within the meaning of the Securities Act and the applicable
published rules and regulations thereunder ("Rules and Regulations") and to the
effect that:
(i) in their opinion the financial statements examined by them and
included in the Offering Documents comply as to form in all material
respects with the applicable accounting requirements of the Securities Act
and the related published Rules and Regulations;
(ii) on the basis of a reading of the latest available interim
financial statements of the Company, inquiries of officials of the Company
who have responsibility for financial and accounting matters and other
specified procedures, nothing came to their attention that caused them to
believe that:
(A) at a specified date not more than three business days prior
to the date of this Agreement, there was any change in the capital
stock or any increase in short-term indebtedness or long-term debt of
the Company and its consolidated subsidiaries or, at such date, there
was any decrease in consolidated net current assets or net assets, as
compared with amounts shown on the latest balance sheet included in
the Offering Documents; or
(B) for the period from the closing date of the latest income
statement included in the Offering Documents to a specified date not
more than three business days prior to the date of this Agreement,
there were any decreases, as compared with the corresponding period of
the previous year, in consolidated net sales, net operating income
consolidated, net income or in the ratio of earnings to fixed charges;
except in all cases set forth in clauses (A) and (B) above for changes,
increases or decreases which are described in such letter;
(iii) in their opinion, with respect to the unaudited pro forma
condensed consolidated balance sheet as of July 2, 1999, and
<PAGE>
15
the unaudited pro forma condensed consolidated statements of income for the
year ended July 2, 1999 included in the Offering Documents, (A) the
assumptions of each of the Issuer's management provide a reasonable basis
for presenting the significant effects directly attributable to the
transactions described in the introductory information to these unaudited
pro forma condensed consolidated financial statements, (B) the related pro
forma adjustments give appropriate effect to those assumptions and (C) the
pro forma column reflects the proper application of those adjustments to
the historical financial statement amounts in these pro forma condensed
consolidated financial statements; and
(iv) on the basis of a reading of the pro forma condensed consolidated
financial statements referred to in 6(a)(iii) above and inquiries of
officials of the Issuers who have responsibility for financial and
accounting matters about whether these unaudited pro forma condensed
consolidated financial statements comply as to form in all material
respects with the applicable accounting requirements of rule 11-02 of
Regulation S-X, nothing came to their attention that caused them to believe
that these unaudited pro forma condensed consolidated financial statements
included in the Offering Documents do not comply as to form in all material
respects with the applicable accounting requirements of rule 11-02 of
Regulation S-X,
(v) they have compared specified dollar amounts (or percentages
derived from such dollar amounts) and other financial information contained
in the Offering Documents to the extent that such dollar amounts,
percentages and other financial information are derived from the general
accounting records of the Issuers and its subsidiaries subject to the
internal controls of the Issuers' accounting system or are derived directly
from such records by analysis or computation) with the results obtained
from inquiries, a reading of such general accounting records and other
procedures specified in such letter and have found such dollar amounts,
percentages and other financial information to be in agreement with such
results, except as otherwise specified in such letter.
(b) Subsequent to the execution and delivery of this Agreement, there shall
not have occurred (i) a change in U.S. or international financial, political or
economic conditions or currency exchange rates or exchange controls that would,
in the reasonable judgment of CSFBC, be likely to prejudice materially the
success of the proposed issue, sale or distribution of the Offered Securities,
whether in the primary market or in respect of dealings in the secondary market,
or (ii)(A) any change, or any development or event involving a prospective
change, in the business, assets, operations, properties, financial condition,
liabilities or prospects of the Issuers and their subsidiaries taken as a whole
which, in the reasonable judgment of CSFBC, is material and adverse and makes it
impractical or inadvisable to proceed with completion of the offering or the
sale of and payment for the Offered Securities; (B) any downgrading in the
rating of any debt securities of either Issuer by any "nationally recognized
statistical rating organization" (as defined for purposes of Rule 436(g) under
the Securities Act) or any public announcement that any such organization has
under surveillance or review its rating of any debt securities of either Issuer
(other than an announcement with positive implications of a possible upgrading,
and no implication of a possible downgrading, of such rating); (C) any
suspension or limitation of trading in securities generally on the New York
Stock Exchange, or any
<PAGE>
16
setting of minimum prices for trading on such exchange, or any suspension of
trading of any securities of either Issuer on any exchange or in the
over-the-counter market; (D) any banking moratorium declared by U.S. Federal or
New York authorities; or (E) any outbreak or escalation of major hostilities in
which the United States is involved, any declaration of war by Congress or any
other substantial national or international calamity or emergency if, in the
reasonable judgment of CSFBC, the effect of any such outbreak, escalation,
declaration, calamity or emergency makes it impractical or inadvisable to
proceed with completion of the offering or sale of and payment for the Offered
Securities.
(c) Concurrently with or prior to the issue and sale of the Offered
Securities by the Issuers, the Transactions shall be consummated on terms that
conform in all material respects to the description thereof in the Offering
Documents and the Initial Purchasers shall have received true and correct copies
of all documents pertaining thereto and evidence reasonably satisfactory to the
Initial Purchasers of the consummation thereof.
(d) Concurrently with or prior to the issuance and sale of the Offered
Securities by the Issuers, the Company and Intersil Holding shall have entered
into the Credit Agreement and the initial borrowings thereunder shall have
occurred. The Initial Purchasers shall have received conformed counterparts
thereof and all other documents and agreements entered into and received
thereunder in connection with the closing of the Credit Agreement. There shall
exist at and as of the Closing Date (after giving effect to the transactions
contemplated by this Agreement and the Transactions) no condition that would
constitute a default (or an event that with notice or lapse of time, or both,
would constitute a default) under the Credit Agreement or any other Transaction
Document.
(e) The Initial Purchasers shall have received an opinion, dated the
Closing Date, of Dechert Price & Rhoads, counsel for the Issuers and the
Guarantors, to the effect that:
(i) each of the Issuers has been duly incorporated and is an existing
corporation in good standing under the laws of the State of Delaware, with
corporate power and corporate authority to own its properties and conduct
its business as described in the Offering Circular; and each of the Issuers
is duly qualified to do business as a foreign corporation and is in good
standing in the jurisdictions listed in such opinion;
(ii) each of the Company's domestic subsidiaries has been duly
incorporated or formed and is an existing corporation or limited liability
company in good standing under the laws of the jurisdiction of its
incorporation or formation, with corporate or limited liability company
power and authority to own its properties and conduct its business as
described in the Offering Circular; and each is duly qualified to do
business as a foreign corporation and is in good standing in the
jurisdictions listed in such opinion;
(iii) all of the issued and outstanding capital stock of the Issuers
and the Subsidiary Guarantors that are corporations has been duly
authorized and validly issued and is fully paid and nonassessable and
conforms in all material respects to the description thereof in the
Offering Circular;
<PAGE>
17
(iv) insofar as is known to such counsel, to the extent the Offering
Circular contains summaries of statutes, legal proceedings or agreements to
which any of Intersil Holding, the Company or any of its subsidiaries is a
party (or provisions thereof) referred to therein, such statements are true
and correct in all material respects;
(v) the Issuers and the Subsidiary Guarantors have duly authorized the
execution, delivery and performance of the Offered Securities, Operative
Documents and the consummation of the transactions contemplated thereby;
(vi) the Operative Documents constitute valid and legally binding
obligations of the Issuers and the Subsidiary Guarantors, subject to
bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' rights generally, general equitable principles and the
discretion of courts in granting equitable remedies and except that any
rights to indemnity and contribution may be limited or prohibited by
Federal and state securities laws and public policy considerations; the
Offered Securities have been duly authorized and executed by the Issuers
and conform in all material respects to the description thereof in the
Offering Circular;
(vii) each of the Guaranties has been duly authorized and executed by
the respective Guarantor, and, assuming the Notes have been duly
authenticated in accordance with the terms of the Indenture and delivered
to and paid for by the Initial Purchasers in accordance with the terms of
this Agreement, the Offered Notes constitute valid and legally binding
obligations of the Company and each of the Guarantors, subject to
bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' rights generally, general equitable principles and the
discretion of the courts in granting equitable remedies;
(viii) the Warrants delivered on the Closing Date (as defined herein)
are convertible into shares of Class A common stock of Intersil Holding in
accordance with the term of the Warrant Agreement; the shares of Class A
common stock of Intersil Holding initially issuable upon exercise of the
Warrants have been duly authorized and reserved for issuance upon such
exercise and, when issued upon such exercise, will be validly issued, fully
paid and nonassessable; the outstanding shares of Class A common stock of
Intersil Holding have been duly authorized and validly issued, are fully
paid and nonassessable and conform in all material respects to the
description thereof contained in the Offering Circular; and the
stockholders of Intersil Holding have no preemptive rights with respect to
the Warrants or the shares of Class A common stock, except as disclosed in
the Offering Circular;
(ix) assuming the accuracy of the representation and warranty of the
Issuers and the Subsidiary Guarantors contained in Section 2(y) of this
Agreement and the accuracy of the representations and warranties of the
Initial Purchasers contained in Section 4 of this Agreement, no consent,
approval, authorization or order of, or filing with, any governmental
agency or body or any court is required for the performance by any of the
Issuers or Subsidiary Guarantors of its obligations under the Operative
Documents or in connection with the issuance and sale of the Offered Notes
Securities by the Issuers and the issuance of
<PAGE>
18
the Guaranties by the Guarantors, except such as have been obtained or made
or as may be required under the Securities Act or the Exchange Act and the
rules and regulations of the Commission thereunder with respect to the
Registration Rights Agreement and the transactions contemplated thereunder
and such as may be required by state securities or blue sky laws in
connection with the offer and sale of the Offered Securities;
(x) the execution, delivery and performance, of the Operative
Documents and the Transaction Documents by Sterling, Intersil Holding, the
Company and the Subsidiary Guarantors (to the extent a party thereto) and
the issuance and sale of the Offered Securities by the Issuers and
compliance with the terms and provisions of the foregoing will not (A)
result in a breach or violation of any of the terms and provisions of (1)
any material New York or Federal statute, rule or regulation applicable to
any of Intersil Holding, the Company or any Subsidiary Guarantor or (2) any
order of any governmental agency or body or any court, domestic or foreign,
having jurisdiction over any of Intersil Holding, the Company, any
Subsidiary Guarantor or any of their properties and which order is known to
such counsel, or, (B) result in a breach or violation of any of the terms
or provisions of, or constitute a default under, any Transaction Documents
listed in such opinion, or (C) result in a violation of the charter or
by-laws of Intersil Holding, the Company or any Subsidiary Guarantor;
(xi) other than those already obtained or applied for, no consent,
approval, authorization or order of, or filing with, any New York or
Federal government agency or body or any New York or Federal court is
required in connection with the consummation of the transactions
contemplated by the Transaction Documents by Sterling, the Issuers or any
of the Subsidiary Guarantors except for such consents, approvals,
authorizations, orders or filings the failure of which to obtain or make
would not result in a Material Adverse Effect;
(xii) each of the Transaction Documents has been duly authorized by
each of Sterling, the Issuers and the Subsidiary Guarantors (to the extent
a party thereto) and will, when duly executed, constitute a valid and
legally binding obligation of each of Sterling, the Issuers and the
Subsidiary Guarantors (to the extent a party thereto) and is enforceable in
accordance with its terms, subject to bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting creditors' rights
generally, general equitable principles and the discretion of the courts in
granting equitable remedies;
(xiii) except as disclosed in the Offering Documents, insofar as is
known to such counsel, there are no actions, suits or proceedings
threatened or pending against Intersil Holding, the Company or any of its
subsidiaries or any of their respective properties that if determined
adversely to Intersil Holding, the Company or any such subsidiary would be
reasonably likely to have a Material Adverse Effect;
(xiv) neither of the Issuers nor any of the Subsidiary Guarantors is
an open-end investment company, unit investment trust or face-amount
certificate company that is or is required to be registered under Section 8
of the Investment Company Act, or a
<PAGE>
19
closed-end investment company required to be registered, but not
registered, thereunder; and neither of the Issuers nor any of the
Subsidiary Guarantors is or, after giving effect to the offering and sale
of the Offered Securities and the application of the proceeds thereof as
described in the Offering Documents, will be an "investment company" as
defined in the Investment Company Act;
(xv) assuming the accuracy of the representations and warranties of
the Initial Purchasers contained in Section 4 of this Agreement, the offer
and sale of the Offered Securities in the manner contemplated by this
Agreement will be exempt from the registration requirements of the
Securities Act (it being understood that no opinion shall be expressed as
to any subsequent resale of any Offered Securities); and it is not
necessary to qualify the Indenture under the Trust Indenture Act; and
(xvi) in addition, such counsel shall state that they have
participated in conferences with officers and other representatives of the
Issuers and the Subsidiary Guarantors and representatives of the Initial
Purchasers and its counsel during which the contents of the Offering
Circular and related matters were discussed and reviewed and, although such
counsel is not passing upon and does not assume any responsibility for the
accuracy, completeness or fairness of the statements contained in the
Offering Circular, on the basis of the information that was developed in
the course of the performance of the services referred to above, considered
in the light of such counsel's understanding of the applicable law, that
nothing came to their attention that caused them to believe that the
Offering Circular or any amendment or supplement thereto made prior to the
Closing Date (other than the financial statements and schedules and the
other financial and statistical data included therein, as to which such
counsel need express no belief), as of the date of the Offering Circular or
any such amendment or supplement thereto and as of the Closing Date,
contained or contains any untrue statement of a material fact or omitted or
omits to state any material fact required to be stated therein or necessary
in order to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws of any jurisdiction other than the State
of New York, the General Corporation Law of the State of Delaware or the
federal laws of the United States, to the extent they deem proper and
specified in such opinion, upon the opinion of other counsel who are
satisfactory to counsel for the Initial Purchasers (which opinion will be
attached thereto) and (B) as to matters of fact, to the extent they deem
proper, on certificates of responsible officers of the Company and public
officials. Such opinion may be limited to the General Corporation Law of
the State of Delaware and the laws of the State of New York, and the
federal laws of the United States. Such opinion may also be given by other
counsel satisfactory to the Initial Purchasers instead of Dechert Price &
Rhoads as it relates to matters involving the application of laws of any
jurisdiction other than the State of New York, the General Corporation Law
of the State of Delaware or the federal laws of the United States.
(f) The Initial Purchasers shall have received from Cravath, Swaine &
Moore, counsel for the Initial Purchasers, such
<PAGE>
20
opinion or opinions, dated the Closing Date, with respect to the validity of the
Offered Securities, the Offering Documents, the exemption from registration for
the offer and sale of the Offered Securities by the Issuers to the Initial
Purchasers and the resales by the Initial Purchasers as contemplated hereby and
other related matters as CSFBC may require, and the Issuers shall have furnished
to such counsel such documents as they request for the purpose of enabling them
to pass upon such matters.
(g) The Initial Purchasers shall have received a certificate:
(i) dated the Closing Date, of the Chief Executive Officer and a
principal financial or accounting officer of each of the Issuers and the
Subsidiary Guarantors in which such officers, in their capacity as such
officers, on behalf of the applicable Issuer or Guarantor, shall state that
the representations and warranties of that Issuer or Guarantor in this
Agreement are true and correct, that the applicable Issuer or Guarantor has
complied with all agreements and satisfied all conditions on their part to
be performed or satisfied hereunder at or prior to the Closing Date and, in
the case of the Company, that subsequent to the date of the most recent
consolidated financial statements of the Company in the Offering Circular
there has been no material adverse change nor any development or event
involving a prospective material adverse change, in the business, assets,
operations, properties, financial condition, liabilities or prospects of
the Company and its subsidiaries taken as a whole, except as set forth in
or contemplated by the Offering Circular or as described in such
certificate.
(h) The Initial Purchasers shall have received a letter, dated the Closing
Date, of Ernst & Young LLP which meets the requirements of subsection (a) of
this Section, except that the specified date referred to in such subsection will
be a date not more than five days prior to the Closing Date for the purposes of
this subsection.
(i) The Company, the Guarantors and the Trustee shall have entered into the
Indenture, and the Initial Purchasers shall have received an executed
counterpart thereof.
(j) Each of the Subsidiary Guarantors shall have become a party to this
Agreement and the Registration Rights Agreement and shall be subject to all the
terms and provisions of each, and all representations and warranties regarding
the Guarantors contained herein shall be true and correct.
The Issuers will furnish the Initial Purchasers with such conformed copies
of such opinions, certificates, letters and documents as the Initial Purchasers
reasonably request. CSFBC may in its sole discretion waive on behalf of the
Initial Purchasers compliance with any conditions to the obligations of the
Initial Purchasers hereunder, whether in respect of the Closing Date or
otherwise.
7. Indemnification and Contribution. (a) The Issuers and the Subsidiary
Guarantors will, jointly and severally, indemnify and hold harmless each Initial
Purchaser, its partners, directors and officers and each person, if any, who
controls such Initial Purchaser within the meaning of Section 15 of the
Securities Act, against any
<PAGE>
21
losses, claims, damages or liabilities, joint or several, to which such Initial
Purchaser may become subject, under the Securities Act or the Exchange Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any breach of any of the
representations and warranties of the Issuers or any of the Guarantors contained
herein or any untrue statement or alleged untrue statement of any material fact
contained in the Offering Documents, or any amendment or supplement thereto, or
Additional Issuer Information, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, including any losses,
claims, damages or liabilities arising out of or based upon the Issuers' failure
to perform its obligations under Section 5(a) of this Agreement, and will
reimburse each Initial Purchaser for any legal or other expenses reasonably
incurred by such Initial Purchaser in connection with investigating or defending
any such loss, claim, damage, liability or action as such expenses are incurred;
provided, however, that the Issuers and the Guarantors will not be liable in any
such case to the extent that any such loss, claim, damage or liability arises
out of or is based upon an untrue statement or alleged untrue statement in or
omission or alleged omission from any of such documents in reliance upon and in
conformity with written information furnished to the Issuers by any Initial
Purchaser through CSFBC specifically for use therein, it being understood and
agreed that such information only consists of the information described as such
in subsection (b) below; and provided further, however, that with respect to any
untrue statement or omission or alleged untrue statement or omission made in the
Preliminary Offering Circular, the indemnity agreement contained in this
subsection (a) shall not inure to the benefit of any Initial Purchaser to the
extent that the sale to the person asserting any such losses, claims, damages or
liabilities was an initial resale by such Initial Purchaser and any such loss,
claim, damage or liability of such Initial Purchaser results from the fact that
there was not sent or given to such person, at or prior to the written
confirmation of the sale of such Offered Securities to such person, a copy of
the Offering Circular if the Issuers had previously furnished copies thereof to
such Initial Purchaser and the Offering Circular corrected such untrue statement
or omission or alleged untrue statement or omission.
(b) The Initial Purchasers, severally and not jointly, will indemnify and
hold harmless the Guarantors, the Issuers, its directors and officers and each
person, if any, who controls either of the Issuers within the meaning of Section
15 of the Securities Act, against any losses, claims, damages or liabilities to
which either of the Issuers or a Guarantor, as the case may be, may become
subject, under the Securities Act or the Exchange Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement
of any material fact contained in the Offering Documents, or any amendment or
supplement thereto or arise out of or are based upon the omission or the alleged
omission to state therein a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, in each case to the extent, but only to the extent, that
such untrue statement or alleged untrue statement or omission or alleged
omission was made in reliance upon and in conformity with written information
furnished to the Issuers and the Guarantors by such Initial Purchaser through
CSFBC specifically for use therein, and will reimburse any legal or other
expenses reasonably
<PAGE>
22
incurred by such Issuer or Guarantor in connection with investigating or
defending any such loss, claim, damage, liability or action as such expenses are
incurred, it being understood and agreed that the only such information
furnished by any Initial Purchaser consists of the following information in the
Offering Documents furnished on behalf of the Initial Purchasers: the table, the
first sentence of the third paragraph, the third and fourth sentences of the
eighth paragraph, the ninth paragraph and the third, fourth and fifth sentences
of the last paragraph under the caption "Plan of Distribution"; provided,
however, that the Initial Purchasers shall not be liable for any losses, claims,
damages or liabilities arising out of or based upon either of the Issuer's
failure to perform its obligations under Section 5(a) of this Agreement.
(c) Promptly after receipt by an indemnified party under this Section of
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under
subsection (a) or (b) above, notify the indemnifying party of the commencement
thereof; but the omission so to notify the indemnifying party will not relieve
it from any liability which it may have to any indemnified party otherwise than
under subsection (a) or (b) above. In case any such action is brought against
any indemnified party and it notifies the indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate therein and, to
the extent that it may wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with counsel reasonably satisfactory to
such indemnified party (which counsel shall not, except with the consent of the
indemnified party, be counsel to the indemnifying party counsel, together with
one local counsel in each jurisdiction, shall act on behalf of all the
indemnified parties with respect to such action), and after notice from the
indemnifying party to such indemnified party of its election so to assume the
defense thereof, the indemnifying party will not be liable to such indemnified
party under this Section for any legal or other expenses subsequently incurred
by such indemnified party in connection with the defense thereof other than
reasonable costs of investigation. No indemnifying party shall, without the
prior written consent of the indemnified party, effect any settlement of any
pending or threatened action in respect of which any indemnified party is or
could have been a party and indemnity could have been sought hereunder by such
indemnified party unless such settlement includes an unconditional release of
such indemnified party from all liability on any claims that are the subject
matter of such action.
(d) If the indemnification provided for in this Section is unavailable or
insufficient to hold harmless an indemnified party under subsection (a) or (b)
above, then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of the losses, claims, damages or
liabilities referred to in subsection (a) or (b) above (i) in such proportion as
is appropriate to reflect the relative benefits received by the Issuers and the
Subsidiary Guarantors on the one hand and the Initial Purchasers on the other
from the offering of the Offered Securities or (ii) if the allocation provided
by clause (i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Issuers and the Subsidiary Guarantors
on the one hand and the Initial Purchasers on the other in connection with the
statements or omissions which resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable considerations. The
relative benefits received by the Issuers and the Subsidiary Guarantors on the
one hand
<PAGE>
23
and the Initial Purchasers on the other shall be deemed to be in the same
proportion as the total net proceeds from the offering of the Offered Securities
(before deducting expenses) received by the Issuers and the Subsidiary
Guarantors bear to the total discounts and commissions received by the Initial
Purchasers from the Issuers under this Agreement. The relative fault shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by one of the Issuers or a
Subsidiary Guarantor or the Initial Purchasers and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
untrue statement or omission. The amount paid by an indemnified party as a
result of the losses, claims, damages or liabilities referred to in the first
sentence of this subsection (d) shall be deemed to include, subject to the
limitations on legal and other expenses set forth in Sections 7(a) and 7(b), any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any action or claim which is the
subject of this subsection (d). Notwithstanding the provisions of this
subsection (d), no Initial Purchaser shall be required to contribute any amount
in excess of the amount by which the total price at which the Offered Securities
purchased by it were resold exceeds the amount of any damages which such Initial
Purchaser has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission. The Initial Purchasers'
obligations in this subsection (d) to contribute are several in proportion to
their respective purchase obligations and not joint.
(e) The obligations of the Issuers and the Subsidiary Guarantors under this
Section shall be in addition to any liability which the Issuers and the
Subsidiary Guarantors may otherwise have and shall extend, upon the same terms
and conditions, to each person, if any, who controls any Initial Purchaser
within the meaning of the Securities Act or the Exchange Act; and the
obligations of the Initial Purchasers under this Section shall be in addition to
any liability which the respective Initial Purchaser may otherwise have and
shall extend, upon the same terms and conditions, to each person, if any, who
controls the Issuers and the Guarantors within the meaning of the Securities Act
or the Exchange Act.
8. Survival of Certain Representations and Obligations. The respective
indemnities, agreements, representations, warranties and other statements of the
Issuers or its officers and of the Initial Purchasers set forth in or made
pursuant to this Agreement will remain in full force and effect, regardless of
any investigation, or statement as to the results thereof, made by or on behalf
of any Initial Purchaser, the Issuers or any of their respective
representatives, officers or directors or any controlling person, and will
survive delivery of and payment for the Offered Securities. If this Agreement is
terminated pursuant to Section 9 or if for any reason the purchase of the
Offered Securities by the Initial Purchasers is not consummated, the Issuers
shall remain responsible for the expenses to be paid or reimbursed by it
pursuant to Section 5 and the respective obligations of the Issuers and the
Initial Purchasers pursuant to Section 7 shall remain in effect. If the purchase
of the Offered Securities by the Initial Purchasers is not consummated for any
reason other than solely because of the termination of this Agreement pursuant
to Section 9 or the occurrence of any event specified in Section 6(b)(i) or
clause (C), (D) or (E) of Section 6(b)(ii), the Issuers will reimburse the
Initial Purchasers for all out-of-pocket expenses (including reasonable fees and
<PAGE>
24
disbursements of counsel) reasonably incurred by them as Initial Purchasers in
connection with the offering of the Offered Securities.
9. Default of Initial Purchasers. If any Initial Purchaser defaults in its
obligation to purchase Offered Securities hereunder and the aggregate principal
amount of Offered Securities that such defaulting Initial Purchaser agreed but
failed to purchase does not, together with the aggregate principal amount of all
Offered Securities failed to be purchased by other Initial Purchasers, exceed
10% of the total number of Units, CSFBC may make arrangements satisfactory to
the Issuers for the purchase of such Offered Securities by other persons,
including any of the Initial Purchasers, but if no such arrangements are made by
the Closing Date, the non-defaulting Initial Purchasers shall be obligated
severally, in proportion to their respective commitments hereunder, to purchase
the Offered Securities that such defaulting Initial Purchasers agreed but failed
to purchase. If any Initial Purchaser or Initial Purchasers so default and the
total number of Units with respect to which such default or defaults occur
exceeds 10% of the total number of Units and arrangements satisfactory to CSFBC
and the Company for the purchase of such Offered Securities by other persons are
not made within 36 hours after such default, this Agreement will terminate
without liability on the part of any non-defaulting Initial Purchaser or the
Issuers, except as provided in Section 8. As used in this Agreement, the term
"Initial Purchaser" includes any person substituted for an Initial Purchaser
under this Section. Nothing herein will relieve a defaulting Initial Purchaser
from liability for its default.
10. Notices. All communications hereunder will be in writing and, if sent
to the Initial Purchasers will be mailed, delivered or telegraphed and confirmed
to the Initial Purchasers, c/o Credit Suisse First Boston Corporation, Eleven
Madison Avenue, New York, N.Y. 10010-3629, Attention: Investment Banking
Department - Transactions Advisory Group, or, if sent to the Issuers, will be
mailed, delivered or telegraphed and confirmed to it at Intersil Corporation,
2401 Palm Bay Road NE, Palm Bay, Florida 32919, Attention: General Counsel, with
a copy to Dechert Price & Rhoads, 1717 Arch Street, Philadelphia, Pennsylvania
19103, Attention: Christopher G. Karras; provided, however, that any notice to
an Initial Purchaser pursuant to Section 7 will be mailed, delivered or
telegraphed and confirmed to such Initial Purchaser.
11. Representation of the Initial Purchasers. CSFBC will act for the
several Initial Purchasers in connection with this Purchase Agreement, and any
action under this Agreement taken by CSFBC will be binding upon all the Initial
Purchasers.
12. Representations and Agreements of the Guarantors. All representations
and warranties regarding a Guarantor shall be deemed to have been made as of,
and all agreements of the Guarantor shall be effective following, the date it
becomes a party hereto. Notwithstanding this section, this Agreement will be
binding as between the Issuers and the Initial Purchasers as of and following
the date hereof.
13. Successors. This Agreement will inure to the benefit of and be binding
upon the parties hereto and their respective successors and the controlling
persons referred to in Section 7, and no other person will have any right or
obligation hereunder, except that holders of Offered Securities shall be
entitled to enforce the
<PAGE>
25
agreements for their benefit contained in the second and third sentences of
Section 5(b) hereof against the Issuers as if such holders were parties thereto.
14. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same Agreement.
15. Applicable Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York without regard to principles
of conflicts of laws.
The Issuers hereby submit to the non-exclusive jurisdiction of the Federal
and state courts in the Borough of Manhattan in The City of New York in any suit
or proceeding arising out of or relating to this Agreement or the transactions
contemplated hereby.
<PAGE>
If the foregoing is in accordance with the Initial Purchasers'
understanding of our agreement, kindly sign and return to us one of the
counterparts hereof, whereupon it will become a binding agreement among the
Issuers, the Guarantors and the Initial Purchasers in accordance with its terms.
Very truly yours,
INTERSIL CORPORATION,
as Issuer
By /s/ Gregory L. Williams
-----------------------
Gregory L. Williams
Chief Executive Officer
INTERSIL HOLDING CORPORATION,
as Issuer and as Guarantor,
By /s/ Gregory L. Williams
-----------------------
Gregory L. Williams
Chief Executive Officer
HARRIS SEMICONDUCTOR, LLC,
HARRIS SEMICONDUCTOR (OHIO), LLC,
HARRIS SEMICONDUCTOR (PENNSYLVANIA), LLC,
CHOICE MICROSYSTEMS, INC.,
as Guarantors,
by /s/ Gregory L. Williams
-----------------------
Gregory L. Williams
Chief Executive Officer
Date: August 13, 1999
The foregoing Purchase Agreement is
hereby confirmed and accepted as of
the date first above written.
CREDIT SUISSE FIRST BOSTON CORPORATION
J.P. MORGAN SECURITIES INC.
SALOMON SMITH BARNEY INC.
by: CREDIT SUISSE FIRST BOSTON CORPORATION
By /s/ Harold W. Bogle
-------------------
Harold W. Bogel
Managing Director
<PAGE>
SCHEDULE A
Number of
Purchaser Units
- - --------- ---------
Credit Suisse First Boston Corporation $120,000
J. P. Morgan Securities Inc. 40,000
Salomon Smith Barney Inc. 40,000
Total $200,000
========
<PAGE>
SCHEDULE B
Place of
Guarantor Formation
- - --------- ---------
Harris Semiconductor, LLC Delaware
Harris Semiconductor (Ohio), LLC Delaware
Harris Semiconductor (Pennsylvania), LLC Delaware
Choice Microsystems, Inc. Kansas
EXHIBIT 4.03
INTERSIL CORPORATION
200,000 Units
consisting of $200,000,000 Principal Amount of
Intersil Corporation's 13 1/4% Senior Subordinated Notes
Due 2009 and Warrants to Purchase 5,555,560 Shares of
Class A Common Stock of Intersil Holding Corporation
REGISTRATION RIGHTS AGREEMENT
August 6, 1999
Credit Suisse First Boston Corporation
J.P. Morgan Securities Inc.
Salomon Smith Barney Inc.
c/o Credit Suisse First Boston Corporation
Eleven Madison Avenue
New York, New York 10010-3629
Ladies and Gentlemen:
Intersil Corporation, a Delaware corporation (the "Issuer"), and Intersil
Holding Corporation, a Delaware corporation ("Intersil Holding"), propose to
issue and sell to Credit Suisse First Boston Corporation, J.P. Morgan Securities
Inc. and Salomon Smith Barney Inc. (collectively, the "Initial Purchasers"),
upon the terms set forth in a purchase agreement of even date herewith (the
"Purchase Agreement"), 200,000 units (the "Units"), each Unit consisting of one
of the Issuer's 13 1/4% Senior Subordinated Notes Due 2009 in a principal amount
of $1,000 (the "Notes") and one Warrant (each a "Warrant") to purchase 27.7778
shares of Class A common stock, par value $0.01 per share, of Intersil Holding.
The Notes are to be unconditionally guaranteed on a senior subordinated basis
(the "Guaranties") by Intersil Holding and each of the Issuer's domestic
subsidiaries listed on Schedule B of the Purchase Agreement (the "Subsidiary
Guarantors", together with Intersil Holding, the "Guarantors" and, collectively
with Intersil Holding and the Issuer, the "Company"). The Notes will also be
guaranteed on a senior subordinated basis by each existing and subsequently
organized domestic subsidiary of the Issuer that becomes a guarantor pursuant to
the Indenture (as defined). The Notes and the Guaranties are together referred
to as the "Initial Securities". The Initial Securities will be issued pursuant
to an indenture, dated as of August 13, 1999, (the "Indenture"), among the
Issuer, the Guarantors and United States Trust Company of New York, as trustee
(the "Trustee"). As an inducement to the Initial Purchasers to enter into the
Purchase Agreement, the Company agrees with the Initial Purchasers, for the
benefit of the Initial Purchasers and the holders of the Securities (as defined
below) (collectively the "Holders"), as follows:
1. Registered Exchange Offer. Unless not permitted by applicable law (after
the Company has complied with the ultimate paragraph of this Section 1), the
Company shall, at its own cost, prepare and, not later than 90 days (such 90th
day being a "Filing Deadline") after the date on which the Initial Purchasers
purchase the Initial Securities pursuant to the Purchase Agreement (the "Closing
Date"), file with the Securities and Exchange Commission (the "Commission") a
registration statement (the "Exchange Offer Registration Statement") on an
appropriate form under the Securities Act of 1933, as amended (the "Securities
Act"), with
<PAGE>
respect to a proposed offer (the "Registered Exchange Offer") to the Holders of
Transfer Restricted Securities (as defined in Section 6 hereof), who are not
prohibited by any law or policy of the Commission from participating in the
Registered Exchange Offer, to issue and deliver to such Holders, in exchange for
the Initial Securities, a like aggregate principal amount of debt securities of
the Company issued under the Indenture, identical in all material respects to
the Initial Securities (except for the transfer restrictions relating to the
Initial Securities and the provisions relating to the matters described in
Section 6 hereof) that would be registered under the Securities Act (the
"Exchange Securities"). The Company shall use its best efforts to (i) cause such
Exchange Offer Registration Statement to become effective under the Securities
Act within 150 days after the Closing Date (such 150th day being an
"Effectiveness Deadline") and (ii) keep the Exchange Offer Registration
Statement effective for not less than 30 days (or longer, if required by
applicable law) after the date notice of the Registered Exchange Offer is mailed
to the Holders (such period being called the "Exchange Offer Registration
Period").
If the Company commences the Registered Exchange Offer, the Company (i)
will be entitled to consummate the Registered Exchange Offer 30 days after such
commencement (provided that the Company has accepted all the Initial Securities
theretofore validly tendered in accordance with the terms of the Registered
Exchange Offer) and (ii) will be required to consummate the Registered Exchange
Offer no later than 40 days after the date on which the Exchange Offer
Registration Statement is declared effective (such 40th day being the
"Consummation Deadline").
Following the declaration of the effectiveness of the Exchange Offer
Registration Statement, the Company shall promptly commence the Registered
Exchange Offer, it being the objective of such Registered Exchange Offer to
enable each Holder of Transfer Restricted Securities electing to exchange the
Initial Securities for Exchange Securities (assuming that such Holder is not an
affiliate of the Company within the meaning of the Securities Act, acquires the
Exchange Securities in the ordinary course of such Holder's business and has no
arrangements with any person to participate in the distribution of the Exchange
Securities and is not prohibited by any law or policy of the Commission from
participating in the Registered Exchange Offer) to trade such Exchange
Securities from and after their receipt without any limitations or restrictions
under the Securities Act and without material restrictions under the securities
laws of the several states of the United States.
The Company acknowledges that, pursuant to current interpretations by the
Commission's staff of Section 5 of the Securities Act, in the absence of an
applicable exemption therefrom, (i) each Holder which is a broker-dealer
electing to exchange Initial Securities, acquired for its own account as a
result of market making activities or other trading activities, for Exchange
Securities (an "Exchanging Dealer"), is required in connection with any resale
of such Exchange Securities to deliver a prospectus containing the information
set forth in (a) Annex A hereto on the cover, (b) Annex B hereto in the
"Exchange Offer Procedures" section and the "Purpose of the Exchange Offer"
section, and (c) Annex C hereto in the "Plan of Distribution" section of such
prospectus in connection with a sale of any such Exchange Securities received by
such Exchanging Dealer pursuant to the Registered Exchange Offer and (ii) an
Initial Purchaser that elects to sell Securities (as defined below) acquired in
exchange for Initial Securities constituting any portion of an unsold allotment,
is required to deliver a prospectus containing the information required by Items
507 or 508 of Regulation S-K under the Securities Act, as applicable, in
connection with such sale.
The Company shall use its best efforts to keep the Exchange Offer
Registration Statement effective and to amend and supplement the
2
<PAGE>
prospectus contained therein, in order to permit such prospectus to be lawfully
delivered by all persons subject to the prospectus delivery requirements of the
Securities Act for such period of time as such persons must comply with such
requirements in order to resell the Exchange Securities; provided, however, that
(i) in the case where such prospectus and any amendment or supplement thereto
must be delivered by an Exchanging Dealer or an Initial Purchaser, such period
shall be the lesser of 90 days after the consummation of the Registered Exchange
Offer and the date on which all Exchanging Dealers and the Initial Purchasers
have sold all Exchange Securities held by them (unless such period is extended
pursuant to Section 3(j) below) and (ii) the Company shall make such prospectus
and any amendment or supplement thereto available to any broker-dealer for use
in connection with any resale of any Exchange Securities for a period of not
less than 90 days after the consummation of the Registered Exchange Offer.
If, upon consummation of the Registered Exchange Offer, any Initial
Purchaser holds Initial Securities acquired by it as part of its initial
distribution, the Company, simultaneously with the delivery of the Exchange
Securities pursuant to the Registered Exchange Offer, shall issue and deliver to
such Initial Purchaser upon the written request of such Initial Purchaser, in
exchange (a "Private Exchange") for the Initial Securities held by such Initial
Purchaser, a like principal amount of debt securities issued by the Company
under the Indenture and guaranteed by the Guarantors and identical in all
material respects (including the existence of restrictions on transfer under the
Securities Act and the securities laws of the several states of the United
States, but excluding provisions relating to the matters described in Section 6
hereof) to the Initial Securities (the "Private Exchange Securities"). The
Initial Securities, the Exchange Securities and the Private Exchange Securities
are herein collectively called the "Securities".
In connection with the Registered Exchange Offer, the Company shall:
(a) mail to each Holder a copy of the prospectus forming part of the
Exchange Offer Registration Statement, together with an appropriate letter
of transmittal and related documents;
(b) keep the Registered Exchange Offer open for not less than 30 days
(or longer, if required by applicable law) after the date notice thereof is
mailed to the Holders;
(c) utilize the services of a depositary for the Registered Exchange
Offer with an address in the Borough of Manhattan, The City of New York,
which may be the Trustee or an affiliate of the Trustee;
(d) permit Holders to withdraw tendered Initial Securities at any time
prior to the close of business, New York time, on the last business day on
which the Registered Exchange Offer shall remain open; and
(e) otherwise comply with all applicable laws.
As soon as practicable after the close of the Registered Exchange Offer or
the Private Exchange, as the case may be, the Company shall:
(x) accept for exchange all the Initial Securities validly tendered
and not withdrawn pursuant to the Registered Exchange Offer and the Private
Exchange;
(y) deliver to the Trustee for cancellation all the Initial Securities
so accepted for exchange; and
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(z) cause the Trustee to authenticate and deliver promptly to each
Holder of the Initial Securities, Exchange Securities or Private Exchange
Securities, as the case may be, equal in principal amount to the Initial
Securities of such Holder so accepted for exchange.
The Indenture will provide that the Exchange Securities will not be subject
to the transfer restrictions set forth in the Indenture and that all the
Securities will vote and consent together on all matters as one class and that
none of the Securities will have the right to vote or consent as a class
separate from one another on any matter.
Interest on each Exchange Security and Private Exchange Security issued
pursuant to the Registered Exchange Offer and in any Private Exchange will
accrue from the last interest payment date on which interest was paid on the
Initial Securities surrendered in exchange therefor or, if no interest has been
paid on the Initial Securities, from the date of original issue of the Initial
Securities.
Each Holder participating in the Registered Exchange Offer shall be
required to represent to the Company in writing that at the time of the
consummation of the Registered Exchange Offer (i) any Exchange Securities
received by such Holder will be acquired in the ordinary course of business,
(ii) such Holder will have no arrangements or understanding with any person to
participate in the distribution of the Securities within the meaning of the
Securities Act, (iii) such Holder is not an "affiliate," as defined in Rule 405
of the Securities Act, of the Company or if it is an affiliate, such Holder will
comply with the registration and prospectus delivery requirements of the
Securities Act to the extent applicable, (iv) if such Holder is not a
broker-dealer, that it is not engaged in, and does not intend to engage in, the
distribution of the Exchange Securities and (v) if such Holder is a
broker-dealer, that it will receive Exchange Securities for its own account in
exchange for Initial Securities that were acquired as a result of market-making
activities or other trading activities and that it will be required to
acknowledge that it will deliver a prospectus in connection with any resale of
such Exchange Securities.
Notwithstanding any other provisions hereof, the Company will ensure that
(i) any Exchange Offer Registration Statement and any amendment thereto and any
prospectus forming part thereof and any supplement thereto complies in all
material respects with the Securities Act and the rules and regulations
thereunder, (ii) any Exchange Offer Registration Statement and any amendment
thereto does not, when it becomes effective, contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading and (iii) any prospectus
forming part of any Exchange Offer Registration Statement, and any supplement to
such prospectus, does not include an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading.
If following the date hereof there has been announced a change in
Commission policy with respect to exchange offers that in the reasonable opinion
of counsel to the Company raises a substantial question as to whether the
Registered Exchange Offer is permitted by applicable federal law, the Company
will seek a no-action letter or other favorable decision from the Commission
allowing the Company to consummate the Registered Exchange Offer unless the
Company makes a good faith determination based on the advice of counsel that
such a request would be denied in light of publicly available no-action letters,
in which case the Company shall proceed to file a Shelf Registration Statement
pursuant to the provisions of Section 2 hereof. In the event the Company seeks a
no-action letter or other favorable decision from the
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Commission pursuant to the preceding sentence, the Company will pursue the
issuance of such a decision to the Commission staff level. In connection with
the foregoing, the Company will take all such other actions as may be requested
by the Commission or otherwise required in connection with the issuance of such
decision, including without limitation (i) participating in telephonic
conferences with the Commission, (ii) delivering to the Commission staff an
analysis prepared by counsel to the Company setting forth the legal bases, if
any, upon which such counsel has concluded that the Registered Exchange Offer
should be permitted and (iii) diligently pursuing a resolution (which need not
be favorable) by the Commission staff.
2. Shelf Registration. If, (i) because of any change in law or in
applicable interpretations thereof by the staff of the Commission, the Company
is not permitted to effect a Registered Exchange Offer, as contemplated by
Section 1 hereof, (ii) the Registered Exchange Offer is not consummated by the
180th day after the Closing Date, (iii) any Initial Purchaser so requests with
respect to the Initial Securities (or the Private Exchange Securities) not
eligible to be exchanged for Exchange Securities in the Registered Exchange
Offer and held by it following consummation of the Registered Exchange Offer or
(iv) any Holder (other than an Exchanging Dealer) is not eligible to participate
in the Registered Exchange Offer or, in the case of any Holder (other than an
Exchanging Dealer) that participates in the Registered Exchange Offer, such
Holder does not receive freely tradeable Exchange Securities on the date of the
exchange and any such Holder so requests, the Company shall take the following
actions (the date on which any of the conditions described in the foregoing
clauses (i) through (iv) occur, including in the case of clauses (iii) or (iv)
the receipt of the required notice, being a "Trigger Date"):
(a) The Company shall, at its cost, as promptly as practicable (but in
no event more than 45 days after the Trigger Date (such 45th day being a
"Filing Deadline")) file with the Commission and thereafter use its best
efforts to cause to be declared effective no later than 140 days after the
Trigger Date (such 140th day being an "Effectiveness Deadline") a
registration statement (the "Shelf Registration Statement" and, together
with the Exchange Offer Registration Statement, a "Registration Statement")
on an appropriate form under the Securities Act relating to the offer and
sale of the Transfer Restricted Securities by the Holders thereof from time
to time in accordance with the methods of distribution set forth in the
Shelf Registration Statement and Rule 415 under the Securities Act
(hereinafter, the "Shelf Registration"); provided, however, that no Holder
(other than an Initial Purchaser) shall be entitled to have the Securities
held by it covered by such Shelf Registration Statement unless such Holder
agrees in writing to be bound by all the provisions of this Agreement
applicable to such Holder.
(b) The Company shall use its best efforts to keep the Shelf
Registration Statement continuously effective in order to permit the
prospectus included therein to be lawfully delivered by the Holders of the
relevant Securities, for a period of two years (or for such longer period
if extended pursuant to Section 3(j) below) from the date of its
effectiveness or such shorter period that will terminate when all the
Securities covered by the Shelf Registration Statement (i) have been sold
pursuant thereto or (ii) are no longer restricted securities (as defined in
Rule 144 under the Securities Act, or any successor rule thereof). The
Company shall be deemed not to have used its best efforts to keep the Shelf
Registration Statement effective during the requisite period if it
voluntarily takes any action that would result in Holders of Securities
covered thereby not being able to offer and sell such
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Securities during that period, unless such action is required by applicable
law.
(c) Notwithstanding any other provisions of this Agreement to the
contrary, the Company shall cause the Shelf Registration Statement and the
related prospectus and any amendment or supplement thereto, as of the
effective date of the Shelf Registration Statement, amendment or
supplement, (i) to comply in all material respects with the applicable
requirements of the Securities Act and the rules and regulations of the
Commission and (ii) not to contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances
under which they were made, not misleading.
3. Registration Procedures. In connection with any Shelf Registration
contemplated by Section 2 hereof and, to the extent applicable, any Registered
Exchange Offer contemplated by Section 1 hereof, the following provisions shall
apply:
(a) The Company shall (i) furnish to each Initial Purchaser, prior to
the filing thereof with the Commission, a copy of the Registration
Statement and each amendment thereof and each supplement, if any, to the
prospectus included therein and, in the event that an Initial Purchaser
(with respect to any portion of an unsold allotment from the original
offering) is participating in the Registered Exchange Offer or the Shelf
Registration Statement, the Company shall use its best efforts to reflect
in each such document, when so filed with the Commission, such comments as
such Initial Purchaser reasonably may propose; (ii) include the information
set forth in Annex A hereto on the cover, in Annex B hereto in the
"Exchange Offer Procedures" section and the "Purpose of the Exchange Offer"
section and in Annex C hereto in the "Plan of Distribution" section of the
prospectus forming a part of the Exchange Offer Registration Statement and
include the information set forth in Annex D hereto in the Letter of
Transmittal delivered pursuant to the Registered Exchange Offer; (iii) if
requested by an Initial Purchaser, include the information required by
Items 507 or 508 of Regulation S-K under the Securities Act, as applicable,
in the prospectus forming a part of the Exchange Offer Registration
Statement; (iv) include within the prospectus contained in the Exchange
Offer Registration Statement a section entitled "Plan of Distribution,"
reasonably acceptable to the Initial Purchasers, which shall contain a
summary statement of the positions taken or policies made by the staff of
the Commission with respect to the potential "underwriter" status of any
broker-dealer that is the beneficial owner (as defined in Rule 13d-3 under
the Securities Exchange Act of 1934, as amended (the "Exchange Act")) of
Exchange Securities received by such broker-dealer in the Registered
Exchange Offer (a "Participating Broker-Dealer"), whether such positions or
policies have been publicly disseminated by the staff of the Commission or
such positions or policies, in the reasonable judgment of the Initial
Purchasers based upon advice of counsel (which may be in-house counsel),
represent the prevailing views of the staff of the Commission; and (v) in
the case of a Shelf Registration Statement, include the names of the
Holders who propose to sell Securities pursuant to the Shelf Registration
Statement as selling securityholders.
(b) The Company shall give written notice to the Initial Purchasers,
the Holders of the Securities and any Participating Broker-Dealer from whom
the Company has received prior written notice that it will be a
Participating Broker-Dealer in the Registered Exchange Offer (which notice
pursuant to clauses
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(ii)-(v) hereof shall be accompanied by an instruction to suspend the use
of the prospectus until the requisite changes have been made):
(i) when the Registration Statement or any amendment thereto has
been filed with the Commission and when the Registration Statement or
any post-effective amendment thereto has become effective;
(ii) of any request by the Commission for amendments or
supplements to the Registration Statement or the prospectus included
therein or for additional information;
(iii) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or the
initiation of any proceedings for that purpose;
(iv) of the receipt by the Company or its legal counsel of any
notification with respect to the suspension of the qualification of
the Securities for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose; and
(v) of the happening of any event that requires the Company to
make changes in the Registration Statement or the prospectus in order
that the Registration Statement or the prospectus does not contain an
untrue statement of a material fact nor omit to state a material fact
required to be stated therein or necessary to make the statements
therein (in the case of the prospectus, in light of the circumstances
under which they were made) not misleading.
(c) The Company shall make every reasonable effort to obtain the
withdrawal, at the earliest possible time, of any order suspending the
effectiveness of the Registration Statement.
(d) The Company shall furnish to each Holder of Securities included
within the coverage of the Shelf Registration, without charge, at least one
copy of the Shelf Registration Statement and any post-effective amendment
thereto, including financial statements and schedules, and, if the Holder
so requests in writing, all exhibits thereto (including those, if any,
incorporated by reference).
(e) The Company shall deliver to each Exchanging Dealer and each
Initial Purchaser, and to any other Holder who so requests, without charge,
at least one copy of the Exchange Offer Registration Statement and any
post-effective amendment thereto, including financial statements and
schedules, and, if any Initial Purchaser or any such Holder requests, all
exhibits thereto (including those incorporated by reference).
(f) The Company shall, during the Shelf Registration Period, deliver
to each Holder of Securities included within the coverage of the Shelf
Registration, without charge, as many copies of the prospectus (including
each preliminary prospectus) included in the Shelf Registration Statement
and any amendment or supplement thereto as such person may reasonably
request. The Company consents, subject to the provisions of this Agreement,
to the use of the prospectus or any amendment or supplement thereto by each
of the selling Holders of the Securities in connection with the offering
and sale of the Securities covered by the prospectus, or any amendment or
supplement thereto, included in the Shelf Registration Statement.
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(g) The Company shall deliver to each Initial Purchaser, any
Exchanging Dealer, any Participating Broker-Dealer and such other persons
required to deliver a prospectus following the Registered Exchange Offer,
without charge, as many copies of the final prospectus included in the
Exchange Offer Registration Statement and any amendment or supplement
thereto as such persons may reasonably request. The Company consents,
subject to the provisions of this Agreement, to the use of the prospectus
or any amendment or supplement thereto by any Initial Purchaser, if
necessary, any Participating Broker-Dealer and such other persons required
to deliver a prospectus following the Registered Exchange Offer in
connection with the offering and sale of the Exchange Securities covered by
the prospectus, or any amendment or supplement thereto, included in such
Exchange Offer Registration Statement.
(h) Prior to any public offering of the Securities pursuant to any
Registration Statement, the Company shall register or qualify or cooperate
with the Holders of the Securities included therein and their respective
counsel in connection with the registration or qualification of the
Securities for offer and sale under the securities or "blue sky" laws of
such states of the United States as any Holder of the Securities reasonably
requests in writing and do any and all other acts or things necessary or
advisable to enable the offer and sale in such jurisdictions of the
Securities covered by such Registration Statement; provided, however, that
the Company shall not be required to (i) qualify generally to do business
in any jurisdiction where it is not then so qualified or (ii) take any
action which would subject it to general service of process or to taxation
in any jurisdiction where it is not then so subject.
(i) The Company shall cooperate with the Holders of the Securities to
facilitate the timely preparation and delivery of certificates representing
the Securities to be sold pursuant to any Registration Statement free of
any restrictive legends and in such denominations and registered in such
names as the Holders may request a reasonable period of time prior to sales
of the Securities pursuant to such Registration Statement.
(j) Upon the occurrence of any event contemplated by paragraphs (ii)
through (v) of Section 3(b) above during the period for which the Company
is required to maintain an effective Registration Statement, the Company
shall promptly prepare and file a post-effective amendment to the
Registration Statement or a supplement to the related prospectus and any
other required document so that, as thereafter delivered to Holders of the
Securities or purchasers of Securities, the prospectus will not contain an
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading.
If the Company notifies the Initial Purchasers, the Holders of the
Securities and any known Participating Broker-Dealer in accordance with
paragraphs (ii) through (v) of Section 3(b) above to suspend the use of the
prospectus until the requisite changes to the prospectus have been made,
then the Initial Purchasers, the Holders of the Securities and any such
Participating Broker-Dealers shall suspend use of such prospectus, and the
period of effectiveness of the Shelf Registration Statement provided for in
Section 2(b) above and the Exchange Offer Registration Statement provided
for in Section 1 above shall each be extended by the number of days from
and including the date of the giving of such notice to and including the
date when the Initial Purchasers, the Holders of the Securities and any
known Participating Broker-Dealer shall have
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<PAGE>
received such amended or supplemented prospectus pursuant to this Section
3(j).
(k) Not later than the effective date of the applicable Registration
Statement, the Company will provide a CUSIP number for the Initial
Securities, the Exchange Securities or the Private Exchange Securities, as
the case may be, and provide the applicable trustee with printed
certificates for the Initial Securities, the Exchange Securities or the
Private Exchange Securities, as the case may be, in a form eligible for
deposit with The Depository Trust Company.
(l) The Company will comply with all rules and regulations of the
Commission to the extent and so long as they are applicable to the
Registered Exchange Offer or the Shelf Registration and will make generally
available to its security holders copies of such reports which it is
required to file with the commission pursuant to Section 13 or 15(d) of the
Exchange Act.
(m) The Company shall cause the Indenture to be qualified under the
Trust Indenture Act of 1939, as amended, in a timely manner and containing
such changes, if any, as shall be necessary for such qualification. In the
event that such qualification would require the appointment of a new
trustee under the Indenture, the Company shall appoint a new trustee
thereunder pursuant to the applicable provisions of the Indenture.
(n) The Company may require each Holder of Securities to be sold
pursuant to the Shelf Registration Statement to furnish to the Company such
information regarding the Holder and the distribution of the Securities as
the Company may from time to time reasonably require for inclusion in the
Shelf Registration Statement, and the Company may exclude from such
registration the Securities of any Holder that unreasonably fails to
furnish such information within a reasonable time after receiving such
request.
(o) The Company shall enter into such customary agreements (including,
if requested, an underwriting agreement in customary form) and take all
such other action, if any, as any Holder of the Securities shall reasonably
request in order to facilitate the disposition of the Securities pursuant
to any Shelf Registration.
(p) In the case of any Shelf Registration, the Company shall (i) make
reasonably available for inspection by the Holders of the Securities, any
underwriter participating in any disposition pursuant to the Shelf
Registration Statement and any attorney, accountant or other agent retained
by the Holders of the Securities or any such underwriter all relevant
financial and other records, pertinent corporate documents and properties
of the Company and (ii) cause the Company's officers, directors, employees,
accountants and auditors to supply all relevant information reasonably
requested by the Holders of the Securities or any such underwriter,
attorney, accountant or agent in connection with the Shelf Registration
Statement, in each case, as shall be reasonably necessary to enable such
persons, to conduct a reasonable investigation within the meaning of
Section 11 of the Securities Act; provided, however, that the foregoing
inspection and information gathering shall be coordinated on behalf of the
Initial Purchasers by you and on behalf of the other parties by one counsel
designated by and on behalf of such other parties as described in Section 4
hereof and provided, further, that as to any information that is designated
in writing by the Company, in good faith, as confidential at the time of
delivery, such information shall be kept confidential by the Holder or by
any such underwriter, attorney, accountant or other agent.
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(q) In the case of any Shelf Registration, the Company, if requested
by any Holder of Securities covered thereby, shall cause (i) its counsel to
deliver an opinion and updates thereof relating to the Securities in
customary form addressed to such Holders and the managing underwriters, if
any, thereof and dated, in the case of the initial opinion, the effective
date of such Shelf Registration Statement (it being agreed that the matters
to be covered by such opinion shall include such matters as are customarily
included in opinions requested in underwritten offerings of such type, such
as the due incorporation and good standing of the Company and its
subsidiaries; the qualification of the Company and its subsidiaries to
transact business as foreign corporations; the due authorization, execution
and delivery of the relevant agreement of the type referred to in Section
3(o) hereof; the due authorization, execution, authentication and issuance,
and the validity and enforceability, of the applicable Securities; the
absence of material legal or governmental proceedings involving the Company
and its subsidiaries; the absence of governmental approvals required to be
obtained in connection with the Shelf Registration Statement, the offering
and sale of the applicable Securities, or any agreement of the type
referred to in Section 3(o) hereof; the compliance as to form of such Shelf
Registration Statement and any documents incorporated by reference therein
and of the Indenture with the requirements of the Securities Act and the
Trust Indenture Act, respectively; and, as of the date of the opinion and
as of the effective date of the Shelf Registration Statement or most recent
post-effective amendment thereto, as the case may be, the absence from such
Shelf Registration Statement and the prospectus included therein, as then
amended or supplemented, and from any documents incorporated by reference
therein of an untrue statement of a material fact or the omission to state
therein a material fact required to be stated therein or necessary to make
the statements therein not misleading (in the case of any such documents,
in the light of the circumstances existing at the time that such documents
were filed with the Commission under the Exchange Act); (ii) its officers
to execute and deliver all customary documents and certificates and updates
thereof reasonably requested by any underwriters of the applicable
Securities and (iii) its independent public accountants and the independent
public accountants with respect to any other entity for which financial
information is provided in the Shelf Registration Statement to provide to
the selling Holders of the applicable Securities and any underwriter
therefor a comfort letter in customary form and covering matters of the
type customarily covered in comfort letters in connection with primary
underwritten offerings, subject to receipt of appropriate documentation as
contemplated, and only if permitted, by Statement of Auditing Standards No.
72.
(r) In the case of the Registered Exchange Offer, if requested by any
Initial Purchaser or any known Participating Broker-Dealer, the Company
shall cause (i) its counsel to deliver to such Initial Purchaser or such
Participating Broker-Dealer a signed opinion in the form set forth in
Section 6(e) of the Purchase Agreement with such changes as are customary
in connection with the preparation of a Registration Statement and (ii) its
independent public accountants and the independent public accountants with
respect to any other entity for which financial information is provided in
the Registration Statement to deliver to such Initial Purchaser or such
Participating Broker-Dealer a comfort letter, in customary form, meeting
the requirements as to the substance thereof as set forth in Section 6(a)
of the Purchase Agreement, with appropriate date changes.
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(s) If a Registered Exchange Offer or a Private Exchange is to be
consummated, upon delivery of the Initial Securities by Holders to the
Company (or to such other Person as directed by the Company) in exchange
for the Exchange Securities or the Private Exchange Securities, as the case
may be, the Company shall mark, or cause to be marked, on the Initial
Securities so exchanged that such Initial Securities are being canceled in
exchange for the Exchange Securities or the Private Exchange Securities, as
the case may be; in no event shall the Initial Securities be marked as paid
or otherwise satisfied.
(t) The Company will use its best efforts to (a) if the Initial
Securities have been rated prior to the initial sale of such Initial
Securities, confirm such ratings will apply to the Securities covered by a
Registration Statement, or (b) if the Initial Securities were not
previously rated, cause the Securities covered by a Registration Statement
to be rated with the appropriate rating agencies, if so requested by
Holders of a majority in aggregate principal amount of Securities covered
by such Registration Statement, or by the managing underwriters, if any.
(u) In the event that any broker-dealer registered under the Exchange
Act shall underwrite any Securities or participate as a member of an
underwriting syndicate or selling group or "assist in the distribution"
(within the meaning of the Conduct Rules (the "Rules") of the National
Association of Securities Dealers, Inc. ("NASD")) thereof, whether as a
Holder of such Securities or as an underwriter, a placement or sales agent
or a broker or dealer in respect thereof, or otherwise, the Company shall
use its best efforts to assist such broker-dealer in complying with the
requirements of such Rules, including, without limitation, by (i) if such
Rules, including Rule 2720, shall so require, engaging a "qualified
independent underwriter" (as defined in Rule 2720) to participate in the
preparation of the Registration Statement relating to such Securities, to
exercise usual standards of due diligence in respect thereto and, if any
portion of the offering contemplated by such Registration Statement is an
underwritten offering or is made through a placement or sales agent, to
recommend the yield of such Securities, (ii) indemnifying any such
qualified independent underwriter to the extent of the indemnification of
underwriters provided in Section 5 hereof and (iii) providing such
information to such broker-dealer as may be required in order for such
broker-dealer to comply with the requirements of the Rules.
(v) The Company shall use its best efforts to take all other steps
necessary to effect the registration of the Securities covered by a
Registration Statement contemplated hereby.
4. Registration Expenses. (a) All expenses incident to the Company's
performance of and compliance with this Agreement will be borne by the Company,
regardless of whether a Registration Statement is ever filed or becomes
effective, including without limitation:
(i) all registration and filing fees and expenses;
(ii) all fees and expenses of compliance with federal securities
and state "blue sky" or securities laws;
(iii) all expenses of printing (including printing certificates
for the Securities to be issued in the Registered Exchange Offer and
the Private Exchange and printing of Prospectuses), messenger and
delivery services and telephone;
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(iv) all fees and disbursements of counsel for the Company, and
all reasonable fees and expenses, if any, of Cravath, Swaine & Moore,
counsel for the Initial Purchasers, incurred in connection with the
Registered Exchange Offer;
(v) all application and filing fees in connection with listing
the Exchange Securities on a national securities exchange or automated
quotation system pursuant to the requirements hereof; and
(vi) all fees and disbursements of independent certified public
accountants of the Company (including the expenses of any special
audit and comfort letters required by or incident to such
performance).
The Company will bear its internal expenses (including, without limitation, all
salaries and expenses of its officers and employees performing legal or
accounting duties), the expenses of any annual audit and the fees and expenses
of any person, including special experts, retained by the Company.
(b) In connection with any Registration Statement required by this
Agreement, the Company will reimburse the Initial Purchasers and the Holders of
Transfer Restricted Securities who are tendering Initial Securities in the
Registered Exchange Offer and/or selling or reselling Securities pursuant to the
"Plan of Distribution" contained in the Exchange Offer Registration Statement or
the Shelf Registration Statement, as applicable, for the reasonable fees and
disbursements of not more than one counsel, who shall be Cravath, Swaine & Moore
unless another firm shall be chosen by the Holders of a majority in principal
amount of the Transfer Restricted Securities for whose benefit such Registration
Statement is being prepared.
5. Indemnification. (a) The Company agrees to indemnify and hold harmless
each Holder of the Securities, any Participating Broker-Dealer and each person,
if any, who controls such Holder or such Participating Broker-Dealer within the
meaning of the Securities Act or the Exchange Act (each Holder, any
Participating Broker-Dealer and such controlling persons are referred to
collectively as the "Indemnified Parties") from and against any losses, claims,
damages or liabilities, joint or several, or any actions in respect thereof
(including, but not limited to, any losses, claims, damages, liabilities or
actions relating to purchases and sales of the Securities) to which each
Indemnified Party may become subject under the Securities Act, the Exchange Act
or otherwise, insofar as such losses, claims, damages, liabilities or actions
arise out of or are based upon (i) any untrue statement or alleged untrue
statement of a material fact contained in a Registration Statement or prospectus
or in any amendment or supplement thereto or in any prospectus relating to a
Shelf Registration, or (ii) the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and shall reimburse, as incurred, the Indemnified
Parties for any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim, damage,
liability or action in respect thereof; provided, however, that (i) the Company
shall not be liable in any such case to the extent that such loss, claim, damage
or liability arises out of or is based upon any untrue statement or alleged
untrue statement or omission or alleged omission made in a Registration
Statement or prospectus or in any amendment or supplement thereto or in any
preliminary prospectus relating to a Shelf Registration in reliance upon and in
conformity with written information pertaining to such Holder and furnished to
the Company by or on behalf of such Holder specifically for inclusion therein
and (ii) with respect to any untrue statement or omission or alleged untrue
statement or omission made in any preliminary prospectus relating to a Shelf
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Registration Statement, the indemnity agreement contained in this subsection (a)
shall not inure to the benefit of any Holder or Participating Broker-Dealer from
whom the person asserting any such losses, claims, damages or liabilities
purchased the Securities concerned, to the extent that a prospectus relating to
such Securities was required to be delivered by such Holder or Participating
Broker-Dealer under the Securities Act in connection with such purchase and any
such loss, claim, damage or liability of such Holder or Participating
Broker-Dealer results from the fact that there was not sent or given to such
person, at or prior to the written confirmation of the sale of such Securities
to such person, a copy of the amended, supplemented or final prospectus if the
Company had previously furnished copies thereof to such Holder or Participating
Broker-Dealer; provided further, however, that this indemnity agreement will be
in addition to any liability which the Company may otherwise have to such
Indemnified Party. The Company shall also indemnify underwriters, their officers
and directors and each person who controls such underwriters within the meaning
of the Securities Act or the Exchange Act to the same extent as provided above
with respect to the indemnification of the Holders of the Securities if
requested by such Holders.
(b) Each Holder of the Securities, severally and not jointly, will
indemnify and hold harmless (i) the Company and each person, if any, who
controls the Company within the meaning of the Securities Act or the Exchange
Act, (ii) each of their respective directors and (iii) each of their respective
officers who signs a Registration Statement from and against any losses, claims,
damages or liabilities or any actions in respect thereof to which the Company or
any such controlling person, director or officer may become subject under the
Securities Act, the Exchange Act or otherwise, insofar as such losses, claims,
damages, liabilities or actions arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in a
Registration Statement or prospectus or in any amendment or supplement thereto
or in any preliminary prospectus relating to a Shelf Registration, or arise out
of or are based upon the omission or alleged omission to state therein a
material fact necessary to make the statements therein not misleading, but in
each case only to the extent that the untrue statement or omission or alleged
untrue statement or omission was made in reliance upon and in conformity with
written information pertaining to such Holder and furnished to the Company by or
on behalf of such Holder specifically for inclusion therein; and, subject to the
limitation set forth immediately preceding this clause, shall reimburse, as
incurred, the Company for any legal or other expenses reasonably incurred by the
Company or any such controlling person in connection with investigating or
defending any loss, claim, damage, liability or action in respect thereof. This
indemnity agreement will be in addition to any liability which such Holder may
otherwise have to the Company or any of its controlling persons.
(c) Promptly after receipt by an indemnified party under this Section 5 of
notice of the commencement of any action or proceeding (including a governmental
investigation), such indemnified party will, if a claim in respect thereof is to
be made against the indemnifying party under this Section 5, notify the
indemnifying party of the commencement thereof; but the omission so to notify
the indemnifying party will not (i) relieve it from liability under paragraph
(a) or (b) above unless and to the extent it did not otherwise learn of such
action and such failure results in the forfeiture by the indemnifying party of
substantial rights and defenses and (ii) will not, in any event, relieve the
indemnifying party from any obligations to any indemnified party other than the
indemnification obligation provided in paragraph (a) or (b) above. In case any
such action is brought against any indemnified party, and it notifies the
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to participate therein and, to the extent that it may wish, jointly
with any other indemnifying
13
<PAGE>
party similarly notified, to assume the defense thereof, with counsel reasonably
satisfactory to such indemnified party (who shall not, except with the consent
of the indemnified party, be counsel to the indemnifying party), and after
notice from the indemnifying party to such indemnified party of its election so
to assume the defense thereof the indemnifying party will not be liable to such
indemnified party under this Section 5 for any legal or other expenses, other
than reasonable costs of investigation, subsequently incurred by such
indemnified party in connection with the defense thereof. No indemnifying party
shall, without the prior written consent of the indemnified party, effect any
settlement of any pending or threatened action in respect of which any
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party unless such settlement includes an
unconditional release of such indemnified party from all liability on any claims
that are the subject matter of such action. No indemnifying party shall be
liable for any settlement of any such action effected without its written
consent (which consent shall not be unreasonably withheld), but if settled with
its written consent or if there be a final judgment for the plaintiff in any
such action, the indemnifying party agrees to indemnify and hold harmless any
indemnified party from and against all loss and liability by reason of such
settlement or judgment.
(d) If the indemnification provided for in this Section 5 is unavailable or
insufficient to hold harmless an indemnified party under subsections (a) or (b)
above, then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of the losses, claims, damages or
liabilities (or actions in respect thereof) referred to in subsection (a) or (b)
above (i) in such proportion as is appropriate to reflect the relative benefits
received by the indemnifying party or parties on the one hand and the
indemnified party on the other from the exchange of the Securities, pursuant to
the Registered Exchange Offer, or (ii) if the allocation provided by the
foregoing clause (i) is not permitted by applicable law, in such proportion as
is appropriate to reflect not only the relative benefits referred to in clause
(i) above but also the relative fault of the indemnifying party or parties on
the one hand and the indemnified party on the other in connection with the
statements or omissions that resulted in such losses, claims, damages or
liabilities (or actions in respect thereof) as well as any other relevant
equitable considerations. The relative fault of the parties shall be determined
by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Company on the one hand or
such Holder or such other indemnified party, as the case may be, on the other,
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The amount paid by
an indemnified party as a result of the losses, claims, damages or liabilities
referred to in the first sentence of this subsection (d) shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any action or claim which is
the subject of this subsection (d). Notwithstanding any other provision of this
Section 5(d), the Holders of the Securities shall not be required to contribute
any amount in excess of the amount by which the net proceeds received by such
Holders from the sale of the Securities pursuant to a Registration Statement
exceeds the amount of damages which such Holders have otherwise been required to
pay by reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. For purposes
of this paragraph (d), each person, if any, who controls such indemnified party
within the meaning of the Securities Act or the Exchange Act shall have the same
rights to contribution as such indemnified party and each
14
<PAGE>
person, if any, who controls the Company within the meaning of the Securities
Act or the Exchange Act shall have the same rights to contribution as the
Company.
(e) The agreements contained in this Section 5 shall survive the sale of
the Securities pursuant to a Registration Statement and shall remain in full
force and effect, regardless of any termination or cancellation of this
Agreement or any investigation made by or on behalf of any indemnified party.
6. Additional Interest Under Certain Circumstances. (a) Additional interest
(the "Additional Interest") with respect to the Initial Securities and Private
Exchange Securities shall be assessed as follows if any of the following events
occur (each such event in clauses (i) through (iv) below a "Registration
Default"):
(i) any Registration Statement required by this Agreement is not filed
with the Commission on or prior to the applicable Filing Deadline;
(ii) any Registration Statement required by this Agreement is not
declared effective by the Commission on or prior to the applicable
Effectiveness Deadline;
(iii) the Registered Exchange Offer has not been consummated on or
prior to the Consummation Deadline; or
(iv) any Registration Statement required by this Agreement has been
declared effective by the Commission but (A) such Registration Statement
thereafter ceases to be effective or (B) such Registration Statement or the
related prospectus ceases to be usable (except as permitted in paragraph
(b) below) in connection with resales of Transfer Restricted Securities
during the periods specified herein because either (1) any event occurs as
a result of which the related prospectus forming part of such Registration
Statement would include any untrue statement of a material fact or omit to
state any material fact necessary to make the statements therein in the
light of the circumstances under which they were made not misleading, or
(2) it shall be necessary to amend such Registration Statement or
supplement the related prospectus, to comply with the Securities Act or the
Exchange Act or the respective rules thereunder.
Each of the foregoing will constitute a Registration Default whatever the reason
for any such event and whether it is voluntary or involuntary or is beyond the
control of the Company or pursuant to operation of law or as a result of any
action or inaction by the Commission.
Additional Interest shall accrue on the Initial Securities and the Private
Exchange Securities over and above the interest set forth in the title of the
Securities from and including the date on which any such Registration Default
shall occur to but excluding the date on which all such Registration Defaults
have been cured, at a rate of 0.50% per annum (the "Additional Interest Rate")
for the first 90-day period immediately following the occurrence of such
Registration Default. The Additional Interest Rate shall increase by an
additional 0.50% per annum with respect to each subsequent 90-day period until
all Registration Defaults have been cured, up to a maximum Additional Interest
Rate of 2.0% per annum.
(b) A Registration Default referred to in Section 6(a)(iv) hereof shall be
deemed not to have occurred and be continuing in relation to a Shelf
Registration Statement or the related prospectus if (i) such Registration
Default has occurred solely as a result of (x) the filing
15
<PAGE>
of a post-effective amendment to such Shelf Registration Statement to
incorporate annual audited financial information with respect to the Company
where such post-effective amendment is not yet effective and needs to be
declared effective to permit Holders to use the related prospectus or (y) other
material events, with respect to the Company that would need to be described in
such Shelf Registration Statement or the related prospectus and (ii) in the case
of clause (y), the Company is proceeding promptly and in good faith to amend or
supplement such Shelf Registration Statement and related prospectus to describe
such events; provided, however, that in any case if such Registration Default
occurs for a continuous period in excess of 30 days, Additional Interest shall
be payable in accordance with the above paragraph from the day following such
30-day period until the date on which such Registration Default is cured.
(c) Any amounts of Additional Interest due pursuant to Section 6(a) will be
payable in cash on the regular interest payment dates with respect to the
Securities. The amount of Additional Interest will be determined by multiplying
the applicable Additional Interest Rate by the principal amount of the Initial
Securities or Private Exchange Securities, as the case may be, and further
multiplied by a fraction, the numerator of which is the number of days such
Additional Interest Rate was applicable during such period (determined on the
basis of a 360-day year comprised of twelve 30-day months), and the denominator
of which is 360.
(d) "Transfer Restricted Securities" means each Security until (i) the date
on which such Security has been exchanged by a person other than a broker-dealer
for a freely transferable Exchange Security in the Registered Exchange Offer,
(ii) following the exchange by a broker-dealer in the Registered Exchange Offer
of an Initial Security for an Exchange Note, the date on which such Exchange
Note is sold to a purchaser who receives from such broker-dealer on or prior to
the date of such sale a copy of the prospectus contained in the Exchange Offer
Registration Statement, (iii) the date on which such Security has been
effectively registered under the Securities Act and disposed of in accordance
with the Shelf Registration Statement or (iv) the date on which such Security is
distributed to the public pursuant to Rule 144 under the Securities Act or is
saleable pursuant to Rule 144(k) under the Securities Act.
7. Rules 144 and 144A. The Company shall use its best efforts to file the
reports required to be filed by it under the Securities Act and the Exchange Act
in a timely manner and, if at any time the Company is not required to file such
reports, it will, upon the request of any Holder of Transfer Restricted
Securities, make publicly available other information so long as necessary to
permit sales of their securities pursuant to Rules 144 and 144A. The Company
covenants that it will take such further action as any Holder of Transfer
Restricted Securities may reasonably request, all to the extent required from
time to time to enable such Holder to sell Transfer Restricted Securities
without registration under the Securities Act within the limitation of the
exemptions provided by Rules 144 and 144A (including the requirements of Rule
144A(d)(4)). The Company will provide a copy of this Agreement to prospective
purchasers of Initial Securities identified to the Company by the Initial
Purchasers upon request. Upon the request of any Holder of Initial Securities,
the Company shall deliver to such Holder a written statement as to whether it
has complied with such requirements. Notwithstanding the foregoing, nothing in
this Section 7 shall be deemed to require the Company to register any of its
securities pursuant to the Exchange Act.
8. Underwritten Registrations. If any of the Transfer Restricted Securities
covered by any Shelf Registration are to be sold in an underwritten offering,
the investment banker or investment bankers and
16
<PAGE>
manager or managers that will administer the offering ("Managing Underwriters")
will be selected by the Holders of a majority in aggregate principal amount of
such Transfer Restricted Securities to be included in such offering.
No person may participate in any underwritten registration hereunder unless
such person (i) agrees to sell such person's Transfer Restricted Securities on
the basis reasonably provided in any underwriting arrangements approved by the
persons entitled hereunder to approve such arrangements and (ii) completes and
executes all questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents reasonably required under the terms of such
underwriting arrangements.
9. Miscellaneous.
(a) Remedies. The Company acknowledges and agrees that any failure by the
Company to comply with its obligations under Section 1 and 2 hereof may result
in material irreparable injury to the Initial Purchasers or the Holders for
which there is no adequate remedy at law, that it will not be possible to
measure damages for such injuries precisely and that, in the event of any such
failure, the Initial Purchasers or any Holder may obtain such relief as may be
required to specifically enforce the Company's obligations under Sections 1 and
2 hereof. The Company further agrees to waive the defense in any action for
specific performance that a remedy at law would be adequate.
(b) No Inconsistent Agreements. The Company will not on or after the date
of this Agreement enter into any agreement with respect to its securities that
is inconsistent with the rights granted to the Holders in this Agreement or
otherwise conflicts with the provisions hereof. The rights granted to the
Holders hereunder do not in any way conflict with and are not inconsistent with
the rights granted to the holders of the Company's securities under any
agreement in effect on the date hereof.
(c) Amendments and Waivers. The provisions of this Agreement may not be
amended, modified or supplemented, and waivers or consents to departures from
the provisions hereof may not be given, except by the Company and the written
consent of the Holders of a majority in principal amount of the Securities
affected by such amendment, modification, supplement, waiver or consents.
(d) Notices. All notices and other communications provided for or permitted
hereunder shall be made in writing by hand delivery, first-class mail, facsimile
transmission, or air courier which guarantees overnight delivery:
(1) if to a Holder of the Securities, at the most current address
given by such Holder to the Company;
(2) if to the Initial Purchasers,
Credit Suisse First Boston Corporation
Eleven Madison Avenue
New York, NY 10010-3629
Fax No.: (212) 325-8278
Attention: Transactions Advisory Group
17
<PAGE>
with a copy to:
Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, NY 10019-7475
Fax No.: (212) 474-3700
Attention: Kris F. Heinzelman, Esq.
(3) if to the Company, at its address as follows:
Intersil Corporation
2401 Palm Bay Road Northeast
Palm Bay, FL 32905
Fax No.: (407) 729-5392
Attention: General Counsel
with a copy to:
Dechert Price & Rhoads
4000 Bell Atlantic Tower
1717 Arch Street
Philadelphia, PA 19103-2793
Fax No.: (215) 994-2222
Attention: Christopher G. Karras, Esq.
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; three business
days after being deposited in the mail, postage prepaid, if mailed; when receipt
is acknowledged by recipient's facsimile machine operator, if sent by facsimile
transmission; and on the day delivered, if sent by overnight air courier
guaranteeing next day delivery.
(e) Third Party Beneficiaries. The Holders shall be third party
beneficiaries to the agreements made hereunder between the Company, on the one
hand, and the Initial Purchasers, on the other hand, and shall have the right to
enforce such agreements directly to the extent they may deem such enforcement
necessary or advisable to protect their rights or the rights of Holders
hereunder.
(f) Agreements of the Subsidiary Guarantors. All agreements of a Subsidiary
Guarantor shall be effective following the date it becomes a party hereto.
Notwithstanding this section, this Agreement will be binding as between the
Issuer, Intersil Holding and the Initial Purchasers as of and following the date
hereof.
(g) Successors and Assigns. This Agreement shall be binding upon the
successors and assigns of each of the parties.
(h) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(i) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(j) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES
OF CONFLICTS OF LAWS.
(k) Severability. If any one or more of the provisions contained herein, or
the application thereof in any circumstance, is held invalid, illegal or
unenforceable, the validity, legality and enforceability of
18
<PAGE>
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.
(l) Securities Held by the Company. Whenever the consent or approval of
Holders of a specified percentage of principal amount of Securities is required
hereunder, Securities held by the Company or its affiliates (other than
subsequent Holders of Securities if such subsequent Holders are deemed to be
affiliates solely by reason of their holdings of such Securities) shall not be
counted in determining whether such consent or approval was given by the Holders
of such required percentage.
19
<PAGE>
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Issuer a counterpart hereof, whereupon
this instrument, along with all counterparts, will become a binding agreement
among the several Initial Purchasers, the Issuer, Intersil Holding and the
Subsidiary Guarantors in accordance with its terms.
Very truly yours,
INTERSIL CORPORATION
by
/s/ Gregory L. Williams
--------------------------------
Gregory L. Williams
Chief Executive Officer
INTERSIL HOLDING CORPORATION,
as Guarantor
by
/s/ Gregory L. Williams
--------------------------------
Gregory L. Williams
Chief Executive Officer
HARRIS SEMICONDUCTOR, LLC,
HARRIS SEMICONDUCTOR (OHIO), LLC,
HARRIS SEMICONDUCTOR (PENNSYLVANIA), LLC,
CHOICE MICROSYSTEMS, INC.,
as Guarantors,
by
/s/ Gregory L. Williams
--------------------------------
Gregory L. Williams
Chief Executive Officer
Date: August 13, 1999
The foregoing Registration Rights Agreement is hereby confirmed and accepted as
of the date first above written.
CREDIT SUISSE FIRST BOSTON CORPORATION
J.P. MORGAN SECURITIES INC.
SALOMON SMITH BARNEY INC.
by: CREDIT SUISSE FIRST BOSTON CORPORATION
by
/s/ Harold W. Bogel
------------------------------
Harold W. Bogel
Managing Director
20
<PAGE>
ANNEX A
Each broker-dealer that receives Exchange Securities for its own account
pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such Exchange Securities. The Letter
of Transmittal states that by so acknowledging and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act. This Prospectus, as it may be amended or
supplemented from time to time, may be used by a broker-dealer in connection
with resales of Exchange Securities received in exchange for Initial Securities
where such Initial Securities were acquired by such broker-dealer as a result of
market-making activities or other trading activities. The Company has agreed
that, for a period of 90 days after the Expiration Date (as defined herein), it
will make this Prospectus available to any broker-dealer for use in connection
with any such resale. See "Plan of Distribution."
21
<PAGE>
ANNEX B
Each broker-dealer that receives Exchange Securities for its own account in
exchange for Initial Securities, where such Initial Securities were acquired by
such broker-dealer as a result of market-making activities or other trading
activities, must acknowledge that it will deliver a prospectus in connection
with any resale of such Exchange Securities. See "Plan of Distribution."
22
<PAGE>
ANNEX C
PLAN OF DISTRIBUTION
Each broker-dealer that receives Exchange Securities for its own account
pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such Exchange Securities. This
Prospectus, as it may be amended or supplemented from time to time, may be used
by a broker-dealer in connection with resales of Exchange Securities received in
exchange for Initial Securities where such Initial Securities were acquired as a
result of market-making activities or other trading activities. The Company has
agreed that, for a period of 90 days after the Expiration Date, it will make
this prospectus, as amended or supplemented, available to any broker-dealer for
use in connection with any such resale. In addition, until , 199 , all dealers
effecting transactions in the Exchange Securities may be required to deliver a
prospectus.(1)
The Company will not receive any proceeds from any sale of Exchange
Securities by broker-dealers. Exchange Securities received by broker-dealers for
their own account pursuant to the Exchange Offer may be sold from time to time
in one or more transactions in the over-the-counter market, in negotiated
transactions, through the writing of options on the Exchange Securities or a
combination of such methods of resale, at market prices prevailing at the time
of resale, at prices related to such prevailing market prices or negotiated
prices. Any such resale may be made directly to purchasers or to or through
brokers or dealers who may receive compensation in the form of commissions or
concessions from any such broker-dealer or the purchasers of any such Exchange
Securities. Any broker-dealer that resells Exchange Securities that were
received by it for its own account pursuant to the Exchange Offer and any broker
or dealer that participates in a distribution of such Exchange Securities may be
deemed to be an "underwriter" within the meaning of the Securities Act and any
profit on any such resale of Exchange Securities and any commission or
concessions received by any such persons may be deemed to be underwriting
compensation under the Securities Act. The Letter of Transmittal states that, by
acknowledging that it will deliver and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act.
For a period of 90 days after the Expiration Date the Company will promptly
send additional copies of this Prospectus and any amendment or supplement to
this Prospectus to any broker-dealer that requests such documents in the Letter
of Transmittal. The Company has agreed to pay all expenses incident to the
Exchange Offer (including the expenses of one counsel for the Holders of the
Securities) other than commissions or concessions of any brokers or dealers and
will indemnify the Holders of the Securities (including any broker-dealers)
against certain liabilities, including liabilities under the Securities Act.
- - --------
(1)In addition, the legend required by Item 502(e) of Regulation S-K will
appear on the back cover page of the Exchange Offer prospectus.
23
<PAGE>
ANNEX D
/ / CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL
COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS THERETO.
Name:
-----------------------------------
Address:
-----------------------------------
-----------------------------------
If the undersigned is not a broker-dealer, the undersigned represents that it is
not engaged in, and does not intend to engage in, a distribution of Exchange
Securities. If the undersigned is a broker-dealer that will receive Exchange
Securities for its own account in exchange for Initial Securities that were
acquired as a result of market-making activities or other trading activities, it
acknowledges that it will deliver a prospectus in connection with any resale of
such Exchange Securities; however, by so acknowledging and by delivering a
prospectus, the undersigned will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
24
EXHIBIT 10.01
================================================================================
INTERSIL CORPORATION,
Issuer
INTERSIL HOLDING CORPORATION,
Guarantor
HARRIS SEMICONDUCTOR, LLC,
Guarantor
HARRIS SEMICONDUCTOR (OHIO), LLC,
Guarantor
HARRIS SEMICONDUCTOR (PENNSYLVANIA), LLC,
Guarantor
CHOICE MICROSYSTEMS, INC.,
Guarantor
13 1/4% Senior Subordinated Notes Due 2009
----------------------
INDENTURE
Dated as of August 13, 1999
----------------------
UNITED STATES TRUST COMPANY OF NEW YORK,
Trustee
================================================================================
<PAGE>
2
CROSS-REFERENCE TABLE
TIA Indenture
Section Section
- - ------- ---------
310(a)(1) .............................. 7.10
(a)(2) .............................. 7.10
(a)(3) .............................. N.A.
(a)(4) .............................. N.A.
(b) .............................. 7.08; 7.10
(c) .............................. N.A.
311(a) .............................. 7.11
(b) .............................. 7.11
(c) .............................. N.A.
312(a) .............................. 2.05
(b) .............................. 13.03
(c) .............................. 13.03
313(a) .............................. 7.06
(b)(1) .............................. N.A.
(b)(2) .............................. 7.06
(c) .............................. 13.02
(d) .............................. 7.06
314(a) .............................. 4.02;
4.11; 13.02
(b) .............................. N.A.
(c)(1) .............................. 13.04
(c)(2) .............................. 13.04
(c)(3) .............................. N.A.
(d) .............................. N.A.
(e) .............................. 13.05
(f) .............................. 4.11
315(a) .............................. 7.01
(b) .............................. 7.05; 13.02
(c) .............................. 7.01
(d) .............................. 7.01
(e) .............................. 6.11
316(a)(last sentence) .............................. 13.06
(a)(1)(A) .............................. 6.05
(a)(1)(B) .............................. 6.04
(a)(2) .............................. N.A.
(b) .............................. 6.07
317(a)(1) .............................. 6.08
(a)(2) .............................. 6.09
(b) .............................. 2.04
318(a) .............................. 13.01
N.A. means Not Applicable.
- - ---------------
Note: This Cross-Reference Table shall not, for any purpose, be deemed to be
part of the Indenture.
<PAGE>
TABLE OF CONTENTS
ARTICLE 1 Page
----
Definitions and Incorporation by Reference
SECTION 1.01. Definitions .................................................1
SECTION 1.02. Other Definitions ..........................................28
SECTION 1.03. Incorporation by Reference of Trust
Indenture Act ...........................................28
SECTION 1.04. Rules of Construction ......................................29
ARTICLE 2
The Securities
SECTION 2.01. Form and Dating ............................................30
SECTION 2.02. Execution and Authentication ...............................30
SECTION 2.03. Registrar and Paying Agent .................................31
SECTION 2.04. Paying Agent To Hold Money in Trust.........................31
SECTION 2.05. Securityholder Lists .......................................32
SECTION 2.06. Transfer and Exchange ......................................32
SECTION 2.07. Replacement Securities .....................................33
SECTION 2.08. Outstanding Securities .....................................33
SECTION 2.09. Temporary Securities .......................................34
SECTION 2.10. Cancellation ...............................................34
SECTION 2.11. Defaulted Interest .........................................34
SECTION 2.12. CUSIP Numbers ..............................................35
SECTION 2.13. Issuance of Additional Securities...........................35
ARTICLE 3
Redemption
SECTION 3.01. Notices to Trustee .........................................36
SECTION 3.02. Selection of Securities To Be
Redeemed ................................................36
SECTION 3.03. Notice of Redemption .......................................36
SECTION 3.04. Effect of Notice of Redemption .............................37
SECTION 3.05. Deposit of Redemption Price ................................37
SECTION 3.06. Securities Redeemed in Part ................................38
<PAGE>
2
ARTICLE 4
Covenants
SECTION 4.01. Payment of Securities ......................................38
SECTION 4.02. SEC Reports ................................................38
SECTION 4.03. Limitation on Indebtedness .................................38
SECTION 4.04. Limitation on Restricted Payments ..........................43
SECTION 4.05. Limitation on Restrictions on
Distributions from Restricted
Subsidiaries.............................................47
SECTION 4.06. Limitation on Sales of Assets and
Subsidiary Stock ........................................49
SECTION 4.07. Limitation on Affiliate Transactions .......................54
SECTION 4.08. Limitation on the Sale or Issuance of
Capital Stock of Restricted
Subsidiaries ............................................55
SECTION 4.09. Change of Control ..........................................56
SECTION 4.10. Future Guarantors ..........................................57
SECTION 4.11. Compliance Certificate .....................................58
SECTION 4.12. Further Instruments and Acts ...............................58
ARTICLE 5
Successor Companies
SECTION 5.01. When Company May Merge or Transfer
Assets ..................................................58
ARTICLE 6
Defaults and Remedies
SECTION 6.01. Events of Default ..........................................61
SECTION 6.02. Acceleration ...............................................63
SECTION 6.03. Other Remedies .............................................64
SECTION 6.04. Waiver of Past Defaults ....................................64
SECTION 6.05. Control by Majority ........................................65
SECTION 6.06. Limitation on Suits ........................................65
SECTION 6.07. Rights of Holders To Receive Payment ..................... 65
SECTION 6.08. Collection Suit by Trustee .................................66
SECTION 6.09. Trustee May File Proofs of Claim ...........................66
SECTION 6.10. Priorities .................................................66
SECTION 6.11. Undertaking for Costs ......................................67
SECTION 6.12. Waiver of Stay or Extension Laws ...........................67
<PAGE>
3
ARTICLE 7
Trustee
SECTION 7.01. Duties of Trustee ..........................................67
SECTION 7.02. Rights of Trustee ..........................................69
SECTION 7.03. Individual Rights of Trustee ...............................69
SECTION 7.04. Trustee's Disclaimer .......................................70
SECTION 7.05. Notice of Defaults .........................................70
SECTION 7.06. Reports by Trustee to Holders ..............................70
SECTION 7.07. Compensation and Indemnity .................................70
SECTION 7.08. Replacement of Trustee .....................................71
SECTION 7.09. Successor Trustee by Merger ................................72
SECTION 7.10. Eligibility; Disqualification ..............................73
SECTION 7.11. Preferential Collection of Claims
Against Company .........................................73
ARTICLE 8
Discharge of Indenture; Defeasance
SECTION 8.01. Discharge of Liability on Securities;
Defeasance ..............................................73
SECTION 8.02. Conditions to Defeasance ...................................75
SECTION 8.03. Application of Trust Money .................................76
SECTION 8.04. Repayment to Company .......................................76
SECTION 8.05. Indemnity for Government
Obligations .............................................76
SECTION 8.06. Reinstatement ..............................................76
ARTICLE 9
Amendments
SECTION 9.01. Without Consent of Holders .................................77
SECTION 9.02. With Consent of Holders ....................................78
SECTION 9.03. Compliance with Trust Indenture ............................79
SECTION 9.04. Revocation and Effect of Consents
and Waivers .............................................79
SECTION 9.05. Notation on or Exchange of
Securities ..............................................80
SECTION 9.06. Trustee To Sign Amendments .................................80
SECTION 9.07. Payment for Consent ........................................80
<PAGE>
4
ARTICLE 10
Subordination
SECTION 10.01. Agreement To Subordinate ...................................81
SECTION 10.02. Liquidation, Dissolution,
Bankruptcy ..............................................81
SECTION 10.03. Default on Senior Indebtedness .............................82
SECTION 10.04. Acceleration of Payment of
Securities ..............................................84
SECTION 10.05. When Distribution Must Be Paid
Over ....................................................84
SECTION 10.06. Subrogation ................................................84
SECTION 10.07. Relative Rights ............................................84
SECTION 10.08. Subordination May Not Be Impaired
by Company ..............................................85
SECTION 10.09. Rights of Trustee and Paying
Agent ...................................................85
SECTION 10.10. Distribution or Notice to
Representative ..........................................85
SECTION 10.11. Article 10 Not To Prevent Events of
Default or Limit Right To
Accelerate ..............................................85
SECTION 10.12. Trust Moneys Not Subordinated ..............................86
SECTION 10.13. Trustee Entitled To Rely ...................................86
SECTION 10.14. Trustee To Effectuate
Subordination ...........................................86
SECTION 10.15. Trustee Not Fiduciary for Holders
of Senior Indebtedness ..................................87
SECTION 10.16. Reliance by Holders of Senior
Indebtedness on Subordination
Provisions ..............................................87
ARTICLE 11
Guaranties
SECTION 11.01. Guaranties .................................................87
SECTION 11.02. Limitation on Liability; Contribution ......................90
SECTION 11.03. Successors and Assigns .....................................90
SECTION 11.04. No Waiver ..................................................90
SECTION 11.05. Modification ...............................................90
SECTION 11.06. Release of Subsidiary Guarantor ............................91
<PAGE>
5
ARTICLE 12
Subordination of Guaranties
SECTION 12.01. Agreement to Subordinate ...................................91
SECTION 12.02. Liquidation, Dissolution, Bankruptcy .......................91
SECTION 12.03. Default on Senior Indebtedness
of Guarantor ............................................92
SECTION 12.04. Demand for Payment .........................................93
SECTION 12.05. When Distribution Must Be Paid Over ........................93
SECTION 12.06. Subrogation ................................................93
SECTION 12.07. Relative Rights ............................................94
SECTION 12.08. Subordination May Not Be Impaired
by Company ..............................................94
SECTION 12.09. Rights of Trustee and Paying Agent .........................94
SECTION 12.10. Distribution or Notice to
Representative ..........................................95
SECTION 12.11. Article 12 Not to Prevent Defaults
Under a Guaranty or Limit Right
To Demand Payment .......................................95
SECTION 12.12. Trustee Entitled To Rely ...................................95
SECTION 12.13. Trustee To Effectuate Subordination ........................95
SECTION 12.14. Trustee Not Fiduciary for Holders of
Senior Indebtedness of Guarantor ........................96
SECTION 12.15. Reliance by Holders of Senior
Indebtedness on Subordination
Provisions ..............................................96
ARTICLE 13
Miscellaneous
SECTION 13.01. Trust Indenture Act Controls ...............................96
SECTION 13.02. Notices ....................................................97
SECTION 13.03. Communication by Holders with Other
Holders .................................................97
SECTION 13.04. Certificate and Opinion as to
Conditions Precedent ....................................97
SECTION 13.05. Statements Required in Certificate
or Opinion ..............................................98
SECTION 13.06. When Securities Disregarded ................................98
SECTION 13.07. Rules by Trustee, Paying Agent and
Registrar ...............................................98
SECTION 13.08. Legal Holidays .............................................99
SECTION 13.09. Governing Law ..............................................99
SECTION 13.10. No Recourse Against Others .................................99
SECTION 13.11. Successors .................................................99
SECTION 13.12. Multiple Originals .........................................99
SECTION 13.13. Table of Contents; Headings ................................99
<PAGE>
6
Rule 144A/Regulation S Appendix
Exhibit 1 to Rule 144A/Regulation S Appendix -
Form of Initial Security
Exhibit 2 to Rule 144A/Regulation S Appendix-
Form of Exchange Security or Private Exchange Security
<PAGE>
INDENTURE dated as of August 13, 1999, among INTERSIL CORPORATION, a
Delaware corporation (the "Company"), INTERSIL HOLDING CORPORATION (the
"Parent"), as Guarantor, HARRIS SEMICONDUCTOR, LLC ("HSI"), as Guarantor, HARRIS
SEMICONDUCTOR (OHIO), LLC ("HSI(OH)"), as Guarantor, HARRIS SEMICONDUCTOR
(PENNSYLVANIA), LLC ("HSI(PA)"), as Guarantor, CHOICE MICROSYSTEMS, INC.
("CMI"), as Guarantor, and UNITED STATES TRUST COMPANY OF NEW YORK, a New York
banking corporation (the "Trustee").
Each party agrees as follows for the benefit of the other parties and for
the equal and ratable benefit of the Holders of (1) the Company's 13 1/4% Senior
Subordinated Notes Due 2009 (the "Initial Securities"), (2) if and when issued
pursuant to a registered exchange for Initial Securities, the Company's 13 1/4%
Senior Subordinated Notes Due 2009 (the "Exchange Securities"), (3) if and when
issued pursuant to a private exchange for Initial Securities, the Company's 13
1/4% Senior Subordinated Notes Due 2009 (the "Private Exchange Securities"), and
(4) if and when issued, any Additional Securities (as defined herein, and
together with the Private Exchange Securities, the Exchange Securities and the
Initial Securities, the "Securities"):
ARTICLE 1
Definitions and Incorporation by Reference
SECTION 1.01. Definitions.
"Acquisition" means the acquisition by the Company of selected portions of
the semiconductor business of Harris substantially as described in the offering
circular used in connection with the initial sale of the Initial Securities.
"Additional Assets" means (1) any property or assets (other than
Indebtedness and Capital Stock) in a Related Business; (2) the Capital Stock of
a Person that becomes a Restricted Subsidiary as a result of the acquisition of
such Capital Stock by the Company or another Restricted Subsidiary; or (3)
Capital Stock constituting a minority interest in any Person that at such time
is a Restricted Subsidiary; provided, however, that any such Restricted
Subsidiary described in clauses (2) or (3) above is primarily engaged in a
Related Business.
<PAGE>
2
"Additional Securities" means, subject to the Company's compliance with
Section 4.03, 13 1/4% Senior Subordinated Notes Due 2009 issued from time to
time after the Issue Date under the terms of this Indenture (other than pursuant
to Section 2.06, 2.07, 2.09 or 3.06 and other than Exchange Securities or
Private Exchange Securities issued pursuant to an exchange offer for other
Securities outstanding under this Indenture).
"Affiliate" of any specified Person means any other Person, directly or
indirectly, controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any Person means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing. For
purposes of Sections 4.04, 4.06 and 4.07 only, "Affiliate" shall also mean any
beneficial owner of Capital Stock representing 10% or more of the total voting
power of the Voting Stock (on a fully diluted basis) of the Company or of rights
or warrants to purchase such Capital Stock (whether or not currently
exercisable) and any Person who would be an Affiliate of any such beneficial
owner pursuant to the first sentence hereof.
"Asset Disposition" means any sale, lease, transfer or other disposition
(or series of related sales, leases, transfers or dispositions) by the Company
or any Restricted Subsidiary, including any disposition by means of a merger,
consolidation or similar transaction (each referred to for the purposes of this
definition as a "disposition"), of (1) any shares of Capital Stock of a
Restricted Subsidiary (other than directors' qualifying shares or shares
required by applicable law to be held by a Person other than the Company or a
Restricted Subsidiary), (2) all or substantially all the assets of any division
or line of business of the Company or any Restricted Subsidiary or (3) any other
assets of the Company or any Restricted Subsidiary outside of the ordinary
course of business of the Company or such Restricted Subsidiary (other than, in
the case of (1), (2) and (3) above, (w) a disposition by a Restricted Subsidiary
to the Company or by the Company or a Restricted Subsidiary to a Wholly Owned
Subsidiary, (x) for purposes of Section 4.06 only, a disposition that
constitutes a Restricted Payment permitted by Section 4.04, (y) a disposition of
shares of Capital Stock of Anshan Harris Broadcast Equipment Co. Ltd. and Harris
Semiconductor (Suzhou) Co. Ltd. and (z) a disposition of assets with a fair
market value of less than $1,000,000).
<PAGE>
3
"Attributable Debt" in respect of a Sale/Leaseback Transaction means, as at
the time of determination, the present value (discounted at the interest rate
borne by the Securities, compounded annually) of the total obligations of the
lessee for rental payments during the remaining term of the lease included in
such Sale/Leaseback Transaction (including any period for which such lease has
been extended).
"Average Life" means, as of the date of determination, with respect to any
Indebtedness or Preferred Stock, the quotient obtained by dividing (1) the sum
of the products of the numbers of years from the date of determination to the
dates of each successive scheduled principal payment of such Indebtedness or
redemption or similar payment with respect to such Preferred Stock multiplied
by the amount of such payment by (2) the sum of all such payments.
"Bank Indebtedness" means all Obligations pursuant to the Credit Agreement.
"Board of Directors" means the Board of Directors of the Company or any
committee thereof duly authorized to act on behalf of such Board.
"Business Day" means each day which is not a Legal Holiday.
"Capital Lease Obligations" means an obligation that is required to be
classified and accounted for as a capital lease for financial reporting purposes
in accordance with GAAP, and the amount of Indebtedness represented by such
obligation shall be the capitalized amount of such obligation determined in
accordance with GAAP; and the Stated Maturity thereof shall be the date of the
last payment of rent or any other amount due under such lease prior to the first
date upon which such lease may be terminated by the lessee without payment of a
penalty.
"Capital Stock" of any Person means any and all shares, interests, rights
to purchase, warrants, options, participations or other equivalents of or
interests in (however designated) equity of such Person, including any Preferred
Stock, but excluding any debt securities convertible into such equity.
"Change of Control" means the occurrence of any of the following events:
<PAGE>
4
(1) any "person" (as such term is used in Sections 13(d) and 14(d) of
the Exchange Act), other than one or more Permitted Holders, is or becomes
the beneficial owner (as defined in Rules 13d-3 and 13d-5 under the
Exchange Act, except that such person shall be deemed to have "beneficial
ownership" of all shares that any such person has the right to acquire,
whether such right is exercisable immediately or only after the passage of
time or the satisfaction of any other conditions), directly or indirectly,
of more than 50% of the total voting power of the Voting Stock of the
Company (for the purposes of this clause (1), such person shall be deemed
to beneficially own any Voting Stock of a Person held by any other Person
(the "parent entity"), if such person is the beneficial owner (as defined
in this clause (1)), directly or indirectly, of more than 50% of the voting
power of the Voting Stock of the parent entity); provided, however, that
notwithstanding the foregoing, CVC shall be deemed to beneficially own a
majority of the voting power of the Voting Stock of Sterling (or any
successor) so long as CVC, employees, officers and directors of CVC and
corporations, partnerships and other entities at least a majority of the
equity in which is held in the aggregate by CVC and its employees, officers
and directors hold in the aggregate no less than a majority of the economic
interests in Sterling (or such successor);
(2) individuals who on the Issue Date constituted the Board of
Directors (together with any new directors (a) whose election by such Board
of Directors or whose nomination for election by the stockholders of the
Company was approved by a vote of a majority of the directors of the
Company then still in office who were either directors on the Issue Date or
whose election or nomination for election was previously so approved or (b)
who were elected to the Board of Directors pursuant to the Stockholders'
Agreement, as amended, modified or supplemented from time to time) cease
for any reason to constitute a majority of the Board of Directors then in
office; or
(3) the merger or consolidation of the Company with or into another
Person or the merger of another Person with or into the Company, or the
sale of all or substantially all the assets of the Company to another
Person, if the securities of the Company that are outstanding immediately
prior to such transaction and which represent 100% of the aggregate voting
power of the Voting Stock of the Company are changed into or
<PAGE>
5
exchanged for cash, securities or property, unless (i) pursuant to such
transaction such securities are changed into orexchanged for, in addition
to any other consideration, securities of the surviving Person or
transferee that represent, immediately after such transaction, at least a
majority of the aggregate voting power of the Voting Stock of the surviving
Person or transferee, or (ii) after giving effect to such transaction, the
Permitted Holders "beneficially own" (as determined pursuant to clause (1)
above) at least 35% of the total voting power of the Voting Stock of the
surviving Person or transferee, as the case may be.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" means the party named as such in this Indenture until a successor
replaces it and, thereafter, means the successor and, for purposes of any
provision contained herein and required by the TIA, each other obligor on the
indenture securities.
"Consolidated Coverage Ratio" as of any date of determination means the
ratio of (a) the aggregate amount of EBITDA for the period of the most recent
four consecutive fiscal quarters ending at least 45 days (or, if less, the
number of days after the end of such fiscal quarter as the consolidated
financial statements of the Company shall be provided to the Securityholders
pursuant hereto) prior to the date of such determination to (b) Consolidated
Interest Expense for such four fiscal quarters; provided, however, that:
(1) if the Company or any Restricted Subsidiary has Incurred any
Indebtedness since the beginning of such period that remains outstanding or
if the transaction giving rise to the need to calculate the Consolidated
Coverage Ratio is an Incurrence of Indebtedness, or both, EBITDA and
Consolidated Interest Expense for such period shall be calculated after
giving effect on a pro forma basis to such Indebtedness as if such
Indebtedness had been Incurred on the first day of such period and the
discharge of any other Indebtedness repaid, repurchased, defeased or
otherwise discharged with the proceeds of such new Indebtedness as if such
discharge had occurred on the first day of such period;
(2) if the Company or any Restricted Subsidiary has repaid,
repurchased, defeased or otherwise
<PAGE>
6
discharged any Indebtedness since the beginning of such period or if any
Indebtedness is to be repaid, repurchased, defeased or otherwise discharged
(in each case other than Indebtedness Incurred under any revolving credit
facility unless such Indebtedness has been permanently repaid and has not
been replaced) on the date of the transaction giving rise to the need to
calculate the Consolidated Coverage Ratio, EBITDA and Consolidated Interest
Expense for such period shall be calculated on a pro forma basis as if such
discharge had occurred on the first day of such period and as if the
Company or such Restricted Subsidiary has not earned the interest income
actually earned during such period in respect of cash or Temporary Cash
Investments used to repay, repurchase, defease or otherwise discharge such
Indebtedness;
(3) if since the beginning of such period the Company or any
Restricted Subsidiary shall have made any Asset Disposition, the EBITDA for
such period shall be reduced by an amount equal to the EBITDA (if positive)
directly attributable to the assets which are the subject of such Asset
Disposition for such period, or increased by an amount equal to the EBITDA
(if negative), directly attributable thereto for such period and
Consolidated Interest Expense for such period shall be reduced by an amount
equal to the Consolidated Interest Expense directly attributable to any
Indebtedness of the Company or any Restricted Subsidiary repaid,
repurchased, defeased or otherwise discharged with respect to the Company
and its continuing Restricted Subsidiaries in connection with such Asset
Disposition for such period (or, if the Capital Stock of any Restricted
Subsidiary is sold, the Consolidated Interest Expense for such period
directly attributable to the Indebtedness of such Restricted Subsidiary to
the extent the Company and its continuing Restricted Subsidiaries are no
longer liable for such Indebtedness after such sale);
(4) if since the beginning of such period the Company or any
Restricted Subsidiary (by merger or otherwise) shall have made an
Investment in any Restricted Subsidiary (or any person which becomes a
Restricted Subsidiary) or an acquisition of assets, including any
acquisition of assets occurring in connection with a transaction requiring
a calculation to be made hereunder and including the Acquisition, which
constitutes all or substantially all of an operating unit of a business,
EBITDA and Consolidated Interest Expense for such period shall be
calculated
<PAGE>
7
after giving pro forma effect thereto (including the Incurrence of any
Indebtedness) as if such Investment or acquisition occurred on the first
day of such period (such pro forma calculation, in the case of the
Acquisition, to be on substantially the same bases as the pro forma
adjustments set forth in the offering circular used in connection with the
initial sale of the Initial Securities); and
(5) if since the beginning of such period any Person (that
subsequently became a Restricted Subsidiary or was merged with or into the
Company or any Restricted Subsidiary since the beginning of such period)
shall have made any Asset Disposition, any Investment or acquisition of
assets that would have required an adjustment pursuant to clause (3) or (4)
above if made by the Company or a Restricted Subsidiary during such period,
EBITDA and Consolidated Interest Expense for such period shall be
calculated after giving pro forma effect thereto as if such Asset
Disposition, Investment or acquisition occurred on the first day of such
period.
For purposes of this definition, whenever pro forma effect is to be given to an
acquisition or disposition of assets, the amount of income or earnings relating
thereto and the amount of Consolidated Interest Expense associated with any
Indebtedness Incurred in connection therewith, the pro forma calculations shall
be determined in good faith by a responsible financial or accounting Officer of
the Company (and shall include any applicable Pro Forma Cost Savings). If any
Indebtedness bears a floating rate of interest and is being given pro forma
effect, the interest of such Indebtedness shall be calculated as if the rate in
effect on the date of determination had been the applicable rate for the entire
period (taking into account any Interest Rate Agreement applicable to such
Indebtedness if such Interest Rate Agreement has a remaining term in excess of
12 months).
"Consolidated Current Liabilities" as of the date of determination means
the aggregate amount of liabilities of the Company and its consolidated
Restricted Subsidiaries which may properly be classified as current liabilities
(including taxes accrued as estimated), on a consolidated basis, after
eliminating (1) all intercompany items between the Company and any Restricted
Subsidiary and (2) all current maturities of long-term Indebtedness, all as
determined in accordance with GAAP consistently applied.
"Consolidated Interest Expense" means, for any period, the
total interest expense of the Company and its
<PAGE>
8
consolidated Restricted Subsidiaries, plus, to the extent not included in such
total interest expense, and to the extent incurred by the Company or its
Restricted Subsidiaries, without duplication:
(1) interest expense attributable to Capital Lease Obligations and the
interest expense attributable to leases constituting part of a
Sale/Leaseback Transaction;
(2) amortization of debt discount and debt issuance cost;
(3) capitalized interest;
(4) non-cash interest expenses;
(5) commissions, discounts and other fees and charges owed with respect to
letters of credit and bankers' acceptance financing;
(6) net costs associated with Hedging Obligations involving any Interest
Rate Agreement (including amortization of fees);
(7) Preferred Stock dividends accrued by consolidated Restricted
Subsidiaries in respect of all Preferred Stock held by Persons other
than the Company or a Restricted Subsidiary;
(8) interest incurred in connection with Investments in discontinued
operations;
(9) interest accruing on any Indebtedness of any other Person to the
extent such Indebtedness is Guaranteed by (or secured by the assets
of) the Company or any Restricted Subsidiary and
(10) the cash contributions to any employee stock ownership plan or similar
trust to the extent such contributions are used by such plan or trust
to pay interest or fees to any Person (other than the Company) in
connection with Indebtedness Incurred by such plan or trust and less,
to the extent included in such total interest expense, the
amortization during such period of capitalized financing costs.
<PAGE>
9
"Consolidated Net Income" means, for any period, the net income of the
Company and its consolidated Subsidiaries; provided, however, that there shall
not be included in such Consolidated Net Income:
(1) any net income of any Person (other than the Company) if such
Person is not a Restricted Subsidiary, except that (A) subject to the
exclusion contained in clause (4) below, the Company's equity in the net
income of any such Person for such period shall be included in such
Consolidated Net Income up to the aggregate amount of cash actually
distributed by such Person during such period to the Company or a
Restricted Subsidiary as a dividend or other distribution (subject, in the
case of a dividend or other distribution paid to a Restricted Subsidiary,
to the limitations contained in clause (3) below) and (B) the Company's
equity in a net loss of any such Person for such period shall be included
in determining such Consolidated Net Income;
(2) any net income (or loss) of any Person acquired by the Company or
a Subsidiary in a pooling of interests transaction for any period prior to
the date of such acquisition;
(3) any net income of any Restricted Subsidiary if such Restricted
Subsidiary is subject to restrictions, directly or indirectly, on the
payment of dividends or the making of distributions by such Restricted
Subsidiary, directly or indirectly, to the Company, except that (A) subject
to the exclusion contained in clause (4) below, the Company's equity in the
net income of any such Restricted Subsidiary for such period shall be
included in such Consolidated Net Income up to the aggregate amount of cash
that could have been distributed by such Restricted Subsidiary consistent
with such restrictions during such period to the Company or another
Restricted Subsidiary as a dividend or other distribution (subject, in the
case of a dividend or other distribution paid to another Restricted
Subsidiary, to the limitation contained in this clause) and (B) the
Company's equity in a net loss of any such Restricted Subsidiary for such
period shall be included in determining such Consolidated Net Income;
(4) any gain (or loss) realized upon the sale or other disposition of
any assets of the Company or its consolidated Subsidiaries (including
pursuant to any sale-and-leaseback arrangement) which is not sold or
<PAGE>
10
otherwise disposed of in the ordinary course of business and any gain (or
loss) realized upon the sale or other disposition of any Capital Stock of
any Person;
(5) extraordinary gains or losses; and
(6) the cumulative effect of a change in accounting principles.
Notwithstanding the foregoing, for the purpose of Section 4.04 only, there shall
be excluded from Consolidated Net Income any dividends, repayments of loans or
advances or other transfers of assets from Unrestricted Subsidiaries to the
Company or a Restricted Subsidiary to the extent such dividends, repayments or
transfers increase the amount of Restricted Payments permitted under such
Section pursuant to clause (a)(3)(D) thereof.
"Credit Agreement" means the Credit Agreement to be entered into by and
among the Parent, the Company, certain of its Subsidiaries, the lenders referred
to therein and Credit Suisse First Boston, Salomon Smith Barney Inc. and Morgan
Guaranty Trust Company, as agents, together with the related documents thereto
(including without limitation the term loans and revolving loans thereunder, any
guarantees and security documents), as amended, extended, renewed, restated,
supplemented or otherwise modified (in whole or in part, and without limitation
as to amount, terms, conditions, covenants and other provisions) from time to
time, and any agreement (and related document) governing Indebtedness incurred
to refund or refinance, in whole or in part, the borrowings and commitments then
outstanding or permitted to be outstanding under such Credit Agreement or a
successor Credit Agreement, whether by the same or any other lender or group of
lenders.
"Currency Agreement" means, in respect of a Person, any foreign exchange
contract, currency swap agreement or other similar agreement to which such
Person is a party or beneficiary.
"CVC" means Citicorp Venture Capital Ltd., a New York corporation.
"Default" means any event which is, or after notice or passage of time or
both would be, an Event of Default.
"Designated Senior Indebtedness" means (1) the Bank Indebtedness; provided,
however, that Bank Indebtedness
<PAGE>
11
outstanding under any Credit Agreement that Refinanced in part, but not in
whole, the previously outstanding Bank Indebtedness shall only constitute
Designated Senior Indebtedness if it meets the requirements of succeeding clause
(2); and (2) any other Senior Indebtedness of the Company which, at the date of
determination, has an aggregate principal amount outstanding of, or under which,
at the date of determination, the holders thereof are committed to lend up to,
at least $10.0 million and is specifically designated by the Company in the
instrument evidencing or governing such Senior Indebtedness as "Designated
Senior Indebtedness" for purposes of this Indenture.
"Disqualified Stock" means, with respect to any Person, any Capital Stock
which by its terms (or by the terms of any security into which it is convertible
or for which it is exchangeable) or upon the happening of any event (1) matures
or is mandatorily redeemable pursuant to a sinking fund obligation or otherwise,
(2) is convertible or exchangeable for Indebtedness or Disqualified Stock or (3)
is redeemable at the option of the holder thereof, in whole or in part, in each
case on or prior to the first anniversary of the Stated Maturity of the
Securities; provided, however, that any Capital Stock that would not constitute
Disqualified Stock but for provisions thereof giving holders thereof the right
to require such Person to repurchase or redeem such Capital Stock upon the
occurrence of an "asset sale" or "change of control" occurring prior to the
first anniversary of the Stated Maturity of the Securities shall not constitute
Disqualified Stock if the "asset sale" or "change of control" provisions
applicable to such Capital Stock are not more favorable to the holders of such
Capital Stock than the provisions of Sections 4.06 and 4.09.
"EBITDA" for any period means the sum of Consolidated Net Income, plus
Consolidated Interest Expense plus the following to the extent deducted in
calculating such Consolidated Net Income:
(1) all income tax expense of the Company and its consolidated
Restricted Subsidiaries;
(2) depreciation expense of the Company and its consolidated
Restricted Subsidiaries;
(3) amortization expense of the Company and its consolidated
Restricted Subsidiaries (excluding amortization expense attributable to a
prepaid cash item that was paid in a prior period);
<PAGE>
12
(4) all other non-cash charges of the Company and its consolidated
Restricted Subsidiaries (excluding any such non-cash charge to the extent
that it represents an accrual of or reserve for cash expenditures in any
future period); and
(5) foreign exchange losses with respect to the Malaysian Ringgit
incurred prior to the Issue Date;
in each case for such period. Notwithstanding the foregoing, the provision for
taxes based on the income or profits of, and the depreciation and amortization
and non-cash charges of, a Restricted Subsidiary shall be added to Consolidated
Net Income to compute EBITDA only to the extent (and in the same proportion)
that the net income of such Restricted Subsidiary was included in calculating
Consolidated Net Income and only if a corresponding amount would be permitted at
the date of determination to be dividended to the Company by such Restricted
Subsidiary without prior approval (that has not been obtained), pursuant to the
terms of its charter and all agreements, instruments, judgments, decrees,
orders, statutes, rules and governmental regulations applicable to such
Restricted Subsidiary or its stockholders.
"Equity Offering" means a primary offering of Capital Stock (other than
Disqualified Stock) of the Company other than any sale of Capital Stock to an
Affiliate of the Company.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Foreign Subsidiary" means any Restricted Subsidiary not created or
organized in the United States of America or any State thereof and that conducts
substantially all its operations outside of the United States.
"GAAP" means generally accepted accounting principles in the United States
of America as in effect as of the Issue Date, including those set forth in (1)
the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants, (2) statements and
pronouncements of the Financial Accounting Standards Board, (3) such other
statements by such other entity as approved by a significant segment of the
accounting profession and (4) the rules and regulations of the SEC governing the
inclusion of financial statements (including pro forma financial statements) in
periodic reports required to be filed pursuant to Section 13 of the Exchange
Act, including opinions and pronouncements
<PAGE>
13
in staff accounting bulletins and similar written statements from
the accounting staff of the SEC. All ratios and computations based on GAAP
contained in this Indenture shall be computed in conformity with GAAP.
"Guarantee" means any obligation, contingent or otherwise, of any Person
directly or indirectly guaranteeing any Indebtedness of any other Person and any
obligation, direct or indirect, contingent or otherwise, of such Person (1) to
purchase or pay (or advance or supply funds for the purchase or payment of) such
Indebtedness or other obligation of such Person (whether arising by virtue of
partnership arrangements, or by agreements to keep-well, to purchase assets,
goods, securities or services, to take-or-pay or to maintain financial statement
conditions or otherwise) or (2) entered into for the purpose of assuring in any
other manner the obligee of such Indebtedness of the payment thereof or to
protect such obligee against loss in respect thereof (in whole or in part);
provided, however, that the term "Guarantee" shall not include endorsements for
collection or deposit in the ordinary course of business. The term "Guarantee"
used as a verb has a corresponding meaning.
"Guarantor" means the Parent and each Subsidiary Guarantor.
"Guaranty" means the Parent Guaranty or any Subsidiary Guaranty.
"Guaranty Agreement" means a supplemental indenture, in a form satisfactory
to the Trustee, pursuant to which a successor to the Parent or a Subsidiary
Guarantor becomes subject to the applicable terms and conditions hereof.
"Harris" means Harris Corporation, a Delaware corporation.
"Harris Loan Obligations" means the loans made by agencies of the
Commonwealth of Pennsylvania to Harris outstanding on the Issue Date in an
aggregate amount not to exceed $4.6 million.
"Hedging Obligations" of any Person means the obligations of such Person
pursuant to any Interest Rate Agreement or Currency Agreement.
"Holder" or "Securityholder" means the Person in whose name a Security is
registered on the Registrar's books.
<PAGE>
14
"Incur" means issue, assume, Guarantee, incur or otherwise become liable
for; provided, however, that any Indebtedness or Capital Stock of a Person
existing at the time such Person becomes a Subsidiary (whether by merger,
consolidation, acquisition or otherwise) shall be deemed to be Incurred by such
Subsidiary at the time it becomes a Subsidiary. The term "Incurrence" when used
as a noun shall have a correlative meaning. The accretion of principal of a
non-interest bearing or other discount security shall not be deemed the
Incurrence of Indebtedness.
"Indebtedness" means, with respect to any Person on any date of
determination (without duplication):
(1) the principal of and premium (if any) in respect of (A)
indebtedness of such Person for money borrowed and (B) indebtedness
evidenced by notes, debentures, bonds or other similar instruments for the
payment of which such Person is responsible or liable;
(2) all Capital Lease Obligations of such Person and all Attributable
Debt in respect of Sale/Leaseback Transactions entered into by such Person;
(3) all obligations of such Person issued or assumed as the deferred
purchase price of property, all conditional sale obligations of such Person
and all obligations of such Person under any title retention agreement (but
excluding trade accounts payable arising in the ordinary course of
business);
(4) all obligations of such Person for the reimbursement of any
obligor on any letter of credit, banker's acceptance or similar credit
transaction (other than obligations with respect to letters of credit
securing obligations (other than obligations described in clauses (1)
through (3) above) entered into in the ordinary course of business of such
Person to the extent such letters of credit are not drawn upon or, if and
to the extent drawn upon, such drawing is reimbursed no later than the
tenth Business Day following payment on the letter of credit);
(5) the amount of all obligations of such Person with respect to the
redemption, repayment or other repurchase of any Disqualified Stock or,
with respect to any Subsidiary of such Person, the liquidation preference
with respect to, any Preferred Stock (but excluding, in each case, any
accrued dividends);
<PAGE>
15
(6) all obligations of the type referred to in clauses (1) through (5)
of other Persons and all dividends of other Persons for the payment of
which, in either case, such Person is responsible or liable, directly or
indirectly, as obligor, guarantor or otherwise, including by means of any
Guarantee;
(7) all obligations of the type referred to in clauses (1) through (6)
of other Persons secured by any Lien on any property or asset of such
Person (whether or not such obligation is assumed by such Person), the
amount of such obligation being deemed to be the lesser of the value of
such property or assets or the amount of the obligation so secured; and
(8) to the extent not otherwise included in this definition, Hedging
Obligations of such Person.
The amount of Indebtedness of any Person at any date shall be the outstanding
balance at such date of all unconditional obligations as described above and the
maximum liability, upon the occurrence of the contingency giving rise to the
obligation, of any contingent obligations at such date; provided, however, that
the amount outstanding at any time of any Indebtedness issued with original
issue discount shall be deemed to be the face amount of such Indebtedness less
the remaining unamortized portion of the original issue discount of such
indebtedness at such time as determined in accordance with GAAP.
"Indenture" means this Indenture as amended or supplemented from time to
time.
"Interest Rate Agreement" means in respect of a Person any interest rate
swap agreement, interest rate cap agreement or other financial agreement or
arrangement designed to protect such Person against fluctuations in interest
rates.
"Investment" in any Person means any direct or indirect advance, loan
(other than advances to customers in the ordinary course of business that are
recorded as accounts receivable on the balance sheet of the lender) or other
extensions of credit (including by way of Guarantee or similar arrangement) or
capital contribution to (by means of any transfer of cash or other property to
others or any payment for property or services for the account or use of
others), or any purchase or acquisition of Capital Stock, Indebtedness or other
similar instruments issued by such Person. For purposes of the definition of
"Unrestricted
<PAGE>
16
Subsidiary", the definition of "Restricted Payment" and Section 4.04:
(1) "Investment" shall include the portion (proportionate to the
Company's equity interest in such Subsidiary) of the fair market value of
the net assets of any Subsidiary of the Company at the time that such
Subsidiary is designated an Unrestricted Subsidiary; provided, however,
that upon a redesignation of such Subsidiary as a Restricted Subsidiary,
the Company shall be deemed to continue to have a permanent "Investment" in
an Unrestricted Subsidiary equal to an amount (if positive) equal to (x)
the Company's "Investment" in such Subsidiary at the time of such
redesignation less (y) the portion (proportionate to the Company's equity
interest in such Subsidiary) of the fair market value of the net assets of
such Subsidiary at the time of such redesignation; and
(2) any property transferred to or from an Unrestricted Subsidiary
shall be valued at its fair market value at the time of such transfer, in
each case as determined in good faith by the Board of Directors.
"Issue Date" means the date on which the Initial Securities are originally
issued.
"Lien" means any mortgage, pledge, security interest, encumbrance, lien or
charge of any kind (including any conditional sale or other title retention
agreement or lease in the nature thereof).
"Malaysian Business" means the business conducted by the Company in
Malaysia on the Issue Date and any business developed thereafter using
substantially the same assets.
"Master Transaction Agreement" means the Master Transaction Agreement dated
as of June 2, 1999 among the Parent, the Company and Harris.
"Mezzanine Parent PIK Note" means the subordinated pay-in-kind note in the
original principal amount of $30.0 million issued with an annual rate of
interest of 13.5% by the Parent to Citicorp Mezzanine Partners, L.P.
"Net Available Cash" from an Asset Disposition means cash payments received
therefrom (including any cash payments received by way of deferred payment of
principal pursuant to a note or installment receivable or otherwise and proceeds
from the sale or other disposition of any
<PAGE>
17
securities received as consideration, but only as and when received, but
excluding any other consideration received in the form of assumption by the
acquiring Person of Indebtedness or other obligations relating to such
properties or assets or received in any other non-cash form), in each case net
of:
(1) all legal, title and recording tax expenses, commissions and other
fees and expenses incurred, and all Federal, state, provincial, foreign and
local taxes required to be accrued as a liability under GAAP, as a
consequence of such Asset Disposition;
(2) all payments made on any Indebtedness which is secured by any
assets subject to such Asset Disposition, in accordance with the terms of
any Lien upon or other security agreement of any kind with respect to such
assets, or which must by its terms, or in order to obtain a necessary
consent to such Asset Disposition, or by applicable law, be repaid out of
the proceeds from such Asset Disposition;
(3) all distributions and other payments required to be made to
minority interest holders in Subsidiaries or joint ventures as a result of
such Asset Disposition; and
(4) the deduction of appropriate amounts provided by the seller as a
reserve, in accordance with GAAP, against any liabilities associated with
the property or other assets disposed in such Asset Disposition and
retained by the Company or any Restricted Subsidiary after such Asset
Disposition.
"Net Cash Proceeds", with respect to any issuance or sale of Capital Stock,
means the cash proceeds of such issuance or sale net of attorneys' fees,
accountants' fees, underwriters' or placement agents' fees, discounts or
commissions and brokerage, consultant and other fees actually incurred in
connection with such issuance or sale and net of taxes paid or payable as a
result thereof.
"Obligations" means with respect to any Indebtedness all obligations for
principal, premium, interest, penalties, fees, indemnifications, reimbursements
and other amounts payable pursuant to the documentation governing such
Indebtedness.
"Officer" means the Chairman of the Board, the President, any Vice
President, the Treasurer or the Secretary of the Company.
<PAGE>
18
"Officers' Certificate" means a certificate signed by two Officers.
"Opinion of Counsel" means a written opinion from legal counsel who is
acceptable to the Trustee. The counsel may be an employee of or counsel to the
Company or the Trustee.
"Parent" means Intersil Holding Corporation, a Delaware corporation, and
any successor corporation.
"Parent Guaranty" means the Guaranty by the Parent of the
Company's obligations with respect to the Securities contained herein.
"Permitted Holders" means (1) CVC, (2) any officer, employee or director of
CVC or any trust, partnership or other entity established solely for the benefit
of such officers, employees or directors, (3) any officer, employee or director
of the Parent, the Company or any Subsidiary or any trust, partnership or other
entity established solely for the benefit of such officers, employees or
directors, and (4) in the case of any individual, any Permitted Transferee of
such individual (as defined in the Stockholders' Agreement), except a Permitted
Transferee by virtue of Section 4.4(b)(iv) of the Stockholders' Agreement;
provided, however, that in no event shall individuals collectively be deemed to
be "Permitted Holders" with respect to more than 30% of the total voting power
of the Parent or the Company.
"Permitted Investment" means an Investment by the Company or any Restricted
Subsidiary in:
(1) a Restricted Subsidiary or a Person that will, upon the making of
such Investment, become a Restricted Subsidiary; provided, however, that
the primary business of such Restricted Subsidiary is a Related Business;
(2) another Person if as a result of such Investment such other Person
is merged or consolidated with or into, or transfers or conveys all or
substantially all its assets to, the Company or a Restricted Subsidiary;
provided, however, that such Person's primary business is a Related
Business;
(3) Temporary Cash Investments;
(4) receivables owing to the Company or any Restricted Subsidiary if
created or acquired in the
<PAGE>
19
ordinary course of business and payable or dischargeable in accordance with
customary trade terms; provided, however, that such trade terms may include
such concessionary trade terms as the Company or any such Restricted
Subsidiary deems reasonable under the circumstances;
(5) payroll, travel and similar advances to cover matters that are
expected at the time of such advances ultimately to be treated as expenses
for accounting purposes and that are made in the ordinary course of
business;
(6) loans or advances to employees made in the ordinary course of
business consistent with past practices of the Company or such Restricted
Subsidiary;
(7) stock, obligations or securities received in settlement of debts
created in the ordinary course of business and owing to the Company or any
Restricted Subsidiary or in satisfaction of judgments;
(8) any Person to the extent such Investment represents the non-cash
portion of the consideration received for an Asset Disposition as permitted
pursuant to Section 4.06;
(9) Currency Agreements and Interest Rate Agreements entered into in
the ordinary course of the Company's business and otherwise in compliance
with the Indenture;
(10) the Permitted Joint Venture; provided, however, such Investment
is received in exchange for the Malaysian Business or paid for with the
proceeds from a disposition of the Malaysian Business; and
(11) so long as no Default shall have occurred and be continuing (or
result therefrom), any Person engaged in a Related Business in an aggregate
amount which, when added together with the amount of all the Investments
made pursuant to this clause (11) which at such time have not been repaid
through repayments of loans or advances or other transfers of assets, does
not exceed the greater of $25.0 million and, after the first anniversary of
the Issue Date, 5.0% of Total Assets (with the fair market value of each
Investment being measured at the time made and without giving effect to
subsequent changes in value).
<PAGE>
20
"Permitted Joint Venture" means any joint venture to which the Company or
any Restricted Subsidiary is a party, which includes the Malaysian Business,
whether the Malaysian Business is sold or contributed to such joint venture.
"Person" means any individual, corporation, partnership, limited liability
company, joint venture, association, joint-stock company, trust, unincorporated
organization, government or any agency or political subdivision thereof or any
other entity.
"Preferred Stock", as applied to the Capital Stock of any Person, means
Capital Stock of any class or classes (however designated) which is preferred as
to the payment of dividends or distributions, or as to the distribution of
assets upon any voluntary or involuntary liquidation or dissolution of such
Person, over shares of Capital Stock of any other class of such Person.
"principal" of a Security means the principal of the Security plus the
premium, if any, payable on the Security which is due or overdue or is to
become due at the relevant time.
"Pro Forma Cost Savings" means, with respect to any period, the reduction
in costs that were:
(1) directly attributable to an asset acquisition and calculated on a
basis that is consistent with Regulation S-X under the Securities Act in
effect and applied as of the Issue Date, or
(2) implemented by the business that was the subject of any such asset
acquisition within six months of the date of the asset acquisition and that
are supportable and qualifiable by the underlying accounting records of
such business,
as if, in the case of each of clause (1) and (2), all such reductions in costs
had been effected as of the beginning of such period.
"Refinance" means, in respect of any Indebtedness, to refinance, extend,
renew, refund, repay, prepay, redeem, defease or retire, or to issue other
Indebtedness in exchange or replacement for, such indebtedness. "Refinanced" and
"Refinancing" shall have correlative meanings.
<PAGE>
21
"Refinancing Indebtedness" means Indebtedness that Refinances any
Indebtedness of the Company or any Restricted Subsidiary existing on the Issue
Date or Incurred in compliance with this Indenture, including Indebtedness that
Refinances Refinancing Indebtedness; provided, however, that (1) such
Refinancing Indebtedness has a Stated Maturity no earlier than the Stated
Maturity of the Indebtedness being Refinanced, (2) such Refinancing Indebtedness
has an Average Life at the time such Refinancing Indebtedness is Incurred that
is equal to or greater than the Average Life of the Indebtedness being
Refinanced and (3) such Refinancing Indebtedness has an aggregate principal
amount (or if Incurred with original issue discount, an aggregate issue price)
that is equal to or less than the aggregate principal amount (or if Incurred
with original issue discount, the aggregate accreted value) then outstanding or
committed (plus fees and expenses, including any premium and defeasance costs)
under the Indebtedness being Refinanced; provided further, however, that
Refinancing Indebtedness shall not include (x) Indebtedness of a Subsidiary that
Refinances Indebtedness of the Company or (y) Indebtedness of the Company or a
Restricted Subsidiary that Refinances Indebtedness of an Unrestricted
Subsidiary.
"Related Business" means any business related, ancillary or complementary
to the businesses of the Company and the Restricted Subsidiaries on the Issue
Date.
"Representative" means any trustee, agent or representative (if any) for an
issue of Senior Indebtedness of the Company; provided, however, that if and for
so long as any Senior Indebtedness lacks such a representative, then the
Representative for such Senior Indebtedness shall at all times be the holders of
a majority in outstanding principal amount of such Senior Indebtedness.
"Restricted Payment" with respect to any Person means:
(1) the declaration or payment of any dividends or any other
distributions of any sort in respect of its Capital Stock (including any
payment in connection with any merger or consolidation involving such
Person) or similar payment to the direct or indirect holders of its Capital
Stock (other than dividends or distributions payable solely in its Capital
Stock (other than Disqualified Stock) and dividends or distributions
payable solely to the Company or a Restricted Subsidiary, and other than
pro rata dividends or other distributions made by a Subsidiary that is not
a Wholly Owned Subsidiary to minority
<PAGE>
22
stockholders (or owners of an equivalent interest in the case of a
Subsidiary that is an entity other than a corporation));
(2) the purchase, redemption or other acquisition or retirement for
value of any Capital Stock of the Company held by any Person or of any
Capital Stock of a Restricted Subsidiary held by any Affiliate of the
Company (other than a Restricted Subsidiary), including the exercise of any
option to exchange any Capital Stock (other than into Capital Stock of the
Company that is not Disqualified Stock);
(3) the purchase, repurchase, redemption, defeasance or other
acquisition or retirement for value, prior to scheduled maturity, scheduled
repayment or scheduled sinking fund payment of any Subordinated Obligations
(other than the purchase, repurchase or other acquisition of Subordinated
Obligations purchased in anticipation of satisfying a sinking fund
obligation, principal installment or final maturity, in each case due
within one year of the date of acquisition); or
(4) the making of any Investment in any Person (other than a Permitted
Investment).
"Restricted Subsidiary" means any Subsidiary of the Company that is not an
Unrestricted Subsidiary.
"Revolving Credit Facilities" means the revolving credit facility contained
in the Credit Agreement and any other facility or financing arrangement that
Refinances or replaces, in whole or in part, any such revolving credit facility.
"Sale/Leaseback Transaction" means an arrangement relating to property now
owned or hereafter acquired whereby the Company or a Restricted Subsidiary
transfers such property to a Person and the Company or a Restricted Subsidiary
leases it from such Person.
"SEC" means the Securities and Exchange Commission.
"Secured Indebtedness" means any Indebtedness of the Company secured by a
Lien.
"Securities" means the Securities issued under this Indenture.
<PAGE>
23
"Seller Parent PIK Note" means the subordinated pay-in-kind note due 2010
in the original principal amount of $90.0 million with an annual rate of
interest of 11.13% issued by the Parent in accordance with the provisions of the
Master Transaction Agreement.
"Senior Indebtedness" of any Person means all (1) Bank Indebtedness of or
guaranteed by such Person, whether outstanding on the Issue Date or thereafter
Incurred, and (2) Indebtedness of such Person, whether outstanding on the Issue
Date or thereafter Incurred, including interest thereon, in respect of (A)
Indebtedness for money borrowed, (B) Indebtedness evidenced by notes,
debentures, bonds or other similar instruments for the payment of which such
Person is responsible or liable and (C) Hedging Obligations, unless, in the case
of (1) and (2), in the instrument creating or evidencing the same or pursuant to
which the same is outstanding, it is provided that such obligations are
subordinate in right of payment to the obligations under the Securities;
provided, however, that Senior Indebtedness shall not include (i) any obligation
of such Person to any subsidiary of such Person, (ii) any liability for Federal,
state, local or other taxes owed or owing by such Person, (iii) any accounts
payable or other liability to trade creditors arising in the ordinary course of
business (including guarantees thereof or instruments evidencing such
liabilities), (iv) any Indebtedness of such Person (and any accrued and unpaid
interest in respect thereof) which is subordinate or junior by its terms to any
other Indebtedness or other obligation of such Person (including, in the case of
the Company, the Securities and, in the case of the Parent, the Mezzanine Parent
PIK Note and the Seller Parent PIK Note) or (v) that portion of any Indebtedness
which at the time of Incurrence is Incurred in violation of this Indenture (but
as to any such Indebtedness under the Credit Agreement, no such violation shall
be deemed to exist if the Representative of the Lenders thereunder shall have
received an officers' certificate of the Company to the effect that the issuance
of such Indebtedness does not violate such covenant and setting forth in
reasonable detail the reasons therefor).
"Senior Subordinated Indebtedness" means (1) with respect to the Company,
the Securities and any other Indebtedness of the Company that specifically
provides that such Indebtedness is to rank pari passu with the Securities in
right of payment and is not subordinated by its terms in right of payment to any
Indebtedness or other obligation of the Company which is not Senior Indebtedness
of the Company and (2) with respect to the Parent or a Subsidiary Guarantor,
their respective Guarantees of the Securities
<PAGE>
24
and any other Indebtedness of such Person that specifically provides that such
Indebtedness rank pari passu with such Guarantee in respect of payment and is
not subordinated by its terms in respect of payment to any Indebtedness or other
obligation of such Person which is not Senior Indebtedness of such Person;
provided, however, that Senior Subordinated Indebtedness shall not include, in
the case of the Parent, the Mezzanine Parent PIK Note and the Seller Parent PIK
Note.
"Significant Subsidiary" means any Restricted Subsidiary that would be a
"Significant Subsidiary" of the Company within the meaning of Rule 1-02 under
Regulation S-X promulgated by the SEC.
"Stated Maturity" means, with respect to any security, the date specified
in such security as the fixed date on which the final payment of principal of
such security is due and payable, including pursuant to any mandatory redemption
provision (but excluding any provision providing for the repurchase of such
security at the option of the holder thereof upon the happening of any
contingency unless such contingency has occurred).
"Sterling" means Sterling Holding Company LLC, a Delaware limited liability
company.
"Stockholders' Agreement" means the Securities Purchase and Holders
Agreement among the stockholders of the Parent, as in effect on the Issue Date.
"Subordinated Obligation" means any Indebtedness of the Company or any
Subsidiary Guarantor (whether outstanding on the Issue Date or thereafter
Incurred) which is subordinate or junior in right of payment to, in the case of
the Company, the Securities or, in the case of such Subsidiary Guarantor, its
Subsidiary Guaranty, pursuant to a written agreement to that effect.
"Subsidiary" means, in respect of any Person, any corporation, association,
partnership or other business entity of which more than 50% of the total voting
power of shares of Capital Stock or other interests (including partnership
interests) entitled (without regard to the occurrence of any contingency) to
vote in the election of directors, managers or trustees thereof is at the time
owned or controlled, directly or indirectly, by (1) such Person, (2) such Person
and one or more Subsidiaries of such Person or (3) one or more Subsidiaries of
such Person.
<PAGE>
25
"Subsidiary Guarantors" mean HSI, HSI (OH), HSI (PA), CMI and any other
subsidiary of the Company that guarantees the Company's obligations with respect
to the Securities.
"Subsidiary Guaranty" means a Guaranty by a Subsidiary Guarantor of the
Company's obligations with respect to the Securities. "Tax Sharing Agreement"
means any tax sharing agreement between the Company and the Parent or any other
Person with which the Company is required to, or is permitted to, file a
consolidated, combined or unitary tax return or with which the Company is or
could be part of a consolidated group for tax purposes.
"Temporary Cash Investments" means any of the following:
(1) any investment in direct obligations of the United States of
America or any agency thereof or obligations guaranteed by the United
States of America or any agency thereof;
(2) investments in time deposit accounts, certificates of deposit and
money market deposits maturing within 180 days of the date of acquisition
thereof issued by a bank or trust company which is organized under the laws
of the United States of America, any state thereof or any foreign country
recognized by the United States of America, and which bank or trust company
has capital, surplus and undivided profits aggregating in excess of $50.0
million (or the foreign currency equivalent thereof) and has outstanding
debt that is rated "A" (or such similar equivalent rating) or higher by at
least one nationally recognized statistical rating organization (as defined
in Rule 436 under the Securities Act) or any money-market fund sponsored by
a registered broker dealer or mutual fund distributor;
(3) repurchase obligations with a term of not more than 30 days for
underlying securities of the types described in clause (1) above entered
into with a bank meeting the qualifications described in clause (2) above;
(4) investments in commercial paper, maturing not more than 90 days
after the date of acquisition, issued by a corporation (other than an
Affiliate of the Company) organized and in existence under the laws of the
United States of America or any foreign country
<PAGE>
26
recognized by the United States of America with a rating at the time as of
which any investment therein is made of "P-1" (or higher) according to
Moody's Investors Service, Inc. or "A-1" (or higher) according to Standard
and Poor's Ratings Group; and
(5) investments in securities with maturities of six months or less
from the date of acquisition issued or fully guaranteed by any state,
commonwealth or territory of the United States of America, or by any
political subdivision or taxing authority thereof, and rated at least "A"
by Standard & Poor's Ratings Group or "A" by Moody's Investors Service,
Inc.
"Term Loan Facilities" means the term loan facilities contained in the
Credit Agreement and any other facility or financing arrangement that Refinances
in whole or in part any such term loan facility.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. ss.ss. 77aaa-77bbbb)
as in effect on the date of this Indenture.
"Total Assets" means the total consolidated assets (calculated in
accordance with GAAP) of the Company and its Restricted Subsidiaries, as set
forth on the Company's most recent consolidated balance sheet.
"Trustee" means the party named as such in this Indenture until a successor
replaces it and, thereafter, means the successor.
"Trust Officer" means the Chairman of the Board, the President or any other
officer or assistant officer of the Trustee assigned by the Trustee to
administer its corporate trust matters.
"Uniform Commercial Code" means the New York Uniform Commercial Code as in
effect from time to time.
"Unrestricted Subsidiary" means (1) any Subsidiary of the Company that at
the time of determination shall be designated an Unrestricted Subsidiary by the
Board of Directors in the manner provided below and (2) any Subsidiary of an
Unrestricted Subsidiary. The Board of Directors may designate any Subsidiary of
the Company including any newly acquired or newly formed Subsidiary of the
Company) to be an Unrestricted Subsidiary unless such Subsidiary or any of its
Subsidiaries owns any Capital Stock or Indebtedness of, or owns or holds any
Lien on any property of, the Company or any other Subsidiary of the
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27
(Company that is not a Subsidiary of the Subsidiary to be so designated;
provided, however, that either (A) the Subsidiary to be so designated has total
assets of $1,000 or less or (B) if such Subsidiary has assets greater than
$1,000, such designation would be permitted under Section 4.04. The Board of
Directors may designate any Unrestricted Subsidiary to be a Restricted
Subsidiary; provided, however, that immediately after giving effect to such
designation (x) the Company could Incur $1.00 of additional Indebtedness under
Section 4.03(a) and (y) no Default shall have occurred and be continuing. Any
such designation by the Board of Directors shall be evidenced to the Trustee by
promptly filing with the Trustee a copy of the resolution of the Board of
Directors giving effect to such designation and an Officers' Certificate
certifying that such designation complied with the foregoing provisions.
"U.S. Dollar Equivalent" means, with respect to any monetary amount in a
currency other than U.S. dollars, at any time for determination thereof, the
amount of U.S. dollars obtained by converting such foreign currency involved in
such computation into U.S. dollars with the applicable foreign currency as
published in The Wall Street Journal in the "Exchange Rates" column under the
heading "Currency Trading" on the date two Business Days prior to such
determination.
Except as described in Section 4.03, whenever it is necessary to determine
whether the Company has complied with any of Sections 4.03 through 4.09 or a
Default has occurred under Section 6.01 and an amount is expressed in a currency
other than U.S. dollars, such amount will be treated as the U.S. Dollar
Equivalent determined as of the date such amount is initially determined in such
currency.
"U.S. Government Obligations" means direct obligations (or certificates
representing an ownership interest in such obligations) of the United States of
America (including any agency or instrumentality thereof) for the payment of
which the full faith and credit of the United States of America is pledged and
which are not callable or redeemable at the issuer's option.
"Voting Stock" of a Person means all classes of Capital Stock or other
interests (including partnership interests) of such Person then outstanding and
normally entitled (without regard to the occurrence of any contingency) to vote
in the election of directors, managers or trustees thereof.
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"Wholly Owned Subsidiary" means a Restricted Subsidiary all the Capital
Stock of which (other than directors' qualifying shares) is owned by the Company
or one or more Wholly Owned Subsidiaries.
SECTION 1.02. Other Definitions.
Defined in
Term Section
---- ----------
"Affiliate Transaction" ................ 4.08
"Bankruptcy Law" ....................... 6.01
"Blockage Notice" ...................... 10.03
"covenant defeasance option" ........... 8.01(b)
"Custodian" ............................ 6.01
"Event of Default" ..................... 6.01
"Indenture Obligations" ................ 11.01
"legal defeasance option" .............. 8.01(b)
"Legal Holiday" ........................ 13.08
"Offer" ................................ 4.07(b)
"Offer Amount" ......................... 4.07(c)(2)
"Offer Period" ......................... 4.07(c)(2)
"pay its Guaranty" ..................... 12.03
"pay the Securities" ................... 10.03
"Paying Agent" ......................... 2.03
"Payment Blockage Period" .............. 10.03
"Payment Default" ...................... 10.03
"Purchase Date" ........................ 4.07(c)(1)
"Registrar"............................. 2.03
"Successor Company" .................... 5.01
SECTION 1.03. Incorporation by Reference of Trust Indenture Act. This
Indenture is subject to the mandatory provisions of the TIA which are
incorporated by reference in and made a part of this Indenture. The following
TIA terms have the following meanings:
"Commission" means the SEC;
"indenture securities" means the Securities and each Guaranty;
"indenture security holder" means a Securityholder;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee; and
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29
"obligor" on the indenture securities means the Company, each Guarantor and
any other obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rule have the
meanings assigned to them by such definitions.
SECTION 1.04. Rules of Construction. Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning assigned
to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) "including" means including without limitation;
(5) words in the singular include the plural and words in the plural
include the singular;
(6) unsecured Indebtedness shall not be deemed to be subordinate or
junior to Secured Indebtedness merely by virtue of its nature as unsecured
Indebtedness;
(7) the principal amount of any noninterest bearing or other discount
security at any date shall be the principal amount thereof that would be
shown on a balance sheet of the issuer dated such date prepared in
accordance with GAAP;
(8) the principal amount of any Preferred Stock shall be (i) the
maximum liquidation value of such Preferred Stock or (ii) the maximum
mandatory redemption or mandatory repurchase price with respect to such
Preferred Stock, whichever is greater;
(9) all references to the date the Securities were originally
issued shall refer to the date the Initial Securities were originally
issued; and
(10) all references to any amount of interest or any other amount
payable on or with respect to any of the Securities shall be deemed to
include payment of any additional interest pursuant to the Registration
Rights Agreement (as defined in the Appendix).
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30
ARTICLE 2
The Securities
SECTION 2.01. Form and Dating. Provisions relating to the Initial
Securities, the Private Exchange Securities and the Exchange Securities are set
forth in the Rule 144A/Regulation S Appendix attached hereto (the "Appendix")
which is hereby incorporated in and expressly made part of this Indenture. The
Initial Securities and the Trustee's certificate of authentication shall be
substantially in the form of Exhibit 1 to the Appendix which is hereby
incorporated in and expressly made a part of this Indenture. The Exchange
Securities, the Private Exchange Securities and the Trustee's certificate of
authentication shall be substantially in the form of Exhibit 2 to the Appendix,
which is hereby incorporated in and expressly made a part of this Indenture. The
Securities may have notations, legends or endorsements required by law, stock
exchange rule, agreements to which the Company is subject, if any, or usage
(provided that any such notation, legend or endorsement is in a form acceptable
to the Company). Each Security shall be dated the date of its authentication.
The terms of the Securities set forth in the Appendix and Exhibits 1 and 2 are
part of the terms of this Indenture.
SECTION 2.02. Execution and Authentication. Two Officers shall sign the
Securities for the Company by manual or facsimile signature. The Company's seal
shall be impressed, affixed, imprinted or reproduced on the Securities and may
be in facsimile form.
If an Officer whose signature is on a Security no longer holds that office
at the time the Trustee authenticates the Security, the Security shall be valid
nevertheless.
A Security shall not be valid until an authorized signatory of the Trustee
manually signs the certificate of authentication on the Security. The signature
shall be conclusive evidence that the Security has been authenticated under
this Indenture.
On the Issue Date, the Trustee shall authenticate and deliver $200.0
million of 13-1/4% Senior Subordinated Notes Due 2009 and, at any time and from
time to time thereafter, the Trustee shall authenticate and deliver Securities
for original issue upon a written order of the Company signed by two Officers or
by an Officer and either an Assistant Treasurer or an Assistant Secretary of the
Company. Such order shall specify the amount of the
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31
Securities to be authenticated and the date on which the original issue of
Securities is to be authenticated and, in the case of an issuance of Additional
Securities pursuant to Section 2.13 after the Issue Date, shall certify that
such issuance is in compliance with Section 4.03.
The Trustee may appoint an authenticating agent reasonably acceptable to
the Company to authenticate the Securities. Unless limited by the terms of such
appointment, an authenticating agent may authenticate Securities whenever the
Trustee may do so. Each reference in this Indenture to authentication by the
Trustee includes authentication by such agent. An authenticating agent has the
same rights as any Registrar, Paying Agent or agent for service of notices and
demands.
SECTION 2.03. Registrar and Paying Agent. The Company shall maintain an
office or agency where Securities may be presented for registration of transfer
or for exchange (the "Registrar") and an office or agency where Securities may
be presented for payment (the "Paying Agent"). The Registrar shall keep a
register of the Securities and of their transfer and exchange. The Company may
have one or more co-registrars and one or more additional paying agents. The
term "Paying Agent" includes any additional paying agent.
The Company shall enter into an appropriate agency agreement with any
Registrar, Paying Agent or co-registrar not a party to this Indenture, which
shall incorporate the terms of the TIA. The agreement shall implement the
provisions of this Indenture that relate to such agent. The Company shall notify
the Trustee of the name and address of any such agent. If the Company fails to
maintain a Registrar or Paying Agent, the Trustee shall act as such and shall
be entitled to appropriate compensation therefor pursuant to Section 7.07. The
Company or any of its domestically incorporated Wholly Owned Subsidiaries may
act as Paying Agent, Registrar, co-registrar or transfer agent.
The Company initially appoints the Trustee as Registrar and Paying Agent in
connection with the Securities.
SECTION 2.04. Paying Agent To Hold Money in Trust. Prior to each due date
of the principal and interest on any Security, the Company shall deposit with
the Paying Agent a sum sufficient to pay such principal and interest when such
becomes due. The Company shall require each Paying Agent (other than the
Trustee) to agree in writing that the Paying Agent shall hold in trust for the
benefit of
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32
Securityholders or the Trustee all money held by the Paying Agent for the
payment of principal of or interest on the Securities and shall notify the
Trustee of any default by the Company in making any such payment, and while any
such default continues, the Trustee may require the Paying Agent to pay all
money held by it to the Trustee. If the Company or a Subsidiary acts as Paying
Agent, it shall segregate the money held by it as Paying Agent and hold it as a
separate trust fund. The Company at any time may require a Paying Agent to pay
all money held by it to the Trustee and to account for any funds disbursed by
the Paying Agent. Upon complying with this Section, the Paying Agent shall have
no further liability for the money delivered to the Trustee.
SECTION 2.05. Securityholder Lists. The Trustee shall preserve in as
current a form as is reasonably practicable the most recent list available to
it of the names and addresses of Securityholders. If the Trustee is not the
Registrar, the Company shall furnish to the Trustee, in writing at least five
Business Days before each interest payment date and at such other times as the
Trustee may request in writing, a list in such form and as of such date as the
Trustee may reasonably require of the names and addresses of Securityholders.
SECTION 2.06. Transfer and Exchange. The Securities shall be issued in
registered form and shall be transferable only upon the surrender of a Security
for registration of transfer. When a Security is presented to the Registrar or a
co-registrar with a request to register a transfer, the Registrar shall register
the transfer as requested if the requirements of Section 8-401(1) of the Uniform
Commercial Code are met. When Securities are presented to the Registrar or a
co-registrar with a request to exchange them for an equal principal amount of
Securities of other denominations, the Registrar shall make the exchange as
requested if the same requirements are met. To permit registration of transfers
and exchanges, the Company shall execute and the Trustee shall authenticate
Securities at the Registrar's or co-registrar's request. The Company may require
payment of a sum sufficient to pay all taxes, assessments or other governmental
charges in connection with any transfer or exchange pursuant to this Section.
The Company shall not be required to make and the Registrar need not register
transfers or exchanges of Securities selected for redemption (except, in the
case of Securities to be redeemed in part, the portion thereof not to be
redeemed) or any Securities for a period of 15 days before a selection of
Securities to be redeemed or 15 days before an interest payment date.
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33
Prior to the due presentation for registration of transfer of any Security,
the Company, the Trustee, the Paying Agent, the Registrar or any co-registrar
may deem and treat the person in whose name a Security is registered as the
absolute owner of such Security for the purpose of receiving payment of
principal of and (subject to the provisions of the Securities with respect to
record dates) interest on such Security and for all other purposes whatsoever,
whether or not such Security is overdue, and none of the Company, the Trustee,
the Paying Agent, the Registrar or any co-registrar shall be affected by notice
to the contrary.
All Securities issued upon any transfer or exchange pursuant to the terms
of this Indenture will evidence the same debt and will be entitled to the same
benefits under this Indenture as the Securities surrendered upon such transfer
or exchange.
SECTION 2.07. Replacement Securities. If a mutilated Security is
surrendered to the Registrar or if the Holder of a Security claims that the
Security has been lost, destroyed or wrongfully taken, the Company shall issue
and the Trustee shall authenticate a replacement Security if the requirements of
Section 8-405 of the Uniform Commercial Code are met and the Holder satisfies
any other reasonable requirements of the Trustee. If required by the Trustee or
the Company, such Holder shall furnish an indemnity bond sufficient in the
judgment of the Company and the Trustee to protect the Company, the Trustee, the
Paying Agent, the Registrar and any co-registrar from any loss which any of them
may suffer if a Security is replaced. The Company and the Trustee may charge the
Holder for their expenses in replacing a Security.
Every replacement Security is an additional obligation of the Company.
SECTION 2.08. Outstanding Securities. Securities outstanding at any time
are all Securities authenticated by the Trustee except for those canceled by it,
those delivered to it for cancellation and those described in this Section as
not outstanding. A Security does not cease to be outstanding because the Company
or an Affiliate of the Company holds the Security.
If a Security is replaced pursuant to Section 2.07, it ceases to be
outstanding unless the Trustee and the Company receive proof satisfactory to
them that the replaced Security is held by a bona fide purchaser, in which case
the replacement Security shall cease to be outstanding, subject to the
provisions of Section 8-405 of the Uniform Commercial Code.
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34
If the Paying Agent segregates and holds in trust, in accordance with this
Indenture, on a redemption date or maturity date money sufficient to pay all
principal and interest payable on that date with respect to the Securities (or
portions thereof) to be redeemed or maturing, as the case may be, and the Paying
Agent is not prohibited from paying such money to the Securityholders on that
date pursuant to the terms of this Indenture, then on and after that date such
Securities (or portions thereof) cease to be outstanding and interest on them
ceases to accrue.
SECTION 2.09. Temporary Securities. Until definitive Securities are ready
for delivery, the Company may prepare and the Trustee shall authenticate
temporary Securities. Temporary Securities shall be substantially in the form of
definitive Securities but may have variations that the Company considers
appropriate for temporary Secur
ities. Without unreasonable delay, the Company
shall prepare and the Trustee shall authenticate definitive Securities and
deliver them in exchange for temporary Securities.
SECTION 2.10 Cancellation. The Company at any time may deliver Securities
to the Trustee for cancellation. The Registrar and the Paying Agent shall
forward to the Trustee any Securities surrendered to them for registration of
transfer, exchange or payment. The Trustee and no one else shall cancel and
destroy all Securities surrendered for registration of transfer, exchange,
payment or cancellation and deliver a certificate of such destruction to the
Company unless the Company directs the Trustee to deliver canceled Securities to
the Company. The Company may not issue new Securities to replace Securities it
has redeemed, paid or delivered to the Trustee for cancellation.
SECTION 2.11. Defaulted Interest. If the Company defaults in a payment of
interest on the Securities, the Company shall pay defaulted interest (plus
interest on such defaulted interest to the extent lawful) in any lawful manner.
The Company may pay the defaulted interest to the persons who are
Securityholders on a subsequent special record date. The Company shall fix or
cause to be fixed any such special record date and payment date to the
reasonable satisfaction of the Trustee and shall promptly mail to each
Securityholder a notice that states the special record date, the payment date
and the amount of defaulted interest to be paid.
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35
SECTION 2.12. CUSIP Numbers. The Company in issuing the Securities may use
"CUSIP" numbers (if then generally in use) and, if so, the Trustee shall use
"CUSIP" numbers in notices of redemption as a convenience to Holders; provided,
however, that any such notice may state that no representation is made as to the
correctness of such numbers either as printed on the Securities or as contained
in any notice of a redemption and that reliance may be placed only on the other
identification numbers printed on the Securities, and any such redemption shall
not be affected by any defect in or omission of such numbers.
SECTION 2.13. Issuance of Additional Securities. The Company shall be
entitled, subject to its compliance with Section 4.03, to issue Additional
Securities under this Indenture which shall have identical terms as the Initial
Securities issued on the Issue Date, other than with respect to the date of
issuance, issue price and amount of interest payable on the first payment date
applicable thereto. The Initial Securities issued on the Issue Date, any
Additional Securities and all Exchange Securities or Private Exchange Securities
issued in exchange therefor shall be treated as a single class for all purposes
under this Indenture.
With respect to any Additional Securities, the Company shall set forth in a
resolution of the Board of Directors and an Officers' Certificate, a copy of
each of which shall be delivered to the Trustee, the following information:
(1) the aggregate principal amount of such Additional Securities to be
authenticated and delivered pursuant to this Indenture;
(2) the issue price and the issue date of such Additional Securities
and the amount of interest payable on the first payment date applicable
thereto; provided, however, that no Additional Securities may be issued at
a price that would cause such Additional Securities to have "original issue
discount" within the meaning of Section 1273 of the Code; and
(3) whether such Additional Securities shall be transfer restricted
securities and issued in the form of Initial Securities as set forth in the
Appendix and Exhibit 1 thereof or shall be issued in the form of Exchange
Securities as set forth in the Appendix and Exhibit 2 thereof.
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36
ARTICLE 3
Redemption
SECTION 3.01. Notices to Trustee. If the Company elects to redeem the
Securities pursuant to paragraph 5 of the Securities, it shall notify the
Trustee in writing of the redemption date, the principal amount of Securities to
be redeemed and the paragraph of the Securities pursuant to which the redemption
will occur.
The Company shall give each notice provided for in this Section to the
Trustee at least 45 days before the redemption date unless the Trustee consents
to a shorter period. Such notice shall be accompanied by an Officers'
Certificate and an Opinion of Counsel from the Company to the effect that such
redemption will comply with the conditions herein.
SECTION 3.02. Selection of Securities To Be Redeemed. If fewer than all the
Securities are to be redeemed, the Trustee shall select the Securities to be
redeemed pro rata or by lot or by a method that complies with applicable legal
and securities exchange requirements, if any, and that the Trustee in its sole
discretion considers to be fair and appropriate. The Trustee shall make the
selection from outstanding Securities not previously called for redemption. The
Trustee may select for redemption portions of the principal of Securities that
have denominations larger than $1,000. Securities and portions of them the
Trustee selects shall be in amounts of $1,000 or a whole multiple of $1,000.
Provisions of this Indenture that apply to Securities called for redemption also
apply to portions of Securities called for redemption. The Trustee shall notify
the Company promptly of the Securities or portions of Securities to be redeemed.
SECTION 3.03. Notice of Redemption. At least 30 days but not more than 60
days before a date for an optional redemption of Securities, the Company shall
mail a notice of redemption by first-class mail to each Holder of Securities to
be redeemed at such Holder's registered address.
The notice shall identify the Securities to be redeemed and shall state:
(1) the redemption date;
(2) the redemption price;
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37
(3) the name and address of the Paying Agent;
(4) that Securities called for redemption must be surrendered to the
Paying Agent to collect the redemption price;
(5) if fewer than all the outstanding Securities are to be redeemed,
the identification and principal amounts of the particular Securities to be
redeemed;
(6) that, unless the Company defaults in making such redemption
payment or the Paying Agent is prohibited from making such payment
pursuant to the terms of this Indenture, interest on Securities (or portion
thereof) called for redemption ceases to accrue on and after the redemption
date;
(7) the paragraph of the Securities pursuant to which the Securities
called for redemption are being redeemed; and
(8) that no representation is made as to the correctness or accuracy
of the CUSIP number, if any, listed in such notice or printed on the
Securities.
At the Company's request, the Trustee shall give the notice of redemption
in the Company's name and at the Company's expense. In such event, the Company
shall provide the Trustee with the information required by this Section.
SECTION 3.04. Effect of Notice of Redemption. Once notice of redemption is
mailed, Securities called for redemption become due and payable on the
redemption date and at the redemption price stated in the notice. Upon surrender
to the Paying Agent, such Securities shall be paid at the redemption price
stated in the notice, plus accrued interest to the redemption date (subject to
the right of Holders of record on the relevant record date to receive interest
due on the relevant interest payment date). Failure to give notice or any defect
in the notice to any Holder shall not affect the validity of the notice to any
other Holder.
SECTION 3.05. Deposit of Redemption Price. Prior to the redemption date,
the Company shall deposit with the Paying Agent (or, if the Company or a
Subsidiary is the Paying Agent, shall segregate and hold in trust) money
sufficient to pay the redemption price of and accrued interest (subject to the
right of Holders of record on the relevant record date to receive interest due
on the relevant interest payment date) on all Securities to be redeemed on
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38
that date other than Securities or portions of Securities called for redemption
which have been delivered by the Company to the Trustee for cancellation.
SECTION 3.06. Securities Redeemed in Part. Upon surrender of a Security
that is redeemed in part, the Company shall execute and the Trustee shall
authenticate for the Holder (at the Company's expense) a new Security equal in
principal amount to the unredeemed portion of the Security surrendered.
ARTICLE 4
Covenants
SECTION 4.01. Payment of Securities. The Company shall promptly pay the
principal of and interest on the Securities on the dates and in the manner
provided in the Securities and in this Indenture. Principal and interest shall
be considered paid on the date due if on such date the Trustee or the Paying
Agent holds in accordance with this Indenture money sufficient to pay all
principal and interest then due and the Trustee or the Paying Agent, as the case
may be, is not prohibited from paying such money to the Securityholders on that
date pursuant to the terms of this Indenture.
The Company shall pay interest on overdue principal at the rate specified
therefor in the Securities, and it shall pay interest on overdue installments of
interest at the same rate to the extent lawful.
SECTION 4.02. SEC Reports. Whether or not subject to the reporting
requirements of Section 13 or 15(d) of the Exchange Act, the Company will file
with the SEC and provide the Trustee and Securityholders with such annual
reports and such information, documents and other reports as are specified in
Sections 13 and 15(d) of the Exchange Act and applicable to a U.S. corporation
subject to such Sections at the times specified for such filings under such
Sections; provided, however that the Company will not be required to file any
reports, documents or other information if the SEC will not accept such a
filing. The Company also shall comply with the other provisions of TIA
ss. 314(a).
SECTION 4.03. Limitation on Indebtedness. (a) The Company shall not, and
shall not permit any Restricted Subsidiary to, Incur, directly or indirectly,
any Indebtedness except that the Company or any Subsidiary Guarantor may Incur
Indebtedness if, after giving effect
<PAGE>
39
thereto, the Consolidated Coverage Ratio exceeds 2.25 to 1.00 if such
Indebtedness is Incurred prior to August 15, 2001 or 2.50 to 1.00 if such
Indebtedness is Incurred thereafter.
(b) Notwithstanding the foregoing paragraph (a), the Company and its
Restricted Subsidiaries may Incur any or all of the following Indebtedness:
(1) Indebtedness of the Company or any Restricted Subsidiary Incurred
pursuant to the Revolving Credit Facilities; provided, however, that,
immediately after giving effect to any such Incurrence, the aggregate
principal amount of all Indebtedness incurred under this clause (1) and
then outstanding does not exceed the greater of (A) $70.0 million and (B)
the sum of 50% of the book value of the inventory of the Company and its
Restricted Subsidiaries and 85% of the book value of the accounts
receivables of the Company and its Restricted Subsidiaries;
(2) Indebtedness of the Company Incurred pursuant to the Term Loan
Facilities; provided, however, that, after giving effect to any such
Incurrence, the aggregate principal amount of all Indebtedness Incurred
under this clause (2) and then outstanding does not exceed $205.0 million
less the aggregate sum of all principal payments actually made from time to
time after the Issue Date with respect to such Indebtedness pursuant to
clause (3)(A) of Section 4.06(a);
(3) Indebtedness of the Company or any Restricted Subsidiary owed to
and held by the Company or a Restricted Subsidiary; provided, however, that
any subsequent issuance or transfer of any Capital Stock which results in
any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or any
subsequent transfer of such Indebtedness (other than to the Company or
another Restricted Subsidiary) shall be deemed, in each case, to constitute
the Incurrence of such Indebtedness by the issuer thereof; provided
further, however, that any such Indebtedness of the Company or a Subsidiary
Guarantor shall be unsecured Subordinated Obligations of the obligor
thereof;
(4) Indebtedness consisting of the Securities (other than Additional
Securities);
(5) Indebtedness outstanding on the Issue Date, including, without
limitation, Indebtedness assumed or to be assumed in respect of the Harris
Loan Obligations
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(other than Indebtedness described in clause (1), (2), (3)or (4) of this
Section 4.03(b));
(6) Refinancing Indebtedness in respect of Indebtedness Incurred
pursuant to Section 4.03(a) or pursuant to clause (4), (5) or (7) of this
Section 4.03(b) or this clause (6);
(7) Indebtedness of a Person Incurred and outstanding on or prior to
the date on which such Person was acquired by the Company or a Restricted
Subsidiary (other than Indebtedness Incurred in connection with, or to
provide all or any portion of the funds or credit support utilized to
consummate, the transaction or series of related transactions pursuant to
which such Person was acquired by the Company or a Restricted Subsidiary);
provided, however, that after giving pro forma effect thereto, (a) the
Consolidated Coverage Ratio increases as a consequence of such incurrence
and related acquisition and (b) after giving effect thereto, the
Consolidated Coverage Ratio is at least 1.5 to 1.0;
(8) Hedging Obligations of the Company or any Restricted Subsidiary
under or with respect to Interest Rate Agreements and Currency Agreements
entered into in the ordinary course of business and not for the purpose of
speculation;
(9) Indebtedness of the Company or any Restricted Subsidiary in
respect of performance bonds and surety or appeal bonds entered into by the
Company and the Restricted Subsidiaries in the ordinary course of their
business;
(10) Indebtedness consisting of the Subsidiary Guaranties and the
Guarantees of Indebtedness Incurred pursuant to Section 4.03(a) or pursuant
to clause (1), (2), (4), (5), (6), (7) above or (16) below of this Section
4.03(b);
(11) Indebtedness of the Company or any Restricted Subsidiary arising
from the honoring by a bank or other financial institution of a check,
draft or similar instrument inadvertently (except in the case of daylight
overdrafts) drawn against insufficient funds in the ordinary course of
business, provided that such Indebtedness is satisfied within five business
days of Incurrence;
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(12) Indebtedness (including Capital Lease Obligations) Incurred by
the Company or any of its Restricted Subsidiaries to finance the purchase,
lease or improvement of property (real or personal) or equipment (whether
through the direct purchase of assets or the Capital Stock of any Person
owning such assets) and Refinancing Indebtedness in respect of any
Indebtedness Incurred pursuant to this clause (12) in an aggregate
principal amount which, when added together with the amount of Indebtedness
Incurred pursuant to this clause (12) and then outstanding, does not exceed
the greater of (A) $15.0 million and (B) 3.5% of Total Assets; provided,
however, that, in the case of any Capital Lease Obligations, the assets
subject to the related capital lease are not owned or used by the Company
or any Restricted Subsidiary on the Issue Date;
(13) Indebtedness of the Company or any Restricted Subsidiary
consisting of indemnification, adjustment of purchase price or similar
obligations, in each case incurred in connection with the disposition of
any assets of the Company or any Restricted Subsidiary in a principal
amount not to exceed the gross proceeds actually received by the Company or
any Restricted Subsidiary in connection with such disposition;
(14) Indebtedness of a Foreign Subsidiary Incurred to finance working
capital of such Foreign Subsidiary;
(15) Indebtedness of the Company issued to directors, employees,
officers or consultants of the Company or a Restricted Subsidiary in
connection with the redemption or purchase of Capital Stock that by its
terms is subordinated to the Securities, is not secured by any assets of
the Company or its Restricted Subsidiaries and does not require cash
payments on or prior to the Stated Maturity of the Securities and
Refinancing Indebtedness in respect thereof, in an aggregate principal
amount which, when added together with the amount of Indebtedness Incurred
pursuant to this clause (15) and then outstanding, does not exceed $5.0
million; and
(16) Indebtedness of the Company and the Restricted Subsidiaries in an
aggregate principal amount which, together with all other Indebtedness of
the Company and the Restricted Subsidiaries outstanding on the date of such
Incurrence (other than Indebtedness
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42
permitted by clauses (1) through (15) of this Section 4.03(b) or Section
4.03(a)), does not exceed $40.0 million.
(c) Notwithstanding the foregoing, the Company shall not, and shall not
permit any Restricted Subsidiary to, Incur any Indebtedness pursuant to Section
4.03(b) if the proceeds thereof are used, directly or indirectly, to Refinance
any Subordinated Obligations unless such Indebtedness shall be subordinated to
the Securities or the relevant Subsidiary Guaranty, as applicable, to at least
the same extent as such Subordinated Obligations.
(d) For purposes of determining compliance with this Section 4.03, (1) in
the event that an item of Indebtedness meets the criteria of more than one of
the types of Indebtedness described herein, the Company, in its sole discretion,
will classify such item of Indebtedness and only be required to include the
amount and type of such Indebtedness in one of the above clauses and (2) an item
of Indebtedness may be divided and classified in more than one of the types of
Indebtedness described herein.
(e) Notwithstanding Section 4.03(a) or 4.03(b), the Company shall not, and
shall not permit any Subsidiary Guarantor to, Incur (1) any Indebtedness if such
Indebtedness is subordinate or junior in ranking in any respect to any Senior
Indebtedness of the Company or such Subsidiary Guarantor, as applicable, unless
such Indebtedness is Senior Subordinated Indebtedness or is expressly
subordinated in right of payment to Senior Subordinated Indebtedness or (2) any
Secured Indebtedness (other than trade payables incurred in the ordinary course
of business) that is not Senior Indebtedness unless contemporaneously therewith
effective provision is made to secure the Securities or the relevant Subsidiary
Guaranty, as applicable, equally and ratably with such Secured Indebtedness for
so long as such Secured Indebtedness is secured by a Lien.
(f) For purposes of determining compliance with any U.S. dollar denominated
restriction on the Incurrence of Indebtedness where the Indebtedness is
denominated in a different currency, the amount of such Indebtedness will be the
U.S. Dollar Equivalent determined on the date of the Incurrence of such
Indebtedness; provided, however, that if any such Indebtedness denominated in a
different currency is subject to a Currency Agreement with respect to U.S.
dollars, covering all principal, premium, if any, and interest payable on such
Indebtedness, the amount of such Indebtedness expressed in U.S. dollars will be
as provided
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43
in such Currency Agreement. The principal of any Refinancing Indebtedness
Incurred in the same currency as the Indebtedness being refinanced will be the
U.S. Dollar Equivalent of the Indebtedness Refinanced, except to the extent that
(i) such U.S. Dollar Equivalent was determined based on a Currency Agreement, in
which case the Refinancing Indebtedness will be determined in accordance with
the preceding sentence, and (ii) the principal amount of the Refinancing
Indebtedness exceeds the principal amount of the Indebtedness being Refinanced,
in which case the U.S. Dollar Equivalent of such excess will be determined on
the date such Refinancing Indebtedness is Incurred.
SECTION 4.04. Limitation on Restricted Payments. (a) The Company shall not,
and shall not permit any Restricted Subsidiary, directly or indirectly, to make
a Restricted Payment if at the time the Company or such Restricted Subsidiary
makes such Restricted Payment:
(1) a Default shall have occurred and be continuing (or would result
therefrom);
(2) the Company is not able to Incur an additional $1.00 of
Indebtedness under Section 4.03(a); or
(3) the aggregate amount of such Restricted Payment and all other
Restricted Payments since the Issue Date would exceed the sum (without
duplication) of:
(A) 50% of the Consolidated Net Income accrued during the period
(treated as one accounting period) from the beginning of the fiscal
quarter immediately following the fiscal quarter during which the
Securities are originally issued to the end of the most recent fiscal
quarter ending at least 45 days (or, if less, the number of days after
the end of such fiscal quarter as the consolidated financial
statements of the Company shall be provided to Securityholders
hereunder) prior to the date of such Restricted Payment (or, in case
such Consolidated Net Income shall be a deficit, minus 100% of such
deficit);
(B) the aggregate Net Cash Proceeds received by the Company from
the issuance or sale of, or capital contribution in respect of, its
Capital Stock (other than Disqualified Stock) subsequent to the Issue
Date (other than an issuance or sale to a Subsidiary of the Company
and other than an issuance or sale to an employee stock ownership
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44
plan or to a trust established by the Company or any of its
Subsidiaries for the benefit of their employees to the extent that the
purchase by such plan or trust is financed by Indebtedness of such
plan or trust to the Company or any Subsidiary or Indebtedness
Guaranteed by the Company or any Subsidiary) and the fair market value
(as determined in good faith by resolution of the Board of Directors
of the Company) of property (other than cash) constituting Temporary
Cash Equivalents or a Related Business and received by the Company or
a Restricted Subsidiary subsequent to the Issue Date as a contribution
to its common equity capital (other than any such property received
from a Subsidiary or that was financed by the Company or any
Restricted Subsidiary);
(C) the amount by which Indebtedness of the Company or any
Restricted Subsidiary is reduced on the Company's consolidated balance
sheet upon the conversion or exchange (other than by a Subsidiary of
the Company) subsequent to the Issue Date of any Indebtedness of the
Company or any Restricted Subsidiary convertible or exchangeable for
Capital Stock (other than Disqualified Stock) of the Company (less the
amount of any cash, or the fair value of any other property,
distributed by the Company or any Restricted Subsidiary upon such
conversion or exchange); and
(D) an amount equal to the sum of (i) the net reduction in
Investments (other than Permitted Investments) made by the Company or
any Restricted Subsidiary in any Person resulting from repurchases,
repayments or redemptions of such Investments by such Person, proceeds
realized on the sale of such Investment or proceeds representing the
return of capital (excluding dividends and distributions), in each
case received by the Company or any Restricted Subsidiary, and (ii) to
the extent such Person is an Unrestricted Subsidiary, the portion
(proportionate to the Company's equity interest in such Subsidiary) of
the fair market value of the net assets of such Unrestricted
Subsidiary at the time such Unrestricted Subsidiary is designated a
Restricted Subsidiary; provided, however, that the foregoing sum shall
not exceed, in the case of such Person or Unrestricted Subsidiary, the
amount of Investments (excluding Permitted Investments) previously
made (and treated as a Restricted
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45
Payment) by the Company or any Restricted Subsidiary in such Person or
Unrestricted Subsidiary.
(b) The provisions of Section 4.04(a) shall not prohibit:
(1) any Restricted Payment made by exchange for, or out of the
proceeds of the substantially concurrent sale of, Capital Stock of the
Company (other than Disqualified Stock and other than Capital Stock issued
or sold to a Subsidiary of the Company or an employee stock ownership plan
or to a trust established by the Company or any of its Subsidiaries for the
benefit of their employees to the extent that the purchase by such plan or
trust is financed by Indebtedness of such plan or trust to the Company or
any Subsidiary of the Company or Indebtedness Guaranteed by the Company or
any Subsidiary of the Company); provided, however, that (A) such Restricted
Payment shall be excluded in the calculation of the amount of Restricted
Payments and (B) the Net Cash Proceeds from such sale shall be excluded
from the calculation of amounts under clause (3)(B) of Section 4.04(a);
(2) any purchase, repurchase, redemption, defeasance or other
acquisition or retirement for value of Subordinated Obligations made by
exchange for, or out of the proceeds of the substantially concurrent sale
of, Indebtedness which is permitted to be Incurred pursuant to Section
4.03; provided, however, that such purchase, repurchase, redemption,
defeasance or other acquisition or retirement for value shall be excluded
in the calculation of the amount of Restricted Payments;
(3) any purchase or redemption of Disqualified Stock of the Company or
a Restricted Subsidiary made by exchange for, or out of the proceeds of the
substantially concurrent sale of, Disqualified Stock of the Company or such
Restricted Subsidiary, as the case may be, which is permitted to be
Incurred pursuant to Section 4.03; provided, however, that such purchase or
redemption shall be excluded in the calculation of the amount of Restricted
Payments;
(4) any purchase or redemption of Subordinated Obligations from the
balance of Net Available Cash after an offer for the Securities pursuant to
Section 4.06; provided, however, that such purchase or
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46
redemption shall be excluded in the calculation of the amount of Restricted
Payments;
(5) upon the occurrence of a Change of Control and within 60 days
after the completion of the offer to repurchase the Securities pursuant to
Section 4.09 (including the purchase of the Securities tendered), any
purchase or redemption of Subordinated Obligations required pursuant to the
terms thereof as a result of such Change of Control at a purchase or
redemption price not to exceed the outstanding principal amount thereof,
plus accrued and unpaid interest (if any); provided, however, that (A) at
the time of such purchase or redemption no Default shall have occurred and
be continuing (or would result therefrom), (B) the Company would be able to
Incur an additional $1.00 of Indebtedness pursuant to Section 4.03(a) after
giving pro forma effect to such Restricted Payment and (C) such purchase or
redemption shall be included in the calculation of the amount of Restricted
Payments;
(6) dividends paid within 60 days after the date of declaration
thereof if at such date of declaration such dividend would have complied
with Section 4.04(a)); provided, however, that at the time of payment of
such dividend, no other Default shall have occurred and be continuing (or
result therefrom); provided further, however, that such dividend shall be
included in the calculation of the amount of Restricted Payments
(7) the repurchase or other acquisition of shares of, or options to
purchase shares of, common stock of the Company or any of its Subsidiaries
from employees, former employees, directors or former directors of the
Company or any of its Subsidiaries (or permitted transferees of such
employees, former employees, consultants, former consultants, directors or
former directors), pursuant to the terms of the agreements (including
employment and consulting agreements) or plans (or amendments thereto)
approved by the Board of Directors under which such individuals purchase or
sell or are granted the option to purchase or sell, shares of such common
stock; provided, however, that the aggregate amount of such repurchases and
other acquisitions shall not exceed the sum of $5.0 million and the Net
Cash Proceeds from the sale of Capital Stock to members of management or
directors of the Company and its Subsidiaries that occurs after the Issue
Date (to the extent the Net Cash Proceeds from the sale of such Capital
Stock have not otherwise been
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47
applied to the payment of Restricted Payments by virtue of clause (3)(B) of
Section 4.04(a); provided further, however, that (A) such repurchases shall
be excluded in the calculation of the amount of Restricted Payments and (B)
the Net Cash Proceeds from such sale shall be excluded from the calculation
of amounts under clause (3)(B) of Section 4.04(a);
(8) dividends or advances to the Parent in an amount necessary to pay
holding company expenses, such amount not to exceed $500,000 in any fiscal
year of the Company; provided, however, that such dividends and advances
shall be excluded in the calculation of the amount of Restricted Payments;
(9) any payment by the Company to the Parent pursuant to a Tax Sharing
Agreement; provided, however, that the amount of any such payment shall not
exceed the amount of taxes that the Company would have been liable for on a
stand-alone basis; provided further, however, that such payment shall be
excluded in the calculation of the amount of Restricted Payments;
(10) the distribution, as a dividend or otherwise, of shares of
Capital Stock or assets of an Unrestricted Subsidiary provided that the
fair market value (as determined in good faith by the Board of Directors of
the Company) of such shares of Capital Stock or assets shall not exceed the
amount of the Investments that were made (and not subsequently reduced
pursuant to clause (3)(D) of Section 4.04(a)) by the Company in such
Unrestricted Subsidiary and were treated as Restricted Payments or were
included in the calculation of the amount of the Restricted Payments
previously made; provided, however, that (A) such distributions shall be
excluded in the calculation of the amount of Restricted Payments, and (B)
any net reduction in Investments in such Unrestricted Subsidiary resulting
from such distribution shall be excluded from the calculation of amounts
under clause (3)(D) of Section 4.04(a); or
(11) Restricted Payments not exceeding $5.0 million in the aggregate;
provided, however, that (A) at the time of such Restricted Payments, no
Default shall have occurred and be continuing (or would result therefrom)
and (B) such Restricted Payments shall be included in the calculation of
the amount of Restricted Payments.
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48
SECTION 4.05. Limitation on Restrictions on Distributions from Restricted
Subsidiaries. The Company shall not, and shall not permit any Restricted
Subsidiary to, create or otherwise cause or permit to exist or become effective
any consensual encumbrance or restriction on the ability of any Restricted
Subsidiary to (a) pay dividends or make any other distributions on its Capital
Stock to the Company or a Restricted Subsidiary or pay any Indebtedness owed to
the Company, (b) make any loans or advances to the Company or (c) transfer any
of its property or assets to the Company, except:
(1) any encumbrance or restriction pursuant to an agreement in effect
at or entered into on the Issue Date or, in the case of the Credit
Agreement, as in effect on the Acquisition Closing Date;
(2) any encumbrance or restriction with respect to a Restricted
Subsidiary pursuant to an agreement relating to any Indebtedness Incurred
by such Restricted Subsidiary on or prior to the date on which such
Restricted Subsidiary was acquired by the Company (other than Indebtedness
Incurred as consideration in, or to provide all or any portion of the funds
or credit support utilized to consummate, the transaction or series of
related transactions pursuant to which such Restricted Subsidiary became a
Restricted Subsidiary or was acquired by the Company) and outstanding on
such date;
(3) any encumbrance or restriction with respect to a Restricted
Subsidiary pursuant to an agreement evidencing Indebtedness Incurred
without violation of any provisions of this Indenture including those
contained in any amendment to an agreement referred to in clause (1) or (2)
of this Section 4.05; provided, however, that the encumbrances and
restrictions with respect to such Restricted Subsidiary are, in the good
faith judgment of the Board of Directors, no more restrictive in any
material respect than the encumbrances and restrictions with respect to
such Restricted Subsidiary contained in agreements of such Restricted
Subsidiary in effect at, or entered into on, the Issue Date;
(4) any such encumbrance or restriction consisting of customary
nonassignment provisions in leases governing leasehold interests to the
extent such provisions restrict the transfer of the lease or the property
leased thereunder or in licenses entered into in the ordinary course of
business to the extent such
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49
licenses restrict the transfer of the license or the property licensed
thereunder;
(5) in the case of clause (c) above, restrictions contained in
security agreements or mortgages securing Indebtedness of a Restricted
Subsidiary to the extent such restrictions restrict the transfer of the
property subject to such security agreements or mortgages;
(6) any restriction with respect to a Restricted Subsidiary imposed
pursuant to an agreement entered into for the sale or disposition of all or
substantially all the Capital Stock or assets of such Restricted Subsidiary
pending the closing of such sale or disposition;
(7) any restriction in any agreement that is not more restrictive than
the restrictions under the terms of the Credit Agreement as in effect on
the Acquisition Closing Date;
(8) in the case of clause (c) above, restrictions on the transfer of
assets subject to any Lien imposed by the holder of such Lien;
(9) provisions with respect to the disposition or distribution of
assets or property in joint venture agreements and other similar agreements
entered into in the ordinary course of business;
(10) any restriction arising under applicable law, regulation or
order;
(11) any restriction contained in any agreement or instrument
governing Capital Stock (other than Disqualified Stock) of any Restricted
Subsidiary that is in effect on the date such Restricted Subsidiary is
acquired by the Company or a Restricted Subsidiary; and
(12) any restriction on cash or other deposits or net worth imposed by
customers under contracts entered into in the ordinary course of business.
SECTION 4.06. Limitation on Sales of Assets and Subsidiary Stock. (a) The
Company shall not, and shall not permit any Restricted Subsidiary to, directly
or indirectly, consummate any Asset Disposition unless:
(1) the Company or such Restricted Subsidiary receives consideration
at the time of such Asset Disposition at least equal to the fair market
value
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50
(including as to the value of all non-cash consideration), as determined in
good faith by the Board of Directors, of the shares and assets subject to
such Asset Disposition;
(2) at least 75% of the consideration thereof received by the Company
or such Restricted Subsidiary is in the form of cash or cash equivalents
unless such Asset Disposition consists of a disposition of the Company's
Malaysian Business to a Permitted Joint Venture; and
(3) an amount equal to 100% of the Net Available Cash from such Asset
Disposition is applied by the Company (or such Restricted Subsidiary, as
the case may be):
(A) first, to the extent the Company elects (or is required by
the terms of any Indebtedness), to prepay, repay, redeem or purchase
Senior Indebtedness or Indebtedness (other than any Disqualified
Stock) of a Restricted Subsidiary (in each case other than
Indebtedness owed to the Company or an Affiliate of the Company)
within one year from the later of the date of such Asset Disposition
and the receipt of such Net Available Cash;
(B) second, to the extent of the balance of such Net Available
Cash after application in accordance with clause (A), to the extent
the Company elects, to acquire Additional Assets within one year (or
enter into a binding agreement therefor within such period and acquire
such Additional Assets within 18 months) from the later of the date of
such Asset Disposition and the receipt of such Net Available Cash; and
(C) third, to the extent of the balance of such Net Available
Cash after application in accordance with clauses (A) and (B), to make
an Offer to the holders of the Securities (and to holders of other
Senior Subordinated Indebtedness designated by the Company) to
purchase Securities (and such other Senior Subordinated Indebtedness)
pursuant to and subject to the conditions of Section 4.06(b);
provided, however, that in connection with any prepayment, repayment or purchase
of Indebtedness pursuant to clause (A) or (C) above, the Company or such
Restricted Subsidiary shall permanently retire such Indebtedness and shall cause
the related loan commitment (if any) to be permanently reduced in an amount
equal to the principal amount so
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51
prepaid, repaid or purchased. Notwithstanding the foregoing provisions of this
Section 4.06, the Company and the Restricted Subsidiaries shall not be required
to apply any Net Available Cash in accordance with this Section 4.06(a) except
to the extent that the aggregate Net Available Cash from all Asset Dispositions
which are not applied in accordance with this Section 4.06(a) exceeds $10.0
million. Pending application of Net Available Cash pursuant to this Section
4.06(a), such Net Available Cash shall be invested in Permitted Investments or
used to reduce loans outstanding under any revolving credit facility.
For the purposes of this Section 4.06, the following are deemed to be cash
or cash equivalents: (x) the assumption of Indebtedness of the Company or any
Restricted Subsidiary and the release of the Company or such Restricted
Subsidiary from all liability on such Indebtedness in connection with such Asset
Disposition, (y) securities received by the Company or any Restricted Subsidiary
from the transferee that are promptly converted by the Company or such
Restricted Subsidiary into cash and (z) any Additional Assets (so long as such
Additional Assets were acquired for fair market value (as determined in good
faith by the Board of Directors of the Company) in connection with the
transaction giving rise to such Asset Disposition and are used for the same or
similar purpose as the assets disposed of in such Asset Disposition), which
Additional Assets shall be deemed to have been acquired pursuant to clause
(3)(B) of Section 4.06(a) in connection with such Asset Disposition.
(b) In the event of an Asset Disposition that requires the purchase of
Securities (and other Senior Subordinated Indebtedness) pursuant to Section
4.06(a)(3)(C), the Company shall be required to purchase Securities tendered
pursuant to an offer by the Company for the Securities (and other Senior
Subordinated Indebtedness) (the "Offer") at a purchase price of 100% of their
principal amount (without premium) plus accrued but unpaid interest (or, in
respect of such other Senior Subordinated Indebtedness, such lesser price, if
any, as may be provided for by the terms of such Senior Subordinated
Indebtedness) in accordance with the procedures (including prorating in the
event of oversubscription) set forth in Section 4.06(c). If the aggregate
purchase price of the Securities (and any other Senior Subordinated
Indebtedness) tendered exceeds the Net Available Cash allotted to the purchase
thereof, the Company will select the Securities (and any other Senior
Subordinated Indebtedness) to be purchased on a pro rata basis but in
denominations of $1,000 or multiples thereof. The Company shall not be required
to make an Offer to
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52
purchase Securities (and other Senior Subordinated Indebtedness) pursuant to
this Section 4.06 if the Net Available Cash available therefor is less than
$10.0 million (which lesser amount shall be carried forward for purposes of
determining whether such an Offer is required with respect to the Net Available
Cash from any subsequent Asset Disposition).
(c) (1) Promptly, and in any event within 10 days after the Company becomes
obligated to make an Offer, the Company shall be obligated to deliver to the
Trustee and send, by first-class mail to each Holder, a written notice stating
that the Holder may elect to have his Securities purchased by the Company either
in whole or in part (subject to prorating as hereinafter described in the event
the Offer is oversubscribed) in integral multiples of $1,000 of principal
amount, at the applicable purchase price. The notice shall specify a purchase
date not less than 30 days nor more than 60 days after the date of such notice
(the "Purchase Date") and shall contain such information concerning the business
of the Company which the Company in good faith believes will enable such Holders
to make an informed decision (which at a minimum will include (i) the most
recently filed Annual Report on Form 10-K (including audited consolidated
financial statements) of the Company, the most recent subsequently filed
Quarterly Report on Form 10-Q and any Current Report on Form 8-K of the Company
filed subsequent to such Quarterly Report, other than Current Reports describing
Asset Dispositions otherwise described in the offering materials (or
corresponding successor reports or, until such time as the Company shall become
subject to the reporting requirements of Section 13 or 15(d) of the Exchange
Act, a corresponding report prepared pursuant to Section 4.02), (ii) a
description of material developments in the Company's business subsequent to the
date of the latest of such Reports, and (iii) if material, appropriate pro forma
financial information) and all instructions and materials necessary to tender
Securities pursuant to the Offer, together with the information contained in
clause (3).
(2) Not later than the date upon which written notice of an Offer is
delivered to the Trustee as provided above, the Company shall deliver to the
Trustee an Officers' Certificate as to (i) the amount of the Offer (the "Offer
Amount"), (ii) the allocation of the Net Available Cash from the Asset
Dispositions pursuant to which such Offer is being made and (iii) the compliance
of such allocation with the provisions of Section 4.06(a). On such date, the
Company shall also irrevocably deposit with the Trustee or with a paying agent
other than the Company in Temporary Cash
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53
Investments, maturing on the last day prior to the Purchase Date or on the
Purchase Date if funds are immediately available by open of business, an amount
equal to the Offer Amount to be held for payment in accordance with the
provisions of this Section. Upon the expiration of the period for which the
Offer remains open (the "Offer Period"), the Company shall deliver to the
Trustee for cancellation the Securities or portions thereof which have been
properly tendered to and are to be accepted by the Company. The Trustee shall,
on the Purchase Date, mail or deliver payment to each tendering Holder in the
amount of the purchase price. In the event that the aggregate purchase price of
the Securities delivered by the Company to the Trustee is less than the Offer
Amount, the Trustee shall deliver the excess to the Company immediately after
the expiration of the Offer Period for application in accordance with this
Section.
(3) Holders electing to have a Security purchased shall be required to
surrender the Security, with an appropriate form duly completed, to the Company
at the address specified in the notice at least three Business Days prior to the
Purchase Date. Holders shall be entitled to withdraw their election if the
Trustee or the Company receives, not later than one Business Day prior to the
Purchase Date, a telegram, telex, facsimile transmission or letter setting forth
the name of the Holder, the principal amount of the Security which was delivered
for purchase by the Holder and a statement that such Holder is withdrawing his
election to have such Security purchased. If at the expiration of the Offer
Period the aggregate principal amount of Securities (and any other Senior
Subordinated Indebtedness included in the Offer) surrendered pursuant to the
Offer exceeds the Offer Amount, the Company shall select the Securities and
other Senior Subordinated Indebtedness to be purchased on a pro rata basis (with
such adjustments as may be deemed appropriate by the Company so that only
Securities and other Senior Subordinated Indebtedness in denominations of
$1,000, or integral multiples thereof, shall be purchased). Holders whose
Securities are purchased only in part shall be issued new Securities equal in
principal amount to the unpurchased portion of the Securities surrendered.
(4) At the time the Company delivers Securities to the Trustee which are to
be accepted for purchase, the Company shall also deliver an Officers'
Certificate stating that such Securities are to be accepted by the Company
pursuant to and in accordance with the terms of this Section 4.06. A Security
shall be deemed to have been accepted for purchase at the time the Trustee,
directly or through an
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54
agent, mails or delivers payment therefor to the surrendering Holder.
(d) The Company shall comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities laws
or regulations in connection with the repurchase of Securities pursuant to this
Section. To the extent that the provisions of any securities laws or regulations
conflict with provisions of this Section, the Company shall comply with the
applicable securities laws and regulations and shall not be deemed to have
breached its obligations under this Section by virtue thereof.
SECTION 4.07. Limitation on Affiliate Transactions. (a) The Company shall
not, and shall not permit any Restricted Subsidiary to, enter into or permit to
exist any transaction (including the purchase, sale, lease or exchange of any
property, employee compensation arrangements or the rendering of any service)
with any Affiliate of the Company (an "Affiliate Transaction") unless the terms
thereof:
(1) are no less favorable to the Company or such Restricted Subsidiary
than those that could be obtained at the time of such transaction in
arm's-length dealings with a Person who is not such an Affiliate;
(2) if such Affiliate Transaction involves an amount in excess of $2.5
million, (A) are set forth in writing and (B) have been approved by a
majority of the members of the Board of Directors having no personal stake
in such Affiliate Transaction; and
(3) if such Affiliate Transaction involves an amount in excess of
$10.0 million, have been determined by (A) a nationally recognized
investment banking firm to be fair, from a financial standpoint, to the
Company and its Restricted Subsidiaries or (B) an accounting or appraisal
firm nationally recognized in making such determinations to be on terms
that are not less favorable to the Company and its Restricted Subsidiaries
than the terms that could be obtained in an arm's-length transaction from a
Person that is not an Affiliate of the Company.
(b) The provisions of Section 4.07(a) shall not prohibit:
(1) any Restricted Payment permitted to be paid pursuant to Section
4.04;
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(2) any issuance of securities, or other payments, awards or grants in
cash, securities or otherwise pursuant to, or the funding of, employment
arrangements, stock options and stock ownership plans approved by the Board
of Directors;
(3) the grant of stock options or similar rights to employees and
directors of the Company pursuant to plans approved by the Board of
Directors;
(4) loans or advances to employees in the ordinary course of business
in accordance with the past practices of the Company or its Restricted
Subsidiaries, but in any event not to exceed $5.0 million in the aggregate
outstanding at any one time;
(5) reasonable fees, compensation or employee benefit arrangements to
and indemnity provided for the benefit of directors, officers or employees
of the Company or any Subsidiary in the ordinary course of business;
(6) any Affiliate Transaction between the Company and a Wholly Owned
Subsidiary or between Wholly Owned Subsidiaries;
(7) any Affiliate Transaction with Harris pursuant to written
agreements in effect on the Issue Date and as amended, renewed or extended
from time to time; provided, however, that any such amendment, renewal or
extension shall not contain terms which are materially less favorable to
the Company than those in the agreements in effect on the Issue Date;
(8) the issuance or sale of any Capital Stock (other than Disqualified
Stock) of the Company; and
(9) any Tax Sharing Agreement; provided, however, that the aggregate
amount payable by the Company pursuant thereto shall not exceed the amount
of taxes that the Company would have been liable for on a stand-alone
basis.
SECTION 4.08. Limitation on the Sale or Issuance of Capital Stock of
Restricted Subsidiaries. The Company shall not sell or otherwise dispose of any
Capital Stock of a Restricted Subsidiary, and shall not permit any Restricted
Subsidiary, directly or indirectly, to issue or sell or otherwise dispose of any
of its Capital Stock except:
(1) to the Company or a Wholly Owned Subsidiary;
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56
(2) if, immediately after giving effect to such issuance, sale or
other disposition, neither the Company nor any of its Subsidiaries own any
Capital Stock of such Restricted Subsidiary;
(3) if, immediately after giving effect to such issuance, sale or
other disposition, such Restricted Subsidiary would no longer constitute a
Restricted Subsidiary and any Investment in such Person remaining after
giving effect thereto would have been permitted to be made under the
covenant described in Section 4.04 if made on the date of such issuance,
sale or other disposition; or
(4) directors' qualifying shares.
SECTION 4.09. Change of Control. (a) Upon the occurrence of a Change of
Control, each Holder shall have the right to require that the Company repurchase
such Holder's Securities at a purchase price in cash equal to 101% of the
principal amount thereof plus accrued and unpaid interest, if any, to the date
of purchase (subject to the right of holders of record on the relevant record
date to receive interest due on the relevant interest payment date), in
accordance with the terms contemplated in Section 4.09(b). In the event that at
the time of such Change of Control the terms of any Senior Indebtedness of the
Company restrict or prohibit any offer pursuant to this Section or the
repurchase of Securities pursuant to this Section, then prior to the mailing of
the notice to Holders provided for in Section 4.09(b) below but in any event
within 30 days following any Change of Control, the Company shall (1) repay in
full all such Senior Indebtedness or offer to repay in full all such Senior
Indebtedness and repay such Senior Indebtedness of each lender who has accepted
such offer or (2) obtain the requisite consent under the agreements governing
such Senior Indebtedness to permit the repurchase of the Securities as provided
for in Section 4.09(b). The Company must first comply with the covenant
described in the preceding sentence before it will be required to purchase
Securities in the event of a Change of Control; provided, however, that the
Company's failure to comply with the covenant described in the preceding
sentence or to make a Change of Control offer because of any such failure shall
constitute a Default described in Section 6.01(4) (and not under Section
6.01(2)).
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(b) Within 30 days following any Change of Control but subject to the
provisions of Section 4.09(a), the Company shall mail a notice to each Holder
with a copy to the Trustee stating:
(1) that a Change of Control has occurred and that such Holder has the
right to require the Company to purchase such Holder's Securities at a
purchase price in cash equal to 101% of the principal amount thereof plus
accrued and unpaid interest (if any) to the date of purchase (subject to
the right of Holders of record on the relevant record date to receive
interest on the relevant interest payment date);
(2) the circumstances and relevant facts regarding such Change of
Control;
(3) the repurchase date (which shall be no earlier than 30 days nor
later than 60 days from the date such notice is mailed); and
(4) the instructions determined by the Company, consistent with this
Section, that a Holder must follow in order to have its Securities
purchased.
(c) Holders electing to have a Security purchased will be required to
surrender the Security, with an appropriate form duly completed, to the Company
at the address specified in the notice at least three Business Days prior to the
purchase date. Holders will be entitled to withdraw their election if the
Trustee or the Company receives not later than one Business Day prior to the
purchase date, a telegram, telex, facsimile transmission or letter setting forth
the name of the Holder, the principal amount of the Security which was delivered
for purchase by the Holder and a statement that such Holder is withdrawing his
election to have such Security purchased.
(d) On the purchase date, all Securities purchased by the Company under
this Section shall be delivered by the Trustee for cancellation, and the Company
shall pay the purchase price plus accrued and unpaid interest, if any, to the
Holders entitled thereto.
(e) The Company shall comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities laws
or regulations in connection with the repurchase of Securities pursuant to this
Section. To the extent that the provisions of any securities laws or regulations
conflict with provisions of this Section, the Company shall comply with the
applicable
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securities laws and regulations and shall not be deemed to have breached its
obligations under this Section by virtue thereof.
SECTION 4.10. Future Guarantors. In the event that, after the Issue Date,
any Restricted Subsidiary (other than a Foreign Subsidiary) Guarantees any
Senior Indebtedness of the Company or any Subsidiary Guarantor Incurred pursuant
to paragraph (a) or clause (1), (2), (10) or (16) of Section 4.03(b), the
Company shall cause such Restricted Subsidiary to Guarantee the Securities by
executing a supplemental indenture hereto and shall cause all Indebtedness of
such Restricted Subsidiary owing to the Company or any other Subsidiary of the
Company and not previously discharged to be converted into Capital Stock of such
Restricted Subsidiary (other than Disqualified Stock).
SECTION 4.11. Compliance Certificate. The Company shall deliver to the
Trustee within 120 days after the end of each fiscal year of the Company a
certificate of the principal executive officer, the principal financial officer
or the principal accounting officer of the Company stating that in the course of
the performance by the signer of his or her duties as an officer of the Company
such officer would normally have knowledge of any Default and whether or not the
signer knows of any Default that occurred during such period. If such signer
does, the certificate shall describe the Default, its status and what action the
Company is taking or proposes to take with respect thereto. The Company also
shall comply with TIA ss. 314(a)(4).
SECTION 4.12. Further Instruments and Acts. Upon request of the Trustee,
the Company will execute and deliver such further instruments and do such
further acts as may be reasonably necessary or proper to carry out more
effectively the purpose of this Indenture.
ARTICLE 5
Successor Companies
SECTION 5.01. When Company May Merge or Transfer Assets. (a) The Company
shall not consolidate with or merge with or into, or convey, transfer or lease,
in one transaction or a series of transactions, all or substantially all its
assets to, any Person, unless:
(1) the resulting, surviving or transferee Person (the "Successor
Company") shall be a Person organized and existing under the laws of the
United States of
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America, any State thereof or the District of Columbia and the Successor
Company (if not the Company) shall expressly assume, by an indenture
supplemental hereto, executed and delivered to the Trustee, in form
satisfactory to the Trustee, all the obligations of the Company under the
Securities and this Indenture;
(2) immediately after giving effect to such transaction (and treating
any Indebtedness which becomes an obligation of the Successor Company or
any Subsidiary as a result of such transaction as having been Incurred by
the Successor Company or such Subsidiary at the time of such transaction),
no Default shall have occurred and be continuing;
(3) immediately after giving effect to such transaction, the Successor
Company would be able to Incur an additional $1.00 of Indebtedness pursuant
to Section 4.03(a); and
(4) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such
consolidation, merger or transfer and such supplemental indenture (if any)
comply with this Indenture;
provided, however, that clause (3) above shall not apply (x) if, in the good
faith determination of the Board of Directors, whose determination shall be
evidenced by a resolution of the Board of Directors, the principal purpose and
effect of such transaction is to change the jurisdiction of incorporation of the
Company or (y) in the case of a merger of the Company with or into a Wholly
Owned Subsidiary.
The Successor Company shall be the successor to the Company and shall
succeed to, and be substituted for, and may exercise every right and power of,
the Company under this Indenture, but the predecessor Company in the case of a
conveyance, transfer or lease shall not be released from the obligation to pay
the principal of and interest on the Securities.
(b) The Company shall not permit any Subsidiary Guarantor to
consolidate with or merge with or into, or convey, transfer or lease, in one
transaction or series of transactions, all or substantially all of its assets to
any Person unless:
(1) the resulting, surviving or transferee Person (if not such
Subsidiary) shall be a Person organized
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and existing under the laws of the jurisdiction under which such Subsidiary
was organized or under the laws of the United States of America, or any
State thereof or the District of Columbia, and such Person shall expressly
assume, by executing a Guaranty Agreement, in a form acceptable to the
Trustee, all the obligations of such Subsidiary, if any, under its
Subsidiary Guaranty;
(2) immediately after giving effect to such transaction or
transactions on a pro forma basis (and treating any Indebtedness which
becomes an obligation of the resulting, surviving or transferee Person as a
result of such transaction as having been issued by such Person at the time
of such transaction), no Default shall have occurred and be continuing; and
(3) the Company delivers to the Trustee an Officers' Certificate and
an Opinion of Counsel, each stating that such consolidation, merger or
transfer and such Guaranty Agreement, if any, complies with this Indenture.
The provisions of clauses (1) and (2) above shall not apply to any one or more
transactions which constitute an Asset Disposition if the Company has complied
with the applicable provisions of Section 4.06.
The Person who shall be the successor to a Subsidiary Guarantor shall
succeed to, and be substituted for, and may exercise every right and power of,
the predecessor Subsidiary Guarantor under this Indenture, but the predecessor
Subsidiary Guarantor in the case of a conveyance, transfer or lease shall not be
released from its obligations under its Subsidiary Guaranty.
(c) The Parent will not merge with or into, or convey, transfer or lease,
in one transaction or a series of transactions, all or substantially all of its
assets to any Person unless:
(1) the resulting, surviving or transferee Person (if not the Parent)
shall be a Person organized and existing under the laws of the jurisdiction
under which the Parent was organized or under the laws of the United States
of America, or any State thereof or the District of Columbia, and such
Person shall expressly assume, by executing a Guaranty Agreement, in a form
acceptable to the Trustee, all the obligations of the Parent, if any, under
the Parent Guaranty;
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(2) immediately after giving effect to such transaction or
transactions on a pro forma basis (and treating any Indebtedness which
becomes an obligation of the resulting, surviving or transferee Person as a
result of such transaction as having been issued by such Person at the time
of such transaction), no Default shall have occurred and be continuing; and
(3) the Company delivers to the Trustee an Officers' Certificate and
an Opinion of Counsel, each stating that such consolidation, merger or
transfer and such Guaranty Agreement, if any, complies with this Indenture.
The Person who shall be the successor to the Parent shall succeed to, and
be substituted for, and may exercise every right and power of, the Parent under
this Indenture, but the Parent in the case of a conveyance, transfer or lease
shall not be released from its obligations under the Parent Guaranty.
ARTICLE 6
Defaults and Remedies
SECTION 6.01. Events of Default. An "Event of Default" occurs if:
(1) the Company defaults in any payment of interest on any Security
when the same becomes due and payable, whether or not such payment shall be
prohibited by Article 10, and such default continues for a period of 30
days;
(2) the Company (i) defaults in the payment of the principal of any
Security when the same becomes due and payable at its Stated Maturity, upon
redemption, upon declaration or otherwise, whether or not such payment
shall be prohibited by Article 10, or (ii) fails to redeem or purchase
Securities when required pursuant to this Indenture or the Securities,
whether or not such redemption or purchase shall be prohibited by Article
10;
(3) the Company or the Parent fails to comply with Section 5.01;
(4) the Company fails to comply with Section 4.02, 4.03, 4.04, 4.05,
4.06, 4.07, 4.08, 4.09 or 4.10 (other than a failure to purchase Securities
when required
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under Section 4.06 or 4.09) and such failure continues for 30 days after
the notice specified below;
(5) the Company fails to comply with any of its agreements in the
Securities or this Indenture (other than those referred to in clause (1),
(2), (3) or (4) above) and such failure continues for 60 days after the
notice specified below;
(6) Indebtedness of the Company or any Significant Subsidiary is not
paid within any applicable grace period after final maturity or is
accelerated by the holders thereof because of a default and the total
amount of such Indebtedness unpaid or accelerated exceeds $10.0 million, or
its foreign currency equivalent at the time;
(7) the Company or any Significant Subsidiary pursuant to or within
the meaning of any Bankruptcy Law:
(A) commences a voluntary case;
(B) consents to the entry of an order for relief against it in an
involuntary case;
(C) consents to the appointment of a Custodian of it or for any
substantial part of its property; or
(D) makes a general assignment for the benefit of its creditors;
or takes any comparable action under any foreign laws relating to
insolvency;
(8) a court of competent jurisdiction enters an order or decree under
any Bankruptcy Law that:
(A) is for relief against the Company or any Significant
Subsidiary in an involuntary case;
(B) appoints a Custodian of the Company or any Significant
Subsidiary or for any substantial part of its property; or
(C) orders the winding up or liquidation of the Company or any
Significant Subsidiary;
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or any similar relief is granted under any foreign laws and the order or
decree remains unstayed and in effect for 60 days;
(9) any judgment or decree for the payment of money in excess of $10.0
million or its foreign currency equivalent at the time is entered against
the Company or any Significant Subsidiary, remains outstanding for a period
of 60 days following the entry of such judgment or decree and is not
discharged, waived or the execution thereof stayed within 10 days after the
notice specified below; or
(10) the Parent Guaranty or any Subsidiary Guaranty ceases to be in
full force and effect (other than in accordance with the terms of such
Guaranty) or the Parent or any Subsidiary Guarantor denies or disaffirms
its obligations under the Parent Guaranty or any Subsidiary Guaranty, as
applicable.
The foregoing will constitute Events of Default whatever the reason for any
such Event of Default and whether it is voluntary or involuntary or is effected
by operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body.
The term "Bankruptcy Law" means Title 11, United States Code, or any
similar Federal or state law for the relief of debtors. The term "Custodian"
means any receiver, trustee, assignee, liquidator, custodian or similar official
under any Bankruptcy Law.
A Default under clause (4), (5), or (9) is not an Event of Default until
the Trustee or the holders of at least 25% in principal amount of the
outstanding Securities notify the Company of the Default and the Company does
not cure such Default within the time specified after receipt of such notice.
Such notice must specify the Default, demand that it be remedied and state that
such notice is a "Notice of Default".
The Company shall deliver to the Trustee, within 30 days after the
occurrence thereof, written notice in the form of an Officers' Certificate of
any Event of Default under clause (6) or (10) and any event which with the
giving of notice or the lapse of time would become an Event of Default under
clause (4), (5) or (9), its status and what action the Company is taking or
proposes to take with respect thereto.
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SECTION 6.02. Acceleration. If an Event of Default (other than an Event of
Default specified in Section 6.01(7) or (8) with respect to the Company) occurs
and is continuing, the Trustee by notice to the Company, or the Holders of at
least 25% in principal amount of the Securities by notice to the Company and the
Trustee, may declare the principal of and accrued but unpaid interest on all the
Securities to be due and payable. Upon such a declaration, such principal and
interest shall be due and payable immediately; provided, however, that if upon
such declaration there are any amounts outstanding under the Credit Agreement
and the amounts thereunder have not been accelerated, such principal and
interest shall be due and payable upon the earlier of the time such amounts are
accelerated and five Business Days after receipt by the Company and the
Representative under the Credit Agreement of such declaration. If an Event of
Default specified in Section 6.01(7) or (8) with respect to the Company occurs,
the principal of and interest on all the Securities shall ipso facto become and
be immediately due and payable without any declaration or other act on the part
of the Trustee or any Securityholders. The Holders of a majority in principal
amount of the outstanding Securities by notice to the Trustee may rescind an
acceleration with respect to the Securities and its consequences if the
rescission would not conflict with any judgment or decree and if all existing
Events of Default have been cured or waived except nonpayment of principal or
interest that has become due solely because of acceleration. No such rescission
shall affect any subsequent Default or impair any right consequent thereto.
SECTION 6.03. Other Remedies. If an Event of Default occurs and is
continuing, the Trustee may pursue any available remedy to collect the payment
of principal of or interest on the Securities or to enforce the performance of
any provision of the Securities or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any of
the Securities or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Securityholder in exercising any right or remedy
accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquies cence in the Event of Default. No remedy is
exclusive of any other remedy. All available remedies are cumulative.
SECTION 6.04. Waiver of Past Defaults. The Holders of a majority in
principal amount of the Securities by notice to the Trustee may waive an
existing Default and its consequences except (1) a Default in the payment of the
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principal of or interest on a Security or (2) a Default in respect of a
provision that under Section 9.02 cannot be amended without the consent of each
Securityholder affected. When a Default is waived, it is deemed cured, but no
such waiver shall extend to any subsequent or other Default or impair any
consequent right.
SECTION 6.05. Control by Majority. The Holders of a majority in principal
amount of the Securities may direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee or of exercising any trust
or power conferred on the Trustee. However, the Trustee may refuse to follow any
direction that conflicts with law or this Indenture or, subject to Section 7.01,
that the Trustee determines is unduly prejudicial to the rights of other
Securityholders or would involve the Trustee in personal liability; provided,
however, that the Trustee may take any other action deemed proper by the Trustee
that is not inconsistent with such direction. Prior to taking any action
hereunder, the Trustee shall be entitled to indemnification satisfactory to it
in its sole discretion against all losses and expenses caused by taking or not
taking such action.
SECTION 6.06. Limitation on Suits. Except to enforce the right to receive
payment of principal, premium (if any) or interest when due, no Securityholder
may pursue any remedy with respect to this Indenture or the Securities unless:
(1) the Holder gives to the Trustee written notice stating that an
Event of Default is continuing;
(2) the Holders of at least 25% in principal amount of the Securities
make a written request to the Trustee to pursue the remedy;
(3) such Holder or Holders offer to the Trustee reasonable security or
indemnity against any loss, liability or expense;
(4) the Trustee does not comply with the request within 60 days after
receipt of the request and the offer of security or indemnity; and
(5) the Holders of a majority in principal amount of the Securities do
not give the Trustee a direction inconsistent with the request during such
60-day period.
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A Securityholder may not use this Indenture to prejudice the rights of
another Securityholder or to obtain a preference or priority over another
Securityholder.
SECTION 6.07. Rights of Holders To Receive Payment. Notwithstanding any
other provision of this Indenture, the right of any Holder to receive payment
of principal of and interest on the Securities held by such Holder, on or after
the respective due dates expressed in the Securities, or to bring suit for the
enforcement of any such payment on or after such respective dates, shall not be
impaired or affected without the consent of such Holder.
SECTION 6.08. Collection Suit by Trustee. If an Event of Default specified
in Section 6.01(1) or (2) occurs and is continuing, the Trustee may recover
judgment in its own name and as trustee of an express trust against the Company
for the whole amount then due and owing (together with interest on any unpaid
interest to the extent lawful) and the amounts provided for in Section 7.07.
SECTION 6.09. Trustee May File Proofs of Claim. The Trustee may file such
proofs of claim and other papers or documents as may be necessary or advisable
in order to have the claims of the Trustee and the Securityholders allowed in
any judicial proceedings relative to the Company, its creditors or its property
and, unless prohibited by law or applicable regulations, may vote on behalf of
the Holders in any election of a trustee in bankruptcy or other Person
performing similar functions. The Trustee shall be entitled and empowered to
collect, receive and distribute any money or other property payable or
deliverable on any such claims, and any Custodian in any such judicial
proceeding is hereby authorized by each Holder to make such payments to the
Trustee and, in the event that the Trustee shall consent to the making of such
payments directly to the Holders, to pay to the Trustee any amount due it for
the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and its counsel, and any other amounts due the Trustee under
Section 7.07.
SECTION 6.10. Priorities. If the Trustee collects any money or property
pursuant to this Article 6, it shall pay out the money or property in the
following order:
FIRST: to the Trustee for amounts due under Section 7.07;
SECOND: to holders of Senior Indebtedness of the Company to the extent
required by Article 10;
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THIRD: to Securityholders for amounts due and unpaid on the Securities
for principal and interest, ratably, without preference or priority of any
kind, according to the amounts due and payable on the Securities for
principal and interest, respectively; and
FOURTH: to the Company.
The Trustee may fix a record date and payment date for any payment to
Securityholders pursuant to this Section. At least 15 days before such record
date, the Company shall mail to each Securityholder and the Trustee a notice
that states the record date, the payment date and amount to be paid.
SECTION 6.11. Undertaking for Costs. In any suit for the enforcement of any
right or remedy under this Indenture or in any suit against the Trustee for any
action taken or omitted by it as Trustee, a court in its discretion may require
the filing by any party litigant in the suit of an undertaking to pay the costs
of the suit, and the court in its discretion may assess reasonable costs,
including reasonable attorneys' fees, against any party litigant in the suit,
having due regard to the merits and good faith of the claims or defenses made by
the party litigant. This Section does not apply to a suit by the Trustee, a suit
by a Holder pursuant to Section 6.07 or a suit by Holders of more than 10% in
principal amount of the Securities.
SECTION 6.12. Waiver of Stay or Extension Laws. The Company (to the extent
it may lawfully do so) shall not at any time insist upon, or plead, or in any
manner whatsoever claim or take the benefit or advantage of, any stay or
extension law wherever enacted, now or at any time hereafter in force, which may
affect the covenants or the performance of this Indenture; and the Company (to
the extent that it may lawfully do so) hereby expressly waives all benefit or
advantage of any such law, and shall not hinder, delay or impede the execution
of any power herein granted to the Trustee, but shall suffer and permit the
execution of every such power as though no such law had been enacted.
ARTICLE 7
Trustee
SECTION 7.01. Duties of Trustee. (a) If an Event of Default has occurred
and is continuing, the Trustee shall exercise such of the rights and powers
vested in it by this Indenture, and use the same degree of care and skill in
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their exercise, as a prudent Person would exercise or use under the
circumstances in the conduct of such Person's own affairs.
(b) Except during the continuance of an Event of Default:
(1) the Trustee undertakes to perform such duties and only such duties
as are specifically set forth in this Indenture and no implied covenants or
obligations shall be read into this Indenture against the Trustee; and
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon certificates or opinions furnished to
the Trustee and conforming to the requirements of this Indenture. However,
in the case of any such certificates or opinions which, by any provision
hereof, are required to be furnished to the Trustee, the Trustee shall
examine such certificates and opinions to determine whether or not they
conform to the requirements of this Indenture.
(c) No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act or its own wilful misconduct, except that:
(1) this paragraph does not limit the effect of paragraph (b) of this
Section;
(2) the Trustee shall not be liable for any error of judgment
made in good faith by a Trust Officer unless it is proved that the
Trustee was negligent in ascertaining the pertinent facts; and
(3) the Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.05.
(d) Every provision of this Indenture that in any way relates
to the Trustee, other than paragraph (g) of this Section, is subject to
paragraphs (a), (b) and (c) of this Section.
(e) The Trustee shall not be liable for interest on any money received by
it except as the Trustee may agree in writing with the Company.
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(f) Money held in trust by the Trustee need not be segregated from other
funds except to the extent required by law.
(g) No provision of this Indenture shall require the Trustee to expend or
risk its own funds or otherwise incur financial liability in the performance of
any of its duties hereunder or in the exercise of any of its rights or powers,
if it shall have reasonable grounds to believe that repayment of such funds or
adequate indemnity against such risk or liability is not reasonably assured to
it.
(h) Every provision of this Indenture relating to the conduct or affecting
the liability of or affording protection to the Trustee shall be subject to the
provisions of this Section and to the provisions of the TIA.
SECTION 7.02. Rights of Trustee. (a) The Trustee may conclusively rely on
any document believed by it to be genuine and to have been signed or presented
by the proper Person. The Trustee need not investigate any fact or matter stated
in the document.
(b) Before the Trustee acts or refrains from acting, it may require an
Officers' Certificate or an Opinion of Counsel. The Trustee shall not be liable
for any action it takes or omits to take in good faith in reliance on the
Officers' Certificate or Opinion of Counsel.
(c) The Trustee may act through agents and shall not be responsible for the
misconduct or negligence of any agent appointed with due care.
(d) Subject to Section 7.01(c), the Trustee shall not be liable for any
action it takes or omits to take in good faith which it believes to be
authorized or within its rights or powers.
(e) The Trustee may consult with counsel, and the advice or opinion of
counsel with respect to legal matters relating to this Indenture and the
Securities shall be full and complete authorization and protection from
liability in respect to any action taken, omitted or suffered by it hereunder
in good faith and in accordance with the advice or opinion of such counsel.
SECTION 7.03. Individual Rights of Trustee. The Trustee in its individual
or any other capacity may become the owner or pledgee of Securities and may
otherwise deal with the Company or its Affiliates with the same rights it would
have if it were not Trustee. Any Paying Agent,
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Registrar, co-registrar or co-paying agent may do the same with like rights.
However, the Trustee must comply with Sections 7.10 and 7.11.
SECTION 7.04. Trustee's Disclaimer. The Trustee shall not be responsible
for and makes no representation as to the validity or adequacy of this Indenture
or the Securities, it shall not be accountable for the Company's use of the
proceeds from the Securities, and it shall not be responsible for any statement
of the Company in the Indenture or in any document issued in connection with
the sale of the Securities or in the Securities other than the Trustee's
certificate of authentication.
SECTION 7.05. Notice of Defaults. If a Default occurs and is continuing and
if it is actually known to the Trustee, or upon written notice from the Company
or any Securityholder or upon a Payment Default, the Trustee shall mail to each
Securityholder notice of the Default within 90 days after it occurs. Except in
the case of a Default in payment of principal of or interest on any Security
(including payments pursuant to the mandatory redemption provisions of such
Security, if any), the Trustee may withhold the notice if and so long as a
committee of its Trust Officers in good faith determines that withholding the
notice is in the interests of Securityholders.
SECTION 7.06. Reports by Trustee to Holders. By July 15 of each year,
beginning with the July 15 following the date of this Indenture, the Trustee
shall mail to each Securityholder a brief report dated as of May 15 of each year
that complies with TIA ss. 313(a). The Trustee also shall comply with TIA
ss. 313(b).
A copy of each report at the time of its mailing to Securityholders shall
be filed with the SEC and each stock exchange (if any) on which the Securities
are listed. The Company agrees to notify promptly the Trustee whenever the
Securities become listed on any stock exchange and of any delisting thereof.
SECTION 7.07. Compensation and Indemnity. The Company shall pay to the
Trustee from time to time reasonable compensation for its services. The
Trustee's compensation shall not be limited by any law on compensation of a
trustee of an express trust. The Company shall reimburse the Trustee promptly
upon request for all reasonable out-of-pocket expenses, disbursements and
advances incurred or made by it, including costs of collection, in addition to
the compensation for its services. Such expenses shall include the reasonable
compensation and expenses,
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disbursements and advances of the Trustee's agents, counsel, accountants and
experts. The Company shall indemnify the Trustee against any and all loss,
liability or expense (including attorneys' reasonable fees) incurred by it in
connection with the administration of this trust and the performance of its
duties hereunder, including the costs and expenses of enforcing this Indenture
(including this Section 7.07) against the Company and the Guarantors and
defending itself against any claim (whether asserted by any Securityholder or
any other Person) or liability in connection with the exercise or performance of
any of its powers or duties hereunder, except to the extent that any such loss,
liability or expense is attributable to its negligence or bad faith. The Trustee
shall notify the Company promptly of any claim for which it may seek indemnity.
Failure by the Trustee to so notify the Company shall not relieve the Company
and the Guarantors of its obligations hereunder unless such failure prejudices
the Company. The Company shall defend the claim and the Trustee may have
separate counsel and the Company shall pay the fees and expenses of such
counsel. The Company and the Guarantors need not reimburse any expense or
indemnify against any loss, liability or expense incurred by the Trustee through
the Trustee's own wilful misconduct, negligence or bad faith. The Company need
not pay for any settlement made by the Trustee without the Company's consent,
such consent not to be unreasonably withheld.
To secure the Company's payment obligations in this Section, the Trustee
shall have a lien prior to the Securities on all money or property held or
collected by the Trustee other than money or property held in trust to pay
principal of and interest on particular Securities.
The Company's payment obligations, and the lien granted to the Trustee,
pursuant to this Section shall survive the discharge of this Indenture. When the
Trustee incurs expenses or renders services after the occurrence of a Default
specified in Section 6.01(7) or (8) with respect to the Company, the expenses
and the compensation for the services (including the fees and expenses of its
agents and counsel) are intended to constitute expenses of administration under
the Bankruptcy Law.
SECTION 7.08. Replacement of Trustee. The Trustee may resign at any time by
so notifying the Company. The Holders of a majority in principal amount of the
Securities
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may remove the Trustee by so notifying the Trustee and may appoint a successor
Trustee. The Company shall remove the Trustee if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged bankrupt or insolvent;
(3) a receiver or other public officer takes charge of the Trustee or
its property; or
(4) the Trustee otherwise becomes incapable of acting.
If the Trustee resigns, is removed by the Company or by the Holders of a
majority in principal amount of the Securities and such Holders do not
reasonably promptly appoint a successor Trustee, or if a vacancy exists in the
office of Trustee for any reason (the Trustee in such event being referred to
herein as the retiring Trustee), the Company shall promptly appoint a successor
Trustee.
A successor Trustee shall deliver a written acceptance of its appointment
to the retiring Trustee and to the Company. Thereupon the resignation or removal
of the retiring Trustee shall become effective, and the successor Trustee shall
have all the rights, powers and duties of the Trustee under this Indenture. The
successor Trustee shall mail a notice of its succession to Securityholders. The
retiring Trustee shall promptly transfer all property held by it as Trustee to
the successor Trustee, provided that the amounts owing to the Trustee hereunder
have been paid and subject to the lien provided for in Section 7.07.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee or the Holders of
10% in principal amount of the Securities may petition any court of competent
jurisdiction for the appointment of a successor Trustee.
If the Trustee fails to comply with Section 7.10, any Securityholder may
petition any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee.
Notwithstanding the replacement of the Trustee pursuant to this Section,
the Company's obligations under Section 7.07 shall continue for the benefit of
the retiring Trustee.
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SECTION 7.09. Successor Trustee by Merger. If the Trustee consolidates
with, merges or converts into, or transfers all or substantially all its
corporate trust business or assets to, another corporation or banking
association, the resulting, surviving or transferee corporation without any
further act shall be the successor Trustee provided that such successor shall be
eligible and qualified under Section 7.10.
In case at the time such successor or successors by merger, conversion or
consolidation to the Trustee shall succeed to the trusts created by this
Indenture any of the Securities shall have been authenticated but not delivered,
any such successor to the Trustee may adopt the certificate of authentication of
any predecessor trustee, and deliver such Securities so authenticated; and in
case at that time any of the Securities shall not have been authenticated, any
successor to the Trustee may authenticate such Securities either in the name of
any predecessor hereunder or in the name of the successor to the Trustee; and in
all such cases such certificates shall have the full force which it is anywhere
in the Securities or in this Indenture provided that the certificate of the
Trustee shall have.
SECTION 7.10. Eligibility; Disqualification. The Trustee shall at all times
satisfy the requirements of TIA ss. 310(a). The Trustee shall have a combined
capital and surplus of at least $50,000,000 as set forth in its most recent
published annual report of condition. The Trustee shall comply with TIA
ss. 310(b); provided, however, that there shall be excluded from the operation
of TIA ss. 310(b)(1) any indenture or indentures under which other securities or
certificates of interest or participation in other securities of the Company
are outstanding if the requirements for such exclusion set forth in TIA
ss. 310(b)(1) are met.
SECTION 7.11. Preferential Collection of Claims Against Company. The
Trustee shall comply with TIA ss. 311(a), excluding any creditor relationship
listed in TIA ss. 311(b). A Trustee who has resigned or been removed shall be
subject to TIA ss. 311(a) to the extent indicated therein.
ARTICLE 8
Discharge of Indenture; Defeasance
SECTION 8.01. Discharge of Liability on Securities; Defeasance. (a) When
(1) the Company delivers to the Trustee all outstanding Securities (other than
Securities
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replaced pursuant to Section 2.07) for cancellation or (2) all outstanding
Securities have become due and payable, whether at maturity or as a result of
the mailing of a notice of redemption pursuant to Article 3 hereof and the
Company irrevocably deposits with the Trustee funds sufficient to pay at
maturity or upon redemption all outstanding Securities, including interest
thereon to maturity or such redemption date (other than Securities replaced
pursuant to Section 2.07), and if in either case the Company pays all other sums
payable hereunder by the Company, then this Indenture shall, subject to Sections
8.01(c), cease to be of further effect. The Trustee shall acknowledge
satisfaction and discharge of this Indenture on demand of the Company
accompanied by an Officers' Certificate and an Opinion of Counsel and at the
cost and expense of the Company.
(b) Subject to Sections 8.01(c) and 8.02, the Company at any time may
terminate (1) all its obligations under the Securities and this Indenture
("legal defeasance option") or (2) its obligations under Sections 4.02 (subject
to any requirements of the TIA), 4.03, 4.04, 4.05, 4.06, 4.07, 4.08, 4.09 and
4.10 and the operation of Sections 6.01(4), 6.01(6), 6.01(7), 6.01(8) and
6.01(9) (but, in the case of Sections 6.01(7) and (8), with respect only to
Significant Subsidiaries) and the limitations contained in Section 5.01(a)(3)
("covenant defeasance option"). The Company may exercise its legal defeasance
option notwithstanding its prior exercise of its covenant defeasance option.
If the Company exercises its legal defeasance option, payment of the
Securities may not be accelerated because of an Event of Default with respect
thereto. If the Company exercises its covenant defeasance option, payment of the
Securities may not be accelerated because of an Event of Default specified in
Sections 6.01(4), 6.01(6), 6.01(7), 6.01(8) and 6.01(9) (but, in the case of
Sections 6.01(7) and (8), with respect only to Significant Subsidiaries) or
because of the failure of the Company to comply with Section 5.01(a)(3) or
because of the failure of the Parent to comply with Section 5.01. If the Company
exercises its legal defeasance option or its covenant defeasance option, the
Parent shall be released from all its obligations with respect to the Parent
Guaranty and each Subsidiary Guarantor shall be released from all its
obligations with respect to its Subsidiary Guaranty.
Upon satisfaction of the conditions set forth herein and upon request of
the Company, the Trustee shall acknowledge in writing the discharge of those
obligations that the Company terminates.
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(c) Notwithstanding clauses (a) and (b) above, the Company's and each of
the Guarantors' obligations in Sections 2.03, 2.04, 2.05, 2.06, 2.07, 2.08,
7.07, 7.08, 8.04, 8.05, 8.06 and 11.01 through 11.06 shall survive until the
Securities have been paid in full. Thereafter, the Company's obligations in
Sections 7.07, 8.04 and 8.05 shall survive.
SECTION 8.02. Conditions to Defeasance. The Company may exercise its legal
defeasance option or its covenant defeasance option only if:
(1) the Company irrevocably deposits in trust with the Trustee money
or U.S. Government Obligations for the payment of principal of and interest
on the Securities to maturity or redemption, as the case may be;
(2) the Company delivers to the Trustee a certificate from a
nationally recognized firm of independent accountants expressing their
opinion that the payments of principal and interest when due and without
reinvestment on the deposited U.S. Government Obligations plus any
deposited money without investment will provide cash at such times and in
such amounts as will be sufficient to pay principal and interest when due
on all the Securities to maturity or redemption, as the case may be;
(3) 123 days pass after the deposit is made and during the 123-day
period no Default specified in Sections 6.01(7) or (8) with respect to the
Company occurs which is continuing at the end of the period;
(4) the deposit does not constitute a default under any other
agreement binding on the Company and is not prohibited by Article 10;
(5) the Company delivers to the Trustee an Opinion of Counsel to the
effect that the trust resulting from the deposit does not constitute, or is
qualified as, a regulated investment company under the Investment Company
Act of 1940, as amended;
(6) in the case of the legal defeasance option, the Company shall have
delivered to the Trustee an Opinion of Counsel stating that (i) the Company
has received from, or there has been published by, the Internal Revenue
Service a ruling, or (ii) since the date of this Indenture there has been a
change in the applicable Federal income tax law, in either case to the
effect that, and based thereon such Opinion of
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Counsel shall confirm that, the Securityholders will not recognize income,
gain or loss for Federal income tax purposes as a result of such defeasance
and will be subject to Federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if such defeasance
had not occurred;
(7) in the case of the covenant defeasance option, the Company shall
have delivered to the Trustee an Opinion of Counsel to the effect that the
Securityholders will not recognize income, gain or loss for Federal income
tax purposes as a result of such covenant defeasance and will be subject
to Federal income tax on the same amounts, in the same manner and at the
same times as would have been the case if such covenant defeasance had not
occurred; and
(8) the Company delivers to the Trustee an Officers' Certificate and
an Opinion of Counsel, each stating that all conditions precedent to the
defeasance and discharge of the Securities as contemplated by this Article
8 have been complied with.
Before or after a deposit, the Company may make arrangements satisfactory
to the Trustee for the redemption of Securities at a future date in accordance
with Article 3.
SECTION 8.03. Application of Trust Money. The Trustee shall hold in trust
money or U.S. Government Obligations deposited with it pursuant to this Article
8. It shall apply the deposited money and the money from U.S. Government
Obligations through the Paying Agent and in accordance with this Indenture to
the payment of principal of and interest on the Securities. Money and securities
so held in trust are not subject to Article 10.
SECTION 8.04. Repayment to Company. The Trustee and the Paying Agent shall
promptly turn over to the Company upon request any excess money or securities
held by them at any time.
Subject to any applicable abandoned property law, the Trustee and the
Paying Agent shall pay to the Company upon request any money held by them for
the payment of principal or interest that remains unclaimed for two years, and,
thereafter, Securityholders entitled to the money must look to the Company for
payment as general creditors.
SECTION 8.05. Indemnity for Government Obligations. The Company shall pay
and shall indemnify the Trustee against any tax, fee or other charge imposed on
or
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assessed against deposited U.S. Government Obligations or the principal and
interest received on such U.S. Government Obligations.
SECTION 8.06. Reinstatement. If the Trustee or Paying Agent is
unable to apply any money or U.S. Government Obligations in accordance with this
Article 8 by reason of any legal proceeding or by reason of any order or
judgment of any court or governmental authority enjoining, restraining or
otherwise prohibiting such application, the Company's obligations under this
Indenture and the Securities shall be revived and reinstated as though no
deposit had occurred pursuant to this Article 8 until such time as the Trustee
or Paying Agent is permitted to apply all such money or U.S. Government
Obligations in accordance with this Article 8; provided, however, that, if the
Company has made any payment of interest on or principal of any Securities
because of the reinstatement of its obligations, the Company shall be subrogated
to the rights of the Holders of such Securities to receive such payment from the
money or U.S. Government Obligations held by the Trustee or Paying Agent.
ARTICLE 9
Amendments
SECTION 9.01. Without Consent of Holders. The Company and the Trustee may
amend this Indenture or the Securities without notice to or consent of any
Securityholder:
(1) to cure any ambiguity, omission, defect or inconsistency;
(2) to comply with Article 5;
(3) to provide for uncertificated Securities in addition to or in
place of certificated Securities; provided, however, that the
uncertificated Securities are issued in registered form for purposes of
Section 163(f) of the Code or in a manner such that the uncertificated
Securities are described in Section 163(f)(2)(B) of the Code;
(4) to make any change in Article 10 or 12 that would limit or
terminate the benefits available to any holder of Senior Indebtedness (or
Representatives therefor) under Article 10 or Article 12;
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(5) to add guarantees with respect to the Securities, including any
Subsidiary Guaranties, or to secure the Securities;
(6) to add to the covenants of the Company for the benefit of the
Holders or to surrender any right or power herein conferred upon the
Company;
(7) to comply with any requirements of the SEC in connection with
qualifying, or maintaining the qualification of, this Indenture under the
TIA;
(8) to make any change that does not adversely affect the rights of
any Securityholder; or
(9) to release a Subsidiary Guaranty when permitted by the terms of
this Indenture.
An amendment under this Section may not make any change that adversely
affects the rights under Article 10 or 12 of any holder of Senior Indebtedness
then outstanding unless the holders of such Senior Indebtedness (or any group or
representative thereof authorized to give a consent) consent to such change.
After an amendment under this Section becomes effective, the Company shall
mail to Securityholders a notice briefly describing such amendment. The failure
to give such notice to all Securityholders, or any defect therein, shall not
impair or affect the validity of an amendment under this Section.
SECTION 9.02. With Consent of Holders. The Company and the Trustee may
amend this Indenture or the Securities without notice to any Securityholder but
with the written consent of the Holders of at least a majority in principal
amount of the Securities then outstanding (including consents obtained in
connection with a tender offer or exchange for the Securities). However, without
the consent of each Securityholder affected thereby, an amendment may not:
(1) reduce the amount of Securities whose Holders must consent to an
amendment;
(2) reduce the rate of or extend the time for payment of interest on
any Security;
(3) reduce the principal of or extend the Stated Maturity of any
Security;
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(4) reduce the amount payable upon the redemption of any Security or
change the time at which any Security may or shall be redeemed in
accordance with Article 3;
(5) make any Security payable in money other than that stated in the
Security;
(6) impair the right of any holder of the Securities to receive
payment of principal of and interest on such holder's Securities on or
after the due dates therefor or to institute suit for the enforcement of
any payment on or with respect to such holder's Securities;
(7) make any change in Article 10 that adversely affects the rights of
any Securityholder under Article 10;
(8) make any change in Section 6.04 or 6.07 or the second sentence of
this Section;
(9) make any change in the Parent Guaranty or any Subsidiary Guaranty
(including the subordination provisions of any such Guaranty) that would
adversely affect the Securityholders; or
(10) make any change in the provisions described under paragraph 6 of
the Securities.
It shall not be necessary for the consent of the Holders under this Section
to approve the particular form of any proposed amendment, but it shall be
sufficient if such consent approves the substance thereof.
An amendment under this Section may not make any change that adversely
affects the rights under Article 10 or 12 of any holder of Senior Indebtedness
then outstanding unless the holders of such Senior Indebtedness (or any group or
representative thereof authorized to give a consent) consent to such change.
After an amendment under this Section becomes effective, the Company shall
mail to Securityholders a notice briefly describing such amendment. The failure
to give such notice to all Securityholders, or any defect therein, shall not
impair or affect the validity of an amendment under this Section.
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SECTION 9.03. Compliance with Trust Indenture Act. Every amendment to this
Indenture or the Securities shall comply with the TIA as then in effect.
SECTION 9.04. Revocation and Effect of Consents and Waivers. A consent to
an amendment or a waiver by a Holder of a Security shall bind the Holder and
every subsequent Holder of that Security or portion of the Security that
evidences the same debt as the consenting Holder's Security, even if notation of
the consent or waiver is not made on the Security. However, any such Holder or
subsequent Holder may revoke the consent or waiver as to such Holder's Security
or portion of the Security if the Trustee receives the notice of revocation
before the date the amendment or waiver becomes effective. After an amendment or
waiver becomes effective, it shall bind every Securityholder. An amendment or
waiver becomes effective upon the execution of such amendment or waiver by the
Trustee.
The Company may, but shall not be obligated to, fix a record date for the
purpose of determining the Securityholders entitled to give their consent or
take any other action described above or required or permitted to be taken
pursuant to this Indenture. If a record date is fixed, then notwithstanding the
immediately preceding paragraph, those Persons who were Securityholders at such
record date (or their duly designated proxies), and only those Persons, shall be
entitled to give such consent or to revoke any consent previously given or to
take any such action, whether or not such Persons continue to be Holders after
such record date. No such consent shall be valid or effective for more than 120
days after such record date.
SECTION 9.05. Notation on or Exchange of Securities. If an amendment
changes the terms of a Security, the Trustee may require the Holder of the
Security to deliver it to the Trustee. The Trustee may place an appropriate
notation on the Security regarding the changed terms and return it to the
Holder. Alternatively, if the Company or the Trustee so determines, the Company
in exchange for the Security shall issue and the Trustee shall authenticate a
new Security that reflects the changed terms. Failure to make the appropriate
notation or to issue a new Security shall not affect the validity of such
amendment.
SECTION 9.06. Trustee To Sign Amendments. The Trustee shall sign any
amendment authorized pursuant to this Article 9 if the amendment does not
adversely affect the rights, duties, liabilities or immunities of the Trustee.
If it does, the Trustee may but need not sign it. In signing any amendment the
Trustee shall be entitled to receive
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indemnity reasonably satisfactory to it and to receive, and (subject to Section
7.01) shall be fully protected in relying upon, an Officers' Certificate and an
Opinion of Counsel stating that such amendment is authorized or permitted by
this Indenture.
SECTION 9.07. Payment for Consent. Neither the Company nor any Affiliate of
the Company shall, directly or indirectly, pay or cause to be paid any
consideration, whether by way of interest, fee or otherwise, to any Holder for
or as an inducement to any consent, waiver or amendment of any of the terms or
provisions of this Indenture or the Securities unless such consideration is
offered to be paid to all Holders that so consent, waive or agree to amend in
the time frame set forth in solicitation documents relating to such consent,
waiver or agreement.
ARTICLE 10
Subordination
SECTION 10.01. Agreement To Subordinate. The Company agrees, and each
Securityholder by accepting a Security agrees, that the Indebtedness evidenced
by the Securities is subordinated in right of payment, to the extent and in the
manner provided in this Article 10, to the prior payment in full in cash of all
Obligations with respect to Senior Indebtedness of the Company and that the
subordination is for the benefit of and enforceable by the holders of such
Senior Indebtedness. The Securities shall in all respects rank pari passu with
all other Senior Subordinated Indebtedness of the Company and only Indebtedness
of the Company which is Senior Indebtedness shall rank senior to the Securities
in accordance with the provisions set forth herein. All provisions of this
Article 10 shall be subject to Section 10.12.
SECTION 10.02. Liquidation, Dissolution, Bankruptcy. Upon any payment or
distribution of the assets of the Company to creditors upon a total or partial
liquidation or a total or partial dissolution or winding up of the Company or
upon any assignment for the benefit of creditors or marshalling of assets of the
Company or in a bankruptcy, reorganization, insolvency, receivership or similar
proceeding relating to the Company or its property, whether voluntary or
involuntary:
(1) the holders of Senior Indebtedness of the Company shall be
entitled to receive payment in full in cash of all Obligations with respect
to such Senior
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Indebtedness (including all interest accruing subsequent to the filing of a
petition in bankruptcy at the rate provided for in the documentation with
respect thereto, whether or not such interest is an allowed claim under
applicable law) before Securityholders shall be entitled to receive any
payment or distribution with respect to the Securities; and
(2) until all Obligations with respect to such Senior Indebtedness are
paid in full in cash, any payment or distribution to which Securityholders
would be entitled but for this Article 10 shall be made to holders of such
Senior Indebtedness as their interests may appear, except that
Securityholders may receive, in exchange for the Securities in any
proceeding of the type described above in this Section 10.02, (x) equity
securities of the Company which, in any case, do not provide for any
mandatory redemption or similar retirement prior to the maturity of the
Securities or (y) unsecured debt securities of the Company which are
subordinated to at least the same extent as the Securities to the payment
of all Senior Indebtedness of the Company and which, in any case, do not
mature or become subject to a mandatory redemption obligation prior to the
maturity of the Securities.
SECTION 10.03. Default on Senior Indebtedness. The Company may not pay (in
cash, property or other assets) the principal of, premium, if any, or interest
on the Securities or make any deposit pursuant to Section 8.01 and may not
repurchase, redeem or (except for Securities delivered to the Trustee pursuant
to the second sentence of paragraph 6 of the Securities) otherwise retire any
Securities (collectively, "pay the Securities") if either of the following
occurs (each a "Payment Default"): (1) any Obligations with respect to Senior
Indebtedness are not paid in full when due or (2) any other default on Senior
Indebtedness occurs and the maturity of such Senior Indebtedness is accelerated
in accordance with its terms unless, in either case, (x) the default has been
cured or waived and any such acceleration has been rescinded in writing or (y)
such Senior Indebtedness has been paid in full in cash; provided, however, that
the Company may pay the Securities without regard to the foregoing if the
Company and the Trustee receive written notice approving such payment from the
Representative of such Senior Indebtedness. During the continuance of any
default (other than a default described in clause (1) or (2) of the preceding
sentence) with respect to any Designated Senior Indebtedness pursuant to which
the maturity thereof may be accelerated immediately without further notice
(except such
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notice as may be required to effect such acceleration) or the expiration of any
applicable grace periods, the Company may not pay the Securities for a period (a
"Payment Blockage Period") commencing upon the receipt by the Company and the
Trustee of written notice (a "Blockage Notice") of such default from the
Representative of such Designated Senior Indebtedness specifying an election to
effect a Payment Blockage Period and ending 179 days thereafter or earlier if
such Payment Blockage Period is terminated:
(1) by written notice to the Trustee and the Company from the Person
or Persons who gave such Blockage Notice;
(2) because no defaults continue in existence which would permit the
acceleration of the maturities of any Designated Senior Indebtedness at
such time; or
(3) because such Designated Senior Indebtedness has been repaid in
full in cash.
Notwithstanding the provisions described above, unless the holders of such
Designated Senior Indebtedness or the Representative of such holders shall have
accelerated the maturity of such Designated Senior Indebtedness, or any Payment
Default otherwise exists, the Company may resume payments on the Securities
after termination of such Payment Blockage Period. The Securities shall not be
subject to more than one Payment Blockage Period in any consecutive 360-day
period, except that if any Blockage Notice is delivered to the Trustee by or on
behalf of holders of Designated Senior Indebtedness (other than holders of the
Bank Indebtedness), a Representative of holders of Bank Indebtedness may give
another Blockage Notice within such period. However, in no event may the total
number of days during which any Payment Blockage Period or Periods is in effect
exceed 179 days in the aggregate during any 360 consecutive day period, and
there must be 181 days during any 360-day consecutive period during which no
Payment Blockage Period is in effect.
For purposes of this Section, no default or event of default which existed
or was continuing on the date of the commencement of any Payment Blockage Period
with respect to the Designated Senior Indebtedness initiating such Payment
Blockage Period shall be, or be made, the basis of the commencement of a
subsequent Payment Blockage Period by the Representative of such Designated
Senior Indebtedness, whether or not within a period of 360 consecutive days,
unless such default or event of default shall have been cured or waived for a
period of not less than 90 consecutive
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84
days (it being acknowledged and agreed that (x) any default or event of default
as a result of a continued failure to meet a financial covenant or test for a
period ended subsequent to the commencement of a Payment Blockage Period shall
constitute a new default or event of default, as the case may be, and shall be
deemed not to be a continuing default or event of default, as the case may be,
for purposes of this sentence and (y) any subsequent action which would give
rise to a default or an event of default pursuant to any provision under which a
default or event of default previously existed or was continuing shall
constitute a new default or event of default, as the case may be, for this
purpose and shall be deemed not to be a continuing default or event of default,
as the case may be, for purposes of this sentence).
SECTION 10.04. Acceleration of Payment of Securities. If payment of the
Securities is accelerated because of an Event of Default, the Company or the
Trustee shall promptly notify the holders of the Designated Senior Indebtedness
(or their Representatives) of the acceleration. If any Designated Senior
Indebtedness is outstanding at the time of such acceleration, neither the
Company nor any Subsidiary Guarantor may pay the Securities until five Business
Days after the Representatives of all the issues of Designated Senior
Indebtedness receive notice of such acceleration and, thereafter, may pay the
Securities only if the Indenture otherwise permits payment at that time.
SECTION 10.05. When Distribution Must Be Paid Over. If a distribution is
made to Securityholders that because of this Article 10 should not have been
made to them, the Securityholders who receive the distribution shall hold it in
trust for holders of Senior Indebtedness of the Company and pay it over to them
as their interests may appear.
SECTION 10.06. Subrogation. After all Senior Indebtedness of the Company is
paid in full in cash and until the Securities are paid in full, Securityholders
shall be subrogated to the rights of holders of such Senior Indebtedness to
receive distributions applicable to such Senior Indebtedness. A distribution
made under this Article 10 to holders of such Senior Indebtedness which
otherwise would have been made to Securityholders is not, as between the Company
and Securityholders, a payment by the Company on such Senior Indebtedness.
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SECTION 10.07. Relative Rights. This Article 10 defines the relative rights
of Securityholders and holders of Senior Indebtedness of the Company. Nothing in
this Indenture shall:
(1) impair, as between the Company and Securityholders, the
obligation of the Company, which is absolute and unconditional, to pay
principal of and interest on the Securities in accordance with their terms;
or
(2) prevent the Trustee or any Securityholder from exercising its
available remedies upon a Default, subject to the rights of holders of
Senior Indebtedness of the Company to receive distributions otherwise
payable to Securityholders.
SECTION 10.08. Subordination May Not Be Impaired by Company. No right of
any holder of Senior Indebtedness of the Company to enforce the subordination of
the Indebtedness evidenced by the Securities shall be impaired by any act or
failure to act by the Company or by its failure to comply with this Indenture.
SECTION 10.09. Rights of Trustee and Paying Agent. Notwithstanding Section
10.03, the Trustee or Paying Agent may continue to make payments on the
Securities and shall not be charged with knowledge of the existence of facts
that would prohibit the making of any such payments unless, not less than two
Business Days prior to the date of such payment, a Trust Officer of the Trustee
receives notice satisfactory to it that payments may not be made under this
Article 10. The Company, the Registrar or co-registrar, the Paying Agent, a
Representative or a holder of Senior Indebtedness may give the notice.
The Trustee in its individual or any other capacity may hold Senior
Indebtedness of the Company with the same rights it would have if it were not
Trustee. The Registrar and co-registrar and the Paying Agent may do the same
with like rights. The Trustee shall be entitled to all the rights set forth in
this Article 10 with respect to any Senior Indebtedness of the Company which may
at any time be held by it, to the same extent as any other holder of such Senior
Indebtedness; and nothing in Article 7 shall deprive the Trustee of any of its
rights as such holder. Nothing in this Article 10 shall apply to claims of, or
payments to, the Trustee under or pursuant to Section 7.07.
SECTION 10.10. Distribution or Notice to Representative. Whenever a
distribution is to be made or a
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notice given to holders of Senior Indebtedness of the Company, the distribution
may be made and the notice given to their Representative (if any).
SECTION 10.11. Article 10 Not To Prevent Events of Default or Limit Right
To Accelerate. The failure to make a payment pursuant to the Securities by
reason of any provision in this Article 10 shall not be construed as preventing
the occurrence of a Default. Nothing in this Article 10 shall have any effect on
the right of the Securityholders or the Trustee to accelerate the maturity of
the Securities.
SECTION 10.12. Trust Moneys Not Subordinated. Notwithstanding anything
contained herein to the contrary, payments from money or the proceeds of U.S.
Government Obligations held in trust under Article 8 by the Trustee for the
payment of principal of and interest on the Securities shall not be subordinated
to the prior payment of any Senior Indebtedness or subject to the restrictions
set forth in this Article 10, and none of the Securityholders shall be obligated
to pay over any such amount to the Company or any holder of Senior Indebtedness
of the Company or any other creditor of the Company, so long as the foregoing
subordination provisions contained in this Article 10 were not violated at the
time the respective amounts were deposited pursuant to the defeasance provisions
of Article 8.
SECTION 10.13. Trustee Entitled To Rely. Upon any payment or distribution
pursuant to this Article 10, the Trustee and the Securityholders shall be
entitled to rely (i) upon any order or decree of a court of competent
jurisdiction in which any proceedings of the nature referred to in Section 10.02
are pending, (ii) upon a certificate of the liquidating trustee or agent or
other Person making such payment or distribution to the Trustee or to the
Securityholders or (iii) upon the Representatives for the holders of Senior
Indebtedness of the Company for the purpose of ascertaining the Persons entitled
to participate in such payment or distribution, the holders of such Senior
Indebtedness and other Indebtedness of the Company, the amount thereof or
payable thereon, the amount or amounts paid or distributed thereon and all other
facts pertinent thereto or to this Article 10. In the event that the Trustee
determines, in good faith, that evidence is required with respect to the right
of any Person as a holder of Senior Indebtedness of the Company to participate
in any payment or distribution pursuant to this Article 10, the Trustee may
request such Person to furnish evidence to the reasonable satisfaction of the
Trustee as to the amount of
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such Senior Indebtedness held by such Person, the extent to which such Person is
entitled to participate in such payment or distribution and other facts
pertinent to the rights of such Person under this Article 10, and, if such
evidence is not furnished, the Trustee may defer any payment to such Person
pending judicial determination as to the right of such Person to receive such
payment. The provisions of Sections 7.01 and 7.02 shall be applicable to all
actions or omissions of actions by the Trustee pursuant to this Article 10.
SECTION 10.14. Trustee To Effectuate Subordination. Each Securityholder by
accepting a Security authorizes and directs the Trustee on his behalf to take
such action as may be necessary or appropriate to acknowledge or effectuate the
subordination between the Securityholders and the holders of Senior Indebtedness
of the Company as provided in this Article 10 and appoints the Trustee as
attorney-in-fact for any and all such purposes.
SECTION 10.15. Trustee Not Fiduciary for Holders of Senior Indebtedness.
The Trustee shall not be deemed to owe any fiduciary duty to the holders of
Senior Indebtedness and shall not be liable to any such holders if it shall
mistakenly pay over or distribute to Securityholders or the Company or any other
Person, money or assets to which any holders of Senior Indebtedness of the
Company shall be entitled by virtue of this Article 10 or otherwise.
SECTION 10.16. Reliance by Holders of Senior Indebtedness on Subordination
Provisions. Each Securityholder by accepting a Security acknowledges and agrees
that the foregoing subordination provisions are, and are intended to be, an
inducement and a consideration to each holder of any Senior Indebtedness of the
Company, whether such Senior Indebtedness was created or acquired before or
after the issuance of the Securities, to acquire and continue to hold, or to
continue to hold, such Senior Indebtedness and such holder of such Senior
Indebtedness shall be deemed conclusively to have relied on such subordination
provisions in acquiring and continuing to hold, or in continuing to hold, such
Senior Indebtedness.
ARTICLE 11
Guaranties
SECTION 11.01. Guaranties. Each Guarantor hereby unconditionally and
irrevocably guarantees, jointly and severally, on a Senior Subordinated basis,
to each Holder
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and to the Trustee and its successors and assigns (a) the full and punctual
payment of principal of and interest on the Securities when due, whether at
maturity, by acceleration, by redemption or otherwise, and all other monetary
obligations of the Company under this Indenture and the Securities and (b) the
full and punctual performance within applicable grace periods of all other
obligations of the Company under this Indenture and the Securities (all the
foregoing being hereinafter collectively called the "Indenture Obligations").
Each Guarantor further agrees that the Indenture Obligations may be extended or
renewed, in whole or in part, without notice or further assent from such
Guarantor and that such Guarantor will remain bound under this Article 11
notwithstanding any extension or renewal of any Indenture Obligation.
Each Guarantor waives presentation to, demand of, payment from and protest
to the Company of any of the Indenture Obligations and also waives notice of
protest for nonpayment. Each Guarantor waives notice of any default under the
Securities or the Indenture Obligations. The obligations of each Guarantor
hereunder shall not be affected by (a) the failure of any Holder or the Trustee
to assert any claim or demand or to enforce any right or remedy against the
Company or any other Person under this Indenture, the Securities or any other
agreement or otherwise; (b) any extension or renewal of any thereof; (c) any
rescission, waiver, amendment or modification of any of the terms or provisions
of this Indenture, the Securities or any other agreement; (d) the release of any
security held by any Holder or the Trustee for the Indenture Obligations or any
of them; (e) the failure of any Holder or the Trustee to exercise any right or
remedy against any other guarantor of the Indenture Obligations; or (f) any
change in the ownership of such Guarantor.
Each Guarantor further agrees that its Guaranty herein constitutes a
guarantee of payment, performance and compliance when due (and not a guarantee
of collection) and waives any right to require that any resort be had by any
Holder or the Trustee to any security held for payment of the Indenture
Obligations.
Each Guaranty is, to the extent and in the manner set forth in Article 12,
subordinated and subject in right of payment to the prior payment in full in
cash of all Obligations with respect to all Senior Indebtedness of the Guarantor
giving such Guaranty and each Guaranty is made subject to such provisions of
this Indenture.
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Except as expressly set forth in Sections 8.01(b), 11.02 and 11.06, the
obligations of each Guarantor hereunder shall not be subject to any reduction,
limitation, impairment or termination for any reason, including any claim of
waiver, release, surrender, alteration or compromise, and shall not be subject
to any defense of setoff, counterclaim, recoupment or termination whatsoever or
by reason of the invalidity, illegality or unenforceability of the Indenture
Obligations or otherwise. Without limiting the generality of the foregoing, the
obligations of each Guarantor herein shall not be discharged or impaired or
otherwise affected by the failure of any Holder or the Trustee to assert any
claim or demand or to enforce any remedy under this Indenture, the Securities or
any other agreement, by any waiver or modification of any thereof, by any
default, failure or delay, willful or otherwise, in the performance of the
obligations, or by any other act or thing or omission or delay to do any other
act or thing which may or might in any manner or to any extent vary the risk of
such Guarantor or would otherwise operate as a discharge of such Guarantor as a
matter of law or equity.
Each Guarantor further agrees that its Guarantee herein shall continue to
be effective or be reinstated, as the case may be, if at any time payment, or
any part thereof, of principal of or interest on any Indenture Obligation is
rescinded or must otherwise be restored by any Holder or the Trustee upon the
bankruptcy or reorganization of the Company or otherwise.
In furtherance of the foregoing and not in limitation of any other right
which any Holder or the Trustee has at law or in equity against any Guarantor by
virtue hereof, upon the failure of the Company to pay the principal of or
interest on any Indenture Obligation when and as the same shall become due,
whether at maturity, by acceleration, by redemption or otherwise, or to perform
or comply with any other Indenture Obligation, each Guarantor hereby promises to
and will, upon receipt of written demand by the Trustee, forthwith pay, or cause
to be paid, in cash, to the Holders or the Trustee an amount equal to the sum of
(1) the unpaid amount of such Indenture Obligations, (2) accrued and unpaid
interest on such Indenture Obligations (but only to the extent not prohibited by
law) and (3) all other monetary Indenture Obligations of the Company to the
Holders and the Trustee.
Each Guarantor agrees that it shall not be entitled to any right of
subrogation in respect of any Indenture Obligations guaranteed hereby until
payment in full of all Indenture Obligations and all obligations to
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which the Indenture Obligations are subordinated as provided in Article 12. Each
Guarantor further agrees that, as between it, on the one hand, and the Holders
and the Trustee, on the other hand, (x) the maturity of the Indenture
Obligations Guaranteed hereby may be accelerated as provided in Article 6 for
the purposes of such Guarantor's Guaranty herein, notwithstanding any stay,
injunction or other prohibition preventing such acceleration in respect of the
Indenture Obligations guaranteed hereby, and (y) in the event of any declaration
of acceleration of such obligations as provided in Article 6, such Indenture
Obligations (whether or not due and payable) shall forthwith become due and
payable by such Guarantor for the purposes of this Section.
Each Guarantor also agrees to pay any and all costs and expenses (including
reasonable attorneys' fees) incurred by the Trustee or any Holder in enforcing
any rights under this Section.
SECTION 11.02. Limitation on Liability; Contribution. Any term or provision
of this Indenture to the contrary notwithstanding, the maximum, aggregate amount
of the Indenture Obligations guaranteed hereunder by any Subsidiary Guarantor
shall not exceed the maximum amount that can be hereby guaranteed without
rendering this Indenture, as it relates to such Subsidiary Guarantor, voidable
under applicable law relating to fraudulent conveyance or fraudulent transfer or
similar laws affecting the rights of creditors generally.
Each Subsidiary Guarantor that makes a payment under its Subsidiary
Guaranty will be entitled to a contribution from each other Subsidiary Guarantor
in an amount equal to such other Subsidiary Guarantor's pro rata portion of such
payment based on the respective net assets of all the Subsidiary Guarantors at
the time of such payment determined in accordance with GAAP.
SECTION 11.03. Successors and Assigns. This Article 11 shall be binding
upon each Guarantor and its successors and assigns and shall inure to the
benefit of the successors and assigns of the Trustee and the Holders and, in the
event of any transfer or assignment of rights by any Holder or the Trustee, the
rights and privileges conferred upon that party in this Indenture and in the
Securities shall automatically extend to and be vested in such transferee or
assignee, all subject to the terms and conditions of this Indenture.
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SECTION 11.04. No Waiver. Neither a failure nor a delay on the part of
either the Trustee or the Holders in exercising any right, power or privilege
under this Article 11 shall operate as a waiver thereof, nor shall a single or
partial exercise thereof preclude any other or further exercise of any right,
power or privilege. The rights, remedies and benefits of the Trustee and the
Holders herein expressly specified are cumulative and not exclusive of any other
rights, remedies or benefits which either may have under this Article 11 at law,
in equity, by statute or otherwise.
SECTION 11.05. Modification. No modification, amendment or waiver of any
provision of this Article 11, nor the consent to any departure by any Guarantor
therefrom, shall in any event be effective unless the same shall be in writing
and signed by the Trustee, and then such waiver or consent shall be effective
only in the specific instance and for the purpose for which given. No notice to
or demand on any Guarantor in any case shall entitle such Guarantor to any other
or further notice or demand in the same, similar or other circumstances.
SECTION 11.06. Release of Subsidiary Guarantor. Upon the sale (including
any sale pursuant to any exercise of remedies by a holder of Senior
Indebtedness) or other disposition (including by way of consolidation or merger)
of a Subsidiary Guarantor or the sale or disposition of all or substantially all
the assets of such Subsidiary Guarantor (in each case other than to the Company
or an Affiliate of the Company), such Subsidiary Guarantor shall be deemed
released from all obligations under this Article 11 without any further action
required on the part of the Trustee or any Holder. At the request of the
Company, the Trustee shall execute and deliver an appropriate instrument
evidencing such release.
ARTICLE 12
Subordination of Guaranties
SECTION 12.01. Agreement To Subordinate. Each Guarantor agrees, and each
Securityholder by accepting a Security agrees, that the Indenture Obligations
(as used in this Article 12, the "Indenture Obligations" of each Guarantor shall
mean all Indenture Obligations guaranteed by such Guarantor pursuant to Article
11 hereof) of such Guarantor are subordinated in right of payment, to the extent
and in the manner provided in this Article 12, to the prior payment in full in
cash of all Obligations with
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respect to Senior Indebtedness of such Guarantor and that the subordination
is for the benefit of and enforceable by the holders of such Senior
Indebtedness. The Indenture Obligations of a Guarantor shall in all respects
rank pari passu with all other Senior Subordinated Indebtedness of such
Guarantor and only Senior Indebtedness of such Guarantor (including such
Guarantor's Guarantee of Senior Indebtedness of the Company) shall rank senior
to the Indenture Obligations of such Guarantor in accordance with the provisions
set forth herein.
SECTION 12.02. Liquidation, Dissolution, Bankruptcy. Upon any payment or
distribution of the assets of any Guarantor to creditors upon a total or partial
liquidation or a total or partial dissolution or winding up of such Guarantor
or upon any assignment for the benefit of creditors or marshalling of assets for
such Guarantor or in a bankruptcy, reorganization, insolvency, receivership or
similar proceeding relating to such Guarantor or its property, whether voluntary
or involuntary:
(1) the holders of Senior Indebtedness of such Guarantor shall be
entitled to receive payment in full in cash of all Obligations with respect
to such Senior Indebtedness (including all interest accruing subsequent to
the filing of a petition in bankruptcy at the rate provided for in the
documentation with respect thereto, whether or not such interest is an
allowed claim under applicable law) before Securityholders shall be
entitled to receive any payment or distribution with respect to any
Indenture Obligations of such Guarantor; and
(2) until all Obligations with respect to the Senior Indebtedness of
any Guarantor is paid in full in cash, any payment or distribution to which
Securityholders would be entitled but for this Article 12 shall be made to
holders of such Senior Indebtedness as their interests may appear, except
that securityholders may, in any proceeding of the type described in
Section 10.02 with respect to such Guarantor, receive securities of the
Parent and/or the Company as provided in clause (2) of Section 10.02,
which, in the case of debt securities of the Company, may be guaranteed by
the Guarantors on substantially the same basis as provided in Article 11,
so long as such guarantees are expressly subordinated to all Senior
Indebtedness at least to the same extent as provided in this Article 12.
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SECTION 12.03. Default on Senior Indebtedness of Guarantor. No Guarantor
may make any payment (in cash, property or other assets) pursuant to any of its
Indenture Obligations or repurchase, redeem or otherwise retire or defease any
Securities or other Indenture Obligations (collectively, "pay its Guaranty") if
either of the following Payment Default occurs: (1) any Obligations with respect
to Senior Indebtedness of the Company is not paid in full when due or (2) any
other default on Senior Indebtedness of the Company occurs and the maturity of
such Senior Indebtedness is accelerated in accordance with its terms unless, in
either case, (x) the default has been cured or waived and any such acceleration
has been rescinded in writing or (y) such Senior Indebtedness has been paid in
full in cash; provided, however, that any Guarantor may pay its Guaranty without
regard to the foregoing if such Guarantor and the Trustee receive written notice
approving such payment from the Representatives of such Senior Indebtedness. No
Guarantor may pay its Guaranty during the continuance of any Payment Blockage
Period after receipt by the Company and the Trustee (with a copy to the Company)
of a Blockage Notice under Section 10.03. Notwithstanding the provisions
described in the immediately preceding sentence (but subject to the provisions
contained in the first sentence of this Section), unless the holders of
Designated Senior Indebtedness giving such Blockage Notice or the Representative
of such holders shall have accelerated the maturity of such Designated Senior
Indebtedness, any Guarantor may resume payments pursuant to its Guaranty after
termination of such Payment Blockage Period.
SECTION 12.04. Demand for Payment. If a demand for payment is made on a
Guarantor pursuant to Article 11, the Trustee shall promptly notify the holders
of the Designated Senior Indebtedness (or their Representatives) of such demand.
If any Designated Senior Indebtedness is outstanding at the time of such
acceleration, neither the Company nor any Subsidiary Guarantor may pay the
Securities until five Business Days after the Representatives of all the issues
of Designated Senior Indebtedness receive notice of such acceleration and,
thereafter, may pay the Securities only if the Indenture otherwise permits
payment at that time.
SECTION 12.05. When Distribution Must Be Paid Over. If a distribution is
made to Securityholders that because of this Article 12 should not have been
made to them, the Securityholders who receive the distribution shall hold it in
trust for holders of the relevant Senior Indebtedness and pay it over to them or
their Representatives as their interests may appear.
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SECTION 12.06. Subrogation. After all Senior Indebtedness of a Guarantor is
paid in full in cash and until the Securities are paid in full, Securityholders
shall be subrogated to the rights of holders of such Senior Indebtedness to
receive distributions applicable to Senior Indebtedness. A distribution made
under this Article 12 to holders of such Senior Indebtedness which otherwise
would have been made to Securityholders is not, as between the relevant
Guarantor and Securityholders, a payment by such Guarantor on such Senior
Indebtedness.
SECTION 12.07. Relative Rights. This Article 12 defines the relative rights
of Securityholders and holders of Senior Indebtedness of a Guarantor. Nothing in
this Indenture shall:
(1) impair, as between a Guarantor and Securityholders, the
obligation of such Guarantor, which is absolute and unconditional, to pay
the Indenture Obligations to the extent set forth in Article 11 or the
relevant Guaranty; or
(2) prevent the Trustee or any Securityholder from exercising its
available remedies upon a default by such Guarantor under the Indenture
Obligations, subject to the rights of holders of Senior Indebtedness of
such Guarantor to receive distributions otherwise payable to
Securityholders.
SECTION 12.08. Subordination May Not Be Impaired by Company. No right of
any holder of Senior Indebtedness of any Guarantor to enforce the subordination
of the Indenture Obligations of such Guarantor shall be impaired by any act or
failure to act by such Guarantor or by its failure to comply with this
Indenture.
SECTION 12.09. Rights of Trustee and Paying Agent. Notwithstanding Section
12.03, the Trustee or Paying Agent may continue to make payments on any Guaranty
and shall not be charged with knowledge of the existence of facts that would
prohibit the making of any such payments unless, not less than two Business Days
prior to the date of such payment, a Trust Officer of the Trustee receives
written notice satisfactory to it that payments may not be made under this
Article 12. The Company, the relevant Guarantor, the Registrar or co-registrar,
the Paying Agent, a Representative or a holder of Senior Indebtedness of the
relevant Guarantor may give the notice.
The Trustee in its individual or any other capacity may hold Senior
Indebtedness with the same rights it
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would have if it were not the Trustee. The Registrar and co-registrar and the
Paying Agent may do the same with like rights. The Trustee shall be entitled to
all the rights set forth in this Article 12 with respect to any Senior
Indebtedness of any Guarantor which may at any time be held by it, to the same
extent as any other holder of Senior Indebtedness; and nothing in Article 7
shall deprive the Trustee of any of its rights as such holder. Nothing in this
Article 12 shall apply to claims of, or payments to, the Trustee under or
pursuant to Section 7.07.
SECTION 12.10. Distribution or Notice to Representative. Whenever a
distribution is to be made or a notice given to holders of Senior Indebtedness
of any Guarantor, the distribution may be made and the notice given to their
Representative (if any).
SECTION 12.11. Article 12 Not To Prevent Defaults Under a Guaranty or Limit
Right To Demand Payment. The failure to make a payment pursuant to a Guaranty by
reason of any provision in this Article 12 shall not be construed as preventing
the occurrence of a default under such Guaranty. Nothing in this Article 12
shall have any effect on the right of the Securityholders or the Trustee to make
a demand for payment on any Guarantor pursuant to Article 11 or the relevant
Guaranty.
SECTION 12.12. Trustee Entitled To Rely. Upon any payment or distribution
pursuant to this Article 12, the Trustee and the Securityholders shall be
entitled to rely (1) upon any order or decree of a court of competent
jurisdiction in which any proceedings of the nature referred to in Section 12.02
are pending, (2) upon a certificate of the liquidating trustee or agent or other
Person making such payment or distribution to the Trustee or to the Security-
holders or (3) upon the Representatives for the holders of Senior Indebtedness
of any Guarantor for the purpose of ascertaining the Persons entitled to
participate in such payment or distribution, the holders of such Senior
Indebtedness and other indebtedness of such Guarantor, the amount thereof or
payable thereon, the amount or amounts paid or distributed thereon and all other
facts pertinent thereto or to this Article 12. In the event that the Trustee
determines, in good faith, that evidence is required with respect to the right
of any Person as a holder of Senior Indebtedness of any Guarantor to participate
in any payment or distribution pursuant to this Article 12, the Trustee may
request such Person to furnish evidence to the reasonable satisfaction of the
Trustee as to the amount of Senior Indebtedness of such Guarantor held by such
Person, the extent to which such Person is entitled to participate
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in such payment or distribution and other facts pertinent to the rights of such
Person under this Article 12, and, if such evidence is not furnished, the
Trustee may defer any payment to such Person pending judicial determination as
to the right of such Person to receive such payment. The provisions of Sections
7.01 and 7.02 shall be applicable to all actions or omissions of actions by the
Trustee pursuant to this Article 12.
SECTION 12.13. Trustee To Effectuate Subordination. Each Securityholder by
accepting a Security authorizes and directs the Trustee on his behalf to take
such action as may be necessary or appropriate to acknowledge or effectuate the
subordination between the Securityholders and the holders of Senior Indebtedness
of any Guarantor as provided in this Article 12 and appoints the Trustee as
attorney-in-fact for any and all such purposes.
SECTION 12.14. Trustee Not Fiduciary for Holders of Senior Indebtedness of
Guarantor. The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Senior Indebtedness of any Guarantor and shall not be liable to any
such holders if it shall mistakenly pay over or distribute to Securityholders or
the Company or any other Person, money or assets to which any holders of such
Senior Indebtedness shall be entitled by virtue of this Article 12 or otherwise.
SECTION 12.15. Reliance by Holders of Senior Indebtedness on Subordination
Provisions. Each Securityholder by accepting a Security acknowledges and agrees
that the foregoing subordination provisions are, and are intended to be, an
inducement and a consideration to each holder of any Senior Indebtedness of any
Guarantor, whether such Senior Indebtedness was created or acquired before or
after the issuance of the Securities, to acquire and continue to hold, or to
continue to hold, such Senior Indebtedness and such holder of Senior
Indebtedness shall be deemed conclusively to have relied on such subordination
provisions in acquiring and continuing to hold, or in
continuing to hold, such Senior Indebtedness.
ARTICLE 13
Miscellaneous
SECTION 13.01. Trust Indenture Act Controls. If any provision of this
Indenture limits, qualifies or con flicts with another provision which is
required to be included in this Indenture by the TIA, the required provision
shall control.
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SECTION 13.02. Notices. Any notice or communication shall be in writing
and delivered in person, mailed by first-class mail or overnight mail or
transmitted via facsimile as follows:
if to the Parent, the Company or any Subsidiary
Guarantor:
Intersil Corporation
2401 Palm Bay Road NE
Palm Bay, Florida 32905
Attention of General Counsel
Telecopier: (407) 729-5392
if to the Trustee:
United States Trust Company of New York
114 West 47th Street, 25th Floor
New York, New York 10036
Attention: Corporate Trust Division
Telecopier: (212) 852-1626.
The Company or the Trustee by notice to the other may designate additional
or different addresses for subsequent notices or communications.
Any notice or communication mailed to a Securityholder shall be mailed to
the Securityholder at the Secu rityholder's address as it appears on the
registration books of the Registrar and shall be sufficiently given if so mailed
within the time prescribed.
Failure to mail a notice or communication to a Securityholder or any defect
in it shall not affect its sufficiency with respect to other Securityholders. If
a notice or communication is mailed in the manner provided above, it is duly
given, whether or not the addressee receives it.
SECTION 13.03. Communication by Holders with Other Holders. Securityholders
may communicate pursuant to TIA ss. 312(b) with other Securityholders with
respect to their rights under this Indenture or the Securities. The Company, the
Trustee, the Registrar and anyone else shall have the protection of TIA
ss. 312(c).
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SECTION 13.04. Certificate and Opinion as to Conditions Precedent. Upon any
request or application by the Company to the Trustee to take or refrain from
taking any action under this Indenture, the Company shall furnish to the
Trustee:
(1) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of the signers,
all conditions precedent, if any, provided for in this Indenture relating
to the proposed action have been complied with; and
(2) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of such counsel,
all such conditions precedent have been complied with.
SECTION 13.05. Statements Required in Certificate or Opinion. Each
certificate or opinion with respect to compliance with a covenant or condition
provided for in this Indenture shall include:
(1) a statement that the individual making such certificate or opinion
has read such covenant or condition;
(2) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of such individual, he has made
such examination or investigation as is necessary to enable him to express
an informed opinion as to whether or not such covenant or condition has
been complied with; and
(4) a statement as to whether or not, in the opinion of such
individual, such covenant or condition has been complied with.
SECTION 13.06. When Securities Disregarded. In determining whether the
Holders of the required principal amount of Securities have concurred in any
direction, waiver or consent, Securities owned by the Company or by any Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with the Company shall be disregarded and deemed not to be
outstanding, except that, for the purpose of determining whether the Trustee
shall be protected in relying on any such direction, waiver or consent, only
Securities which the Trustee knows are so
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owned shall be so disregarded. Also, subject to the foregoing, only Securities
outstanding at the time shall be considered in any such determination.
SECTION 13.07. Rules by Trustee, Paying Agent and Registrar. The Trustee
may make reasonable rules for action by or a meeting of Securityholders. The
Registrar and the Paying Agent may make reasonable rules for their functions.
SECTION 13.08. Legal Holidays. A "Legal Holiday" is a Saturday, a Sunday or
a day on which banking institutions are not required to be open in the State of
New York. If a payment date is a Legal Holiday, payment shall be made on the
next succeeding day that is not a Legal Holiday, and no interest shall accrue
for the intervening period. If a regular record date is a Legal Holiday, the
record date shall not be affected.
SECTION 13.09. Governing Law. This Indenture and the Securities shall be
governed by, and construed in accordance with, the laws of the State of New York
but without giving effect to applicable principles of conflicts of law to the
extent that the application of the laws of another jurisdiction would be
required thereby.
SECTION 13.10. No Recourse Against Others. A director, officer, employee or
stockholder, as such, of the Company or any Guarantor shall not have any
liability for any obligations of the Company or any Guarantor under the
Securities, any Guaranty or this Indenture or for any claim based on, in respect
of or by reason of such obligations or their creation. By accepting a Security,
each Securityholder shall waive and release all such liability. The waiver and
release shall be part of the consideration for the issue of the Securities.
SECTION 13.11. Successors. All agreements of the Company in this Indenture
and the Securities shall bind its successors. All agreements of the Trustee in
this Indenture shall bind its successors.
SECTION 13.12. Multiple Originals. The parties may sign any number of
copies of this Indenture. Each signed copy shall be an original, but all of them
together represent the same agreement. One signed copy is enough to prove this
Indenture.
SECTION 13.13. Table of Contents; Headings. The table of contents,
cross-reference sheet and headings of the Articles and Sections of this
Indenture have been inserted for convenience of reference only, are not intended
to be considered a part hereof and shall not modify or restrict any of the terms
or provisions hereof.
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Indenture to
be duly executed as of the date first written above.
INTERSIL CORPORATION,
by
/s/ Gregory L. Williams
-------------------------------
Gregory L. Williams
Chief Executive Officer
INTERSIL HOLDING CORPORATION,
as Guarantor,
by
/s/ Gregory L. Williams
-------------------------------
Gregory L. Williams
Chief Executive Officer
HARRIS SEMICONDUCTOR, LLC, as
Guarantor
by
/s/ Gregory L. Williams
-------------------------------
Gregory L. Williams
Chief Executive Officer
HARRIS SEMICONDUCTOR (OHIO), LLC,
as Guarantor
by
/s/ Gregory L. Williams
-------------------------------
Gregory L. Williams
Chief Executive Officer
HARRIS SEMICONDUCTOR
(PENNSYLVANIA), LLC, as Guarantor
by
/s/ Gregory L. Williams
-------------------------------
Gregory L. Williams
Chief Executive Officer
<PAGE>
CHOICE MICROSYSTEMS, INC.,
as Guarantor
by
/s/ Gregory L. Williams
-------------------------------
Gregory L. Williams
Chief Executive Officer
UNITED STATES TRUST COMPANY OF
NEW YORK, as Trustee,
by
/s/ Gerard F. Ganey
-------------------------------
Gerard F. Ganey
Senior Vice President
<PAGE>
RULE 144A/REGULATION S APPENDIX
FOR OFFERINGS TO QUALIFIED INSTITUTIONAL BUYERS PURSUANT TO
RULE 144A AND TO CERTAIN PERSONS IN OFFSHORE TRANSACTIONS IN
RELIANCE ON REGULATION S.
PROVISIONS RELATING TO INITIAL SECURITIES,
PRIVATE EXCHANGE SECURITIES
AND EXCHANGE SECURITIES
1. Definitions
1.1 Definitions
For the purposes of this Appendix, the following terms shall have the
meanings indicated below:
"Depositary" means The Depository Trust Company, its nominees and their
respective successors.
"Exchange Securities" means (i) the 13 1/4% Senior Subordinated Notes Due
2009 to be issued pursuant to this Indenture in connection with a Registered
Exchange Offer pursuant to the Registration Rights Agreement and (ii) Additional
Securities, if any, issued pursuant to a registration statement filed with the
SEC under the Securities Act.
"Initial Purchasers" means (i) with respect to the Initial Securities
issued on the Issue Date, Credit Suisse First Boston Corporation, J.P. Morgan
Securities Inc. and Salomon Smith Barney Inc. and (ii) with respect to each
issuance of Additional Securities, the Persons purchasing such Additional
Securities under the related Purchase Agreement.
"Initial Securities" means (i) $200,000,000 13 1/4% Senior Subordinated
Notes Due 2009, issued under this Indenture on the Issue Date and (ii)
Additional Securities, if any, issued in a transaction exempt from the
registration requirements of the Securities Act.
"Private Exchange" means the offer by the Company, pursuant to the
Registration Rights Agreement, to the Initial Purchasers to issue and deliver to
the relevant Initial Purchaser, in exchange for the Initial Securities held by
the Initial Purchaser as part of its initial distribution, if any, a like
aggregate principal amount of Private Exchange Securities.
"Private Exchange Securities" means any 13 1/4% Senior Subordinated Notes
Due 2009 issued in connection with a Private Exchange.
<PAGE>
2
"Purchase Agreement" means (i) with respect to the Initial Securities
issued on the Issue Date, the Purchase Agreement dated August 6, 1999, among the
Company, the Guarantors named therein and the Initial Purchasers and (ii) with
respect to each issuance of Additional Securities, the purchase agreement or
underwriting agreement among the Company and the Persons purchasing such
Additional Securities.
"QIB" means a "qualified institutional buyer" as defined in Rule 144A.
"Registered Exchange Offer" means the offer by the Company, pursuant to the
Registration Rights Agreement, to certain Holders of Initial Securities, to
issue and deliver to such Holders, in exchange for the Initial Securities, a
like aggregate principal amount of Exchange Securities registered under the
Securities Act.
"Registration Rights Agreement" means (i) with respect to the Initial
Securities issued on the Issue Date, the Registration Rights Agreement dated
August 6, 1999, among the Company, the Guarantors named therein and the Initial
Purchasers and (ii) with respect to each issuance of Additional Securities
issued in a transaction exempt from the registration requirements of the
Securities Act, the registration rights agreement, if any, among the Company and
the Person purchasing such Additional Securities under the related Purchase
Agreement.
"Securities" means the Initial Securities, the Exchange Securities and the
Private Exchange Securities, treated as a single class.
"Securities Act" means the Securities Act of 1933.
"Securities Custodian" means the custodian with respect to a Global
Security (as appointed by the Depositary), or any successor person thereto and
shall initially be the Trustee.
"Shelf Registration Statement" means the registration statement issued by
the Company, in connection with the offer and sale of Initial Securities or
Private Exchange Securities, pursuant to the Registration Rights Agreement.
"Transfer Restricted Securities" means Definitive Securities and Securities
that bear or are required to bear the legend set forth in Section 2.3(d) hereto.
<PAGE>
3
1.2 Other Definitions
Defined in
Term Section:
---- ----------
"Agent Members".........................................................2.1(b)
"Definitive Security"...................................................2.1(c)
"Global 144A Security"..................................................2.1(a)
"Global Seasoned Security"..............................................2.1(a)
"Global Security".......................................................2.1(a)
"Regulation S"..........................................................2.1(a)
"Rule 144A".............................................................2.1(a)
2. The Securities.
2.1 Form and Dating.
The Initial Securities are being offered and sold by the Company pursuant
to the Purchase Agreement.
(a) Global Securities. Initial Securities offered and sold to a QIB in
reliance on Rule 144A under the Securities Act ("Rule 144A"), as provided in the
Purchase Agreement (each, a "Global 144A Security"), and Securities sold after
expiration of the 40-day "distribution compliance period" of Regulation S under
the Securities Act ("Regulation S") by a Person who initially purchased such
Security in reliance on Regulation S to a buyer who elects to hold its interest
in such Security in a global security (each, a "Global Seasoned Security") shall
be issued initially in the form of one or more permanent global Securities in
definitive, fully registered form without interest coupons with the global
securities legend and restricted securities legend set forth in Exhibit 1 hereto
(the Global 144A Securities and the Global Seasoned Securities, each a "Global
Security"), which shall be deposited on behalf of the purchasers of the Initial
Securities represented thereby with the Trustee, at its New York office, as
custodian for the Depositary (or with such other custodian as the Depositary may
direct), and registered in the name of the Depositary or a nominee of the
Depositary, duly executed by the Company and authenticated by the Trustee as
hereinafter provided. The aggregate principal amount of the Global Securities
may from time to time be increased or decreased by adjustments made on the
records of the Trustee and the Depositary or its nominee as hereinafter
provided.
(b) Book-Entry Provisions. This Section 2.1(b) shall apply only to a Global
Security deposited with or on behalf of the Depositary.
The Company shall execute and the Trustee shall, in accordance with this
Section 2.1(b), authenticate and deliver
<PAGE>
4
initially one or more Global Securities that (a) shall be registered in the name
of the Depositary for such Global Security or Global Securities or the nominee
of such Depositary and (b) shall be delivered by the Trustee to such Depositary
or pursuant to such Depositary's instructions or held by the Trustee as
custodian for the Depositary.
Members of, or participants in, the Depositary ("Agent Members") shall have
no rights under this Indenture with respect to any Global Security held on their
behalf by the Depositary or by the Trustee as the custodian of the Depositary or
under such Global Security, and the Depositary may be treated by the Company,
the Trustee and any agent of the Company or the Trustee as the absolute owner of
such Global Security for all purposes whatsoever. Notwithstanding the foregoing,
nothing herein shall prevent the Company, the Trustee or any agent of the
Company or the Trustee from giving effect to any written certification, proxy or
other authorization furnished by the Depositary or impair, as between the
Depositary and its Agent Members, the operation of customary practices of such
Depositary governing the exercise of the rights of a holder of a beneficial
interest in any Global Security.
(c) Certificated Securities. (i) Except as provided in Section 2.3 or 2.4,
owners of beneficial interests in Global Securities will not be entitled to
receive physical delivery of certificated Securities.
(ii) Initial Securities offered and sold in reliance on Regulation S, as
provided in the Purchase Agreement, will be issued initially in the form of
individual certificates in definitive, fully registered form without interest
coupons and with the restricted securities legend set forth in Exhibit 1 hereto
(each, a "Definitive Security"); provided, however, that such Definitive
Securities shall be deemed "temporary global securities" for purposes of
Regulation S and shall not be exchangeable for other Definitive Securities or a
Global Seasoned Security until expiration of the 40-day period following the
last issue date for the securities and until certification of beneficial
ownership of such Definitive Security by a non-U.S. person or a U.S. person who
purchased such Definitive Security in a transaction that did not require
registration under the Securities Act.
2.2 Authentication. The Trustee shall authenticate and deliver: (1) on
the Issue Date, $200.0 million 13 1/4% Senior Subordinated Notes Due 2009, (2)
any Additional Securities for an original issue in an aggregate principal amount
specified in the written order of the Company pursuant to Section 2.02 of the
Indenture and (3) Exchange Securities or Private
<PAGE>
5
Exchange Securities in exchange therefor for issue only in a Registered Exchange
Offer or a Private Exchange, respectively, pursuant to the Registration Rights
Agreement, for a like principal amount of Initial Securities, in each case upon
a written order of the Company signed by two Officers or by an Officer and
either an Assistant Treasurer or an Assistant Secretary of the Company. Such
order shall specify the amount of the Securities to be authenticated and the
date on which the original issue of Securities is to be authenticated and
whether the Securities are to be Initial Securities, Exchange Securities or
Private Exchange Securities. In addition, in the case of an issuance of
Additional Securities pursuant to Section 2.13 of the Indenture, such order
shall certify that such issuance is in compliance with Section 4.03 of the
Indenture.
2.3 Transfer and Exchange. (a) Transfer and Exchange of Definitive
Securities. When Definitive Securities are presented to the Registrar or a
co-registrar with a request:
(x) to register the transfer of such Definitive
Securities; or
(y) to exchange such Definitive Securities for an equal principal
amount of Definitive Securities of other authorized denominations,
the Registrar or co-registrar shall register the transfer or make the exchange
as requested if its reasonable requirements for such transaction are met;
provided, however, that the Definitive Securities surrendered for transfer or
exchange:
(i) shall be duly endorsed or accompanied by a written instrument of
transfer in form reasonably satisfactory to the Company and the Registrar
or co-registrar, duly executed by the Holder thereof or his attorney duly
authorized in writing; and
(ii) are being transferred or exchanged pursuant to an effective
registration statement under the Securities Act, pursuant to Section 2.3(b)
or pursuant to clause (A), (B) or (C) below, and are accompanied by the
following additional information and documents, as applicable:
(A) if such Definitive Securities are being delivered to the
Registrar by a Holder for registration in the name of such Holder,
without transfer, a certification from such Holder to that effect (in
the form set forth on the reverse of the Security); or
<PAGE>
6
(B) if such Definitive Securities are being transferred to the
Company, a certification to that effect (in the form set forth on the
reverse of the Security); or
(C) if such Definitive Securities are being transferred (x)
pursuant to an exemption from registration in accordance with Rule
144A, Regulation S or Rule 144 under the Securities Act; or (y) in
reliance on another exemption from the registration requirements of
the Securities Act: (i) a certification to that effect (in the form
set forth on the reverse of the Security) and (ii) if the Company or
Registrar so requests, an opinion of counsel or other evidence
reasonably satisfactory to them as to the compliance with the
restrictions set forth in the legend set forth in Section 2.3(d)(i);
provided further, however, that upon transfer of any such Definitive Security to
a QIB pursuant to Rule 144A in accordance with the provisions of this Indenture,
such Definitive Security will, unless the Global 144A Security has previously
been exchanged, be transferred for an interest in a Global 144A Security.
(b) Restrictions on Transfer of a Definitive Security for a Beneficial
Interest in a Global Security. A Definitive Security may not be exchanged for a
beneficial interest in a Rule 144A Global Security or a Seasoned Global Security
except upon satisfaction of the requirements set forth below. Upon receipt by
the Trustee of a Definitive Security, duly endorsed or accompanied by
appropriate instruments of transfer, in form satisfactory to the Trustee,
together with:
(i) certification, in the form set forth on the reverse of the
Security, that such Definitive Security is either (A) being transferred to
a QIB in accordance with Rule 144A or (B) is being transferred after
expiration of the "distribution compliance period" of Regulation S by a
Person who initially purchased such Security in reliance on Regulation S to
a buyer who elects to hold its interest in such security in the form of a
beneficial interest in the Global Seasoned Security; and
(ii) written instructions directing the Trustee to make, or to direct
the Securities Custodian to make, an adjustment on its books and records
with respect to such Global 144A Security (in the case of a transfer
pursuant to clause (b)(i)(A)) or Global Seasoned Security (in the case of a
transfer pursuant to clause (b)(i)(B)) to
<PAGE>
7
reflect an increase in the aggregate principal amount of the Securities
represented by the Global 144A Security or Global Seasoned Security, as
applicable, such instructions to contain information regarding the
Depositary account to be credited with such increase,
then the Trustee shall cancel such Definitive Security and cause, or direct the
Securities Custodian to cause, in accordance with the standing instructions and
procedures existing between the Depositary and the Securities Custodian, the
aggregate principal amount of Securities represented by the Global 144A Security
or Global Seasoned Security, as applicable, to be increased by the aggregate
principal amount of the Definitive Security to be exchanged and shall credit or
cause to be credited to the account of the Person specified in such instructions
a beneficial interest in the Global 144A Security or Global Seasoned Security,
as applicable, equal to the principal amount of the Definitive Security so
canceled. If no Global 144A Securities or Global Seasoned Security, as
applicable, are then outstanding, the Company shall issue and the Trustee shall
authenticate, upon written order of the Company in the form of an Officers'
Certificate, a new Global 144A Security or Global Seasoned Security, as
applicable, in the appropriate principal amount.
(c) Transfer and Exchange of Global Securities.
(i) The transfer and exchange of Global Securities or beneficial
interests therein shall be effected through the Depositary, in accordance
with this Indenture (including applicable restrictions on transfer set
forth herein, if any) and the procedures of the Depositary therefor. A
transferor of a beneficial interest in a Global Security shall deliver to
the Registrar a written order given in accordance with the Depositary's
procedures containing information regarding the participant account of the
Depositary to credited with a beneficial interest in the Global Security.
The Registrar shall, in accordance with such instructions instruct the
Depositary to credit to the account of the Person specified in such
instructions a beneficial interest in the Global Security and to debit the
account of the Person making the transfer the beneficial interest in the
Global Security being transferred.
(ii) Notwithstanding any other provisions of this Appendix (other than
the provisions set forth in Section 2.4), a Global Security may not be
transferred as a whole except by the Depositary to a nominee of the
Depositary or by a nominee of the Depositary to the Depositary or another
nominee of the Depositary or by the
<PAGE>
8
Depositary or any such nominee to a successor Depositary or a nominee of
such successor Depositary.
(iii) In the event that a Global Security is exchanged for Securities
in definitive registered form pursuant to Section 2.4 or Section 2.09 of
the Indenture, prior to the consummation of a Registered Exchange Offer or
the effectiveness of a Shelf Registration Statement with respect to such
Securities, such Securities may be exchanged only in accordance with such
procedures as are substantially consistent with the provisions of this
Section 2.3 (including the certification requirements set forth on the
reverse of the Initial Securities intended to ensure that such transfers
comply with Rule 144A or Regulation S, as the case may be) and such other
procedures as may from time to time be adopted by the Company.
(d) Legend.
(i) Except as permitted by the following paragraphs (ii), (iii) and
(iv), each Security certificate evidencing the Global 144A Securities and
the Definitive Securities (and all Securities issued in exchange therefor
or in substitution thereof) shall bear a legend in substantially the
following form:
"THIS SECURITY (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A
TRANSACTION EXEMPT FROM REGISTRATION UNDER THE UNITED STATES
SECURITIES ACT OF 1933 (THE "SECURITIES ACT"), AND THIS SECURITY MAY
NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF
THIS SECURITY IS HEREBY NOTIFIED THAT THE SELLER OF THIS SECURITY MAY
BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE
SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.
THE HOLDER OF THIS SECURITY AGREES FOR THE BENEFIT OF THE ISSUER
THAT (A) THIS SECURITY MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE
TRANSFERRED ONLY (I) INSIDE THE UNITED STATES TO A PERSON WHOM THE
SELLER REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" (AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144A, (II) OUTSIDE THE UNITED STATES
IN A TRANSACTION IN ACCORDANCE WITH RULE 904 UNDER THE SECURITIES ACT,
(III) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES
ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE)
<PAGE>
9
(IV) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OR (V) TO THE ISSUER, IN EACH OF CASES (I) THROUGH (V)
IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE
UNITED STATES, AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS
REQUIRED TO, NOTIFY ANY PURCHASER OF THIS SECURITY FROM IT OF THE
RESALE RESTRICTIONS REFERRED TO IN (A) ABOVE."
Each Definitive Security will also bear the following additional
legend:
"IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE
REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION
AS SUCH TRANSFER AGENT MAY REASONABLY REQUIRE TO CONFIRM THAT THE
TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS."
(ii) Upon any sale or transfer of a Transfer Restricted Security
(including any Transfer Restricted Security represented by a Global
Security) pursuant to Rule 144 under the Securities Act:
(A) in the case of any Transfer Restricted Security that is a
Definitive Security, the Registrar shall permit the Holder thereof to
exchange such Transfer Restricted Security for a certificated Security
that does not bear the legend set forth above and rescind any
restriction on the transfer of such Transfer Restricted Security; and
(B) in the case of any Transfer Restricted Security that is
represented by a Global Security, the Registrar shall permit the
Holder thereof to exchange such Transfer Restricted Security for a
certificated Security that does not bear the legend set forth above
and rescind any restriction on the transfer of such Transfer
Restricted Security, if the Holder certifies in writing to the
Registrar that its request for such exchange was made in reliance on
Rule 144 (such certification to be in the form set forth on the
reverse of the Security).
(iii) After a transfer of any Initial Securities or Private Exchange
Securities during the period of the effectiveness of a Shelf Registration
Statement with respect to such Initial Securities or Private Exchange
Securities, as the case may be, all requirements pertaining to legends on
such Initial Security or such Private Exchange Security will cease to
apply, the
<PAGE>
10
requirements requiring any such Initial Security or such Private Exchange
Security issued to certain Holders be issued in global form will cease to
apply, and a certificated Initial Security or Private Exchange Security
without legends will be available to the transferee of the Holder of such
Initial Securities or Private Exchange Securities upon exchange of such
transferring Holder's certificated Initial Security or Private Exchange
Security or directions to transfer such Holder's interest in the Global
Security, as applicable.
(iv) Upon the consummation of a Registered Exchange Offer with respect
to the Initial Securities pursuant to which Holders of such Initial
Securities are offered Exchange Securities in exchange for their Initial
Securities, all requirements pertaining to such Initial Securities that
Initial Securities issued to certain Holders be issued in global form will
cease to apply and certificated Initial Securities with the restricted
securities legend set forth in Exhibit 1 hereto will be available to
Holders of such Initial Securities that do not exchange their Initial
Securities, and Exchange Securities in certificated or global form will be
available to Holders that exchange such Initial Securities in such
Registered Exchange Offer.
(v) Upon the consummation of a Private Exchange with respect to the
Initial Securities pursuant to which Holders of such Initial Securities are
offered Private Exchange Securities in exchange for their Initial
Securities, all requirements pertaining to such Initial Securities that
Initial Securities issued to certain Holders be issued in global form will
still apply, and Private Exchange Securities in global form with the
Restricted Securities Legend set forth in Exhibit 1 hereto will be
available to Holders that exchange such Initial Securities in such Private
Exchange.
(e) Cancelation or Adjustment of Global Security. At such time as all
beneficial interests in a Global Security have either been exchanged for
certificated or Definitive Securities, redeemed, repurchased or canceled, such
Global Security shall be returned to the Depositary for cancelation or retained
and canceled by the Trustee. At any time prior to such cancelation, if any
beneficial interest in a Global Security is exchanged for certificated or
Definitive Securities, redeemed, repurchased or canceled, the principal amount
of Securities represented by such Global Security shall be reduced and an
adjustment shall be made on the books and records of the Trustee (if it is then
the Securities Custodian for such Global Security) with respect to such Global
<PAGE>
11
Security, by the Trustee or the Securities Custodian, to reflect such reduction.
(f) Obligations with Respect to Transfers and Exchanges of Securities.
(i) To permit registrations of transfers and exchanges, the Company
shall execute and the Trustee shall authenticate certificated Securities,
Definitive Securities and Global Securities at the Registrar's or
co-registrar's request.
(ii) No service charge shall be made for any registration of transfer
or exchange, but the Company may require payment of a sum sufficient to
cover any transfer tax, assessments, or similar governmental charge payable
in connection therewith (other than any such transfer taxes, assessments or
similar governmental charge payable upon exchange or transfer pursuant to
Sections 3.06, 4.09 and 9.05).
(iii) The Registrar or co-registrar shall not be required to register
the transfer of or exchange of (a) any certificated or Definitive Security
selected for redemption in whole or in part pursuant to Article 3 of this
Indenture, except the unredeemed portion of any certificated or Definitive
Security being redeemed in part, or (b) any Security for a period beginning
15 Business Days before the mailing of a notice of an offer to repurchase
or redeem Securities or 15 Business Days before an interest payment date.
(iv) Prior to the due presentation for registration of transfer of any
Security, the Company, the Trustee, the Paying Agent, the Registrar or any
co-registrar may deem and treat the person in whose name a Security is
registered as the absolute owner of such Security for the purpose of
receiving payment of principal of and interest on such Security and for all
other purposes whatsoever, whether or not such Security is overdue, and
none of the Company, the Trustee, the Paying Agent, the Registrar or any
co-registrar shall be affected by notice to the contrary.
(v) All Securities issued upon any transfer or exchange pursuant to
the terms of this Indenture shall evidence the same debt and shall be
entitled to the same benefits under this Indenture as the Securities
surrendered upon such transfer or exchange.
<PAGE>
12
(g) No Obligation of the Trustee.
(i) The Trustee shall have no responsibility or obligation to any
beneficial owner of a Global Security, a member of, or a participant in the
Depositary or other Person with respect to the accuracy of the records of
the Depositary or its nominee or of any participant or member thereof, with
respect to any ownership interest in the Securities or with respect to the
delivery to any participant, member, beneficial owner or other Person
(other than the Depositary) of any notice (including any notice of
redemption) or the payment of any amount, under or with respect to such
Securities. All notices and communications to be given to the Holders and
all payments to be made to Holders under the Securities shall be given or
made only to or upon the order of the registered Holders (which shall be
the Depositary or its nominee in the case of a Global Security). The rights
of beneficial owners in any Global Security shall be exercised only through
the Depositary subject to the applicable rules and procedures of the
Depositary. The Trustee may rely and shall be fully protected in relying
upon information furnished by the Depositary with respect to its members,
participants and any beneficial owners.
(ii) The Trustee shall have no obligation or duty to monitor,
determine or inquire as to compliance with any restrictions on transfer
imposed under this Indenture or under applicable law with respect to any
transfer of any interest in any Security (including any transfers between
or among Depositary participants, members or beneficial owners in any
Global Security) other than to require delivery of such certificates and
other documentation or evidence as are expressly required by, and to do so
if and when expressly required by, the terms of this Indenture, and to
examine the same to determine substantial compliance as to form with the
express requirements hereof.
2.4 Certificated Securities.
(a) A Global Security deposited with the Depositary or with the
Trustee as custodian for the Depositary pursuant to Section 2.1 shall be
transferred to the beneficial owners thereof in the form of certificated
Securities in an aggregate principal amount equal to the principal amount of
such Global Security, in exchange for such Global Security, only if such
transfer complies with Section 2.3 and (i) the Depositary notifies the Company
that it is unwilling or unable to continue as Depositary for such Global
Security or if at any time such Depositary ceases to be a "clearing agency"
<PAGE>
13
registered under the Exchange Act and a successor depositary is not appointed by
the Company within 90 days of such notice, or (ii) an Event of Default has
occurred and is continuing or (iii) the Company, in its sole discretion,
notifies the Trustee in writing that it elects to cause the issuance of
certificated Securities under this Indenture.
(b) Any Global Security that is transferable to the beneficial owners
thereof pursuant to this Section shall be surrendered by the Depositary to the
Trustee located in the Borough of Manhattan, The City of New York, to be so
transferred, in whole or from time to time in part, without charge, and the
Trustee shall authenticate and deliver, upon such transfer of each portion of
such Global Security, an equal aggregate principal amount of certificated
Initial Securities of authorized denominations. Any portion of a Global Security
transferred pursuant to this Section shall be executed, authenticated and
delivered only in denominations of $1,000 and any integral multiple thereof and
registered in such names as the Depositary shall direct. Any certificated
Initial Security delivered in exchange for an interest in the Global Security
shall, except as otherwise provided by Section 2.3(d), bear the restricted
securities legend set forth in Exhibit 1 hereto.
(c) Subject to the provisions of Section 2.4(b), the registered Holder
of a Global Security may grant proxies and otherwise authorize any Person,
including Agent Members and Persons that may hold interests through Agent
Members, to take any action which a Holder is entitled to take under this
Indenture or the Securities.
(d) In the event of the occurrence of either of the events specified
in Section 2.4(a), the Company will promptly make available to the Trustee a
reasonable supply of certificated Securities in definitive, fully registered
form without interest coupons.
<PAGE>
EXHIBIT 1
to
RULE 144A/REGULATION S APPENDIX
[FORM OF FACE OF INITIAL SECURITY]
[Global Securities Legend]
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), NEW YORK, NEW YORK, TO
THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND
ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER
NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS
MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC) ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE,
BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH
SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE
LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE
INDENTURE REFERRED TO ON THE REVERSE HEREOF.
[Restricted Securities Legend]
THIS SECURITY (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION
EXEMPT FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), AND THIS SECURITY MAY NOT BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE
EXEMPTION THEREFROM. EACH PURCHASER OF THIS SECURITY IS HEREBY NOTIFIED THAT THE
SELLER OF THIS SECURITY MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF
SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.
THE HOLDER OF THIS SECURITY AGREES FOR THE BENEFIT OF THE ISSUER THAT (A)
THIS SECURITY MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (I)
INSIDE THE UNITED STATES TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A
"QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES
ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (II) OUTSIDE THE
UNITED STATES IN A TRANSACTION IN ACCORDANCE WITH RULE 904 UNDER THE SECURITIES
ACT, (III) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT
PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE) (IV) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR (V) TO THE ISSUER, IN EACH OF
CASES (I)
<PAGE>
2
through (V) IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF
THE UNITED STATES, AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS
REQUIRED TO, NOTIFY ANY PURCHASER OF THIS SECURITY FROM IT OF THE RESALE
RESTRICTIONS REFERRED TO IN (A) ABOVE.
[IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE REGISTRAR
AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS SUCH TRANSFER
AGENT MAY REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE
FOREGOING RESTRICTIONS.](1)
- - ---------------------
(1) Include if a Definitive Security.
<PAGE>
3
CUSIP NO.
ISIN NO.
No. ________ $___________
13 1/4% Senior Subordinated Notes Due 2009
Intersil Corporation, a Delaware corporation, promises to pay to , or
registered assigns, the principal sum of Dollars on August 15, 2009.
Interest Payment Dates: February 15 and August 15
Record Dates: February 1 and August 1
Additional provisions of this Security are set forth on the other side of
this Security.
Dated:
INTERSIL CORPORATION,
by
-------------------------
Name:
Title:
by
-------------------------
Name:
Title:
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
UNITED STATES TRUST COMPANY OF NEW YORK,
as Trustee, certifies that
this is one of the Securities
referred to in the Indenture.
by
------------------------------------
Authorized Signatory
<PAGE>
4
[FORM OF REVERSE SIDE OF INITIAL SECURITY]
13 1/4% Senior Subordinated Note Due August 15, 2009
1. Interest
Intersil Corporation, a Delaware corporation (such corporation, and its
successors and assigns under the Indenture hereinafter referred to, being herein
called the "Company"), promises to pay interest on the principal amount of this
Security at the rate per annum shown above. In addition, if a Registration
Default (as defined in the Registration Rights Agreement) occurs, additional
interest will accrue on this Security at a rate of 0.50% per annum, increasing
by 0.50% per annum on the 90th day after such Registration Default and on every
90th day thereafter during the continuation of any such Registration Default,
from and including the date on which any such Registration Default shall occur
to but excluding the date on which all such Registration Defaults have been
cured; provided, however, that in no event shall such additional interest exceed
2.0% per annum. The Company will pay interest semiannually on February 15 and
August 15 of each year [commencing on February 15, 2000]. Interest on the
Securities will accrue from the most recent date to which interest has been paid
or, if no interest has been paid, from [August 13, 1999] [date of issuance of
any Additional Securities]. Interest will be computed on the basis of a 360-day
year of twelve 30-day months. The Company shall pay interest on overdue
principal at the rate borne by the Securities plus 1% per annum, and it shall
pay interest on overdue installments of interest at the same rate to the extent
lawful.
2. Method of Payment
The Company will pay interest on the Securities (except defaulted interest)
to the Persons who are registered holders of Securities at the close of business
on February 1 or August 1 next preceding the interest payment date even if
Securities are canceled after the record date and on or before the interest
payment date. Holders must surrender Securities to a Paying Agent to collect
principal payments. The Company will pay principal and interest in money of the
United States that at the time of payment is legal tender for payment of public
and private debts. Payments in respect of the Securities represented by a Global
Security (including principal, premium and interest) will be made by wire
transfer of immediately available funds to the accounts specified by The
Depository Trust Company. The Company will make all
<PAGE>
5
payments in respect of a certificated Security (including principal, premium and
interest) by mailing a check to the registered address of each Holder thereof;
provided, however, that payments on a certificated Security will be made by wire
transfer to a U.S. dollar account maintained by the payee with a bank in the
United States if such Holder elects payment by wire transfer by giving written
notice to the Trustee or the Paying Agent to such effect designating such
account no later than 30 days immediately preceding the relevant due date for
payment (or such other date as the Trustee may accept in its discretion).
3. Paying Agent and Registrar
Initially, United States Trust Company of New York, a New York banking
corporation (the "Trustee"), will act as Paying Agent and Registrar. The Company
may appoint and change any Paying Agent, Registrar or co-registrar without
notice. The Company or any of its domestically incorporated Wholly Owned
Subsidiaries may act as Paying Agent, Registrar or co-registrar.
4. Indenture
The Company issued the Securities under an Indenture dated as of August 13,
1999 (the "Indenture"), among the Company, Intersil Holding Corporation, Harris
Semiconductor, LLC, Harris Semiconductor (Ohio), LLC, Harris Semiconductor
(Pennsylvania), LLC and Choice Microsystems, Inc. and the Trustee. The terms of
the Securities include those stated in the Indenture and those made part of the
Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C. ss.ss.
77aaa-77bbbb) as in effect on the date of the Indenture (the "Act"). Terms
defined in the Indenture and not defined herein have the meanings ascribed
thereto in the Indenture. The Securities are subject to all such terms, and
Securityholders are referred to the Indenture and the Act for a statement of
those terms. The Company's obligations under the Securities and the Indenture
are guaranteed by the Parent and certain Subsidiaries of the Company.
The Securities are general unsecured obligations of the Company. The
Company shall be entitled, subject to its compliance with Section 4.03 of the
Indenture, to issue Additional Securities pursuant to Section 2.13 of the
Indenture. The Initial Securities issued on the Issue Date, any Additional
Securities and all Exchange Securities or Private Exchange Securities issued in
exchange therefor will be treated as a single class for all purposes under the
Indenture. The Indenture limits, among other things (i) the incurrence of
additional debt by the Company and its
<PAGE>
6
subsidiaries, (ii) the payment of dividends on capital stock of the Company and
the purchase, redemption or retirement of capital stock or subordinated
indebtedness, (iii) certain transactions with affiliates, (iv) sales of assets,
including capital stock of subsidiaries, and (v) certain consolidations, mergers
and transfers of assets. The Indenture also prohibits certain restrictions on
distributions from subsidiaries. All of these limitations and prohibitions,
however, are subject to a number of important qualifications contained in the
Indenture.
5. Optional Redemption
Except as set forth in the next paragraph, the Securities may not be
redeemed prior to August 15, 2004. On and after that date, the Company may
redeem the Securities in whole at any time or in part from time to time at the
following redemption prices (expressed in percentages of principal amount), plus
accrued and unpaid interest, if any, to the redemption date (subject to the
right of Holders of record on the relevant record date to receive interest due
on the related interest payment date):
if redeemed during the twelve-month period beginning August 15,
Period Percentage
------ ----------
2004.............................................................106.625%
2005.............................................................104.969
2006.............................................................103.313
2007.............................................................101.656
2008 and thereafter..............................................100.000
In addition, at any time prior to August 15, 2002, the Company may redeem
up to 35% of the aggregate principal amount of Securities (which includes
Additional Securities, if any) with the proceeds of an Equity Offering, at any
time or from time to time, at a redemption price of 113.25% of the principal
amount thereof, plus accrued interest to redemption date (subject to the right
of Holders of record on the relevant record date to receive interest due on the
related interest payment date); provided, however, that:
(1) at least 65% of such aggregate principal amount of Securities
(which includes Additional Securities, if any) remains outstanding
immediately after the occurrence of each such redemption (other than the
Securities held, directly or indirectly, by the Company or its Affiliates);
and
<PAGE>
7
(2) each such redemption occurs within 90 days after the date of the
related Equity Offering.
6. Notice of Redemption
Notice of optional redemption will be mailed at least 30 days but not more
than 60 days before the redemption date to each Holder of Securities to be
redeemed at his registered address. Securities in denominations larger than
$1,000 may be redeemed in part but only in whole multiples of $1,000. If money
sufficient to pay the redemption price of and accrued interest on all Securities
(or portions thereof) to be redeemed on the redemption date is deposited with
the Paying Agent on or before the redemption date and certain other conditions
are satisfied, on and after such date interest ceases to accrue on such
Securities (or such portions thereof) called for redemption.
7. Put Provisions
Upon a Change of Control, any Holder of Securities will have the right,
subject to certain conditions, to cause the Company to repurchase all or any
part of the Securities of such Holder at a repurchase price equal to 101% of the
principal amount of the Securities to be repurchased plus accrued and unpaid
interest, if any, to the date of repurchase (subject to the right of Holders of
record on the relevant record date to receive interest due on the related
interest payment date) as provided in, and subject to the terms of, the
Indenture.
8. Subordination
The Securities are subordinated to Senior Indebtedness, as defined in the
Indenture. To the extent provided in the Indenture, Senior Indebtedness must be
paid before the Securities may be paid. The Company agrees, and each
Securityholder by accepting a Security agrees, to the subordination provisions
contained in the Indenture and authorizes the Trustee to give it effect and
appoints the Trustee as attorney-in-fact for such purpose.
9. Denominations; Transfer; Exchange
The Securities are in registered form without coupons in denominations of
$1,000 and whole multiples of $1,000. A Holder may transfer or exchange
Securities in accordance with the Indenture. The Registrar may require a Holder,
among other things, to furnish appropriate endorsements or transfer documents
and to pay any taxes and fees required by law or permitted by the Indenture. The
<PAGE>
8
Registrar need not register the transfer of or exchange any Securities selected
for redemption (except, in the case of a Security to be redeemed in part, the
portion of the Security not to be redeemed) or any Securities for a period of 15
days before a selection of Securities to be redeemed or 15 days before an
interest payment date.
10. Persons Deemed Owners
The registered Holder of this Security may be treated as the owner of it
for all purposes.
11. Unclaimed Money
If money for the payment of principal or interest remains unclaimed for two
years, the Trustee or Paying Agent shall pay the money back to the Company at
its request unless an abandoned property law designates another Person. After
any such payment, Holders entitled to the money must look only to the Company
and not to the Trustee for payment.
12. Discharge and Defeasance
Subject to certain conditions, the Company at any time may terminate some
or all of its obligations under the Securities and the Indenture if the Company
deposits with the Trustee money or U.S. Government Obligations for the payment
of principal and interest on the Securities to redemption or maturity, as the
case may be.
13. Amendment, Waiver
Subject to certain exceptions set forth in the Indenture, (i) the Indenture
or the Securities may be amended with the written consent of the Holders of at
least a majority in principal amount of the Securities then outstanding and (ii)
any default or noncompliance with any provision may be waived with the written
consent of the Holders of a majority in principal amount of the Securities then
outstanding. Subject to certain exceptions set forth in the Indenture, without
the consent of any Securityholder, the Company and the Trustee may amend the
Indenture or the Securities to cure any ambiguity, omission, defect or
inconsistency, or to comply with Article 5 of the Indenture, or to provide for
uncertificated Securities in addition to or in place of certificated Securities,
or to add guarantees with respect to the Securities or to secure the Securities,
or to add additional covenants or surrender rights and powers conferred on the
Company, or to comply with any request of the SEC in connection with qualifying
the Indenture under the Act, or to make certain changes in the subordination
provisions, or to
<PAGE>
9
release a Subsidiary Guaranty when permitted by the Indenture, or to make any
change that does not adversely affect the rights of any Securityholder.
14. Defaults and Remedies
Under the Indenture, Events of Default include (i) default for 30 days in
payment of interest on the Securities; (ii) default in payment of principal on
the Securities at maturity, upon redemption pursuant to paragraph 5 of the
Securities, upon acceleration or otherwise, or failure by the Company to redeem
or purchase Securities when required; (iii) failure by the Company to comply
with other agreements in the Indenture or the Securities, in certain cases
subject to notice and lapse of time; (iv) certain accelerations (including
failure to pay within any grace period after final maturity) of other
Indebtedness of the Company if the amount accelerated (or so unpaid) exceeds
$10.0 million; (v) certain events of bankruptcy or insolvency with respect to
the Company and the Significant Subsidiaries; (vi) certain judgments or decrees
for the payment of money in excess of $10.0 million entered against the Company
or a Significant Subsidiary; and (vii) certain events with respect to the
guarantees of the Securities by the Parent and certain Restricted Subsidiaries
of the Company. If an Event of Default occurs and is continuing, the Trustee or
the Holders of at least 25% in principal amount of the outstanding Securities
may declare all the Securities to be due and payable immediately, subject to
certain conditions. Certain events of bankruptcy or insolvency are Events of
Default which will result in the Securities being due and payable immediately
upon the occurrence of such Events of Default.
Securityholders may not enforce the Indenture or the Securities except as
provided in the Indenture. The Trustee may refuse to enforce the Indenture or
the Securities unless it receives reasonable indemnity or security. Subject to
certain limitations, Holders of a majority in principal amount of the Securities
may direct the Trustee in its exercise of any trust or power. The Trustee may
withhold from Securityholders notice of any continuing Default (except a Default
in payment of principal or interest) if it determines that withholding notice is
in the interest of the Holders.
15. Trustee Dealings with the Company
Subject to certain limitations imposed by the Act, the Trustee under the
Indenture, in its individual or any other capacity, may become the owner or
pledgee of Securities and may otherwise deal with and collect obligations owed
to it
<PAGE>
10
by the Company or its Affiliates and may otherwise deal with the Company or its
Affiliates with the same rights it would have if it were not Trustee.
16. No Recourse Against Others
A director, officer, employee or stockholder, as such, of the Company or
the Trustee shall not have any liability for any obligations of the Company
under the Securities or the Indenture or for any claim based on, in respect of
or by reason of such obligations or their creation. By accepting a Security,
each Securityholder waives and releases all such liability. The waiver and
release are part of the consideration for the issue of the Securities.
17. Authentication
This Security shall not be valid until an authorized signatory
of the Trustee (or an authenticating agent) manually signs the certificate of
authentication on the other side of this Security.
18. Abbreviations
Customary abbreviations may be used in the name of a Securityholder or an
assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the
entireties), JT TEN (=joint tenants with rights of survivorship and not as
tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors
Act).
19. Holders' Compliance with Registration Rights Agreement.
Each Holder of a Security, by acceptance hereof, acknowledges and agrees to
the provisions of the Registration Rights Agreement, including, without
limitation, the obligations of the Holders with respect to a registration and
the indemnification of the Company to the extent provided therein.
20. Governing Law.
THIS SECURITY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES
OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER
JURISDICTION WOULD BE REQUIRED THEREBY.
<PAGE>
11
THE COMPANY WILL FURNISH TO ANY SECURITYHOLDER UPON WRITTEN REQUEST AND
WITHOUT CHARGE TO THE SECURITYHOLDER A COPY OF THE INDENTURE WHICH HAS IN IT THE
TEXT OF THIS SECURITY IN LARGER TYPE. REQUESTS MAY BE MADE TO:
INTERSIL CORPORATION
2401 PALM BAY ROAD NE
PALM BAY, FL 32905
ATTENTION: GENERAL COUNSEL
<PAGE>
12
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
- - --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
- - --------------------------------------------------------------------------------
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint __________________ agent to transfer this Security on
the books of the Company. The agent may substitute another to act for him.
Date: ________________ Your Signature: ______________________________
- - --------------------------------------------------------------------------------
Sign exactly as your name appears on the other side of this Security.
In connection with any transfer of any of the Securities evidenced by this
certificate occurring prior to the expiration of the period referred to in Rule
144(k) under the Securities Act after the later of the date of original issuance
of such Securities and the last date, if any, on which such Securities were
owned by the Company or any Affiliate of the Company, the undersigned confirms
that such Securities are being transferred in accordance with its terms:
CHECK ONE BOX BELOW
(1) / / to the Company; or
(2) / / pursuant to an effective registration statement
under the Securities Act of 1933; or
(3) / / inside the United States to a "qualified
institutional buyer" (as defined in Rule 144A
under the Securities Act of 1933) that
purchases for its own account or for the
account of a qualified institutional buyer to
whom notice is given that such transfer is
being made in reliance on Rule 144A, in each
case pursuant to and in compliance with
Rule 144A under the Securities Act of 1933; or
<PAGE>
13
(4) / / outside the United States in an offshore
transaction within the meaning of Regulation S under
the Securities Act in compliance with Rule 904 under
the Securities Act of 1933;
(5) / / pursuant to another available exemption from
registration provided by Rule 144 under the
Securities Act of 1933; or
(6) / / after the "distribution compliance period" of
Regulation S has expired, by a Person who
purchased in reliance on Regulation S of the
Securities Act of 1933 to a buyer who elects to
hold the Definitive Security in the form of a
beneficial interest in the Global Seasoned
Security.
If such transfer is being made pursuant to an offshore transaction in
accordance with Rule 904 under the Securities Act, the undersigned further
certifies that:
(i) the offer of the Securities was not made to a person in the United
States;
(ii) either (a) at the time the buy offer was originated, the
transferee was outside the United States or we and any person acting on our
behalf reasonably believed that the transferee was outside the United
States, or (b) the transaction was executed in, on or through the
facilities of a designated off-shore securities market and neither we nor
any person acting on our behalf knows that the transaction has been
prearranged with a buyer in the United States;
(iii) no directed selling efforts have been made in the United States
in contravention of the requirements of Rule 903 or Rule 904 of Regulation
S, as applicable;
(iv) the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act;
(v) we have advised the transferee of the transfer restrictions
applicable to the Securities; and
(vi) if the circumstances set forth in Rule 904(B) under the
Securities Act are applicable, we have complied with the additional
conditions therein, including (if applicable) sending a confirmation or
other notice stating that the Securities may be offered and sold during the
distribution compliance period specified in
<PAGE>
14
Rule 903 of Regulation S; pursuant to registration of the Securities under
the Securities Act; or pursuant to an available exemption from the
registration requirements under the Securities Act.
Unless one of the boxes is checked, the Trustee will refuse to register any
of the Securities evidenced by this certificate in the name of any person
other than the registered holder thereof; provided, however, that if box
(3), (4) or (5) is checked, the Trustee may require, prior to registering
any such transfer of the Securities, such legal opinions, additional
certifications and other information as the Company has reasonably
requested to confirm that such transfer is being made pursuant to an
exemption from, or in a transaction not subject to, the registration
requirements of the Securities Act of 1933, such as the exemption provided
by Rule 144 under such Act.
---------------------------
Signature
Signature Guarantee:
- - --------------------- --------------------------
Signature must be Signature
guaranteed
TO BE COMPLETED BY PURCHASER IF (3) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing
this Security for its own account or an account with respect to which it
exercises sole investment discretion and that it and any such account is a
"qualified institutional buyer" within the meaning of Rule 144A under the
Securities Act of 1933, and is aware that the sale to it is being made in
reliance on Rule 144A and acknowledges that it has received such information
regarding the Company as the undersigned has requested pursuant to Rule 144A or
has determined not to request such information and that it is aware that the
transferor is relying upon the undersigned's foregoing representations in order
to claim the exemption from registration provided by Rule 144A.
Dated: ________________ ______________________________
NOTICE: To be executed by
an executive officer
<PAGE>
15
[TO BE ATTACHED TO GLOBAL SECURITIES]
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY
The following increases or decreases in this Global Security have been
made:
<TABLE>
<S> <C> <C> <C> <C>
Date of Amount of decrease Amount of increase Principal Amount Signature of
Exchange in Principal in Principal of this Global authorized officer
Amount of this Amount of this Security following of Trustee or
Global Security Global Security such decrease or Securities
increase) Custodian
- - -------- ------------------ ------------------ ------------------ ------------------
</TABLE>
<PAGE>
16
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the Company
pursuant to Section 4.06 or 4.09 of the Indenture, check the box:
[ ]
If you want to elect to have only part of this Security purchased by the
Company pursuant to Section 4.06 or 4.09 of the Indenture, state the amount in
principal amount: $
Date: _______________ Your Signature: __________________________
(Sign exactly asyour name
appears on the other side of
this Security.)
Signature Guarantee: _______________________________________________________
(Signature must be guaranteed)
<PAGE>
EXHIBIT 2 to
RULE 144A/REGULATION S APPENDIX
[FORM OF FACE OF EXCHANGE SECURITY
OR PRIVATE EXCHANGE SECURITY]
[**/]
[***/]
CUSIP NO.:_________
ISIN NO.:_________
No. _______ $__________
13 1/4% Senior Subordinated Notes Due 2009
Intersil Corporation, a Delaware corporation, promises to pay to _________,
or registered assigns, the principal sum of __________
Dollars on August 15, 2009.
Interest Payment Dates: February 15 and August 15
Record Dates: February 1 and August 1
- - --------
**/ If the Security is to be issued in global form, add the Global
Securities Legend from Exhibit 1 to the Rule 144A/Regulation S Appendix and
the attachment from such Exhibit 1 captioned "[TO BE ATTACHED TO GLOBAL
SECURITIES] SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY".
***/ If the Security is a Private Exchange Security issued in a Private
Exchange to an Initial Purchaser holding an unsold portion of its initial
allotment, add the Restricted Securities Legend from Exhibit 1 to the Rule
144A/Regulation S Appendix and replace the Assignment Form included in this
Exhibit 2 with the Assignment Form included in such Exhibit 1.
<PAGE>
2
Additional provisions of this Security are set forth on the other side of
this Security.
Dated:
INTERSIL CORPORATION,
by
-----------------------------
Name:
Title:
by
-----------------------------
Name:
Title:
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
UNITED STATES TRUST COMPANY OF NEW YORK,
as Trustee, certifies that
this is one of the Securities
referred to in the Indenture.
by
-----------------------------
Authorized Signatory
<PAGE>
3
[FORM OF REVERSE SIDE OF EXCHANGE SECURITY OR
PRIVATE EXCHANGE SECURITY]
13 1/4% Senior Subordinated Note Due August 15, 2009
1. Interest
Intersil Corporation, a Delaware corporation (such corporation, and its
successors and assigns under the Indenture hereinafter referred to, being herein
called the "Company"), promises to pay interest on the principal amount of this
Security at the rate per annum shown above. [In addition, if a Registration
Default (as defined in the Registration Rights Agreement) occurs, additional
interest will accrue on this Security at a rate of 0.50% per annum, increasing
by 0.50% per annum on the 90th day after such Registration Default and on every
90th day thereafter during the continuation of any such Registration Default,
from and including the date on which any such Registration Default shall occur
to but excluding the date on which all such Registration Defaults have been
cured; provided, however, that in no event shall such additional interest exceed
2.0% per annum.]****/ The Company will pay interest semiannually on February 15
and August 15 of each year [commencing on February 15, 2000]. Interest on the
Securities will accrue from the most recent date to which interest has been paid
or, if no interest has been paid, from [August 13, 1999] [date of issuance of
any Additional Securities]. Interest will be computed on the basis of a 360-day
year of twelve 30-day months. The Company shall pay interest on overdue
principal at the rate borne by the Securities plus 1% per annum, and it shall
pay interest on overdue installments of interest at the same rate to the extent
lawful.
2. Method of Payment
The Company will pay interest on the Securities (except defaulted interest)
to the Persons who are registered holders of Securities at the close of business
on February 1 or August 1 next preceding the interest payment date even if
Securities are canceled after the record date and on or before
- - --------
****/ Insert if at the time of issuance of the Exchange Security or Private
Exchange Security (as the case may be) neither the Registered Exchange Offer has
been consummated nor a Shelf Registration Statement has been declared effective
in accordance with the Registration Rights Agreement.
<PAGE>
4
the interest payment date. Holders must surrender Securities to a Paying Agent
to collect principal payments. The Company will pay principal and interest in
money of the United States that at the time of payment is legal tender for
payment of public and private debts. Payments in respect of Securities
(including principal, premium and interest) will be made by wire transfer of
immediately available funds to the accounts specified by the holders thereof or,
if no U.S. dollar account maintained by the payee with a bank in the United
States is designated by any holder to the Trustee or the Paying Agent at least
30 days prior to the relevant due date for payment (or such other date as the
Trustee may accept in its discretion), by mailing a check to the registered
address of such holder.
3. Paying Agent and Registrar
Initially, United States Trust Company of New York, a New York banking
corporation (the "Trustee"), will act as Paying Agent and Registrar. The Company
may appoint and change any Paying Agent, Registrar or co-registrar without
notice. The Company or any of its domestically incorporated Wholly Owned
Subsidiaries may act as Paying Agent, Registrar or co-registrar.
4. Indenture
The Company issued the Securities under an Indenture dated as of August 13,
1999 (the "Indenture"), among the Company, Intersil Holding Corporation, Harris
Semiconductor, LLC, Harris Semiconductor (Ohio), LLC, Harris Semiconductor
(Pennsylvania), LLC and Choice Microsystems, Inc. and the Trustee. The terms of
the Securities include those stated in the Indenture and those made part of the
Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C. ss.ss.
77aaa-77bbbb) as in effect on the date of the Indenture (the "Act"). Terms
defined in the Indenture and not defined herein have the meanings ascribed
thereto in the Indenture. The Securities are subject to all such terms, and
Securityholders are referred to the Indenture and the Act for a statement of
those terms. The Company's obligations under the Securities are guaranteed by
the Parent and certain Subsidiaries of the Company.
The Securities are general unsecured obligations of the Company. The
Company shall be entitled, subject to its compliance with Section 4.03 of the
Indenture, to issue Additional Securities pursuant to Section 2.13 of the
Indenture. The Initial Securities issued on the Issue Date, any Additional
Securities and all Exchange Securities or Private Exchange Securities issued in
exchange therefor will be treated as a single class for all purposes under the
<PAGE>
5
Indenture. The Indenture limits, among other things (i) the incurrence of
additional debt by the Company and its subsidiaries, (ii) the payment of
dividends on capital stock of the Company and the purchase, redemption or
retirement of capital stock or subordinated indebtedness, (iii) certain
transactions with affiliates, (iv) sales of assets, including capital stock of
subsidiaries, and (v) certain consolidations, mergers and transfers of assets.
The Indenture also prohibits certain restrictions on distributions from
subsidiaries. All of these limitations and prohibitions, however, are subject to
a number of important qualifications contained in the Indenture.
5. Optional Redemption
Except as set forth in the next paragraph, the Securities may not be
redeemed prior to August 15, 2004. On and after that date, the Company may
redeem the Securities in whole at any time or in part from time to time at the
following redemption prices (expressed in percentages of principal amount), plus
accrued and unpaid interest, if any, to the redemption date (subject to the
right of Holders of record on the relevant record date to receive interest due
on the related interest payment date):
if redeemed during the twelve-month period beginning August 15,
Period Percentage
------ ----------
2004........................................................... 106.625%
2005........................................................... 104.969
2006........................................................... 103.313
2007........................................................... 101.656
2008 and thereafter............................................ 100.000
In addition, at any time prior to August 15, 2002, the Company may redeem
up to 35% of the aggregate principal amount of Securities (which includes
Additional Securities, if any,) with the proceeds of an Equity Offering, at any
time or from time to time, at a redemption price of 113.25% of the principal
amount thereof, plus accrued interest to redemption date (subject to the right
of Holders of record on the relevant record date to receive interest due on the
related interest payment date); provided, however, that:
(1) at least 65% of such aggregate principal amount of Securities
(which includes Additional Securities, if any) remains outstanding
immediately after the occurrence of each such redemption (other than the
Securities held, directly or indirectly, by the Company or its Affiliates);
and
<PAGE>
6
(2) each such redemption occurs within 90 days after the date of the
related Equity Offering.
6. Notice of Redemption
Notice of optional redemption will be mailed at least 30 days but not more
than 60 days before the redemption date to each Holder of Securities to be
redeemed at his registered address. Securities in denominations larger than
$1,000 may be redeemed in part but only in whole multiples of $1,000. If money
sufficient to pay the redemption price of and accrued interest on all Securities
(or portions thereof) to be redeemed on the redemption date is deposited with
the Paying Agent on or before the redemption date and certain other conditions
are satisfied, on and after such date interest ceases to accrue on such
Securities (or such portions thereof) called for redemption.
7. Put Provisions
Upon a Change of Control, any Holder of Securities will have the right,
subject to certain conditions, to cause the Company to repurchase all or any
part of the Securities of such Holder at a repurchase price equal to 101% of the
principal amount of the Securities to be repurchased plus accrued and unpaid
interest, if any, to the date of repurchase (subject to the right of Holders of
record on the relevant record date to receive interest due on the related
interest payment date) as provided in, and subject to the terms of, the
Indenture.
8. Subordination
The Securities are subordinated to Senior Indebtedness, as defined in the
Indenture. To the extent provided in the Indenture, Senior Indebtedness must be
paid before the Securities may be paid. The Company agrees, and each
Securityholder by accepting a Security agrees, to the subordination provisions
contained in the Indenture and authorizes the Trustee to give it effect and
appoints the Trustee as attorney-in-fact for such purpose.
9. Denominations; Transfer; Exchange
The Securities are in registered form without coupons in denominations of
$1,000 and whole multiples of $1,000. A Holder may transfer or exchange
Securities in accordance with the Indenture. The Registrar may require a Holder,
among other things, to furnish appropriate endorsements or transfer documents
and to pay any taxes and fees required by law or permitted by the Indenture. The
<PAGE>
7
Registrar need not register the transfer of or exchange any Securities selected
for redemption (except, in the case of a Security to be redeemed in part, the
portion of the Security not to be redeemed) or any Securities for a period of 15
days before a selection of Securities to be redeemed or 15 days before an
interest payment date.
10. Persons Deemed Owners
The registered Holder of this Security may be treated as the owner of it
for all purposes.
11. Unclaimed Money
If money for the payment of principal or interest remains unclaimed for two
years, the Trustee or Paying Agent shall pay the money back to the Company at
its request unless an abandoned property law designates another Person. After
any such payment, Holders entitled to the money must look only to the Company
and not to the Trustee for payment.
12. Discharge and Defeasance
Subject to certain conditions, the Company at any time may terminate some
or all of its obligations under the Securities and the Indenture if the Company
deposits with the Trustee money or U.S. Government Obligations for the payment
of principal and interest on the Securities to redemption or maturity, as the
case may be.
13. Amendment, Waiver
Subject to certain exceptions set forth in the Indenture, (i) the Indenture
or the Securities may be amended with the written consent of the Holders of at
least a majority in principal amount of the Securities then outstanding and (ii)
any default or noncompliance with any provision may be waived with the written
consent of the Holders of a majority in principal amount of the Securities then
outstanding. Subject to certain exceptions set forth in the Indenture, without
the consent of any Securityholder, the Company and the Trustee may amend the
Indenture or the Securities to cure any ambiguity, omission, defect or
inconsistency, or to comply with Article 5 of the Indenture, or to provide for
uncertificated Securities in addition to or in place of certificated Securities,
or to add guarantees with respect to the Securities or to secure the Securities,
or to add additional covenants or surrender rights and powers conferred on the
Company, or to comply with any request of the SEC in connection with qualifying
the Indenture under the Act, or to make certain changes in the subordination
provisions, or to
<PAGE>
8
release a Subsidiary Guaranty when permitted by the Indenture, or to make any
change that does not adversely affect the rights of any Securityholder.
14. Defaults and Remedies
Under the Indenture, Events of Default include (i) default for
30 days in payment of interest on the Securities; (ii) default in payment of
principal on the Securities at maturity, upon redemption pursuant to paragraph 5
of the Securities, upon acceleration or otherwise, or failure by the Company to
redeem or purchase Securities when required; (iii) failure by the Company to
comply with other agreements in the Indenture or the Securities, in certain
cases subject to notice and lapse of time; (iv) certain accelerations (including
failure to pay within any grace period after final maturity) of other
Indebtedness of the Company if the amount accelerated (or so unpaid) exceeds
$10.0 million; (v) certain events of bankruptcy or insolvency with respect to
the Company and the Significant Subsidiaries; (vi) certain judgments or decrees
for the payment of money in excess of $10.0 million entered against the Company
or a Significant Subsidiary; and (vii) certain events with respect to the
guarantees of the Securities by the Parent and certain Restricted Subsidiaries
of the Company. If an Event of Default occurs and is continuing, the Trustee or
the Holders of at least 25% in principal amount of the outstanding Securities
may declare all the Securities to be due and payable immediately, subject to
certain conditions. Certain events of bankruptcy or insolvency are Events of
Default which will result in the Securities being due and payable immediately
upon the occurrence of such Events of Default.
Securityholders may not enforce the Indenture or the Securities except as
provided in the Indenture. The Trustee may refuse to enforce the Indenture or
the Securities unless it receives reasonable indemnity or security. Subject to
certain limitations, Holders of a majority in principal amount of the Securities
may direct the Trustee in its exercise of any trust or power. The Trustee may
withhold from Securityholders notice of any continuing Default (except a Default
in payment of principal or interest) if it determines that withholding notice is
in the interest of the Holders.
15. Trustee Dealings with the Company
Subject to certain limitations imposed by the Act, the Trustee under the
Indenture, in its individual or any other capacity, may become the owner or
pledgee of Securities and may otherwise deal with and collect obligations owed
to it
<PAGE>
9
by the Company or its Affiliates and may otherwise deal with the Company or its
Affiliates with the same rights it would have if it were not Trustee.
16. No Recourse Against Others
A director, officer, employee or stockholder, as such, of the Company or
the Trustee shall not have any liability for any obligations of the Company
under the Securities or the Indenture or for any claim based on, in respect of
or by reason of such obligations or their creation. By accepting a Security,
each Securityholder waives and releases all such liability. The waiver and
release are part of the consideration for the issue of the Securities.
17. Authentication
This Security shall not be valid until an authorized signatory of the
Trustee (or an authenticating agent) manually signs the certificate of
authentication on the other side of this Security.
18. Abbreviations
Customary abbreviations may be used in the name of a Securityholder or an
assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the
entireties), JT TEN (=joint tenants with rights of survivorship and not as
tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors
Act).
19. CUSIP Numbers
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures the Company has caused CUSIP numbers to be
printed on the Securities and has directed the Trustee to use CUSIP numbers in
notices of redemption as a convenience to Securityholders. No representation is
made as to the accuracy of such numbers either as printed on the Securities or
as contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
20. Holders' Compliance with Registration Rights Agreement.
Each Holder of a Security, by acceptance hereof, acknowledges and agrees to
the provisions of the Registration Rights Agreement, including, without
limitation, the obligations of the Holders with respect to a registration and
the indemnification of the Company to the extent provided therein.
<PAGE>
10
21. Governing Law.
THIS SECURITY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES
OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER
JURISDICTION WOULD BE REQUIRED THEREBY.
The Company will furnish to any Securityholder upon written request and
without charge to the Securityholder a copy of the Indenture which has in it the
text of this Security in larger type. Requests may be made to:
INTERSIL CORPORATION
2401 PALM BAY ROAD NE
PALM BAY, FL 32905
ATTENTION: GENERAL COUNSEL
<PAGE>
11
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
- - --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
- - --------------------------------------------------------------------------------
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint ________________________ agent to transfer this Security
on the books of the Company. The agent may substitute another to act for him.
Date: _____________________ Your Signature: ____________________________
- - --------------------------------------------------------------------------------
Sign exactly as your name appears on the other side of this Security.
<PAGE>
12
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the Company
pursuant to Section 4.06 or 4.09 of the Indenture, check the box:
/ /
If you want to elect to have only part of this Security purchased by the
Company pursuant to Section 4.06 or 4.09 of the Indenture, state the amount in
principal amount: $
Date: __________________ Your Signature: _______________________________
(Sign exactly as your name
appearson the other side of
the Security.)
Signature Guarantee: _________________________________________________________
(Signature must be guaranteed)
EXHIBIT 10.06
===========================================================
INTERSIL HOLDING CORPORATION,
Issuer
11.13% Subordinated Pay-In-Kind Notes Due 2010
INDENTURE
Dated as of August 13, 1999
United States Trust Company of New York,
Trustee
===========================================================
<PAGE>
CROSS-REFERENCE TABLE
TIA Indenture
Section Section
- - ------- ---------
310(a)(1).............................................................7.10
(a)(2).............................................................7.10
(a)(3).............................................................N.A.
(a)(4).............................................................N.A.
(b)................................................................7.8; 7.10
(c)................................................................N.A.
311(a)................................................................7.11
(b)................................................................7.11
(c)................................................................N.A.
312(a)................................................................2.5
(b)................................................................11.3
(c)................................................................11.3
313(a)................................................................7.6
(b)(1).............................................................N.A.
(b)(2).............................................................7.6
(c)................................................................11.2
(d)................................................................7.6
314(a)................................................................4.2; 11.2
(b)................................................................N.A.
(c)(1).............................................................11.4
(c)(2).............................................................11.4
(c)(3).............................................................N.A.
(d)................................................................N.A.
(e)................................................................11.5
(f)................................................................N.A.
315(a)................................................................7.01
(b)................................................................7.05; 11.2
(c)................................................................7.1
(d)................................................................7.1
(e)................................................................6.11
316(a)(last sentence).................................................11.6
(a)(1)(A)..........................................................6.5
(a)(1)(B)..........................................................6.4
(a)(2).............................................................N.A.
(b)................................................................6.7
317(a)(1).............................................................6.8
(a)(2).............................................................6.9
(b)................................................................2.4
318(a)................................................................11.1
N.A. means Not Applicable.
Note: This Cross-Reference Table shall not, for any purpose, be deemed to be
part of the Indenture.
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE 1 Definitions and Incorporation by Reference.........................1
Section 1.1. Definitions.................................................1
Section 1.2. Other Definitions...........................................8
Section 1.3. Incorporation by Reference of Trust Indenture Act...........8
Section 1.4. Rules of Construction.......................................9
ARTICLE 2 The Securities....................................................10
Section 2.1. Form and Dating............................................10
Section 2.2. Execution and Authentication...............................10
Section 2.3. Registrar and Paying Agent.................................10
Section 2.4. Paying Agent To Hold Money in Trust........................11
Section 2.5. Securityholder Lists.......................................11
Section 2.6. Transfer and Exchange......................................11
Section 2.7. Replacement Securities.....................................12
Section 2.8. Outstanding Securities.....................................12
Section 2.9. Temporary Securities.......................................13
Section 2.10. Cancellation..............................................13
Section 2.11. Defaulted Interest........................................13
Section 2.12. CUSIP Numbers.............................................13
Section 2.13. Issuance of Additional Securities.........................14
ARTICLE 3 Redemption........................................................15
Section 3.1. Notices to Trustee.........................................15
Section 3.2. Selection of Securities To Be Redeemed.....................15
Section 3.3. Notice of Redemption.......................................15
Section 3.4. Effect of Notice of Redemption.............................16
Section 3.5. Deposit of Redemption Price................................16
Section 3.6. Securities Redeemed in Part................................16
ARTICLE 4 Covenants.........................................................17
Section 4.1. Payment of Securities......................................17
Section 4.2. SEC Reports................................................17
Section 4.3. Preservation of Corporate Existence; etc...................17
Section 4.4. Payment of Taxes, Assessment, Charges and Claims...........17
Section 4.5. Limitation on Restricted Payments..........................18
Section 4.6. Compliance with Laws.......................................19
Section 4.7. Limitation on Payment Restrictions.........................19
Section 4.8. Compliance Certificate.....................................19
Section 4.9. Further Instruments and Acts...............................20
Section 4.10. Transactions with Affiliates..............................20
ARTICLE 5 Successor Companies...............................................20
Section 5.1. When Company May Merge or Transfer Assets..................20
i
<PAGE>
ARTICLE 6 Defaults and Remedies.............................................21
Section 6.1. Events of Default..........................................21
Section 6.2. Acceleration...............................................22
Section 6.3. Other Remedies.............................................23
Section 6.4. Waiver of Past Defaults....................................23
Section 6.5. Control by Majority........................................23
Section 6.6. Limitation on Suits........................................23
Section 6.7. Rights of Holders To Receive Payment.......................24
Section 6.8. Collection Suit by Trustee.................................24
Section 6.9. Trustee May File Proofs of Claim...........................24
Section 6.10. Priorities................................................24
Section 6.11. Undertaking for Costs.....................................25
Section 6.12. Waiver of Stay or Extension Laws..........................25
ARTICLE 7 Trustee...........................................................25
Section 7.1. Duties of Trustee..........................................25
Section 7.2. Rights of Trustee..........................................27
Section 7.3. Individual Rights of Trustee...............................27
Section 7.4. Trustee's Disclaimer.......................................27
Section 7.5. Notice of Defaults.........................................28
Section 7.6. Reports by Trustee to Holders..............................28
Section 7.7. Compensation and Indemnity.................................28
Section 7.8. Replacement of Trustee.....................................29
Section 7.9. Successor Trustee by Merger................................30
Section 7.10. Eligibility; Disqualification.............................30
Section 7.11. Preferential Collection of Claims Against Company.........30
ARTICLE 8 Discharge of Indenture; Defeasance................................30
Section 8.1. Discharge of Liability on Securities; Defeasance...........30
Section 8.2. Conditions to Defeasance...................................31
Section 8.3. Application of Trust Money.................................32
Section 8.4. Repayment to Company.......................................33
Section 8.5. Indemnity for Government Obligations.......................33
Section 8.6. Reinstatement..............................................33
ARTICLE 9 Amendments........................................................33
Section 9.1. Without Consent of Holders.................................33
Section 9.2. With Consent of Holders....................................34
Section 9.3. Compliance with Trust Indenture Act........................35
Section 9.4. Revocation and Effect of Consents and Waivers..............35
Section 9.5. Notation on or Exchange of Securities......................36
Section 9.6. Trustee To Sign Amendments.................................36
Section 9.7. Payment for Consent........................................36
ARTICLE 10 Subordination....................................................36
Section 10.1. Subordinated Debt Subordinated to Senior Debt.............36
Section 10.2. No Payment on Subordinated Debt in
Certain Circumstances...................................37
Section 10.3. Subordinated Debt Subordinated to Prior Payment of
All Senior Debt on Dissolution..........................38
ii
<PAGE>
Section 10.4. Holders to be Subrogated to Rights of
Holders of Senior Debt..................................39
Section 10.5. Subordination Rights Not Impaired by Acts or Omissions
of the Company or Holders of Senior Debt................39
Section 10.6. In Furtherance of Subordination...........................40
Section 10.7. Obligations of Company Unconditional......................41
Section 10.8. Holder Entitled to Assume Payments Not Prohibited
in Absence of Notice....................................41
Section 10.9. Rights in Insolvency Proceedings..........................42
Section 10.10. Waiver of Consolidation..................................42
Section 10.11. Miscellaneous............................................42
Section 10.12. Subrogation..............................................44
Section 10.13. Relative Rights..........................................44
Section 10.14. Rights of Trustee and Paying Agent.......................45
Section 10.15. Distribution or Notice to Representative.................45
Section 10.16. Article 10 Not To Prevent Events of Default or
Limit Right To Accelerate..............................45
Section 10.17. Trust Moneys Not Subordinated............................45
Section 10.18. Trustee Entitled To Rely.................................45
Section 10.19. Trustee To Effectuate Subordination......................46
Section 10.20. Trustee Not Fiduciary for Holders
of Senior Indebtedness.................................46
Section 10.21. Reliance by Holders of Senior
Indebtedness on Subordination Provisions...............46
ARTICLE 11 Miscellaneous....................................................47
Section 11.1. Trust Indenture Act Controls..............................47
Section 11.2. Notices...................................................47
Section 11.3. Communication by Holders with Other Holders...............48
Section 11.4. Certificate and Opinion as to Conditions Precedent........48
Section 11.5. Statements Required in Certificate or Opinion.............48
Section 11.6. When Securities Disregarded...............................49
Section 11.7. Rules by Trustee, Paying Agent and Registrar..............49
Section 11.8. Legal Holidays............................................49
Section 11.9. Governing Law.............................................49
Section 11.10. No Recourse Against Others...............................49
Section 11.11. Successors...............................................50
Section 11.12. Multiple Originals.......................................50
Section 11.13. Table of Contents; Headings..............................50
Exhibit A - Form of Security
iii
<PAGE>
INDENTURE dated as of August 13, 1999, between INTERSIL HOLDING
CORPORATION, a Delaware corporation (the "Company" or "Issuer"), and United
States Trust Company of New York, a New York banking corporation (the
"Trustee").
Each party agrees as follows for the benefit of the other party and for the
equal and ratable benefit of the Holders of (1) the Company's 11.13%
Subordinated Pay-In-Kind Notes Due 2010 (the "Initial Securities") and (2) if
and when issued any Additional Securities (as defined herein, and together with
the Initial Securities, the "Securities"):
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.1 Definitions.
"Acceleration Notice" shall have the meaning set forth in Section 6.2
"Additional Securities" means 11.13% Subordinated Pay-In-Kind Notes Due
2010 issued from time to time after the Issue Date under the terms of this
Indenture (other than pursuant to Section 2.6, 2.7, 2.9 or 3.6).
"Affiliate" of any specified Person means any other Person, directly or
indirectly, controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any Person means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
"Agent" means Credit Suisse First Boston, as administrative agent for the
Lenders party to the Credit Agreement, any successor agent and any agent for the
Lenders with respect to any amendment, extension, supplement, increase, renewal,
refunding, replacement, refinancing (including successive refinancings) or other
modification of the Bank Debt. If no such agent exists, "Agent" shall mean the
holders of a majority of the outstanding Bank Debt.
"Asset Disposition" means any sale, lease, transfer or other disposition
(or series of related sales, leases, transfers or dispositions) by the Company
or any Subsidiary, including any disposition by means of a merger, consolidation
or similar transaction (each referred to for the purposes of this definition as
a "disposition"), of (1) any shares of Capital Stock of a Subsidiary (other than
directors' qualifying shares or shares required by applicable law to be held by
a Person other than the Company or a Subsidiary), (2) all or substantially all
of the assets of any division or line of business of the Company or any
Subsidiary or (3) any other assets of the Company or any Subsidiary outside of
the ordinary course of business of the Company or such Subsidiary (other than,
in the case of (1), (2) and (3) above, (x) a disposition by a Subsidiary to the
Company or by the Company or a Subsidiary to a Wholly Owned Subsidiary, (y) for
purposes of Section 4.06 of the Intersil Corporation Indenture only, a
disposition that constitutes
<PAGE>
a Restricted Payment permitted by Section 4.04 of the Intersil Corporation
Indenture and (z) a disposition of assets with a fair market value of less than
$100,000).
"Bank Debt" means all obligations of the Subsidiaries and of the Company as
guarantor, now or hereafter existing (a) under the Credit Agreement as it may
hereafter be amended, extended, supplemented, increased, renewed, refunded,
replaced, refinanced (including successive refinancings) or otherwise modified
from time to time, whether for principal, interest, premium, reimbursement of
amounts drawn under letters of credit issued pursuant to the Credit Agreement,
fees, expenses, indemnities or otherwise and (b) under any of the Senior Loan
Documents, as they may hereafter be amended, extended, supplemented, increased,
renewed, refunded, replaced, refinanced (including successive refinancings) or
otherwise modified from time to time.
"Bankruptcy Law" shall mean Title 11, United States Code or any similar
federal or state law for the relief of debtors.
"Business Day" means each day which is not a Legal Holiday.
"Capital Stock" of any Person means any and all shares, interests, rights
to purchase, warrants, options, participations or other equivalents of or
interests in (however designated) equity of such Person, including any Preferred
Stock, but excluding any debt securities convertible into such equity.
"CMP" means Citicorp Mezzanine Partners, L.P., a Delaware limited
partnership.
"CMP Debt" means all obligations of the Corporation and the Subsidiaries
now or hereafter, existing (a) under the CMP Subordinated Credit Agreement as it
may hereafter be amended, extended, supplemented, increased, renewed, refunded,
replaced, refinanced (including successive refinancings) or otherwise modified
from time to time, whether for principal, interest, premium, reimbursement of
amounts drawn under letters of credit issued pursuant to the CMP Subordinated
Credit Agreement, fees, expenses, indemnities or otherwise and (b) under any of
the CMP Loan Documents, as they may hereafter be amended, extended,
supplemented, increased, renewed, refunded, replaced, refinanced (including
successive refinancings) or otherwise modified from time to time.
"CMP Loan Documents" means all Loan Documents (as defined in the CMP
Subordinated Credit Agreement).
"CMP Subordinated Credit Agreement" means the Subordinated Credit
Agreement, dated as of August 13, 1999, by and between the Corporation and CMP
(the "CMP Subordinated Credit Agreement").
"Code" means the Internal Revenue Code of 1986, as amended.
2
<PAGE>
"Company" means the party named as such in this Indenture until a successor
replaces it and, thereafter, means the successor and, for purposes of any
provision contained herein and required by the TIA, each other obligor on the
indenture securities.
"Credit Agreement" means the Credit Agreement dated as of the date hereof
(as such Agreement may hereafter be amended, extended, supplemented, increased,
renewed, refunded, replaced, refinanced (including successive refinancings) or
otherwise modified), among the Company, as borrower, the Lenders party thereto,
Credit Suisse First Boston, as administrative agent for the Lenders, and as
collateral agent, swingline lender and an issuing bank, Salomon Smith Barney
Inc., as syndication agent, and Morgan Guaranty Trust Company of New York, as
documentation agent.
"Custodian" means any receiver, trustee, assignee, liquidator, sequestrator
or similar official under any Bankruptcy Law or in connection with any
insolvency proceeding.
"CVC" shall mean Citicorp Venture Capital Ltd. or Citicorp N.A.
"Default" means any event which is, or after notice or passage of time or
both would be, an Event of Default.
"Equity Swap" shall have the meaning set forth in Section 4.5.
"Event of Default" shall have the meaning set forth in Section 6.1.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
"GAAP" means generally accepted accounting principles in the United States
of America, including those set forth in (i) the opinions and pronouncements of
the Accounting Principles Board of the American Institute of Certified Public
Accountants, (ii) statements and pronouncements of the Financial Accounting
Standards Board, (iii) such other statements by such other entity as may be
approved by a significant segment of the accounting profession of the United
States and (iv) the rules and regulations of the SEC governing the inclusion of
financial statements (including pro forma financial statements) in periodic
reports required to be filed pursuant to Section 13 of the Exchange Act,
including opinions and pronouncements in staff accounting bulletins and similar
written statements from the accounting staff of the SEC, as in effect on the
date of this Indenture. All ratios and computations based on GAAP contained in
this Indenture shall be computed in conformity with GAAP.
"Harris" shall mean Harris Corporation, a Delaware corporation.
"Holder" or "Securityholder" means the Person in whose name a Security is
registered on the Registrar's books.
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"Intersil Corporation Indenture" means the Indenture dated the date hereof
between Intersil Corporation, a Delaware corporation, and the Intersil
Corporation Trustee relating to the Intersil Corporation Notes.
"Intersil Corporation Notes" means the 13.25% Senior Subordinated Notes
issued under the Intersil Corporation Indenture as it may hereafter be amended,
extended, supplemented, increased, renewed, refunded, replaced, refinanced or
otherwise modified from time to time, whether for principal, interest, premium,
fees, expenses, indemnities or otherwise.
"Intersil Corporation Trustee" means United States Trust Company of New
York, a New York banking corporation, as trustee under the Intersil Corporation
Indenture until a successor replaces it and, thereafter, means the successor.
"Indebtedness" means, without duplication, with respect to any person, (a)
the principal of and premium (if any) in respect of all indebtedness of such
person for borrowed money, (b) the principal of and premium (if any) in respect
of all obligations of such person evidenced by notes, bonds, debentures or other
similar instruments, (c) all indebtedness created or arising under any
conditional sale or other title retention agreement with respect to property
acquired by such person (even though the rights and remedies of the seller or
lender under such agreement in the event of default are limited to repossession
or sale of such property), (d) all obligations of such person as lessee under
leases that have been or should be, in accordance with generally accepted
accounting principles, recorded as capital leases, (e) all obligations,
contingent or otherwise, of such person under acceptance, letter of credit or
similar facilities, (f) all indebtedness of the type referred to in clauses (a)
through (e) above guaranteed directly or indirectly in any manner by such
person, or in effect guaranteed directly or indirectly by such person through an
agreement (1) to pay or purchase such indebtedness or to advance or supply funds
for the payment or purchase of such indebtedness, (2) to purchase, sell or lease
(as lessee or lessor) property, or to purchase or sell services, primarily for
the purpose of enabling the debtor to make payment of such indebtedness or to
assure the holder of such indebtedness against loss, (3) to supply funds to or
in any other manner invest in the debtor (including any agreement to pay for
property or services irrespective of whether such property is received or such
services are rendered) or (4) otherwise to assure a creditor against loss, and
(i) all indebtedness of the type referred to in clauses (a) through (e) above
secured by (or for which the holder of such indebtedness has an existing right,
contingent or otherwise, to be secured by) any lien on property (including,
without limitation, accounts and contract rights) owned by such person, even
though such person has not assumed or become liable for the payment of such
indebtedness, but excluding trade and other accounts payable in the ordinary
course of business in accordance with customary trade terms and which are not
overdue for more than 90 days, or as to which a dispute exists and adequate
reserves in conformity with generally accepted accounting principles have been
established on the books of such person.
"Indenture" means this Indenture as amended or supplemented from time to
time.
"Initial Securities" shall have the meaning set forth in the second
paragraph of this Indenture.
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"Insolvency Proceeding" shall have the meaning set forth in Section 10.9.
"Issue Date" means the date on which the Initial Securities are originally
issued.
"Issuer" shall have the meaning set forth in the first paragraph of this
Indenture.
"Junior Indebtedness" shall mean any Indebtedness of the Company whether
outstanding on the date hereof or incurred thereafter, that is subordinated in
right of payment to the Securities either by its terms or by operation of law,
including without limitation, any junior subordinated debentures issued by the
Company.
"Lenders" means the Lenders as defined in the Credit Agreement.
"Lien" means any mortgage, pledge, security interest, encumbrance, lien or
charge of any kind (including any conditional sale or other title retention
agreement or lease in the nature thereof).
"Loan Parties" shall mean the Company and any Subsidiary which is an
obligor under the Credit Agreement or the Securities.
"Non-payment Default" means any default or event of default (other than a
Payment Default) under any agreement or instrument relating to Senior Debt. For
purposes of the immediately preceding sentence, an "event of default" shall
exist when as a result thereof the holders of the pertinent Senior Debt are then
permitted (whether or not with the requirement that notice be given) to cause
such Senior Debt to become due prior to its scheduled maturity.
"Officer" means the Chief Executive Officer, the President, the Chief
Operating Officer, any Vice President, the Treasurer or the Secretary of the
Company.
"Officers' Certificate" means a certificate signed by two Officers.
"Opinion of Counsel" means a written opinion from legal counsel who is
acceptable to the Trustee. The counsel may be an employee of or counsel to the
Company or the Trustee.
"Payment Blockage Period" shall have the meaning set forth in Section
10.2(3).
"Payment Default" means any default in the payment of principal of,
premium, if any, interest on, or other amounts payable on, or in connection
with, Senior Debt, irrespective of whether such default in payment results from
a failure to pay any amount when originally scheduled to be paid or upon
acceleration or otherwise.
"Person" shall mean any individual, partnership, corporation, trust or
unincorporated organization or a government or agency or political subdivision
thereof.
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"Preferred Stock", as applied to the Capital Stock of any Person, means
Capital Stock of any class or classes (however designated) which is preferred as
to the payment of dividends or distributions, or as to the distribution of
assets upon any voluntary or involuntary liquidation or dissolution of such
Person, over shares of Capital Stock of any other class of such Person.
"Remedies Blockage Period" shall have the meaning set forth in Section
10.2.
"Representative" shall mean (i) the Agent for so long as the Bank Debt is
outstanding, (ii) at such time as the Bank Debt is no longer outstanding, the
Intersil Corporation Trustee, for so long as the Intersil Corporation Notes are
outstanding, and (iii) at such time as the Bank Debt and the Intersil
Corporation Notes are no longer outstanding, the representative selected by
holders of more than 50% of the Senior Debt of the applicable Senior Creditor.
"SEC" shall mean the Securities and Exchange Commission.
"Securities" shall have the meaning set forth in the second paragraph of
this Indenture.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Senior Creditors" means (i) the Lenders and the Agent under the Senior
Loan Documents until the Bank Debt (including all refinancings and successive
refinancings thereof) has been finally and indefeasibly paid in full, (ii) CMP
until the CMP Debt (including all refinancings and successive refinancings
thereof) has been finally and indefeasibly paid in full, (iii) thereafter, the
holders of the Intersil Corporation Notes until they have been finally and
indefeasibly paid in full and (iv) thereafter, the holders of other Senior Debt
on a pro rata basis.
"Senior Debt" means (a) all Indebtedness of the Company and the
Subsidiaries, including principal, premium, if any, and interest on such
Indebtedness, whether outstanding on the date hereof or thereafter created,
incurred or assumed, except for Indebtedness which is expressly by its terms or
the terms of the instrument creating or evidencing such Indebtedness made equal
in right of payment with the Securities or subordinate in right of payment to
the Securities, including, without limitation, Indebtedness under the CMP
Subordinated Credit Agreement, (b) all other amounts due on or in connection
with such Indebtedness, including all charges, fees, indemnities, and expenses
(including reasonable fees and expenses of counsel), (c) all post-petition
interest with respect to such Indebtedness, (d) all amendments, extensions,
supplements, increases, renewals, refundings, replacements, refinancings,
modifications and deferrals of the Indebtedness referred to in clauses (a), (b)
and (c) above, and shall include without limiting the foregoing the Bank Debt,
the CMP Debt, the Intersil Corporation Notes, and all guaranties thereof by the
Company. Notwithstanding the foregoing, Senior Debt shall not include (i) any
Indebtedness of the Company to any Subsidiary of the Company, (ii) any
Indebtedness of the Company which, by its terms or the terms of any instrument
creating or evidencing it (including the terms of any instrument amending,
extending, supplementing, renewing, increasing, refunding, replacing,
refinancing, modifying or deferring the same) is
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expressly made pari passu with or expressly subordinate in right of payment to
the Securities, (iii) Indebtedness to any employee of the Company; (iv) any
liability for taxes; (v) amounts payable to trade creditors for goods and
services provided in the ordinary course of business; (vi) that portion of any
Indebtedness which at the time of incurrence, creation or assumption is
incurred, created or assumed in violation of the Intersil Corporation Indenture
(as in effect on the date of issuance of the Intersil Corporation Notes and
irrespective of whether any Indebtedness is then outstanding thereunder); or
(vii) Indebtedness under the Intersil Corporation Notes (or the terms of any
instrument amending, extending, supplementing, renewing, increasing, refunding,
replacing, refinancing, modifying or deferring the same) in excess of the
principal amount outstanding on the date of original issuance of the Intersil
Corporation Notes plus any interest thereon or other Indebtedness in respect
thereof.
"Senior Default" means a Payment Default or a Non-payment Default.
"Senior Loan Documents" means all Credit Documents (as defined in the
Credit Agreement).
"Series A Preferred" shall mean the Company's 12% Series A Cumulative
Compounding Preferred stock.
"Significant Subsidiary" means any Subsidiary of the Company that would be
a "significant subsidiary" as defined in Rule 1.02(w) of Regulation S-X
promulgated pursuant to the Securities Act.
"Sterling" shall mean Sterling Holding Company, LLC, a Delaware limited
liability company.
"Stockholders Agreement" shall mean the Securities Purchase and Holders
Agreement dated as of August 13, 1999, by and among the Company, CMP, Manatee
Investment Corporation, Intersil Prism, LLC, William N. Stout and the Management
Investors (as defined in the Stockholders Agreement).
"Subordinated Debt" means (a) all obligations of the Company now or
hereafter existing under or with respect to the Securities (whether created
directly or acquired by assignment or otherwise), as it may hereafter be
amended, extended, supplemented or otherwise modified from time to time, whether
for principal, interest (including, without limitation, post-petition interest),
fees, expenses, indemnities, reimbursements, damages, liabilities or otherwise,
and (b) all obligations of any of the Loan Parties in respect of (i) any
Indebtedness (but in no event constituting Bank Debt or CMP Debt) incurred by
any of the Loan Parties to amend, extend, supplement, increase, renew, refund,
replace, refinance or otherwise modify, in whole or in part, the Subordinated
Debt, including interest and premium on any such Indebtedness, (ii) any loan or
credit agreement entered into by any of the Loan Parties in connection with any
such Indebtedness, as such agreement may be amended, extended, supplemented or
otherwise modified from time to time, and (iii) all other amounts payable in
respect of any such
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Indebtedness or agreement, including, without limitation, amounts payable (A) in
respect of any indemnity and (B) in respect of any breach of a representation or
a warranty.
"Subsidiary" means, in respect of any Person, any corporation, association,
partnership or other business entity of which more than 50% of the total voting
power of shares of Capital Stock or other interests (including partnership
interests) entitled (without regard to the occurrence of any contingency) to
vote in the election of directors, managers or trustees thereof is at the time
owned or controlled, directly or indirectly, by (1) such Person, (2) such Person
and one or more Subsidiaries of such Person or (3) one or more Subsidiaries of
such Person.
"Successor Company" shall have the meaning set forth in Section 5.1.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. ss.ss.77aaa-77bbbb)
as in effect on the date of this Indenture.
"Trustee" means the party named as such in this Indenture until a successor
replaces it and, thereafter, means the successor.
"Uniform Commercial Code" means the New York Uniform Commercial Code as in
effect from time to time.
"United States Government Obligations" mean direct obligations (or
certificates representing an ownership interest in such obligations) of the
United States of America (including any agency or instrumentality thereof) for
the payment of which the full faith and credit of the United States of America
is pledged and which are not callable or redeemable at the issuer's option.
"Wholly Owned Subsidiary" means a Subsidiary all the Capital Stock of which
(other than directors' qualifying shares) is owned by the Company or one or more
Wholly Owned Subsidiaries.
Section 1.2. Other Definitions.
Defined in
Term Section
---- ----------
"Legal Holiday"................................11.8
"Paying Agent"..................................2.3
"Registrar".....................................2.3
"Successor Company".............................5.1
Section 1.3. Incorporation by Reference of Trust Indenture Act. This
Indenture is subject to the mandatory provisions of the TIA which are
incorporated by reference in and made a part of this Indenture. The following
TIA terms have the following meanings:
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"Commission" means the SEC;
"indenture securities" means the Securities;
"indenture security holder" means a Securityholder;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee; and
"obligor" on the indenture securities means the Company and any other
obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rule have the
meanings assigned to them by such definitions.
Section 1.4. Rules of Construction. Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning assigned
to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) "including" means including without limitation;
(5) words in the singular include the plural and words in the plural
include the singular;
(6) unsecured Indebtedness shall not be deemed to be subordinate or
junior to secured Indebtedness merely by virtue of its nature as unsecured
Indebtedness;
(7) the principal amount of any noninterest bearing or other discount
security at any date shall be the principal amount thereof that would be
shown on a balance sheet of the issuer dated such date prepared in
accordance with GAAP;
(8) the principal amount of any Preferred Stock shall be (i) the
maximum liquidation value of such Preferred Stock or (ii) the maximum
mandatory redemption or mandatory repurchase price with respect to such
Preferred Stock, whichever is greater; and
(9) all references to the date the Securities were originally issued
shall refer to the date the Initial Securities were originally issued.
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ARTICLE 2
THE SECURITIES
Section 2.1 Form and Dating. The Trustee's certificate of authentication
shall be substantially in the form of Exhibit A, which is hereby incorporated in
and expressly made a part of this Indenture. The Securities may have notations,
legends or endorsements required by law, stock exchange rule, agreements to
which the Company is subject, if any, or usage (provided that any such notation,
legend or endorsement is in a form acceptable to the Company). Each Security
shall be dated the date of its authentication. The terms of the Securities set
forth in Exhibit A are part of the terms of this Indenture.
Section 2.2 Execution and Authentication. Two Officers shall sign the
Securities for the Company by manual or facsimile signature. The Company's seal
shall be impressed, affixed, imprinted or reproduced on the Securities and may
be in facsimile form.
If an Officer whose signature is on a Security no longer holds that office
at the time the Trustee authenticates the Security, the Security shall be valid
nevertheless.
A Security shall not be valid until an authorized signatory of the Trustee
manually signs the certificate of authentication on the Security. The signature
shall be conclusive evidence that the Security has been authenticated under this
Indenture.
On the Issue Date, the Trustee shall authenticate and deliver $90,000,000
of 11.13% Subordinated Pay-In-Kind Notes Due 2010 and, at any time and from time
to time thereafter, the Trustee shall authenticate and deliver Securities for
original issue upon a written order of the Company signed by two Officers or by
an Officer and either an Assistant Treasurer or an Assistant Secretary of the
Company. Such order shall specify the amount of the Securities to be
authenticated. The maximum aggregate principal amount of Securities which the
Trustee shall be permitted to authenticate is the sum of (a) $90,000,000, plus
(b) the amount of Additional Securities which the Company may issue from time to
time in lieu of cash payment of any or all of the accrued interest on any
Security.
The Trustee may appoint an authenticating agent reasonably acceptable to
the Company to authenticate the Securities. Unless limited by the terms of such
appointment, an authenticating agent may authenticate Securities whenever the
Trustee may do so. Each reference in this Indenture to authentication by the
Trustee includes authentication by such agent. An authenticating agent has the
same rights as any Registrar, Paying Agent or agent for service of notices and
demands.
Section 2.3 Registrar and Paying Agent. The Company shall maintain an
office or agency where Securities may be presented for registration of transfer
or for exchange (the "Registrar") and an office or agency where Securities may
be presented for payment (the "Paying Agent"). The Registrar shall keep a
register of the Securities and of their transfer and exchange. The Company may
have one or more co-registrars and one or more additional paying agents. The
term "Paying Agent" includes any additional paying agent.
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The Company shall enter into an appropriate agency agreement with any
Registrar, Paying Agent or co-registrar not a party to this Indenture, which
shall incorporate the terms of the TIA. The agreement shall implement the
provisions of this Indenture that relate to such agent. The Company shall notify
the Trustee of the name and address of any such agent. If the Company fails to
maintain a Registrar or Paying Agent, the Trustee shall act as such and shall be
entitled to appropriate compensation therefor pursuant to Section 7.7. The
Company or any of its domestically incorporated Wholly Owned Subsidiaries may
act as Paying Agent, Registrar, co-registrar or transfer agent.
The Company initially appoints the Trustee as Registrar and Paying Agent in
connection with the Securities.
Section 2.4 Paying Agent To Hold Money in Trust. Prior to each due date of
the principal and interest on any Security, the Company shall deposit with the
Paying Agent a sum sufficient to pay such principal and interest when so
becoming due. The Company shall require each Paying Agent (other than the
Trustee) to agree in writing that the Paying Agent shall hold in trust for the
benefit of Securityholders or the Trustee all money held by the Paying Agent for
the payment of principal of or interest on the Securities and shall notify the
Trustee of any default by the Company in making any such payment, and while any
such default continues, the Trustee may require the Paying Agent to pay all
money held by it to the Trustee. If the Company or a Subsidiary acts as Paying
Agent, it shall segregate the money held by it as Paying Agent and hold it as a
separate trust fund. The Company at any time may require a Paying Agent to pay
all money held by it to the Trustee and to account for any funds disbursed by
the Paying Agent. Upon complying with this Section, the Paying Agent shall have
no further liability for the money delivered to the Trustee.
Section 2.5 Securityholder Lists. The Trustee shall preserve in as current
a form as is reasonably practicable the most recent list available to it of the
names and addresses of Securityholders. If the Trustee is not the Registrar, the
Company shall furnish to the Trustee, in writing at least five Business Days
before each interest payment date and at such other times as the Trustee may
request in writing, a list in such form and as of such date as the Trustee may
reasonably require of the names and addresses of Securityholders.
Section 2.6 Transfer and Exchange. The Securities shall be issued in
registered form and shall be transferable only upon the surrender of a Security
for registration of transfer. When a Security is presented to the Registrar or a
co-registrar with a request to register a transfer, the Registrar shall register
the transfer as requested if the requirements of Section 8-401(1) of the
Uniform Commercial Code are met. When Securities are presented to the Registrar
or a co-registrar with a request to exchange them for an equal principal amount
of Securities of other denominations, the Registrar shall make the exchange as
requested if the same requirements are met. To permit registration of transfers
and exchanges, the Company shall execute and the Trustee shall authenticate
Securities at the Registrar's or co-registrar's request. The Company may require
payment of a sum sufficient to pay all taxes, assessments or other governmental
charges in connection with any transfer or exchange pursuant to this Section.
The
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Company shall not be required to make and the Registrar need not register
transfers or exchanges of Securities selected for redemption (except, in the
case of Securities to be redeemed in part, the portion thereof not to be
redeemed) or any Securities for a period of 15 days before a selection of
Securities to be redeemed or 15 days before an interest payment date.
Prior to the due presentation for registration of transfer of any Security,
the Company, the Trustee, the Paying Agent, the Registrar or any co-registrar
may deem and treat the person in whose name a Security is registered as the
absolute owner of such Security for the purpose of receiving payment of
principal of and (subject to the provisions of the Securities with respect to
record dates) interest on such Security and for all other purposes whatsoever,
whether or not such Security is overdue, and none of the Company, the Trustee,
the Paying Agent, the Registrar or any co-registrar shall be affected by notice
to the contrary.
All Securities issued upon any transfer or exchange pursuant to the terms
of this Indenture will evidence the same debt and will be entitled to the same
benefits under this Indenture as the Securities surrendered upon such transfer
or exchange.
Section 2.7 Replacement Securities. If a mutilated Security is surrendered
to the Registrar or if the Holder of a Security claims that the Security has
been lost, destroyed or wrongfully taken, the Company shall issue and the
Trustee shall authenticate a replacement Security if the requirements of Section
8-405 of the Uniform Commercial Code are met and the Holder satisfies any other
reasonable requirements of the Trustee. If required by the Trustee or the
Company, such Holder shall furnish an indemnity bond sufficient in the judgment
of the Company and the Trustee to protect the Company, the Trustee, the Paying
Agent, the Registrar and any co-registrar from any loss which any of them may
suffer if a Security is replaced. The Company and the Trustee may charge the
Holder for their expenses in replacing a Security.
Every replacement Security is an additional obligation of the Company.
Section 2.8 Outstanding Securities. Securities outstanding at any time are
all Securities authenticated by the Trustee except for those canceled by it,
those delivered to it for cancellation and those described in this Section as
not outstanding. A Security does not cease to be outstanding because the Company
or an Affiliate of the Company holds the Security.
If a Security is replaced pursuant to Section 2.7, it ceases to be
outstanding unless the Trustee and the Company receive proof satisfactory to
them that the replaced Security is held by a bona fide purchaser, in which case
the replacement Security shall cease to be outstanding, subject to the
provisions of Section 8-405 of the Uniform Commercial Code.
If the Paying Agent segregates and holds in trust, in accordance with this
Indenture, on a redemption date or maturity date money sufficient to pay all
principal and interest payable on that date with respect to the Securities (or
portions thereof) to be redeemed or maturing, as the case may be, and the Paying
Agent is not prohibited from paying such money to the Securityholders on that
date pursuant to the terms of this Indenture, then on and after that
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date such Securities (or portions thereof) cease to be outstanding and interest
on them ceases to accrue.
Section 2.9 Temporary Securities. Until definitive Securities are ready for
delivery, the Company may prepare and the Trustee shall authenticate temporary
Securities. Temporary Securities shall be substantially in the form of
definitive Securities but may have variations that the Company considers
appropriate for temporary Securities. Without unreasonable delay, the Company
shall prepare and the Trustee shall authenticate definitive Securities and
deliver them in exchange for temporary Securities.
Section 2.10 Cancellation. The Company at any time may deliver Securities
to the Trustee for cancellation. The Registrar and the Paying Agent shall
forward to the Trustee any Securities surrendered to them for registration of
transfer, exchange or payment. The Trustee and no one else shall cancel and
destroy all Securities surrendered for registration of transfer, exchange,
payment or cancellation and deliver a certificate of such destruction to the
Company unless the Company directs the Trustee to deliver canceled Securities to
the Company. The Company may not issue new Securities to replace Securities it
has redeemed, paid or delivered to the Trustee for cancellation.
Section 2.11 Defaulted Interest. If the Company defaults in a payment of
interest on the Securities, the Company shall pay defaulted interest (plus
interest on such defaulted interest to the extent lawful) in any lawful manner.
The Company may pay the defaulted interest to the persons who are
Securityholders on a subsequent special record date. The Company shall fix or
cause to be fixed any such special record date and payment date to the
reasonable satisfaction of the Trustee and shall promptly mail to each
Securityholder a notice that states the special record date, the payment date
and the amount of defaulted interest to be paid.
Section 2.12 CUSIP Numbers. The Company in issuing the Securities may use
"CUSIP" numbers (if then generally in use) and, if so, the Trustee shall use
"CUSIP" numbers in notices of redemption as a convenience to Holders; provided,
however, that any such notice may state that no representation is made as to the
correctness of such numbers either as printed on the Securities or as contained
in any notice of a redemption and that reliance may be placed only on the other
identification numbers printed on the Securities, and any such redemption shall
not be affected by any defect in or omission of such numbers.
Section 2.13 Issuance of Additional Securities. The Company shall be
entitled to issue Additional Securities under this Indenture which shall have
identical terms as the Initial Securities issued on the Issue Date, other than
with respect to the date of issuance, issue price and amount of interest payable
on the first payment date applicable thereto. The Initial Securities issued on
the Issue Date and any Additional Securities shall be treated as a single class
for all purposes under this Indenture. The Company may at its option and in its
sole discretion issue Additional Securities in lieu of cash payment of any or
all of the interest due on any Security on any interest payment date; provided,
however, that interest shall not be so payable in whole or in part in Additional
Securities in lieu of cash from and after the date of any deposit of
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money pursuant to Section 8.1. If the Company elects pursuant to this Section to
issue Additional Securities in lieu of cash payment of interest due on any
Security on any interest payment date, the Company shall give written notice of
such election to the Trustee on or before, but not more than 45 days prior to,
the record date for the applicable interest payment date; provided, however,
that without limiting the Company's obligation to make interest payments on the
dates provided therefor in cash or Additional Securities, the failure to give
such notice shall not obligate the Company to make an interest payment in cash
if it would otherwise be permitted to make such payment with Additional
Securities; provided further, however, that the Trustee receives notice of such
election by the Company 10 days prior to the relevant interest payment date.
Such notice to the Trustee shall have attached a copy, certified by the
Secretary or Assistant Secretary of the Company, of the resolution adopted by
the Board of Directors of the Company authorizing the issuance of the
appropriate principal amount of Additional Securities. The Company shall also
deliver an Officer's Certificate setting forth the denominations and series of
Securities to be issued, the issue date and yield to maturity and demonstrating
the computation of the principal amount of Additional Securities issuable to
each Holder of outstanding Securities to the Trustee no later than 3 days after
the record date relating to such interest payment date. Following receipt of
such notice and certificates, the Trustee shall authenticate for original issue
on such interest payment date Additional Securities in an aggregate principal
amount equal to the amount of cash interest due but not paid in cash on such
interest payment date. The issuance of such Additional Securities shall
constitute payment in full of the interest in lieu of cash payment of which such
Additional Securities are issued. With respect to each series, the Company shall
notify the Trustee of the amount of original issue discount per $1,000 of
principal amount of Securities which will be set forth on the face of each
Security and such other information as may be required by United States Treasury
Regulations with respect to original issue discount. Each issuance of Additional
Securities in lieu of payment of interest in cash shall be made pro rata with
respect to the outstanding Securities; provided that the Company may at its
option pay cash in lieu of issuing Additional Securities in any denomination of
less than $1,000 as selected by the Company. Each Additional Security shall be
subject to the same terms and conditions, including, without limitation, the
provisions of Article 10 of this Indenture, as the Initial Securities.
ARTICLE 3
Redemption
Section 3.1 Notices to Trustee. If the Company elects to redeem the
Securities pursuant to paragraph 5 of the Securities or is required to redeem
the Securities pursuant to paragraph 6 of the Securities, it shall notify the
Trustee in writing of the redemption date, the principal amount of Securities to
be redeemed and the paragraph of the Securities pursuant to which the redemption
will occur.
Except as described under the second paragraph of Section 3.3, the Company
shall give each notice to the Trustee provided for in this Section at least 45
days before the redemption date unless the Trustee consents to a shorter period.
Such notice shall be
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accompanied by an Officers' Certificate and an Opinion of Counsel from the
Company to the effect that such redemption will comply with the conditions
herein.
Section 3.2 Selection of Securities To Be Redeemed. If fewer than all the
Securities are to be redeemed, the Trustee shall select the Securities to be
redeemed pro rata or by lot or by a method that complies with applicable legal
and securities exchange requirements, if any, and that the Trustee in its sole
discretion considers to be fair and appropriate. The Trustee shall make the
selection from outstanding Securities not previously called for redemption. The
Trustee may select for redemption portions of the principal of Securities that
have denominations larger than $1,000. Securities and portions of them the
Trustee selects shall be in amounts of $1,000 or a whole multiple of $1,000.
Provisions of this Indenture that apply to Securities called for redemption also
apply to portions of Securities called for redemption. The Trustee shall notify
the Company promptly of the Securities or portions of Securities to be redeemed.
Section 3.3 Notice of Redemption. At least 30 days but not more than 60
days before a date for an optional redemption of Securities, the Company shall
mail a notice of redemption by first-class mail to each Holder of Securities to
be redeemed at such Holder's registered address.
The notice shall identify the Securities to be redeemed and shall state:
(1) the redemption date;
(2) the redemption price;
(3) the name and address of the Paying Agent;
(4) that Securities called for redemption must be surrendered to the
Paying Agent to collect the redemption price;
(5) if fewer than all the outstanding Securities are to be redeemed,
the identification and principal amounts of the particular Securities to be
redeemed;
(6) that, unless the Company defaults in making such redemption
payment or the Paying Agent is prohibited from making such payment pursuant
to the terms of this Indenture, interest on Securities (or portion thereof)
called for redemption ceases to accrue on and after the redemption date;
(7) the paragraph of the Securities pursuant to which the Securities
called for redemption are being redeemed; and
(8) that no representation is made as to the correctness or accuracy
of the CUSIP number, if any, listed in such notice or printed on the
Securities.
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At the Company's request, the Trustee shall give the notice of redemption
in the Company's name and at the Company's expense. In such event, the Company
shall provide the Trustee with the information required by this Section.
Section 3.4 Effect of Notice of Redemption. Once notice of redemption is
mailed, Securities called for redemption become due and payable on the
redemption date and at the redemption price stated in the notice. Upon surrender
to the Paying Agent, such Securities shall be paid at the redemption price
stated in the notice, plus accrued interest to the redemption date (subject to
the right of Holders of record on the relevant record date to receive interest
due on the relevant interest payment date). Failure to give notice or any defect
in the notice to any Holder shall not affect the validity of the notice to any
other Holder.
Section 3.5 Deposit of Redemption Price. Prior to the redemption date, the
Company shall deposit with the Paying Agent (or, if the Company or a Subsidiary
is the Paying Agent, shall segregate and hold in trust) money sufficient to pay
the redemption price of and accrued interest (subject to the right of Holders of
record on the relevant record date to receive interest due on the relevant
interest payment date) on all Securities to be redeemed on that date other than
Securities or portions of Securities called for redemption which have been
delivered by the Company to the Trustee for cancellation.
Section 3.6 Securities Redeemed in Part. Upon surrender of a Security that
is redeemed in part, the Company shall execute and the Trustee shall
authenticate for the Holder (at the Company's expense) a new Security equal in
principal amount to the unredeemed portion of the Security surrendered.
ARTICLE 4
Covenants
Section 4.1 Payment of Securities. The Company shall promptly pay the
principal of and interest on the Securities on the dates and in the manner
provided in the Securities and in this Indenture. Principal and interest shall
be considered paid on the date due if on such date the Trustee or the Paying
Agent holds in accordance with this Indenture money sufficient to pay all
principal and interest then due and the Trustee or the Paying Agent, as the case
may be, is not prohibited from paying such money to the Securityholders on that
date pursuant to the terms of this Indenture.
The Company shall pay interest on overdue principal at the rate specified
therefor in the Securities, and it shall pay interest on overdue installments of
interest at the same rate to the extent lawful.
Section 4.2 SEC Reports. The Company shall deliver to the Trustee and
Securityholder promptly (and in any event within 5 days after it files them with
the SEC), copies of the annual reports, quarterly reports and other periodic
reports which the Company may be required to file with the SEC pursuant to
Section 13, 14 or 15(d) of the Exchange Act.
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To the extent that the Company is required to prepare and deliver any
periodic reports to the holders of Senior Debt or to CVC or Sterling, the
Company shall deliver copies of such reports to the Trustee and Securityholder,
at the same time the Company is required to deliver such reports to the holders
of the Senior Debt or to CVC or Sterling, as applicable. The Company shall, upon
reasonable notice, provide officers, employees and representatives of the
Trustee and Securityholder and the proposed transferees with reasonable access
to the Company's premises, properties, books, records and personnel as may
reasonably be requested in connection with a potential transfer of a Security or
any portion thereof. The Company also shall comply with the other provisions of
TIA ss.ss. 314(a).
Section 4.3 Preservation of Corporate Existence; etc. Subject to Section
5.1, the Company will do or cause to be done all things necessary to preserve
and keep in full force and effect the corporate existence and the material
rights (charter and statutory) and franchises of the Company and of the
Significant Subsidiaries; provided, however, that the Company shall not be
required to preserve or cause to be preserved any such material right or
franchise if the board of directors of the Company shall determine that the
preservation thereof is no longer desirable in the conduct of the business of
the Company and that the loss thereof is not, and will not be, adverse in any
material respect to any Holder.
Section 4.4 Payment of Taxes, Assessment, Charges and Claims. The Company
will and will cause the Subsidiaries to duly pay or discharge or cause to be
paid or discharged the following before they shall become delinquent: (i) all
material taxes, assessments and governmental charges levied or imposed upon the
Company or any of the Subsidiaries or upon the income, profit or property of the
Company or any of the Subsidiaries, and (ii) all material lawful claims for
labor, materials and supplies which, if unpaid, might by law become a material
lien upon the property of the Company or any of the Subsidiaries; provided,
however, that the Company or any of the Subsidiaries shall not be required to
pay or discharge or cause to be paid or discharged (but shall make adequate
provision for) any such tax, assessment, charge or claim whose amount,
applicability or validity is being contested in good faith by appropriate
proceedings and for which adequate provision has been made.
Section 4.5 Limitation on Restricted Payments.
(a) The Company (A) shall not effect the declaration, payment or setting
apart for payment of any dividend on any part of its Capital Stock or any cash
interest payment on any Junior Indebtedness or effect or make any payment on
account of or set apart for payment money for a sinking or other similar fund
for, the purchase, prepayment, redemption or other retirement of, any of its
Capital Stock (or any rights, warrants or options to purchase or acquire any
such capital stock) or Junior Indebtedness, or make any distribution of any
nature whatsoever in respect of any thereof, either directly or indirectly, and
whether in cash, or other obligations of the Company or other property (except
dividends or distributions payable solely in shares, rights, warrants or options
of capital stock and except dividends or distributions payable solely to the
Company or its Wholly Owned Subsidiaries), (B) shall not make any payment of
cash interest on Indebtedness that is pari passu with the Securities at any time
when the payment of cash interest
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on the Securities is prohibited by the terms of any Senior Debt, and shall not
make any payment of non-cash interest on such pari passu Indebtedness at any
time when the payment of non-cash interest on the Securities is prohibited by
the terms of any Senior Debt, (C) shall not voluntarily prepay any Indebtedness
that is pari passu with the Securities, (D) shall not permit a Subsidiary or any
other company or other entity directly or indirectly controlled by the Company
to purchase, redeem or otherwise acquire any of the Company's capital stock or
Junior Indebtedness or any Indebtedness that is pari passu with the Securities
and (E) shall not permit any Subsidiary that is not a Wholly Owned Subsidiary to
make any payment or distribution in respect of the capital stock of such
Subsidiary that the Company would be prohibited from making in respect of the
capital stock of the Company. The provisions of this Section 4.5(a) shall not
prohibit (x) the repurchase of securities of the Company from employees, former
employees, directors or former directors of the Company or any Subsidiary (or
permitted transferees of such individuals) pursuant to the terms of Article VII
of the Stockholders Agreement; provided, further, however, that the aggregate
amount of such repurchases shall not exceed the sum of (1) $5.0 million and (2)
the aggregate amount of cash received by the Company after the date hereof from
the sale of such securities to, or the exercise of options to purchase such
securities by, employees or directors of the Company or any Subsidiary, (y) the
exchange of the Series A Preferred for Junior Indebtedness pursuant to the terms
thereof, or (z) the retirement, redemption or exchange of Junior Indebtedness or
Series A Preferred with or for shares of capital stock of the Company (an
"Equity Swap").
(b) The Company will not permit any Subsidiary to effect the declaration,
payment or setting apart for payment of any dividend on any part of such
Subsidiary's Capital Stock (other than dividends or distributions in such
Subsidiary's Capital Stock) except for payments of any dividend to the Company
or a Wholly Owned Subsidiary.
(c) None of the Company's Junior Indebtedness or Capital Stock shall
provide for the mandatory payment of principal by way of redemption, sinking
fund or otherwise (including, without limitation, at the option of the holder
thereof) and the Company will make no optional payment with respect thereto,
prior to the payment of all principal of and interest on the Securities
(including accrued but unpaid interest), except that nothing herein shall
prohibit any Equity Swap. For the avoidance of doubt, the authorization of
Equity Swaps is an authorization of that particular retirement, redemption or
exchange, but not any subsequent act by the Company or any Subsidiary with
respect to the securities received by holders upon such retirement, redemption
or exchange.
Section 4.6 Compliance with Laws. The Company will, and will cause the
Subsidiaries to, comply in all material respects with all applicable statutes,
regulations, orders and restrictions of the United States, any state,
municipality or other governmental division thereof, and agencies and
instrumentalities of the foregoing, in respect of the conduct of its and their
businesses and the ownership of its and their properties (including, without
limitation, applicable statutes, regulations, orders and restrictions relating
to equal employment opportunities and environmental standards and controls),
except such as are being contested in good faith.
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Section 4.7 Limitation on Payment Restrictions. Except as set forth herein,
the Company will not, and will not permit any of the Subsidiaries to, directly
or indirectly, create or otherwise cause or suffer to exist or become effective
any encumbrance or restriction (other than the Securities) on the ability of any
Subsidiary to (i) pay dividends or make any other distribution on its capital
stock or any other interests or participation in, or measured by, its profits,
owned by the Company or any Subsidiary of the Company, or pay any Indebtedness
owed to, the Company or a Subsidiary of the Company, (ii) make loans or advances
to the Company or (iii) transfer any of its properties or assets to the Company,
except for such encumbrances or restrictions existing under or by reason of (A)
applicable law, (B) Senior Debt or (C) Indebtedness existing on the date hereof.
Section 4.8 Compliance Certificate. The Company shall deliver to the
Trustee within 120 days after the end of each fiscal year of the Company a
certificate of the principal executive officer, the principal financial officer
or the principal accounting officer of the Company stating that in the course of
the performance by the signer of his or her duties as an officer of the Company
such office would normally have knowledge of any Default and whether or not the
signer knows of any Default that occurred during such period. If such signer
does, the certificate shall describe the Default, its status and what action the
Company is taking or proposes to take with respect thereto. The Company also
shall comply with TIA ss. 314(a)(4).
Section 4.9 Further Instruments and Acts. Upon request of the Trustee, the
Company will execute and deliver such further instruments and do such further
acts as may be reasonably necessary or proper to carry out more effectively the
purpose of this Indenture.
Section 4.10 Transactions with Affiliates. The Company shall not, and shall
not permit any of its Subsidiaries to, make any payment to, or sell, lease,
transfer or otherwise dispose of any of its properties or assets to, or purchase
any property or assets from, or enter into or make or amend any transaction,
contract, agreement, understanding, loan, advance or guarantee with, or for the
benefit of, any affiliate of the Company or any of its Subsidiaries (each of the
foregoing, an "Affiliate Transaction"), unless such Affiliate Transaction is on
terms that are no less favorable to the Company or the relevant Subsidiary than
those that would have been obtained in a comparable transaction by the Company
or such Subsidiary with an unrelated Person; provided that (A) any employment
agreement entered into by the Company or any of its Subsidiaries in the ordinary
course of business and consistent with past practice of the Company or such
Subsidiary, (B) transactions between or among the Company and/or its
Subsidiaries, (C) Restricted Payments that are permitted by the provisions of
Section 4.5 hereof and (D) the payment by the Company or its Subsidiaries of
reasonable and customary fees to members of their respective Board of Directors,
in each case, shall not be deemed Affiliate Transactions.
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ARTICLE 5
Successor Companies
Section 5.1 When Company May Merge or Transfer Assets.
(a) The Company shall not consolidate with or merge with or into, or
convey, transfer or lease, in one transaction or a series of transaction, all or
substantially all its assets to, any Person, unless:
(i) the resulting, surviving or transferee Person (the "Successor
Company") shall be a Person organized and existing under the laws of the
United States of America, any State thereof or the District of Columbia and
the Successor Company (if not the Company) shall expressly assume, all the
obligations of the Company hereunder;
(ii) immediately after giving effect to such transaction (and treating
any Indebtedness which becomes an obligation of the Successor Company or
any Subsidiary as a result of such transaction as having been incurred by
the Successor Company or such Subsidiary at the time of such transaction),
no Default shall have occurred and be continuing; and
(iii) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such
consolidation, merger or transfer and such supplemental indenture (if any)
comply with the Securities.
The Successor Company shall be the successor to the Company and shall succeed
to, and be substituted for, and may exercise every right and power of, the
Company under the Securities, but the predecessor Company in the case of a
conveyance, transfer or lease shall not be released from the obligation to pay
the principal of and interest on the Securities.
(b) The Company shall not permit any Significant Subsidiary to consolidate
with or merge with or into, or convey, transfer or lease, in one transaction or
series of transaction, all or substantially all of its assets to any Person
unless: (i) the resulting, surviving or transferee Person (if not such
Significant Subsidiary) shall be a Person organized and existing under the laws
of the jurisdiction under which such Significant Subsidiary was organized or
under the laws of the United States of America, or any State thereof or the
District of Columbia; (ii) immediately after giving effect to such transaction
or transactions, no Default shall have occurred and be continuing; and (iii) the
Company delivers to the Trustee an Officers' Certificate and an Opinion of
Counsel, each stating that such consolidation, merger or transfer complies with
the Securities. The provisions of clauses (i) and (ii) above shall not apply to
any one or more transactions which constitute an Asset Disposition if the
Company has complied with the applicable provisions of Section 5.01 of the
Intersil Corporation Indenture.
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ARTICLE 6
Defaults and Remedies
Section 6.1 Events of Default.
An "Event of Default" occurs if:
(1) the Company defaults in the payment of the principal or interest
of any Security when the same becomes due and payable at maturity, upon
acceleration, or otherwise, whether or not such payment shall be prohibited
by the provisions of Article 10;
(2) the Company or any Significant Subsidiary, pursuant to or within
the meaning of any Bankruptcy Law:
(i) commences a voluntary case or proceeding,
(ii) consents to the entry of an order for relief against it in
an involuntary case or proceeding,
(iii) consents to the appointment of a Custodian of it or for all
or substantially all of its property, or
(iv) makes a general assignment for the benefit of its creditors;
(3) a court of competent jurisdiction enters an order or decree under
any Bankruptcy Law that:
(i) is for relief against the Company or any Significant
Subsidiary in an involuntary case or proceeding,
(ii) appoints a Custodian of the Company or any Significant
Subsidiary or for all or substantially all of its property, or
(iii) orders the liquidation of the Company or any Significant
Subsidiary;
and in the case of (i) above the order or decree remains unstayed and in effect
for 60 days;
(4) the Company fails to observe or perform any material covenant,
condition or agreement required on its part to be observed or performed
pursuant to this Indenture, such failure continues for a period of thirty
days after notice from the Trustee or a Holder and notice of such failure
shall have been given to the Representative (which notice may be given by
the Company, the Trustee or the Holder); or
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(5) the Company fails to pay any Indebtedness of the Company within
any applicable grace period after final maturity or any such Indebtedness
is accelerated by the holders thereof and the total amount of such
Indebtedness unpaid or accelerated exceeds $10,000,000 and such failure
continues for 10 days after notice.
Section 6.2 Acceleration. Subject to the provisions of Article 10, if an
Event of Default (other than an Event of Default with respect to the Company
specified in clause (2) or (3) of Section 6.1) occurs and is continuing, the
Holders of 25% or more of the outstanding amount of the Company's 11.13%
Subordinated Pay-In-Kind Notes Due 2010, by written notice to the Company (an
"Acceleration Notice"), may declare the unpaid principal of and accrued interest
on the Securities to be immediately due and payable. Upon such declaration, if
there is at such time any Senior Debt outstanding, the principal, premium, if
any, and interest shall be due and payable upon the first to occur of an
acceleration under the Senior Loan Documents or the CMP Loan Documents or the
Intersil Corporation Indenture or thirty days after receipt by the Agent (or any
Representative of which the holder of the Securities has received notice if the
Bank Debt or the CMP Debt is not then outstanding) of such Acceleration Notice
given hereunder and there has been no cure by such 30th day. If an Event of
Default specified in clause (2) or (3) of Section 6.1 occurs with respect to the
Company, all principal of and interest on the Securities outstanding shall ipso
facto become and be immediately due and payable without any declaration or other
act on the part of the Holder. The Holders of a majority in principal amount of
the Securities by written notice to the Company may rescind an acceleration and
its consequences if (i) all existing Events of Default, other than the
nonpayment of principal of or interest on the Securities which has become due
solely because of the acceleration, have been cured or waived and (ii) the
rescission would not conflict with any judgment or decree of a court of
competent jurisdiction. Any amounts received by Holder in connection with any
action taken pursuant to this Section 6.2 shall be subject to the provisions of
Article 10.
Section 6.3 Other Remedies. Subject to the provisions of Article 10, if an
Event of Default occurs and is continuing, the Trustee may pursue any available
remedy by proceeding at law or in equity to collect the payment of principal of
or interest on the Securities or to enforce the performance of any provision of
the Securities.
A delay or omission by the Trustee or any Holder in exercising any right or
remedy accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. No remedy is
exclusive of any other remedy. All remedies are cumulative to the extent
permitted by law.
Section 6.4 Waiver of Past Defaults. Subject to Section 6.2, the Holders of
a majority in principal amount of the Securities may waive an existing Default
or Event of Default and its consequences. Upon any such waiver, such Default
shall cease to exist, and any Event of Default arising therefrom shall be deemed
to have been cured for every purpose of the Securities; but no such waiver shall
extend to any subsequent or other Default or impair any right consequent
thereon.
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Section 6.5 Control by Majority. The Holders of a majority in principal
amount of the Securities may direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee or of exercising any trust or
power conferred on the Trustee. However, the Trustee may refuse to follow any
direction that conflicts with law or this Indenture or, subject to Section 7.1,
that the Trustee determines is unduly prejudicial to the rights of other
Securityholders or would involve the Trustee in personal liability; provided,
however, that the Trustee may take any other action deemed proper by the Trustee
that is not inconsistent with such direction. Prior to taking any action
hereunder, the Trustee shall be entitled to indemnification satisfactory to it
in its sole discretion against all losses and expenses caused by taking or not
taking such action.
Section 6.6 Limitation on Suits. Except to enforce the right to receive
payment of principal, premium (if any) or interest when due, no Securityholder
may pursue any remedy with respect to this Indenture or the Securities unless:
(1) the Holder gives to the Trustee written notice stating that
an Event of Default is continuing;
(2) the Holders of at least 25% in principal amount of the
Securities make a written request to the Trustee to pursue the remedy;
(3) such Holder or Holders offer to the Trustee reasonable
security or indemnity against any loss, liability or expense;
(4) the Trustee does not comply with the request within 60 days
after receipt of the request and the offer of security or indemnity;
and
(5) the Holders of a majority in principal amount of the
Securities do not give the Trustee a direction inconsistent with the
request during such 60-day period.
A Securityholder may not use this Indenture to prejudice the rights of
another Securityholder or to obtain a preference or priority over another
Securityholder.
Section 6.7 Rights of Holders To Receive Payment. Notwithstanding any other
provision of this Indenture, the right of any Holder to receive payment of
principal of and interest on the Securities held by such Holder, on or after the
respective due dates expressed in the Securities, or to bring suit for the
enforcement of any such payment on or after such respective dates, shall not be
impaired or affected without the consent of such Holder.
Section 6.8 Collection Suit by Trustee. If an Event of Default specified in
Section 6.1(1) occurs and is continuing, the Trustee may recover judgment in its
own name and as trustee of an express trust against the Company for the whole
amount then due and owing (together with interest on any unpaid interest to the
extent lawful) and the amounts provided for in Section 7.7.
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Section 6.9 Trustee May File Proofs of Claim. The Trustee may file such
proofs of claim and other papers or documents as may be necessary or advisable
in order to have the claims of the Trustee and the Securityholders allowed in
any judicial proceedings relative to the Company, its creditors or its property
and, unless prohibited by law or applicable regulations, may vote on behalf of
the Holders in any election of a trustee in bankruptcy or other Person
performing similar functions. The Trustee shall be entitled and empowered to
collect, receive and distribute any money or other property payable or
deliverable on any such claims, and any Custodian in any such judicial
proceeding is hereby authorized by each Holder to make such payments to the
Trustee and, in the event that the Trustee shall consent to the making of such
payments directly to the Holders, to pay to the Trustee any amount due it for
the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and its counsel, and any other amounts due the Trustee under
Section 7.7.
Section 6.10 Priorities. If the Trustee collects any money or property
pursuant to this Article 6, it shall pay out the money or property in the
following order:
FIRST: to the Trustee for amounts due under Section 7.7;
SECOND: to holders of Senior Debt of the Company to the extent required by
Article 10;
THIRD: to Securityholders for amounts due and unpaid on the Securities for
principal and interest, ratably, without preference or priority of any kind,
according to the amounts due and payable on the Securities for principal and
interest, respectively; and
FOURTH: to the Company.
The Trustee may fix a record date and payment date for any payment to
Securityholders pursuant to this Section. At least 15 days before such record
date, the Company shall mail to each Securityholder and the Trustee a notice
that states the record date, the payment date and amount to be paid.
Section 6.11 Undertaking for Costs. In any suit for the enforcement of any
right or remedy under this Indenture or in any suit against the Trustee for any
action taken or omitted by it as Trustee, a court in its discretion may require
the filing by any party litigant in the suit of an undertaking to pay the costs
of the suit, and the court in its discretion may assess reasonable costs,
including reasonable attorneys' fees, against any party litigant in the suit,
having due regard to the merits and good faith of the claims or defenses made by
the party litigant. This Section does not apply to a suit by the Trustee, a suit
by a Holder pursuant to Section 6.7 or a suit by Holders of more than 10% in
principal amount of the Securities.
Section 6.12 Waiver of Stay or Extension Laws. The Company (to the extent
it may lawfully do so) shall not at any time insist upon, or plead, or in any
manner whatsoever claim or take the benefit or advantage of, any stay or
extension law wherever enacted, now or at any time hereafter in force, which may
affect the covenants or the performance of this Indenture;
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and the Company (to the extent that it may lawfully do so) hereby expressly
waives all benefit or advantage of any such law, and shall not hinder, delay or
impede the execution of any power herein granted to the Trustee, but shall
suffer and permit the execution of every such power as though no such law had
been enacted.
ARTICLE 7
Trustee
Section 7.1 Duties of Trustee. (a) If an Event of Default has occurred and
is continuing, the Trustee shall exercise such of the rights and powers vested
in it by this Indenture, and use the same degree of care and skill in their
exercise, as a prudent Person would exercise or use under the circumstances in
the conduct of such Person's own affairs.
(b) Except during the continuance of an Event of Default:
(1) the Trustee undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture and no implied
covenants or obligations shall be read into this Indenture against the
Trustee; and
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements
of this Indenture. However, in the case of any such certificates or
opinions which, by any provision hereof, are required to be furnished
to the Trustee, the Trustee shall examine such certificates and
opinions to determine whether or not they conform to the requirements
of this Indenture.
(c) No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act or its own willful misconduct, except that:
(1) this paragraph does not limit the effect of paragraph (b) of
this Section;
(2) the Trustee shall not be liable for any error of judgment
made in good faith by a Trust Officer unless it is proved that the
Trustee was negligent in ascertaining the pertinent facts; and
(3) the Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.5.
(d) Every provision of this Indenture that in any way relates to the
Trustee, other than paragraph (g) of this Section, is subject to paragraphs (a),
(b) and (c) of this Section.
(e) The Trustee shall not be liable for interest on any money received by
it except as the Trustee may agree in writing with the Company.
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(f) Money held in trust by the Trustee need not be segregated from other
funds except to the extent required by law.
(g) No provision of this Indenture shall require the Trustee to expend or
risk its own funds or otherwise incur financial liability in the performance of
any of its duties hereunder or in the exercise of any of its rights or powers,
if it shall have reasonable grounds to believe that repayment of such funds or
adequate indemnity against such risk or liability is not reasonably assured to
it.
(h) Every provision of this Indenture relating to the conduct or affecting
the liability of or affording protection to the Trustee shall be subject to the
provisions of this Section and to the provisions of the TIA.
Section 7.2 Rights of Trustee. (a) The Trustee may conclusively rely on any
document believed by it to be genuine and to have been signed or presented by
the proper Person. The Trustee need not investigate any fact or matter stated in
the document.
(b) Before the Trustee acts or refrains from acting, it may require an
Officers' Certificate or an Opinion of Counsel. The Trustee shall not be liable
for any action it takes or omits to take in good faith in reliance on the
Officers' Certificate or Opinion of Counsel.
(c) The Trustee may act through agents and shall not be responsible for the
misconduct or negligence of any agent appointed with due care.
(d) Subject to Section 7.1(c), the Trustee shall not be liable for any
action it takes or omits to take in good faith which it believes to be
authorized or within its rights or powers.
(e) The Trustee may consult with counsel, and the advice or opinion of
counsel with respect to legal matters relating to this Indenture and the
Securities shall be full and complete authorization and protection from
liability in respect to any action taken, omitted or suffered by it hereunder in
good faith and in accordance with the advice or opinion of such counsel.
Section 7.3 Individual Rights of Trustee. The Trustee in its individual or
any other capacity may become the owner or pledgee of Securities and may
otherwise deal with the Company or its Affiliates with the same rights it would
have if it were not Trustee. Any Paying Agent, Registrar, co-registrar or
co-paying agent may do the same with like rights. However, the Trustee must
comply with Sections 7.10 and 7.11.
Section 7.4 Trustee's Disclaimer. The Trustee shall not be responsible for
and makes no representation as to the validity or adequacy of this Indenture or
the Securities, it shall not be accountable for the Company's use of the
proceeds from the Securities, and it shall not be responsible for any statement
of the Company in the Indenture or in any document issued in
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connection with the sale of the Securities or in the Securities other than the
Trustee's certificate of authentication.
Section 7.5 Notice of Defaults. If a Default occurs and is continuing and
if it is actually known to the Trustee, or upon written notice from the Company
or any Securityholder or upon a Payment Default, the Trustee shall mail to each
Securityholder notice of the Default within 90 days after it occurs. Except in
the case of a Default in payment of principal of or interest on any Security
(including payments pursuant to the mandatory redemption provisions of such
Security, if any), the Trustee may withhold the notice if and so long as a
committee of its Trust Officers in good faith determines that withholding the
notice is in the interests of Securityholders.
Section 7.6 Reports by Trustee to Holders. By July 15 of each year,
beginning with the July 15 following the date of this Indenture, the Trustee
shall mail to each Securityholder a brief report dated as of May 15 of each year
that complies with TIA ss. 313(a). The Trustee also shall comply with
TIA ss. 313(b).
A copy of each report at the time of its mailing to Securityholders shall
be filed with the SEC and each stock exchange (if any) on which the Securities
are listed. The Company agrees to notify promptly the Trustee whenever the
Securities become listed on any stock exchange and of any delisting thereof.
Section 7.7 Compensation and Indemnity. The Company shall pay to the
Trustee from time to time reasonable compensation for its services. The
Trustee's compensation shall not be limited by any law on compensation of a
trustee of an express trust. The Company shall reimburse the Trustee promptly
upon request for all reasonable out-of-pocket expenses, disbursements and
advances incurred or made by it, including costs of collection, in addition to
the compensation for its services. Such expenses shall include the reasonable
compensation and expenses, disbursements and advances of the Trustee's agents,
counsel, accountants and experts. The Company shall indemnify the Trustee
against any and all loss, liability or expense (including attorneys' reasonable
fees) incurred by it in connection with the administration of this trust and the
performance of its duties hereunder, including the costs and expenses of
enforcing this Indenture (including this Section 7.7) against the Company and
defending itself against any claim (whether asserted by any Securityholder or
any other Person) or liability in connection with the exercise or performance of
any of its powers or duties hereunder, except to the extent that any such loss,
liability or expense is attributable to its negligence or bad faith. The Trustee
shall notify the Company promptly of any claim for which it may seek indemnity.
Failure by the Trustee to so notify the Company shall not relieve the Company of
its obligations hereunder unless such failure prejudices the Company. The
Company shall defend the claim and the Trustee may have separate counsel and the
Company shall pay the fees and expenses of such counsel. The Company need not
reimburse any expense or indemnify against any loss, liability or expense
incurred by the Trustee through the Trustee's own willful misconduct, negligence
or bad faith. The Company need not pay for any settlement made by the Trustee
without the Company's consent, such consent not to be unreasonably withheld.
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To secure the Company's payment obligations in this Section, the Trustee
shall have a lien prior to the Securities on all money or property held or
collected by the Trustee other than money or property held in trust to pay
principal of and interest on particular Securities.
The Company's payment obligations, and the lien granted to the Trustee,
pursuant to this Section shall survive the discharge of this Indenture. When the
Trustee incurs expenses or renders services after the occurrence of a Default
specified in Sections 6.1(2) or (3) with respect to the Company, the expenses
and the compensation for the services (including the fees and expenses of its
agents and counsel) are intended to constitute expenses of administration under
the Bankruptcy Law.
Section 7.8 Replacement of Trustee. The Trustee may resign at any time by
so notifying the Company. The Holders of a majority in principal amount of the
Securities may remove the Trustee by so notifying the Trustee and may appoint a
successor Trustee. The Company shall remove the Trustee if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged bankrupt or insolvent;
(3) a receiver or other public officer takes charge of the
Trustee or its property; or
(4) the Trustee otherwise becomes incapable of acting.
If the Trustee resigns, is removed by the Company or by the Holders of a
majority in principal amount of the Securities and such Holders do not
reasonably promptly appoint a successor Trustee, or if a vacancy exists in the
office of Trustee for any reason (the Trustee in such event being referred to
herein as the retiring Trustee), the Company shall promptly appoint a successor
Trustee.
A successor Trustee shall deliver a written acceptance of its appointment
to the retiring Trustee and to the Company. Thereupon the resignation or removal
of the retiring Trustee shall become effective, and the successor Trustee shall
have all the rights, powers and duties of the Trustee under this Indenture. The
successor Trustee shall mail a notice of its succession to Securityholders. The
retiring Trustee shall promptly transfer all property held by it as Trustee to
the successor Trustee, provided that the amounts owing to the Trustee hereunder
have been paid and subject to the lien provided for in Section 7.7.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee or the Holders of
10% in principal amount of the Securities may petition any court of competent
jurisdiction for the appointment of a successor Trustee.
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If the Trustee fails to comply with Section 7.10, any Securityholder may
petition any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee.
Notwithstanding the replacement of the Trustee pursuant to this Section,
the Company's obligations under Section 7.7 shall continue for the benefit of
the retiring Trustee.
Section 7.9 Successor Trustee by Merger. If the Trustee consolidates with,
merges or converts into, or transfers all or substantially all its corporate
trust business or assets to, another corporation or banking association, the
resulting, surviving or transferee corporation without any further act shall be
the successor Trustee provided that such successor shall be eligible and
qualified under Section 7.10.
In case at the time such successor or successors by merger, conversion or
consolidation to the Trustee shall succeed to the trusts created by this
Indenture any of the Securities shall have been authenticated but not delivered,
any such successor to the Trustee may adopt the certificate of authentication of
any predecessor trustee, and deliver such Securities so authenticated; and in
case at that time any of the Securities shall not have been authenticated, any
successor to the Trustee may authenticate such Securities either in the name of
any predecessor hereunder or in the name of the successor to the Trustee; and in
all such cases such certificates shall have the full force which it is anywhere
in the Securities or in this Indenture provided that the certificate of the
Trustee shall have.
Section 7.10 Eligibility; Disqualification. The Trustee shall at all times
satisfy the requirements of TIA ss. 310(a). The Trustee shall have a combined
capital and surplus of at least $50,000,000 as set forth in its most recent
published annual report of condition. The Trustee shall comply with TIA ss.
310(b); provided, however, that there shall be excluded from the operation of
TIA ss. 310(b)(1) any indenture or indentures under which other securities or
certificates of interest or participation in other securities of the Company are
outstanding if the requirements for such exclusion set forth in
TIA ss. 310(b)(1) are met.
Section 7.11 Preferential Collection of Claims Against Company. The Trustee
shall comply with TIA ss. 311(a), excluding any creditor relationship listed in
TIA ss. 311(b). A Trustee who has resigned or been removed shall be subject to
TIA ss. 311(a) to the extent indicated therein.
ARTICLE 8
Discharge of Indenture; Defeasance
Section 8.1 Discharge of Liability on Securities; Defeasance. (a) When (1)
the Company delivers to the Trustee all outstanding Securities (other than
Securities replaced pursuant to Section 2.7) for cancellation or (2) all
outstanding Securities have become due and payable, whether at maturity or as a
result of the mailing of a notice of redemption pursuant to Article 3 hereof and
the Company irrevocably deposits with the Trustee funds sufficient to pay at
maturity or upon redemption all outstanding Securities, including interest
thereon to maturity or such
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redemption date (other than Securities replaced pursuant to Section 2.7), and if
in either case the Company pays all other sums payable hereunder by the Company,
then this Indenture shall, subject to Section 8.1(c), cease to be of further
effect. The Trustee shall acknowledge satisfaction and discharge of this
Indenture on demand of the Company accompanied by an Officers' Certificate and
an Opinion of Counsel and at the cost and expense of the Company.
(b) Subject to Sections 8.1(c) and 8.2, the Company at any time may
terminate (1) all its obligations under the Securities and this Indenture
("legal defeasance option") or (2) its obligations under Sections 4.2 (subject
to any requirements of the TIA) and 4.5 and the operation of Sections 6.1(2),
(3), (4) and (5) (but, in the case of Section 6.1(2), with respect only to
Significant Subsidiaries) ("covenant defeasance option"). The Company may
exercise its legal defeasance option notwithstanding its prior exercise of its
covenant defeasance option.
If the Company exercises its legal defeasance option, payment of the
Securities may not be accelerated because of an Event of Default with respect
thereto. If the Company exercises its covenant defeasance option, payment of the
Securities may not be accelerated because of an Event of Default specified in
Sections 6.1(2), (3), (4) and (5) (but, in the case of Section 6.1(2), with
respect only to Significant Subsidiaries).
Upon satisfaction of the conditions set forth herein and upon request of
the Company, the Trustee shall acknowledge in writing the discharge of those
obligations that the Company terminates.
(c) Notwithstanding clauses (a) and (b) above, the Company's obligations in
Sections 2.3, 2.4, 2.5, 2.6, 2.7, 2.8, 7.7, 7.8, 8.4, 8.5 and 8.6 shall survive
until the Securities have been paid in full. Thereafter, the Company's
obligations in Sections 7.7, 8.4 and 8.5 shall survive.
Section 8.2 Conditions to Defeasance. The Company may exercise its legal
defeasance option or its covenant defeasance option only if:
(1) the Company irrevocably deposits in trust with the Trustee
money or United States Government Obligations for the payment of
principal of and interest on the Securities to maturity or redemption,
as the case may be;
(2) the Company delivers to the Trustee a certificate from a
nationally recognized firm of independent accountants expressing their
opinion that the payments of principal and interest when due and
without reinvestment on the deposited United States Government
Obligations plus any deposited money without investment will provide
cash at such times and in such amounts as will be sufficient to pay
principal and interest when due on all the Securities to maturity or
redemption, as the case may be;
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(3) 123 days pass after the deposit is made and during the
123-day period no Default specified in Section 6.1(2) with respect to
the Company occurs which is continuing at the end of the period;
(4) the deposit does not constitute a default under any other
agreement binding on the Company and is not prohibited by Article 10;
(5) the Company delivers to the Trustee an Opinion of Counsel
to the effect that the trust resulting from the deposit does not
constitute, or is qualified as, a regulated investment company under
the Investment Company Act of 1940;
(6) in the case of the legal defeasance option, the Company
shall have delivered to the Trustee an Opinion of Counsel stating that
(i) the Company has received from, or there has been published by, the
Internal Revenue Service a ruling, or (ii) since the date of this
Indenture there has been a change in the applicable Federal income tax
law, in either case to the effect that, and based thereon such Opinion
of Counsel shall confirm that, the Securityholders will not recognize
income, gain or loss for Federal income tax purposes as a result of
such defeasance and will be subject to Federal income tax on the same
amounts, in the same manner and at the same times as would have been
the case if such defeasance had not occurred;
(7) in the case of the covenant defeasance option, the Company
shall have delivered to the Trustee an Opinion of Counsel to the effect
that the Securityholders will not recognize income, gain or loss for
Federal income tax purposes as a result of such covenant defeasance and
will be subject to Federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if such
covenant defeasance had not occurred; and
(8) the Company delivers to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent to the defeasance and discharge of the Securities as
contemplated by this Article 8 have been complied with.
Before or after a deposit, the Company may make arrangements satisfactory
to the Trustee for the redemption of Securities at a future date in accordance
with Article 3.
Section 8.3 Application of Trust Money. The Trustee shall hold in trust
money or United States Government Obligations deposited with it pursuant to this
Article 8. It shall apply the deposited money and the money from United States
Government Obligations through the Paying Agent and in accordance with this
Indenture to the payment of principal of and interest on the Securities. Money
and securities so held in trust are not subject to Article 10.
Section 8.4 Repayment to Company. The Trustee and the Paying Agent shall
promptly turn over to the Company upon request any excess money or securities
held by them at any time.
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Subject to any applicable abandoned property law, the Trustee and the
Paying Agent shall pay to the Company upon request any money held by them for
the payment of principal or interest that remains unclaimed for two years, and,
thereafter, Securityholders entitled to the money must look to the Company for
payment as general creditors.
Section 8.5 Indemnity for Government Obligations. The Company shall pay and
shall indemnify the Trustee against any tax, fee or other charge imposed on or
assessed against deposited United States Government Obligations or the principal
and interest received on such United States Government Obligations.
Section 8.6 Reinstatement. If the Trustee or Paying Agent is unable to
apply any money or United States Government Obligations in accordance with this
Article 8 by reason of any legal proceeding or by reason of any order or
judgment of any court or governmental authority enjoining, restraining or
otherwise prohibiting such application, the Company's obligations under this
Indenture and the Securities shall be revived and reinstated as though no
deposit had occurred pursuant to this Article 8 until such time as the Trustee
or Paying Agent is permitted to apply all such money or United States Government
Obligations in accordance with this Article 8; provided, however, that, if the
Company has made any payment of interest on or principal of any Securities
because of the reinstatement of its obligations, the Company shall be subrogated
to the rights of the Holders of such Securities to receive such payment from the
money or United States Government Obligations held by the Trustee or Paying
Agent.
ARTICLE 9
Amendments
Section 9.1 Without Consent of Holders. The Company and the Trustee may
amend this Indenture or the Securities without notice to or consent of any
Securityholder:
(1) to cure any ambiguity, omission, defect or inconsistency;
(2) to comply with Article 5;
(3) to provide for uncertificated Securities in addition to or in
place of certificated Securities; provided, however, that the
uncertificated Securities are issued in registered form for purposes
of Section 163(f) of the Code or in a manner such that the
uncertificated Securities are described in Section 163(f)(2)(B) of the
Code;
(4) to make any change in Article 10 that would limit or
terminate the benefits available to any holder of Senior Debt (or
Representatives therefor) under Article 10;
(5) to add guarantees with respect to the Securities or to secure
the Securities;
(6) to add to the covenants of the Company for the benefit of the
Holders or to surrender any right or power herein conferred upon the
Company;
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(7) to comply with any requirements of the SEC in connection with
qualifying, or maintaining the qualification of, this Indenture under
the TIA; or
(8) to make any change that does not adversely affect the rights
of any Securityholder.
An amendment under this Section may not make any change that adversely
affects the rights under Article 10 of any holder of Senior Debt then
outstanding unless the holders of such Senior Debt (or any group or
representative thereof authorized to give a consent) consent to such change.
After an amendment under this Section becomes effective, the Company shall
mail to Securityholders a notice briefly describing such amendment. The failure
to give such notice to all Securityholders, or any defect therein, shall not
impair or affect the validity of an amendment under this Section.
Section 9.2 With Consent of Holders. The Company and the Trustee may amend
this Indenture or the Securities without notice to any Securityholder but with
the written consent of the Holders of at least a majority in principal amount of
the Securities then outstanding (including consents obtained in connection with
a tender offer or exchange for the Securities). However, without the consent of
each Securityholder affected thereby, an amendment may not:
(1) reduce the amount of Securities whose Holders must consent to
an amendment;
(2) reduce the rate of or extend the time for payment of interest
on any Security;
(3) reduce the principal of or extend the stated maturity of any
Security;
(4) reduce the premium payable upon the redemption of any
Security or change the time at which any Security may or shall be
redeemed in accordance with Article 3;
(5) make any Security payable in money other than that stated in
the Security;
(6) impair the right of any Holder of the Securities to receive
payment of principal of and interest on such Holder's Securities on or
after the due dates therefor or to institute suit for the enforcement
of any payment on or with respect to such Holder's Securities;
(7) make any change in Article 10 that adversely affects the
rights of any Securityholder under Article 10;
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(8) make any change in Section 6.4 or 6.7 or the second sentence
of this Section; or
(9) make any change in the provisions described under
paragraph 6 of the Securities.
It shall not be necessary for the consent of the Holders under this Section
to approve the particular form of any proposed amendment, but it shall be
sufficient if such consent approves the substance thereof.
An amendment under this Section may not make any change that adversely
affects the rights under Article 10 of any holder of Senior Debt then
outstanding unless the holders of such Senior Debt (or any group or
representative thereof authorized to give a consent) consent to such change.
After an amendment under this Section becomes effective, the Company shall
mail to Securityholders a notice briefly describing such amendment. The failure
to give such notice to all Securityholders, or any defect therein, shall not
impair or affect the validity of an amendment under this Section.
Section 9.3 Compliance with Trust Indenture Act. Every amendment to this
Indenture or the Securities shall comply with the TIA as then in effect.
Section 9.4 Revocation and Effect of Consents and Waivers. A consent to an
amendment or a waiver by a Holder of a Security shall bind the Holder and every
subsequent Holder of that Security or portion of the Security that evidences the
same debt as the consenting Holder's Security, even if notation of the consent
or waiver is not made on the Security. However, any such Holder or subsequent
Holder may revoke the consent or waiver as to such Holder's Security or portion
of the Security if the Trustee receives the notice of revocation before the date
the amendment or waiver becomes effective. After an amendment or waiver becomes
effective, it shall bind every Securityholder. An amendment or waiver becomes
effective upon the execution of such amendment or waiver by the Trustee.
The Company may, but shall not be obligated to, fix a record date for the
purpose of determining the Securityholders entitled to give their consent or
take any other action described above or required or permitted to be taken
pursuant to this Indenture. If a record date is fixed, then notwithstanding the
immediately preceding paragraph, those Persons who were Securityholders at such
record date (or their duly designated proxies), and only those Persons, shall be
entitled to give such consent or to revoke any consent previously given or to
take any such action, whether or not such Persons continue to be Holders after
such record date. No such consent shall be valid or effective for more than 120
days after such record date.
Section 9.5 Notation on or Exchange of Securities. If an amendment changes
the terms of a Security, the Trustee may require the Holder of the Security to
deliver it to the Trustee. The Trustee may place an appropriate notation on the
Security regarding the changed
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terms and return it to the Holder. Alternatively, if the Company or the Trustee
so determines, the Company in exchange for the Security shall issue and the
Trustee shall authenticate a new Security that reflects the changed terms.
Failure to make the appropriate notation or to issue a new Security shall not
affect the validity of such amendment.
Section 9.6 Trustee To Sign Amendments. The Trustee shall sign any
amendment authorized pursuant to this Article 9 if the amendment does not
adversely affect the rights, duties, liabilities or immunities of the Trustee.
If it does, the Trustee may but need not sign it. In signing any amendment the
Trustee shall be entitled to receive indemnity reasonably satisfactory to it and
to receive, and (subject to Section 7.1) shall be fully protected in relying
upon, an Officers' Certificate and an Opinion of Counsel stating that such
amendment is authorized or permitted by this Indenture.
Section 9.7 Payment for Consent. Neither the Company nor any Affiliate of
the Company shall, directly or indirectly, pay or cause to be paid any
consideration, whether by way of interest, fee or otherwise, to any Holder for
or as an inducement to any consent, waiver or amendment of any of the terms or
provisions of this Indenture or the Securities unless such consideration is
offered to be paid to all Holders that so consent, waive or agree to amend in
the time frame set forth in solicitation documents relating to such consent,
waiver or agreement.
ARTICLE 10
Subordination
Section 10.1 Subordinated Debt Subordinated to Senior Debt. The Company,
for itself and its successors, and each Holder, by its acceptance thereof,
agrees that the Subordinated Debt is and shall be subordinated in right of
payment, to the extent and in the manner provided in this Article 10, to the
prior payment in full of all Senior Debt. For the purposes of the Securities,
Senior Debt shall be deemed not to have been paid in full until the holders or
owners of the Senior Debt shall have received payment of all Senior Debt in cash
and as long as any lender shall have any obligation under the Senior Loan
Documents, the CMP Loan Documents, the Intersil Corporation Indenture or other
agreement or instrument evidencing any obligations under any Senior Debt. This
Article 10 shall constitute a continuing offer to all persons who, in reliance
upon such provisions, become holders of, or continue to hold, Senior Debt, and
such provisions are made for the benefit of the holders of Senior Debt, and such
holders are made obligees hereunder and any one or more of them may enforce such
provisions.
Section 10.2 No Payment on Subordinated Debt in Certain Circumstances.
(1) Upon the maturity of all or any part of any Senior Debt by
lapse of time, acceleration (unless waived in writing) or otherwise,
all Senior Debt then due shall first be paid in full, or such payment
duly provided for, in cash or cash equivalents in a manner
satisfactory to the holders of such Senior Debt, before any payment is
made on account of the Subordinated Debt, and until the Senior Debt is
paid in full, any distribution to which the Holders would be entitled
but for this Article 10 shall be made to holders of Senior Debt as
their interests may appear.
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(2) In the event that any Payment Default shall have occurred and
be continuing, unless and until such default shall have been cured or
waived in writing, then no payment (including any payment which may be
payable by reason of the payment of any other Indebtedness of the
Company being subordinated to payment of the Subordinated Debt) shall
be made by or on behalf of the Company for or on account of any
Subordinated Debt, and the Holders shall not take or receive from the
Company or any Subsidiary, directly or indirectly, in cash or other
property, or by set-off or in any other manner, including, without
limitation, from or by way of collateral, payment of all or any of the
Subordinated Debt. The Holder shall immediately deliver to the
Representative any monies, securities or other property paid in
violation of the preceding sentence and received by the Holder or its
equivalent in cash, with proper endorsement or assignment if
necessary, and prior to such delivery shall hold in trust, such
monies, securities or other properties solely as trustee for and for
the benefit of the Senior Creditors as set forth in this sentence.
(3) Upon written notice from the Representative to the Company
(which shall give prompt notice to the Trustee and the Holders) of a
Non-payment Default and if such Non-payment Default shall not have
been cured or waived in writing, no payment (including any payment
which may be payable by reason of the payment of any other
Indebtedness of the Company being subordinated to payment of the
Subordinated Debt) shall be made by or on behalf of the Company for or
on account of any Subordinated Debt, and the Holders shall not take or
receive from the Company, directly or indirectly, in cash or other
property or by set-off or in any other manner, including, without
limitation, from or by way of collateral, payment of all or any of the
Subordinated Debt, during the period (the "Payment Blockage Period")
commencing on the date of receipt by the Company of such notice and
ending (unless earlier terminated by notice from the Representative to
the Company (which shall give prompt notice to the Trustee and any
Holder), on the earlier of (A) the date when all Non-payment Defaults
shall have been cured or waived in writing, (B) the date an Event of
Default occurs under Section 6.1(2) or 6.1(3), (C) the date on which
the Bank Debt, CMP Debt, or Intersil Corporation Notes are accelerated
and declared immediately due and payable and (D) the date which is 180
days after the receipt by the Company of such notice of such
Non-payment Default. The Securities shall not be subject to more than
one Payment Blockage Period for Non-payment Defaults in any one
360-day period.
(4) Nothing contained in this Article 10 will limit the right of
the Trustee and any Holder to take any action to accelerate the
maturity of the securities pursuant to Article 6 or to pursue, subject
to Article 6, any rights or remedies hereunder; provided that so long
as any Senior Debt remains outstanding neither the Trustee nor any
Holder shall take any such action during the period (the "Remedies
Blockage Period") commencing upon any Event of Default hereunder until
the earlier of (A) the date when all Events of Default hereunder shall
have been cured or waived in writing, (B) the date an Event of Default
occurs under Section 6.1(2) or 6.1(3), (C) the date on which the Bank
Debt, CMP Debt or Intersil Corporation Notes are accelerated and
declared immediately
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due and payable and (D) the date which is 180 days after the date of
the Senior Default; provided, further, that in the event that any
Subordinated Debt is declared due and payable before its stated
maturity, the holders of all Senior Debt shall be entitled to receive
final and indefeasible payment in full of all amounts due or to become
due (whether or not accelerated) on or in respect of all Senior Debt
before the Holders are entitled to receive any payment (including any
payment which may be payable by reason of the payment of any other
indebtedness of the Company being subordinated to the payment of the
Subordinated Debt) by the Company on account of the Subordinated Debt.
Each of the Trustee and the Holders shall immediately deliver to the
Representative any monies, securities or other property received by
the Holder or its equivalent in cash, with proper endorsement or
assignment if necessary, and prior to such delivery shall hold in
trust, such monies, securities or other properties solely as trustee
for and for the benefit of the Senior Creditors as set forth in this
sentence. The Securities shall not be subject to one or more Remedies
Blockage Periods aggregating more than 180 days in any one 360-day
period.
(5) Nothing contained in this Article 10 shall prevent interest
from accruing to the Securities as provided above until the Securities
are paid in full.
Section 10.3 Subordinated Debt Subordinated to Prior Payment of All Senior
Debt on Dissolution. Upon any payment or distribution of all or any of the
assets or securities of the Company of any kind or character upon any
dissolution, winding up, liquidation, reorganization, arrangement, adjustment,
protection, relief or other similar case or proceeding under any federal or
state bankruptcy or similar law (whether voluntary or involuntary, in
bankruptcy, insolvency, receivership, arrangement, reorganization or relief
proceedings or upon any assignment for the benefit of creditors or any
marshaling of the assets and liabilities of the Company or otherwise):
(1) all Senior Debt shall first be entitled to be paid in full
before the Holders are entitled to receive any payment on account of
the Subordinated Debt; and
(2) any payment or distribution in respect of the Subordinated
Debt to which the Holders would be entitled except for the provisions
of this Article 10 (including any payment that may be payable by
reason of any other Indebtedness of the Company being subordinated to
the payment of the Subordinated Debt), shall be paid by the Company,
the liquidating trustee or agent or other person making such payment
or distribution directly to the Agent (in the case of the Bank Debt)
or to CMP (in the case of the CMP Debt) or to the holders of the other
Senior Debt or their Representative or to the trustee under any
indenture or other agreement (if any) pursuant to which Senior Debt
may have been issued, as the case may be, for application to (in the
case of cash), or as collateral (in the case of non-cash property or
securities) for, the payment or prepayment in full of all Senior Debt
remaining unpaid, after giving effect to any concurrent payment or
distribution (in the case of cash) to the holders of such Senior Debt.
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Section 10.4 Holders to be Subrogated to Rights of Holders of Senior Debt.
Upon final and indefeasible payment in full of all Senior Debt, the Holders
shall be subrogated to the rights of the holders of Senior Debt to receive
payments or distributions of assets of the Company applicable to the Senior Debt
until all Subordinated Debt shall be paid in full, and for the purpose of such
subrogation no such payments or distributions to the holders of Senior Debt by
or on behalf of the Company or by or on behalf of the Holders by virtue of this
Article 10 which otherwise would have been made to the Holders shall, as among
the Company, its creditors other than the holders of Senior Debt and the
Holders, be deemed to be payment by the Company to or on account of the Senior
Debt, it being understood that the provisions of this Section 10.4 are and are
intended solely for the purpose of defining the relative rights of the Holders,
on the one hand, and the holders of Senior Debt, on the other hand.
If any payment or distribution to which the Holders would otherwise have
been entitled but for the provisions of this Article 10 shall have been applied,
pursuant to the provisions of this Article 10, to the payment of all amounts
payable under the Senior Debt, then and in such case, the Holders shall be
entitled to receive from the holders of such Senior Debt at the time outstanding
any payments or distributions received by such holders of Senior Debt in excess
of the amount sufficient to pay holders of Senior Debt all amounts payable under
or in respect of the Senior Debt in full unless the holders of Senior Debt are
otherwise directed by a court of competent jurisdiction.
Section 10.5 Subordination Rights Not Impaired by Acts or Omissions of the
Company or Holders of Senior Debt. The Company agrees that it will not make any
payment of any Subordinated Debt, or take any other action, in contravention of
the provisions of this Article 10, and no right of any present or future holders
of any Senior Debt to enforce subordination as provided herein shall at any time
in any way be prejudiced or impaired by any act or failure to act on the part of
the Company or by any act or failure to act, in good faith, by any such holder,
or by any noncompliance by the Company with the terms of the Securities,
regardless of any knowledge thereof which any such holder may have or with which
any such holder may be otherwise charged. The holders of Senior Debt may amend,
extend, supplement, increase, renew, refund, replace, refinance, restructure or
otherwise modify the terms of the Senior Debt or any instrument or agreement
evidencing or governing the same or any security therefor and release, sell or
exchange any security therefor and otherwise deal freely with any Loan Party,
all without affecting the liabilities and obligations of the Company and the
Holders hereunder (provided that any such increase shall be limited by the
restrictions contained in the definition of Senior Debt).
Section 10.6 In Furtherance of Subordination.
(1) All payments or distributions upon or with respect to the
Subordinated Debt which are received by a Holder contrary to the
provisions of this Article 10 shall be received and held by such
Holder, in trust for the benefit of, shall be segregated from other
funds and property held by such Holder for and shall be paid
immediately over and delivered to the Representative of Senior
Creditors in the same form as so received (with
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<PAGE>
any necessary endorsement), for application (in the case of cash) to,
or as collateral (in the case of non-cash property or securities) for,
the payment or prepayment in full of all Senior Debt of the Senior
Creditors remaining unpaid, after giving effect to any concurrent
payment or distribution (in the case of cash) to the holders of Senior
Debt and shall be applied (A) first to the final and indefeasible
payment in full of all Bank Debt, (B) next to the final and
indefeasible payment in full of all CMP Debt, (C) next to the final
and indefeasible payment in full of the Intersil Corporation Notes and
(D) finally to the payment of any other Senior Debt on a pro rata
basis.
(2) The Company shall give prompt written notice to the Trustee
and the Holders of any Senior Default under any Senior Debt or under
any agreement pursuant to which Senior Debt may have been issued or of
any dissolution, winding up, liquidation, reorganization or other
event described in Section 10.3 relating to the Company; provided
that, except as set forth in Section 10.8, the failure to give any
such notice shall in no way affect the obligations of the Holders
under, or the terms of subordination set forth in, this Article 10.
(3) The Agent or the holders of Senior Debt (including the
Trustee), as the case may be, are hereby authorized to demand specific
performance of the provisions of this Article 10, whether or not the
Company shall have complied with any of the provisions hereof
applicable to it, at any time when the Company or the Holders, as the
case may be, shall have failed to comply with any of the provisions of
this Article 10 applicable to it. The Holders hereby irrevocably waive
any defense based on the adequacy of a remedy at law that might be
asserted as a bar to such remedy of specific performance. The Holders
hereby acknowledge that the provisions of this Article 10 are intended
to be enforceable at all times, whether before or after the
commencement of a proceeding referred to in Section 10.3.
Section 10.7 Obligations of Company Unconditional. Nothing contained in
this Article 10 is intended to or shall impair, as between the Company and the
Holders, the obligations of the Company, which are absolute and unconditional,
to pay to the Holder the principal of, premium, if any, on and interest on the
Securities as and when the same shall become due and payable in accordance with
its terms or is intended to or shall affect the relative rights of the Holders
and creditors of the Company other than the holders of the Senior Debt, and,
except as otherwise expressly provided herein, nothing contained herein shall
prevent any Holder from exercising all remedies otherwise permitted by
applicable law upon Default, subject to the rights, if any, under this Article
10 of the holders of such Senior Debt in respect of cash, property, security or
securities of the Company received upon the exercise of any such remedy. Nothing
contained in this Article 10 or in the Securities shall, except during the
pendency of any dissolution, winding-up, liquidation, reorganization,
recapitalization or readjustment of the Company, affect the obligation of the
Company to make, or prevent the Company from making, at any time (except under
the circumstances described in Section 10.2) payment of principal of or interest
on the Securities.
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Upon any payment or distribution of assets of the Company referred to in
this Article 10, the Holders shall be entitled to rely upon any unstayed, final,
nonappealable order or decree made by any court of competent jurisdiction or
upon any certificate of any agent or other person for the purpose of
ascertaining the persons entitled to participate in any distribution, the
holders of the Senior Debt and other Indebtedness of the Company, the amount
thereof or payable thereon, the amount or amounts paid or distributed thereon
and all other facts pertinent thereto or to this Article 10.
Section 10.8 Holder Entitled to Assume Payments Not Prohibited in Absence
of Notice. No Holder shall at any time be charged with the knowledge of the
existence of any facts which would prohibit the making of any payment to such
Holder, unless and until the Holder shall have received written notice thereof
from the Company or one or more holders of Senior Debt or from the Agent or
Representative therefor; and, prior to the receipt of any such written notice
(and absent actual notice to the contrary on the part of the Holder), that
Holder shall be entitled to assume conclusively that no such facts exist.
Nothing contained in this Article 10 shall limit the right of the holders of
Senior Debt to recover payments as contemplated elsewhere in this Article 10.
Any Holder shall be entitled to rely on the delivery to it of, and upon such
delivery will be charged with knowledge of the existence of, a written notice by
a person representing himself or itself to be a holder of such Senior Debt (or a
trustee on behalf of, or other representative of, such holder) to establish that
such notice has been given by a holder of such Senior Debt or a trustee on
behalf of any such holder.
Section 10.9 Rights in Insolvency Proceedings. Each Holder irrevocably
authorizes and empowers the Representative of the Senior Creditors in any
proceeding defined in Sections 6.1(2) and (3) (an "Insolvency Proceeding")
involving or relating to the Subordinated Debt to file a proof of claim on
behalf of that Holder with respect to the Subordinated Debt if that Holder fails
to file proof of its claims prior to 30 days before the expiration of the time
period during which such claims must be submitted to accept and receive any
payment or distribution which may be payable or deliverable at any time upon or
in respect of the Subordinated Debt in an amount not in excess of the Agent's
portion of the Senior Debt then outstanding and to take such other action as may
be reasonably necessary to effectuate the foregoing. That Holder shall provide
to the Agent all information and documents reasonably necessary to present
claims or seek enforcement as aforesaid. Each Holder agrees that even though it
shall retain the right to vote its claims and otherwise act in any such
Insolvency Proceedings relative to the Company (including, without limitation,
the right to vote to accept or reject any plan of partial or complete
liquidation, reorganization, arrangement, composition or extension), that Holder
shall not take any action or vote in any way so as to contest (i) the validity
or the enforceability of the Credit Agreement, the Senior Loan Documents or the
liens and security interests to the extent granted to the Agent by the Company
with respect to the Bank Debt, (ii) the validity or the enforceability of the
CMP Subordinated Credit Agreement or the CMP Loan Documents, (iii) the validity
or enforceability of the Intersil Corporation Indenture, (iv) the rights of the
Lenders established in the Credit Agreement, the Senior Loan Documents or any
security documents with respect to such liens and security interests, (iv) the
rights of CMP established in the CMP Subordinated Credit Agreement or the CMP
Loan Documents, or (v)
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<PAGE>
the validity or enforceability of terms of subordination set forth herein or any
agreement or instrument to the extent evidencing or relating to the Senior Debt.
The holders of Senior Debt agree that as a condition to each Holder's
obligations in this paragraph, while they shall retain the right to vote the
Senior Debt and otherwise act in any such reorganization proceeding relative to
the Company (including, without limitation, the right to vote or accept or
reject any plan of partial or complete liquidation, reorganization, arrangement,
composition or extension), they shall not take any action or vote in any way so
as to contest the enforceability of the Securities or any other agreement or
instrument to the extent evidencing or relating to the Subordinated Debt.
Section 10.10 Waiver of Consolidation. Each Holder of the Securities agrees
that it will not at any time insist upon, plead, or in any manner whatsoever,
seek the entry of any order or judgment, or take the benefit or advantage of,
any substantive consolidation, piercing of the corporate veil or any other order
or judgment that causes an effective combination of the assets and liabilities
of the Company and any other individual, corporation, partnership or joint
venture in any Insolvency Proceeding.
Section 10.11 Miscellaneous.
(1) Each of the Holders and the Company will, at the Company's
expense and at any time and from time to time, promptly execute and
deliver all further instruments and documents, and take all further
action that may be reasonably necessary or desirable, or that the Agent
or any Representative of the Senior Creditors may reasonably request,
in order to protect any right or interest granted or purported to be
granted by the provisions of this Article 10 or to enable the Agent to
exercise and enforce its rights and remedies hereunder.
(2) All rights and interests under this Article 10 of the
holders of the Bank Debt, CMP Debt, the Agent or the holders of the
Intersil Corporation Notes and any other holder of Senior Debt, and all
agreements and obligations of the Holders and the Company under this
Article 10, shall remain in full force and effect irrespective of:
(a) any lack of validity or enforceability of any Senior
Loan Document, any CMP Loan Document or any other agreement or
instrument relating thereto or to any Senior Debt;
(b) any amendment, extension, renewal, increase, supplement,
refunding, replacement, refinancing or other modification in the
time, manner or place of payment of, or in any other term of, all
or any of the Bank Debt, CMP Debt, the Intersil Corporation Notes
or any other Senior Debt, or any other amendment, extension,
renewal or waiver of or any consent to any departure from any
Senior Loan Document or any CMP Loan Document or any other
agreement or instrument relating thereto or to any other Senior
Debt, including, without limitation, any increase in obligations
resulting from the extension of additional credit to any Loan
Party or any of its subsidiaries or otherwise (provided that
nothing in this paragraph shall operate to make any Indebtedness
that would not otherwise qualify as Senior Debt so qualify).
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(c) any taking, exchange, release or non-perfection of any
other collateral, or any taking, release or amendment or waiver
of or consent to departure from any guaranty, for all or any of
the Bank Debt, CMP Debt, the Intersil Corporation Notes or any
other Senior Debt;
(d) any manner of application of collateral, or proceeds
thereof, to all or any of the Bank Debt, CMP Debt or any other
Senior Debt, or any manner of sale or other disposition of any
collateral for all or any of the Bank Debt, CMP Debt, or any
other Senior Debt, or any other assets of any Loan Party or any
of its subsidiaries;
(e) any change, restructuring or termination of the
corporate structure or existence of any Loan Party or any of its
subsidiaries; or
(f) any other circumstance which might otherwise constitute
a defense available to, or a discharge of, any Loan Party or a
subordinated creditor.
(3) The provisions of this Article 10 shall continue to be effective
or be reinstated, as the case may be, if at any time any payment of any
Senior Debt is rescinded or must otherwise be returned by the Agent, any
holder of Bank Debt or CMP Debt, any holder of the Intersil Corporation
Notes or any other holder of Senior Debt upon the insolvency, bankruptcy or
reorganization of any Loan Party or otherwise, all as though such payment
had not been made.
(4) Each of the Holders and the Company each hereby waives (to the
extent each may lawfully do so) promptness, diligence, notice of acceptance
and any other notice with respect to any of the Senior Debt and this
Article 10 and any requirement that the Agent, any holder of Bank Debt, any
holder of CMP Debt, or any other holder of Senior Debt protect, secure,
perfect or insure any security interest or lien or any property subject
thereto or exhaust any right or take any action against the Company or any
other person or entity or any collateral.
(5) No failure on the part of the Agent, any holder of Bank Debt, any
holder of CMP Debt, any holder of the Intersil Corporation Notes or any
other holder of Senior Debt to exercise, and no delay in exercising, any
right hereunder shall operate as a waiver thereof; nor shall any single or
partial exercise of any right hereunder preclude any other or further
exercise thereof or the exercise of any other right. The remedies hereunder
provided are cumulative and not exclusive of any remedies provided by law.
(6) The provisions of this Article 10 constitute a continuing
agreement and shall (A) remain in full force and effect until all Senior
Debt shall have been finally and indefeasibly paid in full, (B) be binding
upon the Holders and the Company and their successors and assigns, and (C)
inure to the benefit of and be enforceable by any holders of Bank Debt, any
holders of CMP Debt, the Agent, the Intersil Corporation Trustee, any
holder of the Intersil Corporation Notes, any other holder of Senior Debt
and their successors, transferees and assigns.
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Section 10.12 Subrogation. After all Senior Debt of the Company is paid in
full in cash and until the Securities are paid in full, Securityholders shall be
subrogated to the rights of holders of such Senior Debt to receive distributions
applicable to such Senior Debt. A distribution made under this Article 10 to
holders of such Senior Debt which otherwise would have been made to
Securityholders is not, as between the Company and Securityholders, a payment by
the Company on such Senior Debt.
Section 10.13 Relative Rights. This Article 10 defines the relative rights
of Securityholders and holders of Senior Debt of the Company. Nothing in this
Indenture shall:
(1) impair, as between the Company and Securityholders, the obligation
of the Company, which is absolute and unconditional, to pay principal of
and interest on the Securities in accordance with their terms; or
(2) prevent the Trustee or any Securityholder from exercising its
available remedies upon a Default, subject to the rights of holders of
Senior Debt of the Company to receive distributions otherwise payable to
Securityholders.
Section 10.14 Rights of Trustee and Paying Agent. Notwithstanding Section
10.5, the Trustee or Paying Agent may continue to make payments on the
Securities and shall not be charged with knowledge of the existence of facts
that would prohibit the making of any such payments unless, not less than two
Business Days prior to the date of such payment, a Trust Officer of the Trustee
receives notice satisfactory to it that payments may not be made under this
Article 10. The Company, the Registrar or co-registrar, the Paying Agent, a
Representative or a holder of Senior Debt may give the notice.
The Trustee in its individual or any other capacity may hold Senior Debt of
the Company with the same rights it would have if it were not Trustee. The
Registrar and co-registrar and the Paying Agent may do the same with like
rights. The Trustee shall be entitled to all the rights set forth in this
Article 10 with respect to any Senior Debt of the Company which may at any time
be held by it, to the same extent as any other holder of such Senior Debt; and
nothing in Article 7 shall deprive the Trustee of any of its rights as such
holder. Nothing in this Article 10 shall apply to claims of, or payments to, the
Trustee under or pursuant to Section 7.7.
Section 10.15 Distribution or Notice to Representative. Whenever a
distribution is to be made or a notice given to holders of Senior Debt of the
Company, the distribution may be made and the notice given to their
Representative (if any).
Section 10.16 Article 10 Not To Prevent Events of Default or Limit Right To
Accelerate. The failure to make a payment pursuant to the Securities by reason
of any provision in this Article 10 shall not be construed as preventing the
occurrence of a Default. Nothing in this Article 10 shall have any effect on the
right of the Securityholders or the Trustee to accelerate the maturity of the
Securities.
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Section 10.17 Trust Moneys Not Subordinated. Notwithstanding anything
contained herein to the contrary, payments from money or the proceeds of United
States Government Obligations held in trust under Article 8 by the Trustee for
the payment of principal of and interest on the Securities shall not be
subordinated to the prior payment of any Senior Debt or subject to the
restrictions set forth in this Article 10, and none of the Securityholders shall
be obligated to pay over any such amount to the Company or any holder of Senior
Debt of the Company or any other creditor of the Company, so long as the
foregoing subordination provisions contained in this Article 10 were not
violated at the time the respective amounts were deposited pursuant to the
defeasance provisions of Article 8.
Section 10.18 Trustee Entitled To Rely. Upon any payment or distribution
pursuant to this Article 10, the Trustee and the Securityholders shall be
entitled to rely (i) upon any order or decree of a court of competent
jurisdiction in which any proceedings of the nature referred to in Section 10.2
are pending, (ii) upon a certificate of the liquidating trustee or agent or
other Person making such payment or distribution to the Trustee or to the
Securityholders or (iii) upon the Representatives for the holders of Senior Debt
of the Company for the purpose of ascertaining the Persons entitled to
participate in such payment or distribution, the holders of such Senior Debt and
other Indebtedness of the Company, the amount thereof or payable thereon, the
amount or amounts paid or distributed thereon and all other facts pertinent
thereto or to this Article 10. In the event that the Trustee determines, in good
faith, that evidence is required with respect to the right of any Person as a
holder of Senior Debt of the Company to participate in any payment or
distribution pursuant to this Article 10, the Trustee may request such Person to
furnish evidence to the reasonable satisfaction of the Trustee as to the amount
of such Senior Debt held by such Person, the extent to which such Person is
entitled to participate in such payment or distribution and other facts
pertinent to the rights of such Person under this Article 10, and, if such
evidence is not furnished, the Trustee may defer any payment to such Person
pending judicial determination as to the right of such Person to receive such
payment. The provisions of Sections 7.1 and 7.2 shall be applicable to all
actions or omissions of actions by the Trustee pursuant to this Article 10.
Section 10.19 Trustee To Effectuate Subordination. Each Securityholder by
accepting a Security authorizes and directs the Trustee on his behalf to take
such action as may be necessary or appropriate to acknowledge or effectuate the
subordination between the Securityholders and the holders of Senior Debt of the
Company as provided in this Article 10 and appoints the Trustee as
attorney-in-fact for any and all such purposes.
Section 10.20 Trustee Not Fiduciary for Holders of Senior Debt. The Trustee
shall not be deemed to owe any fiduciary duty to the holders of Senior Debt and
shall not be liable to any such holders if it shall mistakenly pay over or
distribute to Securityholders or the Company or any other Person, money or
assets to which any holders of Senior Debt of the Company shall be entitled by
virtue of this Article 10 or otherwise.
Section 10.21 Reliance by Holders of Senior Debt on Subordination
Provisions. Each Securityholder by accepting a Security acknowledges and agrees
that the foregoing
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subordination provisions are, and are intended to be, an inducement and a
consideration to each holder of any Senior Debt of the Company, whether such
Senior Debt was created or acquired before or after the issuance of the
Securities, to acquire and continue to hold, or to continue to hold, such Senior
Debt and such holder of such Senior Debt shall be deemed conclusively to have
relied on such subordination provisions in acquiring and continuing to hold, or
in continuing to hold, such Senior Debt.
ARTICLE 11
Miscellaneous
Section 11.1 Trust Indenture Act Controls. If any provision of this
Indenture limits, qualifies or conflicts with another provision which is
required to be included in this Indenture by the TIA, the required provision
shall control.
Section 11.2 Notices. Any notice or communication shall be in writing and
delivered in person or mailed by first-class mail addressed as follows:
if to the Company:
Intersil Holding Corporation
2401 Palm Bay Road NE
Building 53 M/S 53/198
Palm Bay, FL 32905
Telecopy number: (407) 729-5392
Attention: General Counsel
with required copies to:
Citicorp Venture Capital Ltd.
399 Park Avenue
Sixth Floor
New York, New York 10043
Telecopy number: (212) 888-2940
Attention: Paul C. ("Chip") Schorr, IV
and
Dechert Price & Rhoads
4000 Bell Atlantic Tower
1717 Arch Street
Philadelphia, Pennsylvania 19103
Telecopy number: (215) 994-2222
Attention: G. Daniel O'Donnell
if to the Trustee:
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<PAGE>
United States Trust Company of New York
114 West 47th Street
New York, NY 10036
Telecopy number: (215) 252-1627
Attention: Corporate Trust Division
The Company or the Trustee by notice to the other may designate additional
or different addresses for subsequent notices or communications.
Any notice or communication mailed to a Securityholder shall be mailed to
the Securityholder at the Securityholder's address as it appears on the
registration books of the Registrar and shall be sufficiently given if so mailed
within the time prescribed.
Failure to mail a notice or communication to a Securityholder or any defect
in it shall not affect its sufficiency with respect to other Securityholders. If
a notice or communication is mailed in the manner provided above, it is duly
given, whether or not the addressee receives it.
Section 11.3 Communication by Holders with Other Holders. Securityholders
may communicate pursuant to TIA ss. 312(b) with other Securityholders with
respect to their rights under this Indenture or the Securities. The Company, the
Trustee, the Registrar and anyone else shall have the protection of
TIA ss. 312(c).
Section 11.4 Certificate and Opinion as to Conditions Precedent. Upon any
request or application by the Company to the Trustee to take or refrain from
taking any action under this Indenture, the Company shall furnish to the
Trustee:
(1) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of the signers,
all conditions precedent, if any, provided for in this Indenture relating
to the proposed action have been complied with; and
(2) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of such counsel,
all such conditions precedent have been complied with.
Section 11.5 Statements Required in Certificate or Opinion. Each
certificate or opinion with respect to compliance with a covenant or condition
provided for in this Indenture shall include:
(1) a statement that the individual making such certificate or opinion
has read such covenant or condition;
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<PAGE>
(2) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of such individual, he has made
such examination or investigation as is necessary to enable him to express
an informed opinion as to whether or not such covenant or condition has
been complied with; and
(4) a statement as to whether or not, in the opinion of such
individual, such covenant or condition has been complied with.
Section 11.6 When Securities Disregarded. In determining whether the
Holders of the required principal amount of Securities have concurred in any
direction, waiver or consent, Securities owned by the Company or by any Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with the Company shall be disregarded and deemed not to be
outstanding, except that, for the purpose of determining whether the Trustee
shall be protected in relying on any such direction, waiver or consent, only
Securities which the Trustee knows are so owned shall be so disregarded. Also,
subject to the foregoing, only Securities outstanding at the time shall be
considered in any such determination.
Section 11.7 Rules by Trustee, Paying Agent and Registrar. The Trustee may
make reasonable rules for action by or a meeting of Securityholders. The
Registrar and the Paying Agent may make reasonable rules for their functions.
Section 11.8 Legal Holidays. A "Legal Holiday" is a Saturday, a Sunday or a
day on which banking institutions are not required to be open in the State of
New York. If a payment date is a Legal Holiday, payment shall be made on the
next succeeding day that is not a Legal Holiday, and no interest shall accrue
for the intervening period. If a regular record date is a Legal Holiday, the
record date shall not be affected.
Section 11.9 Governing Law. This Indenture and the Securities shall be
governed by, and construed in accordance with, the laws of the State of New York
but without giving effect to applicable principles of conflicts of law to the
extent that the application of the laws of another jurisdiction would be
required thereby.
Section 11.10 No Recourse Against Others. A director, officer, employee or
stockholder, as such, of the Company shall not have any liability for any
obligations of the Company under the Securities or for any claim based on, in
respect of or by reason of such obligations or their creation. By accepting a
Security, each Securityholder shall waive and release all such liability. The
waiver and release shall be part of the consideration for the issue of the
Securities.
Section 11.11 Successors. All agreements of the Company in this Indenture
and the Securities shall bind its successors. All agreements of the Trustee in
this Indenture shall bind its successors.
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Section 11.12 Multiple Originals. The parties may sign any number of copies
of this Indenture. Each signed copy shall be an original, but all of them
together represent the same agreement. One signed copy is enough to prove this
Indenture.
Section 11.13 Table of Contents; Headings. The table of contents,
cross-reference sheet and headings of the Articles and Sections of this
Indenture have been inserted for convenience of reference only, are not intended
to be considered a part hereof and shall not modify or restrict any of the terms
or provisions hereof.
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IN WITNESS WHEREOF, the parties have caused this Indenture to be duly
executed as of the date first written above.
INTERSIL HOLDING CORPORATION
By: /s/ Daniel J. Heneghan
----------------------------
Daniel J. Heneghan
Vice President
UNITED STATES TRUST COMPANY
OF NEW YORK
By: /s/ Gerard Ganey
----------------------------
Gerard Ganey
Sr. Vice President
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EXHIBIT A
[FORM OF FACE OF SECURITY]
No. _______ $
11.13% Subordinated Pay-In-Kind Notes Due 2010
Intersil Holding Corporation, a Delaware corporation, promises to pay to
Harris Corporation, or registered assigns, the principal sum of ______________
on _________________, 2010.
Interest Payment Dates: January 31 and July 31
Record Dates: January 15 and July 15
Additional provisions of this Security are set forth on the other side of
this Security.
Dated: _____________________, _______
INTERSIL HOLDING CORPORATION,
By:
----------------------------
Name:
Title:
By:
----------------------------
Name:
Title:
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
United States Trust Company of New York
as Trustee, certifies that
this is one of the Securities
referred to in the Indenture.
By:
---------------------------
Authorized Signatory
<PAGE>
A-2
[FORM OF REVERSE SIDE OF SECURITY]
11.13% Subordinated Pay-In-Kind Note Due 2010
1. Interest
Intersil Holding Corporation, a Delaware corporation (such corporation, and
its successors and assigns under the Indenture hereinafter referred to, being
herein called the "Company"), promises to pay interest on the principal amount
of this Security at the rate per annum shown above. The Company will pay
interest semiannually on January 31 and July 31 of each year (each date of
payment being an "Interest Payment Date"). Interest on the Securities will
accrue from the most recent date to which interest has been paid or, if no
interest has been paid, from August 13, 1999. Interest will be computed on the
basis of a 360-day year of twelve 30-day months. The Company shall pay interest
on overdue principal at the rate borne by the Securities, and it shall pay
interest on overdue installments of interest at the same rate to the extent
lawful.
2. Method of Payment
The Company will pay interest on the Securities (except defaulted interest)
to the Persons who are registered holders of Securities at the close of business
on January 15 or July 15 next preceding the interest payment date even if
Securities are canceled after the record date and on or before the interest
payment date. Holders must surrender Securities to a Paying Agent to collect
principal payments. The Company shall pay principal, premium, if any, and
interest in money of the United States that at the time of payment is legal
tender for payment of public and private debts, except that interest may, at the
option and in the sole discretion of the Company, be paid in additional
Securities (the "Additional Securities"). If the Company elects to issue
Additional Securities in lieu of cash payment of interest due on any Security on
any Interest Payment Date, the Company shall give written notice of such
election to the Trustee on or before, but not more than 45 days prior to, the
record date for the applicable Interest Payment Date, and execute Additional
Securities, dated the date of such Interest Payment Date, in a principal amount
equal to the amount of cash interest due but not paid in cash on such Interest
Payment Date; provided, however, that without limiting the Company's obligation
to make interest payments on the dates provided therefor in cash or Additional
Securities, the failure to give such notice shall not obligate the Company to
make an interest payment in cash if it would otherwise be permitted to make such
payment with Additional Securities which payment may be so made during any
permitted grace period; provided further, however that the Trustee receives
notice of such election by the Company 10 days prior to the Interest Payment
Date. The issuance of such
<PAGE>
A-3
Additional Securities shall constitute payment in full of the interest in lieu
of cash payment of which such Additional Securities are issued. Each issuance of
Additional Securities in lieu of cash payments of interest on the Securities
shall be made pro rata with respect to the outstanding Securities, provided that
the Company may at its option pay cash in lieu of issuing Additional Securities
in any denomination of less than $1,000 as selected by the Company. Cash
payments in respect of Securities (including principal, premium and interest)
will be made by wire transfer of immediately available funds to the accounts
specified by the holders thereof or, if no United States dollar account
maintained by the payee with a bank in the United States is designated by any
holder to the Trustee or the Paying Agent at least 30 days prior to the relevant
due date for payment (or such other date as the Trustee may accept in its
discretion), by mailing a check to the registered address of such holder.
Each Additional Security shall be subject to the same terms and conditions
as the Securities, including, without limitation, the provisions of Article 10
of the Indenture.
3. Paying Agent and Registrar
Initially, United States Trust Company of New York, a New York banking
corporation ("Trustee"), will act as Paying Agent and Registrar. The Company may
appoint and change any Paying Agent, Registrar or co-registrar without notice.
The Company or any of its domestically incorporated Wholly Owned Subsidiaries
may act as Paying Agent, Registrar or co-registrar.
4. Indenture
The Company issued the Securities under an Indenture dated as of August 13,
1999 ("Indenture"), between the Company and the Trustee. The terms of the
Securities include those stated in the Indenture and those made part of the
Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C. ss.ss.
77aaa-77bbbb) as in effect on the date of the Indenture (the "Act"). Terms
defined in the Indenture and not defined herein have the meanings ascribed
thereto in the Indenture. The Securities are subject to all such terms, and
Securityholders are referred to the Indenture and the Act for a statement of
those terms.
The Securities are general unsecured obligations of the Company. The
Company shall be entitled to issue Additional Securities pursuant to Section
2.13 of the Indenture. The Initial Securities issued on the Issue Date and any
Additional Securities will be treated as a single class for all purposes under
the Indenture. The Indenture limits, among other things (i) the payment of
dividends on capital stock of the Company and the purchase, redemption or
retirement of capital stock or subordinated indebtedness, (ii) certain
transactions with Affiliates, (iii) sales of assets, including capital stock of
subsidiaries and (iv) certain consolidations, mergers and transfers of assets.
The Indenture also prohibits certain restrictions on distributions from
subsidiaries. All of these limitations and prohibitions, however, are subject to
a number of important qualifications contained in the Indenture.
<PAGE>
A-4
5. Optional Redemption
The Company may, at any time and from time to time, redeem the Securities,
in whole or in part, at a redemption price equal to the principal amount being
redeemed plus accrued and unpaid interest, if any, to the date of redemption
(the "Redemption Price").
6. Special Redemption
(a) Change in Control. Upon the occurrence of a Change in Control, the
Company shall, upon the expiration of any offer to purchase or repayment or
redemption of any Senior Debt required as a result of such Change in Control,
redeem the Securities in full at the Redemption Price. For purposes of this
Paragraph 6(a), the term "Change in Control" shall mean (i) prior to the first
Public Equity Offering, the Permitted Holders cease to be the "beneficial owner"
(as defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or
indirectly, of a majority in the aggregate of the total voting power of the
voting stock of the Company, whether as a result of issuance of securities of
the Company, any merger, consolidation, liquidation or dissolution of the
Company, any direct or indirect transfer of securities by the Permitted Holders
or otherwise (for purposes of this clause (i) and clauses (iii) and (v) below,
the Permitted Holders shall be deemed to beneficially own any voting stock of
any entity held by any other entity (the "parent entity") so long as the
Permitted Holders beneficially own (as so defined), directly or indirectly, in
the aggregate a majority of the voting power of the voting stock of the parent
entity; provided, however, that notwithstanding the foregoing CVC shall be
deemed to beneficially own a majority of the voting power of the voting stock of
Sterling (or any successor) so long as CVC, employees, officers and directors of
CVC and companies, partnerships and other entities at least a majority of the
equity in which is held in the aggregate by CVC and its employees, officers and
directors hold in the aggregate no less than a majority of the economic
interests in Sterling (or such successor)), or (ii) all or substantially all of
the assets of the Company and its Subsidiaries (taken as a whole) shall be
transferred or leased to any Person or group of Persons, or (iii) the Company
shall cease to own 100% of the outstanding capital stock of Intersil
Corporation, or (iv) a majority of the members of the Board of Directors of the
Company cease to be Continuing Directors, or (v) after a Public Equity Offering,
any "person" (as such term is used in Sections 13(d) and 14(d) of the Exchange
Act), other than one or more Permitted Holders, is or becomes the beneficial
owner (as defined in clause (i) above, except that for purposes of this clause
(v) such person shall be deemed to have "beneficial ownership" of all shares
that any such person has the right to acquire, whether such right is exercisable
immediately or only after the passage of time), directly or indirectly, of more
than the greater of 35% of the aggregate voting common stock of the Company then
outstanding or the total voting power of the voting stock of the Company then
held by CVC and its Permitted Transferees (as defined in the Stockholders
Agreement). As used herein, (1) the term "Permitted Holders" shall mean (i) CVC,
(ii) any officer, employee or director of CVC or any trust, partnership or other
entity established solely for the benefit of such officers, employees or
directors, (iii) any officer, employee or director of the Company, Intersil
Corporation or any Subsidiary or any trust, partnership or other entity
established solely for the benefit of such officers, employees or directors, and
(iv) in the case of any individual, any Permitted Transferee
<PAGE>
A-5
of such individual (as defined in the Stockholders Agreement), except a
Permitted Transferee by virtue of Section 4.4(b)(iv) thereof; provided, however,
that in no event shall individuals collectively be deemed to be "Permitted
Holders" with respect to more than 30% of the total voting power of the Company,
(2) the term "Public Equity Offering" shall mean a primary public offering of
Capital Stock (or securities convertible into or exchangeable for Capital Stock)
of the Company, Intersil Corporation, any direct or indirect parent of the
Company (except CVC or any direct or indirect parent of CVC) (each, a "Parent")
or any Subsidiary pursuant to an effective registration statement filed under
the Securities Act other than a registration statement filed on Form S-8 or any
successor form and other than any registration statement filed in connection
with any issuance of Capital Stock (or securities convertible into or
exchangeable for Capital Stock) in connection with the original issuance of the
Securities and (3) "Continuing Director" means any member of the Board of
Directors who (i) was a member of such Board of Directors on the date hereof, or
(ii) was nominated for election or elected to the Board of Directors with, or
whose election to the Board of Directors was approved by, the affirmative vote
of a majority of the Continuing Directors who were members of such Board of
Directors at the time of such nomination or election, or (iii) became a member
of the Board of Directors pursuant to the Stockholders Agreement.
(b) Primary Offerings. Upon the consummation of the initial Public Equity
Offering, the Company shall apply, or cause to be applied, the first $50,000,000
of net cash proceeds received from such initial Public Equity Offering to repay
Senior Debt to the extent required by such Senior Debt and to the extent then
outstanding, and the Company shall pay 50% of the net cash proceeds received by
the issuer from such initial Public Equity Offering in excess of the first
$50,000,000 of net cash proceeds to redeem all or part of the Securities to the
extent then outstanding at the Redemption Price. On the date on which any
subsequent Public Equity Offering is consummated, the Company shall pay an
amount equal to 50% of the net cash proceeds to the issuer from such Public
Equity Offering to redeem all or part of the Securities to the extent then
outstanding at the Redemption Price. Notwithstanding the foregoing, (i) the
Company or any direct or indirect Subsidiary or Parent of the Company shall be
permitted to sell in the aggregate up to 10% of such Person's Capital Stock
outstanding on the date hereof (after giving pro forma effect to such issuance)
to a qualified institutional buyer ("QIB") as such term is defined in Rule 144A
promulgated under the Securities Act ("Rule 144A") organized under the laws of
the United States or any State thereof, pursuant to Rule 144A without being
obligated to redeem the Securities and (ii) the Company shall be permitted to
issue and/or sell in the aggregate up to 30% of the amount of Capital Stock of
the Company outstanding as of the date hereof (after giving pro forma effect to
such issuance) to acquire all of the ownership interests in or all or
substantially all of the assets of any Person, provided that the Company shall
not issue and/or sell more than 15% (after giving pro forma effect to such
issuance) of the amount of the Capital Stock of the Company outstanding as of
the date hereof in connection with any one such acquisition.
(c) Secondary Sales of Capital Stock. So long as Harris Corporation or any
of its Affiliates is the holder of at least 50% of the Securities, the Company
shall redeem the Securities in full upon a Sale; provided that the Redemption
Price in respect of such
<PAGE>
A-6
obligation shall not be deemed payable until 5 days after the Company receives
notice of, or the senior executive officers of the Company obtain knowledge of,
such Sale. The term "Sale" shall mean a direct or indirect transfer by any
Permitted Holder (including by means of a business combination transaction or a
redemption) of any Capital Stock of the Company (or any other securities of the
Company (or a successor to the Company) received on account of ownership of such
Capital Stock, including all securities issued in connection with any merger,
consolidation, stock dividend, stock distribution, stock split, stock
combination, recapitalization, reclassification, subdivision, conversion or
similar transaction in respect thereof) (the "Principal Securities") other than
(i) transfers to a Permitted Transferee (as defined in the Stockholders
Agreement (other than pursuant to Section 4.4(b)(iv) thereof)), (ii) transfers
to the Company pursuant to the Company's exercise of its option to purchase such
Principal Securities under Sections 6.3 or 6.4 of the Stockholders Agreement,
(iii) transfers by the Management Investors party to the Stockholders Agreement
of Principal Securities in one or more transactions (whether or not related) in
an aggregate amount not in excess of 3% of the amount of capital stock of the
Company outstanding as of the date hereof made following and in accordance with
the good faith determination by the Board of Directors of the Company that such
transfers are appropriate and (iv) transfer by Sterling or CVC of up to 3% of
the amount of capital stock of the Company outstanding as of the date hereof
including up to $3,000,000 in liquidation value of Series A Preferred to a QIB
if CVC determines that such transfers are advisable to assure compliance with
any regulatory requirements applicable to Sterling or CVC, based upon the advice
of CVC's internal regulatory counsel.
(d) Restricted Payments. The Company shall redeem the Securities in full to
the extent then outstanding immediately upon any violation of Section 4.5 of the
Indenture.
(e) Limitations on Redemption Obligations. Anything in this Paragraph 6 to
the contrary notwithstanding, except in the case of a redemption required by the
first sentence of Paragraph 6(b), the Company shall not be obligated to redeem
all or any of the Securities to the extent the Company is prohibited from doing
so by the terms of any Senior Debt outstanding at the time of the occurrence of
the event giving rise to such requirement to redeem.
(f) Interest on Securities Called for Redemption. On and after the
redemption date, interest will cease to accrue on the Securities or portion
thereof called for redemption.
7. Notice of Redemption
Except as set forth in paragraph 6 above, notice of optional redemption
will be mailed at least 30 days but not more than 60 days before the redemption
date to each Holder of Securities to be redeemed at his registered address.
Securities in denominations larger than $1,000 may be redeemed in part but only
in whole multiples of $1,000. If money sufficient to pay the redemption price of
and accrued interest on all Securities (or portions thereof) to be redeemed on
the redemption date is deposited with the Paying Agent on or before the
redemption
<PAGE>
A-7
date and certain other conditions are satisfied, on and after such date interest
ceases to accrue on such Securities (or such portions thereof) called for
redemption.
8. Subordination
The Securities are subordinated to Senior Debt, as defined in the
Indenture. To the extent provided in the Indenture, Senior Debt must be paid
before the Securities may be paid. The Company agrees, and each Securityholder
by accepting a Security agrees, to the subordination provisions contained in the
Indenture and authorizes the Trustee to give it effect and appoints the Trustee
as attorney-in-fact for such purpose.
9. Denominations; Transfer; Exchange
The Securities are in registered form without coupons in denominations of
$1,000 and whole multiples of $1,000; provided, however, that Additional
Securities may be issued in denominations of less than $1,000 or in other than
whole multiples of $1,000. A Holder may transfer or exchange Securities in
accordance with the Indenture. The Registrar may require a Holder, among other
things, to furnish appropriate endorsements or transfer documents and to pay any
taxes and fees required by law or permitted by the Indenture. The Registrar need
not register the transfer of or exchange any Securities selected for redemption
(except, in the case of a Security to be redeemed in part, the portion of the
Security not to be redeemed) or any Securities for a period of 15 days before a
selection of Securities to be redeemed or 15 days before an interest payment
date.
10. Persons Deemed Owners
The registered Holder of this Security may be treated as the owner of it
for all purposes.
11. Unclaimed Money
If money for the payment of principal or interest remains unclaimed for two
years, the Trustee or Paying Agent shall pay the money back to the Company at
its request unless an abandoned property law designates another Person. After
any such payment, Holders entitled to the money must look only to the Company
and not to the Trustee for payment.
12. Discharge and Defeasance
Subject to certain conditions, the Company at any time may terminate some
or all of its obligations under the Securities and the Indenture if the Company
deposits with the Trustee money or United States Government Obligations for the
payment of principal and interest on the Securities to redemption or maturity,
as the case may be.
<PAGE>
A-8
13. Amendment; Waiver
Subject to certain exceptions set forth in the Indenture, (i) the Indenture
or the Securities may be amended with the written consent of the Holders of at
least a majority in principal amount outstanding of the Securities and (ii) any
default or noncompliance with any provision may be waived with the written
consent of the Holders of a majority in principal amount outstanding of the
Securities. Subject to certain exceptions set forth in the Indenture, without
the consent of any Securityholder, the Company and the Trustee may amend the
Indenture or the Securities to cure any ambiguity, omission, defect or
inconsistency, or to comply with Article 5 of the Indenture, or to provide for
uncertificated Securities in addition to or in place of certificated Securities,
or to add guarantees with respect to the Securities or to secure the Securities,
or to add additional covenants or surrender rights and powers conferred on the
Company, or to comply with any request of the SEC in connection with qualifying
the Indenture under the Act, or to make certain changes in the subordination
provisions or to make any change that does not adversely affect the rights of
any Securityholder.
14. Default and Remedies
Under the Indenture, Events of Default include (i) default in payment of
interest on the Securities; (ii) default in payment of principal on the
Securities at maturity, upon redemption pursuant to paragraph 5 of the
Securities, upon acceleration or otherwise; (iii) failure by the Company to
comply with other agreements in the Indenture or the Securities, subject to
notice and lapse of time; (iv) certain accelerations (including failure to pay
within any grace period after final maturity) of other Indebtedness of the
Company if the amount accelerated (or so unpaid) exceeds $10,000,000, subject to
notice and lapse of time; and (v) certain events of bankruptcy or insolvency
with respect to the Company and the Significant Subsidiaries. If an Event of
Default occurs and is continuing, the Trustee or the Holders of at least 25% in
principal amount of the Securities may declare all the Securities to be due and
payable immediately, subject to certain conditions. Certain events of bankruptcy
or insolvency are Events of Default which will result in the Securities being
due and payable immediately upon the occurrence of such Events of Default.
Securityholders may not enforce the Indenture or the Securities except as
provided in the Indenture. The Trustee may refuse to enforce the Indenture or
the Securities unless it receives reasonable indemnity or security. Subject to
certain limitations, Holders of a majority in principal amount of the Securities
may direct the Trustee in its exercise of any trust or power. The Trustee may
withhold from Securityholders notice of any continuing Default (except a Default
in payment of principal or interest) if it determines that withholding notice is
in the interest of the Holders.
15. Trustee Dealings with the Company
Subject to certain limitations imposed by the Act, the Trustee under the
Indenture, in its individual or any other capacity, may become the owner or
pledgee of Securities and may otherwise deal with and collect obligations owed
to it by the Company or its Affiliates and may otherwise deal with the Company
or its Affiliates
<PAGE>
A-9
with the same rights it would have if it were not Trustee.
16. No Recourse Against Others
A director, officer, employee or stockholder, as such, of the Company or
the Trustee shall not have any liability for any obligations of the Company
under the Securities or the Indenture or for any claim based on, in respect of
or by reason of such obligations or their creation. By accepting a Security,
each Securityholder waives and releases all such liability. The waiver and
release are part of the consideration for the issue of the Securities.
17. Authentication
This Security shall not be valid until an authorized signatory of the
Trustee (or an authenticating agent) manually signs the certificate of
authentication on the other side of this Security.
18. Abbreviations
Customary abbreviations may be used in the name of a Securityholder or an
assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the
entireties), JT TEN (=joint tenants with rights of survivorship and not as
tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors
Act).
19. CUSIP Numbers
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures the Company has caused CUSIP numbers to be
printed on the Securities and has directed the Trustee to use CUSIP numbers in
notices of redemption as a convenience to Securityholders. No representation is
made as to the accuracy of such numbers either as printed on the Securities or
as contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
20. Governing Law
THIS SECURITY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES
OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER
JURISDICTION WOULD BE REQUIRED THEREBY.
<PAGE>
A-10
The Company will furnish to any Securityholder upon written request and
without charge to the Securityholder a copy of the Indenture which has in it the
text of this Security in larger type. Requests may be made to:
Intersil Holding Corporation
2401 Palm Bay Road NE
Palm Bay, FL 32905
Attention: Chief Financial Officer
<PAGE>
A-11
----------------------------------------
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
(Print or type assignee's name, address and zip code)
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint agent to transfer this Security on the
books of the Company. The agent may substitute another to act for him.
Date: ________________ Your Signature: _____________________________________
____________________________________________________________________________
Sign exactly as your name appears on the other side of this Security.
EXHIBIT 10.08
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (the "Agreement") dated August 13, 1999, by
and among INTERSIL HOLDING CORPORATION, a Delaware corporation formerly known as
HSS Holding Corporation (the "Company"), STERLING HOLDING COMPANY, LLC, a
Delaware limited liability company ("Sterling"), MANATEE INVESTMENT
CORPORATION., a Delaware corporation ("Harris"), CITICORP MEZZANINE PARTNERS,
L.P. ("CMP"), a Delaware limited partnership, the individuals identified on the
signature pages of this Agreement as Management Investors, the individuals who
join in the Stockholders' Agreement and this Agreement as Management Investors
(collectively, the "Management Investors") and other Persons who may from time
to time become parties to this Agreement. Sterling, Harris, CMP and the
Management Investors are sometimes referred to hereinafter individually as an
"Investor" and collectively as the "Investors."
Background
The Company, Sterling, Harris, CMP and the Management Investors are parties
to, and this Agreement is made pursuant to, the Stockholders' Agreement. In
order to induce the Investors to enter into the Stockholders' Agreement, the
Company has agreed to provide the registration rights set forth in this
Agreement.
Terms
In consideration of the mutual covenants contained herein and intending to
be legally bound hereby, the parties hereto agree as follows:
1. Definitions
As used in this Agreement, the following capitalized terms shall have the
following meanings:
"Affiliate" has the meaning set forth in Rule 12b-2 of the Rules
promulgated under the Exchange Act.
"CMP Registrable Securities" means (i) any shares of Common Stock issued or
issuable to CMP or its affiliates upon exercise of the CMP Warrants or otherwise
on or after the date hereof, and (ii) any shares of capital stock of the Company
issued or issuable with respect to the securities referred to in clause (i)
above by way of a stock dividend or stock split or in connection with a
combination of shares, recapitalization, merger, consolidation or other
reorganization. For purposes of this Agreement, a Person will be deemed to be a
holder of CMP Registrable Securities whenever such Person has the right to
acquire directly or indirectly such CMP Registrable Securities (upon conversion
or exercise in connection with a transfer of securities or otherwise, but
disregarding any restrictions or limitations upon the exercise of such right),
whether or not such acquisition has actually been effected, provided, however,
that each such share of Common Stock shall cease to be a CMP Registrable
Security when (i) it has been effectively registered under the Securities Act
and disposed of in accordance with the Registration Statement covering it; (ii)
it is distributed to the public pursuant to Rule 144 (or any similar provisions
then in force) under the Securities Act; or (iii) it has otherwise been
transferred and a new certificate or other evidence of ownership for it not
<PAGE>
bearing or requiring a legend as set forth in Section 4.2 of the Stockholders'
Agreement (or other legend of similar import) and not subject to any stop
transfer order has been delivered by or on behalf of the Company and no other
restriction on transfer exists under the Securities Act.
"CMP Warrants" means the stock purchase warrants (together with all
warrants issued in substitution or replacement therefor) issued to CMP to
purchase Common Stock, pursuant to a Warrant Agreement, dated as of the date
hereof, by and between the Company and CMP (as amended, restated or modified
from time to time).
"Commission" means the Securities and Exchange Commission.
"Common Stock" means the Class A Common Stock, par value $.01 per share, of
the Company and any capital stock of the Company issued or issuable with respect
to such common stock by way of or in connection with any stock dividend or
distribution payable thereon or stock split, reverse stock split,
recapitalization, reclassification, reorganization, exchange, subdivision or
combination thereof.
"Company Registrable Securities" has the meaning set forth in Section 4(b)
of this Agreement.
"Damages" has the meaning set forth in Section 5(a) of this Agreement.
"Demand Registration" and "Demand Registration Requests" have the meanings
set forth in Section 3(a) of this Agreement.
"Exchange Act" means the Securities Exchange Act of 1934, as amended from
time to time.
"Incidental Registration" has the meaning set forth in Section 2(a) of this
Agreement.
"Inspector" and "Inspectors" have the meanings set forth in Section 4(j) of
this Agreement.
"Other Registrable Securities" means (i) any shares of Common Stock issued
or issuable to or otherwise acquired by Harris or the Management Investors on or
after the date hereof and (ii) any shares of capital stock of the Company issued
or issuable with respect to the securities referred to in clause (i) above by
way of a stock dividend or stock split or in connection with a combination of
shares, recapitalization, merger, consolidation or other reorganization,
provided, however, that Incentive Shares (as defined in the Stockholders'
Agreement) of Common Stock issued to Management Investors (and any shares of
capital stock of the Company issued or issuable with respect to such Incentive
Shares by way of a stock dividend or stock split or in connection with a
combination of shares, recapitalization, merger, consolidation or other
reorganization) shall be deemed to be Other Registrable Securities only to the
extent that such shares are subject to the Company's Purchase Option (as defined
in the Stockholders' Agreement) at the Adjusted Book Value Price (as defined in
the Stockholders' Agreement). For purposes of this Agreement, a Person will be
deemed to be a holder of Other Registrable Securities whenever such Person has
2
<PAGE>
the right to acquire, directly or indirectly, such Other Registrable Securities
(upon conversion or exercise in connection with a transfer of securities or
otherwise, but disregarding any restrictions or limitations upon the exercise of
such right), whether or not such acquisition has actually been effected, but in
the case of Registrable Securities subject to vesting, only to the extent that
such Person's right to acquire such Registrable Securities has vested and
provided, further, that each Other Registrable Security shall cease to be an
Other Registrable Security when (i) it has been effectively registered under the
Securities Act and disposed of in accordance with the Registration Statement
covering it; (ii) it is distributed to the public pursuant to Rule 144 (or any
similar provisions then in force) under the Securities Act; or (iii) it has
otherwise been transferred and a new certificate or other evidence of ownership
for it not bearing or requiring a legend as set forth in Section 4.2 of the
Stockholders' Agreement (or other legend of similar import) and not subject to
any stop transfer order has been delivered by or on behalf of the Company and no
other restriction on transfer exists under the Securities Act.
"Person" means an individual, partnership, limited liability company,
corporation, trust or unincorporated organization, or a government or agency or
political subdivision thereof.
"Prospectus" means the prospectus included in any Registration
Statement, as amended or supplemented by any prospectus supplement with respect
to the terms of the offering of any portion of the Registrable Securities
covered by such Registration Statement and all other amendments and supplements
to such prospectus, including post-effective amendments, and all material
incorporated by reference in such prospectus.
"Qualified Public Offering" means the sale, in an underwritten public
offering registered under the Securities Act, of shares of the Company's Common
Stock having an aggregate value (based upon the offering price of such offering)
of at least $20 million.
"Records" has the meaning set forth in Section 4(j) of this Agreement.
"Registration Expenses" means the costs and expenses of all registrations
and qualifications under the Securities Act, and of all other actions the
Company is required to take in order to effect the registration of Registrable
Securities under the Securities Act pursuant to this Agreement (including all
federal and state registration and filing fees, printing expenses, fees and
disbursements of counsel for the Company and the fees and expenses of the
Company's independent public accountants (including the expenses of any special
audit and "cold comfort" letters required by or incident to such registration))
other than the costs and expenses of any Investors whose Registrable Securities
are to be registered pursuant to this Agreement comprising underwriters'
commissions, brokerage fees, transfer taxes or the fees and expenses of any
accountants or other representatives retained by any Investor.
"Registration Statement" means any registration statement of the Company
which covers any of the Registrable Securities pursuant to the provisions of
this Agreement, including the Prospectus, amendments and supplements to such
registration statement, including post-effective amendments, all exhibits and
all material incorporated by reference in such registration statement.
"Registrable Securities" means the Sterling Registrable Securities, CMP
Registrable Securities, or the Other Registrable Securities.
3
<PAGE>
"Securities Act" means the Securities Act of 1933, as amended from time to
time.
"Sterling Registrable Securities" means (i) any shares of Common Stock
issued or issuable to or otherwise acquired by Sterling on or after the date
hereof and (ii) any shares of capital stock of the Company issued or issuable
with respect to the securities referred to in clause (i) above by way of a stock
dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization. For purposes of
this Agreement, a Person will be deemed to be a holder of Sterling Registrable
Securities whenever such Person has the right to acquire, directly or
indirectly, such Sterling Registrable Securities (upon conversion or exercise in
connection with a transfer of securities or otherwise, but disregarding any
restrictions or limitations upon the exercise of such right), whether or not
such acquisition has actually been effected, provided, however, that each such
share of Common Stock shall cease to be a Sterling Registrable Security when (i)
it has been effectively registered under the Securities Act and disposed of in
accordance with the Registration Statement covering it; (ii) it is distributed
to the public pursuant to Rule 144 (or any similar provisions then in force)
under the Securities Act; or (iii) it has otherwise been transferred and a new
certificate or other evidence of ownership for it not bearing or requiring a
legend as set forth in Section 4.2 of the Stockholders' Agreement (or other
legend of similar import) and not subject to any stop transfer order has been
delivered by or on behalf of the Company and no other restriction on transfer
exists under the Securities Act.
"Stockholders' Agreement" means the Securities Purchase and Holders
Agreement dated as of the date hereof by and among the Company, CMP, Sterling
and the Management Investors and other Persons party thereto from time to time.
"Special Registration Statement" means (i) a registration statement on
Forms S-8 or S-4 or any similar or successor form or any other registration
statement relating to an exchange offer or an offering of securities solely to
the Company's employees or security holders or (ii) a registration statement
registering a Unit Offering.
"Unit Offering" means a public offering of a combination of debt and equity
securities of the Company in which (i) not more than 20% of the gross proceeds
received from the sale of such securities is attributed to such equity
securities, and (ii) after giving effect to such offering, the Company does not
have a class of equity securities required to be registered under the Exchange
Act.
"underwritten registration or "underwritten offering" means a registration
in which securities of the Company are sold to an underwriter for reoffering to
the public.
2. Incidental Registration.
(a) Right to Include Common Stock. If the Company at any time proposes to
register any of its Common Stock under the Securities Act (other than on a
Special Registration Statement), whether or not for sale for its own account,
the Company will give written notice at least 30 days prior to the anticipated
effective date of the registration statement filed or to be filed in connection
with such registration to all holders of Registrable Securities of its intention
to issue its Common Stock under the Securities Act and of such holders' rights
under this Section 2. Upon the written request of any such holders of
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Registrable Securities made within 15 days of the date of the foregoing notice
from the Company (which request shall specify the aggregate number of the
Registrable Securities to be registered and will also specify the intended
method of disposition thereof), the Company will effect the registration under
the Securities Act of all Registrable Securities which the Company has been so
requested to register by the holders thereof (an "Incidental Registration"), to
the extent required to permit the public disposition (in accordance with such
intended methods thereof) of the Registrable Securities to be so registered;
provided that (i) if, any time after giving written notice of its intention to
register shares of Common Stock and prior to the effective date of the
Registration Statement filed in connection with such registration, the Company
shall determine for any reason not to register the Common Stock, the Company
shall give written notice of such determination to each holder of Registrable
Securities and, thereupon, shall be relieved of its obligation to register any
Registrable Securities in connection with such registration (but not from its
obligation to pay the Registration Expenses in connection therewith); (ii) if a
registration requested pursuant to this Section 2 shall involve an underwritten
public offering, any holder of Registrable Securities requesting to be included
in such registration may elect, in writing at least 25 days prior to the
effective date of the Registration Statement filed in connection with such
registration, not to register such securities in connection with such
registration; and (iii) if, at any time after the 180-day or shorter period
specified in Section 2(b), the sale of the securities has not been completed,
the Company may withdraw from the registration on a pro rata basis (based on the
number of Registrable Securities requested by each holder of Registrable
Securities to be so registered) the Registrable Securities which the Company has
been requested to register and which have not been sold.
(b) Priority in Incidental Registrations. If a registration pursuant to
Section 2(a) involves an underwritten offering and the managing underwriter
advises the Company in writing that, in its opinion, the total number of shares
of Common Stock to be included in such registration, including the Registrable
Securities requested to be included pursuant to this Section 2, exceeds the
maximum number of shares of Common Stock specified by the managing underwriter
that may be distributed without adversely affecting the price, timing or
distribution of such shares of Common Stock, then the Company shall include in
such registration only such maximum number of Registrable Securities which, in
the reasonable opinion of such underwriter or underwriters, can be sold in the
following order of priority: (i) first, all of the shares of Common Stock that
the Company proposes to sell for its own account, if any; (ii) second, all of
the shares of Common Stock being registered by holder(s) of Registrable
Securities pursuant to a Demand Registration; and (iii) third, the Registrable
Securities of the holder(s) of Registrable Securities requested to be included
in such Incidental Registration. To the extent that shares of Common Stock to be
included in the Incidental Registration must be allocated among the holders(s)
of Registrable Securities pursuant to clause (iii) above, such shares shall be
allocated pro rata among the holders(s) of Registrable Securities based on the
number of shares of Common Stock that such holders(s) of Registrable Securities
shall have requested to be included therein. Notwithstanding the foregoing, if
an Incidental Registration is an underwritten offering, the managing underwriter
or underwriters may select shares for inclusion, or exclude shares completely,
in such Incidental Registration on a basis other than a pro rata basis if, in
the reasonable opinion of such underwriter or underwriters, selection on such
other basis, or inclusion of such shares, would be material to the success of
the offering.
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(c) Selection of Underwriters. If any Incidental Registration is an
underwritten offering, the investment banker(s) and manager(s) for the offering
will be selected by the Company.
(d) Expenses. The Company will pay all Registration Expenses in connection
with any registration of Registrable Securities requested pursuant to this
Section 2.
(e) Liability for Delay. The Company shall not be held responsible for any
delay in the filing or processing of a Registration Statement which includes any
Registrable Securities due to requests by holders of Registrable Securities
pursuant to this Section 2 nor for any delay in requesting the effectiveness of
such Registration Statement.
(f) Participation in Underwritten Registrations. No holder of Registrable
Securities may participate in any underwritten registration hereunder unless
such holder (i) agrees to sell his or its Common Stock on the basis provided in
any underwriting arrangements approved by the persons who have selected the
underwriter and (ii) accurately completes in a timely manner and executes all
questionnaires, powers of attorney, indemnification agreements, underwriting
agreements and other documents customarily required under the terms of such
underwriting arrangements.
3. Demand Registration
(a) Right to Demand Registration. Subject to Section 3(b) below, (i) the
holders of a majority of Sterling Registrable Securities shall be entitled to
make written requests ("Demand Registration Requests") at any time and from time
to time and (ii) the holders of a majority of the CMP Registrable Securities
shall be entitled to make one Demand Registration Request at any time commencing
at the earlier of (A) the sixth anniversary of the date hereof or (B) the
expiration of 180 days after the Company has consummated a Qualified Public
Offering (or otherwise has a class of equity securities registered pursuant to
Section 12 of the Exchange Act), in each case to the Company for registration
with the Commission under and in accordance with the provisions of the
Securities Act (including, but not limited to, registrations under Rule 415
promulgated under the Securities Act) of all or part of the Sterling Registrable
Securities or CMP Registrable Securities, as the case may be, owned by them (a
"Demand Registration") (which Demand Registration Request shall specify the
intended number of Sterling Registrable Securities or CMP Registrable
Securities, as the case may be, to be disposed of by such holders, the
anticipated price range for such offering and the intended method of disposition
thereof); provided that (i) the Company may, if the Board of Directors so
determines in the exercise of its reasonable judgment, that due to a pending or
contemplated acquisition or disposition or public offering it would be
inadvisable to effect such Demand Registration at such time, defer such Demand
Registration for a single period not to exceed 180 days. Within 10 days after
receipt of the Demand Registration Request, the Company will serve written
notice of such Demand Registration Request to all holders of Registrable
Securities and, subject to paragraph (b) below, the Company will include in such
registration all Registrable Securities of such holders with respect to which
the Company has received written requests for inclusion therein from such
holders within 15 business days after duly given to the applicable holder of the
notice from the Company. All requests made pursuant to this paragraph 4(a) will
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specify the aggregate number of the Registrable Securities to be registered and
will also specify the intended methods of disposition thereof.
(b) Priority in Demand Registrations. The Company will not include in any
Demand Registration any securities (other than Company Registrable Securities)
which are not Registrable Securities without the prior written consent of at
least a majority of the Sterling Registrable Securities or CMP Registrable
Securities, as the case may be, included in such registration. If any of the
Registrable Securities proposed to be registered pursuant to a Demand
Registration are to be sold in a firm commitment underwritten offering and the
managing underwriter or underwriters of a Demand Registration advise the Company
and the holders of such Registrable Securities in writing that in its or their
reasonable opinion the number of shares of Common Stock proposed to be sold in
such Demand Registration exceeds the maximum number of shares specified by the
managing underwriter that may be distributed without adversely affecting the
price, timing or distribution of the Common Stock, the Company shall include in
such registration only such maximum number of Registrable Securities which, in
the reasonable opinion of such underwriter or underwriters can be sold in the
following order of priority: (i) first, the number of Sterling Registrable
Securities or CMP Registrable Securities, as the case may be, requested to be
included in such registration, pro rata if necessary; (ii) second, the number of
Company Registrable Securities requested to be included in such registration, if
any; (iii) third, all Other Registrable Securities requested to be included in
such registration, pro rata if necessary; (iv) fourth, all other securities
requested to be included in such registration pursuant to "demand registration"
rights granted to other Persons, provided that such rights will have been
granted only as permitted by this Agreement; and (v) fifth, shares of Common
Stock held by other holders requested to be included in such registration, pro
rata if necessary.
(c) Selection of Underwriters. In the case of a Demand Registration for an
underwritten offering, the holders of a majority of the Sterling Registrable
Securities or CMP Registrable Securities, as the case may be, to be included in
such Demand Registration will have the right to select the investment banker(s)
and manager(s) to administer the offering, which investment banker(s) and
manager(s) will be nationally recognized, subject to the Company's approval
which will not be unreasonably withheld.
(d) Expenses. The Company will pay all Registration Expenses in connection
with any registration of Registrable Securities requested pursuant to this
Section 3.
(e) Other Registration Rights. Except as provided in this Agreement, the
Company shall not grant to any Person the right to request the Company to
register any Common Stock under the Securities Act, or the right to participate
in any registration of Common Stock of the Company under the Securities Act,
without the prior written consent of the holders of a majority of Sterling
Registrable Securities and CMP Registrable Securities outstanding at the time of
such grant.
4. Registration Procedures. If and whenever the Company is required to
effect or cause the registration of any Registrable Securities under the
Securities Act as provided in this Agreement, the Company will, as expeditiously
as possible:
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(a) prepare and file with the Commission a Registration Statement with
respect to such Registrable Securities, and use its best efforts to cause such
Registration Statement to become effective, provided, that before filing any
Registration Statement the Company will furnish to the counsel selected by the
holders of a majority of the Registrable Securities covered by such Registration
Statement copies of all such documents proposed to be filed;
(b) in connection with any Demand Registration, if requested by the party
requesting such Demand Registration, use its best efforts to cause to be
included in such registration, a primary offering by the Company of the
Company's shares of Common Stock having an aggregate value (based on the
midpoint of the proposed offering price range specified in the Registration
Statement used to offer such securities) of up to $20 million ("Company
Registrable Securities");
(c) prepare and file with the Commission such amendments and supplements to
such Registration Statement and the Prospectus used in connection therewith as
may be necessary to keep such Registration Statement effective for a period of
not less than 180 days or such shorter period which will terminate when all
Registrable Securities covered by such Registration Statement have been sold
(but not before the expiration of the applicable period referred to in Section
4(3) of the Securities Act and Rule 174 promulgated thereunder, if applicable)
and comply with the provisions of the Securities Act with respect to the
disposition of all securities covered by such Registration Statement during such
period in accordance with the intended methods of disposition by the seller or
sellers thereof set forth in such Registration Statement;
(d) furnish to each seller of such Registrable Securities such number of
copies of such Registration Statement and of each such amendment and supplement
thereof (in each case including all exhibits), such number of copies of the
Prospectus included in such Registration Statement (including each preliminary
Prospectus and summary Prospectus), in conformity with the requirements of the
Securities Act, and such other documents as such seller may reasonably request
in order to facilitate the disposition of the Registrable Securities by such
seller;
(e) use its best efforts to register or qualify such Registrable Securities
covered by such Registration Statement under such other securities or Blue Sky
laws of such jurisdictions as each seller shall request, and do any and all
other acts and things which may be necessary or advisable to enable such seller
to consummate the disposition in such jurisdictions of the Registrable
Securities owned by such seller; provided, however, that the Company shall not
be required to qualify generally to do business in any jurisdiction where it is
not then so qualified or to take any action which would subject it to general
service of process in any such jurisdiction where it is not then so subject or
subject itself to general taxation in any jurisdiction where it is not then so
subject;
(f) immediately notify each seller of any Registrable Securities covered by
such Registration Statement, at any time when a Prospectus relating thereto is
required to be delivered under the Securities Act within the appropriate period
mentioned in clause (c) of this Section 4, of the Company becoming aware that
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the Prospectus included in such Registration Statement, as then in effect,
includes an untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading in the light of the circumstances then existing, and within ten
days prepare and furnish to all sellers a reasonable number of copies of an
amended or supplemental Prospectus as may be necessary so that, as thereafter
delivered to the purchasers of such Registrable Securities, such Prospectus
shall not include an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances then existing;
(g) cause all such Registrable Securities to be listed on each securities
exchange on which similar securities issued by the Company are then listed and,
if not so listed, to be listed on the Nasdaq National Market of The Nasdaq Stock
Market, Inc. ("Nasdaq"), and arrange for at least two market makers to register
as such with respect to the Registrable Securities with the National Association
of Securities Dealers, Inc.
(h) provide an independent transfer agent and registrar for such
Registrable Securities covered by such Registration Statement not later than the
effective date of such Registration Statement;
(i) furnish to each seller of Registrable Securities covered by such
Registration Statement an original, manually signed copy, addressed to such
seller (and the underwriters, if any) of:
(i) an opinion of counsel for the Company, dated the effective date of
such Registration Statement (or, if such registration involves an
underwritten public offering, dated the date of the closing under the
underwriting agreement), reasonably satisfactory in form and substance
to the sellers of not less than 50% of such Registrable Securities
(and the managing underwriter, if any); and
(ii) a "comfort letter," dated the effective date of such Registration
Statement (or, if such registration involves an underwritten public
offering, dated the date of the closing under the underwriting
agreement), signed by the independent public accountants who have
certified the Company's financial statements included in such
Registration Statement, covering such matters with respect to such
Registration Statement as are customarily covered in accountants'
letters delivered to the underwriters in underwritten offerings of
securities as may reasonably be requested by the sellers of not less
than 50% of such Registrable Securities (and the managing underwriter,
if any);
(j) make available for inspection by any seller of such Registrable
Securities covered by such Registration Statement, by any underwriter
participating in any disposition to be effected pursuant to such Registration
Statement and by any attorney, accountant or other agent retained by any such
seller or any such underwriter (any of the foregoing persons, including such
seller, individually an "Inspector" and collectively the "Inspectors"), all
pertinent financial and other records, pertinent corporate documents and
properties of the Company as shall be reasonably requested by an Inspector
(collectively, the "Records"), and cause all of the Company's officers,
directors and employees to supply all information reasonably requested by any
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Inspector in connection with such Registration Statement; provided that any
Records that are designated by the Company in writing as confidential shall be
kept confidential by the Inspectors unless (A) the disclosure of such Records is
necessary to avoid or correct a misstatement or omission in such Registration
Statement or (B) the release of such Records is ordered pursuant to a subpoena
or other order from a court of competent jurisdiction or by any regulatory
authority having jurisdiction. Each Investor agrees that non-public information
obtained by it as a result of such Inspections shall be deemed confidential and
acknowledges its obligations under the federal securities laws not to trade any
securities of the Company on the basis of material non-public information;
(k) enter into such customary agreements (including underwriting agreements
in customary form) and take all such other actions as the holders of a majority
of the Registrable Securities being sold or the underwriters, if any, reasonably
request in order to expedite or facilitate the disposition of such Registrable
Securities (including, without limitation, effecting a stock split or
combination of shares);
(l) otherwise use its best efforts to comply with all applicable rules and
regulations of the Commission, and make available to its security holders, as
soon as reasonably practicable, an earning statement covering the period of at
least 12 months beginning with the first day of the Company's first full
calendar quarter after the effective date of the Registration Statement, which
earning statement shall satisfy the provisions of Section 11(a) of the
Securities Act and Rule 158 promulgated thereunder;
(m) permit any holder of Registrable Securities which holder, in its sole
and exclusive judgment, might be deemed to be an underwriter or a controlling
person of the Company, to participate in the preparation of such registration or
comparable statement and to require the insertion therein of material, furnished
to the Company in writing, which in the reasonable judgment of such holder and
its counsel should be included;
(n) in the event of the issuance of any stop order suspending the
effectiveness of a registration statement, or of any order suspending of
preventingthe use of any related Prospectus or suspending the qualification of
any Common Stock included in such Registration Statement for sale in any
jurisdiction, the Company will use its reasonable best efforts promptly to
obtain the withdrawal of such order; and
(o) use its best efforts to cause such Registrable Securities covered by
such registration Statement to be registered or approved by such other
governmental agencies or authorities as may be necessary to enable the sellers
thereof to consummate the disposition of such Registrable Securities.
The Company may require each seller of Registrable Securities as to which
any registration is being effected promptly to furnish to the Company such
information regarding the distribution of such Registrable Securities as may be
legally required. Such information shall be furnished in writing and shall state
that it is being furnished for use in the Registration Statement.
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Each holder of Registrable Securities agrees by acquisition of such
Registrable Securities that, upon receipt of any notice from the Company of the
happening of any event of the kind described in clause (f) of this Section 4,
such holder will forthwith discontinue disposition of Registrable Securities
pursuant to the Registration Statement covering such Registrable Securities
until such holder's receipt of the copies of the supplemented or amended
Prospectus contemplated by clause (f) of this Section 4, and, if so directed by
the Company, such holder will deliver to the Company (at the Company's expense)
all copies, other than permanent file copies then in such holder's possession,
of the Prospectus covering such Registrable Securities current at the time of
receipt of the Company's notice. In the event the Company shall give any such
notice, the period mentioned in clause (c) of this Section 4 shall be extended
by the number of days during the period from and including the date of the
giving of such notice pursuant to clause (f) of this Section 4 up to and
including the date when each seller of Registrable Securities covered by such
Registration Statement shall have received the copies of the supplemented or
amended Prospectus contemplated by clause (f) of this Section 4.
If any Registration Statement or comparable statement
contemplated by this Agreement refers to any holder by name or otherwise as the
holder of any securities of the Company and if, in its sole and exclusive
judgment, such holder is or might be deemed to be a controlling person of the
Company, such holder shall have the right to require (i) the insertion therein
of language, in form and substance satisfactory to such holder and presented to
the Company in writing, to the effect that the holding by such holder of such
securities is not to be construed as a recommendation by such holder of the
investment quality of the Company's securities covered thereby and that such
holding does not imply that such holder will assist in meeting any future
financial requirements of the Company, or (ii) in the event that such reference
to such holder by name or otherwise is not required by the Securities Act or any
similar federal statute then in force, the deletion of the reference to such
holder, provided that with respect to this clause (ii) such holder shall furnish
to the Company an opinion of counsel to such effect which opinion and counsel
shall be reasonably satisfactory to the Company.
5. Indemnification.
(a) Indemnification by the Company. The Company hereby agrees to indemnify
and hold harmless each holder of Registrable Securities which shall have been
registered under the Securities Act, and such holder's officers, directors and
agents and each other Person, if any, who controls such holder within the
meaning of the Securities Act and each other Person (including underwriters) who
or which participates in the offering of such Registrable Securities against any
losses, claims, damages, liabilities, reasonable attorneys' fees, costs or
expenses (collectively, the "Damages"), joint or several, to which such holder
or controlling Person or participating Person may become subject under the
Securities Act or otherwise, insofar as such Damages (or proceedings in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact made by the Company or its agents contained in
any Registration Statement under which such Registrable Securities are
registered under the Securities Act, in any preliminary Prospectus or final
Prospectus contained therein, or in any amendment or supplement thereof, or
arise out of or are based upon the omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein not misleading, and will reimburse such holder of Registrable
Securities or such controlling Person or participating Person in connection with
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investigating or defending any such Damages or proceeding; provided, however,
that the Company will not be liable in any such case to the extent that any such
Damages arise out of or are based upon (i) an untrue statement or alleged untrue
statement or omission or alleged omission made in such Registration Statement,
said preliminary or final Prospectus or said amendment or supplement in reliance
upon and in conformity with written information furnished to the Company by such
holder or such controlling or participating Person, as the case may be,
specifically for use in the preparation thereof; or (ii) an untrue statement or
alleged untrue statement, omission or alleged omission in a Prospectus if such
untrue statement or alleged untrue statement, omission or alleged omission is
corrected in an amendment or supplement to the Prospectus which amendment or
supplement is delivered to such holder in a timely manner and such holder
thereafter fails to deliver such Prospectus as so amended or supplemented prior
to or concurrently with the sale of such Registrable Securities to the Person
asserting such Damages.
(b) Indemnification by the Holders of Registrable Securities Which Are
Registered. It shall be a condition of the Company's obligations under this
Agreement to effect any registration under the Securities Act that there shall
have been delivered to the Company an agreement or agreements duly executed by
each holder of Registrable Securities to be so registered, whereby such holder
agrees to indemnify and hold harmless the Company, its directors, officers and
agents and each other Person, if any, which controls the Company within the
meaning of the Securities Act against any Damages, joint or several, to which
the Company, or such other Person or such Person controlling the Company may
become subject under the Securities Act or otherwise, but only to the extent
that such Damages (or proceedings in respect thereof) arise out of or are based
upon any untrue statements or alleged untrue statement of any material fact
contained, on the effective date thereof, in any Registration Statement under
which such Registrable Securities are registered under the Securities Act, in
any preliminary Prospectus or final Prospectus contained therein or in any
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, which, in
each such case, has been made in or omitted from such Registration Statement,
said preliminary or final Prospectus or said amendment or supplement in reliance
upon, and in conformity with, written information furnished to the Company by
such holder of Registrable Securities specifically for use in the preparation
thereof. The Company shall be entitled to receive indemnities from underwriters,
selling brokers, dealer managers and similar securities industry professionals
participating in the distribution, to the same extent as provided above, with
respect to information furnished in writing by such Persons specifically for
inclusion in any Prospectus or Registration Statement.
(c) Conduct of Indemnification Proceedings. Any Person entitled to
indemnification hereunder shall (i) give prompt written notice to the
indemnifying party of the commencement of any action or proceeding involving a
claim referred to in the preceding paragraphs of this Section 5; and (ii) unless
the indemnified party has been advised by its counsel that a conflict of
interest exists between such indemnified and indemnifying parties under
applicable standards of professional responsibility, with respect to such claim,
permit such indemnifying party to assume the defense of such claim with counsel
reasonably satisfactory to the indemnified party. Whether or not such defense is
assumed by the indemnifying party, the indemnifying party will not be subject to
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any liability for any settlement made without its consent (but such consent will
not be unreasonably withheld). No indemnifying party will consent to the entry
of any judgment or enter into any settlement (i) that does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a release from all liability in respect of such claim or
litigation and (ii) except for judgments or settlements calling for the payment
of money only, without the consent of the indemnified party (which consent will
not be unreasonably withheld). An indemnifying party who is not entitled to, or
elects not to, assume the defense of the claim, will not be obligated to pay the
fees and expenses of more than one counsel for all parties indemnified by such
indemnifying party with respect to such claim, unless in the reasonable judgment
of any indemnified party a conflict of interest may exist between such
indemnified party and any other such indemnified parties with respect to such
claim, in which event the indemnifying party shall be obligated to pay the fees
and expenses of such additional counsel or counsels.
(d) Contribution. If for any reason the indemnification provided for in the
preceding Sections 6(a) or 6(b) is unavailable to an indemnified party in
respect of any Damages referred to therein, the indemnifying party shall
contribute to the amount paid or payable by the indemnified party as a result of
such Damages in such proportion as is appropriate to reflect not only the
relative benefits received by the indemnified party and the indemnifying party,
but also the relative fault of the indemnified party and the indemnifying party,
as well as any other relevant equitable considerations. The relative fault of
such indemnifying party and indemnified parties shall be determined by reference
to, among other things, whether any action in question, including any untrue or
alleged untrue statement of a material fact or omission or alleged omission to
state a material fact, has been made by, or relates to information supplied by,
such indemnifying party or indemnified parties, and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such action; provided, however, that in no event shall the liability of any
selling holder of Registrable Securities hereunder be greater in amount than the
difference between the dollar amount of the proceeds received by such holder
upon the sale of the Registrable Securities giving rise to such contribution
obligation and all amounts previously contributed by such holder with respect to
such Damages. No Person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any Person who was not guilty of fraudulent misrepresentation.
(e) The indemnification provided for under this Agreement will remain in
full force and effect regardless of any investigation made by or on behalf of
any indemnified party or any officer, director or controlling Person of such
indemnified party and will survive the transfer of securities. The Company also
agrees to make such provisions, as are reasonably requested by any indemnified
party, for contribution to such party in the event the Company's indemnification
is unavailable for any reason.
6. Hold-Back Agreements
(a) Restrictions on Public Sale by Holder of Registrable Securities. Each
holder of Registrable Securities whose Registrable Securities are eligible for
inclusion in a Registration Statement filed pursuant to Sections 3 or 4 agrees,
if requested by the managing underwriter or underwriters in an underwritten
offering of any Registrable Securities, not to effect any public sale or
distribution of Registrable Securities, including a sale pursuant to Rule 144
(or any similar provision then in force) under the Securities Act (except as
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part of such underwritten registration), during the 10-day period prior to, and
during the 180-day period (or such shorter period as may be agreed to by the
parties hereto) beginning on the effective date of such Registration Statement,
to the extent timely notified in writing by the Company or the managing
underwriter or underwriters, provided that this provision shall not apply to
employees of Sterling, 399 Venture Partners, Inc. or wholly owned subsidiaries
of Citicorp.
The foregoing provisions shall not apply to any holder of Registrable
Securities if such holder is prevented by applicable statute or regulation from
entering into any such agreement; provided, however, that any such holder shall
undertake, in its request to participate in any such underwritten offering, not
to effect any public sale or distribution of Registrable Securities (except as
part of such underwritten registration) during such period unless it has
provided 45 days prior written notice of such sale or distribution to the
managing underwriter or underwriter.
(b) No Inconsistent Agreements. The Company will not enter into any
Agreement which is inconsistent with or violate the rights granted to holders of
Registrable Securities in this Agreement.
(c) Restrictions on Public Sale by the Company and Others. The Company
shall (i) not effect any public sale or distribution of any of its Common Stock
for its own account during the 10-day period prior to, and during the 180-day
period beginning on, the effective date of a Registration Statement filed
pursuant to Sections 3 or 4 (except as part of a Special Registration
Statement), and (ii) use reasonable efforts to cause each holder of Common Stock
purchased from the Company at any time after the date of this Agreement (other
than in a registered public offering) to agree not to effect any public sale or
distribution of any such securities during such period, including a sale
pursuant to Rule 144 under the Securities Act (except as part of such
underwritten registration, if permitted).
7. Miscellaneous
(a) Amendment and Modification. This Agreement may be amended or modified,
or any provision hereof may be waived, provided that such amendment or waiver is
set forth in a writing executed by (i) the Company, (ii) Sterling (so long as
Sterling and its Affiliates own in the aggregate at least 15% of the outstanding
Common Stock on a fully diluted basis), (iii) the holders of a majority of the
CMP Registrable Securities, (iv) the holders of a majority of the outstanding
Common Stock on a fully diluted basis (including Shares owned by Sterling, CMP
and their respective Affiliates) held by the Investors, and (v) in the case of
any amendment which materially and adversely affects any Investor, such
Investor. No course of dealing between or among any persons having any interest
in this Agreement will be deemed effective to modify, amend or discharge any
part of this Agreement or any rights or obligations of any person under or by
reason of this Agreement.
(b) Survival of Representations and Warranties. All representations,
warranties, covenants and agreements set forth in this Agreement will survive
the execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby, regardless of any investigation made by an
Investor or on its behalf.
14
<PAGE>
(c) Successors and Assigns; Entire Agreement. This Agreement and all of the
provisions hereof shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns and executors,
administrators and heirs. In addition, whether or not any express assignment has
been made, the provisions of this Agreement which are for the benefit of
purchasers or holders of Registrable Securities are also for the benefit of, and
enforceable by, any subsequent holder of Registrable Securities. This Agreement
sets forth the entire agreement and understandings among the parties as to the
subject matter hereof and merges and supersedes all prior discussions and
understandings of any and every nature among them.
(d) Separability. In the event that any provision of this Agreement or the
application of any provision hereof is declared to be illegal, invalid or
otherwise unenforceable by a court of competent jurisdiction, the remainder of
this Agreement shall not be affected except to the extent necessary to delete
such illegal, invalid or unenforceable provision unless that provision held
invalid shall substantially impair the benefits of the remaining portions of
this Agreement.
(e) Notices. All notices provided for or permitted hereunder shall be made
in
writing by hand delivery, registered or certified first-class mail, telecopier
or air courier guaranteeing overnight delivery to the other party at the
following addresses (or at such other address as shall be given in writing by
any party to the others):
If to the Company to:
Intersil Holding Corporation
2401 Palm Bay Road Northeast
Palm Bay, FL 32905
Telecopy number: 407-729-5392
Attention: General Counsel
with required copies to:
Citicorp Venture Capital, Ltd.
399 Park Avenue
Sixth Floor
New York, New York 10043
Telecopy number: (212) 888-2940
Attention: Paul C. ("Chip") Schorr, IV
and
Dechert Price & Rhoads
4000 Bell Atlantic Tower
1717 Arch Street
Philadelphia, Pennsylvania 19103
Telecopy number: (215) 994-2222
Attention: G. Daniel O'Donnell
15
<PAGE>
If to Sterling to:
Sterling Holding Company, LLC
c/o Citicorp Venture Capital, Ltd.
399 Park Avenue
Sixth Floor
New York, New York 10043
Telecopy number: (212) 888-2940
Attention: Paul C. ("Chip") Schorr, IV
with a required copy to:
Dechert Price & Rhoads
4000 Bell Atlantic Tower
1717 Arch Street
Philadelphia, Pennsylvania 19103
Telecopy number: (215) 994-2222
Attention: G. Daniel O'Donnell, Esq.
If to Harris to:
Manatee Investment Corporation
1025 West NASA Boulevard
Melbourne, FL 32919
Attention: Ronald R. Spoehel
Telecopy number: (407) 727-9222
with a required copy to:
Squire, Sanders & Dempsey L.L.P.
1201 Pennsylvania Avenue, N.W.
P.O. Box 407
Washington, DC 20044-0407
Attention: James J. Maiwurm, Esq.
Telecopy number: (202) 626-6780
If to CMP to:
Citicorp Mezzanine Partners, L.P.
399 Park Avenue, 14th Floor
New York, NY 10043
Attention: Byron L. Knief
Telecopy No.: (212) 888-2940
with a required copy to:
16
<PAGE>
Kirkland & Ellis
153 East 53rd Street
New York, NY 10022-4675
Attention: Eunu Chun, Esq.
Telecopy No.: (212) 446-4900
If to the Management Investors or any of them, to their addresses as listed
in the books of the Company.
All such notices shall be deemed to have been duly given: when delivered by
hand, if personally delivered; five business days after being deposited in the
mail, postage prepaid, if mailed; when receipt acknowledged, if telecopied; and
on the next business day, if timely delivered to an air courier guaranteeing
overnight delivery.
(f) Governing Law. The validity, performance, construction and effect of
this Agreement shall be governed by and construed in accordance with the
internal law of Delaware, without giving effect to principles of conflicts of
law.
(g) Waiver of Jury Trial. Each of the parties to this Agreement waives, to
the fullest extent permitted by law, any right to trial by jury of any claim,
demand, action or cause of action (i) arising under this Agreement or (ii) in
any way connected with or related or incidental to the dealings of the parties
hereto in respect of this Agreement or any of the transactions related hereto,
in each case whether now existing or hereafter arising, and whether in contract,
tort, equity or otherwise. Each of the parties to this Agreement agrees and
consents that any such claim, demand, action or cause of action shall be decided
by court trial without a jury and that the parties to this Agreement may file an
original counterpart of a copy of this Agreement with any court as written
evidence of the consent of the parties hereto to the waiver of the right to
trial by jury.
(h) Headings. The headings in this Agreement are for convenience of
reference only and shall not constitute a part of this Agreement, nor shall they
affect their meaning, construction or effect.
(i) Counterparts. This Agreement may be executed in two or more
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original, and all of which taken
together shall constitute one and the same instrument.
(j) Further Assurances. Each party shall cooperate and take such action as
may be reasonably requested by another party in order to carry out the
provisions and purposes of this Agreement and the transactions contemplated
hereby.
(k) Termination. Unless sooner terminated in accordance with its terms,
this Agreement shall terminate ten years after the date of this Agreement and
any additional period permitted by law, provided that the indemnification rights
and obligations set forth in Section 5 hereof shall survive the termination of
this Agreement.
17
<PAGE>
(l) Remedies. In the event of a breach or a threatened breach by any party
to this Agreement of its obligations under this Agreement, any party injured or
to be injured by such breach, in addition to being entitled to exercise all
rights granted by law, including recovery of damages, will be entitled to
specific performance of its rights under this Agreement, it being agreed by the
parties that the remedy at law, including monetary damages, for breach of such
provision will be inadequate compensation for any loss and that any defense in
any action for specific performance that a remedy at law would be adequate is
waived.
(m) Party No Longer Owning Registrable Securities. If a party hereto ceases
to own any Registrable Securities, such party will no longer be deemed to be an
Investor for purposes of this Agreement; provided that the indemnification
rights and obligations set forth in Section 5 hereof shall survive any such
cessation of ownership.
(n) Pronouns. Whenever the context may require, any pronouns used herein
shall be deemed also to include the corresponding neuter, masculine or feminine
forms.
(o) No Effect on Employment. Nothing herein contained shall confer on any
Investor the right to remain in the employ of the Company or any of its
subsidiaries or Affiliates.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Registration
Rights Agreement as of the day and year first above written.
INTERSIL HOLDING CORPORATION
By: /s/ Daniel J. Heneghan
----------------------------
Daniel J. Heneghan
Vice President
STERLING HOLDING COMPANY LLC
CITICORP VENTURE CAPITAL LTD.
By: /s/ James A. Urry
----------------------------
James A. Urry
Vice President
MANATEE INVESTMENT CORPORATION
By: /s/ Ronald Spoehel
--------------------------------
Ronald Spoehel
Vice President
CITICORP MEZZANINE PARTNERS, L.P.
By: /s/ Byron L. Knief
----------------------------
Byron L. Knief
Title:
S-1
<PAGE>
/s/ Lawrence J. Ciaccia
-----------------------
Lawrence J. Ciaccia
Social Security Number: ###-##-####
Residence Address: 200 Naylor St. NE
Palm Bay, FL 32907
Residence Telephone: (407) 725-9779
Business Address: 2401 Palm Bay Road NE
Palm Bay, FL 32905
Business Telephone: (407) 729-5728
/s/ Raymond T. Ford
-----------------------
Raymond T. Ford
Social Security Number: ###-##-####
Residence Address: 45 Shady Tree Dr.
Mountaintop, PA 18707
Residence Telephone: (570) 474-9246
Business Address: 2401 Palm Bay Road NE
Palm Bay, FL 32905
Business Telephone: (570) 474-9246
/s/ Rick Furtney
-----------------------
Rick Furtney
Social Security Number: ###-##-####
Residence Address: 157 Dickinson St. NE
Palm Bay, FL 32907
Residence Telephone: (407) 676-0934
Business Address: 2401 Palm Bay Road NE
Palm Bay, FL 32905
Business Telephone: (407) 729-5861
S-2
<PAGE>
/s/ George Gidzinski
-----------------------
George Gidzinski
Social Security Number: ###-##-####
Residence Address: 1020 Pellam Ave. NE
Palm Bay, FL 32907
Residence Telephone: (407) 729-9372
Business Address: 2401 Palm Bay Road NE
Palm Bay, FL 32905
Business Telephone: (407) 729-4906
/s/ Daniel J. Heneghan
-----------------------
Daniel J. Heneghan
Social Security Number: ###-##-####
Residence Address: 730 Ridgemoor Place
Melbourne, FL 32940
Residence Telephone: (407) 242-7151
Business Address: 2401 Palm Bay Road NE
Palm Bay, FL 32905
Business Telephone: (407) 729-4688
/s/ Jeffrey G. Mansmann
-----------------------
Jeffrey G. Mansmann
Social Security Number: ###-##-####
Residence Address: 2512 Saddlebridge Dr.
Raleigh, NC 27615
Residence Telephone: (919) 847-7553
Business Address: 2401 Palm Bay Road NE
Palm Bay, FL 32905
Business Telephone: (919) 405-3615
S-3
<PAGE>
/s/ Karl McCalley
-----------------------
Karl McCalley
Social Security Number: ###-##-####
Residence Address: 125 Lansing Island Drive
Indian Harbour Beach, FL 32937
Residence Telephone: (407) 777-2111
Business Address: 2401 Palm Bay Road NE
Palm Bay, FL 32905
Business Telephone: (407) 724-7386
/s/ W. Russell Morcom
-----------------------
W. Russell Morcom
Social Security Number: ###-##-####
Residence Address: 339 Coral Way West
Indialantic, FL 32903
Residence Telephone: (407) 777-6219
Business Address: 2401 Palm Bay Road NE
Palm Bay, FL 32905
Business Telephone: (407) 729-4604
/s/ Raymond D. Odom
-----------------------
Raymond D. Odom
Social Security Number: ###-##-####
Residence Address: 853 Champions Drive NE
Residence Telephone: (407) 723-3958
Business Address: 2401 Palm Bay Road NE
Palm Bay, FL 32905
Business Telephone: (407) 724-7307
S-4
<PAGE>
/s/ Larry Sims
-----------------------
Larry Sims
Social Security Number: ###-##-####
Residence Address: 1810 Long Iron Dr., Apt. 327
Rockledge, FL 32955
Residence Telephone: (407) 632-9340
Business Address: 2401 Palm Bay Road NE
Palm Bay, FL 32905
Business Telephone: (407) 729-5638
/s/ CB The
-----------------------
CB Teh
Social Security Number: Malaysian citizen - no US SSN
Residence Address: No. 1, Lorong Pimping,
Ukay Heights
68000 Ampang
Selangor, Malaysia
Residence Telephone: 911-603-451-8223
Business Address: 2401 Palm Bay Road NE
Palm Bay, FL 32905
Business Telephone: 011-603-456-2585
/s/ Stephen Titus
-----------------------
Stephen Titus
Social Security Number: ###-##-####
Residence Address: 1305 Golf Vista Ct. NE
Palm Bay, FL 32905
Residence Telephone: (407) 676-0193
Business Address: 2401 Palm Bay Road NE
Palm Bay, FL 32905
Business Telephone: (407) 724-7912
S-5
<PAGE>
/s/ Gregory L. Williams
-----------------------
Gregory L. Williams
Social Security Number: ###-##-####
Residence Address: 686 Deerhurst Drive
Melbourne, FL 32940
Residence Telephone: (407) 253-3069
Business Address: 2401 Palm Bay Road NE
Palm Bay, FL 32905
Business Telephone: (407) 729-5756
S-6
<PAGE>
/s/ Michael W. Althar
-----------------------
Michael W. Althar
Social Security Number: ###-##-####
Residence Address: 3219 Pepper Pike
Findlay, OH 45840
Residence Telephone: (419) 425-1532
Business Address: 2401 Palm Bay Road NE
Palm Bay, FL 32905
Business Telephone: (419) 425-8118
S-7
EXHIBIT 10.09
SECURITIES PURCHASE AND HOLDERS AGREEMENT
by and among
INTERSIL HOLDING CORPORATION,
STERLING HOLDING COMPANY, LLC,
MANATEE INVESTMENT CORPORATION
CITICORP MEZZANINE PARTNERS, L.P.,
Intersil Prism, LLC,
William N. Stout
and
Management Investors
August 13, 1999
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I. DEFINITIONS.........................................................2
ARTICLE II. PURCHASE OF SECURITIES.............................................6
2.1 Purchase of Securities............................................6
2.2 Closing...........................................................7
2.3 Conditions to Investor's Obligations..............................7
2.4 Conditions to the Company's Obligations...........................7
2.5 Application of Prism LLC..........................................8
ARTICLE III. REPRESENTATION AND WARRANTIES OF THE COMPANY AND PRISM LLC........8
3.1 Representations and Warranties of the Company.....................8
3.2 Representations and Warranties of Prism LLC.......................9
ARTICLE IV. REPRESENTATIONS, WARRANTIES AND COVENANTS OF EACH INVESTOR.........9
4.1 Representations, Warranties and Covenants of Each Investor........9
4.2 Legends..........................................................10
4.3 Management Investor Representations and Warranties...............11
4.4 Restrictions on Transfers of Securities..........................11
4.5 Notation.........................................................13
4.6 Limitation on Repurchase of Company Stock........................13
4.7 Reliance.........................................................13
4.8 Subsequent Management Investors.................................13
4.9 Application to Prism LLC.........................................14
ARTICLE V. OTHER COVENANTS AND REPRESENTATIONS................................14
5.1 Observers' Rights................................................14
5.2 Financial Statements and Other Information.......................15
5.3 Regulatory Compliance Cooperation................................15
5.4 Small Business Administration Forms..............................16
5.5 Sale of the Company..............................................16
5.6 Tag-Along Rights.................................................16
5.7 Preemptive Rights................................................18
5.8 Covenant Not To Compete..........................................19
5.9 Application to Prism LLC.........................................20
ARTICLE VI. CORPORATE ACTIONS.................................................20
6.1 Certificate of Incorporation and Bylaws..........................20
6.2 Directors and Voting Agreements..................................20
6.3 Right to Remove Sterling Directors...............................21
6.4 Right to Fill Certain Vacancies in Company's Board...............21
6.5 Directors of Company Subsidiaries................................21
6.6 Termination of Voting Agreements.................................21
i
<PAGE>
ARTICLE VII. ADDITIONAL RESTRICTIONS ON TRANSFER OF SECURITIES
HELD BY MANAGEMENT INVESTORS.....................................22
7.1 Restrictions on Transfer.........................................22
7.2 Purchase Option..................................................22
7.3 Company's Right of First Refusal.................................27
7.4 Involuntary Transfers............................................27
7.5 Lapse............................................................27
7.6 Proprietary Information..........................................28
7.7 Proceeds upon Sale of the Company................................29
7.8 EBITDA Target Adjustments........................................30
7.9 Application to Prism LLC.........................................31
ARTICLE VIII. REGISTRATION RIGHTS.............................................31
ARTICLE IX. MISCELLANEOUS.....................................................31
9.1 Purchaser Representative.........................................31
9.2 Section 83(b) Elections..........................................32
9.3 Amendment and Modification.......................................32
9.4 LLC Expenses.....................................................32
9.5 Survival of Representations and Warranties.......................33
9.6 Successors and Assigns; Entire Agreement.........................33
9.7 Separability.....................................................33
9.8 Notices..........................................................33
9.9 Governing Law....................................................36
9.10 Consent to Exclusive Jurisdiction...............................36
9.11 Waiver of Jury Trial............................................37
9.12 ACKNOWLEDGMENT OF MANAGEMENT INVESTORS..........................37
9.13 No Effect on Employment.........................................37
9.14 Headings........................................................37
9.15 Counterparts....................................................37
9.16 Further Assurances..............................................37
9.17 Termination.....................................................37
9.18 Remedies........................................................38
9.19 Party No Longer Owning Securities...............................38
9.20 Pronouns........................................................38
9.21 Application to Prism LLC........................................38
ii
<PAGE>
SECURITIES PURCHASE AND HOLDERS AGREEMENT
SECURITIES PURCHASE AND HOLDERS AGREEMENT, dated as of August 13,
1999 (the "Agreement"), by and among INTERSIL HOLDING CORPORATION, a Delaware
corporation formerly known as HSS Holding Corporation (the "Company"), STERLING
HOLDING COMPANY, LLC, a Delaware limited liability company ("Sterling"), MANATEE
INVESTMENT CORPORATION, a Delaware corporation ("Harris"), Intersil Prism, LLC,
a Delaware limited liability company ("Prism LLC"), Citicorp Mezzanine Partners,
L.P., a Delaware limited partnership ("CMP"), William N. Stout ("Stout"), the
individuals designated on Schedule I as Management Investors (the "Management
Investors") and individuals who join in this Agreement, as hereinafter provided,
as Management Investors. The Management Investors and individuals joining this
Agreement as Management Investors are sometimes referred to hereinafter
individually as a "Management Investor" and collectively as the "Management
Investors." Sterling, Harris, Prism LLC, Stout and the Management Investors are
sometimes referred to hereinafter individually as an "Investor" and collectively
as the "Investors."
Background
A. Harris, the Company and Intersil Corporation, a Delaware
corporation and a wholly-owned subsidiary of the Company formerly known as HSS
Operating Corporation ("Intersil") are parties to an Amended and Restated Master
Transaction Agreement dated June 2, 1999 (the "Master Agreement") pursuant to
which Harris is transferring certain assets and rights of the Business (as
defined in the Master Agreement), subject to certain liabilities, to the Company
and Intersil.
B. The authorized capital stock of the Company consists of shares of
(i) Class A Common Stock, par value $.01 per share ("Class A Common Stock"),
(ii) Class B Common Stock, par value $.01 per share ("Class B Common Stock" and,
collectively with the Class A Common Stock, the "Common Stock"), and (iii) 12%
Series A Cumulative Compounding Preferred Stock, par value $.01 per share
("Series A Preferred Stock"). The Company desires to sell, and each of the
Investors desires to purchase, the number of shares of Class A Common Stock,
Class B Common Stock and Series A Preferred Stock set forth opposite their
respective names on Schedule II. In addition, the Company will issue options to
purchase shares of Series A Preferred Stock to certain Management Investors (the
"Preferred Options"). The Common Stock, the Preferred Options and the Series A
Preferred Stock (including the Shares issuable upon exercise of the Preferred
Options) may hereinafter be referred to collectively as the "Shares."
C. Prism LLC desires to sell and each of the Investors desires to
purchase, the number of membership units of Prism LLC ("Membership Units") set
forth opposite their respective names on Schedule II.
D. CMP has received stock purchase warrants (together with all
warrants issued in substitution or replacement therefor, the "CMP Warrants") to
purchase Class A Common Stock,
<PAGE>
pursuant to a Warrant Agreement, dated as of the date hereof, by and between the
Company and CMP (as amended, restated or modified from time to time, the
"Warrant Agreement").
E. The Management Investors will be employed by or will otherwise
render valuable services to the Company and/or Intersil, directly or indirectly.
The Board of Directors of the Company wishes to grant the opportunity to the
Management Investors to make an investment in the Company, and thereby to
acquire an increased personal and proprietary interest in the Company's success
and progress through the purchase of Shares pursuant to this Agreement.
F. As used herein, the term "Securities" shall mean the Shares held
by any party hereto, including the Preferred Options and including all shares of
Common Stock (including any Incentive Shares) and all other securities of the
Company (or a successor to the Company) received on account of ownership of
Shares, including all securities issued in connection with any merger,
consolidation, stock dividend, stock distribution, stock split, reverse stock
split, stock combination, recapitalization, reclassification, subdivision,
conversion or similar transaction in respect thereof.
G.The Investors and the Company wish to set forth certain agreements
regarding their future relationships and their rights and obligations with
respect to the Securities and the Membership Units.
Terms
In consideration of the mutual covenants contained herein and
intending to be legally bound hereby, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1. As used in this Agreement, the following capitalized terms shall have the
following meanings:
"Acquired Business" has the meaning set forth in Section 7.8 of this
Agreement.
"Acquired Business EBITDA" has the meaning set forth in Section 7.8
of this Agreement.
"Acquiring Entity" has the meaning set forth in Section 5.5(a) of
this Agreement.
"Acquisition" has the meaning set forth in Section 7.8 of this
Agreement.
"Adjusted Cost Price" has the meaning set forth in Section
7.2(a)(ii)(C)(1) of this Agreement.
"Affiliate" has the meaning set forth in Rule 12b-2 of the Rules
promulgated under the Exchange Act.
2
<PAGE>
"Agreement" has the meaning set forth in the Preamble of this
Agreement.
"Approved Sale" has the meaning set forth in Section 5.5(a) of this
Agreement.
"Assurance of Compliance" has the meaning set forth in Section 5.4
of this Agreement.
"Called Shares" has the meaning set forth in Section 7.2(a)(iii) of
this Agreement.
"Cause," when used in connection with the termination of a
Management Investor's employment with the Company, means the Management
Investor's (i) act or acts of dishonesty, moral turpitude or criminality with
respect to his or her employment with the Company, (ii) continued failure to
perform such Management Investor's duties as an employee, as reasonably
determined by the Board of Directors of the Company acting in good faith, after
reasonable notice of such failure is given to such employee by the Board of
Directors of the Company, for a period of 30 days after such notice and
opportunity to cure such failure, or (iii) willful or deliberate violations of
such Management Investor's obligations to the Company that result in material
injury to the Company.
"Class A Common Stock" has the meaning set forth in Background
Section B of this Agreement.
"Class B Common Stock" has the meaning set forth in Background
Section B of this Agreement.
"Closing" has the meaning set forth in Section 2.2 of this
Agreement.
"CMP" has the meaning set forth in Preamble to this Agreement.
"CMP Warrants" has the meaning set forth in Background Section D to
this Agreement.
"Common Stock" has the meaning set forth in Background Section B of
this Agreement.
"Company" means Intersil Holding Corporation, a Delaware
corporation, except that when used in Article VII, "Company" means the Company
and all other entities of which the Company from time to time owns, directly or
indirectly, 50% or more of the stock or assets.
"CSFB Warrants" means the Warrants as defined in the Warrant
Agreement dated as of August 13, 1999 between the Company and United States
Trust Company of New York, as warrant agent.
"EBITDA Target in Effect" has the meaning set forth in Section 7.8
of this Agreement.
"Escrow Amount" has the meaning set forth in Section 5.6(d)(i) of
this Agreement.
3
<PAGE>
"Escrow Notice" has the meaning set forth in Section 5.6(d)(ii) of
this Agreement.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Fair Market Value Price" has the meaning set forth in Section
7.2(a)(ii)(C)(2) of this Agreement.
"Fair Market Value Price Percentage" has the meaning set forth in
Section 7.2(a)(iii)(B) of this Agreement.
"Harris" means Manatee Investment Corporation, a Delaware
corporation.
"Incentive Units" means the Membership Units owned by each
Management Investor designated as Incentive Units on Schedule I, and all other
securities of Prism LLC (or a successor to Prism LLC) received on account of
ownership of such Membership Units, including any and all incentive securities
issued in connection with any merger, consolidation, stock dividend, stock
distribution, stock split, reverse stock split, stock combination,
recapitalization, reclassification, subdivision, conversion or similar
transaction in respect thereof.
"Incentive Shares" means the shares of Class A Common Stock owned by
each Management Investor designated as Incentive Shares on Schedule I, and all
other securities of the Company (or a successor to the Company) received on
account of ownership of such shares, including any and all incentive securities
issued in connection with any merger, consolidation, stock dividend, stock
distribution, stock split, reverse stock split, stock combination,
recapitalization, reclassification, subdivision, conversion or similar
transaction in respect thereof.
"Intersil" has the meaning set forth in Background Section A of this
Agreement.
"Investor" and "Investors" have the meanings set forth in the
Preamble of this Agreement.
"Management Investor" and "Management Investors" have the meanings
set forth in the Preamble of this Agreement.
"Membership Units" has the meaning set forth in the Background
Section C of this Agreement.
"Observers" has the meaning set forth in Section 5.1 of this
Agreement.
"Option Purchase Price" has the meaning set forth in Section
7.2(a)(ii)(A) of this Agreement.
"Permitted Transferee" has the meaning set forth in Section 4.4(b)
of this Agreement.
"Person" means any individual, corporation, limited liability
company, partnership, firm, association, joint venture, joint stock company,
trust or other entity, or any government or regulatory administrative or
political subdivision or agency, department or instrumentality thereof.
4
<PAGE>
"Preemptive Notice" has the meaning set forth in Section 5.7(c) of
this Agreement.
"Preemptive Reply" has the meaning set forth in Section 5.7(c) of
this Agreement.
"Preferred Options" has the meaning set forth in Background Section
B of this Agreement.
"Prism LLC" has the meaning set forth in the Preamble of this
Agreement.
"Prism Option" has the meaning set forth in Section 4.1(f).
"Public Offering" means a successfully completed firm-commitment
underwritten public offering (other than a Unit Offering, as hereinafter
defined) pursuant to an effective registration statement under the Securities
Act in respect of the offer and sale of shares of Common Stock for the account
of the Company resulting in aggregate net proceeds to the Company and any
stockholder selling shares of Common Stock in such offering of not less than $30
million.
"Purchase Number" has the meaning set forth in Section 7.2(a)(ii) of
this Agreement.
"Purchase Option" has the meaning set forth in Section 7.2(a) of
this Agreement.
"Registration Rights Agreement" has the meaning set forth in Article
VIII of this Agreement.
"Regulatory Problem" has the meaning set forth in Section 5.3 of
this Agreement.
"Restricted Investor" has the meaning set forth in Section 4.4 of
this Agreement.
"Sale Notice" has the meaning set forth in Section 7.3 of this
Agreement.
"Sale of Company Escrow Amount" has the meaning set forth in Section
7.7 of this Agreement.
"Securities" has the meaning set forth in Background Section E of
this Agreement.
"Securities Act" means the Securities Act of 1933, as amended.
"Series A Preferred Stock" has the meaning set forth in Background
Section B of this Agreement.
"Shares" has the meaning set forth in Background Section B of this
Agreement.
"Significant Transfer" has the meaning set forth in Section 5.6(a)
of this Agreement.
"Size Status Declaration" has the meaning set forth in Section 5.4
of this Agreement.
"Small Debt-Financed Acquisition" has the meaning set forth in
Section 7.8 of this Agreement.
5
<PAGE>
"Sterling" means Sterling Holding Company, LLC, a Delaware limited
liability company.
"Stout" has the meaning set forth in the Preamble of this Agreement.
"Subsequent Offering" has the meaning set forth in Section
7.2(a)(iii)(A) of this Agreement.
"Subsidiary" means, as to any Person, any corporation more than 50%
of whose stock of any class or classes having by the terms thereof ordinary
voting power to elect a majority of the directors of such corporation
(irrespective of whether or not at the time stock of any class or classes of
such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time owned by such Person and/or one or
more Subsidiaries of such Person.
"Tag-Along Acceptance Notice" has the meaning set forth in Section
5.6(b) of this Agreement.
"Tag-Along Right" has the meaning set forth in Section 5.6(a) of
this Agreement.
"Tag-Along Rightholders" has the meaning set forth in Section 5.6(a)
of this Agreement.
"Tag-Along Sale Notice" has the meaning set forth in Section 5.6(b)
of this Agreement.
"Tag-Along Seller" has the meaning set forth in Section 5.6(b) of
this Agreement.
"Termination Date" has the meaning set forth in Section 7.2(a) of
this Agreement.
"Transfer" has the meaning set forth in Section 4.5(a) of this
Agreement.
"Transfer Date" has the meaning set forth in Section 7.4 of this
Agreement.
"Unit Offering" means an underwritten public offering of a
combination of debt securities and Common Stock (or warrants or exchange rights
to purchase Common Stock) of the Company in which not more than 15% of the gross
proceeds received for the sale of such securities is attributed to Common Stock.
"83(b) Election" has the meaning set forth in Section 9.2 of this
Agreement.
ARTICLE II
PURCHASE OF SECURITIES
2.1. Purchase of Securities. Subject to the terms and conditions set forth
herein, at the Closing the Company will issue and sell to each of the Investors,
and each of the Investors will purchase, such Investor's Securities at a
purchase price of $0.05 per share of Common Stock, $1,000 per share of Series A
Preferred Stock and Prism LLC will issue and sell to each of the Investors, and
each of
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the Investors will purchase, such Investor's Membership Units at a purchase
price of $0.01 per Membership Unit, all as set forth opposite such Investor's
name on Schedule II. In addition, the Company will issue Preferred Options to
those Investors, and exercisable for the number of shares of Series A Preferred
Stock, as set forth on Schedule III.
2.2. Closing. The closing of the purchase and sale of the Securities (the
"Closing") will take place on the date of the Closing under the Master Agreement
(the "Closing Date"). At the Closing, (i) the Company will deliver to each
Investor certificates evidencing the number of shares of Class A Common Stock,
Class B Common Stock and Series A Preferred Stock to be purchased by such
Investor, against payment of the purchase price therefor by wire transfer of
immediately available funds or by certified check, and (ii) Prism LLC, at its
option, may deliver to each Investor certificates to evidence the number of
Membership Units to be purchased by such Investor, against payment of the
purchase price therefor by wire transfer of immediately available funds or by
certified check.
2.3. Conditions to Investor's Obligations. The obligation of each Investor
to purchase such Investor's Securities at the Closing is subject to the
satisfaction on or prior to the Closing Date of the following conditions:
(a) The representations and warranties of the Company set forth in
Article III shall be true and correct in all material respects on and as of the
Closing Date as though then made, and all covenants of the Company required to
be performed on or prior to the Closing shall have been performed in all
material respects.
(b) The Company's Certificate of Incorporation and Bylaws shall be
substantially in the forms of Exhibits A and B, respectively.
(c) The Prism LLC Limited Liability Company Agreement shall be
substantially in the form of Exhibit C.
(d) The Company shall have delivered to each of the Investors
certificates for the Securities being purchased by such Investor.
(e) The conditions to the closing of the Master Agreement shall have
been satisfied or waived.
(f) All corporate and other proceedings, if any, taken or to be
taken by the Company in connection with the transactions contemplated hereby
shall have been taken.
2.4. Conditions to the Company's Obligations. The obligations of the
Company to sell the Securities to each Investor as set forth herein at the
Closing are subject to the satisfaction on or prior to the Closing of the
following conditions:
(a) The representations and warranties of each Investor set forth in
Article IV shall be true and correct in all material respects at and as of the
Closing Date as though then made, and all covenants of each Investor required to
be performed at or prior to the Closing shall have been performed in all
material respects.
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(b) The conditions to the closing of the Master Agreement shall have
been satisfied or waived.
(c) Such Investor shall have delivered the purchase price required
of such Investor pursuant to this Article II.
2.5. Application to Prism LLC. The provisions of Sections 2.3 through 2.4
(other than Section 2.3(b)) shall apply to Prism LLC as well as to the Company.
Such sections are hereby incorporated into this Section 2.5 with each reference
to the Company therein replaced with a reference to Prism LLC, each reference to
Securities, Common Stock or shares of Common Stock replaced with a reference to
Membership Units, each reference to Incentive Shares replaced with a reference
to Incentive Units and each reference to the Company's Board of Directors
replaced with Prism LLC's Board of Directors.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND PRISM LLC
3.1. Representations and Warranties of the Company. The Company represents and
warrants to each of the Investors as follows:
(a) The Company is a corporation validly existing and in good
standing under the laws of the State of Delaware.
(b) The Company has full corporate power and corporate authority to
make, execute, deliver and perform this Agreement and to carry out all of the
transactions provided for herein.
(c) The Company has taken such corporate action as is necessary or
appropriate to enable it to perform its obligations hereunder, and this
Agreement constitutes the legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms.
(d) The Shares are validly issued, fully paid and non-assessable.
(e) As of the Closing, the authorized capital stock of the Company
will consist of (i) 125,000,000 shares of Class A Common Stock, of which
22,974,612 will be issued and outstanding, (ii) 125,000,000 shares of Class B
Common Stock, of which 77,369,721.44 will be issued and outstanding and (iii)
2,000,000 shares of Preferred Stock, 1,000,000 of which are designated as shares
of Series A Preferred Stock, of which 83,434.13 will be issued and outstanding.
Except for the Preferred Options, the CMP Warrants, the CSFB Warrants and as
otherwise set forth herein, as of the Closing there will be no rights,
subscriptions, warrants, options, conversion rights or agreements of any kind
outstanding to purchase from the Company, or otherwise require the Company to
issue, any shares of capital stock of the Company or securities or obligations
of any kind convertible into or exchangeable for any shares of capital stock of
the Company; the Company will not be subject to any obligation (contingent or
otherwise) to repurchase or otherwise acquire or retire any shares of its
capital stock; and the Shares will constitute all of the outstanding shares of
the Company's capital stock.
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3.2. Representations and Warranties of Prism LLC. Prism LLC represents and
warrants to each of the Investors as follows:
(a) Prism LLC is a limited liability company validly existing and in
good standing under the laws of the State of Delaware.
(b) Prism LLC has full power and authority to make, execute, deliver
and perform this Agreement and to carry out all of the transactions provided for
herein.
(c) Prism LLC has taken such action as is necessary or appropriate
to enable it to perform its obligations hereunder, and this Agreement
constitutes the legal, valid and binding obligation of Prism LLC, enforceable
against Prism LLC in accordance with its terms.
(d) The Membership Units are validly issued, fully paid and
non-assessable.
(e) As of the Closing, 100,000,000 Membership Units will be issued
and outstanding. Except as otherwise set forth herein, as of the Closing there
will be no rights, subscriptions, warrants, options, conversion rights or
agreements of any kind outstanding to purchase from Prism LLC, or otherwise
require Prism LLC to issue, any shares of capital stock of Prism LLC or
securities or obligations of any kind convertible into or exchangeable for any
shares of capital stock of Prism LLC; Prism LLC will not be subject to any
obligation (contingent or otherwise) to repurchase or otherwise acquire or
retire any shares of its capital stock; and the Membership Units will constitute
all of the outstanding shares of Prism LLC's capital stock. Prism LLC intends to
issue a substantial amount of additional Membership Units in connection with the
exercise of the Prism Option (as defined below).
ARTICLE IV
REPRESENTATIONS, WARRANTIES AND
COVENANTS OF EACH INVESTOR
4.1. Representations, Warranties and Covenants of Each Investor. Each of the
Investors severally represents and warrants to, and covenants and agrees with,
the Company that:
(a) Such Investor has full legal right, power and authority
(including the due authorization by all necessary corporate action in the case
of corporate Investors) to enter into this Agreement and to perform such
Investor's obligations hereunder without the need for the consent of any other
Person; and this Agreement has been duly authorized, executed and delivered and
constitutes the legal, valid and binding obligation of such Investor enforceable
against such Investor in accordance with the terms hereof.
(b) The Securities are being purchased by such Investor for
investment and not with a view to any distribution thereof that would violate
the Securities Act, or the applicable securities laws of any state; and such
Investor will not distribute the Securities in violation of the Securities Act
or the applicable securities laws of any state.
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(c) Such Investor understands that the Securities have not been
registered under the Securities Act or the securities laws of any state and must
be held indefinitely unless subsequently registered under the Securities Act and
any applicable state securities laws or unless an exemption from such
registration becomes or is available.
(d) Such Investor is financially able to hold the Securities for
long-term investment, believes that the nature and amount of the Securities
being purchased are consistent with such Investor's overall investment program
and financial position, and recognizes that there are substantial risks involved
in the purchase of the Securities.
(e) Such Investor confirms that (i) such Investor is familiar with
the business of the Company, (ii) such Investor has had the opportunity to ask
questions of officers and directors of the Company and to obtain (and that such
Investor has received to its satisfaction) such information about the business
and financial condition of the Company as it or he has reasonably requested, and
(iii) such Investor, either alone or with such Investor's representative (as
defined in Rule 501(h) promulgated under the Securities Act), if any, has such
knowledge and experience in financial and business matters that such Investor is
capable of evaluating the merits and risks of the prospective investment in the
Securities.
(f) Such Investor acknowledges and understands that (i) Prism LLC's
only asset is an option to acquire the Prism chip set business of Intersil (the
"Prism Option"), (ii) if the Prism Option is not exercised, Prism LLC will have
no value, (iii) if the Prism Option is to be exercised, such Investor would be
required to invest significant additional funds in Prism LLC to fund the
exercise price under the Prism Option in order to avoid having such Investor's
interests in Prism LLC substantially diluted and (iv) consents of (A) the
holders of the 13.25% Senior Subordinated Notes Due 2009 of Intersil pursuant to
the Indenture governing such notes and (B) the lenders under the Credit
Agreement, dated as of the date hereof, among Intersil, the Company, the Lenders
named therein, Credit Suisse First Boston, Salomon Smith Barney Inc. and Morgan
Guaranty Trust Company of New York, are required for Prism LLC to exercise the
Prism Option.
4.2. Legends. (a) All Shares. All certificates representing Shares shall
bear the following legends in addition to any other legend required under
applicable law:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY
STATE AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR OTHERWISE DISPOSED OF
WITHOUT REGISTRATION UNDER THE SECURITIES ACT AND ANY APPLICABLE STATE
SECURITIES LAWS OR AN OPINION OF COUNSEL, SATISFACTORY TO THE COMPANY,
THAT SUCH REGISTRATION IS NOT REQUIRED.
THE EXPRESS TERMS OF THE SHARES REPRESENTED BY THIS CERTIFICATE AND OF THE
OTHER CLASSES AND SERIES OF SHARES WHICH THE COMPANY IS AUTHORIZED TO
ISSUE ARE CONTAINED IN THE COMPANY'S CERTIFICATE OF INCORPORATION, A COPY
OF WHICH WILL BE MAILED TO THE HOLDER HEREOF WITHOUT CHARGE
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WITHIN FIVE DAYS AFTER RECEIPT OF A WRITTEN REQUEST THEREFOR.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE ALSO SUBJECT TO THE
TERMS AND CONDITIONS OF A SECURITIES PURCHASE AND HOLDERS AGREEMENT BY AND
AMONG THE COMPANY AND THE HOLDERS SPECIFIED THEREIN, A COPY OF WHICH
AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICE OF THE COMPANY. THE SALE,
TRANSFER, ASSIGNMENT OR OTHER DISPOSITION OF THE SECURITIES IS SUBJECT TO
THE TERMS OF SUCH AGREEMENT AND THE SECURITIES ARE TRANSFERABLE ONLY UPON
PROOF OF COMPLIANCE THEREWITH.
(b) Incentive Shares. In addition to the legends required by Section
4.2(a) above, the following legend shall appear on certificates representing
Incentive Shares, provided, that the Company's failure to cause certificates
representing Incentive Shares to bear such legend shall not affect the Company's
Purchase Option described in Section 7.2:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE ALSO SUBJECT FOR A
PERIOD OF TIME TO A PURCHASE OPTION OF THE COMPANY APPLICABLE TO
"INCENTIVE SHARES" AS DESCRIBED IN THE SECURITIES PURCHASE AND HOLDERS
AGREEMENT BY AND AMONG THE COMPANY AND THE HOLDERS SPECIFIED THEREIN, A
COPY OF WHICH AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICE OF THE COMPANY.
4.3. Management Investor Representations and Warranties. Each Management
Investor severally represents and warrants to the Company that:
(a) such Management Investor has full legal right, power and
authority to perform such Management Investor's obligations hereunder without
the need for the consent of any other Person; and such obligations constitute
the legal, valid and binding obligation of such Management Investor in
accordance with the terms hereof;
(b) such Management Investor's residence, business address, business
and residence telephone numbers and social security number are as set forth
below such Management Investor's signature to this Agreement; and
(c) in formulating the decision to enter into this Agreement, such
Management Investor has relied solely upon an independent investigation of the
Company's business and upon consultations with such Management Investor's legal
and financial advisers with respect to this Agreement and the nature of such
Management Investor's investment; and that in entering into this Agreement no
reliance was placed upon any representations or warranties other than those
contained in this Agreement.
4.4. Restrictions on Transfers of Securities. The following restrictions
on Transfer shall apply to all Securities owned by any Restricted Investor. As
used herein, "Restricted Investor" shall mean CMP, any Investor or Permitted
Transferee except a Permitted Transferee by virtue of Section
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4.4(b)(iii) hereof and "Securities" shall include the CMP Warrant and any Shares
acquired upon exercise of the CMP Warrant:
(a) No Restricted Investor shall Transfer (other than in connection
with a redemption or purchase by the Company) any Securities unless (i) such
Transfer is to a Permitted Transferee or a Person approved in advance in writing
by the holders of at least 50% of the outstanding Common Stock then held by the
Investors (including shares held by the transferor) and (ii) such Transfer
complies with the provisions, if applicable, of Sections 5.5, 5.6 and 5.7, this
Section 4.4 and, in addition, in the case of Securities held by Management
Investors, the applicable provisions of Article VII of this Agreement. No
Restricted Investor may effect any Transfer of Shares unless the transferee
(other than a Permitted Transferee under Section 4.5(b)(iii)) executes an
agreement pursuant to which such transferee agrees to be bound by the terms and
provisions of this Agreement applicable to the transferor (except as otherwise
specifically provided herein). Any purported Transfer in violation of this
Agreement shall be null and void and of no force and effect and the purported
transferee shall have no rights or privileges in or with respect to the Company.
As used herein, "Transfer" means the making of any sale, exchange, assignment,
hypothecation, gift, security interest, pledge or other encumbrance, or any
contract therefor, any voting trust or other agreement or arrangement with
respect to the transfer of voting rights or any other beneficial interest in any
of the Securities, the creation of any other claim thereto or any other transfer
or disposition whatsoever, whether voluntary or involuntary, affecting the
right, title, interest or possession in or to such Securities.
Prior to any proposed Transfer of any Securities, the holder thereof
shall give written notice to the Company describing the manner and circumstances
of the proposed Transfer accompanied by a written opinion of legal counsel,
addressed to the Company and the transfer agent, if other than the Company, and
reasonably satisfactory in form and substance to each addressee, to the effect
that the proposed Transfer of the Securities may be effected without
registration under the Securities Act and applicable state securities laws. Each
certificate evidencing the Securities transferred shall bear the legends set
forth in Section 4.2(a) and, if applicable, the legend set forth in Section
4.2(b), except that such certificate shall not bear the legends set forth in
Section 4.2(a) if the opinion of counsel referred to above is to the further
effect that such legend is not required in order to establish compliance with
any provision of the Securities Act or applicable state securities laws.
(b) As used herein, "Permitted Transferee" shall mean:
(i) in the case of any Investor or Permitted Transferee who is
a natural person, such person's spouse or children or grandchildren (in each
case, natural or adopted), any trust for the sole benefit of such person, such
person's spouse or children or grandchildren (in each case, natural or adopted),
any charitable trust the grantor of which is an Investor or Permitted
Transferee, or any corporation or partnership in which the direct and beneficial
owner of all of the equity interest is such individual person or such person's
spouse or children or grandchildren (in each case, natural or adopted) (or any
trust solely for the benefit of such persons);
(ii) in the case of any Investor or Permitted Transferee who
is, in each case, a natural person, the heirs, executors, administrators or
personal representatives upon the death
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of such person or upon the incompetency or disability of such person for
purposes of the protection and management of such person's assets;
(iii) in the case of any Investor or Permitted Transferee, any
Person if such Person takes such Securities pursuant to a sale in connection
with a Public Offering or following a Public Offering in open market
transactions or under Rule 144 under the Securities Act;
(iv) in the case of Sterling or any Permitted Transferee of
Sterling, (A) Citicorp Venture Capital Ltd., Citibank Delaware or any Affiliate
of Citigroup Inc., a Delaware corporation; (B) any officer, employee or director
of any of the foregoing entities, or any trust, partnership or other entity
established solely for the benefit of such officers, employees or directors; or
(C) any qualified institutional buyer (as such term is defined in Rule 144A
under the Securities Act) organized under the laws of the United States or any
State thereof, provided that such qualified institutional buyer shall only be a
Permitted Transferee of up to 3% of the outstanding Common Stock and up to $3.0
million in liquidation value of Series A Preferred Stock);
(v) in the case of Stout and transfers to Sterling of his
interests in the Company and his Membership Units in Prism LLC;
(vi) in the case of Harris, any person who acquires or
succeeds to 50% or more of the outstanding capital stock or assets of Harris or
engages in any similar extraordinary transaction involving Harris or any
Affiliate of Harris Corporation, a Delaware corporation.
(vii) in the case of CMP, as a distribution in kind to its
general partner or its limited partners pro rata in accordance with their
respective partnership interests.
4.5. Notation. A notation will be made in the appropriate transfer records
of the Company with respect to the restrictions on transfer of the Securities
referred to in this Agreement.
4.6. Limitation on Repurchase of Company Stock. Each Investor understands
that concurrently with the issuance of the Shares, the Company is entering into
certain financing agreements which will contain prohibitions, restrictions and
limitations on the ability of the Company to purchase any of the Shares and to
pay dividends on the Shares.
4.7. Reliance. Each Investor acknowledges that the Company and each of the
other Investors is entering into this Agreement in reliance upon such Investor's
representations and warranties and other covenants and agreements contained
herein.
4.8. Subsequent Management Investors. (a) In the event that the Company
issues and sells shares of Class A Common Stock to any member of management of
the Business (hereinafter referred to as a "Subsequent Management Investor"),
the Company shall have the right and option at any time and from time to time
within 6 months of Closing (excluding any required notice period pursuant to
Section 4.8(b)) to repurchase from Sterling such number of shares of Class A
Common Stock, as the Company shall designate to be sold to such Subsequent
Management Investor at a purchase price equal to the price paid by Management
Investors for such Class A Common Stock at the time of issuance of such Class A
Common Stock (but in no event at a price less than $.05 per share of Class A
Common Stock) multiplied by the number of shares of Class A Common Stock
repurchased from Sterling. The number of shares of Securities to be repurchased
pursuant to this
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Section 4.8 shall not exceed 2,750,000 shares of Class A Common Stock.
Subsequent Management Investors shall agree to be bound by this Agreement as
Management Investors including but not limited to the provisions of Article VI
hereof with respect to such shares of Class A Common Stock.
(b) Such repurchase shall be exercised by written notice to Sterling
signed by an officer of the Company on behalf of the Company or by its
designee(s), as the case may be. Such notice shall set forth the number of
shares of Class A Common Stock desired to be purchased and shall set forth a
time and place of closing which shall be no earlier than 10 days and no later
than 60 days after the date such notice is sent. At such closing, Sterling shall
deliver the certificates evidencing the number of shares of Class A Common Stock
to be repurchased by the Company and/or its designee(s), accompanied by stock
powers duly endorsed in blank or duly executed instruments of transfer, and any
other documents that are necessary to transfer to the Company and/or its
designee(s) good title to such of the shares of Class A Common Stock to be
transferred, free and clear of all pledges, security interests, liens, charges,
encumbrances, equities, claims and options of whatever nature other than those
imposed under this Agreement, and concurrently with such delivery, the Company
and/or its designee(s) shall deliver to Sterling the full amount of the
repurchase price for such shares of Class A Common Stock in cash by certified or
bank cashier's check.
4.9. Application to Prism LLC. The provisions of Sections 4.1 through 4.7
shall apply to Prism LLC as well as to the Company. Such sections are hereby
incorporated into this Section 4.9 with each reference to the Company therein
replaced with a reference to Prism LLC, each reference to Securities, Shares,
Common Stock or shares of Common Stock replaced with a reference to Membership
Units, each reference to Incentive Shares replaced with a reference to Incentive
Units and each reference to the Company's Board of Directors replaced with Prism
LLC's Board of Directors.
ARTICLE V
OTHER COVENANTS AND REPRESENTATIONS
5.1. Observers' Rights. So long as Sterling or its Affiliates own at least 5% of
the Common Stock outstanding, if no employee of Sterling or its Affiliates is a
member of the Company's Board of Directors, Sterling shall have the right to
designate two observers (the "Observers") to attend meetings of the Company's
Board of Directors and committees thereof. If at least one employee of Sterling
or its Affiliates is a member of the Company's Board of Directors, Sterling
shall have the right to designate one Observer to attend meetings of the
Company's Board of Directors and committees thereof. So long as Harris or its
Affiliates own at least 5% of the Common Stock outstanding, if no officer of
Harris is a member of the Company's Board of Directors, Harris shall have the
right to designate one Observer to attend meetings of the Company's Board of
Directors and committees thereof. The Observers shall not have the right to vote
on any matter presented to the Board of Directors or any committee thereof. The
Company shall give each Observer written notice of each meeting of the Board of
Directors and committees thereof at the same time and in the same manner as the
members of the Board of Directors or such committee receive notice of such
meetings, and the Company shall permit each Observer to attend as an observer
all meetings of its Board of Directors and committees thereof. Each Observer
shall be entitled to receive all written materials and other information given
to the directors in connection with such meetings at the same
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time such materials and information are given to the directors, and each
Observer shall keep such materials and information confidential. If the Company
proposes to take any action by written consent in lieu of a meeting of its Board
of Directors or a committee thereof, the Company shall give written notice
thereof to each Observer prior to the effective date of such consent. The
Company shall provide to each Observer all written materials and other
information given to the directors in connection with such action by written
consent at the same time such materials and information are given to the
directors, and each Observer shall keep such materials and information
confidential. The Company shall pay the reasonable out-of-pocket expenses of
each Observer incurred in connection with attending such meetings.
5.2. Financial Statements and Other Information . So long as Sterling or
Harris or any of their Affiliates owns any of the Securities or any of the
Management Investors who purchased Securities hereunder and is a party to this
Agreement is an employee of the Company, the Company shall deliver to Sterling
(if any Securities are owned by it), Harris (if any Securities are owned by it
or an Affiliate) and each Management Investor who purchased Securities hereunder
and is a party to this Agreement (if such Management Investor is an employee of
the Company):
(a) as soon as available and in any event within 45 days after the
end of each of the first three quarters of each fiscal year of the Company,
consolidated balance sheets of the Company and its subsidiaries as of the end of
such period, and consolidated statements of income and cash flows of the Company
and its subsidiaries for the period then ended prepared in conformity with
generally accepted accounting principles applied on a consistent basis, except
as otherwise noted therein, and subject to the absence of footnotes and to
year-end adjustments; and
(b) as soon as available and in any event within 90 days after the
end of each fiscal year of the Company, a consolidated and consolidating balance
sheet of the Company and its subsidiaries as of the end of such year, and
consolidated and consolidating statements of income and cash flows of the
Company and its subsidiaries for the year then ended prepared in conformity with
generally accepted accounting principles applied on a consistent basis, except
as otherwise noted therein, together with an auditor's report thereon of a firm
of established national reputation and a written assessment containing the
information required by the provisions of 13 CFR 107.630(e).
5.3. Regulatory Compliance Cooperation. So long as Sterling or its
Affiliates beneficially own any of the Securities, before the Company redeems,
purchases or otherwise acquires, directly or indirectly, or converts or takes
any action with respect to the voting rights of, any shares of any class of its
capital stock or any securities convertible into or exchangeable for any shares
of any class of its capital stock, the Company shall give Sterling 30 days prior
written notice of such pending action. Upon the written request of Sterling made
within 30 days after its receipt of any such notice, stating that after giving
effect to such action Sterling would have a Regulatory Problem (as described
below), the Company will defer taking such action for such period (not to extend
beyond 90 days after Sterling's receipt of the Company's original notice) as
Sterling requests to permit it and its Affiliates to reduce the quantity of
Securities held by it and its Affiliates in order to avoid the Regulatory
Problem. In addition, the Company will not be a party to any merger,
consolidation, recapitalization or other transaction pursuant to which Sterling
would be required to take any voting securities, or any securities convertible
into voting securities, which might reasonably be expected to cause Sterling to
have a Regulatory Problem. For purposes of this paragraph, a Person will be
deemed to have a "Regulatory Problem" when such Person and such
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person's Affiliates own, control or have power over (or believes that there is a
substantial risk of an assertion that such Person owns, controls or has power
over) a greater quantity of securities of any kind issued by the Company than
are permitted to be owned by such Person under any requirement of any
governmental authority applicable to such Person.
5.4. Small Business Administration Forms.
Prior to and after the Closing, the Company shall, if requested by
Sterling or any Permitted Transferee of Sterling, execute Forms 480 ("Size
Status Declaration") and 652-D ("Assurance of Compliance") of the Small Business
Administration and any other documents that may be required by the Small
Business Administration or any other governmental agency having jurisdiction
over the activities of Sterling, or which Sterling or such Permitted Transferee
may reasonably require in connection therewith.
5.5. Sale of the Company.
(a) So long as the Company has not consummated a Public Offering, if
holders of at least 50% of the Common Stock (including voting and non-voting
shares voting as a single class) then outstanding vote in favor of (at a duly
called and duly held meeting of stockholders of the Company) or consent in
writing to the merger or consolidation of the Company or the sale of all or
substantially all of its assets or sale of all or a majority of the outstanding
capital stock or any other similar transaction (any of the foregoing, an
"Approved Sale") to a person (the "Acquiring Entity"), (i) each Restricted
Investor will consent to, vote for, and raise no objections against, and waive
dissenters and appraisal rights (if any) with respect to, the Approved Sale,
(ii) if the Approved Sale includes a sale of Securities, each Restricted
Investor will agree to sell and will be permitted to sell all of such Restricted
Investor's Securities on the terms and conditions approved by the holders of a
majority of the Common Stock then outstanding. Each Restricted Investor will
take all necessary and desirable actions in connection with the consummation of
an Approved Sale.
(b) The obligations of each of the Investors with respect to an
Approved Sale are subject to the satisfaction of the conditions that upon the
consummation of the Approved Sale all of the Investors and Permitted Transferees
will receive the same form and amount of consideration per share of Common
Stock, or if any holder of Common Stock is given an option as to the form and
amount of consideration to be received, all Investors and Permitted Transferees
will be given the same option.
5.6. Tag-Along Rights.
(a) Except in the case of a Public Offering or a Transfer to a
Permitted Transferee, Sterling and its Permitted Transferees that are not
natural persons that collectively own more than 40% of the outstanding Common
Stock shall not effect a Transfer of shares of Common Stock in, or otherwise
participate in, any transaction or series of related transactions that
constitute a "Significant Transfer" unless all other Investors and their
Permitted Transferees and assigns and CMP (collectively, the "Tag-Along
Rightholders") are offered an equal opportunity (the "Tag-Along Right") to
participate in such transaction or transactions on a pro rata basis and on
identical terms. As used herein, a "Significant Transfer" means a Transfer alone
or in the aggregate to any
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Person or Persons of 50% or more of the total number of shares of Common Stock
owned by Sterling and such Permitted Transferees.
(b) Prior to any sale of Common Stock subject to these provisions,
the seller (the "Tag-Along Seller") shall notify the Company in writing of the
proposed sale. Such notice (the "Tag-Along Sale Notice") shall set forth (i) the
number of shares of Common Stock subject to the proposed sale; (ii) the name and
address of the proposed purchaser; and (iii) the proposed amount of
consideration and terms and conditions of payment offered by such proposed
purchaser. The Company shall promptly, and in any event within ten days, mail or
cause to be mailed the Tag-Along Sale Notice to the Tag-Along Rightholders. Each
Tag-Along Rightholder may exercise the Tag-Along Right by delivery of a written
notice (the "Tag-Along Acceptance Notice") to the Tag-Along Seller within
fifteen days of the date the Company mailed or caused to be mailed the Tag-Along
Sale Notice. The Tag-Along Acceptance Notice shall state the number of shares of
Common Stock that the Tag-Along Rightholder proposes to include in the proposed
sale. If no Tag-Along Acceptance Notice is received during the fifteen-day
period referred to above, Tag-Along Seller shall have the right for a 120-day
period to effect the proposed sale of shares of Common Stock on terms and
conditions no more favorable to the transferee than those stated in the
Tag-Along Sale Notice.
(c) Each Tag-Along Rightholder other than Sterling acknowledges and
agrees that Sterling or a Permitted Transferee of Sterling may grant similar
"tag-along" rights to other Persons and, in such event, such other Persons shall
be offered an equal opportunity to participate in such transaction or
transactions to the same extent as such Tag-Along Rightholders hereunder and
shall be included in the calculation of the pro rata basis upon which such
Tag-Along Rightholders may participate in such transaction or transactions.
(d) (i) Notwithstanding the requirements of this Section 5.6, a
Tag-Along Seller may sell Common Stock at any time without complying with the
requirements of Section 5.6(b) so long as the Tag-Along Seller deposits into
escrow with an independent third party at the time of sale that amount of
consideration received in the sale equal to the "Escrow Amount." As used herein,
the "Escrow Amount" shall equal that amount of consideration as all Tag-Along
Rightholders would have been entitled to receive if they had the opportunity to
participate in the sale on a pro rata basis, determined as if each Tag-Along
Rightholder (A) delivered a Tag-Along Notice to the Tag-Along Seller in the time
period set forth in Section 5.6(b) and (B) proposed to include all of his, her
or its shares of Common Stock in such sale.
(ii) The Tag-Along Seller shall notify the Company in writing
of the proposed sale pursuant to this Section 5.6(d) no later than the date of
such sale. Such notice (the "Escrow Notice") shall set forth the information
required in the Tag-Along Sale Notice, and in addition, such notice shall state
the name of the escrow agent and, if the consideration (in whole or in part) for
the sale was cash, then the account number of the escrow account. The Company
shall promptly, and in any event within ten days, mail or cause to be mailed the
Escrow Notice to each Tag-Along Rightholder. Such Tag-Along Rightholder may
exercise the tag-along right by delivery to the Tag-Along Seller, within ten
days of the date the Company mailed or caused to be mailed the Escrow Notice, of
(A) a written notice specifying the number of shares of Common Stock it proposes
to sell; and (B) the certificates for such Common Stock, with stock powers duly
endorsed in blank and with signatures guaranteed.
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(iii) Promptly after the expiration of the tenth day after the
Company has mailed or caused to be mailed the Escrow Notice, (A) the Tag-Along
Seller shall purchase that number of shares of Common Stock as the Tag-Along
Seller would have been required to include in the sale had the Tag-Along Seller
complied with the provisions of Section 5.6(b), (B) all shares of Common Stock
not required to be purchased by the Tag-Along Seller shall be returned to the
Tag-Along Rightholders thereof and (C) all funds and other consideration held in
escrow shall be released to the Tag-Along Seller. If the Tag-Along Seller
received consideration other than cash in his, her or its sale, the Tag-Along
Seller shall purchase the shares of Common Stock tendered by paying to the
Tag-Along Rightholders non-cash consideration and cash in the same proportion as
received by the Tag-Along Seller in the sale.
(e) The Tag-Along Rights provided pursuant to this Section 5.6 shall
terminate upon the earlier of (i) a Public Offering or sale of the Company; and
(ii) the day after the date on which Sterling and its Permitted Transferees that
are not natural persons own less than 40% of the Common Stock. In addition, the
rights of the Management Investors under this Section 5.6 shall terminate on the
date on which the Management Investors and their Permitted Transferees own less
than 50% of the shares of Common Stock purchased or retained by the Management
Investors hereunder.
5.7. Preemptive Rights.
(a) If the Company proposes to issue and sell any of its shares of
Common Stock or any securities containing options or rights to acquire any
shares of Common Stock or any securities convertible or exchangeable into shares
of Common Stock to Sterling, Citicorp Venture Capital Ltd. or any of their
respective corporate Affiliates, the Company will first offer to each of the
other Investors (as used in this Section 5.7, "Investors" shall include CMP) a
portion of the number or amount of such securities proposed to be sold in any
such transaction or series of related transactions equal to the product of (i)
the percentage each such Investor and such Investor's Permitted Transferees
holds of all shares of Common Stock then held by
(b) or issuable to the Investors and (ii) the number of shares
represented by the securities proposed to be issued and sold by the Company in
any such transaction or series of related transactions, all for the same price
and upon the same terms and conditions as the securities that are being offered
to Sterling, Citicorp Venture Capital Ltd. and their respective Affiliates in
such transaction or series of transactions.
(c) Notwithstanding the foregoing, the provisions of this Section
5.7 shall not be applicable to the issuance of shares of Common Stock (i) upon
the conversion of shares of one class of Common Stock into shares of another
class; (ii) as a dividend on all the outstanding shares of Common Stock; (iii)
in any transaction in respect of a Security that is available to all holders of
such Security on a pro rata basis, provided, that for purposes of this clause
(iii) all classes of Common Stock shall be treated as a single security; (iv) in
connection with grants of stock or options to employees or directors of the
Company; or (v) in an offering or sale of securities pursuant to a registration
statement filed with, and declared effective by, the Securities and Exchange
Commission pursuant to the Securities Act.
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(d) The Company will deliver or cause to be delivered to the
Investors a written notice setting forth the terms and conditions (including the
consideration per share) upon which the Investors may purchase such shares or
other securities (the "Preemptive Notice"). After receiving a Preemptive Notice,
an Investor must deliver or cause to be delivered to the Company a written
notice (the "Preemptive Reply") within 45 days of the date of such Preemptive
Notice that such Investor agrees to purchase the shares or other securities
offered pursuant to this Section 5.7 on the date of sale to Sterling, Citicorp
Venture Capital Ltd. and their respective Affiliates. If any Investor fails to
make a Preemptive Reply in accordance with this Section 5.7, shares or other
securities offered to such Investor in accordance with this Section 5.7 may
thereafter, for a period not exceeding 90 days following the expiration of such
45-day period, be issued, sold or subjected to rights or options to Sterling,
Citicorp Venture Capital Ltd. and their respective Affiliates at a price not
less than that at which they were offered to the Investors and on such other
terms and conditions no more favorable than those offered to the Investors. Any
such shares or other securities not so issued, sold or subjected to rights or
options to Sterling, Citicorp Venture Capital Ltd. and their respective
Affiliates during such 90-day period will thereafter again be subject to the
preemptive rights provided for in this Section 5.7.
5.8. Covenant Not To Compete.
(a) In consideration of the opportunity to participate in the equity
offering of the Company, each Management Investor covenants and agrees that, for
one (1) year after termination of such Management Investor's employment with the
Company or any of its Subsidiaries, neither Management Investor nor any of his
or her Affiliates which are not natural Persons shall directly or indirectly,
engage in, represent in any way, be connected with, become employed by or have
any interest in any business or activity competing in any manner with any
businesses carried on by the Company, any Subsidiary of the Company, or any
entity directly or indirectly controlled by the Company or any such Subsidiary
at the time of such termination, provided that a Management Investor shall be
permitted to own not more than 5% of any publicly traded company.
(b) In consideration of the opportunity to participate in the equity
offering of the Company, each Management Investor covenants and agrees that, for
one (1) year after termination of such Management Investor's employment with the
Company or any of its Subsidiaries, neither Management Investor nor any of his
or her Affiliates shall solicit, employ, retain as a consultant, interfere with
or attempt to entice away from the Company or its Affiliates any individual who
is, has agreed to be or within six months of such solicitation, employment,
retention, interference or enticement has been, employed or retained by the
Company or any of its Affiliates in a senior executive capacity.
(c) In consideration of the opportunity to participate in the equity
offering of the Company, each Management Investor covenants and agrees that, for
one (1) year after termination of such Management Investor's employment with the
Company or any of its Subsidiaries, neither Management Investor nor any of his
or her Affiliates shall divert or attempt to divert any customers or accounts of
the Company or any of its Subsidiaries which accounted for at least 1% of
aggregate sales of the Company and its Subsidiaries within one year of such
diversion or attempted diversion (the "Customers"), or any of the business or
patronage of any of the Customers, from the Company or any of its Subsidiaries.
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(d) Each Management Investor acknowledges and agrees that the remedy
at law for any breach, or threatened breach, of any of the provisions of this
Section 5.8 will be inadequate and, accordingly, each Management Investor
covenants and agrees that the Company shall, in addition to any other rights and
remedies which the Company may have, be entitled to equitable relief, including
injunctive relief, and to the remedy of specific performance with respect to any
breach or threatened breach of such covenant, as may be available from any court
of competent jurisdiction. Such right to obtain equitable relief may be
exercised, at the option of the Company, concurrently with, prior to, after, or
in lieu of, the exercise of any other rights or remedies which the Company may
have as a result of any such breach or threatened breach.
(e) In the event that the provisions of this Section 5.8 shall be
determined by a court of competent jurisdiction to be unenforceable under
applicable law as to that jurisdiction (the parties agreeing that such decision
shall not be binding, res judicata or collateral estoppel in any other
jurisdiction) for any reason whatsoever, then any such provision or provisions
shall not be deemed void, but the parties hereto agree that said limits may be
modified by the court and that said covenant contained in this Section 5.8 shall
be amended in accordance with said modifications, it being specifically agreed
by each Management Investor and the Company that it is their continuing desire
that this covenant be enforced to the full extent of its terms and conditions or
if a court finds the scope of the covenant unenforceable, the court should
redefine the covenant so as to comply with applicable law.
5.9. Application to Prism LLC. The provisions of Sections 5.1 through 5.8
shall apply to Prism LLC as well as to the Company. Such sections are hereby
incorporated into this Section 5.9 with each reference to the Company therein
replaced with a reference to Prism LLC, each reference to Securities, Shares,
Common Stock or shares of Common Stock replaced with a reference to Membership
Units, each reference to Incentive Shares replaced with a reference to Incentive
Units and each reference to the Company's Board of Directors replaced with Prism
LLC's Board of Directors.
ARTICLE VI
CORPORATE ACTIONS
6.1. Certificate of Incorporation and Bylaws. Each Investor has reviewed the
Certificate of Incorporation of the Company and the Bylaws of the Company in the
forms attached hereto as Exhibits A and B, respectively, and hereby approves and
ratifies the same.
6.2. Directors and Voting Agreements. Each Investor shall take, at any
time and from time to time, all action necessary (including, without limitation,
voting the Class A Common Stock owned by him, her or it, calling special
meetings of stockholders and executing and delivering written consents) to
ensure that the Board of Directors of the Company is composed at all times of up
to five persons, determined as follows: (i) the chief executive officer of the
Company; (ii) one individual designated by Sterling; (iii) up to two independent
directors, who shall be designated by Sterling (to the extent permitted by
applicable law as determined by Sterling in its sole discretion), subject to the
right of the holders of a majority of the outstanding shares of Class A Common
Stock (including any shares of Class A Common Stock held by Sterling) to veto
the election of any such independent director, provided that in the event that
Sterling concludes that it is unable to designate,
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or elects not to designate for any reason, one or more of such independent
directors or the election of any such independent director is not approved by
the holders of a majority of the outstanding shares of Class A Common Stock,
such directorship(s) shall not be filled by the remaining members of the
Company's Board of Directors but shall remain vacant until the election of a
director designated by Sterling to fill such vacancy in accordance with this
Section 6.2; and (iv) at all times, but only at such times, when the Board of
Directors of the Company includes two independent directors determined in
accordance with clause (iii) of this Section 6.2, one additional individual
designated by Sterling, and provided that, notwithstanding clauses (i) through
(iv) of this Section 6.2, if Sterling at any time owns of record in excess of
50% of the Class A Common Stock then outstanding, then the Board of Directors of
the Company shall consist of the chief executive officer of the Company and up
to four individuals designated by Sterling in its sole discretion. The initial
directors named pursuant to this Section 6.2 shall be Gregory L. Williams, James
A. Urry and Gary E. Gist.
6.3. Right to Remove Sterling Directors. Sterling may request that any
director designated by Sterling pursuant to clause (ii) or (iv) of Section 6.2
be removed (with or without cause) by written notice to the other Investors,
and, in any such event, each Investor shall promptly consent in writing or vote
or cause to be voted all shares of Common Stock entitled to vote thereon now or
hereafter owned or controlled by it for the removal of such Sterling Director as
a director. In the event any person ceases to be a director, such person shall
also cease to be a member of any committee of the Board of Directors of the
Company.
6.4. Right to Fill Certain Vacancies in Company's Board. In the event that
a vacancy is created on the Company's Board of Directors at any time by the
death, disability, retirement, resignation or removal (with or without cause) of
a Sterling Director, or if otherwise there shall exist or occur any vacancy on
the Company's Board of Directors in a directorship subject to designation by
Sterling, such vacancy shall not be filled by the remaining members of the
Company's Board of Directors but each Investor hereby agrees promptly to consent
in writing or vote or cause to be voted all shares of Common Stock entitled to
vote thereon now or hereafter owned or controlled by it to elect that individual
designated to fill such vacancy and serve as a director, as shall be designated
by Sterling, which individual shall thereafter be a Sterling Director.
6.5. Directors of Company Subsidiaries. The Company shall take, and each
of the Investors agrees that he or it shall cause the Company to take, at any
time and from time to time, all action necessary (including voting all shares of
common stock of any Subsidiary of the Company, calling special meetings of
stockholders and executing and delivering written consents) to ensure that the
Boards of Directors of all Subsidiaries of the Company are identical to the
Board of Directors of the Company.
6.6. Termination of Voting Agreements. The voting agreements in Sections
6.2, 6.3, 6.4 and 6.5 shall terminate on the earlier of (i) the date the Company
consummates a Public Offering (if requested by the underwriter with respect to
such offering) and (ii) the date when Sterling and its Permitted Transferees and
their respective Affiliates no longer own at least 15% of the issued and
outstanding Common Stock.
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ARTICLE VII
ADDITIONAL RESTRICTIONS ON TRANSFERS OF
SECURITIES HELD BY MANAGEMENT INVESTORS
7.1. Restrictions on Transfer. In addition to any restrictions on Transfer
imposed by Section 4.4, no Management Investor shall effect a Transfer of any
Securities (other than a Transfer to a Permitted Transferee pursuant to Sections
4.4(b)(i) or 4.4(b)(ii)) without the consent of the Company, as evidenced by a
resolution duly adopted by at least a majority of the Board of Directors. In the
event of such a Transfer to a Permitted Transferee, for purposes of determining
the applicability of the Purchase Option of the Company described in Section 7.2
and, if applicable, the amount of the Option Purchase Price for Incentive Shares
purchased under such Purchase Option, reference shall be made to the Termination
Date of the Management Investor who first owned the Incentive Shares transferred
in such Transfer. In exercising the consent and approval described in the first
sentence of this Section 7.1, the Company may employ its sole discretion in
evaluating the nature of the proposed transferee and the Company may impose such
conditions on Transfer as it deems appropriate in its sole discretion,
including, but not limited to, requirements that the transferee be an employee
of the Company and that the transferee purchase the Management Investor's
Securities as a "Management Investor" subject to the restrictions of this
Article VII. Any purported Transfer in violation of this Agreement shall be null
and void and of no force and effect and the purported transferees shall have no
rights or privileges in or with respect to the Company.
7.2. Purchase Option.
(a) General Terms. In the event that on or prior to the fifth
anniversary of the Closing, any Management Investor shall cease to be employed
by the Company for any reason (including, but not limited to, death, temporary
or permanent disability, retirement at age 62 or more under the Company's normal
retirement policies, resignation or termination by the Company with or without
Cause), such Management Investor (or such Management Investor's heirs,
executors, administrators, transferees, successors or assigns) shall give prompt
notice to the Company of such termination (except in the case of termination by
the Company with or without Cause), and the Company, or one or more designee(s)
selected by a majority of the members of the Board of Directors, shall have the
right and option at any time within 90 days after the later of the effective
date of such termination of employment (the "Termination Date") or the date of
the Company's receipt of the aforesaid notice, to purchase from such Management
Investor, any Person purchasing Securities hereunder on behalf of such
Management Investor, or such Management Investor's or Person's heirs, executors,
administrators, transferees, successors or assigns, as the case may be, any or
all of the Incentive Shares then owned by such Management Investor and such
Management Investor's Permitted Transferees at a purchase price equal to the
Option Purchase Price. The Company or its designee(s) shall give notice to the
terminated Management Investor (or such Management Investor's heirs, executors,
administrators, transferees, successors or assigns) of its intention to purchase
Incentive Shares at any time not later than 90 days after the Termination Date.
(The right of the Company and its designee(s) set forth in this Section 7.2 to
purchase a terminated Management Investor's Incentive Shares is hereinafter
referred to as the "Purchase Option"). As a condition to purchasing a Management
Investor's Incentive Shares pursuant to this Section 7.2, any designee(s)
selected by the Board of Directors must agree in writing to assume the Company's
obligations under Section 7.2(a)(iii). A designee's agreement to assume such
obligations will relieve
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the Company of its obligations under Section 7.2(a)(iii) with regard to the
particular terminated Management Investor and such Management Investor shall
thereafter have no recourse against the Company under Section 7.2(a)(iii).
(i) Exercise of Purchase Option. The Purchase Option shall be
exercised by written notice to the terminated Management Investor (or such
Management Investor's heirs, executors, administrators, transferees, successors
or assigns) signed by an officer of the Company on behalf of the Company or by
its designee(s), as the case may be. Such notice shall set forth the number of
Incentive Shares desired to be purchased and shall set forth a time and place of
closing which shall be no earlier than ten days and no later than 60 days after
the date such notice is sent. At such closing, the seller shall deliver the
certificates evidencing the number of Incentive Shares to be purchased by the
Company and/or its designee(s), accompanied by stock powers duly endorsed in
blank or duly executed instruments of transfer, and any other documents that are
necessary to transfer to the Company and/or its designee(s) good title to such
of the Incentive Shares to be transferred, free and clear of all pledges,
security interests, liens, charges, encumbrances, equities, claims and options
of whatever nature other than those imposed under this Agreement, and
concurrently with such delivery, the Company and/or its designee(s) shall
deliver to the seller the full amount of the Option Purchase Price for such
Incentive Shares in cash or by certified or bank cashier's check.
(ii) Option Purchase Price. (A) If the Management Investor
shall be terminated by the Company without Cause or shall cease to be employed
by the Company by reason of death, normal retirement at age 62 or more under the
Company's normal retirement policies, or temporary or permanent disability, the
"Option Purchase Price" for the Incentive Shares to be purchased from such
Management Investor or such Management Investor's Permitted Transferees pursuant
to the Purchase Option (such number of Incentive Shares being the "Purchase
Number") shall equal the price calculated as set forth in the table below
opposite the applicable Termination Date of such Management Investor:
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If the Termination Date Occurs: Option Purchase Price
- - ------------------------------- ---------------------
On or prior to the first anniversary Adjusted Cost Price multiplied by
of the Closing the Purchase Number
After the first anniversary of the Adjusted Cost
Closing, and on or prior to Price multiplied by 80% of the
the second anniversary of the Closing Purchase Number, plus Fair Market
Value Price multiplied by 20% of the
Purchase Number
After the second anniversary of the Adjusted Cost
Closing, and on or prior to Price multiplied by 60% of the
the third anniversary of the Closing Purchase Number, plus Fair Market
Value Price multiplied by 40% of the
Purchase Number
After the third anniversary of the Adjusted Cost
Closing, and on or prior to Price multiplied by 40% of the
the fourth anniversary of the Closing Purchase Number, plus Fair Market
Value Price multiplied by 60% of the
Purchase Number
After the fourth anniversary of the Adjusted Cost
Closing, and on or prior to Price multiplied by 20% of the
the fifth anniversary of the Closing Purchase Number, plus Fair Market
Value Price multiplied by 80% of the
Purchase Number
provided, however, that, on each of the first four anniversaries of the Closing,
Incentive Shares shall vest an additional 7.5 percentage points (and the above
table shall be adjusted accordingly) each time the actual EBITDA for any of the
Company's prior fiscal years completed following the Closing was at least 110%
of the EBITDA target for such fiscal year as established by the Company's Board
of Directors and as adjusted pursuant to Section 7.8; provided further, that on
a Public Offering or an Approved Sale (subject to Section 7.7), if less than 80%
of the Incentive Shares have vested, a number of unvested Incentive Shares shall
immediately vest so that 80% of all Incentive Shares are vested.
By way of example, assume that (i) the Company's actual EBITDA was
at least 110% of the EBITDA targets for each of the first two completed fiscal
years following Closing and (ii) a certain Management Investor is terminated by
the Company without Cause after the second anniversary of the Closing, but prior
to the third anniversary of the Closing. The Option Purchase Price for the
Incentive Shares to be purchased from this terminated Management Investor shall
equal Adjusted Cost Price multiplied by 45% of the Purchase Number, plus Fair
Market Value Price multiplied by 55% of the Purchase Number. This Option
Purchase Price is calculated as follows: (A) the Purchase Number to be
multiplied by the Adjusted Cost Price shall be decreased, and the Purchase
Number to be multiplied by the Fair Market Value Price shall be increased, by 20
percentage points on each of the first and second anniversaries of the Closing
as shown in the table above; and (B) the Purchase Number to be multiplied by the
Adjusted Cost Price shall be decreased, and the Purchase Number to be multiplied
by the Fair Market Value Price shall be increased, by 7.5
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percentage points on each of the first and second anniversaries of the Closing
as a result of 110% of the EBITDA targets being reached in two different years.
(B) If the Management Investor shall cease to be
employed by the Company for any reason other than those set forth in clause (A)
of this Section 7.2(a)(ii) (including, but not limited to, as the result of
voluntary resignation or termination for Cause), the Option Purchase Price for
all Incentive Shares to be purchased from the Management Investor (and such
Management Investor's Permitted Transferees) pursuant to the Purchase Option
shall equal the Adjusted Cost Price multiplied by the Purchase Number.
(C) As used herein:
1. "Adjusted Cost Price" for each Incentive Share means
five cents ($0.05), which represents the Management Investor's original cost per
share;
2. "EBITDA" shall have the meaning assigned to such term
in the Indenture governing the $200.0 million 13.25% Senior Subordinated Notes
Due 2009 of Intersil Corporation;
3. "EBITDA Multiple" shall mean (i) with respect to an
entity that has common stock registered under the Exchange Act, (A) the product
of (x) the average of the daily market prices for each business day during the
period commencing 15 business days before the Termination Date and ending on the
date one day prior to the Termination Date or, if the common stock has been
registered under the Exchange Act for less than 15 consecutive business days
before the Termination Date, then the average of the daily market prices for all
of the business days before the Termination Date for which daily market prices
are available and (y) the number of shares of such common stock outstanding on
the Termination Date divided by (B) such entity's EBITDA during the 12 full
calendar months ending at the end of the fiscal quarter immediately preceding
the Termination Date as reflected in such entity's financial statements and (ii)
with respect to an entity that does not have common stock registered under the
Exchange Act, the EBITDA multiple as determined in good faith by the Company's
Board of Directors;
4. "Fair Market Value Price" for each Incentive Share
means (A) the amount obtained by subtracting (y) from (x) where (x) equals the
product of the Company's EBITDA during the 12 full calendar months ending at the
end of the fiscal quarter immediately preceding the Termination Date as
reflected in the Company's financial statements and the greater of (I) the
number 4.9 and (II) upon the occurrence of a Change in Control (as defined in
the Indenture, dated as of the Closing Date, for the Company's $90.0 million
11.13% Subordinated Pay-In-Kind Notes Due 2010), the acquiring entity's EBITDA
Multiple and (y) equals all Indebtedness of the Company and its Subsidiaries
outstanding at the end of the fiscal quarter immediately preceding the
Termination Date plus the aggregate liquidation preference (plus accrued and
unpaid dividends) of all shares of preferred stock of the Company outstanding on
such date less all cash, cash equivalents and similar type investments
(including marketable securities) of the Company and its Subsidiaries on such
date ("Cash") (to the extent such Cash is available to the Company for general
corporate purposes without incurring substantial repatriation costs) (the amount
clause (x) exceeds clause (y) being referred to herein as the "Enterprise
Value"), divided by (B) the number of shares of Common Stock outstanding on the
Termination Date (adjusted to
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reflect the pro forma exercise of all dilutive securities, regardless of whether
such securities are then exercisable or would otherwise satisfy requirements
under generally accepted accounting principles as they relate to the
determination of "dilutive securities"); provided, that if any class of Common
Stock is listed on a national securities exchange or reported on the National
Association of Securities Dealers, Inc. Automated Quotation System, the "Fair
Market Value Price" shall equal for each Incentive Share the closing price per
share of Common Stock on such exchange or as so reported on the Management
Investor's Termination Date; and
5. "Indebtedness" includes all obligations, contingent
and otherwise, which in accordance with generally accepted accounting principles
should be classified upon the obligor's balance sheet as liabilities, or to
which reference should be made by footnotes thereto, including without
limitation, in any event and whether or not so classified: (I) all debt and
similar monetary obligations, whether direct or indirect; (II) all liabilities
secured by any mortgage, pledge, security interest, lien, charge, or other
encumbrance existing on property owned or acquired subject thereto, whether or
not the liability secured thereby shall have been assumed; (III) all guaranties,
endorsements and other contingent obligations whether direct or indirect in
respect of Indebtedness of others, including any obligation to supply funds to
or in any manner to invest in, directly or indirectly, the debtor, to purchase
Indebtedness, or to assure the owner of Indebtedness against loss, through an
agreement to purchase goods, supplies, or services for the purpose of enabling
the debtor to make payment of the Indebtedness held by such owner or otherwise;
(IV) obligations to reimburse issuers of any letters of credit and (V) all
obligations under leases which shall have been or should be, in accordance with
generally accepted accounting principles, recorded as capital leases in respect
of which the Company or its Subsidiaries are liable as lessee.
(iii) Adjustments to Option Purchase Price. If the Company or
its designee exercises the Purchase Option with respect to any or all of the
Incentive Shares of any Management Investor whose employment with the Company
was terminated by the Company without Cause (the "Called Shares"), and if within
six months after the closing pursuant to such exercise of the Purchase Option by
the Company or its designee:
(A) the Company is merged into, consolidated with or
otherwise combined with or acquired by another Person, or there is a liquidation
of the Company, or there is a Public Offering (a "Subsequent Offering") of the
Company's Common Stock pursuant to an effective registration statement under the
Securities Act in which other Management Investors participate as selling
stockholders (other than (1) a registration statement on Form S-8 or any
successor forms or any other registration statement relating to a special
offering to the Company's employees or (2) a registration statement relating to
a Unit Offering); and
(B) the per share consideration received by the
stockholders of the Company in such transaction, or the per share net proceeds
received for the Company's Common Stock in the Subsequent Offering, as the case
may be (in each case after being adjusted downward to reflect what the per share
consideration or per share net offering proceeds, as the case may be, would have
been had the Common Stock of such terminated Management Investor purchased by
the Company or its designee pursuant to the Purchase Option been outstanding on
the date of the closing of such transaction or Subsequent Offering), exceeds the
Fair Market Value Price used in calculating the Option Purchase Price pursuant
to the exercise of the Purchase Option, then
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such Management Investor shall be entitled to receive from the Company or its
designee an amount per Called Share equal to such excess multiplied by the
applicable Fair Market Value Price Percentage within 30 days after the closing
of any such transaction or Subsequent Offering. "Fair Market Value Price
Percentage" means 20% multiplied by the number of full years elapsed between the
Closing and the Termination Date for such Management Investor.
7.3. Company's Right of First Refusal. If a Management Investor or his or
her Permitted Transferees proposes to sell any or all of such Management
Investor's or Permitted Transferee's Securities to a third party in a bona fide
transaction, and provided such transaction is permitted under any applicable
restrictions set forth in Sections 4.4 and 7.1, the Management Investor, or his
Permitted Transferees, may not Transfer such Securities without first offering
to sell such Securities to the Company pursuant to this Section 7.3.
The Management Investor, or his Permitted Transferees, shall deliver
a written notice (a "Sale Notice") to the Company describing in reasonable
detail the Securities being offered, the name of the offeree, the purchase price
requested and all other material terms of the proposed Transfer. Upon receipt of
the Sale Notice, the Company, or a designee selected by a majority of the
directors appointed by Sterling pursuant to Section 6.2, shall have the right
and option to purchase all or any portion of the Securities being offered at the
price and on the terms of the proposed Transfer set forth in the Sale Notice.
Within 30 days after receipt of the Sale Notice, the Company shall notify such
Management Investor, or his Permitted Transferees, whether or not it wishes to
purchase any or all of the offered Securities.
If the Company elects to purchase any of the offered Securities, the
closing of the purchase and sale of such Securities shall be held at the place
and on the date established by the Company in its notice to the Management
Investor, or his Permitted Transferees, in response to the Sale Notice, which in
no event shall be less than ten or more than 60 days from the date of such
notice. In the event that the Company does not elect to purchase all the offered
Securities, the Management Investor, or his Permitted Transferees, may, subject
to the other provisions of this Agreement, Transfer the remaining offered
Securities to the offeree specified in the Sale Notice at a price no less than
the price specified in the Sale Notice and on other terms no more favorable to
the transferee(s) thereof than specified in the Sale Notice during the 180-day
period immediately following the last date on which the Company could have
elected to purchase the offered Securities. Any such Securities not transferred
within such 180-day period will be subject to the provisions of this Section 7.3
upon subsequent Transfer.
7.4. Involuntary Transfers. In the event that Securities owned by any
Management Investor, or his Permitted Transferees, shall be subject to sale or
other Transfer (the date of such sale or Transfer shall hereinafter be referred
to as the "Transfer Date") by reason of (i) bankruptcy or insolvency
proceedings, whether voluntary or involuntary, or (ii) distraint, levy,
execution or other involuntary Transfer, then such Management Investor, or his
Permitted Transferees, shall give the Company written notice thereof promptly
upon the occurrence of such event stating the terms of such proposed Transfer,
the identity of the proposed transferee, the price or other consideration, if
readily determinable, for which the Securities are proposed to be transferred,
and the number of shares of Common Stock to be transferred. After its receipt of
such notice or, failing such receipt, after the Company otherwise obtains actual
knowledge of such a proposed Transfer, the Company, or a designee selected by a
majority of the non-employee members of the Board of Directors of the
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Company, shall have the right and option to purchase all, but, not less than all
of such Securities which right shall be exercised by written notice given by the
Company to such proposed transferor within 60 days following the Company's
receipt of such notice or, failing such receipt, the Company's obtaining actual
knowledge of such proposed Transfer. Any purchase pursuant to this Section 7.4
shall be at the price and on the terms applicable to such proposed transfer. If
the nature of the event giving rise to such involuntary Transfer is such that no
readily determinable consideration is to be paid for the Transfer of the
Securities, the price to be paid by the Company shall be the Option Purchase
Price that would have been applicable hereunder had the Management Investor
incurred a Termination Date as of the date of such proposed Transfer of the
Securities and such Securities had been Incentive Shares. The closing of the
purchase and sale of Securities shall be held at the place and the date to be
established by the Company, which in no event shall be less than ten or more
than 60 days from the date on which the Company gives notice of its election to
purchase the Securities. At such closing, the Management Investor, or his
Permitted Transferees, shall deliver the certificates evidencing the number of
shares of Common Stock to be purchased by the Company, accompanied by stock
powers duly endorsed in blank or duly executed instruments of transfer, and any
other documents that are necessary to transfer to the Company good title to such
of the securities to be transferred, free and clear of all pledges, security
interests, liens, charges, encumbrances, equities, claims and options of
whatever nature other than those imposed under this Agreement, and concurrently
with such delivery, the Company shall deliver to the Management Investor, or his
Permitted Transferees, the full amount of the purchase price for such Securities
in cash by certified or bank cashier's check.
7.5. Lapse.
(a) The provisions of Sections 7.1, 7.3 and 7.4, insofar as they
relate to Securities other than Incentive Shares and Incentive Shares that have
vested pursuant to Section 7.2(ii), shall terminate (i) immediately after
consummation of an Approved Sale or (ii) upon the consummation of a Public
Offering.
(b) The provisions of Section 7.2 shall terminate and the provisions
of Section 7.7 shall govern immediately after consummation of an Approved Sale.
7.6 Proprietary Information.
(a) Each Management Investor covenants and agrees that (i) during
such Management Investor's employment with the Company or any of its
Subsidiaries, such Management Investor will not (A), directly or indirectly,
engage in any activity in competition with the Company or its Affiliates or (B)
plan, or otherwise take, any preliminary steps, either alone or in concert with
others, to set up or engage in any semiconductor manufacturing or designing in
competition with the Company or its Affiliates; (ii) during such Management
Investor's employment with the Company or any of its Subsidiaries and for a
period of one (1) year thereafter, such Management Investor will not, either
directly or indirectly, either alone or in concert with others, solicit or
entice any employee of or consultant to the Company or its Affiliates to leave
the Company or its Affiliates or work for anyone in competition with the Company
or its Affiliates or solicit, entice or in any way divert any customer or
supplier to do business with any business entity in competition with the Company
or its Affiliates; and (iii) for one (1) year after termination of such
Management Investor's employment with the Company or any of its Subsidiaries,
such
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Management Investor will not accept any employment or engage in any activities
competitive with the Company or its Affiliates, if the loyal and complete
fulfillment of the duties of the competitive employment or activities would
inherently call upon such Management Investor to reveal Proprietary Information
to which such Management Investor had access or learned during his Employment.
With respect to any period following termination of a Management Investor,
Affiliates of the Company shall be determined as of the date of termination of
such Management Investor's employment with the Company. As used herein,
"Proprietary Information" shall mean information generally unavailable to the
public that has been created, discovered, developed, or otherwise become known
to the Company or any of its Subsidiaries or in which property rights have been
assigned or otherwise conveyed to the Company or any of its Subsidiaries, which
information has material economic value or potential material economic value to
the business in which the Company or any of its Subsidiaries is or will be
engaged. Proprietary Information shall include, but not be limited to trade
secrets, processes, formulas, data, know-how, negative know-how, improvements,
discoveries, developments, designs, inventions, techniques, all technical data,
customer and supplier lists, and any modifications or enhancements thereto,
programs, and information (whether or not necessarily in writing) which has
actual or potential economic value to the Company or any of its Subsidiaries.
(b) In addition to any other provision contained herein, if upon the
cessation of any Management Investor's employment with the Company or any of its
Subsidiaries the Company repurchases all Securities held by such Management
Investor, then such Management Investor covenants and agrees that, for one (1)
year after such termination, neither Management Investor nor any of his or her
Affiliates shall (i) directly or indirectly, engage in, represent in any way, be
connected with, become employed by or have any interest in any business or
activity competing in any manner with any businesses carried on by the Company
or any of its Affiliates at the time of such termination, (ii) solicit, employ,
retain as a consultant, interfere with or attempt to entice away from the
Company or its Affiliates any individual who is, has agreed to be or within six
months of such solicitation, employment, retention, interference or enticement
has been, employed or retained by the Company or any of its Affiliates in a
senior executive capacity or (iii) divert or attempt to divert any Customers, or
any of the business or patronage of any of the Customers, from the Company or
any of its Subsidiaries.
7.7. Proceeds upon Sale of the Company.
(a) Each Management Investor agrees, subject solely to the
conditions set forth in this Section 7.7(a), that a portion of the cash proceeds
of any sale of Incentive Shares pursuant to Section 5.5 equal to (x) multiplied
by (y) (such portion, the "Sale of Company Escrow Amount"), where (x) equals (i)
the aggregate of the total amount of such cash proceeds and all cash proceeds
received by such Management Investor upon sales of Incentive Shares pursuant to
an Approved Sale less (ii) the Adjusted Cost Price multiplied by all Incentive
Shares owned by such Management Investor and (y) equals (i) 20% if immediately
prior to such Approved Sale less than or equal to 80% of such Management
Investor's Incentive Shares had vested or (ii) the percentage of such Management
Investor's Incentive Shares that were unvested immediately prior to such
Approved Sale if greater than 80% of such Management Investor's Incentive Shares
had vested by such time, shall not be paid to such Management Investor and shall
instead be deposited into a trust for the exclusive benefit of the Management
Investors, until there is an event of forfeiture (as described below), at which
time the funds subject to such forfeiture shall be paid on a pro rata basis to
those
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Management Investors who are employed by the Company at such time. Such trust
shall be established in accordance with such agreements and instruments as shall
be reasonably determined by the Board of Directors of the Company and shall
permit the trustee thereunder to invest the funds of such trust in such manner,
consistent with such trustee's fiduciary obligations, as such trustee shall
reasonably determine. The trust agreement shall provide (i) that the assets of
the trust shall not be subject to the claims of the Company or any successor to
the Company, except as provided herein in the case of forfeiture and (ii) that
in the event a Management Investor prevails in a suit against the Company or the
trustee regarding his right to funds held in the trust, the Company shall pay
the reasonable attorneys' fees and expenses of the Management Investor incurred
in such suit. The trustee shall release to a Management Investor an amount equal
to the cash investment of such Management Investor in the Acquiring Entity (as
defined in Section 5.5(a)). In addition, on the first anniversary of an Approved
Sale, the trustee shall distribute to each Management Investor all funds held
for the account of such Management Investor (with interest) less any amount
distributed by the trustee pursuant to the immediately preceding sentence;
provided, however, that in the event that the employment of the Management
Investor is terminated by the Company or its successor without Cause (for
purposes of this paragraph, the definition of "Cause" shall not include clause
(ii) of the definition of "Cause" set forth in Section 1.1 of this Agreement) or
by reason of death, disability or retirement under the Company's normal
retirement policies, the trustee shall promptly pay all remaining funds held for
the account of such Management Investor, to such Management Investor, or to his
heirs, administrators, or estate (with interest), and in the event that the
Management Investor shall cease to be employed by the Company or its successor
or a subsidiary thereof (other than by reason of an approved leave of absence)
for any reason other than death, disability or retirement under the Company's
normal retirement policies or termination by the Company or a subsidiary thereof
without Cause, all interest of the Management Investor in such funds shall
immediately terminate. A Management Investor shall not be bound by the
provisions of this Section 7.7(a) unless the Acquiring Entity agrees in writing
to continue such Management Investor's employment through the period ending on
the fifth anniversary of the Closing (or, if earlier, the second anniversary of
the closing of the Approved Sale) on terms and conditions at least as favorable,
in the aggregate, to the Management Investor as the terms and conditions of his
employment prior to the Approved Sale.
(b) If the Company or any Investor enters into any negotiation or
transaction for which Rule 506 (or any similar rule then in effect) promulgated
by the Securities and Exchange Commission under the Securities Act may be
available with respect to such negotiation or transaction (including a merger,
consolidation or other reorganization), each Management Investor will, at the
request of the Company, appoint a purchaser representative (as such term is
defined in Rule 501(h) promulgated by the Securities and Exchange Commission
under the Securities Act) reasonably acceptable to the Company. If any
Management Investor appoints the purchaser representative designated by the
Company, the Company will pay the fees of such purchasers representative, but if
any Management Investor declines to appoint the purchaser representative
designated by the Company such Management Investor will appoint another
purchaser representative (reasonably acceptable to the Company), and such
Management Investor will be responsible for the fees of the purchaser
representative so appointed.
7.8. EBITDA Target Adjustments. (a) In the event that the Company
consummates an acquisition (an "Acquisition") of a business, brand or product
line (an "Acquired Business"), the EBITDA target for the fiscal year during
which such acquisition occurs (the "EBITDA Target in
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Effect") shall be adjusted pursuant to Section 7.8(b) below; provided, however,
that the EBITDA Target in Effect shall not be adjusted in the event that the
aggregate consideration paid by the Company for such Acquisition is less than
$1,000,000 (such Acquisition, a "Small Debt-Financed Acquisition").
(b) In connection with an Acquisition (other than a Small
Debt-Financed Acquisition), the Company shall make a reasonable projection,
prepared in good faith, of the EBITDA for the Acquired Business for the same
period used to determine the EBITDA Target in Effect (the "Acquired Business
EBITDA"). Concurrently with the closing of the Acquisition, the EBITDA Target in
Effect shall be reset for all purposes hereunder to an amount equal to (i) the
EBITDA Target in Effect, plus (ii) the Acquired Business EBITDA.
7.9. Application to Prism LLC. The provisions of Sections 7.1 through 7.8
shall apply to Prism LLC as well as to the Company. Such sections are hereby
incorporated into this Section 7.9 with each reference to the Company therein
replaced with a reference to Prism LLC, each reference to Securities, Shares,
Common Stock or shares of Common Stock replaced with a reference to Membership
Units, each reference to Incentive Shares replaced with a reference to Incentive
Units and each reference to the Company's Board of Directors replaced with Prism
LLC's Board of Directors; provided, that any reference to employment or
termination of employment of a Management Investor shall mean employment or
termination of employment, as the case may be, with the Company and shall not
mean employment or termination of employment with Prism LLC provided further,
that if the Prism Option has not been exercised prior to a Management Investor's
termination of employment with the Company, such Management Investor's
Membership Units shall be automatically cancelled upon the purchase by the
Company or its designee(s) of all of such Management Investor's Incentive
Shares.
ARTICLE VIII
REGISTRATION RIGHTS
The Investors shall have registration rights with respect to the
Shares as set forth in the Registration Rights Agreement among the parties
hereto and dated as of the date hereof, the form of which is attached hereto as
Exhibit D (the "Registration Rights Agreement"). Each of the Investors agree not
to effect any public sale or distribution of any securities of the Company
during the periods specified in the Registration Rights Agreement, except as
permitted by the Registration Rights Agreement, and each such Investor agrees to
be bound by the rights of priority to participate in offerings as set forth
therein.
ARTICLE IX
MISCELLANEOUS
9.1. Purchaser Representative. If the Company or any Investor enters into any
negotiation or transaction for which Rule 506 (or any similar rule then in
effect) promulgated by the Securities and Exchange Commission under the
Securities Act may be available with respect to such negotiation or
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transaction (including a merger, consolidation or other reorganization), each
Management Investor will, at the request of the Company, appoint a purchaser
representative (as such term is defined in Rule 501(h) promulgated by the
Securities and Exchange Commission under the Securities Act) reasonably
acceptable to the Company. If any Management Investor appoints the purchaser
representative designated by the Company, the Company will pay the fees of such
purchaser representative, but if any Management Investor declines to appoint the
purchaser representative designated by the Company such Management Investor will
appoint another purchaser representative (reasonably acceptable to the Company),
and such Management Investor will be responsible for the fees of the purchaser
representative so appointed.
9.2. Section 83(b) Elections. Each Management Investor shall make the
election (the "83(b) Election") to include in such Management Investor's income,
in the year such Management Investor receives the Incentive Shares, the excess,
if any, of the fair market value of the Incentive Shares on the date such shares
are acquired (determined without regard to restrictions which lapse) over five
cents ($0.05), the price deemed paid per Incentive Share, pursuant to Section
83(b) of the Internal Revenue Code of 1986, as amended, in the manner and within
the time period specified by the regulations promulgated thereunder. EACH
MANAGEMENT INVESTOR ACKNOWLEDGES THAT (1) HE OR SHE ALONE IS RESPONSIBLE FOR
FILING WITH THE INTERNAL REVENUE SERVICE, BY THE APPLICABLE DEADLINE, ALL
APPLICABLE FORMS REQUIRED TO EFFECT THE 83(b) ELECTION, (2) NO EXTENSION OF THE
83(b) ELECTION DEADLINE WILL BE AVAILABLE UNDER LAW AND (3) ADVERSE TAX
CONSEQUENCES MAY RESULT TO SUCH MANAGEMENT INVESTOR IF THE 83(b) ELECTION IS NOT
TIMELY MADE.
9.3. Amendment and Modification. This Agreement may be amended or
modified, or any provision hereof may be waived, provided that such amendment,
modification or waiver is set forth in a writing executed by (i) the Company
(such Company consent is not required to amend the sections referenced in clause
(z) of the below proviso), (ii) Sterling (so long as Sterling and its Permitted
Transferees own in the aggregate at least 15% of the outstanding Common Stock on
a fully diluted basis) and (iii) the holders of a majority of the outstanding
Common Stock on a fully diluted basis (including Shares owned by Sterling and
its Affiliates) held by the Investors; provided, however that (x) the provisions
of this Agreement which affect Harris' rights or obligations hereunder cannot be
amended, modified or waived, unless Harris also executes such amendment,
modification or waiver, (y) without the approval of the holders of a majority of
the outstanding Common Stock then held by Management Investors, (A) the
provisions of this Agreement cannot be amended to treat Management Investors
differently than the other Investors and (B) the provisions of Sections 4.4,
5.2, 5.6, 5.7, 5.8, 6.2, 9.3 and Article VII of this Agreement may not be
amended or modified to the detriment of Management Investors, (z) without the
written approval of Prism LLC, the provisions of Sections 2.5, 4.9, 5.9, 7.9 and
9.21 may not be amended or modified and (aa) without the written approval of
CMP, the provisions of Sections 4.4, 5.5, 5.6 and 5.7 may not be amended or
modified. No course of dealing between or among any Persons having any interest
in this Agreement will be deemed effective to modify, amend or discharge any
part of this Agreement or any rights or obligations of any Person under or by
reason of this Agreement.
9.4. LLC Expenses. The Company shall be responsible for the payment of the
reasonable expenses incurred by (i) Sterling in connection with its purchase of
Securities hereunder and (ii) Prism LLC in connection with its formation and the
Investors' investments therein.
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9.5. Survival of Representations and Warranties. All representations,
warranties, covenants and agreements set forth in this Agreement will survive
the execution and delivery of this Agreement, the Closing, and the consummation
of the transactions contemplated hereby and by the Master Agreement, regardless
of any investigation made by an Investor or on its behalf.
9.6. Successors and Assigns; Entire Agreement. This Agreement and all of
the provisions hereof shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns and
executors, administrators and heirs. This Agreement, together with the
Registration Rights Agreement, sets forth the entire agreement and understanding
among the parties as to the subject matter hereof and merges and supersedes all
prior discussions, agreements and understandings of any and every nature among
them.
9.7. Separability. In the event that any provision of this Agreement or
the application of any provision hereof is declared to be illegal, invalid or
otherwise unenforceable by a court of competent jurisdiction, the remainder of
this Agreement shall not be affected except to the extent necessary to delete
such illegal, invalid or unenforceable provision unless that provision held
invalid shall substantially impair the benefits of the remaining portions of
this Agreement.
9.8 Notices. All notices provided for or permitted hereunder shall be made
in writing by hand delivery, registered or certified first-class mail,
telecopier or air courier guaranteeing overnight delivery to the other party at
the following addresses (or at such other address as shall be given in writing
by any party to the others):
If to the Company to:
Intersil Holding Corporation
2401 Palm Bay Road NE
Building 53 M/S 53/198
Palm Bay, FL 32905
Telecopy number: (407) 729-5392
Attention: General Counsel
with required copies to:
Citicorp Venture Capital Ltd.
399 Park Avenue
Sixth Floor
New York, New York 10043
Telecopy number: (212) 888-2940
Attention: Paul C. ("Chip") Schorr, IV
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and
Dechert Price & Rhoads
4000 Bell Atlantic Tower
1717 Arch Street
Philadelphia, Pennsylvania 19103
Telecopy number: (215) 994-2222
Attention: G. Daniel O'Donnell
If to Sterling to:
Sterling Holding Company, LLC
c/o Citicorp Venture Capital Ltd.
399 Park Avenue
Sixth Floor
New York, New York 10043
Telecopy number: (212) 888-2940
Attention: Paul C. ("Chip") Schorr, IV
with a required copy to:
Dechert Price & Rhoads
4000 Bell Atlantic Tower
1717 Arch Street
Philadelphia, Pennsylvania 19103
Telecopy number: (215) 994-2222
Attention: G. Daniel O'Donnell
If to CMP to:
Citicorp Mezzanine Partners, L.P.
399 Park Avenue, 14th Floor
New York, NY 10043
Attention: Byron L. Knief
Telecopy No.: (212) 888-2940
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with a required copy to:
Kirkland & Ellis
153 East 53rd Street
New York, NY 10022-4675
Attention: Eunu Chun, Esq.
Telecopy No.: (212) 446-4900
If to Harris to:
Manatee Investment Corporation
1025 West NASA Boulevard
Melbourne, FL 32919
Telecopy number: (407) 727-9222
Attention: Corporate Secretary
with a required copy to:
Squire, Sanders & Dempsey L.L.P.
1201 Pennsylvania Avenue, N.W.
P.O. Box 407
Washington, DC 20044-0407
Telecopy number: (202) 626-6780
Attention: John Henry
If to Prism LLC to:
Intersil Prism, LLC
c/o Intersil Holding Corporation
2401 Palm Bay Road NE
Building 53 M/S 53/198
Palm Bay, FL 32905
Telecopy number: (407) 729-5392
Attention: General Counsel
with a required copy to:
Dechert Price & Rhoads
4000 Bell Atlantic Tower
1717 Arch Street
Philadelphia, Pennsylvania 19103
Telecopy number: (215) 994-2222
Attention: G. Daniel O'Donnell
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If to Stout to:
William N. Stout
5550 E. McDowell Road
Mesa, AZ 85215
Telecopy number: _____________________
with a required copy to:
Bartlit Beck Herman Palenchar & Scott
511 Sixteenth Street
Denver, CO 80202
Telecopy number: (303) 592-3140
Attention: Thomas Stephens
If to the Management Investors or any of them, to their addresses as
listed in the books of the Company.
All such notices shall be deemed to have been duly given: when
delivered by hand, if personally delivered; five business days after being
deposited in the mail, postage prepaid, if mailed; when receipt acknowledged, if
telecopied; and on the next business day, if timely delivered to an air courier
guaranteeing overnight delivery.
9.9. Governing Law. The validity, performance, construction and effect of
this Agreement shall be governed by and construed in accordance with the
internal law of Delaware, without giving effect to principles of conflicts of
law.
9.10 Consent to Exclusive Jurisdiction. Each of the Company, Prism LLC,
Stout, Sterling, Harris and the Management Investors agree that any legal action
or proceeding with respect to this Agreement or any agreement, certificate or
other instrument entered into in contemplation of the transactions contemplated
by this Agreement, or any matters arising out of or in connection this Agreement
or such other agreement, certificate or instrument, and any action for the
enforcement of any judgment in respect thereof, shall be brought exclusively in
the Chancery Court of New Castle County, Delaware or the courts of the United
States of America for the District of Delaware. By execution and delivery of
this Agreement, each of the Company, Sterling, Harris and the Management
Investors irrevocably consent to service of process out of any of the
aforementioned courts in any such action or proceeding by the mailing of copies
thereof by registered or certified mail, postage prepaid, or by recognized
express carrier or delivery service, to the applicable party at his or its
address referred to herein. Each of the Company, Sterling, Harris and the
Management Investors hereby irrevocably waives any objection which he or it may
now or hereafter have to the laying of venue of any of the aforementioned
actions or proceedings arising out of or in connection with this Agreement, or
any related agreement, certificate or instrument referred to above, brought in
the courts referred to above and hereby further irrevocably waive and agree, to
the fullest extent permitted by applicable law, not to plead or claim in any
such court that any such action or proceeding brought in any such court has been
brought in any inconvenient
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forum. Nothing herein shall affect the right of any party to serve process in
any other manner permitted by law.
9.11. Waiver of Jury Trial. Each of the parties to this Agreement waives,
to the fullest extent permitted by law, any right to trial by jury of any claim,
demand, action or cause of action (i) arising under this Agreement or (ii) in
any way connected with or related or incidental to the dealings of the parties
hereto in respect of this Agreement or any of the transactions related hereto,
in each case whether now existing or hereafter arising, and whether in contract,
tort, equity or otherwise. Each of the parties to this Agreement agrees and
consents that any such claim, demand, action or cause of action shall be decided
by court trial without a jury and that the parties to this Agreement may file an
original counterpart of a copy of this Agreement with any court as written
evidence of the consent of the parties hereto to the waiver of the right to
trial by jury.
9.12. ACKNOWLEDGMENT OF MANAGEMENT INVESTORS. EACH MANAGEMENT INVESTOR
ACKNOWLEDGES THAT HE IS A SOPHISTICATED BUSINESSPERSON WHO WAS ADEQUATELY
REPRESENTED BY COUNSEL DURING NEGOTIATIONS REGARDING THE PROVISIONS OF THIS
AGREEMENT, INCLUDING, WITHOUT LIMITATION, THE PROVISIONS RESTRICTING THE
TRANSFER OF SECURITIES BY MANAGEMENT INVESTORS SET FORTH IN SECTION 4.4 AND
ARTICLE VII, AND SPECIFICALLY SECTION 7.2, WHICH SETS FORTH THE COMPANY'S
PURCHASE OPTION WITH RESPECT TO INCENTIVE SHARES. EACH MANAGEMENT INVESTOR
ACKNOWLEDGES THAT ANY PROPERTY RIGHT THAT HE HAS IN INCENTIVE SHARES IS SUBJECT
IN ALL RESPECTS TO THE COMPANY'S PRIOR RIGHT TO REPURCHASE SUCH INCENTIVE SHARES
AS PROVIDED IN ARTICLE VII. EACH MANAGEMENT INVESTOR FURTHER ACKNOWLEDGES THAT
IF THE COMPANY EXERCISES ITS PURCHASE OPTION SUCH MANAGEMENT INVESTOR'S
INCENTIVE SHARES COULD BE PURCHASED BY THE COMPANY AT A PRICE THAT IS LESS THAN
THE FAIR MARKET VALUE OF SUCH SECURITIES AT THE TIME OF SUCH EXERCISE.
9.13. No Effect on Employment. Nothing herein contained shall confer on
any Management Investor the right to remain in the employ of the Company or any
of its subsidiaries or Affiliates.
9.14. Headings. The headings in this Agreement are for convenience of
reference only and shall not constitute a part of this Agreement, nor shall they
affect its meaning, construction or effect.
9.15. Counterparts. This Agreement may be executed in two or more
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original, and all of which taken
together shall constitute one and the same instrument.
9.16. Further Assurances. Each party shall cooperate and take such action
as may be reasonably requested by another party in order to carry out the
provisions and purposes of this Agreement and the transactions contemplated
hereby.
9.17. Termination. Unless sooner terminated in accordance with its terms,
this Agreement shall terminate on the tenth anniversary of the Closing.
37
<PAGE>
9.18. Remedies. In the event of a breach or a threatened breach by any
party to this Agreement of its obligations under this Agreement, any party
injured or to be injured by such breach, in addition to being entitled to
exercise all rights granted by law, including recovery of damages, will be
entitled to specific performance of its rights under this Agreement. The parties
agree that the provisions of this Agreement shall be specifically enforceable,
it being agreed by the parties that the remedy at law, including monetary
damages, for breach of such provision will be inadequate compensation for any
loss and that any defense in any action for specific performance that a remedy
at law would be adequate is waived.
9.19. Party No Longer Owning Securities. If a party hereto ceases to own
any Securities, such party will no longer be deemed to be an Investor or
Management Investor for purposes of this Agreement.
9.20. Pronouns. Whenever the context may require, any pronouns used herein
shall be deemed also to include the corresponding neuter, masculine or feminine
forms.
9.21. Application to Prism LLC. The provisions of Article IX shall apply
to Prism LLC as well as to the Company. Such sections are hereby incorporated
into this Section 9.21 with each reference to the Company therein (other than
with respect to references to a Management Investor's employment with the
Company) replaced with a reference to Prism LLC, each reference to Securities,
Shares, Common Stock or shares of Common Stock replaced with a reference to
Membership Units, each reference to Incentive Shares replaced with a reference
to Incentive Units and each reference to the Company's Board of Directors
replaced with Prism LLC's Board of Directors.
38
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Securities
Purchase and Holders Agreement the day and year first above written.
INTERSIL HOLDING CORPORATION
By: /s/ Daniel J. Heneghan
-------------------------------------
Daniel J. Heneghan
Vice President
STERLING HOLDING COMPANY, LLC
CITICORP VENTURE CAPITAL LTD.
By: /s/ James A. Urry
-------------------------------------
James A. Urry
Vice President
MANATEE INVESTMENT CORPORATION
By: /s/ Ronald Spoehel
-------------------------------------
Ronald Spoehel
President
CITICORP MEZZANINE PARTNERS, L.P.
By: /s/ Byron L. Knief
-------------------------------------
Byron L. Knief
Title:
INTERSIL PRISM, LLC
By: /s/ Daniel J. Heneghan
-------------------------------------
Daniel J. Heneghan
Vice President
S-1
<PAGE>
/s/ William N. Stout
----------------------------------------------
William N. Stout
Social Security Number: ###-##-####
Residence Address: 8084 McKenzie Court
Las Vegas, NV 89129
Residence Telephone: (702) 658-4108
Business Address: 5550 E. McDowell Road
Mesa, AZ 85215
Business Telephone: (602) 985-9000
MANAGEMENT INVESTORS
/s/ Michael W. Althar
----------------------------------------------
Michael W. Althar
Social Security Number: ###-##-####
Residence Address: 3219 Pepper Pike
Findlay, OH 45840
Residence Telephone: (419) 425-1532
Business Address: 2401 Palm Bay Road NE
Palm Bay, FL 32905
Business Telephone: (419) 425-8118
/s/ Lawrence J. Ciaccia
----------------------------------------------
Lawrence J. Ciaccia
Social Security Number: ###-##-####
Residence Address: 200 Naylor St. NE
Palm Bay, FL 32907
Residence Telephone: (407) 725-9779
Business Address: 2401 Palm Bay Road NE
Palm Bay, FL 32905
Business Telephone: (407) 729-5728
S-2
<PAGE>
/s/ Raymond T. Ford
----------------------------------------------
Raymond T. Ford
Social Security Number: ###-##-####
Residence Address: 45 Shady Tree Dr.
Mountaintop, PA 18707
Residence Telephone: (570) 474-9246
Business Address: 2401 Palm Bay Road NE
Palm Bay, FL 32905
Business Telephone: (570) 474-9246
/s/ Rick Furtney
----------------------------------------------
Rick Furtney
Social Security Number: ###-##-####
Residence Address: 157 Dickinson St. NE
Palm Bay, FL 32907
Residence Telephone: (407) 676-0934
Business Address: 2401 Palm Bay Road NE
Palm Bay, FL 32905
Business Telephone: (407) 729-5861
/s/ George Gidzinski
----------------------------------------------
George Gidzinski
Social Security Number: ###-##-####
Residence Address: 1020 Pellam Ave. NE
Palm Bay, FL 32907
Residence Telephone: (407) 729-9372
Business Address: 2401 Palm Bay Road NE
Palm Bay, FL 32905
Business Telephone: (407) 729-4906
S-3
<PAGE>
/s/ Daniel J. Heneghan
-------------------------------------------------
Daniel J. Heneghan
Social Security Number: ###-##-####
Residence Address: 730 Ridgemoor Place
Melbourne, FL 32940
Residence Telephone: (407) 242-7151
Business Address: 2401 Palm Bay Road NE
Palm Bay, FL 32905
Business Telephone: (407) 729-4688
/s/ Jeffrey G. Mansmann
-------------------------------------------------
Jeffrey G. Mansmann
Social Security Number: ###-##-####
Residence Address: 2512 Saddlebridge Dr.
Raleigh, NC 27615
Residence Telephone: (919) 847-7553
Business Address: 2401 Palm Bay Road NE
Palm Bay, FL 32905
Business Telephone: (919) 405-3615
/s/ Karl McCalley
-------------------------------------------------
Karl McCalley
Social Security Number: ###-##-####
Residence Address: 125 Lansing Island Drive
Indian Harbour Beach, FL
32937
Residence Telephone: (407) 777-2111
Business Address: 2401 Palm Bay Road NE
Palm Bay, FL 32905
Business Telephone: (407) 724-7386
S-4
<PAGE>
/s/ W. Russell Morcom
-----------------------------------------------
W. Russell Morcom
Social Security Number: ###-##-####
Residence Address: 339 Coral Way West
Indialantic, FL 32903
Residence Telephone: (407) 777-6219
Business Address: 2401 Palm Bay Road NE
Palm Bay, FL 32905
Business Telephone: (407) 729-4604
/s/ Raymond D. Odom
-----------------------------------------------
Raymond D. Odom
Social Security Number: ###-##-####
Residence Address: 853 Champions Drive NE
Residence Telephone: (407) 723-3958
Business Address: 2401 Palm Bay Road NE
Palm Bay, FL 32905
Business Telephone: (407) 724-7307
/s/ Larry Sims
-----------------------------------------------
Larry Sims
Social Security Number: ###-##-####
Residence Address: 1810 Long Iron Dr., Apt. 327
Rockledge, FL 32955
Residence Telephone: (407) 632-9340
Business Address: 2401 Palm Bay Road NE
Palm Bay, FL 32905
Business Telephone: (407) 729-5638
S-5
<PAGE>
/s/ CB Teh
-----------------------------------------------------
CB Teh
Social Security Number: Malaysian citizen - no US SSN
Residence Address: No. 1, Lorong Pimping,
Ukay Heights
68000 Ampang
Selangor, Malaysia
Residence Telephone: 911-603-451-8223
Business Address: 2401 Palm Bay Road NE
Palm Bay, FL 32905
Business Telephone: 011-603-456-2585
/s/ Stephen Titus
-----------------------------------------------------
Stephen Titus
Social Security Number: ###-##-####
Residence Address: 1305 Golf Vista Ct. NE
Palm Bay, FL 32905
Residence Telephone: (407) 676-0193
Business Address: 2401 Palm Bay Road NE
Palm Bay, FL 32905
Business Telephone: (407) 724-7912
/s/ Gregory L. Williams
-----------------------------------------------------
Gregory L. Williams
Social Security Number: ###-##-####
Residence Address: 686 Deerhurst Drive
Melbourne, FL 32940
Residence Telephone: (407) 253-3069
Business Address: 2401 Palm Bay Road NE
Palm Bay, FL 32905
Business Telephone: (407) 729-5756
S-6
<PAGE>
Schedule I
Management Investors
Incentive Shares Incentive Units
-------------------- -------------------
Gregory L. Williams ................. 3,000,000 3,000,000
Michael W. Althar ................... 300,000 300,000
Lawrence J. Ciaccia ................. 150,000 150,000
Raymond T. Ford ..................... 176,429.60 145,537
Raymond T. Ford IRA ................. 123,570.40 154,463
Rick Furtney ........................ 150,000 150,000
George Gidzinski .................... 600,000 600,000
Daniel J. Heneghan .................. 300,000 300,000
Jeffrey G. Mansmann ................. 150,000 150,000
Karl McCalley ....................... 200,000 200,000
W. Russell Morcom ................... 500,000 500,000
Raymond D. Odom ..................... 500,000 500,000
Larry Sims .......................... 600,000 600,000
CB Teh .............................. 200,000 200,000
Stephen Titus ....................... 300,000 300,000
<PAGE>
Schedule II
Investors
<TABLE>
<CAPTION>
Class A Class B
Common Common Series A Membership
Stock Stock Preferred Stock Units
------------- ------------- --------------- ----------
<S> <C> <C> <C> <C>
Sterling Holding Company, LLC ...... 10,988,165.36 67,822.346.61 73,556.48 78,810,512
Sterling Holding Company, LLC ...... 2,750,000.00 2,750,000
Manatee Investment Corporation ..... 2,263,027.86 6,797,374.83 8,456.38 9,060,403
William N. Stout* .................. 100,671.14 93.96 100,671
Gregory L. Williams ................ 3,316,574.95 45.47 3,316,575
Gregory L. Williams IRA ............ 30,740.49 28.69 30,740
Michael W. Althar .................. 365,880.96 61.49 365,881
Lawrence J. Ciaccia ................ 185,590.52 33.22 185,591
Raymond T. Ford .................... 176,429.60 145,537
Raymond T. Ford IRA ................ 166,130.99 39.72 197,024
Rick Furtney ....................... 190,890.60 38.16 190,891
George Gidzinski ................... 684,563.76 3.93 684,564
Daniel J. Heneghan ................. 382,634.09 27.13 382,634
Jeffrey G. Mansmann ................ 164,390.18 13.43 164,390
Karl McCalley ...................... 533,905.28 311.64 533,905
W. Russell Morcom .................. 1,025,247.45 415.23 1,025,247
Raymond D. Odom .................... 570,020.50 15.35 570,020
Larry Sims ......................... 835,916.17 145.19 835,916
CB Teh ............................. 303,988.25 97.06 303,988
Stephen Titus ...................... 355,280.54 51.60 355,281
</TABLE>
- - ------------
* To be contributed from Stout to Sterling Holding Company, LLC the following:
100,671.14 shares of Class A Common Stock, 93.96 shares of Series A Preferred
Stock and 100,671 membership units.
<PAGE>
Schedule III
Preferred Options
Number of Shares of Series A
Investor Preferred Stock Subject to Option
- - -------- ---------------------------------
George Gidzinski 100
Daniel Heneghan 66.67
W. Russell Morcom 100
Ray Odom 66.67
Larry Sims 100
Gregory Williams 333.33
<PAGE>
EXHIBIT A
CERTIFICATE OF INCORPORATION
<PAGE>
EXHIBIT B
BYLAWS
<PAGE>
EXHIBIT C
LIMITED LIABILITY COMPANY AGREEMENT
<PAGE>
EXHIBIT D
REGISTRATION RIGHTS AGREEMENT
EXHIBIT 10.10
INTERSIL HOLDING CORPORATION
OPTION AWARD AGREEMENT
AGREEMENT by and between Intersil Holding Corporation, a Delaware
corporation ("Intersil Holding" or "Company") and ____________ (the "Optionee"),
dated as of the 13th day of August, 1999.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. A. Grant of Stock Option.
Intersil Holding hereby grants the Optionee an option (the "Option") to
purchase:
(a) Preferred Shares: _________ shares of 12% Series A Cumulative
Compounding Preferred Stock, par value $.01 per share, of Intersil
Holding (the "Preferred Shares"), with a liquidation value on date of
grant of $1000 per share. The number of shares of Preferred Stock for
which options are granted hereunder shall be adjusted annually as
provided in paragraph 1B; and
(b) The term "Shares" shall mean the Preferred Shares.
B. Preferred Stock Option Adjustment:
Provided that the Options granted hereby have not otherwise terminated, on
each anniversary date of the date of grant, the number of Preferred Shares
subject to this Option, and for which the Option remains unexercised, shall be
increased by a number of Preferred Shares, including fractional shares,
sufficient to increase the liquidation value of the Preferred Shares subject to
the Option over that value at the grant date in the case of the first
anniversary, or at the immediately preceding anniversary date in the case of any
other anniversary, by 12%. For purposes of this calculation, the number of
shares subject to Options at any date earlier than the calculation date will be
reduced by the number of shares for which Options have since been exercised.
2. Option Price. The initial exercise price of the options to acquire Preferred
Shares is $250 per share. Provided that the Optionee is still employed by
Intersil Holding on that date, and the Options granted hereby have not otherwise
terminated or been forfeited, on each anniversary date of the date of grant, the
price per Preferred Share subject to this Option shall be increased over that
price at the grant date in the case of the first anniversary, or at the
immediately preceding anniversary date in the case of any other anniversary, by
12%.
3. Term.
Unless earlier forfeited, the Option will expire in its entirety upon the
tenth anniversary of the date hereof.
<PAGE>
4. Exercise of Option.
(a) Right to Exercise. This Option shall be exercisable during its term in
accordance with this Option Agreement beginning on the date of grant.
(b) Method of Exercise. This Option shall be exercisable by delivery of an
exercise notice in the form attached hereto as Exhibit A (the
"Exercise Notice") which shall state the election to exercise the
Option, the number of whole Shares with respect to which the Option is
being exercised, and such other representations and agreements as
may be required by the Company. The Exercise Notice shall be
accompanied by payment of the aggregate exercise price as to all
exercised Shares. This Option shall be deemed to be exercised upon
receipt by the Company of such fully executed Exercise Notice
accompanied by the aggregate exercise price.
No Shares shall be issued pursuant to the exercise of an Option unless
such issuance and such exercise complies with applicable laws.
Assuming such compliance, for income tax purposes the Shares shall be
considered transferred to the Optionee on the date on which the Option
is exercised with respect to such Shares.
5. Any exercise of an Option shall also be considered to be an exercise of a pro
rata portion of any fractional shares produced by the adjustment calculation
under paragraph 1B, which fractional shares will be settled in cash. At the
Company's election, that settlement can be effected by the delivery of cash to
the Optionee or by a reduction in the Exercise Price equal to the otherwise
deliverable cash.
(a) Securities Matters. In the event the Shares have not been registered
under the Securities Act of 1933, as amended (the "Securities Act"),
at the time this Option is exercised, the Optionee shall, if required
by the Company, concurrently with the exercise of all or any portion
of this Option, deliver to the Company his or her Investment
Representation Statement in the form attached hereto as Exhibit B.
(b) Shareholders' Agreement. Optionee acknowledges that in addition to the
requirements and restrictions of this Agreement:
(1) Optionee is to be considered a Management Investor, as that term
is defined in the Securities Purchase and Holders Agreement by and
among Intersil Holding Corporation, Sterling Holding Company, LLC,
Manatee Investment Corporation., Intersil Prism, LLC, William N.
Stout and the Management Investors, dated August 13, 1999 (the
"Shareholders Agreement"), and
(2) That Optionee has received and agrees to be bound by the
Shareholders Agreement, which is incorporated herein by reference,
with respect to the Option and any shares of Intersil Holding
stock acquired upon exercise of this Option.
-2-
<PAGE>
Optionee is familiar with the terms and provisions of the Shareholders
Agreement, and hereby accepts this Option subject to all of the terms and
provisions thereof. Optionee has reviewed the Shareholders Agreement and this
Option Agreement in their entirety, has had an opportunity to obtain the advice
of counsel prior to executing this Option Agreement and fully understands all
provisions of the Option Agreement.
6. Method of Payment. Payment of the aggregate exercise price shall be by
cash or check, or a combination thereof, at the election of the Optionee.
7. Restrictions on Exercise. This Option may not be exercised if the issuance of
such Shares upon such exercise or the method of payment of consideration for
such shares would constitute a violation of any applicable law.
8. Non-Transferability of Option. This Option may not be transferred in any
manner except to the extent specifically permitted pursuant to the Shareholders
Agreement.
9. Term of Option. This Option will expire in its entirety on the tenth
anniversary of the date of this Agreement.
10. Notices. All notices or other communications given hereunder or in
connection herewith shall be sent pursuant to the Shareholders Agreement.
11. Option Not Compensation. Neither the Option, the value of Shares issued upon
exercise, any excess of market value over the Option price at times of exercise,
nor any other rights, profits, values or interests resulting from the grant or
exercise of the Option, shall be considered as "compensation" of the Optionee
for purposes of computing the Optionee's benefit rights under any present or
future pension benefit or welfare benefit plan or incentive compensation plan of
the Company under which he or she may become eligible for benefits on the basis
of such compensation.
12. No Guarantee of Continued Employment. If Optionee is an employee, Optionee
acknowledges and agrees that this agreement, the transactions contemplated
hereunder and the vesting schedule set forth herein do not constitute an express
or implied promise of continued employment or other relationship as a service
provider to the Company, and shall not interfere in any way with Optionee's
right or the company's right to terminate Optionee's employment or relationship
as a service provider at any time, with or without cause (subject in the case of
a service provider to any applicable service agreement).
13. Entire Agreement. This Option Agreement and the Shareholders Agreement
constitute the entire agreement of the parties with respect to the subject
matter hereof and supersede in their entirety all prior undertakings and
agreements of the Company and Optionee with respect to the subject matter
hereof.
14. Consent to Exclusive Jurisdiction. The Company and the Optionee agree that
any legal action or proceeding with respect to this Agreement or any agreement,
certificate or other instrument entered into in contemplation of the
transactions contemplated by this Agreement, or any matters arising out of or in
connection with this Agreement or such other agreement, certificate or
-3-
<PAGE>
instrument, and any action for the enforcement of any judgment in respect
thereof, shall be brought exclusively in the Chancery Court of New Castle
County, Delaware or the courts of the United States of America for the District
of Delaware. By execution and delivery of this Agreement, the Company and the
Optionee irrevocably consents to service of process out of any of the
aforementioned courts in any such action or proceeding by the mailing of copies
thereof by registered or certified mail, postage prepaid, or by recognized
express carrier or delivery service, to the applicable party at his or its
address referred to herein. Each of the Company and the Optionee hereby
irrevocably waives any objection which he or it may now or hereafter have to the
paying of venue of any of the aforementioned actions or proceedings arising out
of or in connection with this Agreement, or any related agreement, certificate
or instrument referred to above, brought in the courts referred to above and
hereby further irrevocably waive and agree, to the fullest extent permitted by
applicable law, not to plead or claim in any such court that any such action or
proceeding brought in any such court has been brought in any inconvenient forum.
Nothing herein shall affect the right of any party to service process in any
other manner permitted by law.
15. Waiver of Jury Trial. Each of the parties to this Agreement waives, to the
fullest extent permitted by law, any right to trial by jury of any claim,
demand, action or cause of action (i) arising under this Agreement or (ii) in
any way connected with or related or incidental to the dealings of the parties
hereto in respect of this Agreement or any of the transactions related hereto,
in each case whether now existing or hereafter arising , and whether in
contract, tort, equity or otherwise. Each of the parties to this Agreement
agrees and consents that any such claim, demand, action or cause of action shall
be decided by court trial without a jury and that the parties to this Agreement
may file an original counterpart of a copy of this Agreement with any court as
written evidence of the consent of the parties hereto to the waiver of the right
to trial by jury.
-4-
<PAGE>
SCHEDULE 1
INTERSIL HOLDING CORPORATION
OPTION AWARD AGREEMENT
OPTIONEE PREFERRED SHARES
-------- ----------------
George Gidzinski 100
Daniel Heneghan 66.67
W. Russell Morcom 100
Ray Odom 66.67
Larry Sims 100
Gregory Williams 333.33
<PAGE>
EXHIBIT A
EXERCISE NOTICE
Intersil Holding Corporation
Attention:
1. Exercise of Option. Effective as of today, __________________, ____ the
undersigned ("Optionee") hereby elects to exercise Optionee's option to purchase
_____ shares of 12% Series A Cumulative Compounding Preferred Stock, par value
$.01 per share (the "Shares"), of Intersil Holding Corporation (the "Company"),
under and pursuant to the Intersil Holding Corporation Option Award Agreement
dated August 13, 1999 (the "Option Agreement").
2. Delivery of Payment. Optionee herewith delivers to the Company the full
purchase price of the Shares, as set forth in the Option Agreement.
3. Representations of Optionee. Optionee acknowledges that Optionee has
received, read and understood the Shareholders Agreement, as that term is
defined by the Option Agreement and the Option Agreement and agrees to abide by
and be bound by their terms and conditions.
4. Rights as Shareholder. Until the issuance of the Shares (as evidenced by
the appropriate entry on the books of the Company or of a duly authorized
transfer agent of the Company), no right to vote or receive dividends or any
other rights as a Shareholder shall exist with respect to the Option Shares,
notwithstanding the exercise of the Option. The Shares shall be issued to the
Optionee as soon as practicable after the Option is exercised. The Optionee
specifically acknowledges that the Option and any Shares acquired upon exercise
of the Option are subject to the Company's rights and those of the other parties
to the Shareholders Agreement.
5. Tax Consultation. Optionee understands that Optionee may suffer adverse
tax consequences as a result of Optionee's purchase or disposition of the
Shares. Optionee represents that Optionee has consulted with all tax consultants
Optionee deems advisable in connection with the purchase or disposition of the
Shares and that Optionee is not relying on the Company or the Committee for any
tax advice.
6. Restrictive Legends and Stop-Transfer Orders.
(a) Legends. Optionee understands and agrees that the Company shall cause
the legend set forth below or a legend substantially equivalent
thereto to be placed upon any certificate(s) evidencing ownership of
the Shares together with any other legends that may be required by the
Company or by state or federal securities laws:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 (THE "ACT") AND MAY NOT BE OFFERED, SOLD OR
-2-
<PAGE>
OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL
REGISTERED UNDER THE ACT OR, IN THE OPINION OF COUNSEL SATISFACTORY TO
THE ISSUER OF THESE SECURITIES, SUCH OFFER, SALE OR TRANSFER, PLEDGE
OR HYPOTHECATION IS IN COMPLIANCE THEREWITH.
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
RESTRICTIONS ON TRANSFER, A RIGHT OF FIRST REFUSAL AND OTHER RIGHTS
HELD BY THE PARTIES TO A SECURITIES PURCHASE AND HOLDERS AGREEMENT BY
AND AMONG INTERSIL HOLDING CORPORATION, STERLING HOLDING COMPANY, LLC,
HARRIS FAR EAST LTD., INTERSIL PRISM, LLC, WILLIAM N. STOUT AND THE
MANAGEMENT INVESTORS NAMED THEREIN, DATED AUGUST 13, 1999 (THE
"SHAREHOLDERS AGREEMENT") AS INCORPORATED BY REFERENCE INTO THE
EXERCISE NOTICE BETWEEN THE ISSUER AND THE ORIGINAL OPTIONEE OF THESE
SHARES, A COPY OF WHICH MAY BE OBTAINED AT THE PRINCIPAL OFFICE OF THE
ISSUER. SUCH TRANSFER RESTRICTIONS AND RIGHT OF FIRST REFUSAL ARE
BINDING ON TRANSFEREES OF THESE SHARES.
(b) Stop-Transfer Orders. Optionee agrees that, in order to ensure
compliance with the restrictions referred to herein, the Company may
issue appropriate "stop transfer" instructions to its transfer agent,
if any, and that, if the Company transfers its own securities, it may
make appropriate notations to the same effect in its own records.
(c) Refusal to Transfer. The Company shall not be required (i) to transfer
on its books any Shares that have been sold or otherwise transferred
in violation of any of the provisions of this Exercise Notice or (ii)
to treat as owner of such Shares or to accord the right to vote or pay
dividends to any purchaser or other transferee to whom such Shares
shall have been so transferred.
7. Entire Agreement. The Shareholders Agreement and Option Agreement are
incorporated herein by reference. Unless otherwise defined herein, the terms
defined in the Plan shall have the same meaning in this Exercise Notice. The
Shareholders Agreement and the Option Agreement constitute the entire agreement
of the parties with respect to the subject matter hereof and supersede in their
entirety all prior undertakings and agreements of the Company and Optionee with
respect to the subject matter hereof, and may not be modified adversely to the
Optionee's interest except by means of a writing signed by the Company and
Optionee. In the event of a conflict between the terms and conditions of this
Exercise Notice and the Shareholders Agreement and/or the Option Agreement, the
terms and conditions of the Shareholders Agreement or Option Agreement, as
applicable shall prevail.
<PAGE>
Submitted by: Accepted by:
OPTIONEE: INTERSIL HOLDING CORPORATION
____________________________ By:___________________________
-3-
<PAGE>
EXHIBIT B
INVESTMENT REPRESENTATION STATEMENT
Optionee _______________.
Security _______________ Shares of Preferred Stock of Intersil Holding,
liquidation value $1,000 per share
Amount ________________________________________________
Date ________________________________________________
In connection with the purchase of the above-listed Securities, the
undersigned Optionee represents to the Company the following:
1. Optionee is aware of the Company's business affairs and financial
condition and has acquired sufficient information about the Company to reach an
informed and knowledgeable decision to acquire the Securities. Optionee is
acquiring these Securities for investment for Optionee's own account only and
not with a view to, or for resale in connection with, any "distribution" thereof
within the meaning of the Securities Act of 1933, as amended (the "Securities
Act").
2. Optionee acknowledges and understands that the Securities constitute
"restricted securities" under the Securities Act and have not been registered
under the Securities Act in reliance upon a specific exemption therefrom, which
exemption depends upon, among other things, the bona fide nature of Optionee's
investment intent as expressed herein. In this connection, Optionee understands
that, in the view of the Securities and Exchange Commission, the statutory basis
for such exemption may be unavailable if Optionee's representation was
predicated solely upon a present intention to hold these Securities for the
minimum capital gains period specified under tax statutes, for a deferred sale,
for or until an increase or decrease in the market price of the Securities, or
for a period of one year or any other fixed period in the future. Optionee
further understands that the Securities must be held indefinitely unless they
are subsequently registered under the Securities Act or an exemption from such
registration is available. Optionee further acknowledges and understands that
the Company is under no obligation to register the Securities. Optionee
understands that the certificate evidencing the Securities will be imprinted
with a legend which prohibits the transfer of the Securities unless they are
registered or such registration is not required in the opinion of counsel
satisfactory to the Company and with any other legend required under applicable
state securities laws.
3. Holder is familiar with the provisions of Rule 701 and Rule 144, each
promulgated under the Securities Act, which, in substance, permit limited public
resale of "restricted securities" acquired, directly or indirectly from the
issuer thereof, in a non-public offering subject to the satisfaction of certain
conditions. Rule 701 provides that if the issuer qualifies under Rule 701 at the
time of the grant of the Option to the Optionee, the exercise will be exempt
<PAGE>
from registration under the Securities Act. In the event the Company becomes
subject to the reporting requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, ninety (90) days thereafter (or such longer period as any
market stand-off agreement may require) the Securities exempt under Rule 701 may
be resold, subject to the satisfaction of certain of the conditions specified by
Rule 144, including: (a) the resale being made through a broker in an
unsolicited "broker's transaction" or in transactions directly with a market
maker (as said term is defined under the Securities Exchange Act of 1934); and,
in the case of an affiliate, (b) the availability of certain public information
about the Company, (c) the amount of Securities being sold during any three
month period not exceeding the limitations specified in Rule 144(e), and (d) the
timely filing of a Form 144, if applicable.
In the event that the Company does not qualify under Rule 701 at the time
of grant of the Option, then the Securities may be resold in certain limited
circumstances subject to the provisions of Rule 144, which requires the resale
to occur not less than one year after the later of the date the Securities were
sold by the Company or the date the Securities were sold by an affiliate of the
Company, within the meaning of Rule 144; and, in the case of acquisition of the
Securities by an affiliate, or by a non-affiliate who subsequently holds the
Securities less than two years, the satisfaction of the conditions set forth in
sections (a), (b), (c) and (d) of the paragraph immediately above.
4. Optionee further understands that in the event all of the applicable
requirements of Rule 701 or 144 are not satisfied, registration under the
Securities Act, compliance with Regulation A, or some other registration
exemption will be required; and that, notwithstanding the fact that Rules 144
and 701 are not exclusive, the Staff of the Securities and Exchange Commission
has expressed its opinion that persons proposing to sell private placement
securities other than in a registered offering and otherwise than pursuant to
Rules 144 or 701 will have a substantial burden of proof in establishing that an
exemption from registration is available for such offers or sales, and that such
persons and their respective brokers who participate in such transactions do so
at their own risk. Optionee understands that no assurances can be given that any
such other registration exemption will be available in such event.
Signature of Optionee:
Date: _____________________________ _________________________________
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EXHIBIT 10.11
EXECUTION COPY
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT (this "Agreement"), dated as of August 9, 1999,
between Intersil Holding Corporation, a Delaware corporation formerly known as
HSS Holding Corporation (the "Company"), and Gregory L. Williams ("Executive").
Background
The Company wishes to retain the services of Executive to assist in the
management of the Company.
Terms
In consideration of the premises and of the mutual covenants herein
contained, the parties agree as follows:
1. Position. During the term of his employment with the Company hereunder,
Executive shall serve as Chief Executive Officer of the Company and Intersil
Corporation, formerly known as HSS Operating Company, a wholly-owned subsidiary
of the Company ("Intersil").
Executive shall diligently devote his entire business skill, time and
effort to his employment hereunder; provided, however, that he shall be entitled
annually to at least four weeks vacation and sick leave pursuant to policies
adopted by the Company from time to time for senior executive officers of the
Company. Notwithstanding the foregoing, and provided that such activities do not
interfere with the fulfillment of Executive's obligations hereunder, Executive
may (a) serve as a director or trustee of any charitable or non-profit entity
and of not more than two for profit business corporations so long as such
entities are not, directly or indirectly in competition with the Company, any
subsidiary of the Company, or any entity directly or indirectly controlled by
the Company or any such subsidiary (an "Affiliate"); and (b) acquire solely as
an investment any securities so long as (i) he remains a passive investor in
such entity and (ii) such entity is not, directly or indirectly, in competition
with the Company or any Affiliate; provided, however, that the foregoing clause
(ii) shall not prohibit Executive from acquiring as an investment up to five
percent (5%) of any issuer's outstanding publicly traded securities.
2. Term of Employment. Executive's term of employment by the Company under
this Agreement shall begin on the Closing Date (as such term is defined in the
Master Transaction Agreement, dated June 2, 1999 as amended on July 21, 1999 and
August 6, 1999, among Harris Corporation, a Delaware corporation, the Company
and Intersil Corporation, a Delaware corporation formerly known as HSS Operating
Corporation) and shall continue for a period of 60 months (the "Employment
Term") (the termination date being hereafter referred to as the "Normal
Termination Date") and shall continue for successive additional 12 month periods
<PAGE>
thereafter (each continued term, the "Extended Employment Term") unless written
notice to the contrary is given by either party to the other at least one
hundred eighty (180) days prior to the then current termination date, unless
sooner terminated as hereinafter provided.
3. Compensation. As compensation for the services contemplated hereby,
Executive shall receive during the Employment Term and each Extended Employment
Term a base salary equal to $425,000 per annum to be paid semi-monthly in equal
installments. Such salary rate shall be subject to annual merit increase reviews
by the Board of Directors (such salary as adjusted from time to time being the
"Base Salary"); it being understood that the Board of Directors shall in good
faith consider appropriate increases in the compensation of the Executive if as
a result of substantial acquisitions by the Company the duties and
responsibilities of the Executive are substantially expanded (other than through
a Change in Control as defined in Section 12(b))..
4. Bonus; Relocation Payments.
(a) In addition to the compensation provided to Executive in Section 3
hereof, Executive shall receive, during the Employment Term and each Extended
Employment Term, at the discretion of the Board of Directors, and subject to
annual review, an annual performance bonus based on individual criteria and/or
executive incentive programs to be determined from time to time by the Board of
Directors (the "Performance Bonus").
(b) At Executive's option, the Company's corporate headquarters will be
relocated within the next 12 months to a site to be selected by Executive. The
costs of any such relocation will be subject to the reasonable approval of the
Company's Board of Directors. The Company will reimburse Executive for all
reasonable relocation expenses, including any federal or state taxes, incurred
by Executive in connection with any such relocation of the type listed on
Schedule 4(b) hereto.
5. Employment Benefits. Executive shall be entitled to participate, during
the Employment Term and each Extended Employment Term, in all medical benefit
plans, hospitalization plans, group life insurance, long term disability or
other employee welfare benefit plans (collectively, the "Group Insurance Plans")
and any pension plans (including any supplemental employee retirement plans)
that may be provided by the Company or its subsidiaries to senior executive
officers from time to time during the Employment Term or Extended Employment
Term, as the case may be.
6. Expenses; Other Benefits.
(a) The Company shall pay or reimburse Executive for any expenses
reasonably incurred by him in furtherance of his duties hereunder, including,
but not limited to, reasonable expenses for traveling, meals and hotel
accommodations, and business related entertainment upon submission by him of
appropriate documentation thereof, all so prepared in compliance with such
policies and procedures relating thereto as the Company may from time to time
adopt.
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(b) The Company shall reimburse Executive for legal fees and expenses
incurred by Executive in connection with the negotiation and execution of this
Agreement and the Securities Purchase Agreement (as defined in Section 13) and
related matters in an amount not to exceed $ 55,000.
(c) The Company shall pay, at the Executive's direction, or reimburse the
Executive for up to $5,000 per year of the Employment Term and Extended
Employment Term for tax and estate planning expenses incurred by the Executive.
7. Termination.
(a) Termination by Company for Cause or Without Cause. The Company may
terminate this Agreement and (except as provided below) all of the Company's
obligations hereunder, either for "Cause" or "Without Cause." Such termination
shall be effected by notice thereof delivered by the Company to Executive, and
shall be effective as of the date of such notice. In the event that Executive is
terminated by the Company for Cause, Executive shall be entitled to receive all
Base Salary earned and accrued to the date of termination, but all other rights
of Executive hereunder shall terminate as of the effective date of Executive's
termination, except as otherwise provided by law.
In the event that Executive is terminated by the Company Without Cause,
Executive shall be entitled (i) to receive all payments due as Base Salary to
the end of the then current Employment Term or Extended Employment Term, as the
case may be but in no event less than 12 months following the date of
termination of employment, as and when the same would have otherwise been
payable had Executive not been terminated, (such term, the "Continuation
Period"), (ii) to receive a pro rata portion of any Performance Bonus or any
other accrued benefit or incentive compensation for (and based on the results
of) the year in which Executive is terminated which shall be payable at the time
such bonus would have otherwise been payable had Executive not been terminated,
and (iii) to continue to participate at the Company's expense in the Group
Insurance Plans during the Continuation Period.
As used herein, (i) "Cause" means (A) Executive's conviction of a felony
which constitutes a crime involving moral turpitude and results in harm to the
Company or any of its Affiliates; or (B) a judicial determination that Executive
has committed fraud, misappropriation or embezzlement against any person; or (C)
Executive's failure to comply with the terms of this Agreement and/or
Executive's willful or gross and repeated neglect of duties hereunder, or
willful or gross and repeated misconduct in the performance of such duties, in
each instance so as to cause material harm to the Company or any of its
Affiliates, determined in good faith by its Board of Directors and after written
notice to Executive by the Board of Directors specifying the manner in which the
Board of Directors believes that such failure, neglect or misconduct has
occurred; and the failure by Executive to cure such failure, neglect or
misconduct within thirty (30) days after written notice from the Board of
Directors and, if requested by Executive within such 30-day period, after
Executive has had the opportunity to meet and discuss such failure with such
Board of Directors, and (ii) "Without Cause" means any termination of Executive
other than for Cause, resignation, Total Disability or death, and (except in the
event of a Change in Control, which shall be governed exclusively by the
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<PAGE>
provisions of paragraph 11), shall include (y) material and substantial
diminution of Executive's duties and authorities hereunder, as compared with his
duties and authorities as of the date hereof or a demotion from the office of
Chief Executive Officer (individually or collectively, a "Demotion") and (z) any
failure by the Company to comply with the terms of this Agreement after written
notice by Executive to the Board of Directors specifying the manner in which
Executive believes that such failure has occurred, and the failure by the
Company to cure such failure within thirty (30) days after such written notice
from Executive.
(b) Resignation of Executive. In the event that Executive resigns (except
in the case of resignation due to Total Disability or following a Demotion)
during the Employment Term or any Extended Employment Term, Executive shall be
entitled to receive all Base Salary earned and accrued to the date of
resignation and a pro rata portion of any Performance Bonus or other incentive
compensation for (and based on the results of) the year in which such
resignation occurs, but all other rights of Executive hereunder shall terminate
as of the date of Executive's resignation, except as otherwise provided by law.
(c) Executive's Total Disability. In the event that Executive is terminated
by the Company or Executive resigns due to Executive's Total Disability,
Executive shall be entitled to receive all Base Salary earned and accrued to the
date of termination or resignation plus Base Salary for a period of 12 months
following the date of termination or resignation as and when the same would
otherwise have been payable had Executive not been terminated or not resigned,
and a pro rata portion of any Performance Bonus for the year in which Executive
is terminated which shall be payable at the time such bonus would have otherwise
been payable had Executive not been terminated or not resigned, and shall be
entitled to continue to participate in the Group Insurance Plans for a period of
12 months following the date of termination or resignation (such term, the
"Disability Continuation Period"), but all other rights of Executive hereunder
shall terminate as of the date of Executive's termination or resignation, except
as otherwise provided by law.
As used herein, "Total Disability" shall mean any physical or
mental ailment or incapacity as determined by a licensed physician agreed to by
the Company and Executive (or, in the event that Executive and the Company
cannot so agree, by a licensed physician agreed upon by a physician selected by
Executive and a physician selected by the Company), which prevents Executive
from performing the duties incident to Executive's employment hereunder which
has continued for a period of either (i) ninety (90) consecutive days in any
12-month period or (ii) one hundred eighty (180) total days in any 12-month
period, and which is expected to be of permanent duration. Executive shall
permit such physician to examine Executive from time to time prior to
Executive's being determined to be Totally Disabled, as reasonably requested by
the Company, to determine whether Executive has suffered a Total Disability
hereunder.
(d) Death. In the event that Executive dies during the Employment Term,
Executive's estate shall be entitled to receive all Base Salary earned and
accrued to the date of death plus Base Salary for a period of 12 months
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<PAGE>
following the date of death as and when the same would otherwise have been
payable had Executive not died, and a pro rata portion of any Performance Bonus
for the year in which Executive is terminated which shall be payable at the time
such bonus would have otherwise been payable had Executive not died, and his
spouse and dependents shall be entitled to participate in the Group Insurance
Plans for a period of 12 months following the date of Executive's death, as well
as any other benefits payable under any then current life insurance policy
provided to Executive pursuant to Section 5 hereof, but all other rights of
Executive hereunder shall terminate, except as otherwise provided by law.
8. Protection of Confidential Information.
(a) Covenant. Executive acknowledges that his employment by the Company
will, throughout the term of this Agreement, bring him into close contact with
many confidential affairs of the Company and its Affiliates, including
information concerning the Company's finances and operating results, its
markets, key personnel, operational methods and other business affairs and
methods, technical data, computer software and other proprietary intellectual
property, other information not readily available to the public, and plans for
future developments relating thereto. Executive further acknowledges that the
services to be performed under this Agreement are of a special, unique, unusual,
extraordinary and intellectual character. In recognition of the foregoing,
Executive covenants and agrees that he will:
(i) keep secret all confidential matters of the Company and its
Affiliates known to him which are not otherwise in the public domain and will
not intentionally disclose them to anyone outside of the Company and its
Affiliates, wherever located, either during or after the term of this Agreement
except with the Company's prior written consent.
(ii) promptly disclose to the Company, and that the Company will own
all right, title and interest in, all inventions, computer software and other
intellectual property (the "Intellectual Property") which he conceives or
develops during the course of his employment (excluding that which he conceives
or develops without the use of the time, resources or facilities of the Company
or its Affiliates and which does not relate to the past, present or prospective
activities of the Company or its Affiliates), will affix appropriate legends and
copyright notices indicating the Company's ownership of all Intellectual
Property and all underlying documentation, and will execute such further
assignments and other documents as the Company considers necessary to vest,
perfect, patent, maintain or defend the Company's right, title and interest in
the Intellectual Property; and
(iii) deliver promptly to the Company on termination of his employment
by the Company, or at any other time the Company may so request, all memoranda,
notes, records, reports, computer discs and other documents (and all copies
thereof) relating to the business of the Company or its Affiliates which he
obtained or developed while employed by, or otherwise serving or acting on
behalf of, the Company or its Affiliates and which he may then possess or have
under this control or relating to the Intellectual Property; provided, however,
that in the event of any dispute between the Company and Executive in relation
to the termination of his employment by the Company, Executive may retain copies
of the foregoing to be used solely in connection with any arbitration or
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<PAGE>
judicial proceeding to resolve such dispute; provided further, however,
Executive shall immediately upon the resolution of such dispute deliver all such
retained copies to the Company.
(b) Covenant. During the Employment Term, any Extended Employment Term and
any Continuation Period or Disability Continuation Period, Executive will not
(i), directly or indirectly, engage in any activity in competition with the
Company or its Affiliates or (ii) plan, or otherwise take, any preliminary
steps, either alone or in concert with others, to set up or engage in any
semiconductor manufacturing or designing in competition with the Company or its
Affiliates. During the Employment Term, any Extended Employment Term and any
Continuation Period or Disability Continuation Period, and upon termination of
the Employment Term or any Extended Employment Term, during the Restriction
Period (as defined in Section 9(a)), Executive will not, either directly or
indirectly, either alone or in concert with others, solicit or entice any
employee of or consultant to the Company or its Affiliates to leave the Company
or its Affiliates or work for anyone in competition with the Company or its
Affiliates or solicit, entice or in any way divert any customer or supplier to
do business with any business entity in competition with the Company or its
Affiliates. With respect to any Continuation Period or Disability Continuation
Period, Affiliates of the Company shall be determined as of the date of
termination of Executive's employment with the Company. In the event of
termination of the Employment Term or any Extended Employment Term, during the
Restriction Period, Executive will not accept any employment or engage in any
activities competitive with the Company or its Affiliates, if the loyal and
complete fulfillment of the duties of the competitive employment or activities
would inherently call upon Executive to reveal Propriety Information to which
Executive had access or learned during his Employment. As used herein,
"Proprietary Information" shall mean information generally unavailable to the
public that has been created, discovered, developed, or otherwise become known
to the Company or any of its subsidiaries or in which property rights have been
assigned or otherwise conveyed to the Company or any of its subsidiaries, which
information has material economic value or potential material economic value to
the business in which the Company or any of its subsidiaries is or will be
engaged. Proprietary Information shall include, but not be limited to trade
secrets, processes, formulas, data, know-how, negative know-how, improvements,
discoveries, developments, designs, inventions, techniques, all technical data,
customer and supplier lists, and any modifications or enhancements thereto,
programs, and information (whether or not necessarily in writing) which has
actual or potential economic value to the Company or any of its subsidiaries.
(c) Specific Remedy. If Executive commits a breach of any of the provisions
of paragraph 8(a), the Company and its Affiliates shall have the right and
remedy to have such provisions specifically enforced by any court having equity
jurisdiction, it being acknowledged and agreed that any such breach or
threatened breach will cause irreparable injury to the Company and its
Affiliates and that money damages will not provide an adequate remedy to the
Company and its Affiliates.
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<PAGE>
9. Covenant Not to Compete.
(a) Covenant. During the Employment Term, any Extended Employment Term and
any Continuation Period or Disability Continuation Period, and upon termination
of the Employment Term or any Extended Employment Term, during the Restriction
Period, Executive will not (i) directly or indirectly, engage in, represent in
any way, be connected with, become employed by or have any interest in any
business or activity competing in any manner with any businesses carried on by
the Company or its Affiliates at the time of such termination, or (ii) solicit,
employ, retain as a consultant, interfere with or attempt to entice away from
the Company or its Affiliates any individual who is, has agreed to be or within
six months of such solicitation, employment, retention, interference or
enticement has been, employed or retained by the Company or any of its
Affiliates in a senior executive capacity. As used herein, "Restriction Period"
means one year following the date of termination of the Employment Term or
Extended Employment Term, as the case may be.
(b) Specific Remedy. If Executive commits a breach of the provisions of
paragraph 9(a), the Company and its Affiliates shall have the right and remedy
to have such provisions specifically enforced by any court having equity
jurisdiction, it being acknowledged and agreed that any such breach or
threatened breach will cause irreparable injury to the Company and its
Affiliates and that money damages will not provide an adequate remedy to the
Company and its Affiliates.
10. Right of Indemnification. The Company hereby agrees to indemnify the
Executive as Chief Executive Officer, director and representative of the Company
and its affiliates to the fullest extent permitted and the manner required under
the laws of the State of Delaware, as the same now exist or may hereafter be
amended (but, in the case of any such amendment, only to the extent that such
amendment permits the Company to provide broader indemnification rights than
provided by the laws of the State of Delaware prior to such amendment), in the
event the Executive is made a party or is threatened to be made a party to, or
is involved in or called as a witness in, any action, suit or proceeding,
whether civil, criminal, administrative or investigative, and any appeal
therefrom. The Company agrees that such indemnification shall cover all expenses
incurred by the Executive (including, but not limited to, attorneys' fees and
expenses) and all liabilities and losses incurred by the Executive in connection
therewith. The right of indemnification contained herein shall survive the
termination of this Agreement.
11. Independence, Severability and Non-Exclusivity. Each of the rights and
remedies enumerated in paragraphs 8(b) and 9(b) shall be independent of the
others and shall be severally enforceable and all of such rights and remedies
shall be in addition to and not in lieu of any other rights and remedies
available to the Company or its Affiliates under the law or in equity. If any of
the provisions contained in paragraph 8(a) or 9(a) or if any of the rights or
remedies enumerated in paragraph 8(b) or 9(b) is hereafter construed to be
invalid or unenforceable, the same shall not affect the remainder of the
covenant or covenants, or rights or remedies, which shall be given full effect
without regard to the invalid portions. If the courts of any one or more
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jurisdictions shall hold all or any part of such provisions wholly unenforceable
by reason of the breadth of such scope or otherwise, it is the intention of the
parties that such determination shall not bar or in any way affect the Company's
or its Affiliates' right to relief in the court of any other jurisdiction as to
failures to observe such provisions in such other jurisdictions, the above
provisions as they relate to each jurisdiction, being, for this purpose,
severable into diverse and independent provisions. If any of the provisions
contained in paragraph 8(a) or 9(a) is held to be unenforceable because of the
duration of such provision or the area covered thereby, the parties agree that
the court making such determination shall have the power to reduce the duration
and/or area of such provision and in its reduced form such provision shall then
be enforceable.
12. Change in Control. (a) Notwithstanding any other provision of this
Agreement, Executive may, by written notice to the Company given within 30 days
after the occurrence of any Change in Control (as defined below) of the Company
that occurs during the term of his employment hereunder, elect to terminate his
employment by the Company effective on the 90th day following such Change in
Control (the "Change in Control Termination Date"). If Executive makes such
election, he shall be entitled to receive, in a lump sum on the Change in
Control Termination Date, an amount equal to 250% of his annual Base Salary as
in effect immediately prior to such Change in Control and the Company shall have
no further obligations to Executive under this Agreement, except as otherwise
provided by law. During the period following any such notice and prior to any
Change in Control Termination Date, Executive shall continue to be employed by
the Company pursuant to the terms of this Agreement, except that his duties,
obligations, position and authorities as described in paragraph 1 shall be
limited to those reasonably requested by the Board of Directors of the Company
in connection with a transition period.
(b) As used herein, "Change in Control" means:
(i) the sale, transfer, conveyance or other disposition (other than by
way of merger or consolidation), in one or a series of related transactions, of
all or substantially all of the assets of the Company or its affiliates to any
person;
(ii) the consummation of any transaction (including, without
limitation, any merger or consolidation) the result of which is that any person,
other than Sterling Holding Company, LLC ("Sterling"), becomes the owner,
directly or indirectly, of more than (A) 50% of the voting stock of the Company
or (B) the owner of more of the voting stock of the Company than Sterling;
(iii) the first day on which Sterling and its Affiliates do not have
the authority to appoint a majority of the members of the Board of Directors of
the Company; or
(iv) the adoption of a plan relating to the liquidation or dissolution
of the Company.
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<PAGE>
13. Vesting. Notwithstanding the vesting schedule contained in Section
7.2(a)(ii) of the Securities Purchase and Holders Agreement, dated as of August
13, 1999 (the "Securities Purchase Agreement") among the Company, Intersil,
Harris Far East Ltd. and the Management Investors named therein, (a) upon a
Public Offering, all of the Executive's Incentive Shares shall immediately fully
vest and (b) upon any Approved Sale, all of the Executive's Incentive Shares
shall immediately fully vest and the escrow provisions of Section 7.7 of the
Securities Purchase and Holders Agreement shall not apply to Executive.
Capitalized terms used in this paragraph 13, but not defined herein shall have
the meanings ascribed to them in the Securities Purchase and Holders Agreement.
14. Assignment of Executive Benefits; Successors and Assigns. Absent the
prior written consent of the Company, and subject to the laws of descent and
distribution, Executive shall have no right to exchange, convert, encumber or
dispose of the rights of Executive to receive benefits and payments under this
Agreement, which payments, benefits and rights thereto are non-assignable and
non-transferable. This Agreement shall inure to the benefit of and shall be
binding upon the Company and Executive and, subject to the preceding sentence,
their respective heirs, executors, personal representatives, successors and
assigns. Nothing in this paragraph 14, however, shall prevent Executive from
making assignments or transfers for purposes of personal estate planning.
15. Notices. All notices hereunder shall be given in writing by personal
delivery or by registered or certified mail addressed to the Company at its
principal place of business and to Executive at his residence address as then
listed in the Company's records.
16. Arbitration. Any controversy or claim arising out of or relating to
this Agreement, or any breach thereof, shall be settled by arbitration in
accordance with the rules of the American Arbitration Association and judgment
upon such award rendered by the arbitrators(s) may be entered in any court
having jurisdiction thereof. The arbitration shall be held in New York City
unless another location shall be mutually agreed to by the parties at the time
of arbitration. In any dispute between the parties as to which Executive is
sustained on the claim(s) by or against him, the Company shall pay all legal
fees and other related expenses incurred by Executive in connection with the
dispute over such claim(s). If more than one claim is involved in any dispute
and if Executive is sustained as to one or more of such claims but not as to all
of such claims, there shall be a reasonable allocation of applicable expenses.
The Company will reimburse Executive for those legal expenses and other related
expenses determined by the arbitrator(s) or by the consent of the parties to be
allocable to the claim or claims as to which Executive is upheld.
17. General.
(a) Governing Law. This Agreement shall be governed by, and construed and
enforced in accordance with, the laws of the State of Delaware, without giving
effect to conflicts of laws principles thereof which might refer such
interpretations to the laws of a different state or jurisdiction.
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(b) Captions. The section headings contained herein are for reference
purposes only and shall not in any way affect the meaning or interpretation of
this Agreement.
(c) Entire Agreement. This Agreement sets forth the entire agreement and
understanding of the parties relating to the subject matter hereof, and
supersedes all prior agreements, arrangements and understandings, written or
oral, between the parties.
(d) No Other Representations. No representation, promise or inducement has
been made by any party hereto that is not embodied in this Agreement, and no
party shall be bound by or liable for any alleged representation, promise or
inducement not so set forth.
(e) Amendments; Waivers. This Agreement may be amended, modified,
superseded, cancelled, renewed or extended, and the terms or covenants hereof
may be waived, only by a written instrument executed by all of the parties
hereto, or in the case of a waiver, by the party waiving compliance. The failure
of any party at any time or times to require performance of any provision hereof
shall in no manner affect the right of such party at a later time to enforce the
same. No waiver by any party of the breach of any term or covenant contained in
this Agreement, whether by conduct or otherwise, in any one or more instances,
shall be deemed to be, or construed as, a further or continuing waiver of any
such breach, or a waiver of the breach of any other term or covenant contained
in this Agreement.
(f) Consent to Exclusive Jurisdiction. The Company and Executive agree that
any legal action or proceeding with respect to this Agreement or any agreement,
certificate or other instrument entered into in contemplation of the
transactions contemplated by this Agreement, or any matters arising out of or in
connection this Agreement or such other agreement, certificate or instrument,
and any action for the enforcement of any judgment in respect thereof, shall be
brought exclusively in the Chancery Court of New Castle County, Delaware or the
courts of the United States of America for the District of Delaware. By
execution and delivery of this Agreement, each of the Company and Executive
irrevocably consent to service of process out of any of the aforementioned
courts in any such action or proceeding by the mailing of copies thereof by
registered or certified mail, postage prepaid, or by recognized express carrier
or delivery service, to the applicable party at his or its address referred to
herein. The Company and Executive hereby irrevocably waive any objection which
he or it may now or hereafter have to the laying of venue of any of the
aforementioned actions or proceedings arising out of or in connection with this
Agreement, or any related agreement, certificate or instrument referred to
above, brought in the courts referred to above and hereby further irrevocably
waive and agree, to the fullest extent permitted by applicable law, not to plead
or claim in any such court that any such action or proceeding brought in any
such court has been brought in any inconvenient forum. Nothing herein shall
affect the right of any party to serve process in any other manner permitted by
law.
IN WITNESS WHEREOF, the parties hereto have executed this Employment
Agreement as of the 9th day of August, 1999.
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INTERSIL HOLDING CORPORATION
By: /s/ Daniel J. Heneghan
----------------------
Daniel J. Heneghan
Vice President
/s/ Gregory L. Williams
-----------------------
Gregory L. Williams
-11
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Schedule 4(b)
Relocation expenses ("Relocation Expenses") shall be limited to the following
expenses incurred by Executive in connection with any relocation of the
Company's corporate headquarters pursuant to Section 4(b):
1. Travel for Executive and his family location of Executive's new residence;
2. Insured packing/unpacking and moving of household goods, including
Executive's motor vehicles;
3. One house hunting trip for Executive;
4. Temporary living arrangements for Executive and his family;
5. Expenses associated with new home purchase, excluding origination points;
6. Miscellaneous expenses consisting of:
(a) real estate brokerage fees and closing costs on Executive's existing
residence;
(b) storage fees and movement of Executive's household goods to and from
storage;
(c) Inspection fees of Executive's new residence;
(d) Maintenance of former residence as required by the Company;
(e) Utilities, taxes, property insurance and mortgage interest
post-settlement;
7. Equity reimbursement on losses resulting from sale of Executive's current
residence, including improvements;
8. Optional home sale program through a capable service provider, if
necessary to sell Executive's current residence; and
9. At time of purchase of Executive's new residence, the Company shall pay
Executive, as a one-time lump sum pursuant to a national index, any housing
differential based on a residence and area in California equivalent to
Executive's current residence and area. Any such housing differential is
refundable if Executive fails to close on his new residence.
-12-
EXHIBIT 10.12
AGREEMENT
between the
HARRIS CORPORATION
and
LOCAL UNION NO. 1907
INTERNATIONAL BROTHERHOOD
OF
ELECTRICAL WORKERS, AFL-CIO
at and for the
Company's Plant
Findlay, Ohio
July 1, 1996 to and
including July 1, 2000
<PAGE>
INDEX
Subject/Page
ACCESS TO PLANT, 34
ACQUISITION OF CONTINUOUS SERVICE CREDIT, 20
ADDITION AND SEPARATION LISTS, 40
ADMINISTRATIVE LETTERS, 41
AMOUNT OF MILITARY PAY, 29
APPLICATION FOR LEAVES OF ABSENCE, 28
ARBITRATION, 34
BEREAVEMENT PAY, 30
BULLETIN BOARDS, 40
CHANGE OF ADDRESS OR NAME, 40
CHECK OFF, 7
CLEARANCE OF DISCIPLINARY RECORDS, 40
COMPANY GRIEVANCE PROCEDURE, 34
COMPLAINTS, 32
COMPUTATION OF OVERTIME PAYMENT, 16
CONTINUITY OF SERVICE, 20
DEFINITION OF GRIEVANCE, 32
DEFINITION OF TERMS, 11
DESIGNATED HOLIDAYS, 19
DETERMINATION OF OVERTIME AND HOURS WORKED, 15
EFFECT OF LAW, 40
EMPLOYEES RETURNING FROM LEAVE, 30
GRIEVANCE STEPS AND REPRESENTATIVES OF THE PARTIES THEREIN, 33
GRIEVANCE ZONES, 32
HARDSHIP TRANSFERS, 28
HOLIDAY PAY, 19
HOW SENIORITY IS ACQUIRED, 21
INTRODUCTION OF NEW OR TRANSFERRED EMPLOYEES, 38
JURY DUTY AND WITNESS PAY, 30
LAYOFF, 22
LAYOFF ALLOWANCE, 23
LEAVES OF ABSENCE FOR UNION ACTIVITY, 29
LUNCH PERIODS, 40
MILITARY LEAVE OF ABSENCE, 29
NIGHT SHIFT PREMIUM, 9
NORMAL WORK SCHEDULES, 12
NOTICE OF CHANGE, 41
NOTICES, 38
NOTIFICATION AS TO RULES, 6
2
<PAGE>
NOTIFICATION OF DISCHARGE, 40
OVERTIME PREFERENCE, 14
OVERTIME PAYMENT FOR THE REGULAR WORK WEEK, 14
PAY FOR ANNUAL ACTIVE DUTY FOR TRAINING IN THE UNIFORMED SERVICES, 29
PAYMENT FOR TIME SPENT HANDLING GRIEVANCES, 36
PERSONAL/SICK PAY, 31
PLANTWIDE BID, 25
PRESENTATION OF AGREEMENT TO EMPLOYEES, 38
PRESENTATION OF GRIEVANCES, 32
PROVISION AGAINST DISCRIMINATION, INTIMIDATION AND COERCION, 7
RATIFICATION OF AGREEMENT, 49
RECALL, 27
RECOGNITION OF STEWARDS, 42
RECOGNITION OF GRIEVANCE COMMITTEE, 42
RECOGNITION OF PRESIDENT OF LOCAL UNION, 42
RECOGNITION, 5
REPRESENTATION LISTS, 41
RESOLUTION OF GRIEVANCES, 39
REST PERIODS, 45
RESTORATION OF BROKEN SERVICE, 23
RETIREMENT PLAN JOINT COMMITTEE, 46
RETIREMENT AND INSURANCE BENEFITS, 43
RIGHTS AND FUNCTIONS OF MANAGEMENT, 5
RULES FOR MAKING MODIFICATION IN MID-TERM, 50
SAFETY AND HEALTH, 43
SCHEDULED DAYS OFF, 13
SENIORITY PRIVILEGES, FOR EMPLOYEES WHO ARE TRANSFERRED OUT OF THE
BARGAINING UNIT, 32
SENIORITY PRIVILEGES, 24
SENIORITY OF UNION REPRESENTATIVES, 28
SENIORITY LISTS, 31
SENIORITY POLICY, 24
SHIFT CHANGES AND NOTICE, 18
SHIFT ADMINISTRATORS' LEAVE OF ABSENCE, 35
SHIFT PREFERENCE, 28
SHIFT SCHEDULES, 61
SHOW-UP AND CALL-IN PAY, 10
SPECIAL RULES GOVERNING VACATION PAYMENT, 20
STRIKES, LOCKOUTS & INTERRUPTION OF WORK, 6
SUPPLEMENTAL WORKERS' COMPENSATION PAYMENTS, 44
TEMPORARY LAYOFF, 28
TEMPORARY ABSENCE FOR DISABLING ILLNESS, INJURY OR PREGNANCY RELATED
DISABILITY, 33
3
<PAGE>
TERM AND NOTICE OF TERMINATION, 50
TIME STUDY RATES, 47
UNION DUTIES OF UNION REPRESENTATIVES, 42
UNION BUSINESS OR ACTIVITIES ON COMPANY TIME OR PREMISES, 41
UNION SHOP, 7
UPGRADING, 31
VACATION PAYMENT, 19
VACATION YEAR, 19
VACATION POLICY, 18
VACATION PAYMENT TO EMPLOYEES ON PAYROLL, 21
VACATION SEASON, 19
WAGE APPENDIX, 62
WAGE RATES FOR NEW OR CHANGED OCCUPATIONAL CLASSIFICATIONS, 11
WAGE RATES, 10
WAGES, 8
WAIVER, 49
WORK OUT OF CLASSIFICATION, 11
WORK WEEK, 46
4
<PAGE>
AGREEMENT
Agreement, entered into this 1st day of July, 1996 between Harris Corporation,
hereinafter referred to as the Company, and Local Union No. 1907, International
Brotherhood of Electrical Workers, AFL-CIO, hereinafter referred to as the
Union, with respect to the bargaining unit composed of production and
maintenance employees at the Company's plant in Findlay, Ohio.
BASIC PRINCIPLES
The Union representing the employees of the Company and the Company desire to
establish and maintain, through harmonious cooperation, a standard of conditions
and procedures to provide orderly collective bargaining relations, prompt and
equitable disposition of grievances, and fair wages, hours and working
conditions for the employees covered by this Agreement.
ARTICLE I
RECOGNITION
1.01 RECOGNITION
The Company recognizes the Union as the sole and exclusive bargaining
representative for all Production and Maintenance employees, and warehousing
employees, at the Findlay, Ohio plants of the Company, located in Hancock
County, excluding office employees, technical employees, executive employees and
administrative employees, guards, professional employees and all supervisors as
defined in the National Labor Relations Act, as amended.
ARTICLE II
RECOGNITION OF RIGHTS
2.01 RIGHTS AND FUNCTIONS OF MANAGEMENT
Except as otherwise expressly limited by the provisions of this Agreement, the
Company shall retain all its rights and functions of ownership or management,
including the right to manage the plants and direct the working forces, to hire
new employees and to discipline or discharge employees for just cause. Also the
right to lay off employees for lack of work or other legitimate reason, to make
such reasonable rules and regulations relating to the conduct of its employees
as it considered necessary or advisable for the orderly and efficient conduct of
its business, and to require employees to observe such rules and regulations.
5
<PAGE>
It is further agreed that the right to determine the number and location of its
plants, the products to be manufactured, the tools, equipment, schedules of
production and the methods or processes in connection with manufacturing, shall
be vested exclusively in the Company.
The enumeration of management rights and functions herein shall not be deemed to
exclude other rights or functions of management not so enumerated, nor in any
way be prejudicial to the rights, duties and responsibilities of the Union, as
the collective bargaining representative of the employees to whom this Agreement
applies, to process grievances, disputes or differences as to the interpretation
or application of any provision of this Agreement, except that management rights
vested exclusively in the Company shall be arbitrable only to the extent that
they are abridged by provisions in said Agreements.
2.02 STRIKES, LOCKOUTS & INTERRUPTION OF WORK
There shall be no strike, work stoppage, slowdown, sit-down, refusal to handle
merchandise, refusal to work, boycott, or picketing by the Union or its
representatives or members, or lockout on the part of the Company during the
term of this Agreement; unless and until all Steps of the Grievance Procedure,
including Arbitration, shall have been employed and one of the Parties hereto
fails or refuses to comply promptly with any final decision made against such
Party thereunder, provided, however, that a member of the Union may refuse to
enter upon the premises of any employer if the employee's of such employer are
engaged in a primary strike ratified or approved by a representative of such
employees whom such employer is required to recognize under the Labor Management
Relations Act of 1947.
If a strike should occur, salaried employees, guards and other plant protection
and the regularly scheduled Plant Service Mechanic shall be permitted to perform
their respective functions without interference by the Union or its members. The
Company shall have the right to request the service of Plant Maintenance
employees in the event of emergency situations. The request will be made of the
Union President or his/her designated representative and such requests will be
duly considered in order to protect the assets of the plant and its operating
environment based on a plan mutually agreed upon for such purpose by the Company
and the Union.
In consideration of this Agreement, the Union agrees not to sue the Company, its
officers, or representatives, and the Company agrees not to sue the Union, its
officers, agents, or members for any labor matters in any curt of law or equity.
2.03 NOTIFICATION AS TO RULES
Prior to their inauguration, the Company will consult with the Union concerning
rules affecting this Agreement or the general welfare and working Relationship
of employees represented by the Union. The employees involved will be informed
in advance of any new rules or changes in rules.
6
<PAGE>
ARTICLE III
UNION SECURITY
3.01 UNION SHOP
It shall be a condition of employment that all employees of the employer covered
by this Agreement who are members of the Union in good standing on the effective
date of this Agreement shall remain members in good standing and those who are
not members on the effective date of this Agreement shall on the thirtieth
(30th) calendar day following the effective date of this Agreement become and
remain members in good standing of the Union.
It shall also be a condition of employment that all employees covered by this
Agreement and hired on or after its effective date shall on the thirtieth (30th)
calendar day following the beginning of such employment become and remain
members in good standing of the Union.
This provision shall not apply if prohibited by any local, State, or Federal
law, and if so prohibited it shall apply whenever the law is changed so that it
may be effective.
3.02 CHECK OFF
Upon receipt of an employee's written authorization which shall not be revocable
for more than one year or beyond the termination date of this Agreement,
whichever occurs sooner, the Company shall deduct from such employee's wages the
Union dues and remit them monthly to the duly authorized representative of the
Union, together with a list of names of the employees from whose pay deductions
were made.
Within thirty (30) days after receipt of a written authorization from the
employee, the Company will deduct an amount equal to the reasonable initiation
fee uniformly required as a condition of acquiring membership in the Union and
will remit said amount to the duly authorized representative of the Union,
together with a list of the names of the employees from whose wages such
deductions were made.
The Union agrees to hold the Company free from all liability in connection with
dues and/or initiation fee collection except for ordinary diligence and care in
transmittal of the monies to the Union, and further agrees that the Company will
not be required to deduct from an employee's wages both Union dues and
initiation fees in the same month.
3.03 PROVISION AGAINST DISCRIMINATION, INTIMIDATION AND COERCION
There shall be no discrimination, intimidation or coercion by the Company or by
the Union against any employee because of sex, race, color, national origin,
creed, age, handicap, veteran's status, or because of Union activity or
membership.
7
<PAGE>
ARTICLE IV
GENERAL WAGE PROVISIONS
4.01 WAGES
A. All employees covered by this Agreement shall be granted a general
increase to be effective February 1, 1997 equal to two (2%) of the applicable
straight time hourly wage rate. A second general increase will be granted on
February 1, 1998 equal to three (3%) of the applicable straight time hourly wage
rate. A third general increase will be granted February 1, 1999 equal to three
(3%) of the applicable straight time hourly wage rate. A fourth general increase
will be granted on February 1, 2000 equal to three (3%) of the applicable
straight time hourly wage rate. Effective February 1, 1997, the maximum
occupational wage rates shall be as follows:
Labor
Grade Occupation/Title Wage
- - ----- ---------------- ----
1 Laborer-Cleaner 11.69
2 Manufacturing Operator 11.74
3 Manufacturing Support 12.23
6 Manufacturing Maint. Support 13.02
8 Plant Maint. Mechanic A 14.56
Plant Services Mechanic 14.56
9 Plant Electrician A 14.80
10 Elec. Equip. Elect. A 15.46
11 Tool and Die Maker 16.25
12 Equipment Specialist 16.71
B. Special lump sum bonus will be granted to eligible employees on the
following dates:
July 1, 1996........................ One-Thousand Dollars ($1,000.00).
July 1, 1997........................ Two (2%) of qualified earnings.
July 1, 1998........................ Three (3%) of qualified earnings.
July 1, 1999........................ Three (3%) of qualified earnings.
Employees on the payroll who are eligible for the special lump sum bonus will
receive such bonus on or before the end of the second full pay period of July.
1. Qualified earnings are those earnings received during the period from:
July 1, 1996 to and including June 30, 1997 (for July 1, 1997). July 1, 1997 to
and including June 30, 1998 (for July 1, 1998). July 1, 1998 to and including
June 30, 1999 (for July 1, 1999).
8
<PAGE>
2. Qualified earnings include straight time, overtime, night shift premium,
holiday, vacation, bereavement, military differential, jury duty and witness,
personal/sick, show-up and call-in, Company-Union contract administration lost
time and dispensary visit lost time pay. Any other earnings, including special
one time payments received by eligible employees from the Company or third party
payers are excluded.
3. Eligible employees are those regular employees on active payroll on each
of the dates specified. Regular employees not on payroll by reason of layoff or
approved Leave of Absence on each date will receive a Special Bonus Payment
provided they return to active payroll with unbroken continuous service credit
before the date of the next bonus payment or in the case of the 7-1-99 payment
on or before 7-1-2000. Probationary employees on active payroll on each of these
dates will be granted the respective special bonus payment, provided they
subsequently acquire seniority.
4. Employees hired into labor grades 1 through 6 will be paid the
percentages shown below of the minimum or start rate of the applicable labor
grade in accordance with the following schedule:
From But Less Than Percentage
- - ---- ------------- ----------
Hire Date 6 months 80%
6 months 12 months 85%
12 months 18 months 90%
18 months 24 months 95%
24 months 100%
After twenty-four (24) months, such employees will receive further increases to
the maximum wage rate in accordance with the labor grade progression schedules
of the applicable Wage Rate Schedule. The minimum or start rate of the
applicable labor grade shall be that in effect on February 1, 1997, and shall
not be increased during the term of this Agreement.
4.02 WAGE RATES
The wage rates for employees covered by this Agreement shall be as set forth in
Wage Rate Schedules to be attached to and made a part of this agreement.
4.03 NIGHT SHIFT PREMIUM
A wage differential of 10% of the applicable hourly wage rate shall be paid to
all employees who work on recognized night shifts.
4.04 SHOW-UP AND CALL-IN PAY
An employee (a) reporting for work, in the absence of a notice not to report by
the Company via telephone at least two (2) hours prior to the employee's
scheduled starting time, or (b) an employee reporting for work who has been
called in for an emergency, shall be guaranteed a minimum of four (4) hours at
9
<PAGE>
the applicable rate. An employee (c) who works more than four (4) hours of the
employee's established shift, in the absence of notice not to work, shall be
guaranteed the applicable rate for the regularly scheduled number of hours in
such established shift, or eight (8) hours, whichever is the lesser. In such an
event, if work is not available in the employee's classification, the employee
may be assigned work in another classification where work of a similar nature is
available, at the employee's regular base rate of pay, by agreement with the
appropriate Union representative. Provided, however, this paragraph shall not
apply to employees under (a) and (c) above where general disaster, fire, power
failure, explosion or bombing cause damage which makes it impossible to resume
work in the section in which such employee works. The foregoing provisions of
the paragraph also apply to an employee who is scheduled to work and reports on
the employee's scheduled days off.
4.05 WAGE RATES FOR NEW OR CHANGED OCCUPATIONAL CLASSIFICATIONS
In the event the Company desires to establish new occupational classifications
or change existing occupational classifications the hourly rates applicable
thereto shall be determined by negotiation between the Company and the Union.
Production shall not be delayed through failure to immediately agree upon hourly
rates applicable to any new or changed occupational classification. In such
cases, pending the results of negotiations, the Company will establish the
occupational classification and the Company-proposed hourly rate applicable
thereto and shall place such occupational classification and such hourly rates
into effect. Negotiated rates finally established which are higher than the
Company-proposed rates will be paid retroactive to the date of the start of the
occupation. The Company will supply the Union, seven (7) days prior to such
negotiations, with the occupational classification number, occupational
classification title and the job description pertaining thereto.
In the event that the local plant management and the Union cannot agree upon a
final rate for any new or changed occupational classification within fifteen
(15) calendar days after such occupation is established, the matter may be
referred to the grievance procedure. If such representatives fail to reach
agreement, either party may refer the matter to arbitration in accordance with
Article XI. However, the authority of the arbitrator shall be limited to
selecting the final wage position of either the Company or the Union for
implementation.
4.06 WORK OUT OF CLASSIFICATION
If, because of production requirements, it is necessary for an employee to work
out of classification, such employee will not be worked out of classification:
(a) for more than five (5) consecutive working days without having their
occupational classification changed unless an extension is mutually agreed upon,
or (b) for less than eight (8) hours in any one (1) day. During the period when
an employee may work out of his/her regular classification, the employee will be
paid as follows:
A. If an employee works in a higher classification, the employee will be
paid the maximum hourly wage rate for that classification.
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B. If an employee works in a lower classification, the employee shall
continue to receive the same hourly wage rate that the employee would have
received had the employee continued on the employee's regular occupational
classification.
ARTICLE V
HOURS AND OVERTIME
5.01
The "regular work week" for all employees covered by this Agreement shall be
forth (40) hours, Monday through Friday, not to exceed eight (8) hours in any
one day of twenty-four (24) hours; except for such employees as are engaged in
continuous operations, or any night shifts terminating on Saturday or holiday
mornings, or beginning on Sunday night whose normal work week shall be five (5)
consecutive days, not to exceed eight (8) hours in any one day of twenty-four
(24) hours, and, except for employees assigned to the compressed work week.
Continuous shift operations will be established only upon agreement between the
Company and the Union.
5.02 DEFINITION OF TERMS
A. "Regular Work Week" The "regular work week" for all employees shall
begin at 12:00 o'clock midnight Sunday and end at 12:00 o'clock midnight the
following Sunday night (i.e., seven (7) consecutive "calendar days," Monday to
Sunday, inclusive).
B. "Compressed Work Week"
A "compressed work week" shall be scheduled in advance. Employees assigned
to the "compressed work week" shall be scheduled to work twelve (12) consecutive
hours on his/her regular work day.
C. "Regular Work Day"
For the determination of daily overtime, the "regular work day" shall be
twenty-four (24) consecutive hours, commencing with the starting time of any
shift; except that this determination shall not carry over from one "regular
work week." In all cases, therefore, the starting time of the Monday "regular
shift" shall be the start of the "regular work day" even though it may fall
within the "regular work day" of Sunday, the last day of the previous work week.
D. "Calendar Day"
For the determination of overtime worked in the "regular work week," on
"scheduled days off," and on holidays, the "calendar day" (i.e. from 12:00
o'clock midnight to 12:00 midnight twenty-four (24) consecutive hours) shall be
used, and hours work on a shift starting in the "calendar day" shall be counted
as worked in such calendar day.
E. "Regular Shift"
11
<PAGE>
A "regular shift" shall be scheduled in advance, and shall consist of a
specified number of consecutive hours, exclusive of meal periods of not less
than one-half (1/2) hour or more than one (1) hour each. The "regular shift"
will normally be eight (8) hours, exclusive of one meal period, and no employee
shall be required to work more than six (6) hours without a meal period.
F. "Scheduled Days Off"
A "scheduled day off" shall be a "calendar day" during which no "regular
shift" is scheduled to start for the employee.
G. "Night Shift"
The term "night shift" shall mean any shift starting at or after 1:00 p.m.
and before 6:00 a.m. A shift starting at or after 1:00 p.m. and ending at or
before 6:30 p.m. shall not be considered a "night shift."
The time that an employee reports to work or leaves before or after his/her
"regular shift" will not determine whether a "night shift" has been worked.
5.03 SCHEDULED DAYS OFF
The employee's "scheduled days off" shall be consecutive and scheduled in
advance.
5.04 NORMAL WORK SCHEDULES
A. The regular work schedule shall consist of five (5) regular work days in
each "regular work week." The two (2) days on which work is not regularly
scheduled (normally Saturday and Sunday) shall be "scheduled days off.
B. The "Compressed Work Week" will consist of four (4) 12-hour shifts
1. Work four (4) consecutive days and will be off the following four (4)
consecutive days.
2. Work two (2) days followed by three (3) days off followed by two (2)
days worked followed by two (2) days off followed by three (3) days worked
followed by two (2) days off. This schedule will provide alternating weekends as
scheduled days off.
Employees working such shifts will receive three (3) ten minute paid rest
periods. Employees working such shift shall also receive one (1) 30 minute
unpaid lunch period during each complete shift (with exception of Plant Service
Mechanics who receive a paid lunch period).
3. Payment for daily hours worked will be as follows: The first eight (8)
hours will be paid at straight time; the next three (3) hours will be paid at
time and one-half; and the final one half hour will be paid at double time.
4. Overtime payment for work on scheduled days off will be as follows for
the CWW schedule described in paragraph 1 of 5.04 B above: either of the first
two scheduled days off which are worked will be paid at time and one-half up to
a total of 11 hours per day and double time will be paid beyond that. Work
12
<PAGE>
performed on either of the third or fourth scheduled days off will be paid at
double time if the first and second scheduled days off were worked. In any
event, the first two days worked on scheduled days off will be paid at time and
one-half up to 11 hours per day and double time will be paid for all hours
worked thereafter.
Overtime payment for work on scheduled days off will be as follows for the
CWW schedule described in paragraph 2 of 5.04 B above: Either of the first two
scheduled days off during the regular work week which are worked will be paid at
time and one-half up to a total of 11 hours per day and double time will be paid
beyond that. Work performed on either the third or fourth scheduled days off
during the regular work week will be paid at double time if the first and second
scheduled days off during the regular work week were worked. In any event, the
first two days worked on scheduled days off during the regular work week will be
paid at time and one-half up to eleven hours a day and double time will be paid
for all hours worked thereafter.
5. Work performed on holidays will be paid in accordance with current
practice. However, an employee working on a scheduled day off which qualifies
for double time and where such day is a designated holiday, said employee will
be paid 3X for all hours worked and will receive no holiday pay. Said employee
who works less than the number of hours in his/her regular shift shall be paid,
in addition to 3X for all hours worked, his/her straight time hourly base rate
for the difference between the hours worked in the regular shift and the number
of hours worked on the holiday.
6. Payment for holiday, bereavement, military differential, jury duty and
witness, and personal/sick days will be eleven and one-half (11 1/2) hours times
the employee's applicable hourly base rate.
7. Vacation may be scheduled for plant shutdown or by individual days or
weeks off. Five (5) days of vacation for each eligible week will be allowed when
vacations of less than four (4) consecutive work days are taken. A vacation of
four (4) consecutive work days will equal one (1) full week. Scheduled days off
which fall during a vacation period will not be counted as vacation days.
8. Consistent with current practices employees working such compressed work
week shifts will be entitled to the same life insurance, temporary disability
insurance or long term disability insurance benefits as employees working eight
(8) hour shifts.
9. When fifty-five percent (55%) of those employees who have a seniority
date earlier than January 1, 1986 are assigned to CWW, no additional employees
hired before January 1, 1986 may be involuntarily assigned to the Compressed
Work Week Schedule.
10. When a CWW schedule is established in a new area, up to fifty-percent
(50%) of those employees hired prior to 1-1-86 will be given the opportunity to
"bump" less senior employees in their occupation on another shift.
13
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11. Unless otherwise mutually agreed, items relating to CWW not enumerated
herein will be resolved by application of current practice.
12. Employees assigned to CWW will celebrate designated holidays on the
calendar day of occurrence.
13. Employees may submit a shift preference to CWW shifts A, B, C. D.
5.05 OVERTIME PAYMENT FOR THE REGULAR WORK WEEK
Whenever more than eleven (11) consecutive hours are worked, whether they
include hours before or after a regular shift or extend into another workday,
pay will be computed as follows:
A. Eight (8) hours at straight time. Three (3) hours at time and a half
(1-1/2). All additional hours which are worked consecutively at double time.
B. Consecutive hours worked during the first scheduled day off will be
computed as follows: Up to eleven (11) hours at time and a half (1-1/2). All
consecutive hours over eleven (11) at double time.
C. All hours worked during the second scheduled day off will be computed at
double time.
The determination of first and second days off shall depend upon
the chronological order of occurrence of the two scheduled days off as they are
established within the "regular work week."
In all cases payment of overtime shall be at least equal to the overtime payment
required under the Fair Labor Standards Act and the Walsh-Healey Act.
5.06 OVERTIME PREFERENCE
So far as practicable and consistent with efficient operations, overtime will be
assigned in accordance with the following:
A. Preference in the assignment of overtime shall be given to employees on
the basis of seniority, in accordance with arrangements made between the parties
for application of this paragraph.
B. Employees who will be scheduled to work on the first scheduled day off
will be so advised two (2) days prior to the scheduled overtime, whenever
possible.
C. In the event emergency overtime occurs and an employee must be called
in, employees who cannot be contacted personally by telephone may be by-passed.
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D. When overtime work is required in a particular occupational
classification and the Company is unable to fulfill its requirements with
employees in such occupational classification, the Company will determine the
occupational classification from which employees will be selected for such
overtime work. All employees in the selected occupational classification, who
possess the skill and ability to perform the work as determined by the Company,
in order of seniority, will be given the opportunity to work the required
overtime before the Company selects another occupational classification.
E. In order to provide Union representation when overtime is worked by
three or more employees in any group within the Steward's zone of jurisdiction,
the Steward for that group will be offered work if there is work available and
they are capable of performing such work in their classification. The Chief
Stewards shall be offered overtime for available work which they are capable of
performing in their occupational classification if there are one hundred (100)
or more employees working overtime within their jurisdiction.
5.07 DETERMINATION OF OVERTIME AND HOURS WORKED
Overtime hours worked will be determined as follows:
A. Daily Overtime
1. Hours worked in excess of eight (8) hours in any one "regular work
day."
2. Hours worked before or after a "regular shift."
B. Overtime on "Scheduled Days Off"
1. All hours worked on shifts starting on the "scheduled days off" will be
counted as overtime hours.
2. When an employee works beyond his/her "regular shift" and thereby works
into the next "calendar day," such excess hours will not be regarded as an
additional day worked, provided however, that if an employee so continues to
work into one of their "scheduled days off" to the extent of one-half of their
"regular shift" or is called back to work on one of their "scheduled days off,"
the "scheduled day off" will be counted as worked.
5.08 COMPUTATION OF OVERTIME PAYMENT
Payment for overtime hours worked (determined in accordance with Paragraph 5.07
above) shall be computed at the following rates:
A. Daily Overtime -- At time and one-half for all hours worked in excess of
the "regular shift" in any one "regular work day." When more than eleven (11)
hours are worked in a "regular work day," double time shall be paid for such of
said hours worked as are in excess of eleven (11).
B. First "Scheduled Day Off" in the "Regular work Week" at time and
one-half time for the first eleven (11) hours worked and double time for hours
worked in excess of eleven (11) hours.
C. Second "Scheduled Day Off" in the "Regular Work Week," at double time.
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NOTE: (With reference to B. and C. above). In any case, the determination
of "first" or "second scheduled days off" shall depend upon the chronological
order of occurrence of the two (2) "Scheduled Days Off" as they are established
within the "regular work week."
5.09 SHIFT CHANGES AND NOTICE
Subject to the provisions of Paragraph 5.07, A.2. of this Agreement, the Company
shall be free to establish the starting and quitting time for any job upon
notice to the appropriate steward and the employees affected. Prior to any
changes in regular shifts being made effective, the matter of such changes will
be discussed by the Company representatives with the appropriate Union
representatives.
In establishing schedules of work for compressed work week employees, the Union
and the Company recognize the practical impossibility of providing Saturday and
Sunday as "scheduled days off" on a regular basis.
The Company agrees that it will exercise care in arranging schedules of work of
such employees in order to reduce to a minimum the occasions where an employee
works beyond five (5) days without a "scheduled day off."
ARTICLE VI
VACATION
6.01 VACATION POLICY
It is the policy of the Company to grant a vacation to employees annually as
herein provided. Vacations will be granted so far as possible, at the time most
desired by the employees; but, the Company has the right to ensure orderly and
efficient operations.
Employees entitled to vacation shall signify to the Company their choice of time
for Vacation by January 31st. The selection of the time for Vacation will be
granted on the basis of the continuous service credit of the employee, provided
that the number of employees in an occupational classification within any
department who will be granted such Vacation at the same time is consistent with
efficient and orderly operations.
Notices will be posted by the Company 90 days in advance of the optional
vacation/shutdown periods. The Company may have two optional vacation/shutdown
periods: 5 consecutive days from May 1 to September 30, and 5 consecutive days
outside of the May 1 to September 30 time frame. Employee has option to use
vacation or not for these vacation/shutdown periods.
Employees who have not exhausted their vacation by March 31 will be allowed to
carry over 5 days or less into the next vacation year to be used by September 30
of the next vacation year.
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6.02 VACATION YEAR
The Vacation Year which shall be used in computing the amount of Vacation time
and payment shall be from April 1st to March 31st, both inclusive, of each year
in which this Agreement continues in effect.
6.03 VACATION SEASON
The Vacation Season in which Vacations will be granted and the Vacation Payments
herein provided for will be paid, shall be from April 1st to March 31st, both
inclusive, of each year in which this Agreement continues in effect. An employee
shall take the Vacation to which entitled, unless it is otherwise agreed between
the Company and the Union.
6.04 VACATION PAYMENT
A. Each employee who at the close of the Vacation Year has not less than
six (6) months of continuous service credit shall receive Vacation and Vacation
Payment in accordance with the following schedule:
FROM BUT LESS THAN VACATION VAC. PYMNT
- - ---- ------------- -------- ----------
6 Months 2 Years 1 Week 2.0%
2 Years 3 Years 2 Weeks 3.2%
3 Years 4 Years 2 Weeks 3.6%
4 Years 5 Years 2 Weeks 4.0%
5 Years 6 Years 2 Weeks 4.2%
6 Years 7 Years 2 Weeks 4.4%
7 Years 15 Years 3 Weeks 6.0%
15 Years 20 Years 4 Weeks 8.0%
20 Years and over 5 Weeks 10.0%
The Vacation Payment shall be computed upon the above indicated percentage
of the employee's total earnings during the Vacation year.
B. The Company will make up the difference in Vacation Payment from that
received by any veteran reemployed during the period from October 1 of the
Vacation Year currently applicable to Vacation and Vacation Payment and
September 30 of the immediately succeeding Vacation year, under the normal
Vacation Policy and that which the employee would have received, assuming the
employee was on the payroll for an entire twelve (12) month period. This payment
is to be made on the basis of the veteran's hourly rate as of September 30 in
accordance with the following schedule:
FROM BUT LESS THAN PAYMENT
- - ---- ------------- -------
6 Months 2 Years 40 Hours
2 Years 3 Years 56 Hours
3 Years 4 Years 72 Hours
4 Years 5 Years 80 Hours
5 Years 6 Years 84 Hours
6 Years 7 Years 88 Hours
7 Years 8 Years 96 Hours
8 Years 9 Years 104 Hours
9 Years 10 Years 112 Hours
10 Years and over 120 Hours
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C. Any employee who has been on the active payroll for at least six (6)
months and who is thereafter terminated, granted a leave of absence or laid off
due to lack of work shall be entitled to a Vacation payment for that portion of
the Vacation Year in which the employee is terminated, granted a leave of
absence or laid off at the rate applicable as of the date of such termination,
leave of absence or layoff.
6.05 SPECIAL RULES GOVERNING VACATION PAYMENT
In no case will the length or the amount of Vacation payment be allowed or
calculated upon an anticipated basis. Paid holidays occurring during any
employee's Vacation shall not be counted as part of the employee's Vacation
time. With the consent of the Company, Vacation time may be taken in one-half
(1/2) day increments.
6.06 VACATION PAYMENT TO EMPLOYEES ON PAYROLL
Employees on the payroll who are eligible for a Vacation payment will receive
such payment on or before the end of the second full pay period of April. At the
request of the employee, the Company will make pro rata payments in the pay
period the Vacation is taken. Any remaining vacation pay will be paid prior to
March 31st. The Company will provide each employee with the gross payroll number
used to compute the employee's vacation earnings for the Vacation Year.
ARTICLE VII
HOLIDAYS
7.01 DESIGNATED HOLIDAYS
The following holidays shall apply to all employees covered by this Agreement:
New Year's Day, Good Friday, the Monday after Easter, Memorial Day, Fourth of
July, Labor Day, Thanksgiving Day, Friday after Thanksgiving, Christmas and the
second half of the regularly scheduled shift on each of the last work days in
the employee's normal work schedule immediately preceding the Christmas and New
Year's Holidays.
7.02 HOLIDAY PAY
A. The Company shall pay employees for each of the designated holidays at
their straight time hourly base rate for the number of hours, per day, for which
they are regularly scheduled to work during the work week in which the holiday
occurs. Employees who are required to work on any one of the designated holidays
shall be paid double time and one-half for all hours worked and shall receive no
holiday pay as such, except that employees who work less than the number of
hours in their regular shift shall be paid, in addition to double time and
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one-half of all hours worked, their straight time hourly base rate for the
difference between the number of hours in their regular shift and the hours
worked on the holiday.
An employee who is on jury duty, appearing as a subpoenaed witness in court
or on non-war military duty shall receive holiday pay in accordance with this
paragraph instead of either of the differential payments provided for in
paragraph 10.05 and 10.06. When any of the holidays provided for in Paragraph
7.01 falls on Sunday, the Company shall grant the following Monday as the
holiday and when a holiday provided for in Paragraph 7.01 falls on Saturday, the
Company shall grant the preceding Friday as the holiday, except as provided in
Paragraph 5.04, B.12.
B. Employees who are on payroll during the work week in which any of the
designated holidays fall shall be paid for time not worked on such holiday at
the applicable straight time hourly rate for the number of hours for which they
are regularly scheduled during the days of that week, provided the employee
works one scheduled work day in the work week in which the holiday occurs, and,
in addition, the employee is on the payroll when the holiday occurs. Employees
who are scheduled to work on a designated holiday and who do not report for work
shall receive no pay for that holiday, unless a four hour notice is given or a
documented emergency arises that prevents the employees from reporting to work.
Employees on approved absence of layoff of not more than two (2) weeks, or on
approved vacations, will be paid for holidays not worked. Employees on approved
absence or layoff of more than two (2) weeks will not be paid holiday pay for
hours not worked. Premiums shall not be applied to the base rate for the purpose
of determining the holiday pay.
ARTICLE VIII
CONTINUOUS SERVICE CREDIT
8.01 ACQUISITION OF CONTINUOUS SERVICE CREDIT
The principle of continuity of service is recognized in accordance with and
subject to the provisions of this Agreement. Each employee shall have continuous
service credit with the Company dating from the first date of unbroken service
in a classification of work covered by this Agreement.
8.02 CONTINUITY OF SERVICE
The continuous service credit and seniority of an employee will be broken under
the following conditions, and when so broken such employee shall be for all
purposes considered a new employee if and when rehired:
A. Resignation or other voluntary termination of employment.
B. Discharge for just cause.
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C. Absence in excess of three (3) consecutive regularly scheduled working
days without notice, either by telephone or written message by messenger to the
Human Resources Department, unless satisfactory evidence of inability to so
report is shown.
D. Absence in excess of five (5) consecutive regularly scheduled working
days without a formal leave of absence, unless satisfactory evidence of
inability to apply for it is shown.
E. A pattern of unauthorized absence after the time limit of an authorized
vacation or an approved absence, unless satisfactory evidence of inability to
report for work is shown.
F. Failure to report to work after layoff within fourteen (14) calendar
days after the Company gives the employee written notice to return to such work
and failure to notify the Company of intention to return to work within five (5)
calendar days after such notice is given. such notice shall be deemed to have
been sufficiently given if sent to the employee by registered or certified mail
addressed to the last address furnished to the Human Resources Department of the
Company.
G. Layoff without recall to work within five (5) years from the date of
such layoff.
8.03 RESTORATION OF BROKEN SERVICE
An employee whose continuous service credit is broken as the result of not being
recalled to work after a layoff from the Bargaining Unit, who is subsequently
reemployed in the Bargaining Unit, shall be credited with the continuous service
credit accrued at the time of the layoff that caused the most recent break in
the employee's continuous service credit provided such employee accumulates
three (3) years of unbroken continuous service credit after being reemployed.
Upon accumulating three (3) years of unbroken continuous service credit after
reemployment, the employee's continuous service credit shall thereupon be
recomputed and such recomputed continuous service credit of the employee shall
apply to the following benefits:
(1) Personal/Sick Pay;
(2) Vacation;
(3) Service Awards;
(4) Layoff Allowance.
Any period between the date an employee was removed from payroll and the date
such employee was reemployed shall not be included in any recomputation of
continuous service credit. In addition, the provisions of Paragraph 9.01, shall
not be applicable after the recomputation of the employee's continuous service
credit so that the employee's seniority shall date only from the employee's most
recent date of reemployment.
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ARTICLE IX
SENIORITY
9.01 SENIORITY POLICY
The Company and the Union accept the principle of employee seniority based upon
continuous service credit from the first date of the employee's unbroken
continuous service in a classification of work covered by this Agreement.
Employees shall have seniority privileges as provided for in the following
paragraphs.
9.02 HOW SENIORITY IS ACQUIRED
Each new employee hired shall be a probationary employee and shall not have
seniority until the end of a probationary period of ninety (90) days. Upon the
completion of the probationary period, the employee shall be considered as a
regular employee and shall have seniority from date of hire. When thus
established, such seniority will equal the employee's continuous service credit.
There shall be no requirement that the Company reinstate or rehire probationary
employees if they are discharged during their probationary period.
9.03 SENIORITY PRIVILEGES
After completion of the applicable probationary period with the company, each
employee shall have seniority in the occupational classification in which the
employee is then working. When thus established, such seniority shall equal the
employee's total continuous service credit with the Company.
After having established seniority, the employee, if transferred to a different
occupational classification, shall retain seniority in the occupational
classification from which the employee was transferred. After the employee has
worked in such different occupational classification for a period of thirty (30)
days in labor Grade 7 or below or sixty (60) days in Labor Grade 8 or above, the
employee's seniority therein shall equal the employee's total continuous service
credit with the Company, and the employee shall continue to accumulate seniority
in the occupational classification in which the employee is then working and in
all other occupational classifications in which the employee has previously
established seniority.
An employee who is transferred to a different classification due to layoff shall
immediately have all seniority rights in that classification equal to the
employee's total continuous service credit and shall continue to accumulate
seniority in the classification from which the employee was laid off and all
other classifications in which the employee has established seniority. When two
or more employees otherwise would have identical seniority within a
classification, seniority rank will be determined by alphabetical order of last
names, a name commencing with "A" being the more senior. Once established in
this manner seniority rank shall not be altered by subsequent name changes. This
procedure shall apply in all determinations of seniority.
If, at the time of layoff or recall, an employee refused to take a job in a
lower labor grade than that of the occupation from which the employee was laid
off, the employee shall retain, but shall not accumulate, established seniority,
and shall be considered for recall only in an occupation within the same labor
grade as that of the occupation from which the employee was laid off.
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9.04 LAYOFF
When layoff is necessary it shall be made in the following manner.
A. Probationary employees, as defined in Section 9.02 shall be laid off
first and will be replaced by employees having the last seniority in the
particular occupational classification affected by the layoff. If further
layoffs are necessary, such layoffs shall be made by continuous service credit.
An employee with continuous service credit who is subject to layoff under the
foregoing shall have the option to exercise all seniority rights in an
occupational classification in the same labor grade, or the employee may
exercise all seniority rights in the occupational classification in successively
lower labor grades on a plant wide basis, provided the employee has the ability,
skill and physical capabilities to do the work required.
B. Employees will be permitted to voluntarily downgrade to the
Manufacturing Operator or Laborer Cleaner classification when there is a layoff
in their occupational classification based on their seniority, provided the
employee possesses the required ability, skill and physical capabilities to do
the required work.
C. No employee may bump another employee in a higher graded classification.
D. In all cases of layoff, the Company will give not less than two (2) days
advance notice of contemplated layoffs of more than one (1) week to the
employees affected and to the appropriate steward. Where, however, such notice
is not feasible, the Company will notify the employee and such steward affected
as promptly as possible and give in lieu of two (2) days' notice, two (2) days'
pay, not to exceed eight (8) hours per day, at the employee's straight time
hourly base rate.
E. Upgrades will be honored to fill any openings created by a layoff.
9.05 LAYOFF ALLOWANCE
A. Regular full time employees will be entitled to layoff allowance in
accordance with the provisions of this paragraph when indefinitely laid off for
lack of work for a period longer than one regularly scheduled work week.
B. No employee will be entitled to layoff allowance in cases where such
layoff is caused by tornado, fire, flood, explosion, bombing or earthquake
causing damages in the plant which make it impossible to resume work in the
section in which such employee works.
C. No employee will be entitled to layoff allowance who has refused to
accept a job in the same or higher labor grade.
D. The layoff allowance for employees entitled thereto under the provisions
of this paragraph, shall be as follows:
1. All employees that are laid off for lack of work shall be eligible to
receive a sum equal to one week's pay for each full year of credited service.
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For the purpose of this provision, a "week's pay" for such eligible
employees shall be calculated by multiplying the employee's base rate at the
time of layoff times the number of hours in the employee's normal work week, at
the time of layoff, up to a maximum of forty (40) hours.
2. Layoff Allowance will be paid on a weekly basis, until such Layoff
Allowance is exhausted.
3. Benefits received as a regular employee will continue through the Layoff
Allowance period. Any required employee contributions will be deducted from the
Layoff Allowance, according to the terms of the particular plan or program.
4. Layoff Allowance will stop upon the earlier of:
(a) The date of recall
(b) The date recall is refused, or
(c) The exhaustion of all Layoff
Allowance under the program.
5. Any employee who exhausts his/her layoff allowance as herein provided,
and who is subsequently reinstated in employment with the Company shall not
again be eligible for additional layoff allowance until accumulating one (1)
additional year of unbroken continuous service credit with the Company. Upon
establishing one (1) year additional continuous service credit after such
reinstatement, the employee shall again be entitled to layoff allowance in
accordance with established unbroken continuous service credit with the Company
if again laid off under the conditions herein provided.
6. Any employee who does not exhaust his/her layoff allowance as herein
provided, and who is subsequently reinstated in employment with the Company is
eligible for the remainder of their original layoff allowance entitlement if
place on layoff again within one (1) year of reinstatement. If placed on layoff
after one (1) year of reinstatement, paragraph (5) will apply.
9.06 RECALL
For purposes of reinstatement all laid off employees shall be recalled in order
of seniority to the highest classification in which they have established
seniority, or to any equal or lower classification provided they have the
ability, skill and physical capabilities to do the work required.
No new employees will be hired until all such laid off employees have been
reinstated as set forth above, if capable of performing the work required.
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9.07 TEMPORARY LAYOFF
A temporary layoff is any layoff of five (5) working days or less. When it is
necessary to have a temporary layoff, employees without seniority in the
occupation who normally perform the job which is being shut down, will be laid
off temporarily without regard to other established seniority. If additional
employees must be laid off, the least senior employees who normally perform the
job which is being shut down will be laid off temporarily without regard to
other established seniority; provided that within the thirty-five (35) day
period immediately preceding the date of such temporary layoff the employee
affected shall not have had more than five (5) working days' (40) hours lost
time resulting from temporary layoffs. The said five (5) working days shall be
computed from days falling within the employees' normal work schedule.
In the event that work is available in other areas within the plant on the
employee's own shift, the Company will continue the practice of giving those
employees affected by temporary layoff an opportunity to be assigned to those
areas provided the employee has the skill, ability, physical capability and
required certification to perform such work. Such assignment will be discussed
with the appropriate union representative.
9.08 SENIORITY OF UNION REPRESENTATIVES
As long as there is work available which they are capable of performing,
Department Stewards shall hold seniority over all employees in their respective
jurisdiction and shift; and Chief Stewards shall hold seniority over all
employees in their zones of jurisdiction.
This Paragraph shall apply only in case of layoff and shall not apply to the
upgrading provisions of this Agreement. Local Union officers authorized to
participate in the administration of this agreement in addition to their
established seniority shall hold seniority over all employees and occupations in
the same or lower labor grades.
9.09 SHIFT PREFERENCE
Preference for assignment to a designated shift within a classification shall be
given to employees with the greatest seniority in that classification. It will
be the responsibility of each individual employee to indicate the shift of
his/her preference from among those listed by the Company on the preference box
prior to 4:00 p.m. on the last Wednesday of March and September. Shift
preference requests on file prior to 4:00 p.m. that Wednesday shall be honored
in accordance with seniority in April and October. Those employees with greater
seniority may exercise shift preference to "bump" employees with less seniority
in the same occupational classification. In case vacancies occur on any shift at
other than the aforementioned dates, following the application of 9.10,
employees with shift preference on file will fill the vacancies.
If a shift is eliminated, senior employees on the shift affected shall have the
right to exercise their seniority on remaining shifts.
A Just In Case card will be made available for employees to indicate a primary
and secondary shift option. Cards on file prior to 4:00 p.m. on the last
Wednesday in March and September will be considered in accordance with seniority
in the event an employee is "bumped" from his/her shift by a more senior
employee. This move will not be charged as a shift preference.
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In October 1996, employees will receive one (1) shift preference and may have a
maximum of two (2) shift preferences if one had been carried over from April
1996. In Calendar Year 1997, employees will receive one (1) shift preference
(April or October) unless one was carried over from 1996; in which case the
employee would be afforded a maximum of two shift preferences. In Calendar Year
1998, employees will receive one (1) shift preference (April or October) unless
one was carried over from 1997; in which case the employee would be afforded a
maximum of two shift preferences. In Calendar Year 1999, employees will receive
one (1) shift preference (April or October) unless one was carried over from
1998; in which case the employee would be afforded a maximum of two shift
preferences.
Shift preference cards honored to fill vacancies caused by a layoff will not be
charged as a shift preference unless layoffs occur at the same time as the April
or October shift preference.
9.10 PLANTWIDE BID
Vacancies declared by the Company as a result of a termination, death,
retirement, addition in headcount within an existing area, or long term
disability will be posted for Plantwide bid for seven (7) calendar days. The
posting will specify the classification, shift, normal performing task(s) and
areas.
Areas are defined as: Plant Maintenance, Line Maintenance, Laborer Cleaner,
Photo, Diffusion, Thin Film, Etch, Implant, Probe, Calibration Lab,
Manufacturing Support, and Manufacturing Maintenance Support. Employees on
active status with seniority may submit a bid on a form provided for that
purpose.
In labor grades 1-5, bids will be awarded to the senior eligible bidder who
meets the physical capacity requirements. Bids for classifications in Labor
grade 6 and above will be awarded on the basis of qualifications and seniority .
In evaluating the qualifications of bidders, skill and ability tests may be
administered. All factors being relatively equal, selection will be made by
seniority.
Application shall be made on the bid form no later than 4:00 p.m. on the seventh
calendar day of posting. The employee awarded the bid will be transferred no
later than the second Monday following the date of the employee's acceptance of
the bid.
Employees may be awarded a Plantwide bid once in a rolling 12 month period. An
employee awarded a bid will not be charged a shift preference.
Through this process, an employee awarded a bid will be assigned to the normal
performing task(s) of the employee being replaced/and will be given a trial
period of up to 60 calendar days. Upon successful completion of the trial
period, the employee will not be moved from bid job unless seniority warrants
(labor load) for a minimum of 12 months. If the bidder is disqualified during
the trial period, he/she will be returned to his/her former classification and
shift provided he/she has seniority. A disqualified employee may not submit a
bid for the same area for 12 months from the date he/she is disqualified.
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The original declared vacancy will be filled by the Plantwide bidding procedure.
These provisions do not supersede the rights of employees under paragraph 9.03.
Vacancies other than those posted for Plantwide bidding will be filled in the
following order: shift preference, upgrade, hardship transfers, new hires.
AREAS ARE DEFINED AS:
1. Plant Maintenance
Electrician
Mechanic
Plant Service Mechanic
Tool & Die Maker
2. Line Maintenance
Equipment Specialist
MMP's
3. Photo }
4. Diffusion }
5. Thin Film } Manufacturing Operator
6. Etch }
7. Implant }
8. Probe
Manufacturing Operator & Electronic
Equipment Maintenance
9. Calibration Lab
Electronic Equipment Maintenance
10. Manufacturing Support
Machine Attendant & Material Prep
11. Manufacturing Maintenance Support
Tool Crib & Material Handler
12. Laborer Cleaner
9.11 SENIORITY LISTS
Every six (6) months, the Company shall make available to representatives of the
Union a seniority list, and shall post on the Plant bulletin boards a notice to
all employees affected thereby that such list is available. Any employee may
contest the accuracy of his/her seniority status, and if error is established,
correction will be made.
9.12 UPGRADING
To the extent practicable, the Company will give first consideration for
upgrading to employees on active payroll when they meet the necessary
qualifications. In upgrading employees to higher rated occupational
classifications, the Company will consider seniority as an important factor.
Upgrade opportunities will be posted for seven (7) calendar days and the
employee awarded the upgrade will be transferred no later than the second Monday
following the employee's acceptance of the Company's offer of upgrade unless
otherwise mutually agreed. Employees with seniority who have requested upgrading
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will be selected on the basis of ability, skill, experience, physical
capabilities and seniority. These factors being relatively equal, selection will
be made by seniority. The Company will consider for upgrade, employees with less
than ninety (90) calendar days service, prior to hiring from the outside. In
determining the qualifications of employees to be upgraded, skill and ability
tests may be given to verify such qualifications.
The Union agrees to recognize such test results as factors in such
determination. Any employee who is refused upgrading because of failure to meet
the standards required on the tests established by the Company, may request to
be retested no sooner than six (6) months after the date they were last tested.
However, once an employee fails to meet the standards twice on the test for the
same occupation, the employee may not be retested for that occupation, unless
the employee has shown suitable evidence that they have obtained additional
training which could qualify them for the occupation involved.
9.13 SENIORITY PRIVILEGES, FOR EMPLOYEES WHO ARE TRANSFERRED OUT OF THE
BARGAINING UNIT
When an employee has established seniority privileges in an
occupational classification within the Bargaining Unit and is or has been
thereafter transferred or promoted to another position which is not within the
Bargaining Unit, in the event such employee is again restored to a position
within the Bargaining Unit only after all employees who are on layoff from that
occupational classification are recalled, will then be considered a new hire and
establish seniority as of the date they are returned to the Bargaining Unit.
9.14 HARDSHIP TRANSFERS
In the event an employee with seniority has a verifiable medical hardship or
other unusual circumstance, the Company will consider the employee's request for
a transfer to a vacancy. Such requests will be honored prior to filing the
position with an outside hire.
ARTICLE X
LEAVES OF ABSENCE
10.01 APPLICATION FOR LEAVES OF ABSENCE
Except for Military Service, no application for a leave of absence will be
considered unless it is applied for in writing and on forms to be provided and
made available by the Company for that purpose.
10.02 TEMPORARY ABSENCE FOR DISABLING ILLNESS, INJURY OR PREGNANCY RELATED
DISABILITY
An employee having thirty (30) days or more of continuous service
credit with the company and who shall be found and certified by the plant
physician to be unable to perform regularly assigned duties with the Company
because of illness, injury or pregnancy related disability, shall receive leave
of absence without pay, but with service credit and seniority accumulating while
such condition continues. If the disability continues beyond six (6) months, the
employee shall receive an additional leave of absence not to exceed an
additional six (6) months, without pay, with service credit and seniority
accumulating. If the disability continues beyond one (1) year, the employee
shall receive additional leaves of absence, without pay, not to exceed six (6)
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months in the case of any leave of absence, or a total of twelve (12) months,
with service credit and seniority accumulating, and at the end of a total period
of two (2) years, if the employee has not returned to work, the employee"
service credit and seniority will be broken and terminated. An employee absent
under such condition shall inform the Human Resource Department immediately upon
such occurrence and thereafter keep the Human Resource Department informed
monthly, in writing, stating the best estimate of the time when such employee
will be able to resume the usual duties. Upon approval and certification by the
plant physician that such employee has sufficiently recovered and is physically
qualified to return to work and perform the usual duties, the employee will be
restored to employment if under normal conditions the employee would have been
continued in employment by the Company, except for such sickness or disability.
Upon a finding by the plant physician that such employee's physical conditions
will enable the employee to return to work, refusal promptly to resume such
work, if available, will terminate the employee's service credit and seniority.
The Company may at any reasonable time or times require the employee to furnish
a physician's statement certifying to the condition. For the purpose of
determining the condition and the likely duration of such sickness or
disability, a Company selected nurse may interview or a Company selected
physician may interview or examine such employee.
10.03 LEAVES OF ABSENCE FOR UNION ACTIVITY
Any member of the Union with at least six (6) months of continuous service
credit, shall, on written request of the Union, be granted a leave of absence
for Union activity for a one (1) year period. Extensions of one year duration
shall be requested and granted on written request of the Union prior to the
termination of such leave. Continuity of service and full seniority privileges
shall be retained and accumulated during such leaves of absence.
Employees who are on said leave of absence for union business will be eligible
to continue life insurance in the amount in effect at the beginning of the leave
of absence. Said employees will also be eligible to continue their Long Term
Disability (LTD) insurance in accordance with the amount in effect at the
beginning of the leave of absence. Life and LTD insurances may increased on the
effective date of any subsequent increase to the base wage for the employee's
occupational classification. If the employee declines any increase and later
elects to increase his or her insurance, evidence of insurability will be
required. LTD and Supplemental Life insurances may be continued by remitting the
applicable premium in advance.
When the Union activity for which such leaves of absence are granted shall
cease, the Union shall immediately notify the Company in writing, and if
application is made within ten (10) days thereafter, such Union member will be
given reinstatement in the former position, if same still exists, or a
comparable position, in accordance with seniority privileges and at the
applicable wage rate at the time of return. On written request of the Union,
employees shall be entitled to a leave of absence, without pay, to attend
Official Regional Conventions of the AFL-CIO or International Conventions of the
Union. The number of employees to be granted such leaves of absence shall be
discussed between the Company and the Union.
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10.04 MILITARY LEAVE OF ABSENCE
A military leave of absence and the relevant terms and conditions will be
governed by the Uniformed Services Employment and Re-employment Rights Act.
10.05 AMOUNT OF MILITARY PAY
The Company will pay to an employee who has acquired six (6) months or more
continuous service, who is on leave for Military Service, for one month only,
military allowance equal to the difference between regular monthly earnings
during the last month's employment by the Company and the base rate of
compensation for the first month's military service if the first month's
military earnings are less than the last month's Harris earnings.
METHOD OF COMPUTING: Regular monthly earnings for an hourly-rated employee
will represent 4-1/3 times the employee's average weekly earnings exclusive of
overtime allowances, during the four weeks prior to departure. (The multiplier
of 4-1/3 represents the number of weeks in any average month.)
10.06 PAY FOR ANNUAL ACTIVE DUTY FOR TRAINING IN THE UNIFORMED SERVICES
An employee with six (6) months or more continuous service credit who is called
for and performs mandatory training will be paid the difference between total
military pay, including allowances such as flight pay and submarine pay, for the
period served, but not to exceed fourteen (14) calendar days, and the payment
that would have been received for the straight-time hours lost from the
employee's regular work schedule, but not to exceed ten (10) work days each
year, computed at the established hourly base rate or hourly wage rate.
If called for emergency military duty, the employee will be paid the difference
between daily military pay, including allowances such as flight pay and
submarine pay, and the payment that would have been received for the
straight-time hours lost from the employee's regular work schedule, but not to
exceed five (5) work days each year, computed at the established hourly base
rate or hourly wage rate.
10.07 SHIFT ADMINISTRATORS' LEAVE OF ABSENCE
Employees with thirty (30) days of continuous service credit shall be granted a
leave of absence for death in the family, quarantine, marriage, or voluntary
service with a Government agency. Leaves of absence may also be granted to
employees with such continuous service for other miscellaneous reasons.
Application for such approved absence should be made to the Shift Administrator.
Shift Administrators are empowered to grant leaves of absences not to exceed
fourteen (14) calendar days for reasons other than medical purposes.
10.08 EMPLOYEES RETURNING FROM LEAVE
Employees returning from leaves of absence of six (6) months or less shall be
permitted to return to the shift and area in which they were working at the time
the leave was granted, provided such employee is more senior than the least
senior employee in that occupation working said shift.
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10.09 BEREAVEMENT PAY
Employees with thirty (30) calendar days or more of continuous service credit,
in the event of death in their immediate families, shall be paid for three (3)
days absence during the normal work week at their straight time hourly base rate
for the number of hours in the regular shift. Such period of absence must be
completed within three (3) working days following the funeral or memorial
service. For purposes of this payment, the immediate family includes the
following relatives of the employee: Mother, Step-Mother, Father, Step-Father,
Sisters, Brothers, Grandparents, Children (including Stepchildren and if living
in employee's home, Foster Children), Husband or Wife, Mother-in-Law,
Father-in-Law, Sisters-in-Law, Brothers-in-Law, Grandparents-in-Law,
Grandchildren, Sons-in-Law and Daughters-in-Law, Step Brothers, and Step
Sisters.
10.10 JURY DUTY AND WITNESS PAY
An employee with thirty (30) calendar days or more of continuous service credit
who is called for Jury Duty or who is subpoenaed to appear in Court as a witness
will be compensated by the Company for the difference between payment received
for such compulsory Jury Duty or Court appearance and the payment that would
have been received for the straight-time hours thereby required to lose from the
employee's normal regular work schedule, computed at the established hourly base
rate or hourly wage rate. However, when subpoenaed by a party other than the
Company, the employee will not be compensated if the employee, the Company or
the Union is a party in the case, or if the employee has any direct interest or
financial interest in the case. Differential payment shall be made so long as
such Jury Duty or Court appearance continues, only upon presentation of
documentary proof of Jury Duty or Court appearance and the payment received
therefore.
Continuous service credit and duly established seniority privileges will
accumulate during such leaves.
10.11 PERSONAL/SICK PAY
A. With the approval of the appropriate shift administrator, employees may
request and be paid for each half or full day of approved absence. Such payment
will be made up to the maximum number of days in any one calendar year,
depending upon continuous service credit, set forth as follows:
- - ------------------------------------------------------ -------------------------
Continuous Service Personal/Sick Pay In Any
Credit (As of Dec. 1st) One Year
- - ------------------------------------------------------ -------------------------
- - ------------------------------------------------------ -------------------------
2 1/2 Years to 5 Years 1 day
- - ------------------------------------------------------ -------------------------
- - ------------------------------------------------------ -------------------------
5 Years to 10 Years 2 days
- - ------------------------------------------------------ -------------------------
- - ------------------------------------------------------ -------------------------
10 Years to 15 Years 3 days
- - ------------------------------------------------------ -------------------------
- - ------------------------------------------------------ -------------------------
15 Years to 25 Years 4 days
- - ------------------------------------------------------ -------------------------
- - ------------------------------------------------------ -------------------------
25 Years and over 5 days
- - ------------------------------------------------------ -------------------------
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B. An employee is expected to notify the employee's shift administrator in
advance of the employee's absence, whenever possible, to permit arranging for a
replacement or rescheduling the work.
C. Such payment will be made at the employee's straight-time hourly base
rate in effect at the time of the absence up to the number of hours in the
employee's regular workday. Absences will be charged against such payment
allowance in half day units. Days counted are those which fall within the
employee's normal work schedule. In case of an employee on a rotating or
continuous shift, payment will be made for time lost during the employee's
normal work schedule.
D. Reimbursement for absence will not be made for any day or days for which
weekly disability benefits are payable under the Harris Temporary Disability
Insurance Plan or under Worker's Compensation nor for which the employee
receives any type of monetary benefits from the Company. All eligible employees
must work at least one day after November 30th to receive personal/sick pay in
that calendar year.
E. Unused personal/sick pay remaining as of November 30th, up to a maximum
of thirty (30) days, may be carried forward to the following year.
F. Unused personal/sick pay remaining as of November 30, up to a maximum of
ten (10) days, may be paid in a lump sum at the request of the employee, if such
request is made prior to December 15 of the current year.
G. All unused personal/sick pay available to an employee will be paid upon
the death, retirement or indefinite layoff of such employee. In addition, unused
personal/sick pay available to an employee will be paid at the employee's option
in the event the employee observes on a regular work day a recognized holiday
not designated in Paragraph 7.01, or in the event of temporary down days or a
plant shutdown of two (2) days or more duration. In such cases the amount of pay
shall be limited to the regular work day(s) lost (excluding designated holidays)
which occur during such plant shutdown or undesignated, recognized holiday(s).
H. Beginning July 1, 1997 and thereafter, all dates marked with an asterisk
(*) will change to December 31.
ARTICLE XI
COMPLAINT AND GRIEVANCE PROCEDURE
11.01 COMPLAINTS
An employee or employees having a complaint shall have the right to verbally
present the same, directly or through the Steward, to the shift administrator.
If the complaint is not settled by the end of the next scheduled shift and
involves a matter subject to Grievance Procedure, it may be reduced to writing
and considered a grievance subject to the grievance procedure.
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11.02 DEFINITION OF GRIEVANCE
"Grievance" shall mean, and be limited to, disputes or differences between the
Company and Union, or employees so represented, with respect to the
interpretation or application of any provision of this Agreement.
11.03 PRESENTATION OF GRIEVANCES
All grievances shall be presented as soon as practicable after the occurrence
upon which the same is based, but in no event later than five (5) working days
if the same is a Dismissal Grievance, fifteen (15) working days if the same is a
Wage Grievance, and fifteen (15) working days if the same is a Grievance arising
for any other cause. The failure to submit a grievance within such periods shall
constitute a bar to further action thereon. If it is determined under the
Grievance Procedure that an adjustment in wages is appropriate, such adjustment
shall be applied retroactively to the date of first occurrence, provided that
such date is not more than thirty (30) days prior to the date upon which the
complaint was presented. Dismissal grievances may be presented at the Third Step
and the dismissed employee may be present during all such procedures.
11.04 GRIEVANCE ZONES
For the purpose of efficiently handling complaints and grievances, the various
departments of the plant shall be divided into zones as determined through
mutual agreement of the parties.
11.05 RESOLUTION OF GRIEVANCES
Unless settled or disposed of in an earlier step, all grievances shall be
processed through four (4) steps. Step 4 must be completed within fifteen (15)
working days after the matter has been referred to that step. If a grievance is
not disposed of in the first four (4) steps of the Grievance Procedure, it may
be appealed to arbitration by either party in accord with the arbitration
procedure set forth in the following paragraphs.
11.06 GRIEVANCE STEPS AND REPRESENTATIVES OF THE PARTIES THEREIN
A duly presented grievance shall be negotiated in each of the following
successive steps between the representatives of the parties specified in each
step.
Step 1. Between the immediate shift administrator and the appropriate
Steward. The shift administrator shall give the Steward a written reply to the
grievance within two (2) days after the meeting with the Steward. If this reply
is unsatisfactory, the Steward may appeal the decision to Step 2, provided such
appeal is made within two (2) days after receipt of the Supervisor's reply.
Step 2. Between the department manager and the Chief Steward, or their
designated representatives. The Company representatives shall give his/her
written reply within two (2) days after the meeting with the Local Union
representative. If this reply is unsatisfactory, the Local Union representative
may appeal this reply to Step 3, provided the appeal is made within two (2) days
after the receipt of the Company representative's reply.
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Step 3. Between the appropriate Union Grievance Committee, as defined in
Paragraph 12.06 and the Company Committee, composed of the Human Resources
Manager and/or his/her designated representatives and not to exceed five (5)
other Company representative. The aggrieved employee and/or the Steward involved
may also be present. The Company Grievance Committee shall make a reply in
writing to the grievance not later than seven (7) days after the meeting of the
Grievance Committee. If this reply is unsatisfactory, the grievance may be
appealed to Step 4, provided such appeal is made within seven (7) days following
receipt of the Third step reply.
Step 4. Between the representatives of the executives of the Company,
representatives of the Union and their respective Grievance Committees. An
International Representative of the Union may be present at this step.
Step 5. Any grievance which has not been finally settled or disposed of in
accordance with the steps of the Grievance Procedure outlined above may be
submitted to Arbitration, within thirty-one (31) days after receipt of the
Fourth Step reply, by either Party, under the voluntary arbitration rules
provided by the American Arbitration Association, except that the Arbitrator
shall be selected as follows: The American Arbitration Association shall submit,
as soon as possible, to each of the Parties, duplicate lists of the names of
eleven (11) persons qualified to act. The Union and the Company, shall within
fifteen (15) days from the receipt of such lists have the right to strike five
(5) of the names from their respective lists and shall indicate the order of
preference for the names remaining on such lists. These lists shall be returned
to the Association which shall, thereupon, select the Arbitrator from the name
or names remaining.
For the purpose of the Grievance Procedure, Saturdays, Sundays, and holidays
shall not be counted in computing the due date for any decision or appeal
therefrom.
Time limits for grievance meetings at any step may be extended by mutual
agreement of both parties in writing.
11.07 COMPANY GRIEVANCE PROCEDURE
If the Company has a grievance arising under the terms of the Agreement, the
Human Resources Manager may present the grievance in writing to the President of
the Local Union. If the matter is not satisfactorily adjusted between the Human
Resources Manager and the President within five (5) working days, it shall be
referred to the Executive Committee of the Union for adjustment. If the matter
is not satisfactorily adjusted within ten (10) working days by the Executive
Committee of the Union, it may be referred to the Grievance Procedure at Step 4.
11.08 ARBITRATION
In arbitration under this Agreement, the Company and the Union agree that the
decision or award of the Arbitrator or Arbitration Board shall be final and
binding of each of the parties and that they will abide thereby, subject to such
laws, rules or regulations as may be applicable. The authority of the Arbitrator
or Arbitration Board shall be limited to determining questions, grievances, or
disputes which directly involve only the interpretation or application of the
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provisions of this Agreement. The Arbitrator or Arbitration Board shall have no
authority to add to, subtract from, or to change any of the terms of this
Agreement, to change an existing wage rate or establish a new wage rate except
as provided in Paragraph 4.05.
Each party shall bear the expense of preparing and presenting its own case. The
cost of the Arbitrator's services and any other expenses incidental to the
arbitration, mutually agreed to in advance, shall be borne equally by the
parties.
ARTICLE XII
UNION ACTIVITY AND UNION REPRESENTATION
12.01 REPRESENTATION LISTS
The Union agrees to furnish the Company with complete written lists of Chief
Stewards, and Stewards and the zones or areas to which their jurisdiction in
presenting grievances of complaints is limited. The Company agrees to inform the
Union of changes in organization of the supervisory staff at the plant. It is
also agreed that the Union will furnish the Company with lists of its duly
elected officers and representatives with whom the Company is authorized to deal
in the administration of the provisions of this Agreement. The Union and the
Company agree to keep such lists correct and current at all times.
12.02 ACCESS TO PLANT
The Company agrees that the authorized Representatives of the Union shall have
admission by pass from the Company to the Departments of the Plant at any time
during scheduled working hours for the purpose of conducting Union Business
authorized by the Agreement and to verify the fact that this Agreement is being
observed by the Parties hereto.
12.03 UNION BUSINESS OR ACTIVITIES ON COMPANY TIME OR PREMISES
Except as otherwise specifically agreed, no employee shall engage in any Union
or non Company activity or business on Company time, and no employee shall
engage in such activity or business on Company premises except during
non-working hours of the employee and non-working hours of any other employee
involved.
12.04 RECOGNITION OF STEWARDS
There will be one Chief Steward on all recognized shifts. The number of Stewards
to be recognized by the Company shall be determined by mutual agreement of the
parties. However, at no time shall the total number of such Stewards exceed the
proportion of one Steward to each fifty employees represented in the bargaining
unit. The Chief Stewards and Stewards shall be employees of the Company and
shall be selected by the Union. No employee shall be represented by more than
one Steward.
12.05 RECOGNITION OF PRESIDENT OF LOCAL UNION
The Company agrees to recognize the President of the Union, or, in absence, the
President's designated representative, in the performance of the duties of the
President's office to the employees in the bargaining unit. The designated
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representative of the President shall be empowered to act as such only when
authorized by the President in writing.
12.06 RECOGNITION OF GRIEVANCE COMMITTEE
A Grievance Committee, consisting of not more than five (5) members, shall be
employees of the Company and shall be selected by the Local Union. Such
Committee shall assist in the administration of this Agreement by participating
in the settlement of grievances in the manner set forth in Article XI, and, in
connection therewith, shall be accompanied by the President of the Local Union
or the President's designated representative, and may be accompanied by a
representative of the International Brotherhood of Electrical Workers.
12.07 UNION DUTIES OF UNION REPRESENTATIVES
The duties and activities of the Steward while acting as such in the Plant,
shall be limited to the handling of grievances and complaints which arise in the
zone which the Steward represents and in accordance with the grievance
procedure. Except when they are engaged in the settlement of grievances and
complaints under the grievance procedure, all Union representatives shall
continue at their regular work in the same manner as other workers. When a Union
representative is required to leave his/her regular duties for the orderly and
expeditious handling of a grievance, complaint or other recognized Company-Union
business, the procedure outlined below will be followed:
A. The Union representative will notify his/her shift administrator
whenever he/she must leave his/her assigned job. If necessary a Union
representative shall remain on his/her regular work until a reasonable time is
afforded to provide a substitute in his/her place.
B. When Union representative leaves the area the representative will fill
out a time voucher indicating his/her name and reason for leaving.
C. When entering the area of another shift administrator's responsibility,
the Steward will contact the shift administrator before attempting to contact
any employee.
D. When returning to their own area, the Union representative will return
his/her voucher to his/her shift administrator and return to his/her regularly
assigned duties.
12.08 PAYMENT FOR TIME SPENT HANDLING GRIEVANCES
All Union business and activity shall be on the employee's own time, except time
spent solely during the regular scheduled work day on recognized Company-Union
business and administration of Agreement by Chief Stewards, adjustment of
grievances during the complaint stage by the Steward, and the adjustment of
grievances during Steps No. 1, 2, 3 and 4 of the Grievance Procedure by Union
representatives.
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ARTICLE XIII
SAFETY, HEALTH AND INSURANCE
13.01 SAFETY AND HEALTH
The Company will continue to make all reasonable provisions for the safety and
health of its employees during hours of employment, and to provide protective
devices and other equipment necessary to protect all employees from injury. The
Union agrees to cooperate with the Company in assuring conformance to all
established safety regulations.
13.02 RETIREMENT AND INSURANCE BENEFITS
Employees covered by this Agreement shall be entitled to participate in and
shall be covered by the following Harris Corporation Employee Benefit Plans for
Employees Represented by The IBEW, AFL-CIO.
1. Retirement Plan
2. Employee Stock Purchase Plan
3. Medical Plan
4. Dental Assistance Plan
5. Survivor's Benefits Program and Dependent Life Insurance Program
6. Disability Income Plans
a. Short-Term Disability Income
b. Long-Term Disability Income
For the term of this Agreement the Company shall have the right to amend or
change the foregoing benefit plans at any time without being required to bargain
with the Union provided such changes or amendments apply uniformly to other
Harris employees. Changes to the Medical and Dental Assistance plans regarding
employee contributions, deductibles or maximum out-of-pocket expenses will be
made only during the month of August, if at all, during each year of this
Agreement. The specific benefits to be provided, the employee and Company
contribution requirements and other rights and obligations shall be defined by
the pertinent plan documents, insurance policies and/or insurance contracts.
13.03 SUPPLEMENTAL WORKERS' COMPENSATION PAYMENTS
When an employee is entitled to temporary disability payments under the
applicable Workers' Compensation Act, and the weekly payments due to the
employee under the Act are less than eighty percent (80%) of the base weekly
pay, as hereinafter defined, the Company will make a weekly payment, in addition
to that required by the Act, equal to the difference between eighty percent
(80%) of said base pay and said required disability payment. This additional
payment shall be made only during the period while the employee is entitled to
Workers' Compensation for said disability, and only while absent from work and
unable to engage in gainful employment because of said disability, not including
any period after an award has been made under the Worker's Compensation Act for
partial and permanent or total and permanent disability. Said additional
payments shall no be made in any case for a period longer than twelve (12) weeks
on account of the same disability. "Base Weekly Pay" shall mean the number of
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hours per week the employee is regularly scheduled to work not exceeding forty
(40), multiplied by the employee's base hourly rate, exclusive of any
supplemental payments such as for incentive or piecework earnings, night shift
premium or overtime. The additional payment herein provided for is intended to
supplement the amount of weekly temporary disability benefits under the Workers'
Compensation Act for the period above defined while the employee is absent from
work and to apply under the same conditions as the law requires for Workers'
Compensation. These additional payments shall apply only to disabilities subject
to the Workers' Compensation Act which occur on or after the effective date of
this Agreement.
13.04 REST PERIODS
A. Rest periods of ten minutes duration in the first half of each regular
shift and in the second half of each regular shift shall be scheduled for all
direct labor production employees.
B. Except in unusual circumstances, the Company will afford a rest period
to indirect labor employees on an informal or unscheduled basis. Such rest
periods will not exceed those of direct labor employees.
C. Employees may smoke in designated areas.
D. When overtime work of at least four hours is scheduled to commence
immediately following the termination of the employee's regularly scheduled
shift, a rest period of ten (10) minutes' duration will be provided immediately
preceding the termination of such regularly scheduled shift and a ten (10)
minute rest period will be granted after working two (2) hours.
E. When overtime work of at least four hours is scheduled immediately
before the employee's regularly scheduled shift, a rest period of ten (10)
minutes' duration will be provided at the start of such regularly scheduled
shift.
F. Employees assigned to the Compressed Work Week will receive three (3)
ten minute paid rest periods and one (1) 30 minute unpaid lunch period during
each complete shift.
The Company and the Union will jointly and in goof faith cooperate in their
efforts to assure conformance to the above provision.
ARTICLE XIV
GENERAL PROVISIONS
14.01 NOTICES
Whenever notice is given under the terms of this Agreement, from either party to
the other it shall be in writing. Notice to the Company shall be addressed to
the Human Resources Manager, Harris Corporation, Findlay Plant, Findlay, Ohio.
Notice to the Local Union shall be addressed to the President, who shall keep
the Company informed of his/her correct address. Employees shall keep the
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Company informed of their correct address and in case of notice to such
employees, it shall be by registered or certified mail. Such notices shall be
sent to the last known address furnished to the Company by the employee and
shall be deemed to have been given as of the date receipted for, or if returned
to the Company due to the employee's having failed to keep the Company informed
of their correct address, the date such notice is returned.
14.02 RETIREMENT PLAN JOINT COMMITTEE
There shall be a joint committee consisting of two (2) members appointed by the
Company and two (2) members appointed by the Union, which shall hold monthly
meetings and shall be authorized to confer and make recommendations with respect
to questions of fact relating to age, service and eligibility under the
Retirement Plan.
14.03 PRESENTATION OF AGREEMENT TO EMPLOYEES
The Company shall supply all present and new employees with a copy of this
Agreement.
14.04 INTRODUCTION OF NEW OR TRANSFERRED EMPLOYEES
Shift administrators shall introduce new or transferred employees to the
appropriate Steward for the Section or Department in which such employee will
work within three (3) work days.
14.05 WORK ASSIGNMENTS
Employees who are excluded from the jurisdiction of the Bargaining Unit shall
not be assigned to, not perform work of a nature normally performed by employees
included in the Bargaining Unit.
In the event it becomes necessary to bring in service representatives,
appropriate bargaining unit employees will always be offered the opportunity to
work with these representatives for training.
A joint Company/Union committee will be established with appropriate
representation from skilled trades and management personnel and shall be
facilitated by a Chief Steward and Human Resources, or their designated
representation.
The object of this committee is:
1. Determine when it is appropriate to use subcontractors versus in-house
personnel, recognizing cost, timing and impact to on time-delivery as factors.
2. Identify skills required to minimize subcontractors use and recommend
appropriate certification or training.
3. Review parts inventory as well as determine feasibility of
purchase/rental of "special tools" as they relate to work performed in the
plant.
4. The Company will provide this committee a schedule of required
facilities project(s) to be reviewed.
5. The committee will provide in advance to the Union and Company written
notice as to incoming subcontractors and the jobs they will perform.
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The Union President and Plant Manager have the responsibility to see that this
committee meets these objectives. The plant manager has the limited right to
overrule the committee in critical on-time-deliver situations.
Every effort will be made to use union subcontractors whenever possible,
recognizing that plant emergencies or other timing issues may inhibit or
preclude their use.
The Union may, if it believes the Company did not give reasonable consideration
of employees in the Bargaining Unit, grieve these matters through the normal
procedures as described in 11.06 and 11.08 of this Agreement.
14.06 TIME STUDY RATES
Time study rates, which term includes production standards (i.e., time study
rates expressed in pieces per hour), shall be established by the Company by such
means as time study, motion study, or other established means of determining
operator performance. Production standards will be established by the Company on
the basis of fairness and equity consistent with quality and reasonable working
capacity of average experience operators. Failure to meet production standards
shall subject an employee to disciplinary action or discharge. Time study
standard rates shall not be changed except to correct obvious errors, or unless
there is a change in method, process, parts or equipment used in performing the
operation. An employee shall have the right to request a re-study of his/her
operation if the employee feels it has been unfairly set. The Company will
notify the Union of any new or revised time study rates.
14.07 BULLETIN BOARDS
The Company agrees to provide a suitable number of bulletin boards for posting
of Union publicity. Material posted shall be limited to notices of Local Union
meetings, Local Union newspaper items and Union recreation and social
activities. It is agreed that only notices approved by the Company shall be
posted. Approval of such posting shall not be unreasonably withheld. It is
further agreed that there shall be no other general distribution of literature
in working areas during working time or posting by employees of any other
literature upon Company property without prior approval by the Company.
14.08 ADDITION AND SEPARATION LISTS
The Company will furnish weekly to the Union lists of represented hourly
employees who have been recalled, transferred, terminated, granted leaves of
absence or extensions thereof, or reinstated from leave of absence, and all
hourly employees hired or rehired by the Company.
14.09 LUNCH PERIODS
A lunch period will be established approximately at the mid-point of each shift
and reasonable notice shall be given of any change in a lunch period. All
employees shall be afforded opportunity to use facilities substantially equal to
those of the cafeteria during lunch periods.
14.10 NOTIFICATION OF DISCHARGE
The Company will notify the employee's steward in all cases of discipline or
discharge prior to such action. If the employee's steward is unavailable, the
Chief Steward will be contacted.
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14.11 CLEARANCE OF DISCIPLINARY RECORDS
Unless otherwise mutually agreed, records of discipline related to unacceptable
attendance records will not be used in the grievance procedure after one (1)
year and all other records of discipline will not be used in the grievance
procedure after six (6) months if there are not further infractions.
14.12 CHANGE OF ADDRESS OR NAME
Employees must notify the Employment and Records office of any change in name or
address or telephone number. Failure to so notify the Company shall relieve the
Company from and obligation under other paragraphs of the Agreement requiring
notice to the employee by telephone or writing.
14.13 RATIFICATION OF AGREEMENT
This Agreement has been ratified by the Union in accordance with its
constitution and bylaws thereof.
14.14 EFFECT OF LAW
In the event that now or hereafter there is any State or Federal law or any
directive, order, rule or regulation made pursuant thereto, which is mandatory
and in conflict with any provision or provisions of any agreement between the
parties, the same shall supersede such provision or provisions, and thereafter
shall govern and control the relations and conduct of the parties so long as
such law, directive, order, rule or regulation shall remain in force and effect.
In the event that this or and other agreements existing between the parties
hereto, now or hereafter require the approval of any Government authority before
becoming effective, the same will and shall be subject to such approval. Nothing
in this Agreement shall preclude the employer from taking actions it reasonably
believes are necessary to comply with its obligations under the Americans with
Disabilities Act, including but not limited to providing reasonable
accommodation to applicants and employees with a disability, and maintaining the
confidentiality of medical information.
14.15 WAIVER
The parties acknowledge that during the negotiations which resulted in this
Agreement, each had the unlimited right and opportunity to make demands and
proposals with respect to any subject or matter not removed by law from the area
of collective bargaining, and that the understandings and agreements arrived at
by the parties after the exercise of that right and opportunity are set forth in
this Agreement. Therefore, the parties, for the life of this Agreement,
voluntarily and unqualifiedly waive the right, and each agrees that the other
shall not be obligated to bargain collectively with respect to any subject or
matter referred to, or covered in this Agreement. Further, the parties, for the
life of this Agreement, voluntarily and unqualifiedly waive the right, and each
agrees that the other shall not be obligated to bargain collectively with
respect to any subject or matter not specifically referred to or covered in this
Agreement, event though such subject or matter may not have been within the
knowledge or contemplation of any of the parties at the time this Agreement was
negotiated or signed.
40
<PAGE>
14.16 RULES FOR MAKING MODIFICATION IN MID-TERM
After this Agreement has been signed no provision may be altered or modified
during the life of the Agreement except by mutual consent in writing between the
Union and the Company, and only at a conference called for such purpose by the
parties and ratified by their respective organizations.
14.17 ADMINISTRATIVE LETTERS
All letters of Agreement concerning the interpretation or the application of any
provision of this Agreement must be finally approved by the International Office
of the Union and by the Director, Human Resources of the Company, or an
authorized representative, before becoming effective. All such Administrative
Letters shall be binding and fully enforceable on all parties involved provided
they do not modify, change, or amend the provisions of this Agreement.
14.18 NOTICE OF CHANGE
Either party may give written notice sixty (60) days prior to July 1, 2000 or
sixty (60) days prior to any subsequent anniversary date of this Agreement, or
any proposed change or changes of this Agreement. Whenever such a notice of
change is given, the party giving the notice shall submit its proposals in
writing to the other party prior to the end of thirty (30) days from the date of
notice. If the parties do not reach an agreement with respect to such proposals
on or before July 1, 2000, or on or before a subsequent July 1 anniversary date
of this Agreement, whichever is applicable, the first sentence of paragraph 2.02
shall not apply, but all other provisions of the Agreement shall continue in
full force and effect, except that there shall be no grievance or arbitration as
to work that may be performed for this Company during any resulting cessation of
work.
14.19 TERM AND NOTICE OF TERMINATION
This agreement shall become effective as of the date hereof, upon ratification
as herein before provided, and shall continue in full force and effect to and
including July 1, 200, and thereafter shall be automatically renewed from year
to year unless notice in writing shall be given by either party to the other of
its termination sixty (60) days prior to its expiration date of July 1, 2000, or
a subsequent applicable expiration date after automatic renewal, in which event
it shall terminate on its expiration date unless, by mutual agreement, it is
extended for a further period of time.
In WITNESS WHEREOF, the Parties have caused this Agreement to be executed by
their duly authorized officers and representatives on the date first written
above.
Local Union No. 1907 International Brotherhood of Electrical Workers, AFL-CIO
By:
Dave Dorman
Ken Ludwig
Paula Woodruff
Dewey Gant
Marc Liggett
41
<PAGE>
Betty Carman
Denny Marquart
APPROVED:
J. J. Barry
International President
IBEW, AFL-CIO
Harris Corporation
By:
George Latshaw
Paul Leonard
Michael Boehm
Marty Davis
APPROVED:
Joe Foyle
Director, Human Resources
Harris Corporation
42
<PAGE>
SHIFT SCHEDULES
START END
----- ---
3RD SHIFT 12:00 MIDNIGHT 7:45 a.m.
1st SHIFT 7:30 a.m. 4:00 p.m.
2nd SHIFT 3:45 p.m. 12:15 a.m.
A & B SHIFT 1:00 p.m. 1:00 a.m.
C & D SHIFT 1:00 a.m. 1:00 p.m.
<PAGE>
Letters Of Agreement
Dave Dorman
Local 1907 President
International Brotherhood of
Electrical Workers (AFL-CIO)
1016 Tiffin Avenue
Findlay, Ohio 45840
Dear Mr. Dorman,
This will confirm our understanding regarding the continued use of the Total
Quality Management process.
Both the Union and the Company agree to jointly promote and support a Total
Quality Management (TQM) process that augments and serves as a basic operational
foundation for the Findlay plant.
Both parties agree to fully utilize Employee Involvement, Total Productive
Maintenance, Statistical Process Control, Just-In-Time manufacturing process,
and other world class manufacturing methods in our daily operations. We
recognize that TQM is critical to the success of the Findlay operation and will
serve to enhance our mutual growth and viability. These concepts are not
intended to jeopardize employee job security. Additionally, the Company and
Union agree to continue the Joint Quality Systems Steering Committee (QSSC), as
well as to include appropriate Union representation on the plant Total Quality
Management Steering Committee.
The Company and the Union further agree to conduct timely joint communication
sessions to all employees regarding TQM to insure open, honest communications
44
<PAGE>
and promote a growing understanding and support of TQM and its "key tools". By
empowering our employees, we will improve our ability to respond to changing
customer requirements, thereby enhancing our ability to become a world leader in
semiconductor manufacturing.
It is understood that the TQM process, its key tools are not part of the
contract body and such actions performed under TQM shall not conflict with
existing contract language.
Sincerely,
ACCEPTED AND AGREED TO THIS
First DAY OF JULY, 1996
- - ----------------------------- -----------------------------
George Latshaw Dave Dorman
Harris Findlay Local 1907-President
45
<PAGE>
Mr. Dave Dorman
Local 1907 President
International Brotherhood of
Electrical Workers (AFL-CIO)
1016 Tiffin Avenue
Findlay, Ohio 45840
Dear Mr. Dorman,
CONFIRMED PREGNANCY
The following guidelines will be used for employees who provide written medical
verification that they are pregnant:
1. A volunteer in a non-fab area on the same shift will be sought. If a
volunteer is found, the two employees will switch jobs.
2. A volunteer on other sifts including the CWW will be sought. If a
volunteer if found, the two employees will switch jobs. Shift preference cards
will not be honored in this step and the pregnant employee must switch with the
volunteer.
3. The pregnant employee will fill the next available opening in a non-fab
area, CWW included. Shift preference cards will not be honored in this step and
the pregnant employee must transfer to the opening.
4. The pregnant employee will be allowed to request a predisability LOA.
5. After receipt of written verification, employee will be moved as soon as
possible, provided there is a volunteer or opening.
6. When the employee is no longer pregnant, the volunteer will be allowed
to return to their original area, if seniority permits.
46
<PAGE>
PLANNED PREGNANCY
The following guidelines will be used for employees that provide written medical
verification that they are planning to become pregnant:
1. A volunteer in a non-fab area on the same shift will be sought. If a
volunteer is found, the two employees will switch jobs.
2. The employee will be transferred to the next available non-fab opening,
CWW included. Shift preference cards will be honored in this step and the
employee must transfer to the opening that remains.
3. The employee will be allowed to request a personal business LOA.
4. Any employee who is planning to become pregnant and requests to be
temporarily assigned to a non-fab area by utilizing Step 1 or Step 2 of this
procedure will be eligible to be returned to a fab area after six (6) months
unless there is written a medical verification that they are pregnant. Status of
individuals beyond this initial six (6) months period will be reviewed on a case
by case basis.
5. Those employees who are planning to become pregnant are temporarily
assigned to a non-fab area by utilizing either Step 1 or Step 2 of this "planned
pregnancy" procedure could be bumped from the non-fab area based upon their
plant seniority. At times of shift preference or reduction in force, these
employees must go where they seniority carries them.
6. After six (6) months, the employees will be returned to their original
area, on request, unless written medical verification is provided, and seniority
permits.
If there is an issue as to need to protect a specific skill or expertise, the
Company and Union will discuss to mutually resolve.
47
<PAGE>
In the event changes, to include additional requirements under paragraph 14.14
and/or other `study' findings make it necessary to alter these guidelines, the
Company and the Union agree to discuss ways of mutually accommodating these
changes.
Sincerely,
ACCEPTED AND AGREED TO THIS
First DAY OF JULY, 1996
George Latshaw Dave Dorman
- - ------------------------- -------------------------
Harris Findlay Local 1907-President
48
<PAGE>
<TABLE>
Effective: 1-27-97
Supersedes: 10-7-96
FINDLAY HOURLY WAGE RATE SCHEDULE
SEMICONDUCTOR SECTOR
<CAPTION>
LABOR GRADE OCC. OCCUPATION MINIMUM STEP I STEP II MAXIMUM
NO. TITLE
<S> <C> <C> <C> <C> <C> <C>
1 2000 Labor-Cleaner $11.29 $11.43 $11.56 $11.69
2 1100 Manufacturing Operator $11.34 $11.48 $11.60 $11.74
3 $11.82 $11.95 $12.10 $12.23
4 5200 Plater $12.40 $12.54 $12.67 $12.82
5 3100 Maintenance Mech. B $12.48 $12.59 $12.74 $12.90
4000 Elec. Equip. Elec. B
4200 Electrician B
3200 Maintenance Machinist B
6 3800 Maint. Support $12.58 $12.72 $12.86 $13.02
2500 Manufacturing Support
7 4100 PMI Inspector $12.71 $12.84 $12.97 $13.15
8 3400L Line Maint. Mech. A $14.07 $14.23 $14.38 $14.56
9 4300L Line Electrician A $14.31 $14.46 $14.64 $14.80
10 4400 Elec. Equip. Elect. A $14.95 $15.11 $15.29 $15.46
4500 Electro-Mech. Equip. Spec
3400P Millwright
5100 Plant Services Mech.
4300P Plant Electrician A
11 3600 Tool & Die Maker $15.72 $15.89 $16.07 $16.25
12 4600 Equipment Specialist $16.19 $16.36 $16.47 $16.71
</TABLE>
NOTE (1) Group leaders shall be paid 15 cents a hour more than the highest
occupational rate in the group they lead
NOTE (2) Progression from minimum to maximum is in intervals of 30 days at
each step.
49
EXHIBIT 10.13
AGREEMENT
between the
HARRIS CORPORATION
and
LOCAL UNION NO. 177
International Union Of Electronic, Electrical, Salaried
Machine and Furniture Workers, AFL-CIO
at and for the
COMPANY'S PLANT
MOUNTAINTOP, PENNSYLVANIA
December 1, 1998
to and including
December 1, 2001
<PAGE>
AGREEMENT
The Company and the Union recognize that harmonious and constructive contractual
relations are mutually beneficial and both are desirous of maintaining such
relations.
ARTICLE I
PARTIES
Paragraph 1.01, PARTIES: Agreement entered into this 1st day of December, 1998,
between the Harris Corporation, hereafter referred to as "the Company" and Local
Union No. 177 International Union Of Electronic, Electrical, Salaried, Machine
And Furniture Workers, AFL-CIO, hereafter referred to as "the Union," with
respect to the Bargaining Unit composed of production and maintenance employees
at the Company's plant in Mountaintop, Pennsylvania.
ARTICLE II
PURPOSE OF AGREEMENT
Paragraph 2.01, PURPOSE: The purpose of and consideration for this Agreement is
to provide orderly collective bargaining relations between the Company and the
Union, to secure prompt and equitable disposition of grievances, and to
establish fair wages, hours, and working conditions for the employees covered by
this Agreement.
ARTICLE III
RECOGNITION OF RIGHTS
Paragraph 3.01, BARGAINING UNIT RECOGNITION: The Company recognizes the Union as
the sole collective bargaining representative with respect to rates of pay,
wages, hours, and other conditions of employment for the Bargaining Unit which
consists of all hourly-paid Production and Maintenance employees at the
Mountaintop, Pennsylvania, Plant of the Company, located in Luzerne County,
Pennsylvania, exclusive of all cafeteria employees, all executive,
administrative, clerical and office employees, all salaried technical and
professional employees, all guards, all employees represented by other unions
having agreements with the Company, and all supervisors as defined in
Section 2(11) of the National Labor Relations Act, as amended.
Paragraph 3.02, UNION SHOP: All employees in the Bargaining Unit covered by this
Agreement shall, as a condition of employment, on the 30th day following the
date of this Agreement, or on the 30th day following the date of their hiring,
whichever is the later, become and remain members of Local #177, International
Union Of Electronic, Electrical, Salaried, Machine And Furniture Workers,
AFL-CIO, in good standing.
The Company shall, without interference from the Union, select and hire its
employees, subject to the terms and conditions of this Agreement.
<PAGE>
Paragraph 3.03, CHECK-OFF: Upon receipt of an employee's written authorization,
which shall not be irrevocable for more than one (1) year, or beyond the
termination date of this Agreement, whichever occurs sooner, the Company shall
deduct the appropriate union dues from such employee's wages each payday and
remit the same weekly to the duly authorized representative of the Union.
Paragraph 3.04, AGREEMENT AGAINST STRIKE, LOCKOUT, ETCETERAS: The Parties
mutually agree that there shall be no strike, work stoppage, slowdown, sit-down,
or picketing by the Union or its representatives or lockout on the part of the
Company, unless and until all Steps of the Grievance Procedure including
Arbitration, shall have been employed and one of the Parties hereto fails or
refuses to comply promptly with any final decision made against such Party
thereunder.
If a strike should occur, management, supervisory and clerical employees,
watchmen, guards, firemen, and other plant protection and maintenance employees
shall be permitted to perform their respective functions without interference by
the Union or its members on the basis of a plan mutually agreed upon for such
purpose by the Company and the Union. It is understood, however, that the
Company will not discriminate against any employees who, under this plan, may
refuse to enter the struck plant.
In consideration of this Agreement, the Union agrees not to sue the Company, its
officers or representatives, and the Company agrees not to sue the Union, its
officers, agents or members, for any labor matters, in any court of law or
equity, and neither party will institute any proceedings before any Government
administrative board or agency for any act or omission of the other party or its
agents or representatives which occurs during the life of this Agreement.
Paragraph 3.05, RECOGNITION OF RIGHTS AND FUNCTIONS OF MANAGEMENT:
Subject only to the express provisions of this Agreement, the Union agrees that
supervision, management and control of the Company's business, operations and
plants are exclusively the function of the Company and that the Company has the
right to make such reasonable rules and regulations as it considers necessary or
advisable for the orderly and efficient conduct of its business.
Paragraph 3.06, PROVISION AGAINST DISCRIMINATION, INTIMIDATION OR
COERCION: There shall be no discrimination, intimidation or coercion by either
Company or Union against any employee or prospective employee because of race,
color, creed, sex, national origin, handicap, veteran's status or because of
union activity or membership.
Paragraph 3.07, EFFECT OF LAW: In the event that now or hereafter there is any
state, local government, or federal law or any directive, order, rule or
regulation made pursuant thereto, which is mandatory and in conflict with any
provision or provisions of any agreement between the parties, the same shall
<PAGE>
supersede such provision or provisions, and thereafter shall govern and control
the relations and conduct of the parties so long as such law, directive, order,
rule or regulation shall remain in force and effect. In the event that this or
any other agreements existing between the parties hereto, now or hereafter
require approval of any government authority before becoming effective, the same
will and shall be subject to such approval. Nothing in this Agreement shall
preclude the company from taking actions it reasonably believes are necessary to
comply with its obligations under the Americans With Disabilities Act, including
but not limited to providing reasonable accommodation to applicants and
employees with a disability, and maintaining the confidentiality of medical
information.
ARTICLE IV
GENERAL WAGE PROVISIONS
Paragraph 4.01, WAGES:
1. All employees covered by this Agreement shall be granted a general increase
to be effective December 6, 1999, equal to four percent (4%) of the
applicable straight time hourly wage rate. A second general increase will
be granted on December 4, 2000, equal to four percent (4%) of the
applicable straight time hourly wage rate. A third general increase will be
granted on December 3, 2001, equal to four percent (4%) of the applicable
straight time hourly wage rate. Additionally, there will be a lump sum
payment of $250 also effective December 3, 2001. The general increases
shall be incorporated into the Wage Rate Schedules attached to and made
part of this Agreement.
2. A special lump sum payment in the amount of $1,100.00 will be made
effective December 3, 1998. The full lump sum amount will be distributed to
all eligible, full-time employees on the active payroll as of November 1,
1998. Regular employees not on active payroll by reason of layoff or
approved leave of absence will receive the full lump sum payment provided
they return to active payroll with unbroken continuous service credit on or
before June 30, 1999. The above-mentioned employees who do not return to
active payroll prior to June 30, 1999, but do return prior to December 1,
1999, will receive a lump sum payment of $550.
3. In addition to the above-mentioned wage adjustments and bonus payments,
Local #177 active members will participate in the Harris Semiconductor
Sector Variable Pay Plan under the terms and conditions of that Plan. The
Plan will be communicated in advance prior to the start of each fiscal year
(the fiscal year runs from July 1 through June 30). Payments, if any, will
be made no later than July 31 of each plan year. Should the Company
unilaterally eliminate the Harris Semiconductor Variable Pay Plan at any
time prior to July 1, 2001, Local #177 active employees will receive a 2%
lump sum payment before July 31 of the year the payment was to occur. This
is in lieu of a variable payment for each affected year until the end of
this Agreement.
<PAGE>
Paragraph 4.02, WAGE POLICY: The Company, under as favorable hours and working
conditions as prevail in manufacturing establishments, will maintain the policy
of paying as high wages as are paid to employees engaged in similar classes of
work in the Mountaintop area.
Paragraph 4.03, HOURLY WAGE RATE SCHEDULE: The wage rates for employees covered
by this Agreement shall be those set forth in the Wage Rate Schedules attached
hereto and made a part hereof as they become effective in accordance with
Paragraph 4.01 of the Agreement. The Company shall supply the Union with copies
of Hourly Wage Rate Schedules.
Paragraph 4.04, HOURLY WAGE RATES FOR NEW EMPLOYEES: Employees hired on or after
the settlement date into occupational classifications that are not in Labor
Grades 9 through 13 will be paid the percentages shown below of the minimum or
start rate of the applicable labor grade in accordance with the following
schedule:
--------------------------------------------------------------------------
From But Less Than Percentage
--------------------------------------------------------------------------
Hire Date 6 Months 80%
--------------------------------------------------------------------------
6 Months 12 Months 85%
--------------------------------------------------------------------------
12 Months 18 Months 90%
--------------------------------------------------------------------------
18 Months 24 Months 95%
--------------------------------------------------------------------------
24 Months 100%
--------------------------------------------------------------------------
After twenty-four (24) months, such employees will receive further increases to
the maximum wage rate in accordance with the labor grade progression schedules
of the applicable Wage Rate Schedule. The minimum or start rate of the
applicable labor grade shall be that in effect on the settlement date and shall
not be increased during the term of this Agreement.
Paragraph 4.05, RULES FOR NEW EMPLOYEES WITH PRIOR EXPERIENCE: New employees who
prove their prior experience to the Company in the assigned occupational
classifications when employed, will be paid a wage rate within the established
rate range of the occupation in accordance with the provisions of Article 4,
Paragraph 4.04.
Paragraph 4.06, WAGE RATES AND NEW OCCUPATIONAL CLASSIFICATIONS: In the event
that the Company desires to make any new occupational classifications, the
hourly rates applicable thereto shall be determined by negotiations between the
Company and the Union, and the Company will supply the Union with the
occupational classification number, the definitions thereof, and the agreed
hourly wage rates for such new occupational classifications.
Paragraph 4.07, GUARANTEE FOR HOURS WORKED: The hourly rate of each individual
employee is guaranteed for hours worked unless a change is made in the
<PAGE>
individual employee's hourly rate or occupational classification. If changed,
the new hourly rate is guaranteed for hours worked after any such change becomes
effective.
Paragraph 4.08, WAGE DIFFERENTIAL FOR SECOND AND THIRD SHIFT WORKERS: An
employee who is scheduled by the Company to work on an established night shift
shall be paid a night shift differential of 10% of his/her hourly earnings for
time worked by him/her on such shift, provided, however, that if a day shift
employee works overtime into the hours covered by an established night shift,
he/she shall not be entitled to night shift differential pay.
Paragraph 4.09, SHOW-UP AND CALL-IN PAY: An employee (a) reporting for work in
the absence of notice not to report, or (b) an employee reporting for work who
has been called in for an emergency, shall be guaranteed a minimum of four (4)
hours base rate pay or hourly wage rate. An employee (c) who works more than
four (4) hours of his/her established shift in the absence of notice not to work
shall be guaranteed the base rate pay for the regularly scheduled number of
hours in his/her established shift, or eight (8) hours, whichever is lesser,
provided, however, this paragraph shall not apply to employees under (a) and (c)
above where fire, flood, explosion, bombing or earthquake cause damage in the
plant which makes it impossible to resume work in the section in which such
employee works.
Paragraph 4.10, RULES FOR CHANGE OF OCCUPATIONAL CLASSIFICATIONS: An employee
subject to layoff due to lack of work who exercises his/her seniority privileges
in accordance with the provisions of this Agreement and is thereby reclassified
to a lower rated occupational classification will receive the top hourly wage
rate of the lower rated occupational classification or his/her present
occupational classification or his/her present hourly wage rate, whichever is
lower. When an employee is temporarily assigned to a lower rated occupational
classification on the request of the Company and there is work available in
his/her regular occupational classification, such employee shall continue to
receive the same hourly wage rate that he/she would have received had he/she
continued on his/her regular occupational classification. Such temporary
assignment shall not exceed fifteen (15) working days and shall not be used to
avoid the recall procedure.
In the event of an upgrading to a higher rated occupational classification, the
employee shall receive his/her present hourly wage rate or the minimum hourly
wage rate for the occupational classification, whichever is higher. If the
present hourly wage rate of such employee is equal to or higher than the minimum
hourly wage rate for that occupational classification, his/her present hourly
wage will be increased to the next higher, intermediate rate step of that
occupation.
Paragraph 4.11, MAINTENANCE OF PRODUCTION STANDARDS: The Union agrees to
cooperate with the Company to the fullest extent in the attainment, maintenance
and improvement of production rates based on production standards established by
the Company by such means as Time Studies, Motion Studies, or other methods of
<PAGE>
determining operator output on the basis of fairness and equity consistent with
quality and reasonable working capacity of normal experienced operators. During
periods when new methods or new operations are introduced, the Union agrees to
cooperate with the Company in the maintenance and enforcement of the established
retraining schedule for employees assigned to such work.
Paragraph 4.12, QUALITY STANDARDS: The Union agrees to cooperate with the
Company in the maintenance of high quality standards. This cooperative effort
encompasses the Total Quality Management concepts, work team development and
training, and the empowerment of Company employees. Both the Union and the
Company agree to promote Employee Involvement Programs during the term of this
Agreement, including the use of recognition systems for work teams and/or team
member(s). Both parties recognize the potential benefits which said programs may
have on the workplace and for the employees of Harris Mountaintop. Therefore,
all employees are expected to participate in these efforts and the team concept.
ARTICLE V
HOURS
Paragraph 5.01, NORMAL WORK WEEK: The "Normal work week" for all employees
covered by this agreement shall be forty (40) hours, Monday through Friday, not
to exceed eight (8) hours in any one day of twenty-four (24) hours; except such
employees as are engaged in continuous operations or on any night shifts
terminating on Saturday or holiday mornings or beginning on Sunday night, whose
normal work week shall be five (5) consecutive days, not to exceed eight (8)
hours in any one day of twenty-four (24) hours, and employees who are assigned
to a compressed work week as described in Paragraph 5.02.
Paragraph 5.02, COMPRESSED WORK WEEK:
a. The compressed work week will consist of three (3) or four (4) day work
shifts.
b. Payment for daily hours worked will be as follows: The first eight (8)
hours will be paid at straight time; the next three (3) hours will be paid
at time and one-half; and double time beyond that time.
c. Overtime payment for work on scheduled days off will be paid as follows for
the compressed work week schedule: Either of the first two days off which
are worked will be paid at time and one-half up to 11 hours and double time
beyond that time. Work performed on either the third or fourth scheduled
day(s) off will be paid at double time for all hours worked, provided the
employee has worked one (1) time and one-half day which may be either the
first, second or third scheduled day off. Otherwise, they will be paid in
accordance with the rate established for the first two days off.
d. Worked performed on holidays will be paid in accordance with practice as
established in Paragraph 14.02 of this Agreement.
<PAGE>
e. Payment for holiday, bereavement, military differential, jury duty and
witness, and sick days will be paid at the normally scheduled Compressed
Work Week shift hours at straight time.
f. Vacations will be scheduled for plant shutdown or by individual days or
weeks off. Five (5) days of vacation for each eligible week will be allowed
when vacations of less than three (3) or four (4) consecutive work days are
taken. A vacation of three (3) or four (4) consecutive work days will equal
one (1) full week. Scheduled days off which fall during a vacation period
will not be counted as vacation days.
g. Consistent with current practices, employees working such compressed work
week shifts will be entitled to the same life insurance, temporary
disability insurance or long term disability insurance benefits as
employees working eight (8) hour shifts.
h. A compressed work week is defined as an AM crew or a PM crew.
i. Unless otherwise mutually agreed, items relating to the compressed work
week not enumerated herein will be resolved by application of current
practice.
j. Employees assigned to the compressed work week will celebrate holidays as
follows:
Normal production will not be scheduled the following days:
- New Year's Day
- Easter Sunday (Not a paid day)
- Memorial Day
- Fourth Of July
- Labor Day
- Thanksgiving Day
- Christmas Day
The following holidays will be scheduled work days and will be paid double time
and one-half for all hours worked, but shall not receive holiday pay as such:
- President's Day
- Good Friday
- Easter Monday
- Day After Thanksgiving
If an employee is absent the holiday that he/she is scheduled to work, he/she
will not receive holiday pay (Paragraph 14.02 of the contract).
k. Effective November 1, 1998, production areas that are currently on the
Normal work week will remain on the normal work week for the term of this
Agreement.
Paragraph 5.03, DAILY OVERTIME: All time over eight (8) hours in one day shall
be overtime.
<PAGE>
Paragraph 5.04, OVERTIME OUTSIDE OF SCHEDULED SHIFTS: Any time worked before the
established starting time or after the established quitting time for any shift
shall be regarded as overtime unless mutually agreed to by both parties.
Paragraph 5.05, SHIFT CHANGES AND NOTICE: Subject to the provisions of Paragraph
5.04 of this Agreement, the Company shall be free to establish the starting and
quitting time for any job upon notice to the appropriate Shop Steward and the
employees affected; but any proposed changes in regularly established shifts
shall be worked out between the Company and the Union.
Paragraph 5.06, OVERTIME NOTICE: Except in emergencies, the employee and the
appropriate Shop Steward shall be notified of the necessity to work overtime.
Such notice shall be given to employees on the first shift not later than twelve
o'clock noon, on the day prior to the day on which such overtime shall be worked
and to employees on the second and third shifts not later than at the beginning
of the employees' regular lunch period of the day prior to the day on which such
overtime shall be worked.
Paragraph 5.07, DIVISION OF OVERTIME: Insofar as the same is practicable and
consistent with efficient operations, the Company will divide overtime work
equally.
Paragraph 5.08, OVERTIME RATES FOR "NORMAL WORK WEEK": All overtime and time
worked on Saturdays shall be paid for at the rate of time and one-half time; and
all time worked on Sundays and all time worked over eleven (11) hours on any day
shall be paid for at the rate of double time, provided, however, that when power
house employees work on their scheduled consecutive days off, which there shall
be two (2) per week, they shall be paid time and one-half time for hours worked
on their first scheduled day off, provided, however, that they shall be paid at
the rate of double time for all time over eleven (11) hours and double time for
all hours worked on their second scheduled day off.
Paragraph 5.09, OVERTIME RATES FOR "COMPRESSED WORK WEEK": All overtime and time
worked on scheduled days off for employees on Compressed Work Week shall be paid
in accordance with Paragraph 5.02.
ARTICLE VI
UNION ACTIVITIES
Paragraph 6.01, UNION BUSINESS OR ACTIVITIES ON COMPANY TIME OR PREMISES: Except
for the performance of his/her duly assigned Company work or duties, and except
as otherwise expressly provided in this Agreement for the administration of this
Agreement, and the handling of Grievances in the Plant, no employee shall engage
in Union activity or Union business on Company time, and no employee shall
engage in any Union activity or Union business on the Company premises in such a
manner as will interfere with the Company's production or business.
<PAGE>
Paragraph 6.02, NUMBER OF UNION REPRESENTATIVES: The Parties agree that the
Union Representatives for the administration of this Agreement and the handling
of Grievances in the Plant shall be: (a) One president who shall also be the
District Chairperson as District Chairperson is designated in Article VII; (b)
one vice president who shall also be an Assistant District Chairperson as
designated in Paragraph 7.03, but who may function as an Assistant District
Chairperson only in the absence of the District chairperson or when designated
to so function by the President; (c) three Chief Stewards who shall also be
Assistant District Chairperson as Assistant District Chairpersons are designated
in Paragraph 7.03; (d) Shop Stewards for each designated area. Insofar as
practicable Union operations conditions will permit, the total number of all
such Representatives shall not exceed the proportion of one Representative to
each fifty employees in the Bargaining Unit. (Wherever the word "District"
appears in this Article, it means Mountaintop Plant.)
Paragraph 6.03, QUALIFICATIONS OF UNION REPRESENTATIVES: No Union Representative
referred to in Paragraph 6.02 shall be designated or qualified to act as such,
when he/she has less than six months unbroken continuous service credit with the
Company. No such Union Representative shall act as such during any layoff or
leave of absence, except the President who shall be paid by the Union. The Chief
Shop Stewards shall be full time Company employees and shall have jurisdiction
over all Grievance Districts. Each Shop Steward shall be a full time Company
employee of the Grievance District which he/she represents. No Alternate Union
Representative may act except in the absence or inability to act of his/her
principal. Union Representatives, except the President, who begin the settlement
of a grievance in any step in the Grievance Procedure shall continue therewith
until such Grievance is concluded in such step.
Paragraph 6.04, PRESIDENT - AUTHORITY: The President and the Vice President
shall be paid by the Union when on Union business and shall be empowered and
authorized by the Union to deal with the Company in all matters pertaining to
the administration of this Agreement in all particulars in the Plant, and the
investigation of grievances after a final decision therein in the Second Step.
The President and Vice President shall have access to the Human Resources
Department and any Section of the Mountaintop Plant where employees covered by
this Agreement are working to see that this Agreement is carried out.
The Vice President shall be empowered to act as such only when authorized by the
President in writing for specified time and assignments.
Paragraph 6.05, UNION AND COMPANY REPRESENTATION LISTS: Each Party agrees
promptly to furnish the other with a complete written list of the names of their
respective Representatives and their Assistants or Alternates and, in addition,
the Company will furnish three (3) sets of complete Company and Union
Representation Lists to the Union Office. Said lists shall specify the name and
clock number of each of the Representatives and the Grievance District to which
their jurisdiction in presenting grievances or complaints is limited; and their
<PAGE>
designation shall be evidence of their authority from the Union or the Company
to act as such, and for such purposes. Each Party agrees promptly to furnish the
other in writing any change or changes occurring in their respective
Representation Lists. Each Party shall keep such Representation List correct and
current at all times. In addition, the Union will furnish the Company with a
list of its duly elected officers.
Paragraph 6.06, PRESENTATION OF AGREEMENT TO EMPLOYEES: Within thirty
(30) days after the execution date of this Agreement, barring inability of any
printer to meet this commitment, the Company shall supply all the employees in
the Bargaining Unit with a copy of this Agreement. A copy of the Agreement shall
be given to each newly hired or rehired employee covered by the Bargaining Unit.
The above procedure shall also apply to any additional contract clauses that
become party of this Agreement.
Paragraph 6.07, NOTICE OF HIRING AND RATE: At the same time it notifies an
employee or applicant to report for work, the Company shall notify the Union of
such person's occupational classification and hiring rate and management shall
give to the appropriate shop steward a copy of such notice.
Paragraph 6.08, BULLETIN BOARDS: Notices of local Union meetings and other
information of interest to Union members shall be posted by the Company on its
Plant Bulletin boards subject to the approval of the local Human Resources
Department.
Paragraph 6.09, NOTICE OF EMPLOYEE CLASSIFICATION: When an employee's
occupational classification is changed, the employee and his/her appropriate
Shop Steward shall be notified, in writing, within fifteen (15) days after the
effective date of such change.
ARTICLE VII
RULES FOR UNION REPRESENTATIVES FOR THE HANDLING OF GRIEVANCES IN THE PLANT
Paragraph 7.01, GRIEVANCE DISTRICTS: Insofar as Union practical operating
conditions will permit, the Union's Grievance Districts within the Bargaining
Union shall be as compact as possible. Each Grievance District shall be
represented by one District Chairperson and one Assistant District Chairperson.
Sections or portions thereof within each Grievance District shall be represented
by Shop Stewards as designated by the Union. Stewards within a Section or
portion thereof may act as alternates to each other as designated by the Union
on the Representation list.
Paragraph 7.02, GRIEVANCE APPEAL COMMITTEE MEMBERSHIP, QUALIFICATION, AUTHORITY
AND PROCEDURE: The Grievance appeal Committee which will handle all Third Step
Grievances shall be composed as follows:
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(a) The Union Representatives thereon shall be duly authorized and designated
Officers or Representatives of the Union. One such Representative shall be
a grade of Business Agent or Assistant Business Agent, one shall be a grade
of District Chairperson or Assistant District chairperson, one shall be a
grade of Shop Steward or Alternate Shop Steward in whose jurisdiction the
Grievance originated.
(b) The Company representatives thereon shall be duly authorized and designated
officers or Representatives of the Company with the authority of Plant
Manager; one shall be the Human Resources Manager, or a person designated
by him/her with the authority of Human Resources Manager, and one shall be
a grade of Department Manager, or Representative in whose jurisdiction the
Grievance originated. Said Committee shall have (1) authority in the first
instance to handle all Dismissal Grievances arising out of or in connection
with the discharge of an employee; (2) authority to handle all Grievances
which have been duly appealed from the Second to the Third Step of the
Grievance Procedure; and (3) authority to handle such other matters as the
Union and the Company may agree in writing to submit to such Committee. The
Representatives of each Party shall vote separately as a group. The
decision of a Party's group shall be binding on the other party only when
such decision is voted to be satisfactory or acceptable to the other
party's group, or is not appealed to the Fourth Step Arbitration by the
Party's group which was dissatisfied with the decision in the time and
manner provided for in this Agreement. Appeals to the Fourth Step
Arbitration may be taken by a vote of the appropriate Party's group in the
manner and form of other appeals. Regularly scheduled meetings shall be
held at 9:00 A. M. on each Thursday of each calendar week, and not
otherwise, except in cases where the Committee agrees to the contrary.
Paragraph 7.03, THE AUTHORITY OF DISTRICT CHAIRPERSON AND ASSISTANT DISTRICT
CHAIRPERSON: The sole Union duty and authority under the Grievance Procedure of
a District Chairperson and an Assistant District Chairperson while acting as
such in the Plant shall be: (1) authority to investigate Grievances which have
been finally disposed of at the First Step and are pending an appeal therefrom;
(2) authority to handle and dispose only of those Grievances which have been
duly appealed from the First to the Second Step of the Grievance Procedure by
one of the Shop Stewards in one of the designated portions of the Grievance
District for which such District Chairperson or Assistant District Chairperson
is designated; (3) authority to appeal a Grievance which he/she has authority to
handle and dispose of, and on which he/she was unable to get a decision which
was satisfactory or acceptable, from the Second to the Third Step of the
Grievance Procedure, as provided in this Agreement; and (4) authority to act as
one member of the Grievance Appeal Committee on any grievance originating in the
portion of the Grievance District of which he/she is the designated
representative.
Paragraph 7.04, THE AUTHORITY OF SHOP STEWARDS: The sole Union duty and
authority under the Grievance Procedure of a Shop Steward while acting as such
<PAGE>
in the Plant shall be: (1) authority to investigate and prevent Grievances
within the designated portion of the Grievance District which he/she represents;
(2) authority to handle and dispose of only those Grievances which duly
originated and arose within the designated portion of the Grievance District for
which he/she is designated and authorized to act as Shop Steward; (3) authority
to appeal such a grievance on which he/she was unable to get a decision which is
satisfactory or acceptable to him/her, from the First to the Second Step of the
Grievance Procedure, as provided in this Agreement, and (4) authority to act as
one member of the Grievance Appeal Committee on any grievances originating in
the portion of the Grievance District of which he/she is the designated
representative. As long as any work is being performed requiring supervision,
the Shop Steward for that group will be offered work if there is work available
and he/she performs such work.
Paragraph 7.05, PROCEDURE FOR DISTRICT CHAIRPERSONS, ASSISTANT DISTRICT
CHAIRPERSONS AND SHOP STEWARDS FOR HANDLING OF GRIEVANCES: Except when they are
engaged in the disposal of a Grievance as provided in this Agreement, all such
District Chairpersons, Assistant District Chairpersons and Shop Stewards shall
continue at their regularly assigned Company work or duties in the same manner
as other production workers. When such Union Representatives are required to
leave their regularly assigned company duties for the disposal of a Grievance
within their authority, they shall notify the appropriate Company Supervisor or
Representative. If necessary, such Union Representatives shall remain on their
regularly assigned Company duties until a reasonable time is afforded to provide
a substitute worker in their place. In each such case, such Union
Representatives will "ring out" their time card when they leave, and "ring in"
their time card when they return to their assigned Company duties. In addition,
each such Union Representative shall furnish written information called for on a
"Grievance Lost Time Voucher" to be provided by the Company and he/she shall
initial each entry thereon and also present the same to the duly authorized
Company Representative involved in the investigation, presentation, negotiation
or other handling of such Grievance. In all cases where such a Union
Representative is required to enter any Department or Section of the Plant
within which he/she has authority to act as such but in which he/she is not
regularly employed, he/she shall inform the appropriate Representative or
Supervisor and explain the business which requires his/her presence there.
Paragraph 7.06, PAYMENT FOR INVESTIGATION AND DISPOSAL OF GRIEVANCES: The
Company agrees to pay for the Company time lost by any duly authorized and
designated Union Representatives in the investigation and prompt and orderly
disposal of Grievances up to and including the Third Step of the Grievance
Procedure as set forth in Articles VII and VIII of this Agreement. In the event
that either Party to this Agreement is of the opinion that excess time is being
spent on the disposal of Grievances by any Representative of either Party, that
matter may be referred by either Party directly to the Grievance Appeal
Committee for solution, and if not there disposed of, the same may be made the
subject of a Grievance at that Step.
<PAGE>
ARTICLE VIII
GRIEVANCE PROCEDURE
Paragraph 8.01, GRIEVANCE PARTIES AND DEFINITION: In the event there is any
Grievance, dispute or difference between any employee in the Bargaining Unit or
local Union or the Company, or any of Said parties, with respect to the
interpretation or application of any provision of this Agreement, there shall be
an earnest effort made to settle or dispose of such matters promptly by
negotiations between the appropriate designated Representatives of such Parties
in the manner provided in this Grievance Procedure, upon and subject to the
provisions of this Agreement. For convenience, all such Grievances, disputes and
differences will be called "Grievances" in this Agreement and its
administration.
Paragraph 8.02, DEFINITION OF CALENDAR DAYS: Within the meaning of this Article
VIII, each day, Monday through Friday inclusive - except holidays designated in
Paragraph 14.01 - shall be considered and counted as a calendar day. In no event
shall Saturdays, Sundays, or Holidays designated in paragraph 14.01 be
considered or counted as calendar days.
Paragraph 8.03, TIME, PLACE AND MANNER OF PRESENTING GRIEVANCES: All such
Grievances shall be presented in writing to the appropriate designated
Representative of the Party against whom it is made, on "Grievance Forms" to be
provided by the Company from time to time, the form of which shall be mutually
agreed upon by the local Union and the Company. Such "Grievance Forms" shall be
in sufficient number and shall make adequate provision to enable the appropriate
designated Representative of each of the Parties hereto at all times to set down
and retain a sufficient written record of all action taken by such
Representatives in handling and disposing of the same at each Step of the
Grievance procedure up to the appeal to Fourth Step Arbitration and each Party
agrees to make such written record and to assist the other Party so to do. All
Grievances shall be presented as soon as practicable after the occurrence upon
which the same is based, but in no event later than seven (7) days if the same
is a Dismissal Grievance, sixty (60) days in the event the same is a Wage
Grievance, and thirty (30) days if the same is a Grievance arising for any other
cause. Dismissal Grievances shall be presented at the Third Step and the
dismissed employee may be present during all such proceedings. Except as
otherwise specifically provided, all Grievances shall be presented at the First
Step of the Grievance Procedure. All such Grievances and Dismissal Grievances
not so presented shall be deemed to have been abandoned, and shall not be
entitled to consideration by the party to whom it is presented.
Paragraph 8.04, TIME, APPLICATION AND EFFECT OF GRIEVANCE DECISIONS: Unless the
time therefore is extended by the written consent of the Representative who duly
presented a Grievance, a written decision thereon shall be made by the
Representative to whom it is so presented at the conclusion of the Grievance
Meeting if at all possible, or by the end of the first calendar day after it is
so presented at the First Step; or by the end of the second calendar day after
<PAGE>
it is duly appealed to the Second Step; or by the end of the seventh calendar
day after it is duly appealed to the Third Step. If no decision is made by a
Representative at any Step in the time and manner herein specified, the Party
entitled to such decision shall have the right to take an appeal to the next
Step in the same time and manner as an appeal in the case of an unsatisfactory
decision. A final decision made with respect to any Grievance shall apply to
that Grievance only, shall not become a binding precedent in the case of any
other Grievance, nor a precedent which shall bind the parties under this
Agreement in the future.
Paragraph 8.05, TIME AND MANNER FOR TAKING GRIEVANCE APPEALS: Unless
the time therefore is extended by written consent of the Representative who made
the written decision at any Step, an appeal from such decision, if any, must be
taken by having the Representative of the Party presenting the Grievance at that
Step serve a written notice of appeal on the Representative of the Party who
made the decision at that Step; if at the First Step by the end of the second
calendar day after such decision was made; if at the Second Step by the end of
the second calendar day after such decision was made; and if at the Third Step
by the end of the fifteenth calendar day after such decision. If no appeal is
taken from a decision made at any Step in the time and manner specified in this
Article VIII, such decision shall be final and binding with respect to such
Grievance.
Paragraph 8.06, GRIEVANCE STEPS AND REPRESENTATIVES OF THE PARTIES THEREIN:
Except as otherwise specifically provided in this Agreement, a duly presented
Grievance shall be negotiated when necessary to reach a final decision in each
of the following successive Steps between the duly designated and appropriate
Representatives of the Parties specified in each Step:
FIRST STEP: Between the Company's Representative or his/her Alternate and the
Union Shop Steward, or his/her Alternate Shop Steward, for the appropriate
portion of the Grievance District in which the Grievance originated as specified
in the Representation Lists of the Parties, with or without the presence of the
aggrieved party as such aggrieved party may elect.
SECOND STEP: Between the duly designated and appropriate Company Representative,
or his/her Alternate, who shall be of the grade of Department Manager,
Superintendent or General Supervisor and the Union's District Chairperson, or
Assistant District Chairperson for the appropriate Grievance District as
specified in the Representation Lists of the parties. Either Party in this
Second Step may have their Representative who negotiated the same Grievance in
the First Step participate.
THIRD STEP: Between their respective groups of Representatives on the Grievance
Appeal Committee, as provided in Paragraph 7.02.
FOURTH STEP: Arbitration: Any Grievance which has been negotiated through each
Step of the Grievance Procedure, as provided in this Agreement, and has not been
finally settled or disposed of thereby, may be submitted to Arbitration upon due
notice by either Party to the other Party as provided in this Agreement, under
the voluntary labor arbitration rules, then obtaining, of the American
Arbitration Association, except the Arbitrator shall be selected in the manner
provided in this Paragraph 8.06. The Parties agree that the decision or award of
<PAGE>
such Arbitrator shall be final and binding on each of the Parties and that they
will abide thereby subject to such rules and regulations as any Federal agency
having jurisdiction may impose. In no event shall the Arbitrator modify or amend
the provisions of the Agreement, nor shall the same question or issue be the
subject of arbitration more than once. The Arbitrator shall be selected in the
following manner: The American Arbitration Association shall submit to each of
the Parties duplicate lists of the names of eleven (11) persons qualified to act
as Arbitrator. As soon as possible, and in any event within five (5) days from
the receipt of such lists, the local Union and the Company shall each have the
right to strike five (5) of such names from their respective lists, shall
indicate the order of preference for the names remaining on such list and shall
return such lists to the Association. The American Arbitration Association shall
select the Arbitrator from the name or names remaining. The decision or award of
the Arbitrator shall be made as soon as practicable after submission of the
Grievance or dispute. Any expense of Arbitration shall be borne by and divided
equally between the Union and Company.
Paragraph 8.07, REPRESENTATIVES AUTHORITY: The Representative of the Parties to
whom any Grievance shall be submitted at any Step of the Grievance Procedure in
accordance with this Agreement shall have jurisdiction and authority to
interpret and apply the provisions of this Agreement insofar as it shall be
necessary to the determination of such Grievance, but he/she shall not have
jurisdiction or authority to alter in any way the provisions of this Agreement
which may be modified and amended only as expressly provided in Article XVII,
Paragraph 17.03.
Paragraph 8.08, RETROACTIVE SETTLEMENTS: All retroactive payments agreed upon or
awarded as a result of a final decision on a Grievance, shall be disposed of at
that Step in the Grievance Procedure in which settlement is reached, in the
following manner:
1. The respective Representatives of the Parties shall mutually agree upon the
basis for computing the amount of such retroactive payment.
2. The Company shall then compute the amount of such retroactive payment, and
after obtaining the approval of the appropriate Union Representative,
thereon, the effective date for payment shall be stipulated by the
respective Representative of the Parties.
Paragraph 8.09, NATIONAL DISCUSSIONS: In the event a question arises concerning
the interpretation or application of this Agreement and no satisfactory
settlement has been reached at Step Three in the Grievance Procedure, either
party may ask for discussions with representatives of the respective national
offices on that particular issue. If the Parties agree to meet and this dispute
is not settled satisfactorily at such a meeting, either Party shall have the
right to refer the dispute to arbitration in accordance with Step Four of the
Grievance procedure.
ARTICLE IX
CONTINUOUS SERVICE CREDIT
<PAGE>
Paragraph 9.01, HOW CONTINUOUS SERVICE CREDIT IS ACQUIRED: The principle of
continuity of employment is recognized in accordance with and subject to the
provisions of this Agreement, and each employee shall have continuous service
credit with the Company dating from the first date of his unbroken continuous
service.
Paragraph 9.02, HOW CONTINUOUS SERVICE CREDIT IS LOST OR TERMINATED: Continuous
service credit of an employee will be lost or terminated under the following
conditions, and when so lost or terminated an employee for all purposes shall be
considered a new employee without seniority or other Company privileges if and
when rehired:
(a) Resignation or other voluntary termination of employment.
(b) Discharge for just cause.
(c) Unexcused absence for one work week.
(d) Unauthorized absence beyond the time limit of any authorized leave of
absence specifically provided for in this Agreement.
(e) Failure to report to work, following a layoff in his/her former job or a
job similar in nature and pay within five (5) regular work days after
written notice to so report is given by the Company to the employee and the
local Union. Such notice shall be deemed to be sufficiently given if sent
to the employee by registered mail at the last address furnished by such
employee to the Company, and, if sent to the Union, in the manner provided
for in this Agreement.
(f) Layoff without recall to work within three (3) years from the date of such
layoff.
Paragraph 9.03, NOTICE OF REMOVAL FROM PAYROLL: Except as provided for in
Paragraph 12.02, Shop Stewards shall be notified of all other removals from
payroll not later than at the time of such removal. The reason shall be shown by
marking the applicable cause of removal on a form provided for that purpose by
the Company, with a copy of such form to be mailed to the Union's office. In the
event that the Steward considers such removal to be unjustified, the matter
shall be subject to the Grievance Procedure.
Paragraph 9.04, CONTINUOUS SERVICE CREDIT BY TRANSFER: Subject to the provisions
of Article X of this Agreement, the Human Resources Department shall, in times
of layoff, give effect to Continuous Service Credit by transfer from one
Division or Department to another, provided job vacancies exist and provided the
employees have the skill and ability to do the work.
Paragraph 9.05, CONTINUOUS SERVICE WITH RCA: Subject to the other provisions of
this Article, employees will be given credit for their continuous service with
RCA.
ARTICLE X
SENIORITY PROVISIONS
<PAGE>
Paragraph 10.01, SENIORITY POLICY: The Company and the Union accept the
principle of employee plantwide occupational seniority in layoffs and rehiring
based upon continuous service credit from the first date of the employee's
unbroken continuous service and other terms and conditions of this Agreement.
In layoffs for lack of work and transfers, each occupational classification in
the Mountaintop Plant shall be treated separately and seniority therein shall
govern.
Layoffs and transfers for lack of work shall be made in the following sequence:
The employee with the lowest seniority in the occupation shall be the first laid
off or transferred.
Paragraph 10.02, SENIORITY PRIVILEGES FOR UNION REPRESENTATIVES: For the sole
purpose of layoff, Shop Stewards, Chief Shop Stewards and the President,
provided they perform on-the-job steward-like duties directly related to the
day-to-day administration of this Agreement, will have top seniority in their
respective jurisdictions during the period they serve as such, so long as there
is work available which they are capable of performing.
Paragraph 10.03, SENIORITY PRIVILEGES FOR EMPLOYEES TRANSFERRED WITHIN
BARGAINING UNIT: When an employee is transferred to an occupational
classification in which he/she has previously established seniority, he/she
shall assume full accumulated seniority privileges at once.
Paragraph 10.04, NEW EMPLOYEES: New employees and those hired after a forfeiture
of seniority, shall be considered on probation for a period of thirty (30) work
days from their date of hire in Labor Grades 4 and 8, and forty-five (45) work
days in Labor Grades 9, 10, 11 and 13. Upon completion of the probationary
period, seniority shall be calculated as of the date of hiring.
Paragraph 10.05, SENIORITY PRIVILEGES: After completion of the probationary
period, each employee shall have seniority in the occupational classification in
which he/she is then working and not otherwise. When thus established, such
seniority will equal the employee's total continuous service credit with the
Company. After having thus established seniority, an employee who is transferred
to a different occupational classification shall retain his/her seniority in the
former occupational classification from which he/she was transferred until
he/she has worked in the latter occupational classification for a period of
thirty (30) days, after which such employee shall have seniority only in the
latter occupational classification.
An employee who is subject to layoff in the current occupational classification
shall exercise seniority in an occupational classification in which seniority
had been previously established by displacing the least senior employee. An
employee shall exercise the seniority in the reverse order by which seniority
was established.
<PAGE>
Employees with more than twenty (20) years seniority will be retained on the
payroll, provided they have the skill and ability to do the work, in preference
to employees with ten (10) years or less of seniority; and employees with more
than fifteen (15) years seniority will be retained on the payroll provided they
have the skill and ability to do the work, in preference to employees with eight
(8) years or less of seniority; and employees with more than ten (10) years
seniority will be retained on the payroll, provided they have the skill and
ability to do the work, in preference to employees with five (5) years or less
of seniority, and employees with more than five (5) years seniority will be
retained on the payroll, provided they have the skill and ability to do the
work, in preference to employees with two (2) years or less of seniority.
Paragraph 10.06, SENIORITY PRIVILEGES FOR EMPLOYEES WHO ARE TRANSFERRED OUT OF
THE BARGAINING UNIT: Where an employee has established seniority privileges in
an occupational classification within the Bargaining Unit and is thereafter
transferred or promoted to another position which is not within the Bargaining
Unit, in the event such employee is again restored to a position within the
Bargaining Unit within the six (6) month period immediately following the
transfer and had over ten (10) years of continuous service at time of transfer,
such employee shall be deemed to have retained seniority privileges within the
Bargaining Unit in accordance with Article X. An employee transferring from the
Bargaining Unit with less than ten (10) years continuous service shall only
retain seniority privileges in accordance with Article X, if they return to the
Bargaining Unit within a three (3) month period immediately following the
transfer. However, all employees who are on layoff from the occupation in which
such employee holds seniority shall be recalled before such employee may return
to the Bargaining Unit.
ARTICLE XI
TRANSFERS
Paragraph 11.01, SHIFT TRANSFERS: When a vacancy exists on any shift, shift
requests on file will be honored plant-wide according to seniority standing in
the occupation. However, in the formation of a new or reformation of a
previously established shift, 90% of each shift openings shall be given to
qualified employees in the department/area. The balance of the 10% of each shift
openings shall be granted by seniority from the shift requests on file.
Paragraph 11.02, RETURN TO PREVIOUS OCCUPATIONAL CLASSIFICATION: An employee who
is reclassified as a result of exercising his/her seniority privileges at time
of layoff for lack of work shall be given the opportunity to return to his/her
previous occupational classification in line of seniority, when a vacancy exists
in such occupational classification, provided at the time he/she is reclassified
from such previous occupational classification the employee shall notify the
Human Resources Department that his/her name should be placed in the "call back"
file under his/her previous occupational classification. When such employee is
<PAGE>
notified that a vacancy exists and that he/she is eligible for return to his/her
previous occupational classification, he/she shall remain in his/her currently
assigned occupational classification until a reasonable time is afforded to
provide a substitute worker in his/her place. When a vacancy exists in the
previous occupational classification of an employee who has been reclassified
for any other reasons, he/she shall not press for a return to his/her previous
occupational classification, but if the company finds it advantageous to return
such employee to his/her previous occupational classification, the Union shall
raise no objection.
ARTICLE XII
LAYOFFS AND REHIRING
Paragraph 12.01, RULES APPLICABLE TO REHIRING: All laid off employees shall be
pooled for purposes of rehiring on the principle that the oldest employee in
terms of plantwide seniority shall be the first rehired within his/her
occupational classification. If there are no laid off employees with seniority
in such occupational classification, other laid off employees who can do the
work shall first be considered for such jobs. No new employees will be hired
until all such laid off employees who desire employment have been rehired.
Paragraph 12.02, NOTICE OF LAYOFFS: The Company will give no less than one week
advance notice of contemplated layoffs of more than one week to the employee
affected and to the appropriate Shop Steward. Where, however, such notice is not
feasible, the Company will notify the employees and such Shop Steward affected
as promptly as possible, and give in lieu of the one week notice, one (1) day's
pay not to exceed 11-1/2 hours straight time hourly base rate.
Paragraph 12.03, LAYOFF ALLOWANCE: Any employee other than an employee with less
than two (2) years of continuous service credit, and other than a part-time or
temporary employee, who meets the continuous service credit requirements stated
herein, shall be entitled to layoff allowance in accordance with the provisions
of this Paragraph when he/she is laid off for lack of work for a period in
excess of thirty (30) days. No employee shall be entitled to layoff allowance in
cases where such layoff is due to fire, flood, explosion, bombing or earthquake
causing damages in the Plant which makes it impossible to resume work in the
Section which such employee works.
The layoff allowance for employees entitled thereto under the provisions of this
Paragraph, shall be as follows:
(a) All employees who at the time they are laid off for lack of work have more
than two (2) years and less than four (4) years of continuous service
credit with the Company, shall be eligible to receive a layoff allowance in
a sum equal to their hourly base rate or hourly wage rate for their
established weekly shift at the time of such layoff, not including any
overtime hours or hours in excess of five (5) eight-hour days.
<PAGE>
(b) All employees who at the time they are laid off for lack of work have four
(4) or more years of unbroken continuous service credit with the Company,
shall be eligible to receive layoff allowance in a sum equal to their
hourly base rate or hourly wage rate for two (2) such established weekly
shifts, not including any overtime hours or any hours in excess of ten (10)
eight-hour days.
Such layoff allowance shall be paid at the end of a waiting period of thirty
(30) days from the date of such layoff. An employee who is reinstated in
employment with the Company during the waiting period shall not be entitled to
layoff allowances as herein provided. For the purpose of this provision, any
employee who receives layoff allowance as herein provided, and who is
subsequently reinstated in employment with the Company within three (3) years
from the date of such layoff, shall not again be eligible for additional layoff
allowance until he/she accumulates two (2) additional years of unbroken
continuous service credit with the Company. Upon establishing two (2) years
additional continuous service credit after such reinstatement, the employee
shall again be entitled to layoff allowance in accordance with his/her
established unbroken continuous service credit with the Company if again laid
off under the conditions herein provided.
For the period of layoff, so long as recall rights exist, all laid off employees
shall accumulate seniority for purposes of layoff and recalls. This accumulation
of seniority shall start as of September 30, 1949, for all employees on layoff
on that date. Effective August 10, 1970, laid off employees shall accumulate
continuous service credit during periods of layoff for so long as they have
recall rights. Such accumulation of continuous service credit shall be
retroactive to September 30, 1949.
Paragraph 12.04, LAYOFF EXTENSION BENEFITS: An employee with five (5) or more
years of continuous service credit, who, following the effective date of this
Agreement, is placed on layoff for lack of work, and who has not been offered
any other work in an occupation to which his/her seniority will entitle him/her
or to an existing vacancy within the Bargaining Unit will be eligible for a
Layoff Extension Benefit in accordance with the provisions set forth.
- - --------------------------------------------------------------------------------
Continuous Service
- - --------------------------------------------------------------------------------
From But Less Than Amount Of Layoff Extension Weekly Payment At
Benefit 1/2 A Week's Pay
- - --------------------------------------------------------------------------------
5 years 6 Years 1 Week's Pay 2 Weeks
- - --------------------------------------------------------------------------------
6 years 7 Years 2 Weeks' Pay 4 Weeks
- - --------------------------------------------------------------------------------
7 Years 8 Years 3 Weeks' Pay 6 Weeks
- - --------------------------------------------------------------------------------
8 Years 9 Years 4 Weeks' Pay 8 Weeks
- - --------------------------------------------------------------------------------
9 Years 10 Years 5 Weeks' Pay 10 Weeks
- - --------------------------------------------------------------------------------
10 Years 11 Years 6 Weeks' Pay 12 Weeks
- - --------------------------------------------------------------------------------
11 Years 12 Years 7 Weeks' Pay 14 Weeks
- - --------------------------------------------------------------------------------
12 Years 13 Years 8 Weeks' Pay 16 Weeks
- - --------------------------------------------------------------------------------
1 3 Years 14 Years 9 Weeks' Pay 18 Weeks
- - --------------------------------------------------------------------------------
14 Years & Over 10 Weeks' Pay 20 Weeks
- - --------------------------------------------------------------------------------
<PAGE>
For the purposes of this provision, a "week's pay" for such eligible employees
shall be calculated by multiplying his/her base rate at the time of layoff times
the number of hours in his/her normal work week, at the time of layoff, up to a
maximum of forty (40) hours. If an eligible employee remains on layoff after
his/her entitlement to state or federal unemployment compensation have been
exhausted, payment of the Layoff Extension Benefit for which he/she is eligible
will be made weekly providing that he/she is still unemployed and is able and
available to return to work with the Company. Such weekly payments will be made
for as long as such unemployment continues, in amounts equal to one-half of the
employee's pay as defined above, until the full amount for which he/she is
qualified is paid or until he/she is eligible for further state or federal
unemployment compensation. In any event, at the end of two years following the
effective date of layoff, all Layoff Extension Benefits will cease.
For purposes of this provision, an employee will be considered employed during
any week in which he/she earns wages from any source which total more than one
quarter of his/her "week's pay" as defined above. All benefits will cease at the
time an employee receives notice of recall from layoff. However, during any
regular work week in which an employee is returned to work, the benefit for that
week shall be calculated on a pro rata basis for those days, not exceeding five
(5) in such weeks that he/she was unemployed.
An employee will not be entitled to receive any payment under the terms of this
provision after he/she has retired or his/her employment has otherwise been
terminated.
An employee who is reinstated before receiving all of his/her entitlement to
Layoff Extension Benefits as herein provided, shall receive the balance of such
entitlement, based upon his/her continuous service credit at the time of the
preceding layoff, upon subsequent layoff if he/she otherwise meets the
requirements as set forth in this Paragraph.
An employee who receives Layoff Extension Benefits as herein provided, who is
subsequently reinstated in employment with the Company will be eligible for
additional benefits under this provision for that period of his/her continuous
service beginning with the date of such reinstatement, if again laid off under
the conditions herein provided.
Paragraph 12.05, JOB SECURITY AND PROTECTION: In the event the Company decides
to discontinue or close all or part of a plant or business operation, or to
discontinue or close all or part of a plant or business operation and relocate
or otherwise transfer to another location or other non-Company sources some or
all of the work performed by employees of such plant or business operation,
employees who are laid off as a direct result of any such Company actions or who
are laid off within six (6) months prior to the announcement of such actions
shall be eligible for the following benefits:
(1) Such laid off employees with five (5) or more years of continuous service
credit will receive, while unemployed, job placement education and
<PAGE>
retraining assistance amounting, collectively, to a maximum of $1,500 for
each such employee to be paid as such assistance expenses are incurred;
(2) Such laid off employees under 55 years of age with thirty (30) or more
years of continuous service credit who at the time of said layoff are
vested members of the Harris Retirement Plan will be treated, for life and
health insurance purposes upon retirement at age 55 as if they were
actively employed when they attain age 55;
(3) Such laid off employees with thirty (30) or more years of continuous
service credit will receive life insurance coverage at no cost for two (2)
years after being laid off and thereafter may continue such coverage on a
contributory basis until age 55 whereupon they may retire as provided in
the preceding subparagraph 2 and receive life insurance coverage at no cost
in an amount equal to 15% of such employee's life insurance coverage
immediately prior to retirement;
(4) Such laid off employees with thirty (30) or more years of continuous
service credit will receive health insurance coverage at no cost for six
(6) months after being laid off and thereafter may continue such coverage
on a contributory basis until age 55 whereupon they may retire as provided
in the above subparagraph 2 and receive health insurance/pre-Medicare
coverage at no cost;
(5) Such laid off employees with thirty (30) or more years of continuous
service credit who exhaust their layoff allowance benefits under Paragraph
12.03 will thereupon receive the Layoff Extension Benefits to which they
are entitled by Paragraph 12.04, under the terms and conditions of such
Paragraph 12.04.
After payment of Layoff Extension Benefits commences, amounts received by
an employee for federal or state unemployment compensation, worker's
compensation or other similar benefits will be deducted from the employee's
Layoff Extension Benefits.
ARTICLE XIII
LEAVES OF ABSENCE
Paragraph 13.01, RULES FOR LEAVE OF ABSENCE FOR UNION ACTIVITY: Any member of
the Union with at least six (6) months of unbroken continuous service credit,
who shall be a duly elected regular officer of the Union, or a duly elected or
appointed officer or representative of the District Council or the International
Union, shall, on written request of the Union, be granted leave of absence
without pay for such Union activity, provided the number of such persons on such
leaves shall not exceed three (3) at any one time. Continuity of service and
full seniority privileges shall be retained and accumulated during such leave of
absence. When the Union activity for which such leaves of absence are granted
shall cease, the Union shall immediately notify the Company in writing, and if
application is made therefor within ten (10) days thereafter, such Union member
will be given reemployment in his/her former or a comparable position in
accordance with his/her seniority privileges, and at the applicable wage rate at
the time of his/her return.
<PAGE>
Paragraph 13.02, RULES FOR LEAVE OF ABSENCE FOR DISABILITY RELATED TO ILLNESS,
INJURY OR PREGNANCY: Any employee who, after the effective date of this
Agreement, is unable to perform his/her regular duties with the Company because
of sickness or disability, shall receive a leave of absence without pay except
as provided in Paragraph 16.03, for a period not to exceed twenty-four (24)
months with continuous service credit and seniority privileges while such
condition continues during such twenty-four (24) month period. An employee
absent under such conditions shall inform the Human Resources Department
immediately upon such occurrence and shall thereafter keep the Human Resources
Department informed monthly in writing stating the best estimate of the time
when such employee will be able to resume his/her usual Company duties. Such
employee will be restored to employment when recovered if under normal working
conditions he/she would have continued in employment by the Company except for
such disability, upon approval of the Company physician certifying he/she has
sufficiently recovered and is physically qualified to return to work and perform
his/her usual Company duties. The Company may, at any reasonable time or times,
request from such an employee a certificate of a physician certifying to his/her
condition. The company may also have a doctor or nurse selected by the Company
interview or examine such employee for the purpose of determining his/her
condition and the likely duration of such sickness or disability.
Paragraph 13.03, RULES OF LEAVE OF ABSENCE FOR DEATH IN IMMEDIATE FAMILY:
Employees, in the event of death in their immediate family, shall be paid for
three (3) days absence, during the normal work week at their straight time
hourly base rate for the number of hours in their regular shift. For purposes of
this payment, the immediate family shall include the employee's mother,
step-mother, father, step-father, sisters, brothers and children of the employee
(including step-children and, if living in the employee's home, foster
children), spouse, spouse's mother and father, sisters-in-law, brothers-in-law,
sons-in-law, daughters-in-law, grandparents, grandparents-in-law and
grandchildren. Any employee of the Company who loses more than five (5) days
work because of death in his/her immediate family shall be allowed a leave of
absence up to two (2) weeks overall. Such leave may be extended one (1) week in
unusual cases. The employee shall accumulate seniority privileges during such
leave.
Paragraph 13.04, RULES FOR ABSENCE AND PAYMENT FOR JURY DUTY AND WITNESSES: An
employee who is called for Jury Duty or who is subpoenaed to appear in Court as
a witness will be compensated by the Company for the difference between payment
received for such compulsory Jury Duty or Court appearance and the payment
he/she would have received for the straight time hours he/she was thereby
required to lose from his/her regular work schedule, but not to exceed five (5)
eight-hour days per week, computed at his/her established hourly base rate or
hourly wage rate or in accordance with Paragraph 5.02e. However, when subpoenaed
by a party other than the Company, the employee will not be compensated if the
employee, the Company, or the Union is a party in the case, or if the employee
has any direct interest or financial interest in the case. Differential payment
shall be made so long as such Jury Duty or Court appearance continues, only upon
presentation of documentary proof of Jury Duty or Court appearance and the
<PAGE>
payment received therefor. Continuous service credit and duly established
seniority privileges will accumulate during such leaves.
Paragraph 13.05, GENERAL PROCEDURE FOR LEAVES OF ABSENCE: All leaves of absence
except those for Union activity, military service or death in immediate family
as herein provided, shall be applied for and granted in writing on forms to be
provided by the Company, and no one shall be deemed to be on leave of absence
unless this provision is complied with. A copy of the signed form of leave of
absence shall be given to the employee and notice thereof shall be sent to the
Union.
The Company reserves the right to request from an employee, documentary proof of
the conditions necessitating the leave of absence. The Company may also, when in
its opinion it is necessary, arrange for a doctor or a nurse, selected by the
Company, to interview or examine such employee who has applied for leave of
absence because of illness or disability, for the purpose of determining his/her
condition and the possible duration of such sickness or disability.
Employees who are on leave of absence will be restored to employment if, under
normal working conditions, they would have continued in employment by the
Company except for such leave of absence. An employee who misrepresents facts on
the basis of which a leave of absence is granted shall be dismissed.
Paragraph 13.06, NON-WAR MILITARY DUTY ABSENCE AND PAYMENT: An employee who is
called for and performs mandatory non-war military duty will be granted a leave
of absence and differential payment as set forth below. Such an employee's
continuous service credit and duly established seniority privileges will
accumulate during such leave.
If called for training, the employee will be paid the difference between his/her
total military pay, including allowances such as flight pay and submarine pay,
for the period served, but not to exceed fourteen (14) calendar days, and the
payment he/she would have received for the straight time hours he/she is thereby
required to lose from his/her regular work schedule, but not to exceed ten (10)
eight-hour work days each year, computed at his/her established hourly base rate
or hourly wage rate.
If called for emergency military duty, the employee will be paid the difference
between his/her daily military pay, including allowances such as flight pay and
submarine pay, and the payment he/she would have received for the straight time
hours he/she is thereby required to lose from his/her regular work schedule, but
not to exceed five (5) eight-hour work days each year, computed at his/her
established hourly rate or hourly wage rate.
Paragraph 13.07, RULES FOR LEAVE OF ABSENCE FOR MILITARY SERVICE: Any employee
of the Company under this Agreement who shall be called or volunteer for
military service in any branch of the United States armed forces when the United
States is at war or during any duly declared national emergency in peace time,
<PAGE>
will be reinstated in the position held by such employee at the time of entering
such military service and will be given credit for seniority for the time spent
in such military service; provided, however, that such employee makes
application for such reinstatement in the Company's service within 90 days after
the termination of such military service, and in any event not later than 180
days after such state of war or such national emergency terminates, and
provided, further, that at the time of such application for reinstatement such
employee under normal working conditions would have been employed by the Company
except for such military service, and provided further that such employee is not
at the time of applying for such reinstatement physically or otherwise
incapacitated from performing his/her usual work in such previously held
position. It is agreed, however, that if while this Agreement continues in
effect there is a United States statute fixing and declaring the rights and
responsibility of an employer or employee in any such case, such statutory
provision shall supersede the provisions of this Paragraph 13.07 and the
provisions of this Paragraph 13.07 shall thereafter no longer have any force or
effect.
ARTICLE XIV
HOLIDAYS
Paragraph 14.01, DESIGNATED HOLIDAYS: The following holidays shall be granted:
New Year's Day, President's Day (the third Monday of February), Good Friday, the
Monday following Easter, Memorial Day, Fourth Of July, Labor Day, Thanksgiving
Day, the day after Thanksgiving, and Christmas Day. When a holiday falls on a
Saturday, the Company shall grant the preceding Friday as the holiday. When a
holiday falls on a Sunday, the Company shall grant the following Monday as the
holiday. When such holidays are granted on days other than that on which they
occur, holiday payment as described in Paragraph 14.02 shall be made for the day
granted rather than the actual date of the holiday. Any Federal or State law
which requires the observance of a holiday other than as provided in this
Paragraph shall supersede the provisions of this Paragraph.
Paragraph 14.02, HOLIDAY PAYMENT: The Company shall pay employees at their
straight time hourly base rate for the number of hours in their regular
scheduled shift the holidays, or days granted as such designated in Paragraph
14.01. Employees who are required to work eight (8) hours or less on any one of
the designated holidays, or days granted as such shall be paid time and one-half
for hours worked and shall, in addition, receive the holiday pay to which they
may be entitled in accordance with the above. Employees who are required to work
in excess of eight (8) hours on any one of the designated holidays, or days
granted as such shall be paid double time and one-half for all hours worked but
shall not receive the holiday pay set forth in the first sentence of this
Paragraph. On continuous shift operations, the Company will insofar as
practicable, work a reduced working force and an employee engaged in a
continuous shift operation, who is scheduled to work on a designated holiday and
fails to do so shall not be entitled to receive the above holiday payment.
Employees on sick leaves approved by the Plant Physician and on approved leaves
of absence of not more than two (2) weeks will be paid holiday pay for hours not
worked. If a holiday occurs during the waiting week of short-term disability,
<PAGE>
payment for the holiday will be made regardless of the length of the leave of
absence. An employee who is on Jury Duty, appearing as a subpoenaed witness in
Court or on non-war military duty shall receive holiday pay in accordance with
this Paragraph instead of either of the differential payments provided for in
Paragraphs 13.04 or 13.06.
ARTICLE XV
VACATIONS
Paragraph 15.01, VACATION POLICY: It will be the policy of the Company to grant
a vacation to employees annually as herein provided. In the event a shutdown is
contemplated in the Plant or in any Department or Section thereof, the vacation
shall run concurrently with such shutdown period. Otherwise, vacations will, so
far as possible, be granted at times most desired by employees, but the right to
fix the time for vacation is reserved by the Company in order to insure the
orderly and efficient operation of the Plant or any Department or Section
thereof.
Paragraph 15.02, VACATION YEAR: The "Vacation Year" which shall be used in
computing the amount of vacation time shall be from April 1st to March 31st both
inclusive of each year in which this Agreement continues in effect. The
"Vacation Year" which shall be used in computing the amount of vacation payment
shall be the fifty-two (52) weeks from the first day of the second quarter to
the last day of the first quarter, both inclusive, of each year in which this
Agreement continues in effect.
Paragraph 15.03, VACATION SEASON: The "Vacation Season" in which vacations will
be granted shall be from April 1st to March 31st inclusive of each year.
Paragraph 15.04, QUALIFICATIONS AND AMOUNT OF VACATION AND VACATION PAYMENTS:
Each employee who at the close of the "Vacation Year" has not less than six (6)
months of continuous service credit shall receive "Vacation" and "Vacation
Payment" in accordance with the following schedule:
- - ---------------------------------------------------------------------------
Continuous Service
- - ---------------------------------------------------------------------------
From But Less Than Vacation Vacation Payment
- - ---------------------------------------------------------------------------
6 months 2 Years 1 Week 2.0%
- - ---------------------------------------------------------------------------
2 Years 3 Years 2 Weeks 3.2%
- - ---------------------------------------------------------------------------
3 Years 4 Years 2 Weeks 3.6%
- - ---------------------------------------------------------------------------
4 Years 5 Years 2 Weeks 4.0%
- - ---------------------------------------------------------------------------
5 Years 6 Years 2 Weeks 4.2%
- - ---------------------------------------------------------------------------
6 Years 7 Years 2 Weeks 4.4%
- - ---------------------------------------------------------------------------
7 Years 15 Years 3 Weeks 6.0%
- - ---------------------------------------------------------------------------
15 Years 20 Years 4 Weeks 8.0%
- - ---------------------------------------------------------------------------
20 Years & Over 5 Weeks 10.0%
- - ---------------------------------------------------------------------------
The "Vacation Payment" shall be computed upon the above indicated percentage of
the employee's total earnings during the "Vacation Year." An additional amount
shall be paid as a differential, however, in any case where, because of layoff
for lack of work, the vacation payment of an employee under the foregoing
<PAGE>
schedule is less than one week's pay of the employee at his/her regular straight
time base rate for the number of hours in his/her normal scheduled work week. In
such case, the employee's vacation payment will be equal to the amount of said
one week's pay, provided that this additional amount should not be paid unless
the employee shall have worked at least twenty-six (26) weeks in the vacation
year and shall not apply for more than one vacation year of an employee.
The Company will make up the difference in vacation pay from that received by
any veteran re-employed during the period from October 1 of the "Vacation Year"
currently applicable to "Vacation" and "Vacation Payment" and September 30 of
the immediately succeeding "Vacation Year," under the normal vacation plan and
that which he/she would have received, assuming he/she was on the payroll for an
entire twelve (12) month period. This payment is to be made on the basis of the
veteran's hourly rate as of September 30 in accordance with the following
schedule:
- - -----------------------------------------------------------
Continuous Service
- - -----------------------------------------------------------
From But Less Than Vacation Payment
- - -----------------------------------------------------------
6 Months 2 Years 40 Hours
- - -----------------------------------------------------------
2 Years 3 Years 56 Hours
- - -----------------------------------------------------------
3 Years 4 Years 72 Hours
- - -----------------------------------------------------------
4 Years 5 Years 80 Hours
- - -----------------------------------------------------------
5 Years 6 Years 84 Hours
- - -----------------------------------------------------------
6 Years 7 Years 88 Hours
- - -----------------------------------------------------------
7 Years 8 Years 96 Hours
- - -----------------------------------------------------------
8 Years 9 Years 104 Hours
- - -----------------------------------------------------------
9 Years l0 Years 112 Hours
- - -----------------------------------------------------------
10 Years 15 Years 120 Hours
- - -----------------------------------------------------------
15 Years 20 Years 140 Hours
- - -----------------------------------------------------------
20 Years & Over 160 Hours
- - -----------------------------------------------------------
Paragraph 15.05, "VACATION PAYMENT" TO EMPLOYEES OFF PAYROLL: Any
employee who has once qualified for a "vacation" and who is thereafter
terminated, granted a leave of absence or is laid off due to lack of work shall
be entitled to a "Vacation Payment" for that portion of the year during which
he/she was employed at the percentage rate applicable as of the date of such
termination, leave of absence or layoff as herein provided. "Vacation payment"
for such employees shall be mailed not later than ten (10) weeks after the close
of the "Vacation Year."
Paragraph 15.06, SPECIAL RULES GOVERNING VACATIONS: With the consent of the
Company, vacation time in excess of the vacation shutdown period may be taken in
full one-day increments.
<PAGE>
No "vacations" may be postponed from one "vacation year" to another. Holidays
occurring during an employee's "vacation" will be counted as part of his/her
vacation time, but payment for such holidays shall be made by the Company as
provided for in Paragraph 14.02.
Employees on the payroll who are eligible for vacation payment will receive such
vacation payment at the close of the "vacation year" (March 31). If there is a
plant shutdown for the vacation period, all employees having their vacation at
the time of or after the plant shutdown may receive their vacation payment not
later than one week prior to the shutdown or the commencement of his/her
vacation. Any employee whose vacation entitlement exceeds the period of plant
shutdown, may elect to defer the payment (in weekly increments) applicable to
the weeks in excess of the plant shutdown to such time as he/she so designates.
Each such payment shall be in the sum equal to the quotient obtained by dividing
the total vacation payment earned by the number of weeks vacation entitlement.
Deferred vacation and payment must be requested at least two weeks in advance.
ARTICLE XVI
INSURANCE AND DISABILITY BENEFITS
Paragraph 16.01, RETIREMENT AND INSURANCE BENEFITS: Employees covered by this
Agreement shall be entitled to participate in and shall be covered by the
following Harris Corporation Employee Benefit Plans for Employees Represented by
the IUE, AFL-CIO:
1. Retirement Plan
2. Vision Plan
3. Medical Plan
4. Dental Assistance Plan
5. Survivor's Benefits Program and Dependent Life Insurance Program
6. Disability Income Plans
a. Short Term Disability Income
b. Long Term Disability Income
The specific benefits to be provided, the employee and Company contribution
requirements and other rights and obligations shall be defined by the pertinent
plan documents, insurance policies and/or insurance contracts. During the term
of this Agreement, the Company agrees that there will be no changes in the basic
benefits provided by the above employee Benefit Plans except by mutual agreement
and those covered under a Letter Of Agreement.
Paragraph 16.02, SUPPLEMENTAL WORKER'S COMPENSATION PAYMENTS: When an employee
is entitled to temporary disability payments under the applicable Worker's
Compensation Act, and the weekly payments due to the employee under the Act are
less than eighty percent (80%) of his/her base weekly pay, as hereinafter
defined, the Company will make a weekly payment, in addition to that required by
the Act equal to the difference between eighty percent (80%) of said base pay
<PAGE>
and said required disability payment. This additional payment shall be made only
during the period while the employee is entitled to Worker's Compensation for
said disability, and only while he/she is absent from work and unable to engage
in gainful employment because of said disability, not including any period after
an award has been made under the Worker's Compensation Act for partial and
permanent or total and permanent disability. Said additional payments shall not
be made in any case for a period longer than twelve (12) weeks on account of the
same disability. "Base weekly pay" shall mean forty times the employee's base
hourly rate, exclusive of any supplemental payments such as for incentive or
piecework earnings, night shift premium or overtime. The additional payment
herein provided for is intended to supplement their amount of weekly temporary
disability benefits under the Worker's Compensation Act for the period above
defined while the employee is absent from work and to apply under the same
conditions as the law requires for Worker's Compensation. These additional
payments shall apply only to disabilities subject to the Worker's Compensation
Act which occur on or after the effective date of this Agreement.
Paragraph 16.03, SICK PAY:
(a) With the approval of the appropriate supervisor, an hourly paid employee
may be paid for each half or full day of approved absence due to personal
illness. Such payment will be made up to the maximum number of days in any
one year, depending upon continuous service credit, set forth as follows:
- - ------------------------------------------------------------------------------
Continuous Service Credit Sick Pay In Any One Calendar Year
- - ------------------------------------------------------------------------------
(As Of December 1st) Effective 12/98 Effective 12/98 Effective 12/00
- - ------------------------------------------------------------------------------
2-1/2 Years to 5 Years 1 Day 1 Day 2 Days
- - ------------------------------------------------------------------------------
5 Years to 10 Years 2 Days 2 Days 3 Days
- - ------------------------------------------------------------------------------
10 Years to 15 Years 3 Days 4 Days 4 Days
- - ------------------------------------------------------------------------------
15 Years to 25 Years 4 Days 5 Days 5 Days
- - ------------------------------------------------------------------------------
25 years And Over 6 Days 6 Days 6 Days
- - ------------------------------------------------------------------------------
The word "year" in Paragraph 16.03 is understood by the parties to be the
period from December 1 through November 30.
(b) It is agreed that the Company at its discretion may investigate absence of
an employee before payment for absence is authorized. An employee is
expected to notify the Company in advance of his/her absence whenever
possible, to permit arranging for a replacement or rescheduling the work.
(c) Such payment will be made at the employee's regular base hourly rate in
effect at the time of the absence up to the number of hours in the
employee's regular workday. Absences will be charged against such payment
allowance in half day units. Days counted are those which fall within the
five (5) days of the employee's regular work week and in
<PAGE>
accordance with Paragraph 5.02e. In case of an employee on a rotating or
continuous shift, payment will be made for time lost during the employee's
established five-day week.
(d) Reimbursement for absence will not be made for any day or days for which
weekly disability benefits are payable under the Harris Short Term
Disability Income Plan or under Worker's Compensation nor for which the
employee receives any type of monetary benefits from the Company. All
eligible employees must work at least one day after November 30 to receive
sick pay for that calendar year.
(e) Unused sick pay remaining as of November 30 up to a maximum of thirty (30)
days, may be carried forward to the following calendar year for use in the
event of approved absences due to personal illness. Hourly employees may
elect to be paid for a maximum of seven (7) unused sick days per calendar
year provided the employee elects to do so between December 1 and December
15 of the next year.
(f) All unused sick pay available to an employee will be paid upon the death,
retirement and indefinite layoff of such employee. In addition, unused sick
pay available to an employee will be paid "at the employee's option in the
event the employee observes a recognized holiday on a regular work day not
designated in Paragraph 14.01" or "in the event of a plant shutdown, other
than vacation shutdowns, of one week or more duration. In such cases the
amount of pay shall be limited to the regular work days lost (excluding
holidays) which occur during such plant shutdown or on such undesignated
recognized holiday(s)." An incentive paid employee will be paid for such
hours at his/her regular base rate excluding incentive earnings.
(g) The provisions of the Paragraph will not apply in the event
of any work stoppage, authorized or unauthorized, emergency send home, or
situations where fire, flood, explosion, bombing or earthquake cause damage
in the Plant which makes it impossible to resume work in the section in
which such employee works.
ARTICLE XVII
GENERAL PROVISIONS
Paragraph 17.01, APPLICATION OF AGREEMENT: This Agreement shall supersede all
prior agreements between the parties. The attached Letters Of Agreement are
hereby adopted as a part of this Agreement. The Union and the Plant Management
may mutually agree to modify or change such letters of agreement, but such
changes shall not deprive employees of any benefits of this Agreement.
<PAGE>
Paragraph 17.02, EFFECT OF INVALIDITY, ETC.: If any Paragraph, clause, sentence
or other part of this Agreement is, for any reason, held to be invalid or
unenforceable in any respect, such a decision shall not affect the remaining
portions of this Agreement which shall continue in full force and effect.
Paragraph 17.03, RULES FOR GIVING NOTICE, ETC.: Any notice provided for in this
Agreement will be properly given if, given to the local Union, it is in writing
and addressed to the local Union Secretary at local Union Headquarters, if given
to the Company it is addressed to the Mountaintop Human Resources Manager at his
office in the local Plant, and if given to an employee, is addressed to the last
address furnished by such employee to the Company in writing, and is delivered
by registered mail, or is delivered in person and duly acknowledged in writing.
Paragraph 17.04, RULES FOR NEW PRODUCTS AND JOB BREAKDOWN: When a job is broken
down or, in the case of new products coming into the Plant, the rates will be
established in accordance with the rates of occupational classifications and job
descriptions existing in the Plant for work of the same or similar skill. The
rates shall be so established irrespective of whether men or women are employed
on such jobs.
Paragraph 17.05, EFFECT OF DEFAULTS OR WAIVERS: No default under, or waiver of,
any provisions of this Agreement by either Party hereto shall be deemed to be a
continuing default or waiver, and shall not constitute a binding precedent for
the future.
Paragraph 17.06, UPGRADING: When opportunities for upgrading to jobs present
themselves, the general principle of upgrading shall be practiced and the
greatest skill possessed by an employee shall be utilized by the Company.
Seniority shall be a factor in consideration for upgrading and sex shall be
neither a qualification nor a restriction.
Paragraph 17.07, UPGRADING PRIVILEGES FOR REINSTATED VETERANS: A veteran may
request that he/she be given the rate and the job which he/she would in all
probability have attained if he/she had remained in the continuous service of
the Company during his/her period of military service, and upon receipt of such
request, the Company shall give him/her such rate and job, provided that
employees with greater seniority shall not be affected.
Paragraph 17.08, EMERGENCY SEND-HOME: In case of machine breakdown or lack of
material and where the interchanging of employees is not practicable and
consistent with efficient operation, the Company shall have the right to send
<PAGE>
home employees on the jobs affected without pay in any department of any plant
without recourse to the seniority provisions of this Agreement, provided,
however, that no employee may be sent home in such emergency for more than four
(4) working days in any two week period or ten (10) working days in any 26 week
period, including the week in which the proposed send home will occur. Beyond
this, the seniority provisions of this Agreement shall apply. The number of
hours paid for under the provisions of Paragraph 4.09 shall not be included in
the computation of emergency send home for any employee.
Paragraph 17.09, OCCUPATIONAL DESCRIPTIONS: During the term of this Agreement,
the Company agrees to furnish in writing to the Union, Occupational Descriptions
in such occupations as are governed by the Bargaining Unit and in effect at the
time of this Agreement.
Paragraph 17.10, REST PERIODS: The practice of giving rest periods shall
continue wherever this is in effect at the present time.
Paragraph 17.11, VENDOR'S PLANT ON STRIKE: The Parties agree to discuss any
situation which may arise in connections with orders placed by the Company with
a Plant whose employees are on strike. The Union will take into account
conditions where the Company cannot control the source of supply or services. It
is also understood that no questions shall be raised by the Union with regard to
any work or materials arising from orders placed by the Company before the
commencement of any strike.
Paragraph 17.12, PRODUCTION WORK: Employees who are excluded from the
jurisdiction of the Bargaining Unit shall not perform work normally performed by
employees in the Bargaining Unit.
Paragraph 17.13, TERM AND NOTICE OF TERMINATION: This Agreement shall continue
in full force and effect to and including December 1, 2001, and thereafter be
automatically renewed from year to year unless notice in writing shall be given
by either party to the other of changes desired in the Agreement or of its
termination at least sixty (60) days prior to the end of its current term.
ARTICLE XVIII
AMENDMENTS AND MODIFICATIONS
Paragraph 18.01, NOTICE OF CHANGE: Either party may give written notice sixty
days prior to the expiration date of this Agreement, as defined in Paragraph
17.13 hereof, and sixty days prior to any subsequent anniversary date of this
<PAGE>
Agreement of any proposed changes of this Agreement. The proposals in such
notice shall be presented as far as practicable in the language and form of
specific contract provisions. Negotiations on such proposed changes shall
commence not later than thirty days after the date of notice. If the parties do
not reach an agreement with respect to such proposals on or before said
expiration date, or on or before the subsequent anniversary date of the
Agreement, the first sentence of Paragraph 3.04 of the Agreement shall not be
applicable, but all other provisions of the Agreement shall continue in full
force and effect.
Paragraph 18.02, RULES FOR MAKING MODIFICATIONS IN MID-TERM: After this
Agreement has been signed, no provision may be altered in mid-term except by
mutual consent in writing between the Union and the Company, and only at a
Negotiating Conference of the respective Negotiating Representatives of the
Parties called for such purpose by the Parties and duly ratified by their
respective organizations.
The Parties acknowledge that during the negotiations which resulted in this
Agreement, each had the unlimited right and opportunity to make demands and
proposals with respect to any subject of matter not removed by law from the area
of collective bargaining, and that the understandings and agreements arrived at
by the Parties after the exercise of that right and opportunity are set forth in
this Agreement. Therefore, the Parties, for the life of this Agreement,
voluntarily and unqualifiedly waive the right, and each agrees that the other
shall not be obligated, except as otherwise specifically provided in this
Agreement, to bargain collectively with respect to any subject or matter
referred to or covered in this Agreement. Further, the Parties, for the life of
this Agreement, voluntarily and unqualifiedly waive the right, and each agrees
that the other shall not be obligated to bargain collectively with respect to
any subject or matter not specifically referred to or covered in this Agreement
even though such subject or matter may not have been within the knowledge or
contemplation of any of the Parties at the time this Agreement was negotiated or
signed.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Settlement Agreement to
be executed by their duly authorized officers and representatives as o the day
and year first written above.
Harris Corporation Local Union No. 177
International Union of Electric
Electrical, Salaried, Machine And
Furniture Workers, AFL-CIO
By Company Negotiating Committee By Local Union 177 Negotiating
Committee
R. A. Bishop M. Giardino
R. T. Ford S. Hooper
J. A. Foyle J. Makowski
D. M. Marini C. Pitcavage
C. Senczakowicz
<PAGE>
<TABLE>
<CAPTION>
- - --------------------------------------------------------------------------------------------------------------------------
MOUNTAINTOP PLANT
HOURLY WAGE RATE SCHEDULE
EFFECTIVE NOVEMBER 9, 1998
- - --------------------------------------------------------------------------------------------------------------------------
L.G. OCC.# OCCUPATION TITLE MIN. 4 WEEKS 8 WEEKS 12 WEEKS MAX.
- - --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
4 202 Production Associate 11.81 11.94 12.06 12.18 12.30
- - --------------------------------------------------------------------------------------------------------------------------
8 208 Utility Associate 12.25 12.38 12.50 12.63 12.76
209 Fabrication Specialist
- - --------------------------------------------------------------------------------------------------------------------------
9 206 Equipment Repairer 12.81 12.94 13.07 13.21 13.34
- - --------------------------------------------------------------------------------------------------------------------------
10 210 Fabrication Support Specialist 13.04 13.17 13.31 13.44 13.58
- - --------------------------------------------------------------------------------------------------------------------------
11 213 Maintenance Electrician 14.09 14.25 14.39 14.53 14.68
215 Maintenance Mechanic
- - --------------------------------------------------------------------------------------------------------------------------
13 216 Tool & Die Maker 15.72 15.88 16.04 16.21 16.37
- - --------------------------------------------------------------------------------------------------------------------------
"Weeks" as used herein shall be computed from the date of hire except that any
change which would normally become effective as of Monday, Tuesday or Wednesday
of any payroll week shall become effective as of Monday of the same payroll
week, while any change which occurs on a Thursday, Friday, Saturday or Sunday of
such payroll week shall become effective on Monday of the subsequent payroll
week.
-------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- - --------------------------------------------------------------------------------------------------------------------------------
MOUNTAINTOP PLANT
NEW HIRE HOURLY WAGE RATE SCHEDULE
EFFECTIVE NOVEMBER 9, 1998
- - --------------------------------------------------------------------------------------------------------------------------------
L.G. OCC.# OCCUPATION TITLE START 6 MONTHS 12 MONTHS 18 MONTHS 24 MONTHS
- - --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
4 202 Production Associate 9.45 10.04 10.63 11.22 11.81
- - --------------------------------------------------------------------------------------------------------------------------------
8 208 Utility Associate 9.80 10.41 11.03 11.64 12.25
209 Fabrication Specialist
- - --------------------------------------------------------------------------------------------------------------------------------
"Weeks" as used herein shall be computed from the date of hire except that any
change which would normally become effective as of Monday, Tuesday or Wednesday
of any payroll week shall become effective as of Monday of the same payroll
week, while any change which occurs on a Thursday, Friday, Saturday or Sunday of
such payroll week shall become effective on Monday of the subsequent payroll
week.
- - --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- - -------------------------------------------------------------------------------------------------------------------------
MOUNTAINTOP PLANT
MAINTENANCE MECHANIC APPRENTICESHIP PROGRAM
EFFECTIVE NOVEMBER 9, 1998
- - -------------------------------------------------------------------------------------------------------------------------
L.G. OCC.# OCCUPATION TITLE START 1 YEAR* 2 YEARS* 3 YEARS*
- - -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 301 MAINTENANCE 70% OF 80% OF 90% OF 100% OF
MECHANIC CURRENT CURRENT CURRENT CURRENT
APPRENTICE MAINTENANCE MAINTENANCE MAINTENANCE MAINTENANCE
MECHANIC MECHANIC MECHANIC MECHANIC
HOURLY WAGE HOURLY WAGE HOURLY WAGE HOURLY WAGE
- - -------------------------------------------------------------------------------------------------------------------------
*CHANGE OF RATE WILL OCCUR ONLY IF APPRENTICE PASSES SKILL CERTIFICATION.
- - -------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- - ----------------------------------------------------------------------------------------------------------------------------
MOUNTAINTOP PLANT
HOURLY WAGE RATE SCHEDULE
EFFECTIVE DECEMBER 6, 1999
- - ----------------------------------------------------------------------------------------------------------------------------
L.G. OCC.# OCCUPATION TITLE MIN. 4 WEEKS 8 WEEKS 12 WEEKS MAX.
- - ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
4 202 Production Associate 11.81 12.42 12.54 12.67 12.79
- - ----------------------------------------------------------------------------------------------------------------------------
8 208 Utility Associate 12.25 12.88 13.00 13.14 13.27
209 Fabrication Specialist
- - ----------------------------------------------------------------------------------------------------------------------------
9 206 Equipment Repairer 13.32 13.46 13.59 13.74 13.87
- - ----------------------------------------------------------------------------------------------------------------------------
10 210 Fabrication Support Specialist 13.56 13.70 13.84 13.98 14.12
- - ----------------------------------------------------------------------------------------------------------------------------
11 213 Maintenance Electrician 14.65 14.82 14.97 15.11 15.27
215 Maintenance Mechanic
- - ----------------------------------------------------------------------------------------------------------------------------
13 216 Tool & Die Maker 16.35 16.52 16.68 16.86 17.02
- - ----------------------------------------------------------------------------------------------------------------------------
"Weeks" as used herein shall be computed from the date of hire except that any
change which would normally become effective as of Monday, Tuesday or Wednesday
of any payroll week shall become effective as of Monday of the same payroll
week, while any change which occurs on a Thursday, Friday, Saturday or Sunday
of such payroll week shall become effective on Monday of the subsequent payroll
week.
- - ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- - -----------------------------------------------------------------------------------------------------------------------------
MOUNTAINTOP PLANT
HOURLY WAGE RATE SCHEDULE
EFFECTIVE DECEMBER 4, 2000
- - -----------------------------------------------------------------------------------------------------------------------------
L.G. OCC.# OCCUPATION TITLE MIN. 4 WEEKS 8 WEEKS 12 WEEKS MAX.
- - -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
4 202 Production Associate 11.81 12.92 13.04 13.18 13.30
- - -----------------------------------------------------------------------------------------------------------------------------
8 208 Utility Associate 12.25 13.40 13.52 13.67 13.80
209 Fabrication Specialist
- - -----------------------------------------------------------------------------------------------------------------------------
9 206 Equipment Repairer 13.85 14.00 14.13 14.29 14.42
- - -----------------------------------------------------------------------------------------------------------------------------
10 210 Fabrication Support Specialist 14.10 14.25 14.39 14.54 14.68
- - -----------------------------------------------------------------------------------------------------------------------------
11 213 Maintenance Electrician 15.24 15.41 15.57 15.71 15.88
215 Maintenance Mechanic
- - -----------------------------------------------------------------------------------------------------------------------------
13 216 Tool & Die Maker 17.00 17.18 17.35 17.53 17.70
- - -----------------------------------------------------------------------------------------------------------------------------
"Weeks" as used herein shall be computed from the date of hire except that any
change which would normally become effective as of Monday, Tuesday or Wednesday
of any payroll week shall become effective as of Monday of the same payroll
week, while any change which occurs on a Thursday, Friday, Saturday or Sunday of
such payroll week shall become effective on Monday of the subsequent payroll
week.
- - -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- - --------------------------------------------------------------------------------------------------------------------------
MOUNTAINTOP PLANT
HOURLY WAGE RATE SCHEDULE
EFFECTIVE DECEMBER 3, 2001
- - --------------------------------------------------------------------------------------------------------------------------
L.G. OCC.# OCCUPATION TITLE MIN. 4 WEEKS 8 WEEKS 12 WEEKS MAX.
- - --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
4 202 Production Associate 11.81 13.44 13.56 13.71 13.83
- - --------------------------------------------------------------------------------------------------------------------------
8 208 Utility Associate 12.25 13.94 14.06 14.22 14.35
209 Fabrication Specialist .
- - --------------------------------------------------------------------------------------------------------------------------
9 206 Equipment Repairer 14.40 14.56 14.70 14.86 15.00
- - --------------------------------------------------------------------------------------------------------------------------
10 210 Fabrication Support Specialist 14.66 14.82 14.97 15.12 15.27
- - --------------------------------------------------------------------------------------------------------------------------
11 213 Maintenance Electrician 15.85 16.03 16.19 16.34 16.52
215 Maintenance Mechanic
- - --------------------------------------------------------------------------------------------------------------------------
13 216 Tool & Die Maker 17.68 17.87 18.04 18.23 18.41
- - --------------------------------------------------------------------------------------------------------------------------
"Weeks" as used herein shall be computed from the date of hire except that any
change which would normally become effective as of Monday, Tuesday or Wednesday
of any payroll week shall become effective as of Monday of the same payroll
week, while any change which occurs on a Thursday, Friday, Saturday or Sunday of
such payroll week shall become effective on Monday of the subsequent payroll
week.
- - --------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
EXHIBIT 10.14
MACHINERY AND EQUIPMENT LOAN TO HARRIS CORPORATION
AND THE
COMMONWEALTH OF PENNSYLVANIA
MELF #95-9-246
IN THE AMOUNT OF $500,000
DATED SEPTEMBER 9, 1996
<PAGE>
KMK/09-04-96 MELF #95-9-246
LOAN AGREEMENT
THIS LOAN AGREEMENT, MADE this 9th day of September, 1996, effective as of
September 10, 1996, BY AND BETWEEN HARRIS CORPORATION, a Delaware corporation,
with its principal offices at 125 Crestwood Road, Mountaintop, Pennsylvania
18707-2189, (the "Borrower") and the COMMONWEALTH OF PENNSYLVANIA, acting by and
through the DEPARTMENT OF COMMUNITY AND ECONOMIC DEVELOPMENT, having its
principal place of business at Room 485 Forum Building. Harrisburg, Pennsylvania
17120 (the "Department").
WITNESSETH THAT:
WHEREAS, the Borrower has established an industrial development project on
a tract of land in Luzerne County, Pennsylvania (the "Project"); and
WHEREAS, in concert with the establishment of the Project the Borrower has
purchased or intends to purchase certain machinery and equipment for use at the
Project as more fully described at Exhibit A and which is incorporated herein by
reference and made a part hereof (the "Equipment"); and
WHEREAS, pursuant to the authority granted the Department by virtue of the
Machinery and Equipment Loan Fund ("MELF") Act, Act 120 of 1988, P.L. 1050 (the
"Act"), the Department has approved the Borrowers application for a loan not to
exceed the principal amount of $500,000 (the "Loan") to be used exclusively to
defray a part of the cost of purchasing the Equipment (the "Cost"); and
<PAGE>
WHEREAS, the Department is willing to make the Loan upon the terms and
subject to the conditions hereinafter set forth:
NOW, THEREFORE, the parties hereto, in consideration of the mutual
promises herein contained and intending to be legally bound hereby, covenant and
agree as follows:
Section 1. The Loan. Subject to the conditions set forth herein, the
Department agrees to make the Loan to the Borrower for the purpose of defraying
a portion the Cost of purchasing the equipment described in Exhibit A.
Section 2. The Note. The Loan shall be evidenced by a note (the "Note") of
even date herewith given by the Borrower to the Department, the terms and
provisions of which are incorporated herein by reference thereto and made a part
hereof.
Section 3. The Security Documents.
(a) The Security Agreement. Payment of the Note and satisfaction of
all obligations of the Borrower hereunder and under the Note shall be
secured by a perfected security interest in the Equipment given by the
Borrower to the Department under a security agreement of even date
herewith (the "Security Agreement"), the terms and provisions of which are
incorporated herein by reference thereto and made a part hereof. The
Security Agreement shall be dated the date of the Note and shall create a
perfected first lien upon the Equipment.
(b) The Note, Security Agreement and this Agreement shall be
referred to herein collectively as the Loan Documents.
Section 4. Prepayments. Prepayments of the outstanding principal amount of
the Loan shall be as set forth in and governed by the terms of the Note.
-2-
<PAGE>
Section 5. Representations and Warranties of the Borrower. To induce the
Department to enter into this Agreement and to make the Loan, the Borrower
represents and warrants that:
(a) the Borrower is a corporation, duly organized and validly
existing and in good standing under the laws of the State of Delaware and
is qualified to do business in the Commonwealth of Pennsylvania;
(b) the Borrower has all necessary corporate power and authority to
purchase, own, encumber and sell Borrower's property and to carry on
Borrower's business as now being conducted, and to carry out the
transactions contemplated by this Agreement:
(c) the execution and delivery of this Agreement consummation of the
transactions herein contemplated and compliance with the terms and
provisions hereof and of the Note and Security Agreement will not conflict
with, or result in a breach of, any of the terms, conditions or provisions
of the Articles of Incorporation or By-Laws of the Borrower or of any
agreement, indenture or other instrument to which the Borrower is a party
or by which Borrower is bound or to which Borrower or Borrower's property
is subject, or constitute a default thereunder and will not result in the
creation or imposition of any lien, charge or encumbrance of any nature
whatsoever (except those created pursuant hereto) upon any of the property
of the Borrower pursuant to the terms of any such agreement. indenture or
other instrument;
(d) the execution, delivery and performance of this Agreement, the
performance of the transactions contemplated by the provisions hereof, and
the execution, issuance and delivery of the Note and the Security
Agreement in accordance
-3-
<PAGE>
with the provisions hereof have each been duly authorized by all necessary
corporate action on the part of the Borrower;
(e) this Agreement has been duly and validly executed and delivered
by the Borrower and constitutes a valid and legally binding obligation of
the Borrower, enforceable in accordance with the terms of this Agreement
and the Note and Security Agreement. when executed and delivered in
accordance with the terms thereof, will be valid and legally binding
obligations of the Borrower, enforceable in accordance with the respective
terms of each;
(f) there is no material litigation or governmental proceeding
pending or, to the knowledge of the Borrower or Borrower's officers
threatened against the Borrower other than that which has been previously
disclosed to the Department in writing. If such litigation or proceeding
exists, Borrower shall set forth in an exhibit information regarding the
amount of the claim, the forum in which the claim was filed, the date for
the same, all of which shall be attached hereto and made a part hereof;
(g) the Borrower has filed all required federal, state and local tax
returns and has paid all taxes shown on such returns as such taxes have
become due; and
(h) no consent or approval to the execution and performance of this
Agreement and the transactions contemplated hereby not already obtained is
required to be obtained by the Borrower from any governmental body,
authority, agency, court or other person or entity, public or private,
other than the Department.
All of the representations and warranties of the Borrower set forth herein shall
survive and continue until the Loan is paid in full and all of the Borrower's
obligations hereunder have been satisfied.
-4-
<PAGE>
Section 6. General Conditions of Lending. The obligation of the Department
to make the Loan hereunder is subject to the fulfillment of the following
conditions by the Borrower to the satisfaction of the Department:
(a) concurrently with, or prior to, the disbursement of the Loan and
dated the date of such disbursement, the Borrower shall have furnished to
the Department in form and substance satisfactory to the Department's
counsel a favorable written opinion of Borrower's counsel;
(b) there shall have been delivered to the Department a certificate
executed by the Secretary of the Borrower, dated the date of the initial
disbursement under the Loan, setting forth the corporate action taken by
the Borrower in connection with the Loan and the authorization of the
Borrower, or authorized representatives of the Borrower to execute,
deliver and perform pursuant to the terms and conditions of this Agreement
and the execution by the Borrower of the Note, the Security Agreement and
all related documentation, their By-Laws and Articles of incorporation as
the Department's counsel shall deem appropriate;
(c) all legal matters incident or related to the Loan shall be in
form and substance satisfactory to counsel for the Department;
(d) the Note and the Security Agreement and related financing
statements shall have been duly executed and delivered to the Department
or delivered for recording, where appropriate; and
(e) compliance with such other conditions as shall be required by
the Department.
-5-
<PAGE>
Section 7. Covenants of the Borrower. Until the Loan has been entirely
repaid and all of Borrower's obligations to the Department in connection
therewith and herewith have been satisfied, the Borrower hereby covenants that:
(a) the Borrower shall use the proceeds of the Loan solely for the
purpose of defraying a portion of the Cost;
(b) the Borrower shall preserve Borrower's corporate existence,
rights, privileges and franchises, and maintain Borrower's good standing
as a corporation under the laws of Delaware;
(c) the Borrower shall comply with all laws, regulations and orders
of any court or governmental body having jurisdiction over the Project;
(d) the Borrower shall, upon request by the Department, provide
financial information and other information concerning Borrower in form
reasonably satisfactory to the Department, including at least the
following:
(i) a certificate of an authorized officer of the Borrower
setting forth the number of employees and their respective job
classifications (skilled, semi-skilled and unskilled) employed
during the previous year at the Project; and (ii) financial
statements of the Borrower for its most recent fiscal year,
including its balance sheet and income statement;
(e) the Borrower shall comply with all of the terms and conditions
of this Agreement, the Note, and the Security Agreement;
(f) the Borrower shall not create any additional debt secured by the
Equipment;
-6-
<PAGE>
(g) the Borrower shall not discriminate against any employee or
against any applicant for employment because of race, color, religious
creed, national origin, ancestry, sex or age (including, but not limited
to, employment upgrading. demotion or transfer, recruitment or recruitment
advertising, layoff or termination, rates of pay or other forms of
compensation, and selection for training, including apprenticeship). The
Borrower hereby accepts and agrees to be bound by the nondiscrimination
provisions as set forth in Exhibit "B" attached hereto;
(h) the Borrower shall comply with the contractor integrity
provisions as set forth in Exhibit "C" attached hereto;
(i) the Borrower shall comply with the contractor responsibility
provisions as set forth in Exhibit "D" attached hereto;
(j) the Borrower shall pay all the costs of filing financing
statements and any other costs that may be incurred pursuant to the
closing and administration of the Loan;
(k) the Borrower shall provide proper facilities at all times for
inspection of the Equipment by the Department and its authorized
representatives, and shall afford full and free access to the Project to
such persons as may from time to time be designated by the Department;
(l) without the prior written consent of the Department. the
Borrower shall not (i) change its name, merge, consolidate or divide, or
(ii) sell, transfer, assign, lease or otherwise convey or dispose of all
or any material part of its assets, except in the ordinary course of
business;
(m) the Borrower shall comply with the Americans With Disabilities
Act Provisions as set forth in Exhibit "E" attached hereto; and
-7-
<PAGE>
(n) the Borrower shall provide the Department yearly with the
Borrower's current 10K filing with Securities and Exchange Commission.
Section 8. Events of Default. The following shall each constitute an event
of default hereunder (an "Event of Default"):
(a) The Borrower shall fail to pay when due any amount payable under
any of the Loan Documents (including, without limitation, any installment
of principal or interest under the Note), and such failure shall continue
for a period of thirty (30) days;
(b) any representation or warranty made herein, in the application
to the Department made by the Borrower in connection with the Loan, or in
any certificate or financial or other statement furnished pursuant to the
provisions hereof or as a part of such application, shall have been false
or misleading in any material respect as of the time made or furnished;
(c) the Borrower shall (i) become insolvent, (ii) admit Borrower's
inability to pay Borrower's debts as they come due, (iii) make an
assignment to the benefit of Borrower's creditors, (iv) be adjudicated
bankrupt or insolvent, (v) voluntarily initiate proceedings under any
bankruptcy or reorganization law either now or hereafter in effect, (vi)
become the subject of any involuntary proceedings under any bankruptcy or
reorganization law either now or hereafter in effect that shall not have
been discharged within sixty (60) days of the initiation thereof, or (vii)
seek to take advantage of any moratorium law either now or hereafter in
effect;
(d) a receiver, liquidator or trustee shall be appointed for the
Borrower and shall not have been discharged within sixty (60) days;
-8-
<PAGE>
(e) a default or an event of default under the Security Agreement or
the Note, or any other instrument relating to the Loan shall occur or be
continuing and such default shall not be remedied for a period of thirty
(30) days after the giving of written notice thereof to the Borrower by
the Department; or
(f) the Borrower shall fail to perform any other covenant, condition
or provision hereof or of any of the Loan Documents and such failure shall
not be remedied for a period of thirty (30) days after the giving of
written notice thereof to the Borrower by the Department.
Immediately and without further notice to the Borrower, upon the occurrence of
an Event of Default hereunder, the Department. or any subsequent holder of the
Note, may declare the Note and interest accrued thereon and all liabilities of
the Borrower thereunder to be immediately due and payable, and the same shall
thereupon become and be due and payable, without presentment, demand, protest or
notice of any kind to the Borrower, all of which are hereby expressly and
knowingly waived. In addition, upon the occurrence of an Event of Default
hereunder, the Department shall have the right to raise the rate of interest on
the Loan up to twelve and one-half percent (12 1/2%) per annum, applied
retroactively to the date of the first occurrence of the default until such time
as the default is cured.
Section 9. Failure to Create Jobs. If the Borrower shall fail to create
the number of employment opportunities or jobs specified in Borrower's
application, the Department shall have the right to increase the interest rate
to the greater of 12 1/2% per annum or two percentage points greater than the
prime interest rate (as defined in the Note),unless such an increase is waived
by the Department because the failure to meet the job projections is deemed to
be the result of circumstances beyond the control of the Borrower.
-9-
<PAGE>
Section 10. Miscellaneous. The terms of the Loan Documents shall be
construed liberally in favor of the Department to effectuate the purposes
hereof. No delay or failure on the part of the Department in exercising any
right, power or privilege hereunder shall affect such right, power or privilege;
nor shall any single or partial exercise thereof or any abandonment, waiver, or
discontinuance of steps to enforce such a right, power or privilege preclude any
other or further exercise thereof, or the exercise of any other right, power or
privilege. The rights and remedies of the Department hereunder are cumulative
and concurrent and not exclusive of any rights or remedies which the Department
might otherwise have. The Department shall have the right at all times to
enforce the provisions of this Agreement, the Note, the Security Agreement, and
all related documentation in strict accordance with the terms hereof and
thereof, notwithstanding any conduct or custom on the part of the Department in
refraining from so doing at any time or times. The failure of the Department at
any time or times to enforce the Department's rights under such provisions,
strictly in accordance with the same, shall not be construed as having created a
custom in any way or manner contrary to specific provisions of this Agreement or
any such documentation or as having in any way or manner modified or waived the
same.
Section 11. Writing Required. Any permit, consent or approval of any kind
or character on the part of the Department under this Agreement, and any waiver
of any provision or condition of this Agreement, must be in writing and executed
by the Department and shall be effective only to the extent specifically set
forth in such writing.
Section 12. Duration of Covenants. All covenants and agreements of the
Borrower contained herein or made in writing in connection herewith shall
survive and continue until the Loan is entirely paid and all of the Borrower's
obligations hereunder have been entirely satisfied.
-10-
<PAGE>
Section 13. Pennsylvania Law to Govern. This Agreement, the Commitment
Letter dated December 20, 1995, the Note, and the Security Agreement and all
other agreements delivered pursuant hereto shall be deemed to be contracts made
under the laws of the Commonwealth of Pennsylvania and, for all purposes, shall
be construed in accordance with the laws of such Commonwealth.
Section 14. Counterparts. This Agreement may be executed in as many
counterparts as may be deemed necessary and convenient and each of which, when
so executed, shall be deemed an original, but all such counterparts shall
constitute but one and the same instrument.
Section 15. Complete Agreement. This Agreement, the Note, and the Security
Agreement constitute the entire agreement between the Department and the
Borrower. The Loan Documents supersede and replace all prior agreements related
to the subject matter thereof. Such instruments may be modified or amended only
by a written instrument duly executed by the Department and the Borrower.
Section 16. Notices. Notices required hereunder, or any correspondence
concerning this Agreement shall be directed to the following addresses and shall
he deemed properly given (a) if delivered by hand; (b) if sent by certified
mail, return receipt requested, postage prepaid or by recognized overnight
courier service (including, without limitation Federal Express or United Parcel
Service overnight service), charges prepaid; or (c) if sent by facsimile, with a
Copy sent by first class U.S. Mail, postage prepaid.
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<PAGE>
To the Department:
PENNSYLVANIA DEPARTMENT OF COMMUNITY
AND ECONOMIC DEVELOPMENT
485 Forum Building
Harrisburg, Pennsylvania 17120
FAX: (717) 234-4560
Attention: Machinery and Equipment Loan Fund
To Borrower:
HARRIS CORPORATION, SEMICONDUCTOR SECTOR
125 Crestwood Road
Mountaintop, Pennsylvania 18707-2189
Attention: Plant Manager
And simultaneously to:
HARRIS CORPORATION, SEMICONDUCTOR SECTOR
2401 East Palm Bay Road
Palm Bay, Florida 32905
Attention: Vice President-Counsel
Notices and communications hereunder shall be deemed sufficiently given when
dispatched pursuant to the foregoing provisions. Notices and communications
delivered by hand shall be effective upon receipt; notices and communications
sent by fax, with a copy by first class U.S. Mail, shall be effective upon
dispatch; notices and communications sent by recognized overnight courier
service shall be effective on the business day following dispatch; and notices
sent by certified mail shall be effective on the third business day following
dispatch. The parties hereto may, by a notice given hereunder, designate any
further or different addresses to which any subsequent notice or communication
hereunder shall be sent.
Section 17. Severability. The terms and provisions of this Agreement are
severable. The unenforceability or invalidity of any one or more of the terms,
covenants, conditions or provisions of this Agreement under federal, state or
other applicable law shall not render any other term, covenant, condition or
provision hereof unenforceable or invalid.
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Section 18. Under Seal. This Agreement shall take effect as an instrument
under seal.
Section 19. Further Assurances. The Borrower, from time to time, shall
execute such further instruments as the Department may reasonably request to
further confirm and assure the interests and rights created or intended to be
created in favor of the Department hereunder or under the Security Agreement or
the Note.
Section 20. Successors and Assigns. This Agreement and each of the Loan
Documents shall be binding upon and inure to the benefit of the Borrower, the
Department and their respective successors and assigns. except that the Borrower
may not assign or transfer its rights hereunder or thereunder without the prior
written consent of the Department. The parties do not intend the benefits of
this Agreement to inure to any third party. No portion of the Department's
commitment to make the Loan will, at any time, be subject to attachment or levy
by any creditor of the Borrower or by any contractor, subcontractor, materialman
or supplier or any creditor of any such contractor, subcontractor. materialman
or supplier. Notwithstanding anything contained herein or in the Note, the
Security Agreement, or any other document executed in connection with this
transaction, or any conduct or course of conduct by any of the parties hereto,
before or after signing this Agreement or any of the other aforesaid documents,
this Agreement shall not be construed as creating any rights, claims, or causes
of action against the Department, in favor of any contractor, subcontractor,
supplier of labor or materials, or any of their respective creditors, or any
other person or entity other than the Borrower.
Section 21. Setoff. The Borrower agrees that the Commonwealth of
Pennsylvania may set off the amount of any state tax liability or other debt of
the Borrower or its respective subsidiaries that is owed to the Commonwealth and
not being contested on appeal against any payments due the Borrower under this
or any other contract with the Commonwealth.
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<PAGE>
Section 22. Consent to Jurisdiction. The Borrower hereby irrevocably (a)
agrees that any suit, action or other legal proceeding arising out of or
relating to this Agreement or the Loan Documents may be brought in any federal
or state court located in or whose district includes Harrisburg, Pennsylvania or
the county wherein the Project is located and consents to the jurisdiction of
such court in any such suit, action or proceeding, and (b) waives any objection
which it may have to the laying of venue of any such suit, action or proceeding
in any such court and any claim that any such suit, action or proceeding has
been brought in an inconvenient forum. The Borrower hereby irrevocably consents
to the service of any and all process in any such suit, action or proceeding by
mailing of copies of such process to the Borrower at its address provided under
or pursuant to Section 15. The Borrower agrees that a final judgment in any such
action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
All mailings under this section shall be by certified or registered mail, return
receipt requested. Nothing in this section shall affect the right of the
Department to serve legal process in any other manner permitted by law or affect
the right of the Department to bring any suit, action or proceeding against the
Borrower or Borrower's property in the courts of any other jurisdiction.
Section 23. Incorporation by Reference. All exhibits to this Agreement and
the terms of all Loan Documents shall be incorporated herein by reference as
though expressly set forth herein.
Section 24. Descriptive Headings. Descriptive headings of the several
Sections of each of the Loan Documents are intended for convenience only and
shall not control or affect the meaning or construction of any of the provisions
hereof.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
as of the day and year first above written.
WITNESS: COMMONWEALTH OF PENNSYLVANIA,
acting by and through the DEPARTMENT OF
COMMUNITY AND ECONOMIC DEVELOPMENT
/s/ Kimberly A. [illegible] By: /s/ Emily [illegible]
- - ----------------------------- -------------------------------------
Deputy Secretary
(OFFICIAL SEAL)
ATTEST: HARRIS CORPORATION
SEMICONDUCTOR SECTOR
[illegible] By: [illegible]
- - ----------------------------- -------------------------------------
Secretary Sector President
(CORPORATE SEAL)
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<PAGE>
EXHIBIT "A"
EQUIPMENT
Debtor's "Equipment" - The machinery, equipment and other tangible
personal property listed below, and all parts, replacements., additions and
accessions thereto, any proceeds of sale or disposition thereof and any proceeds
of insurance thereon or condemnation thereof.
THE EQUIPMENT SCHEDULE
TYPE OF EQUIPMENT VENDOR/MANUFACTURER MODEL NO./SERIAL NO.
- - ----------------- ------------------- --------------------
NOVELLUS SYSTEMS CONCEPT ONE V929764 1,154,855
Chemical Vapor Deposition System
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<PAGE>
EXHIBIT "B"
NONDISCRIMINATION CLAUSE
During the term of this contract, the Borrower agree as follows:
1. the Borrower shall not discriminate against any employee, applicant for
employment, independent contractor or any other person because of race, color,
religious creed, ancestry, national origin, age or sex. The Borrower shall take
affirmative action to insure that applicants are employed, and that employees or
agents are treated during employment, without regard to their race, color,
religious creed, ancestry, national origin, age or sex. Such affirmative action
shall include, but is not limited to: employment, upgrading, demotion or
transfer, recruitment or recruitment advertising; layoff or termination; rates
of pay or other forms of compensation; and selection for training. The Borrower
shall post in conspicuous places, available to employees, agents, applicants for
employment and other persons, a notice to be provided by the contracting agency
setting forth the provisions of this nondiscrimination clause.
2. the Borrower shall in advertisements or requests for employment placed
by it or on its behalf, state that all qualified applicants will receive
consideration for employment without regard to race, color, religious creed.
ancestry, national origin, age, or sex.
3. the Borrower shall send each labor union or workers' representative
with which they have a collective bargaining agreement or other contract or
understanding. a notice advising said labor union or workers representative of
their commitment to this nondiscrimination clause. Similar notice shall be sent
to every other source of recruitment regularly utilized by the Borrower.
4. it shall be no defense to a finding of noncompliance with this
nondiscrimination clause that the Borrower had delegated some of its employment
practices to any union, training program or other source of recruitment which
prevents it from meeting its obligations. However, if the evidence indicates
that the Borrower was not on notice of the third-party discrimination or made a
good faith effort to correct it, such factor shall be considered in mitigation
in determining appropriate sanctions.
5. where the practices of a union or of any training program or other
source of recruitment will result in the exclusion of minority group persons, so
that the Borrower will be unable to meet its obligations under this
nondiscrimination clause, the Borrower shall then employ and fill vacancies
through other nondiscriminatory employment procedures.
6. the Borrower shall comply with all state and federal laws prohibiting
discrimination in hiring or employment opportunities. In the event of the
Borrower's noncompliance with the nondiscrimination clause of this contract or
with any such laws, this contract may be terminated or suspended, in whole or in
part, and the Borrower may be declared temporarily ineligible for further
Commonwealth contracts, and other sanctions may be imposed and remedies invoked.
7. the Borrower shall furnish all necessary employment documents and
records to, and permit access to its books, records and accounts by, the
contracting agency and the Office of
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<PAGE>
Administration, Bureau of Affirmative Action, for purposes of investigation to
ascertain compliance with the provisions of this clause. If the Borrower does
not possess documents or records reflecting the necessary information requested,
it shall furnish such information on reporting forms supplied by the contracting
agency or the Bureau of Affirmative Action.
8. the Borrower shall actively recruit minority subcontractors or
subcontractors with substantial minority representation among its employees.
9. the Borrower shall include the provisions of this nondiscrimination
clause in every subcontract., so that such provisions will be binding upon each
subcontractor.
10. the Borrower obligations under this clause are limited to the
Borrower's facilities within Pennsylvania or where the contract is for purchase
of goods manufactured outside of Pennsylvania, the facilities at which such
goods are actually produced.
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EXHIBIT "C"
CONTRACTOR INTEGRITY PROVISIONS
1. Definitions.
a. Confidential information means information that is not public
knowledge, or available to the public on request, disclosure of which would give
an unfair, unethical, or illegal advantage to another desiring to contract with
the Commonwealth.
b. Consent means written permission signed by a duly authorized officer or
employee of the Commonwealth, provided that where the material facts have been
disclosed, in writing, by prequalification, bid, proposal, or contractual terms,
the Commonwealth shall be deemed to have consented by virtue of execution of
this Agreement.
c. Commonwealth means the Commonwealth of Pennsylvania Acting by and
Through its Department of Community and Economic Development and any agencies
and instrumentalities of the Commonwealth of Pennsylvania for which the
Department of Community and Economic Development provides staff services
(including without limitation the Pennsylvania industrial Development Authority,
Pennsylvania Economic Development Financing Authority, Pennsylvania Energy
Development Authority, and Pennsylvania Minority Business Development
Authority).
d. Contractor means the individual or entity that has entered into an
agreement with the Commonwealth, assumed the obligations of another to repay
moneys to the Commonwealth, or is the intended beneficiary of, and has knowingly
received benefits under, an agreement between the Commonwealth and a financial
intermediary or educational institution, including directors, officers,
partners, managers, key employees, and owners of more than a 5% interest.
e. Financial Interest means:
(1) ownership of more than a 5% interest in any business; or
(2) holding a position as an officer, director, trustee, partner,
employee, or the like, or holding any position of management.
f. Gratuity means any payment of more than nominal monetary value in the
form of cash, travel, entertainment, gifts meals, lodging, loans, subscriptions,
advances, deposits of money, services, employment, or contracts of any kind.
2. The Contractor shall take no action in violation of state or federal
laws, regulations. or other requirements that govern contracting with the
Commonwealth.
3. The Contractor shall not, in connection with this or any other
agreement with the Commonwealth, directly or indirectly offer, confer, or agree
to confer any pecuniary benefit on anyone as consideration for the decision,
opinion, recommendation, vote, other exercise of discretion, or violation of a
known legal duty by any officer or employee of the Commonwealth.
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<PAGE>
4. The Contractor shall not, in connection with this or any other
agreement with the Commonwealth, directly or indirectly offer, give, or agree or
promise to give to anyone any gratuity for the benefit of or at the direction or
request of any officer or employee of the Commonwealth.
5. Except with the consent of the Commonwealth the Contractor shall not
have a financial interest in any other contractor, subcontractor, or supplier
providing services, labor, or material on this project.
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<PAGE>
EXHIBIT "D"
CONTRACTOR RESPONSIBILITY PROVISIONS
1. The Contractor certifies that it is not currently under suspension or
debarment by the Commonwealth, any other state, or the federal government, and
if the Contractor cannot so certify, then it agrees to submit along with the
bid/proposal a written explanation of why such certification cannot be made.
2. If the Contractor enters into any subcontracts or employs under this
contract any subcontractors/individuals who are currently suspended or debarred
by the Commonwealth or the federal government or who become suspended or
debarred by the Commonwealth or federal government during the term of this
contract or any extensions or renewals thereof, the Commonwealth shall have the
right to require the Contractor to terminate such subcontracts or employment.
3. The Contractor agrees to reimburse the Commonwealth for the reasonable
costs of investigation incurred by the Office of Inspector General for
investigations of the Contractor's compliance with terms of this or any other
agreement between the Contractor and the Commonwealth which result in the
suspension or debarment of the Contractor. Such costs shall include, but not be
limited to, salaries of investigators, including overtime; travel and lodging
expenses; and expert witness and documentary fees. The Contractor shall not be
responsible for investigative costs for investigations which do not result in
the Contractor's suspension or debarment.
4. The Contractor may obtain the current list of suspended and debarred
contractors by contacting the:
Department of General Services
Office of Chief Counsel
603 North Office Building
Harrisburg. PA 17125
Telephone No. (717) 783-6472
Fax No. (717) 787-9138
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EXHIBIT "E"
AMERICANS WITH DISABILITIES ACT PROVISIONS
During the term of this contract, the Contractor agrees as follows:
1. Pursuant to federal regulations promulgated under the authority of The
Americans With Disabilities Act 28 C.F.R. Section 35.101 et seq., the Contractor
understands and agrees that no individual with a disability shall, on the basis
of the disability, be excluded from participation in this contract or from
activities provided for under this contract. As a condition of accepting and
executing this contract, the Contractor agrees to comply with the "General
Prohibitions Against Discrimination," 28 C.F.R. Section 35.130, and all other
regulations promulgated under Title II of The Americans With Disabilities Act
which are applicable to the benefits, services, programs, and activities
provided by the Commonwealth of Pennsylvania through contracts with outside
contractors.
2. The Contractor shall be responsible for and agrees to indemnify and
hold harmless the Commonwealth of Pennsylvania from all losses, damages,
expenses, claims, demands, suits, and actions brought by any party against the
Commonwealth of Pennsylvania as a result of the Contractor's failure to comply
with the provisions of paragraph 1 above.
3. "Contractor" means the individual or entity that has entered into this
Agreement with the Commonwealth.
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<PAGE>
EXHIBIT 10.15
MELF (MACHINERY AND EQUIPMENT LOAN FUND) TO HARRIS CORPORATION #96-9-250
$500,000.00 LOAN
DATED AS OF NOVEMBER 3, 1998
BETWEEN HARRIS CORPORATION AND THE COMMONWEALTH OF PENNSYLVANIA,
acting by and through the DEPARTMENT OF COMMUNITY AND ECONOMIC DEVELOPMENT
<PAGE>
LOAN AGREEMENT
THIS LOAN AGREEMENT, MADE this 2nd day of November, 1998, effective as of
November 3, 1998, BY AND BETWEEN HARRIS CORPORATION, a Delaware corporation ,
with offices at 125 Crestwood Road, Mountaintop, Pennsylvania 18707-2189, (the
"Borrower") and the COMMONWEALTH OF PENNSYLVANIA, acting by and through the
DEPARTMENT OF COMMUNITY AND ECONOMIC DEVELOPMENT, having its principal place of
business at Room 480 Forum Building, Harrisburg, Pennsylvania 17120 (the
"Department").
WITNESSETH THAT:
WHEREAS, the Borrower has established an industrial development project on
a tract of land in Luzerne County, Pennsylvania (the "Project"); and
WHEREAS, in concert with the establishment of the Project, the Borrower
has purchased or intends to purchase certain machinery and equipment for use at
the Project as more fully described at Exhibit A and which is incorporated
herein by reference and made a part hereof (the "Equipment"); and
WHEREAS, pursuant to the authority granted the Department by virtue of the
Machinery and Equipment Loan Fund ("MELF') Act, Act 120 of 1988, P.L 1050 (the
"Act"), the Department has approved the Borrower's application (the
"Application") for a loan not to exceed the principal amount of $500,000 (the
"Loan") to be used exclusively to defray a part of the cost of purchasing the
Equipment (the "Cost"); and
WHEREAS, the Department is willing to make the Loan upon the terms and
subject to the conditions hereinafter set forth;
NOW, THEREFORE, the parties hereto, in consideration of the mutual
promises herein contained and intending to be legally bound hereby, covenant and
agree as follows:
Section 1. The Loan. Subject to the conditions set forth herein, the
Department agrees to make the Loan to the Borrower for the purpose of defraying
a portion the Cost of purchasing the equipment described in Exhibit A.
Section 2. The Note. The Loan shall be evidenced by a note (the "Note") of
even date herewith given by the Borrower to the Department, the terms and
provisions of which are incorporated herein by reference thereto and made a part
hereof.
Section 3. The Security Documents.
a. The Security Agreement. Payment of the Note and satisfaction of all
obligations of the Borrower hereunder and under the Note shall be secured by a
perfected security interest in the equipment given by the Borrower to the
Department under a security agreement of even date
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<PAGE>
herewith (the "Security Agreement"), the terms and provisions of which are
incorporated herein by reference thereto and made a part hereof. The Security
Agreement shall be dated the date of the Note and shall create a perfected first
lien upon the Equipment.
b. The Note, Security Agreement and this Agreement shall be referred to
herein collectively as the Loan Documents.
Section 4. Prepayments. Prepayments of the outstanding principal amount of
the Loan shall be as set forth in and governed by the terms of the Note.
Section 5. Representations and Warranties of the Borrower. To induce the
Department to enter into this Agreement and to make the Loan, the Borrower
represents and warrants that:
(a) the Borrower is a corporation, duly organized and validly existing and
in good standing under the laws of the State of Delaware and is qualified to do
business in the Commonwealth of Pennsylvania;
(b) the Borrower has all necessary corporate power and authority to
purchase, own, encumber and sell Borrower's property and to carry on Borrower's
business as now being conducted, and to carry out the transactions contemplated
by this Agreement;
(c) the execution and delivery of this Agreement, consummation of the
transactions herein contemplated and compliance with the terms and provisions
hereof and of the Note and Security Agreement will not conflict with, or result
in a breach of any of the terms, conditions or provisions of the Articles of
Incorporation or By-Laws of the Borrower or of any agreement, indenture or other
instrument to which the Borrower is a party or by which Borrower is bound or to
which Borrower or Borrower's property is subject, or constitute a default
thereunder, and will not result in the creation or imposition of any lien,
charge or encumbrance of any nature whatsoever (except those created pursuant
hereto) upon any of the property of the Borrower pursuant to the terms of any
such agreement, indenture or other instrument;
(d) the execution, delivery and performance of this Agreement, the
performance of the transactions contemplated by the provisions hereof, and the
execution, issuance and delivery of the Note and the Security Agreement in
accordance with the provisions hereof have each been duly authorized by all
necessary corporate action on the part of the Borrower;
(e) this Agreement has been duly and validly executed and delivered by the
Borrower and constitutes a valid and legally binding obligation of the Borrower,
enforceable in accordance with the terms of this Agreement and the Note and
Security Agreement, when executed and delivered in accordance with the terms
thereof, will be valid and legally binding obligations of the Borrower,
enforceable in accordance with the respective terms of each;
(f) there is no material litigation or governmental proceeding pending or,
to the knowledge of the Borrower or Borrower's officers, threatened against the
Borrower other than
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<PAGE>
that which has been previously disclosed to the Department in writing. If such
litigation or proceeding exists, Borrower shall set forth in an exhibit
information regarding the amount of the claim, the forum in which the claim was
filed, the date for the same, all of which shall be attached hereto and made a
part hereof;
(g) the Borrower has filed all required federal, state and local tax
returns and has paid all taxes shown on such returns as such taxes have become
due; and
(h) no consent or approval to the execution and performance of this
Agreement and the transactions contemplated hereby not already obtained is
required to be obtained by the Borrower from any governmental body, authority,
agency, court or other person or entity, public or private, other than the
Department.
All of the representations and warranties of the Borrower set forth herein
shall survive and continue until the Loan is paid in full and all of the
Borrower's obligations hereunder have been satisfied.
Section 6. General Conditions of Lending. The obligation of the Department
to make the Loan hereunder is subject to the fulfillment of the following
conditions by the Borrower to the satisfaction of the Department:
(a) concurrently with, or prior to, the disbursement of the Loan and dated
the date of such disbursement, the Borrower shall have furnished to the
Department in form and substance satisfactory to the Department's counsel a
favorable written opinion of Borrower's counsel;
(b) there shall have been delivered to the Department a certificate
executed by the Secretary of the Borrower, dated the date of the initial
disbursement under the Loan, setting forth the corporate action taken by the
Borrower in connection with the Loan and the authorization of the Borrower, or
authorized representatives of the Borrower to execute, deliver and perform
pursuant to the terms and conditions of this Agreement, and the execution by the
Borrower of the Note, the Security Agreement and all related documentation,
their By-Laws and Articles of Incorporation as the Department's counsel shall
deem appropriate;
(c) all legal matters incident or related to the Loan shall be in form and
substance satisfactory to counsel for the Department;
(d) the Note and the Security Agreement and related financing statements
shall have been duly executed and delivered to the Department or delivered for
recording, where appropriate; and
(e) compliance with such other conditions as shall be required by the
Department.
Section 7. Covenants of the Borrower. Until the Loan has been entirely
repaid and all of Borrower's obligations to the Department in connection
therewith and herewith have been satisfied, the Borrower hereby covenants that:
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(a) the Borrower shall use the proceeds of the Loan solely for the purpose
of defraying a portion of the Cost;
(b) the Borrower shall preserve Borrower's corporate existence, rights,
privileges and franchises, and maintain Borrower's good standing as a
corporation under the laws of Delaware;
(c) the Borrower shall comply with all laws, regulations and orders of any
court or governmental body having jurisdiction over the Project;
(d) the Borrower shall, upon request by the Department, provide financial
information and other information concerning Borrower in form reasonably
satisfactory to the Department, including at least the following:
(i) a certificate of an authorized officer of the Borrower setting
forth the number of employees and their respective job classifications (skilled,
semiskilled and unskilled) employed during the previous year at the Project; and
(ii) financial statements of the Borrower for its most recent fiscal year,
including its balance sheet and income statement;
(e) the Borrower shall comply with all of the terms and conditions of this
Agreement, the Note, and the Security Agreement;
(f) the Borrower shall not create any additional debt secured by the
Equipment;
(g) the Borrower shall not discriminate against any employee or against
any applicant for employment because of race, color, religious creed, national
origin, ancestry, sex or age (including, but not limited to, employment
upgrading, demotion or transfer, recruitment or recruitment advertising, layoff
or termination, rates of pay or other forms of compensation, and selection for
training, including apprenticeship). The Borrower hereby accepts and agrees to
be bound by the nondiscrimination provisions as set forth in Exhibit "B"
attached hereto;
(h) the Borrower shall comply with the contractor integrity provisions as
set forth in Exhibit "C" attached hereto;
(i) the Borrower shall comply with the contractor responsibility
provisions as set forth in Exhibit "1)" attached hereto;
(j) the Borrower shall pay all the costs of filing financing statements
and any other costs that may be incurred pursuant to the closing and
administration of the Loan;
(k) the Borrower shall provide proper facilities at all times for
inspection of the Equipment by the Department and its authorized
representatives, and shall afford full and free access to the Project to such
persons as may from time to time be designated by the Department;
(l) without the Prior written consent of the Department, the Borrower
shall not (i) change its name, merge, consolidate or divide, or (ii) sell,
transfer, assign, lease or otherwise
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<PAGE>
convey or dispose of all or any material part of its assets, except in the
ordinary course of business;
(m) the Borrower shall comply with the Americans With Disabilities Act
Provisions as set forth in Exhibit "E" attached hereto; and
(n) the Borrower shall provide the Department yearly with the Borrower's
current 10K filing with Securities and Exchange Commission.
(o) the Borrower shall create 31 new full-time equivalent jobs (one
full-time equivalent job is 1,950 hours of employment per year), as specified in
Borrower's Application within three years from the date of this Agreement over
and above the existing 901.3 full-time equivalent jobs that existed at the time
Borrower submitted its Application to the Department.
Section 8. Events of Default. The following shall each constitute an event
of default hereunder (an "Event of Default"):
(a) The Borrower shall fail to pay when due any amount payable under any
of the Loan Documents (including, without limitation, any installment of
principal or interest under the Note), and such failure shall continue for a
period of thirty (30) days;
(b) any representation or warranty made herein, in the application to the
Department made by the Borrower in connection with the Loan, or in any
certificate or financial or other statement furnished pursuant to the provisions
hereof or as a part of such application, shall have been false or misleading in
any material respect as of the time made or furnished;
(c) the Borrower shall (i) become insolvent, (ii) admit Borrower's
inability to pay Borrower's debts as they come due, (iii) make an assignment to
the benefit of Borrower's creditors, (iv) be adjudicated bankrupt or insolvent,
(v) voluntarily initiate proceedings under any bankruptcy or reorganization law
either now or hereafter in effect, (vi) become the subject of any involuntary
proceedings under any bankruptcy or reorganization law either now or hereafter
in effect that shall not have been discharged within sixty (60) days of the
initiation thereof, or (vii) seek to take advantage of any moratorium law either
now or hereafter in effect;
(d) a receiver, liquidator or trustee shall be appointed for the Borrower
and shall not have been discharged within sixty (60) days;
(e) a default or an event of default under the Security Agreement or the
Note, or, any other instrument relating to the Loan shall occur or be continuing
and such default shall not be remedied for a period of thirty (30) days after
the giving of written notice thereof to the Borrower by the Department; or
(f) the Borrower shall fail to perform any other covenant, condition or
provision hereof or of any of the Loan Documents and such failure shall not be
remedied for a period of thirty (30) days after the giving of written notice
thereof to the Borrower by the Department.
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Immediately and without prior notice to the Borrower, upon the occurrence of an
Event of Default hereunder, the Department, or any subsequent holder of the
Note, may declare the Note and interest accrued thereon and all liabilities of
the Borrower thereunder, to be immediately due and payable, and the same shall
thereupon become and be due and payable, without presentment, demand, protest or
notice of any kind to the Borrower, all of which are hereby expressly and
knowingly waived. In addition, upon the occurrence of an Event of Default
hereunder, the Department shall have the right to raise the rate of interest on
the Loan up to twelve and one-half percent (12 1/2%) per annum, applied
retroactively to the date of the first occurrence of the default until such time
as the default is cured.
Section 9. Failure to Create Jobs. Upon the occurrence of an Event of
Default based solely on the Borrower's failure to create the number of
employment opportunities or jobs specified in Borrower's application, the
Department shall have the right to increase the interest rate to the greater of
12-1/2% per annum or two percentage points greater than the prime interest rate
(as defined in the Note), unless such an increase is waived by the Department
because the failure to meet the job projections is deemed to be the result of
circumstances beyond the control of the Borrower.
Section 10. Miscellaneous. The terms of the Loan Documents shall be
construed liberally in favor of the Department to effectuate the purposes
hereof. No delay or failure on the part of the Department in exercising any
right, power or privilege hereunder shall affect such right, power or privilege;
nor shall any single or partial exercise thereof or any abandonment, waiver, or
discontinuance of steps to enforce such a right, power or privilege preclude any
other or further exercise thereof, or the exercise of any other right, power or
privilege. The rights and remedies of the Department hereunder are cumulative
and concurrent and not exclusive of any rights or remedies which the Department
might otherwise have. The Department shall have the right at all times to
enforce the provisions of this Agreement, the Note, the Security Agreement, and
all related documentation in strict accordance with the terms hereof and
thereof, notwithstanding any conduct or custom on the part of the Department in
refraining from so doing at any time or times. The failure of the Department at
any time or times to enforce the Department's rights under such provisions,
strictly in accordance with the same, shall not be construed as having created a
custom in any way or manner contrary to specific provisions of this Agreement or
any such documentation or as having in any way or manner modified or waived the
same.
Section 11. Writing Required. Any permit, consent or approval of any kind
or character on the part of the Department under this Agreement, and any waiver
of any provision or condition of this Agreement, must be in writing and executed
by the Department and shall be effective only to the extent specifically set
forth in such writing.
Section 12. Duration of Covenants. All covenants and agreements of the
Borrower contained herein or made in writing in connection herewith shall
survive and continue until the Loan is entirely paid and all of the Borrower's
obligations hereunder have been entirely satisfied.
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Section 13. Pennsylvania Law to Govern. This Agreement, the Commitment
Letter dated June 5, 1997, the Note, and the Security Agreement and all other
agreements delivered pursuant hereto shall be deemed to be contracts made under
the laws of the Commonwealth of Pennsylvania and, for all purposes, shall be
construed in accordance with the laws of such Commonwealth.
Section 14. Counterparts. This Agreement may be executed in as many
counterparts as may be deemed necessary and convenient and each of which, when
so executed, shall be deemed an original, but all such counterparts shall
constitute but one and the same instrument.
Section 15. Complete Agreement. This Agreement, the Note, and the Security
Agreement constitute the entire agreement between the Department and the
Borrower. The Loan Documents supersede and replace all prior agreements related
to the subject matter thereof. Such instruments may be modified or amended only
by a written instrument duly executed by the Department and the Borrower.
Section 16. Notices. Notices required hereunder, or any correspondence
concerning this Agreement shall be directed to the following addresses and shall
be deemed properly given (a) if delivered by hand, (b) if sent by certified
mail, return receipt requested, postage prepaid, or by recognized overnight
courier service (including, without limitation, Federal Express or United Parcel
Service overnight service), charges Prepaid; or (c) if sent by facsimile, with a
copy sent by first class U.S. Mail, postage prepaid.
To the Department:
PENNSYLVANIA DEPARTMENT OF COMMUNITY
AND ECONOMIC DEVELOPMENT
480 Forum Building
Harrisburg, Pennsylvania 17120
FAX: (717) 772-2890
Attention: Machinery and Equipment Loan Fund
To Borrower:
HARRIS CORPORATION, SEMICONDUCTOR SECTOR
125 Crestwood Road
Mountaintop, Pennsylvania 18707-2189
Attention: Plant Manager
And simultaneously to:
HARRIS CORPORATION, SEMICONDUCTOR SECTOR
2401 Palm Bay Rd., N.E.
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<PAGE>
Palm Bay, Florida 32905
Attention: Vice President-Counsel
Notices and communications hereunder shall be deemed sufficiently given when
dispatched pursuant to the foregoing provisions. Notices and communications
delivered by hand shall be effective upon receipt; notices and communications
sent by fax, with a copy by first class U.S. Mail, shall be effective upon
dispatch; notices and communications sent by recognized overnight courier
service shall be effective on the business day following dispatch; and notices
sent by certified mail shall be effective on the third business day following
dispatch. The parties hereto may, by a notice given hereunder, designate any
further or different addresses to which any subsequent notice or communication
hereunder shall be sent.
Section 17. Severability. The terms and provisions of this Agreement are
severable. The unenforceability or invalidity of any one or more of the terms,
covenants, conditions or provisions of this Agreement under federal, state or
other applicable law shall not render any other term, covenant, condition or
provision hereof unenforceable or invalid.
Section 18. Under Seal. This Agreement shall take effect as an instrument
under seal.
Section 19. Further Assurances. The Borrower, from time to time, shall
execute such further instruments as the Department may reasonably request to
further confirm and assure the interests and rights created or intended to be
created in favor of the Department hereunder or under the Security Agreement or
the Note.
Section 20. Successors and Assigns. This Agreement and each of the Loan
Documents shall be binding upon and inure to the benefit of the Borrower, the
Department and their respective successors and assigns, except that the Borrower
may not assign or transfer its rights hereunder or thereunder without the prior
written consent of the Department. The parties do not intend the benefits of
this Agreement to inure to any third party. No portion of the Department's
commitment to make the Loan will, at any time, be subject to attachment or levy
by any creditor of the Borrower or by any contractor, subcontractor, materialman
or supplier or any creditor of any such contractor, subcontractor, materialman
or supplier. Notwithstanding anything contained herein or in the Note, the
Security Agreement, or any other document executed in connection with this
transaction, or any conduct or course of conduct by any of the parties hereto,
before or after signing this Agreement or any of the other aforesaid documents,
this Agreement shall not be construed as creating any rights, claims, or causes
of action against the Department, in favor of any contractor, subcontractor,
supplier of labor or materials, or any of their respective creditors, or any
other person or entity other than the Borrower.
Section 21. Setoff. The Borrower agrees that the Commonwealth of
Pennsylvania may set off the amount of any state tax liability or other debt of
the Borrower or its respective subsidiaries that is owed to the Commonwealth and
not being contested on appeal against any payments due the Borrower under this
or any other contract with the Commonwealth.
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Section 22. Consent to Jurisdiction. Borrower hereby irrevocably (a)
agrees that any suit, action or other legal proceeding arising out of or
relating to this Agreement or the Loan Documents may be brought in any federal
or state court located in or whose district includes Harrisburg, Pennsylvania or
the county wherein the Project is located and consents to the jurisdiction of
such court in any such suit, action or proceeding, and (b) waives any objection
which it may have to the laying of venue of any such suit, action or proceeding
in any such court and any claim that any such suit, action or proceeding has
been brought in an inconvenient forum. The Borrower hereby irrevocably consents
to the service of any and all process in any such suit, action or proceeding by
mailing of copies of such process to the Borrower at its address provided under
or pursuant to Section 15. The Borrower agrees that a final judgment in any such
action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided bylaw. All
mailings under this section shall be by certified or registered mail, return
receipt requested. Nothing in this section shall affect the right of the
Department to serve legal process in any other manner permitted by law or affect
the right of the Department to bring any suit, action or proceeding against the
Borrower or Borrower's property in the courts of any other jurisdiction.
Section 23. Incorporation by Reference. All exhibits to this Agreement and
the terms of all Loan Documents shall be incorporated herein by reference as
though expressly set forth herein.
Section 24. Descriptive Headings. Descriptive headings of the several
Sections of each of the Loan Documents are intended for convenience only and
shall not control or affect the meaning or construction of any of the provisions
hereof.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
as of the day and year first above written.
WITNESS: COMMONWEALTH OF PENNSYLVANIA,
acting by and through the DEPARTMENT OF
COMMUNITY AND ECONOMIC DEVELOPMENT
/s/ Jody Michael By [illegible]
- - -------------------------- ---------------------------------
Deputy Secretary
(OFFICIAL SEAL)
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<PAGE>
ATTEST: HARRIS CORPORATION SEMICONDUCTOR SECTOR
/s/ Richard L. Balantyne By /s/ Gregory L. Williams
- - -------------------------- ---------------------------------
Secretary Sector President
(CORPORATE SEAL)
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EXHIBIT "A"
EQUIPMENT
Debtor's "Equipment" - The machinery, equipment and other tangible
personal property listed below, and all parts, replacements, additions and
accessions thereto, any proceeds of sale or disposition thereof and any proceeds
of insurance thereon or condemnation thereof.
THE EQUIPMENT SCHEDULE
TYPE OF EQUIPMENT VENDOR/MANUFACTURER MODEL NO/SERIAL NO.
- - ----------------- ------------------- -------------------
Chemical vapor deposition Novellus Systems, Inc. Concept One-200 Maxus 96-
system 24-2151
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EXHIBIT "B"
NONDISCRIMINATION CLAUSE
During the term of this contract, the Borrower agree as follows:
1. the Borrower shall not discriminate against any employee, applicant for
employment, independent contractor or any other person because of race, color,
religious creed, ancestry, national origin, age or sex. The Borrower shall take
affirmative action to insure that applicants are employed, and that employes or
agents are treated during employment, without regard to their race, color,
religious creed, ancestry, national origin, age or sex. Such affirmative action
shall include, but is not limited to: employment, upgrading, demotion or
transfer, recruitment or recruitment advertising; layoff or termination; rates
of pay or other forms of compensation; and selection for training. The Borrower
shall post in conspicuous places, available to employes, agents, applicants for
employment and other persons, a notice to be provided by the contracting agency
setting forth the provisions of this nondiscrimination clause.
2. the Borrower shall in advertisements or requests for employment placed
by it or on its behalf state that all qualified applicants will receive
consideration for employment without regard to race, color, religious creed,
ancestry, national origin, age, or sex.
3. the Borrower shall send each labor union or workers' representative
with which they have a collective bargaining agreement or other contract or
understanding, a notice advising said labor union or workers' representative of
their commitment to this nondiscrimination clause. Similar notice shall be sent
to every other source of recruitment regularly utilized by the Borrower.
4. it shall be no defense to a finding of noncompliance with this
nondiscrimination clause that the Borrower had delegated some of its employment
practices to any union, training program or other source of recruitment which
prevents it from meeting its obligations. However, if the evidence indicates
that the Borrower was not on notice of the third-party discrimination or made a
good faith effort to correct it, such factor shall be considered in mitigation
in determining appropriate sanctions.
5. where the practices of a union or of any training program or other
source of recruitment will result in the exclusion of minority group persons, so
that the Borrower will be unable to meet its obligations under this
nondiscrimination clause, the Borrower shall then employ and fill vacancies
through other nondiscriminatory employment procedures.
6. the Borrower shall comply with all state and federal laws prohibiting
discrimination in hiring or employment opportunities. In the event of the
Borrower's noncompliance with the nondiscrimination clause of this contract or
with any such laws, this contract may be terminated or suspended, in whole or in
part, and the Borrower may be declared temporarily ineligible for further
Commonwealth contracts, and other sanctions may be imposed and remedies invoked.
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<PAGE>
7. the Borrower shall furnish all necessary employment documents and
records to, and permit access to its books, records and accounts by, the
contracting agency and the Office of Administration, Bureau of Affirmative
Action, for purposes of investigation to ascertain compliance with the
provisions of this clause. If the Borrower does not possess documents or records
reflecting the necessary information requested, it shall furnish such
information on reporting forms supplied by the contracting agency or the Bureau
of Affirmative Action.
8. the Borrower shall actively recruit minority subcontractors or
subcontractors with substantial minority representation among its employes.
9. the Borrower shall include the provisions of this nondiscrimination
clause in every subcontract, so that such provisions will be binding upon each
subcontractor.
10. the Borrower obligations under this clause are limited to the
Borrower's facilities within Pennsylvania or, where the contract is for purchase
of goods manufactured outside of Pennsylvania, the facilities at which such
goods are actually produced.
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EXHIBIT "C"
CONTRACTOR INTEGRITY PROVISIONS
1. Definitions.
a. Confidential information means information that is not public
knowledge, or available to the public on request, disclosure of which would give
an unfair, unethical, or illegal advantage to another desiring to contract with
the Commonwealth.
b. Consent means written permission signed by a duly authorized officer or
employee of the Commonwealth, provided that where the material facts have been
disclosed, in writing, by prequalification, bid, proposal, or contractual terms,
the Commonwealth shall be deemed to have consented by virtue of execution of
this Agreement.
c. Commonwealth means the Commonwealth of Pennsylvania Acting by and
Through its Department of Community and Economic Development and any agencies
and instrumentalities of the Commonwealth of Pennsylvania for which the
Department of Community and Economic Development provides staff services
(including without limitation the Pennsylvania Industrial Development Authority,
Pennsylvania Economic Development Financing Authority, Pennsylvania Energy
Development Authority, and Pennsylvania Minority Business Development
Authority).
d. Contractor means the individual or entity that has entered into an
agreement with the Commonwealth, assumed the obligations of another to repay
moneys to the Commonwealth, or is the intended beneficiary of, and has knowingly
received benefits under, an agreement between the Commonwealth and a financial
intermediary or educational institution, including directors, officers,
partners, managers, key employees, and owners of more than a 5% interest.
e. Financial Interest means:
(1) ownership of more than a 5% interest in any business; or
(2) holding a position as an officer, director, trustee, partner,
employee, or the like, or holding any position of management.
f. Gratuity means any payment of more than nominal monetary value in the
form of cash, travel, entertainment, gifts, meals, lodging, loans,
subscriptions, advances, deposits of money, services, employment, or contracts
of any kind.
2. The Contractor shall take no action in violation of state or federal
laws, regulations, or other requirements that govern contracting with the
Commonwealth.
3. The Contractor shall not, in connection with this or any other
agreement with the Commonwealth, directly or indirectly offer, confer, or agree
to confer any pecuniary benefit on
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<PAGE>
anyone as consideration for the decision, opinion, recommendation, vote, other
exercise of discretion, or violation of a known legal duty by any officer or
employee of the Commonwealth.
4. The Contractor shall not, in connection with this or any other
agreement with the Commonwealth, directly or indirectly offer, give, or agree or
promise to give to anyone any gratuity for the benefit of or at the direction or
request of any officer or employee of the Commonwealth.
5. Except with the consent of the Commonwealth, the Contractor shall not
have a financial interest in any other contractor, subcontractor, or supplier
providing services, labor, or material on this project.
6. The Contractor, upon being informed that any violation of these
provisions has occurred or may occur, shall immediately notify the Commonwealth
in writing.
7. The Contractor, by execution of this Agreement and by the submission of
any bills or invoices for payment pursuant thereto, certifies and represents
that he has not violated any of these provisions.
8. The Contractor, upon the inquiry or request of the Inspector General of
the Commonwealth or any of that official's agents or representatives, shall
provide, or if appropriate, make promptly available for inspection or copying,
any information of any type or form relevant to the Contractor's compliance with
this Agreement (including without limitation these provisions relating to
Contractor integrity). Such information shall be retained by the Contractor for
a period of three years beyond the termination of the contract unless provided
bylaw.
9. For violation of any of the above provisions, the Commonwealth may
declare an event of default hereunder, subject to applicable notice and cure
provisions, and debar and suspend the Contractor from doing business with the
Commonwealth, including without limitation participation in its financial
assistance programs. These rights and remedies are cumulative, and the use or
nonuse of any one shall not preclude the use of all or any other. These rights
and remedies are in addition to those the Commonwealth may have under law,
statute, regulation, or otherwise.
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<PAGE>
EXHIBIT "D"
CONTRACTOR RESPONSIBILITY PROVISIONS
1. The Contractor certifies that it is not currently under suspension or
debarment by the Commonwealth, any other state, or the federal government, and
if the Contractor cannot so certify, then it agrees to submit along with the
bid/proposal a written explanation of why such certification cannot be made.
2. If the Contractor enters into any subcontracts or employs under this
contract any subcontractors/individuals who are currently suspended or debarred
by the Commonwealth or the federal government or who become suspended or
debarred by the Commonwealth or federal government during the term of this
contract or any extensions or renewals thereof, the Commonwealth shall have the
right to require the Contractor to terminate such subcontracts or employment.
3. The Contractor agrees to reimburse the Commonwealth for the reasonable
costs of investigation incurred by the Office of Inspector General for
investigations of the Contractor's compliance with terms of this or any other
agreement between the Contractor and the Commonwealth which result in the
suspension or debarment of the Contractor. Such costs shall include, but not be
limited to, salaries of investigators, including overtime; travel and lodging
expenses; and expert witness and documentary fees. The Contractor shall not be
responsible for investigative costs for investigations which do not result in
the Contractor's suspension or debarment.
4. The Contractor may obtain the current list of suspended and debarred
contractors by contacting the:
Department of General Services
Office of Chief Counsel
603 North Office Building
Harrisburg, PA 17125
Telephone No. (717) 783-6472
Fax No. (717) 787-9138
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EXHIBIT "E"
AMERICANS WITH DISABILITIES ACT PROVISIONS
During the term of this contract, the Contractor agrees as follows:
1. Pursuant to federal regulations promulgated under the authority of The
Americans With Disabilities Act, 28 C.F.R. ss.35.101 et seq., the Contractor
understands and agrees that no individual with a disability shall, on the basis
of the disability, be excluded from participation in this contract or from
activities provided for under this contract. As a condition of accepting and
executing this contract, the Contractor agrees to comply with the "General
Prohibitions Against Discrimination," 28 C.F.R. ss.35.130, and all other
regulations promulgated under Title II of The Americans With Disabilities Act
which are applicable to the benefits, services, programs, and activities
provided by the Commonwealth of Pennsylvania through contracts with outside
contractors.
2. The Contractor shall be responsible for and agrees to indemnify and
hold harmless the Commonwealth of Pennsylvania from all losses, damages,
expenses, claims, demands, suits, and actions brought by any party against the
Commonwealth of Pennsylvania as a result of the Contractor's failure to comply
with the provisions of paragraph 1 above.
3. "Contractor" means the individual or entity that has entered into this
Agreement with the Commonwealth.
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<PAGE>
NOTE
Dated: November 3, 1998
At Luzerne County, Pennsylvania
$500,000
FOR VALUE RECEIVED, the undersigned HARRIS CORPORATION, a corporation
organized and existing under and by virtue of the laws of the State of Delaware
with an address at 125 Crestwood Road, Mountaintop, Pennsylvania 18707-2189 (the
"Maker"), does hereby irrevocably promise to pay, without defalcation, to the
order of the COMMONWEALTH OF PENNSYLVANIA acting through the Department of
Community and Economic Development (the "Department'), at the latter's principal
office in Harrisburg, Pennsylvania or at such other places as the Department may
designate, the principal sum of Five Hundred Thousand Dollars ($500,000), or so
much thereof as shall be disbursed to the Maker hereunder (the "Loan'), together
with interest as provided below, in lawful money of the United States of
America, payable as directed by the Department in monthly installments, a
portion of which will be interest at the rate of three and three quarter percent
(3.75%) per annum on the outstanding principal balance calculated on the basis
of a 360 day year, and a portion of which will be a payment of principal. The
monthly payments will commence on January 1, 1999, and the entire unpaid balance
due will be paid on or before December 1, 2005. Failure to draw down the full
amount of the Loan or prepayment of the Loan may cause a change in the
amortization of the Loan either by a reduction in the amount of each monthly
installment or by a reduction in the term over which the Loan shall be repaid.
All payments made hereunder shall be paid into the Machinery and Equipment Loan
Fund.
Interest on the outstanding principal balance will accrue from and
including the date of this Note and such interest as accrues through November
30, 1998 shall be due and payable on the first day of December, 1998, in
addition to the first monthly installment of principal and interest. The monthly
installments shall be applied first to interest on the unpaid principal, and the
balance of said monthly installments shall be applied to principal. In addition,
in the event any monthly installment provided for herein shall not be paid when
due, the Maker agrees to pay a late charge of twelve and one half percent
(12-1/2%) per annum of any such overdue monthly installment to compensate the
Department for damages suffered because of Maker's failure to make prompt
payments.
This Note is executed and delivered pursuant to the Loan Agreement between
the Maker and the Department, dated of even date herewith, (the "Loan
Agreement'), and is subject to all the terms and conditions thereof, including
provisions for prepayment and the acceleration of the maturity hereof under
certain circumstances.
THE MAKER HEREBY COVENANTS AND AGREES AS FOLLOWS:
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1. All the terms, covenants, conditions and provisions of the Loan
Agreement are incorporated herein by reference and are made a part hereof, and
any breach or violation thereof shall constitute a breach or violation of this
Note.
2. Each of the following shall constitute an event of default hereunder
(an "Event of Default'): (a) Maker shall fail to pay any sum required to be paid
by the Maker under this Note, the Loan Agreement or the Security Agreement
within thirty (30) days after the same becomes due and payable; or (b) there is
an Event of Default as defined in the Loan Agreement. Upon the occurrence of an
Event of Default, at the discretion of the Department, the whole unpaid balance
of the principal indebtedness, together with all interest thereon and all other
sums due hereunder, shall become due and payable immediately without notice to
the Maker.
3. Upon declaring an Event of Default hereunder, the Department, in its
discretion, may increase the rate of interest under this Note to a rate not to
exceed the greater of twelve and one-half percent (12 1/2%) per annum or the
prime interest rate plus 2% per annum. If the Department increases the rate of
interest under this Note by reason of any Event of Default, the increased rate
of interest shall apply retroactively from the first date of the conduct giving
rise to the declaration of the Event of Default and continuing prospectively
until such Event of Default is cured. For purposes of this paragraph, the prime
interest rate shall be the highest rate known or declared to be prime as of the
first date of the conduct giving rise to the declaration of the Event of Default
or the date as of which job creation is measured by those banking institutions
then located within the Commonwealth of Pennsylvania with assets in excess of
Three Billion Dollars ($3,000,000,000), as the case may be. If the Department
increases the rate of interest under this Note pursuant to this paragraph
hereof, the unpaid additional interest accruing from the date or dates of
disbursement of the proceeds hereunder or from the date of the event giving rise
to the declaration of the Event of Default, as the case may be, to the date the
Department takes action to raise the rate of interest shall be payable
immediately upon the Department's taking action to raise the rate of interest
unless the Department shall otherwise permit.
Failure to create the number of jobs specified in Maker's Loan Application
which is incorporated herein by reference thereto and made a part hereof, shall
give the Department the right to increase the interest rate on the Loan to a
fixed interest rate equal to the greater of 121/2% per annum or two percentage
points greater than the prime interest rate, unless such an increase is waived
by the Department because the failure to meet the job projections is deemed to
be the result of circumstances beyond the control of the Maker.
4. THE FOLLOWING PARAGRAPH SETS FORTH A WARRANT OF AUTHORITY FOR AN
ATTORNEY TO CONFESS JUDGMENT AGAINST THE MAKER. IN GRANTING THIS WARRANT OF
ATTORNEY TO CONFESS JUDGMENT AGAINST THE MAKER. THE MAKER HEREBY KNOWINGLY,
INTENTIONALLY AND VOLUNTARILY, AND, ON THE ADVICE OF THE SEPARATE COUNSEL OF THE
MAKER UNCONDITIONALLY WAIVES ANY AND ALL RIGHTS THE MAKER HAS OR MAY HAVE TO
PRIOR NOTICE AND AN OPPORTUNITY FOR HEARING UNDER THE
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<PAGE>
RESPECTIVE CONSTITUTIONS AND LAWS OF THE UNITED STATES AND THE COMMONWEALTH OF
PENNSYLVANIA.
IF THE MAKER IS IN DEFAULT UNDER THE TERMS OF THIS NOTE AT THE EXPIRATION
OF THIRTY (30) DAYS AFTER WRITTEN NOTICE THEREOF TO THE MAKER THEN THE MAKER
HEREBY IRREVOCABLY AUTHORIZES AND EMPOWERS ANY ATTORNEY OF AN COURT OF RECORD IN
THE COMMONWEALTH OF PENNSYLVANIA, OR ELSEWHERE, TO APPEAR FOR AND TO ENTER AND
CONFESS JUDGMENT AGAINST THE MAKER, AT ANY TIME OR TIMES AND AS OF ANY TERM, FOR
THE PRINCIPAL SUM ABOVE MENTIONED, WITH OR WITHOUT DECLARATION, WITH INTEREST
AND COSTS OF SUIT, WITHOUT STAY OF EXECUTION, AND WITH REASONABLE ATTORNEY'S
FEES. THE MAKER AGREES THAT ANY OF ITS PROPERTY MAY BE LEVIED UPON TO COLLECT
SAID) JUDGMENT AND MAY BE SOLD UPON A WRIT OF EXECUTION, AND HEREBY WAIVES AND
RELEASES ALL LAWS, NOW OR HEREAFTER IN FORCE RELATING TO EXEMPTION, APPRAISEMENT
OR STAY OF EXECUTION. THE AUTHORITY HEREBY GRANTED TO CONFESS JUDGMENT SHALL NOT
BE EXHAUSTED BY ANY EXERCISE THEREOF, BUT SHALL CONTINUE FROM TIME TO TIME AND
AT ALL TIMES UNTIL THE MAKER HAS PAID ALL SUMS REQUIRED TO BE PAID BY THE MAKER
UNDER THIS NOTE, THE LOAN AGREEMENT AND THE MORTGAGE AND HAS PERFORMED ALL OF
THE OTHER PROVISIONS HEREOF OR THEREOF TO BE PERFORMED BY THE MAKER.
IF MAKER WISHED TO CHALLENGE ANY JUDGMENT CONFESSED PURSUANT TO THIS
PARAGRAPH, IT SHALL DO SO ONLY BE FILING A PETITION TO OPEN THE JUDGMENT
PURSUANT TO PENNSYLVANIA RULES OF CIVIL PROCEDURE RULE 2959. AS IN EFFECT FROM
TIME TO TIME, ("RULE 2959") AND SHALL NOT OTHERWISE INTERFERE (BY FILING ANY
CIVIL ACTION, BILL IN EQUITY, OR OTHERWISE) WITH THE OPERATION OF THE JUDGMENT
GRANTED PURSUANT TO THIS SECTION. MAKER EXPRESSLY ACKNOWLEDGES THAT THE
PROCEDURE AVAILABLE TO IT THROUGH RULE 2959 WILL PROVIDE IT WITH A FULL AND FAIR
OPPORTUNITY TO BE HEARD AS TO ANY REASON WHY JUDGMENT SHOULD NOT BE ENTERED
AGAINST IT.
THE MAKER ACKNOWLEDGES THAT IT UNDERSTANDS THE MEANING AND EFFECT OF THE
CONFESSION CONTAINED IN THE FOREGOING PARAGRAPH. SPECIFICALLY, THE MAKER
UNDERSTANDS AMONG OTHER THINGS THAT (1) IT IS RELINQUISHING THE RIGHT TO HAVE
NOTICE EXCEPT AS PROVIDED HEREIN, AN OPPORTUNITY TO BE HEARD AND THE RIGHT TO
HAVE THE BURDEN OF PROOF OF DEFAULT REST ON THE DEPARTMENT PRIOR TO THE ENTRY OF
JUDGMENT. (2) THE ENTRY OF JUDGMENT MAY RESULT IN A LIEN ON ITS PROPERTY. (3) IT
WILL BEAR THE BURDEN AND EXPENSE OF ATTACKING THE JUDGMENT AND CHALLENGING
EXECUTION ON THE LIEN AND SALE OF PROPERTY COVERED THEREBY, AND (4) ENOUGH OF
ITS PROPERTY MAY BE
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TAKEN TO PAY THE PRINCIPAL AMOUNT, INTEREST COSTS AND ATTORNEY'S FEES.
5. Prepayments of the principal indebtedness may be made at any time,
without premium.
6. All of the covenants herein contained shall accrue to the benefit of
the successors and assigns, voluntary or involuntary, of the Department.
7. Demand, grace, presentment for payment, protest, notice of dishonor or
nonpayment and notice of the exercise of any option hereunder are hereby waived
by the Maker and all guarantors and endorsers hereof.
8. The remedies provided in this Note, the Loan Agreement and the Security
Agreement or otherwise available to the Department for the enforcement of the
payment of the principal sum together with interest and performance of the
covenants, conditions, and agreements, matters and things herein and therein
contained are cumulative and concurrent and may be pursued singly or
successively or together at the sole discretion of the Department, and may be
exercised from time to tune as often as occasion therefor shall occur until the
Department has been paid all sums due in full.
9. The terms and provisions of this Note are severable. The
unenforceability or invalidity of any one or more of the terms, covenants,
conditions or provisions of this Note under federal, state or other applicable
law shall not render any other term, covenant condition or provision hereunder
unenforceable or invalid. In the event any waiver by the Maker hereunder is
prohibited by law, including but not limited to the waiver of exemption from
execution, such waiver shall be and be deemed to be deleted herefrom.
10. Capitalized terms used but not defined herein shall have the meanings
ascribed to them in the Loan Agreement.
IN WITNESS WHEREOF, intending to be legally bound hereby, the Maker has
caused this Note to be duly executed, the day and year first above written.
ATTEST: HARRIS CORPORATION
SEMICONDUCTOR SECTOR
/s/ Richard L. Balantyne By /s/ Gregory L. Williams
- - ------------------------ -----------------------
Secretary Sector President
(CORPORATE SEAL)
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SECURITY AGREEMENT
GRANTING CLAUSE
HARRIS CORPORATION, a Delaware corporation with offices at 125 Crestwood
Road, Mountaintop, Pennsylvania 18707-2189, (hereinafter referred to as
`Debtor") grants to the COMMONWEALTH OF PENNSYLVANIA, acting through the
DEPARTMENT OF COMMUNITY AND ECONOMIC DEVELOPMENT (hereinafter referred as
"Department") a security interest in the machinery and equipment listed on
Exhibit "A" hereto and all parts, replacements, accessions and any proceeds of
insurance thereon (the "Collateral").
This Security Agreement secures payment to the Department of $500,000 as
provided in a Note executed by Debtor as Maker, the performance of Debtor's
obligations stated herein, and all other obligations (direct, indirect, primary,
secondary) of Debtor to the Department now or hereafter existing.
LOCATION AND USE OF COLLATERAL
Debtor represents and warrants that the Collateral will be used Primarily
for Debtor's business. Debtor is a corporation with offices at 125 Crestwood
Road, Mountaintop, Pennsylvania 18707-2189. The Collateral is or will be located
at 125 Crestwood Road, Mountaintop in Luzerne County, Pennsylvania 18707-2189.
Debtor will not permit any of the Collateral to be removed from Luzerne County
without the prior written consent of the Department.
The Collateral may be attached to real estate commonly known as 125
Crestwood Road, Mountaintop in Luzerne County, Pennsylvania, and the
manufacturing plant located or to be located there in such a manner as to become
a fixture and in that case the security interest created hereby will attach to
the fixtures. On demand of the Department, Debtor will furnish a written
disclaimer of any interest in the Collateral by any lessor of the real property.
The Proceeds of the obligation secured hereby will be used to purchase the
Collateral and the security interest will create, upon filing of financial
statements in the required offices, a perfected first lien upon the Collateral.
DEBTOR'S DUTIES
1. Debtor will not permit any lien or secured interest other than that
created hereby to attach to the Collateral nor permit the Collateral to be
levied upon, attached or seized, nor permit the Collateral to become an
accession to other goods. Debtor will defend the Collateral against the claims
and demands of all persons except the Department. Debtor will not lease or
dispose of the Collateral without the prior written consent of the Department.
Debtor will notify the Department at least 30 days in advance of its intention
to acquire the Collateral, and the location of the newly acquired Collateral.
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<PAGE>
2. Debtor agrees to comply with all governmental regulations or statute
affecting the use of the Collateral and will not commit nor permit any act of
waste or injury to the Collateral nor use or permit use of the Collateral in any
unlawful manner. Debtor will keep the Collateral in good repair. The Department
may inspect the Collateral at reasonable times and intervals and may for this
purpose enter the premises upon which the Collateral is located upon reasonable
notice to Debtor.
3. Debtor will keep the Collateral continuously insured with such
carriers, and in such amount, and against such risks as shall be reasonably
satisfactory to the Department, with the loss payable clause in favor of the
Department All policies of insurance shall provide for thirty days' written
notice of cancellation to the Department, and the Department shall be furnished
with evidence of compliance with the foregoing provisions. In the event of loss,
the Department shall have full power to settle, adjust and collect any and all
of the proceeds from the insurance coverage on the Collateral which shall be
paid over to and shall at the Department's option pay such proceeds against the
Loan, purchase new Collateral or repair or restore the collateral. Debtor may
maintain this insurance coverage under its corporate wide "umbrella" insurance
coverage with its standard deductibles.
4. Debtor will pay before they become delinquent all taxes, or other
governments charges levied against the Collateral or its use, and all
assessments, including stock assessments, and will pay any tax which may be
levied on any obligation secured hereby.
5. Debtor will execute from time to time any financing statements or other
documents and do other acts considered by the Department to be appropriate to
perfect or protect the security interest and shall pay all costs and expenses
(including reasonable fees and expenses of counsel and filing fees) related to
the preparation and filing of any financing statements, continuation statements
or other documents related to the protect of the security interest.
6. Debtor shall notify the Department of the following events within sixty
(60) days of the date of their occurrence, regardless of whether Debtor has
received any required consent of the Department at or prior to said event:
structure;
(a) Change in Debtor's name, or in the case of an organization, its name,
identity or corporate structure;
(b) Change in Debtor's principal offices, place of business, notice
address, or residence; or
(c) Change in location of Collateral.
The giving of notice as required in this Section shall not act as a wavier of
any consent of the Department, required herein or in the Loan Documents, nor
shall it estop the Department from exercising or enforcing any of its rights or
remedies with respect to the occurrence of any such event without the required
consent.
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<PAGE>
7. At its option, and without any obligation to do so the Department, may
pay any taxes, assessments, liens, security interest or other encumbrances at
any time placed against the Collateral, and may pay for insurance, repair and
preservation of Collateral and any necessary expenses, including reasonable
attorney fees, to protect the priorities of the Department's interests in the
Collateral and in exercising its rights and remedies on default. Any amount so
paid shall be repaid by Debtor and shall be part of the debt secured hereby.
8. Debtor agrees to indemnify and save harmless the Department from any
loss, or damage caused by the Collateral or its use and to immediately give
written notice to the Department of any loss or damage to, or loss of possession
of, the Collateral, occasioned by any cause whatsoever.
9. If the Collateral should become unsatisfactory to the Department or
deteriorate in market or actual value, Debtor shall promptly after demand reduce
the debt to the Department to the extent specified by it, or increase the
Collateral in sufficient amounts to fully collateralize the Department.
EVENTS OF DEFAULT
Time is of the Essence
Debtor shall be in default upon the happening of any of the following
events: (a) any failure to pay when due the principal and interest, insurance
premiums, and taxes (except if such taxes are being contested in good faith and
debtor has posted bond or some other form of security including, but not limited
to, an escrow account containing the full amount of the tax obligation) or other
obligations secured hereby and such failure shall continue for a period of
thirty (30) days; (b) any failure to perform or observe any term or agreement
herein; (c) any representation or warranty made by Debtor herein or any
financial statement given by Debtor to the Department as a basis for any
extension of credit secured hereby shall prove to have been incorrect in any
material respect, (d) if the Collateral shall be seized or levied upon under any
legal or governmental process against the Debtor or against the Collateral; or
if the Collateral is lost, stolen, substantially damaged, destroyed, or
unreasonably depreciates in value; or if any equity in the Collateral is
assigned without the written consent of the Department; or (e) if the Debtor
becomes insolvent, is the subject of any insolvency proceeding, has any property
placed in the control of a custodian, fails to maintain its corporate existence
in good standing, or if the Department believes that the prospect of payment or
performance under the Loan Documents is impaired.
REMEDIES ON DEFAULT
Upon default, the entire amount of the outstanding principal balance and
other charges and indebtedness secured hereby shall, at the option of the
Department, become due and payable at the expiration of thirty days. The
Department shall have the immediate right to pursue all remedies provided by
law, together with all rights provided in this agreement and in any notes
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<PAGE>
secured by this agreement and in any other applicable security agreement or loan
agreement, all of which remedies and rights shall be cumulative to the extent
permitted.
The Department may require Debtor to assemble all or any part of the
Collateral and make it available to the Department at any place designated in a
notice sent to Debtor. Debtor agrees that the Department's place of business
shown on this agreement is a place reasonably convenient to it to assemble the
Collateral.
Debtor agrees that a notice sent to it by first class mail, or otherwise
in accordance with the notice provisions set forth in the Loan Agreement, thirty
days before the time of any public sale or the time after which any private sale
or other disposition of the Collateral is to be made, shall be deemed to be
reasonable notice of such sale or other disposition.
NON-WAIVER ADEQUATE NOTICE, AND PROHIBITION OF ORAL MODIFICATIONS
Notice to Debtor under the Note or his Agreement shall be deemed
sufficient if given in accordance with the notice provisions set forth in the
Loan Agreement. No failure or delay of the Department in exercising any right or
remedy shall be a waiver thereof, nor shall any single or partial exercise by
the Department of any right or remedy hereunder preclude any other or future
exercise of any other right or remedy. This Security Agreement shall be
interpreted in accordance with the laws of the Commonwealth of Pennsylvania. The
venue of any action brought upon this agreement, shall be Dauphin County, unless
the Department agrees in writing to another location. All the terms of this
Agreement shall inure to the benefit of and bind the successors and assignees of
the parties. This Agreement may be amended in writing only. Such amendment must
be executed by any party against whom enforcement of any waiver, modification or
discharge is sought.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
as of this 2nd day of November, 1998, effective as of November 3, 1998.
ATTEST: HARRIS CORPORATION
SEMICONDUCTOR SECTOR
/s/ Richard L. Balantyne By /s/ Gregory L. Williams
- - ------------------------ -----------------------
Secretary Sector President
(CORPORATE SEAL)
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<PAGE>
EXHIBIT "A"
Debtor's "Equipment" - The machinery, equipment and other tangible
personal property listed below, and all parts, replacements, additions and
accessions thereto, any proceeds of sale or disposition thereof and any proceeds
of insurance thereon or condemnation thereof.
THE EQUIPMENT SCHEDULE
TYPE OF EQUIPMENT VENDOR/MANUFACTURER MODEL NO/SERIAL NO.
- - ----------------- ------------------- -------------------
Chemical vapor deposition Novellus Systems, Inc. Concept One-200 Maxus 96-
system 24-2151
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<PAGE>
EXHIBIT 10.16
[LOGO] HARRIS
SEMICONDUCTOR
Contracts
December 2, 1997
OPTUM
SOFTWARE
<PAGE>
OPTUM
SOFTWARE
ORDER FORM
This ORDER, made as of the date of acceptance below by and between Harris
Corporation Semiconductor Sector ("CLIENT"), with its principal place of
business at P.O. Box 883, Melbourne, Florida 32902-0883 and OPTUM Software
Corporation ("OPTUM"), with its principal place of business at 3330 Harbor
Boulevard, Costa Mesa, California, 92626, provides for the products and
services identified below pursuant to the Master Agreement Terms and
Conditions.
<TABLE>
<CAPTION>
TERMS & CONDITIONS PROGRAM(S) SERVICES THIRD PARTY
ADDENDUM A - PROGRAM(S) LICENSE
<S> <C> <C> <C>
Attachment A:
Move License Fee (50 concurrent users) $275,000
ADDENDUM B - PROFESSIONAL SERVICES & HARDWARD
(Estimated Fees)
Attachment A:
Statement of Work (See pricing detail:
Exhibit A and Gap Analysis: Exhibit B) $540,600
Attachment B:
Hardware Purchase (See detail: Exhibit C) $137,157
ADDENDUM C - MAINTENANCE & SUPPORT
Attachment A: 1
Supported Client Sites Kuala Lumpur
Attachment B:
Annual Support Fees/year MOVE based on $ 51,188
annual Standard support (7 X 24) based
on a three year contract, with annual
payments and certified CLIENT help desk
Pass thru Expenses (Estimated) $ 75,000
Column Totals $275,000 $666,788 $137,157
Grand Total $1,078,945
</TABLE>
Approvals:
OPTUM CLIENT
By: /s/ Paul A. Crist By: /s/ Karl McCelley
-------------------------- ------------------------
Acceptance Date: 12/12/97 Acceptance Date: 1-20-98
------------- -----------
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<PAGE>
MASTER AGREEMENT TERMS & CONDITIONS
This Master Agreement along with the Order Form and the Addenda's and
Attachments shall form the complete agreement ("AGREEMENT") between the parties,
and shall supersede and replace all previous oral and written representations,
warranties, disclosures, correspondence, AGREEMENTS or understandings, expressed
or implied related to the subject matter of this AGREEMENT prior to the
Acceptance Date hereof. The following Addenda's and Attachments have been
included in this AGREEMENT.
ADDENDUM A PROGRAM(S) License Terms & Conditions
Attachment A: PROGRAM(S) License Fees.
ADDENDUM B Professional Services Terms & Conditions
Attachment A: Statement of Work
Exhibit A: Price Detail
Exhibit B: Gap Analysis
Attachment B: Hardware Purchase Option
Exhibit C: RF Price Detail
ADDENDUM C Maintenance & Support Terms & Conditions
Attachment A: Supported Client Sites
Attachment B: Maintenance & Support Fees
1.0 DEFINITIONS
1.1 "PROGRAM" or "PROGRAM(S)"shall mean the object code of the computer
PROGRAM(S) owned or distributed by OPTUM for which CLIENT is granted a license
pursuant to this AGREEMENT, and the related documentation, instructions, user's
guides, and subsequent updates, whether in printed or machine readable form. Any
enhancements of the licensed PROGRAM(S) purchased by the CLIENT are included in
the PROGRAM(S).
1.2 "ORDER FORM" shall mean the document by which the CLIENT orders PROGRAM(S)
licenses and services, and which is agreed to by the parties. The ORDER FORM
shall reference the Acceptance Date of this AGREEMENT.
1.3 "AGREEMENT" shall mean OPTUM'S standard form or ordering any of the
following: PROGRAM(S) licenses, Configuration Workshop Services, Project
Implementation Services, Start-Up Services, Maintenance & Support Services, or
Third Party Hardware/Software. When completed and signed by both parties, the
AGREEMENT shall document the items which have been granted and which are to be
provided under this AGREEMENT.
1.4 "SUPPORTED PROGRAM(S) LICENSE" shall mean a license for which CLIENT has
ordered Maintenance and Support Services for the relevant time period.
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<PAGE>
1.5 "UPDATE(S)" shall mean subsequent releases of the PROGRAM(S) which are
generally made available for SUPPORTED PROGRAM(S) LICENSES at no additional
charge, other than media services and handling charges. Updates shall not
include any releases, options or future products which OPTUM licenses
separately.
1.6 "SYSTEM READINESS TEST (SRT)" shall mean the verification by the CLIENT that
the PROGRAM(S) meet the CLIENT's expectations as mutually defined by the CLIENT
and OPTUM as the SRT acceptance criteria for potential modifications, functional
tests, host interface test, system performance and training/ documentation
material and are officially accepted by the CLIENT.
1.7 "LETTER OF AUTHORIZATION (LOA)" shall mean formal authorization to perform
services, procure hardware, change of scope, etc., from an authorized individual
within the CLIENT's organization.
2.0 AGREEMENT OF OVERVIEW OPTUM will license to CLIENT the PROGRAM(S) and
perform certain services for CLIENT according to the Terms and Conditions of
this AGREEMENT.
3.0 DOCUMENT PRECEDENCE
If the terms of this AGREEMENT differ from the terms of any other documentation
provided by OPTUM, the descending order of precedence of the terms that shall
govern is (1) Statement Of Work, (2) Attachments, (3) Addenda's, (4) Agreement,
(5) Order Form, (6) Letter of Authorization.
4.0 TERM AND TERMINATION
4.1 Term
This AGREEMENT and each license granted hereunder shall remain in effect
perpetually unless terminated as provided in Paragraph 4.2.
4.2 Termination
OPTUM shall have the right to terminate this AGREEMENT after a thirty (30)
calendar day cure period for material breach of any of the terms contained in
this AGREEMENT and/or violations of OPTUM's copyrights or trade secrets which
are Proprietary Property and Data under this AGREEMENT. CLIENT shall upon
effective date of such notice cease to use the PROGRAM(S) for any purpose. The
provisions of this paragraph with respect to termination shall be reciprocal on
behalf of CLIENT should OPTUM breach its obligations under this AGREEMENT.
CLIENT shall upon effective date of such notice cease to use the PROGRAM(S) for
any purpose. The provisions of this paragraph with respect to termination shall
be reciprocal on behalf of CLIENT should OPTUM breach its obligations under this
AGREEMENT.
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<PAGE>
4.3 Effect of Termination
Termination of this AGREEMENT or any license shall not limit either party from
pursuing any other remedies available to it, including injunctive relief nor
shall such termination relieve CLIENT's obligation to pay all fees accrued prior
to such termination.
4.4 Return of PROGRAM(S) Upon Termination
Upon termination of this AGREEMENT by OPTUM of CLIENT's breach, CLIENT shall (a)
cease using the applicable PROGRAM(S), within 30 days of termination and (b)
certify to OPTUM within ninety (90) days after termination that CLIENT has
destroyed or has returned to OPTUM the PROGRAM(S) and all copies. This
requirement applies to copies in all forms, partial and complete, in all types
of media and computer memory, and whether or not modified or merged into other
materials.
4.5 Termination For Convenience
CLIENT reserves the right upon 30 days' advance written notice from CLIENT'S
Contractual Authority, to terminate all or any part of the work specified in the
Statement of Work for CLIENT'S own convenience. Any such termination will not be
construed as a cancellation for breach. Upon OPTUM'S receipt of such notice of
termination. OPTUM agrees to immediately (i) stop work under this order to the
extent specified in the notice, (ii) terminate all of OPTUM'S own orders and
subcontracts to the extent they relate solely to the terminated work, (iii)
place no further orders for materials or otherwise except as necessary to
complete nonterminated work and (iv) take all necessary steps to protect
uncompleted work or other property in which CLIENT has an interest. CLIENT'S
exclusive liability and OPTUM'S exclusive remedy for such termination will be
payment (a) for finished goods and services delivered or performed according to
schedule prior to termination, subject to CLIENT'S final acceptance, (b) of
OPTUM'S actual costs of the terminated portion of the work to the extent such
costs reasonable and properly allocable under generally accepted accounting
principles, excluding any lost or anticipated profits: and (c) of OPTUM'S actual
costs of discharging liabilities for termination of applicable subcontracts
reasonable cost for protection work in which CLIENT has an interest. CLIENT
reserves the right to direct the manner of disposition of any work or property
CLIENT pays for hereunder. OPTUM'S TERMINATION CLAIM MUST BE SUBMITTED TO HARRIS
IN WRITING NOT LATER THAN NINETY (90) DAYS FROM THE DATE OPTUM RECEIVES CLIENT'S
TERMINATION NOTICE. In no event will CLIENT'S liability in the aggregate exceed
the total price which would have been paid hereunder for the work had it not
been terminated or be greater than the actual cost incurred by OPTUM plus a
reasonable profit plus 60 days' additional cost (if necessary) to enable OPTUM
personal transfer to other OPTUM projects. The 60-day transfer cost shall not
exceed $80,000 dollars (U.S.) NOTWITHSTANDING THE FOREGOING, TO THE EXTENT SUCH
TERMINATION INVOLVES GOODS OPTUM NORMALLY MANUFACTURES OR SUPPLIES FOR
DISTRIBUTION TO OTHER CUSTOMERS, AND NOT SPECIALLY MANUFACTURED TO THIS ORDER,
CLIENT'S ESCLUSIVE LIABILITY AND OPTUM'S ESCLUSIVE REMEDY WILL BE PAYMENT FOR
FINISHED GOODS AND SERVICES DELIVERED OR PERFORMED ACCORDING TO SCHEDULE PRIOR
TO TERMINATION, SUBJECT TO THE CLIENT'S FINAL ACCEPTANCE, AT THE APPLICABLE
PRICE SPECIFIED. The provisions of the paragraph 4.5 will not apply to any
portion of this order cancelled for OPTUM'S breach.
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<PAGE>
5.0 LIMITATION OF LIABILITY
IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR ANY INDIRECT, INCIDENTAL, SPECIAL
OR CONSEQUENTIAL DAMAGES, INCLUDING LOSS OF PROFITS, REVENUE, DATA, OR USE,
INCURRED BY EITHER PARTY OR ANY THIRD PARTY, WHETHER IN AN ACTION IN CONTRACT OR
TORT, EVEN IF THE OTHER PARTY OR ANY OTHER PERSON HAS BEEN ADVISED OF THE
POSSIBILITY OF SUCH DAMAGES. OPTUM'S LIABILITY FOR DAMAGES HEREUNDER SHALL IN NO
EVENT EXCEED THE AMOUNT OF FEES PAID BY CLIENT UNDER THIS AGREEMENT. THE
PROVISIONS OF THIS ARTICLE 5 ALLOCATE THE RISKS UNDER THIS AGREEMENT BETWEEN
OPTUM AND CLIENT.
6.0 ASSIGNMENT
This AGREEMENT may not be assigned by CLIENT, or, OPTUM without prior written
consent of the other party and any attempted assignment made without benefit of
such prior written consent shall be deemed null, void, and of no legal force of
effect. OPTUM and CLIENT agree not to unreasonably withhold consent to
assignment. In the case of merger, acquisition, or complete or partial sale of
the CLIENT's business this AGREEMENT may be reassigned to the successor
corporation using the PROGRAM(S) without prior knowledge or consent of OPTUM, or
CLIENT so long as the successor corporation is duly informed of this AGREEMENT
and OPTUM, or CLIENT is notified within thirty (30) days after the transaction
occurs.
7.0 JURISDICTION
7.1 Governing Law
This AGREEMENT shall be governed by the laws of the State of California, and
shall be deemed to be executed in Orange County, California.
7.2 Jurisdiction
Both parties agree that, without respect to the place of making or place of
performance of this AGREEMENT, in the event OPTUM initiates any action against
CLIENT, the same shall be exclusively governed by and interpreted according to
California law, both statutory and decisional. OPTUM shall be entitled to
collect legal fees, court costs and other reasonable costs and fees should OPTUM
prevail. Both parties agree that, without respect to the place of making or
place of performance of this AGREEMENT, in the event CLIENT initiates any action
against OPTUM, the same shall be exclusively governed by and interpreted
according to California law, both statutory and decisional. CLIENT shall be
entitled to collect legal fees, court costs and other reasonable costs and fees
should CLIENT prevail.
8.0 NOTICES
All notices, including notices of address change, required to be sent hereunder
shall be in writing and shall be deemed to have been given when mailed via
certified mail return receipt requested to the CLIENT address below (if to
CLIENT) or to the OPTUM address below (if to OPTUM). Written notice may also be
sent via a carrier which guarantees overnight delivery or by Facsimile.
STEVE TRAINES
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<PAGE>
Contracts Business Mgr. VP, Operations
Harris Semiconductor OPTUM
P.O. Box 883, M/S 53-170 3330 Harbor Blvd
Melbourne, FL 32902-0883 Costa Mesa, CA 92626
9.0 WAIVER
The waiver by either party of any default or breach of this AGREEMENT shall not
constitute a waiver of any other or subsequent default or breach.
10.0 SOLICITATION OF EMPLOYEES
OPTUM and CLIENT agree that during the term of this AGREEMENT, including
extensions or modifications thereto, and for one year thereafter, neither will
solicit, either directly or indirectly, for employment or hire, any technical or
professional employee of either company without the prior written approval of
that company. If during the term of this agreement, either party accepts for
employment an employee form the other, the hiring party agrees to pay the other
100% of the employees first years wages.
11.0 PAYMENT TERMS AND PRICES
All invoices will be due and payable within thirty (30) days of receipt.
Interest will be charged on delinquent accounts at the rate of ten percent (10%)
per year, invoiced bi-monthly for undisputed invoices. OPTUM may at its sole
option terminate this AGREEMENT, in accordance with section 4.2, or temporarily
suspend all of its responsibilities under this AGREEMENT in the event CLIENT is
delinquent in payment of any undisputed invoice from OPTUM for a period of more
than thirty (30) days after written notice from OPTUM. Prices quoted herein are
exclusive of all sales and use taxes. CLIENT shall pay or reimburse OPTUM for
all such taxes. In addition to these fees, CLIENT shall be billed for shipping,
media, and insurance charges when OPTUM is required to send materials to CLIENT.
12.0 FORCE MAJEURE
If performance of this AGREEMENT, or any obligation hereunder, is prevented,
restricted, or interfered with by reason of fire, flood, earthquake, explosion,
or other casualty or accident, strikes or labor disputes OPTUM or CLIENT are a
party to, inability to procure or obtain delivery of supplies or power, war or
other violence, any law, order, proclamation, regulation, ordinance, demand or
requirement of any governmental agency, or any other act or condition whatsoever
beyond the reasonable control of the affected party, the party so affected, upon
giving prompt notice to the other party, shall be excused from such performance
to the extent of such prevention, restriction or interference; provided,
however, that the party so affected shall take all reasonable steps to avoid or
remove such cause of non-performance and shall resume performance hereunder and
shall notify the other party of the cause and expected duration of such claimed
force majeure and any force majeure lasting more than 90 days will entitle
CLIENT to cancel all agreements and receive a refund of license fees and all
service fees paid.
13.0 SEVERABILITY
In the event any provision of this AGREEMENT is held to be invalid or
unenforceable, the remaining provisions of this AGREEMENT will remain in full
force and effect.
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<PAGE>
14.0 MULTIPLE ORIGINALS
This AGREEMENT may be executed in duplicate counterparts, each of which shall be
deemed an original hereof, and all of which shall constitute one original
AGREEMENT. This AGREEMENT may also be executed by facsimile, with each facsimile
signature having the same force and effect as an original signature.
15.0 BINDING EFFECT
On and after the date affixed by OPTUM in its written acceptance by signature
above ("Acceptance Date") this AGREEMENT shall be deemed binding upon and inure
to the benefit of the parties, their respective personal representative,
successors and assigns.
16.0 NONDISCLOSURE
The CLIENT confidential disclosure agreement dated November 19th, 1997 executed
by the parties hereto is incorporated by reference into this agreement as if
fully set forth herein.
17.0 EXPORT ADMINISTRATION
If the PROGRAM(S) are for use outside the United States, CLIENT agrees to comply
fully with all relevant regulations of the US Department of Commerce and with
the United States Export Administration Act to assure that the PROGRAM(S) and
media are not exported in violation of United States law. OPTUM agrees to obtain
any export license required if any, for the delivery of the initial PROGRAM(S)
and all subsequent upgrades to the client site outside of the U.S.
18.0 ENTIRE AGREEMENT
This AGREEMENT constitutes the complete AGREEMENT and supersedes all previous
AGREEMENTS or representations, written or oral. This AGREEMENT may not be
modified or amended except in a writing signed by a duly authorized
representative of each party.
19.0 ARBITRATION
All disputes, differences, or questions between the parties concerning the
construction, interpretation, and effect of this Agreement or any clause herein
contained, or the rights and liabilities of the parties, will first be attempted
to be settled by non-binding arbitration. In the case of a dispute, difference,
or question, either party may send to the other party a certified letter asking
for arbitration and appointing its arbitrator. Within one (1) month, the other
party will indicate the name of its own arbitrator, failing which, an arbitrator
will be appointed by the President of the American Arbitration Association. The
two arbitrators so appointed will meet within one (1) month after the
appointment of the last arbitrator. If they do not agree as to their decision,
they will chose a third arbitrator, and if they do not agree within one (1)
month on the choice of the arbitrator, the third arbitrator will be appointed by
the President of the American Arbitration Association. The arbitration will be
governed by California law and the decision of the arbitrators will be
non-binding. The arbitrators must agree to conduct the arbitration in confidence
or this paragraph shall not be binding on either party. The parties may mutually
agree to make the decision final at any time. CLIENT or OPTUM may appeal within
20 days if an arbitration decision is reached. If the decision is acceptable to
the parties, the judgment upon the award rendered by the arbitrators may be
entered in any court having jurisdiction thereof. This clause shall survive
termination of the Agreement.
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<PAGE>
20.0 PRICING
OPTUM guarantees that CLIENT will be offered a price quote for new PROGRAM(S)
which represents its lowest price given to any other client of a like value and
scope of business relationship.
21.0 DEFAULT
In the event of default by OPTUM, CLIENT may notify OPTUM (default notice)
specifying the basis(es) for each default and advising OPTUM that such default
must be cured within thirty (30) days of notice or the AGREEMENT may be
terminated. Notwithstanding, CLIENT may, in it's sole discretion allow OPTUM to
rectify the default to CLIENT'S reasonable satisfaction. CLIENT may grant an
additional period of such duration as CLIENT'S rights hereunder, so long as
OPTUM has commenced curing such default and is effectuating a cure with
diligence and continuity during such thirty (30) day period or any other period
which CLIENT prescribes. After thirty (30) days, the default notice shall be
sent to OPTUM specifying the date OPTUM shall discontinue services upon the
termination date.
22.0 REMEDIES FOR DEFAULT
Upon termination for default of OPTUM by CLIENT as set forth in Clause 21.0, all
obligations of CLIENT to pay any fees or make any payments of any kind,
immediately shall cease. Additionally, any milestone or project payments paid by
CLIENT shall be immediately reimbursed to CLIENT by OPTUM.
Approvals:
OPTUM CLIENT
By: /s/ Paul A. Crist By: /s/ Karl McCelley
-------------------------- ------------------------
Acceptance Date: 12/12/97 Acceptance Date: 1-20-98
------------- -----------
-8-
<PAGE>
OPTUM
SOFTWARE
ADDENDUM A
PROGRAM(S) LICENSE TERMS & CONDITIONS
This PROGRAM(S) License AGREEMENT between OPTUM and the CLIENT shall set forth
the terms and conditions under which OPTUM will license to CLIENT the
PROGRAM(S).
1.0 PROGRAM(S) LICENSE
1.1 Rights Granted
1.1.1 OPTUM hereby grants to CLIENT a perpetual, nonexclusive, irrevocable
license to use the PROGRAM(S) CLIENT obtains pursuant to this AGREEMENT on one
production , one development and one training computer to (a) use the PROGRAM(S)
solely for CLIENT'S data processing operations on the specific CPU designated in
the relevant Addendum A/Attachment A and on up to two (2) additional CPU's for
the purpose of training, testing and software verification prior to releasing a
new version into production and a backup system if the designated production CPU
is inoperative; and to (b) copy the PROGRAM(S) for archival or backup purposes.
All archival and backup copies of the PROGRAM(S) are subject to the provisions
of this AGREEMENT, and all titles trademarks, and copyright and restricted
rights notices shall be reproduced in such copies; and to (c) combine the
PROGRAM(S) with other PROGRAM(S) products, provided that the PROGRAM(S) or such
portions thereof included in such derivative PROGRAM(S) products remain subject
to the provisions of this AGREEMENT. The license(s) granted are independent of
other agreements. CLIENT has the option to continue using the PROGRAM(S) without
paying annual maintenance fees if they so desire.
1.1.2 CLIENT agrees not to cause or permit the reverse engineering or
disassembly of the PROGRAM(S) .
1.1.3 By virtue of this AGREEMENT, CLIENT acquires only the right to use the
PROGRAM(S) and does not acquire any rights of ownership. All rights, title and
interest in the PROGRAM(S) shall at all times remain the property of OPTUM. This
section is subordinate to section 7.0 regarding Escrow.
1.2 Transfer and Assignment
1.2.1 The agreement shall provide for the unrestricted transferability of the
PROGRAM(S) to any site within the CLIENT Semiconductor Sector and to any of the
then current OPTUM "Approved" computer platforms of greater capacity and/or to
different models of the same or competitive manufacture SRT upon written notice
to OPTUM.
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1.2.2 The rights granted herein are restricted for use by CLIENT and may not be
assigned or transferred to a third party except as provided by Section 6.0 of
the Master Agreement. The rights granted for an unlimited site Enterprise
License apply to CLIENT and it subsidiaries but not to the parent Harris
Corporation.
1.3 Media and Documentation.
OPTUM will provide CLIENT with three (3) copies of all system and user level
documentation (MOVE User Guide, System Administrator's Guide and MOVE
configuration Guide). OPTUM grants the unlimited right to CLIENT to duplicate
the above documentation for internal use only. CLIENT shall acquire no right to
copy Oracle Documentation by this AGREEMENT, OPTUM will provide CLIENT one(1)
electronic set of documentation in OPTUM'S standard application format. Any
request to perform conversion to non-standard OPTUM application formats will
incur time and material cost to the CLIENT. For the Limited or Full Enterprise
License purchase, OPTUM shall deliver to the shipment address specified in the
Order Form, one copy of the software media ("Master Copy") and one set of
documentation for each PROGRAM(S) (MOVE and Oracle) currently available in
production release as of the date the PROGRAM(S) are ordered for the use on the
applicable Designated Systems. The Acceptance Period for each of the PROGRAM(S)
and all subsequent copies shall commence on the delivery by OPTUM of the Master
Copy of the PROGRAM(S) at the Pilot Site Acceptance Test sign off, and all
subsequent copies shall be deemed accepted upon acceptance of the Master Copy.
CLIENT shall be responsible for copying the software media for the PROGRAM(S)
and installing the PROGRAM(S) in accordance with the terms specified herein.
1.4 Verification
On OPTUM'S reasonable request, but not more frequently than annually, CLIENT
shall furnish OPTUM with a signed statement (a) verifying that the PROGRAM(S)
are being used pursuant to the provisions of this AGREEMENT; (b) listing the
location, type, and serial number of any and all CPUs on which the PROGRAM(S)
are run; and (c) listing the number of users currently accessing the PROGRAM(S).
Oracle and/or OPTUM, may at their expense, audit CLIENT's use of the PROGRAM(S).
Any such audit shall be conducted during regular business hours at CLIENT's
facilities and shall not unreasonably interfere with CLIENT's business
activities. If an audit reveals that CLIENT has underpaid fees to OPTUM, CLIENT
shall be invoiced for such underpaid fees based on the prices listed in Addendum
A/Attachment A; if the underpaid fees exceed 5% of the license fees paid, then
CLIENT shall also pay Oracle's or OPTUM'S reasonable costs of conducting the
audit. Audits shall be conducted no more than once annually.
2.0 INVOICING
Invoice for payment of license fees shall be according to Addendum A/Attachment
A - PROGRAM(S) License Fees
3.0 WARRANTIES & REMEDIES
3.1 Infringement Indemnity
OPTUM will defend and indemnify CLIENT against a claim that PROGRAM(S) furnished
and used within the scope of this AGREEMENT infringe a copyright or patent, (a)
CLIENT shall notify OPTUM in writing as soon as reasonably practical after
receipt of claim. (b) OPTUM
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shall have sole control of the defense and all related settlement negotiations,
and (c) CLIENT shall provides OPTUM with the reasonable assistance, information,
and authority necessary to perform the above; reasonable expenses incurred by
CLIENT in providing such reasonable assistance will be reimbursed by OPTUM. If
CLIENT has changed the source code, OPTUM shall have no liability for any claim
of infringement based on: (a) use of a superseded or altered release of
PROGRAM(S) if such infringement would have been avoided by the use of a current
unaltered release of the PROGRAM(S) that OPTUM provides to CLIENT; or (b) the
combination, operation, or use of any PROGRAM(S) furnished under this AGREEMENT
with PROGRAM(S) or data not furnished or certified by, OPTUM if such
infringement would have been avoided by the use of the PROGRAM(S) without such
PROGRAM(S) or data. In the event the PROGRAM(S) are held or are believed by
OPTUM to infringe, OPTUM shall have the option, at its expense, to [1] modify
the PROGRAM(S) to be noninfringing without loss of features or functionality [2]
obtain for CLIENT a license to continue using the PROGRAM(S), [3] replace the
PROGRAM(S) with a nonfringing product complying with the PROGRAM(S)
specifications without the loss of features or functionality or [4] terminate
the license for the infringing PROGRAM(S) and refund the fees paid for those
PROGRAM(S) plus any or all other programs licensed by CLIENT at CLIENT'S option.
Item number four cannot be exercised unless #1, #2 and #3 are unavailable.
3.2 Warranties and Disclaimers
3.2.1 PROGRAMS(S) License Warranties
For each SUPPORTED PROGRAM(S) LICENSE OPTUM warrants that the PROGRAM(S), unless
modified by CLIENT, will perform the functions described in the Configuration
Workshop Product Definition documentation provided by OPTUM when operated on the
designated hardware and operating system. OPTUM will undertake best efforts to
correct any reported error condition in accordance with its Maintenance &
Support AGREEMENT.
3.2.2 OPTUM does not warrant that the PROGRAM(S) will meet CLIENT's requirements
outside those described in the Configuration Workshop Production Definition
documentation provided by OPTUM. OPTUM does not warrant that they will operate
in combination not defined in the Configuration Workshop Product Definition
documentation provided by OPTUM which CLIENT may select for use. OPTUM does not
warrant that the operation of the PROGRAM(S) will be uninterrupted or
error-free, or that Oracle PROGRAM(S) ERRORS will be corrected.
3.2.3 Media Warranty: OPTUM warrants the tapes, diskettes or other media to be
free of defects in materials and workmanship under normal use. CLIENT may return
defective media to OPTUM and it will be replaced without charge. Replacement of
media is CLIENT's sole remedy in the event of a media defect.
3.2.4 Support for Year 2000: The MOVE software shall be Millennium Compliant. In
the event that any of the MOVE software is found at any date in the future to be
non-Millennium Compliant as (defined below), then OPTUM will make any and all
modification necessary to make the software Millennium Compliant, including date
century recognition, calculations which accommodate same century and
multi-century formulas and date values that reflect the century
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shall be made at no additional charge. As used in this Agreement, "Millennium
Compliant" shall mean the ability of the system to provide the following
functions:
(i) Consistently handle date information before, during and after January 1,
2000, including but not limited to accepting date input, providing date
output, and performing date calculations on date or portions of dates;
(ii) function accurately in accordance with the Specifications and without
interruption before, during and after January 1, 2000, without any change
in operations associated with the advent of the new century;
(iii) respond to two-digit date input in away that resolves any ambiguity as to
century in a disclosed, defined and predetermined manner; and
(iv) store and provide output of date information in ways that are unambiguous
as to century.
4.0 PROGRAM(S) SUPPORT
OPTUM shall support the PROGRAM(S) for Ninety (90) days from the date of SRT
CLIENT's Final Acceptance Test at no additional charge according to OPTUM'S
standard Maintenance & Support plan. Thirty (30) days of Acceptance Testing is
included in the Statement Of Work and billed at standard time and material
rates. The CLIENT may at its option continue support on an annual Maintenance &
Support AGREEMENT which shall extend the support for the PROGRAM(S) for the time
frame selected and paid for by the CLIENT.
5.0 PROGRAM(S) USE
The PROGRAM(S) are not specifically developed, or licensed for use in any
nuclear, aviation, mass transit, or medical application or in any other
inherently dangerous applications. The CLIENT hereby agrees that OPTUM shall not
be liable for any claims or damages arising from such use if the CLIENT uses the
PROGRAM(S) for such applications. The CLIENT agrees to indemnify and hold OPTUM
harmless from any claims for losses, costs, damages, or liability arising out of
or in connection with the use of the PROGRAM(S) in such applications.
6.0 CLIENT SOURCE CODE ESCROW
The following represents a summary of the terms and conditions of OPTUM'S escrow
agreement with DSI.
6.1 OPTUM agrees that, within sixty (60) days after the execution of this
AGREEMENT, source of code of PROGRAM(S) will be irrevocably deposited with a
third party escrow agent. The nature and completeness of any deposited materials
shall at all times be subject to verification by CLIENT.
6.2 OPTUM further agrees to maintain the aforementioned source PROGRAM(S),
currently by irrevocably depositing with the escrow agent any modifications,
improvements, enhancements or replacement PROGRAM(S) within sixty (60) days
after their availability.
6.3 OPTUM further agrees to deposit a copy of the source code to the escrow
agent upon execution of the AGREEMENT. Future releases of the source code will
be deposited with the
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escrow agent within sixty (60) days after the release is made available to
CLIENT. CLIENT shall pay the reasonable fees, currently estimated at $500 per
year, for the escrow agent, when approved in advance by CLIENT.
6.4 In the event that OPTUM ceases to carry on business on a regular basis, or
fails, or is otherwise unable to maintain the PROGRAM(S) for any reason
whatsoever, the source code will be delivered to CLIENT by the escrow agent with
whom the materials are deposited per Attachment B Escrow Agreement.
6.5 Once the deposited materials have been delivered to CLIENT, CLIENT shall
have the non-exclusive perpetual. world-wide, royalty free right to use the
source code, free of charge.
Approvals:
OPTUM CLIENT
By: /s/ Paul A. Crist By: /s/ Karl McCelley
-------------------------- ------------------------
Acceptance Date: 12/12/97 Acceptance Date: 1-20-98
------------- -----------
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ADDENDUM A/ATTACHMENT A
PROGRAM(S) LICENSE FEES
DESCRIPTION OF PROGRAMS & UPGRADES:
THE PROGRAM is OPTUM'S warehouse management system called MOVE/NT. OPTUM
guarantees the release of the MOVE/NT PROGRAM in a 'production ready' state, by
February, 15, 1998. OPTUM will replace the MOVE/UNIX version with the MOVE/NT
version at no cost, except for Professional Services if necessary to perform the
loading, testing, verification, etc. The MOVE/NT version will provide the same
level of functionality as described in the MOVE specification documentation.
Modifications developed by OPTUM for Harris can be incorporated into the NT
version of MOVE at no additional cost to Harris. OPTUM guarantees that both the
UNIX and the NT version of MOVE provide equivalent functionality as stated in
the MOVE Specification document. All upgrades are subject to the terms and
conditions as the standard OPTUM MOVE product and services.
FINAL ACCEPTANCE CRITERIA:
'VV' Acceptance is defined as 30 days after 1st shipment of the KL VV PDC
Finished Goods Inventory being processed on the NT/Optum PRODUCT with no more
than 10 days of interruption and the last 10 days without interruption caused by
OPTUM PROGRAM(S). Payment will be withheld until the last 10 uninterrupted days
are achieved.
'Power' Acceptance is defined as 30 days after 1st shipment of the KL Power PDC
Finished Goods Inventory being processed on the NT/Optum PRODUCT with no more
than 10 days of interruption and the last 10 days without interruption caused by
the OPTUM PROGRAM(S). Payment will be withheld until the last 10 uninterrupted
days are achieved.
'Final Acceptance' of the MOVE WMS is defined as when MOVE NT successfully
handles 100% of the daily KL PDC transaction volume (2,000 lines/day), or the
then current volume at the time of 'Final Acceptance', whichever is less.
MISCELLANEOUS:
Interface to RF Bar Code Equipment:
OPTUM guarantees that the MOVE software will interface and perform with the
following RF bar code scanning equipment suppliers: Intermec, Telxon and Symbol.
Maintenance Support Plan:
Maintenance & Support agreements current at the time of software replacement
with the MOVE/NT version will continue in full force providing for equivalent
support at no additional cost. OPTUM plans upgrades to the latest versions of
critical system software (e.g. NT, Oracle) within 18 months or sooner from the
certified release date.
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LOCATION OF INSTALLATIONS:
The location of the implementation is the Harris Semiconductor Sector
Distribution Center in Kuala Lumpur, MAYLASIA.
TYPE OF COMPUTER HARDWARE:
The project will commence utilizing the UNIX version of MOVE with the
appropriate server hardware configuration (Harris is to secure the necessary
UNIX hardware) to meet the requirements of the project implementation plan. The
appropriate NT hardware will be determined during the System Configuration Stage
of the project. The NT hardware will support:
o NT 4.0 ON x86 platform
o Oracle 7.3 or greater
o SQL Net 2.3 or greater
PAYMENT TERMS FOR PROGRAMS(S) LICENSE FEE
Price MOVE: $275,000 (50 Concurrent Users)
Total $275,000
Note: Sales tax to be determined by OPTUM and CLIENT finance departments
separately.
PAYMENT SCHEDULE FOR PROGRAM(S) LICENSE FEES
Invoiced upon Order Placement 15%
Customer Empowerment Completion 25%
Completion of SRT w/Modifications 30%
'VV' Acceptance (estimated to be 10%
of total volume and 30 days after start up) 20% (Acceptance as
defined above)
'Power' Acceptance (estimated to be 40%
of total volume and 60 days after start up) 10% (Acceptance as
defined above)
CONVERSION TO ENTERPRISE LICENSE
This option allows Harris Semiconductor to convert its license fee to an
Enterprise Wide license fee for the Harris Semiconductor Sector. Harris has the
option to convert its single site license (Kuala Lumpur) to an Enterprise
license for an additional $125,000 license fee ($400,000 total license fee). The
option must be executed within thirty (30) days after Final Harris Acceptance of
the Kuala Lumpur site. Harris may also elect to convert to an Enterprise license
up to (12) months after the Final Harris Acceptance at the Kuala Lumpur site for
an additional $225,000
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license fee ($500,000 total license fee). The Enterprise license conversion
option is exclusively limited to Harris Semiconductor Sector locations. An
Enterprise license for Harris Corporation can be negotiated at any time and
license fee paid by Harris Semiconductor Sector to that point will be credited
toward the Harris Corporate Enterprise license.
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OPTUM
SOFTWARE
ADDENDUM B
PROFESSIONAL SERVICES TERMS & CONDITIONS
OPTUM will perform Professional Services as described in the STATEMENT OF WORK,
Attachment A. CLIENT is to pay for said services based on the following terms
and conditions.
1.0 STATEMENT OF WORK (SOW)
Professional Services to be performed by OPTUM for the CLIENT are defined by a
Statement of Work, Attachment A. The Statement of work defines the estimated
scope of work, location of work, labor hours allocated by task, material to be
procured by task, and a proposed schedule to be followed on a "best effort"
basis. The Statement of Work may be redefined by CLIENT or OPTUM and is subject
to review and approval by each party and an appropriate adjustment of work hours
and fees.
2.0 PROFESSIONAL SERVICES
Fees for services are based on the time and materials expended on a project
(including travel time to and from the site) by executive, management, technical
and support personnel. Fees are based on OPTUM'S then current published rates.
OPTUM reserves the right to change the rates annually on August 1. The annual
increase to these rates shall not exceed 3%.
3.0 REIMBURSABLE EXPENSES
The following items of expense will be billed as they occur at their annual
expense:
3.1 Transportation and subsistence expenses incurred for necessary travel.
3.1.1 For use of personal or company vehicles at 30 cents per mile plus all
parking and toll fees.
3.1.2 For use of rental cars plus all parking, toll fees and taxis.
3.1.3 Expenses in accordance with CLIENT travel policy.
3.2 Shipping, overnight delivery services, and insurance charges for
project-associated materials and/or products shipped by OPTUM.
3.3 Modem telephone connect charges and international telephone connect charges.
4.0 INVOICES
Will be submitted once a month for services performed during the prior month for
time & materials work.
5.0 WARRANTY
OPTUM'S professional services will be performed in accordance with generally
accepted engineering and professional practices. This warranty is in lieu of all
other warranties expressed or implied.
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6.0 TIME & MATERIAL CONTRACT
OPTUM will perform the agreed upon services on a time-and-material basis. If, at
any time during the course of performance, the estimate of cost or schedule
should change, OPTUM will notify CLIENT. It is understood that CLIENT will not
be obligated to reimburse OPTUM for costs incurred in excess of the estimated
cost until same is revised and approved by CLIENT, nor will OPTUM be required to
continue performance once the actual costs of performance are equal to the
estimated costs established in the contract until such additional costs are
approved by CLIENT.
Approvals:
OPTUM CLIENT
By: /s/ Paul A. Crist By: /s/ Karl McCelley
-------------------------- ------------------------
Acceptance Date: 12/12/97 Acceptance Date: 1-20-98
------------- -----------
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ADDENDUM B/ATTACHMENT A:
PROFESSIONAL SERVICES STATEMENT OF WORK
This document defines the Statement of work for the implementation of the MOVE
Warehouse Management System (WMS) at one of the CLIENT Distribution Facilities.
This Statement of Work consists of the following components:
o Project overview
o List of OPTUM deliverables
o List of CLIENT responsibilities
o Base Line Project schedule
o Base Line Work Breakdown Structure
o Payment Schedule
1.0 PROJECT OVERVIEW
The MOVE Warehouse Management Solution will automate the distribution operations
in the CLIENT facility. The solution, as presently defined, is provided by the
standard MOVE functionality with enhancements, which will be defined during the
Configuration Workshop performed during the System Configuration Phase. The
project will implemented with OPTUM'S Process-21 Project Implementation
Methodology which includes the following basic:
o Contract acceptance
o Project Preparation
o Customer Empowerment
o System Configuration
o Implementation
o Installation & Start-up
o System Support
1.1 PROJECT PREPARATION PHASE
During the Project Preparation phase both the CLIENT and OPTUM will form their
respective team members who will be responsible for the implementation of the
project. These team members will then begin preparations for the Project
Initiation Review. These preparations include defining the scope of the first
site, developing project risks and mitigation plans, preparing process flows and
development of the Project Initiation Review (PIR) briefing.
1.2 CUSTOMER EMPOWERMENT PHASE
The Customer Empowerment Phase begins with the Project Initiation Review. This
review will base line the project scope, the project schedule, the project costs
and the associated project risk and issues. Once completed this review kickoffs
a number of standard processes. These include Team Training, Interface
Definition, Requirements Documentation, Pilot Hardware and Third Party Software
Acquisition, Site Preparation I and the Installation and Integration of the
Pilot Hardware and Third Party Software.
The technical environment will be defined, with third party hardware and
software requirements detailed and orders placed for the first site. The focus
of this phase is to "empower" the CLIENT
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with knowledge of the OPTUM product prior to beginning the Configuration
Workshop and to obtain the system integration components for use in configuring
the first site.
The Site Preparation process will include the preparation of the CLIENT site by
CLIENT. The RF vendor selected by CLIENT will perform the RF site survey for the
CLIENT site.
1.3 SYSTEM CONFIGURATION PHASE
The System Configuration Phase begins with the System Configuration Readiness
Review. This review will status the project and assess the readiness of the
project to enter the Configuration Workshop process. The standard process within
this phase include the Configuration Workshop, Configuration and Mapping Review,
Pilot Configuration and Mapping and Verification, Test Development and Planning,
Operational Flow Documentation, and Start-up Plan Development.
The interactive Configuration Workshop (CWS) sessions between CLIENT and OPTUM
representatives, will include tasks to review the business requirements and work
flows of the CLIENT facility. These requirements will be matched to the Move
System functionality. The CLIENT warehouse will be mapped to MOVE, and the
system configured with standard CLIENT data. During this phase OPTUM will
provide standard data loading utilities and instruct the CLIENT in their use.
During the phase CLIENT will provide OPTUM, as part of the Test Development and
Planning activity, with a reasonable set of "acceptance criteria". These
criteria will be based on the specifications set forth in the MOVE specification
document and CLIENT requirements document: these specifications are subject to
change based on findings as a result of the configuration workshop. CLIENT is
obligated to develop an acceptance test plan consistent with the approved
acceptance criteria and subject to final acceptance by both OPTUM and CLIENT. In
this phase OPTUM will provide example test cases for reference or reuse by the
CLIENT.
1.4 IMPLEMENTATION PHASE
This phase begins with the Implementation Readiness Review. The completion of
this review initiates a number of processes. These include processes to develop
the Host Interface to MOVE, System Integration, and the Start-up Readiness Test.
Host Development includes all the tasks necessary to implement the interface
between MOVE and the CLIENT Host System. OPTUM will support CLIENT with this
activity. The system integration process will integrate hardware, third party
software components with the MOVE software as specified in the Project Plan.
This process will also integrate any enhancement made to the MOVE product.
Prior to the Start-up Readiness Test, the team will hold a Readiness Review.
This review will provide a mechanism for assessing the status of preparations
for the Start-up Readiness Test (SRT). Assessment includes review of the test
plan, the test data, the test scenarios and the acceptance criteria developed in
the prior phase. During the SRT, the MOVE system is validated against the System
Readiness Test Plan. A sign-off of the SRT Acceptance Form by the CLIENT will
constitute acceptance of this phase by the CLIENT. Acceptance of the PROGRAM(S)
is defined in Addendum A/Attachment A.
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The communications link between MOVE and the CLIENT business host and other
peripheral devices, if any, will be established and tested by CLIENT. Initial
integration tests will be performed at the site to verify the basic operation of
the system and the communications link between the host and other peripheral
devices, if any. Backup and recovery operations will also be verified by the
CLIENT at this time. The MOVE system is validated against the System Readiness
Test Plan. A sign off of the SRT Acceptance Form by the CLIENT will constitute
acceptance by the CLIENT of this phase. OPTUM will provide support, as required,
during integration of the business host.
1.5 INSTALLATION AND STARTUP PHASE
The Installation and Start-up Phase begins with the Start-up Initiation Review.
This is a comprehensive review of the project to insure that all the activities
necessary for a successful start-up have been, or are scheduled to be,
completed. Completion of this review begins a number of activities including
Site Preparation II and User Training. Once complete a Start-up Readiness Review
is held to status start-up just before the cut-over process begins. Equipment
including the NT server, CRT's, terminals, and printers will be installed and
the communication network set-up. The MOVE system will be installed and
operation validated by OPTUM. The system database will be finalized via the
conversion and loading of product master, UOM, and initial inventory data. The
initial warehouse map created during the system configuration phase will be
updated as required. System operators, supervisors, and system administrators,
and CLIENT trainers, will be trained in their respective activities.
Methodical ramp-up of volume begins once the SRR is completed and the data
conversion has ended. During this period, inventory tracking will be carefully
monitored. Following successful completion the first ramp-up operation, volume
is increased as outlined in the Start-up Plan (developed during the System
Configuration Phase). OPTUM will provide support as required during this phase.
Acceptance of this phase is conditional upon the CLIENT'S Acceptance as defined
by `Final Acceptance Criteria' in Addendum A/Attachment A. A sign-off of the
Site Acceptance Test Form by the CLIENT will constitute acceptance by the CLIENT
of this phase.
2.0 LIST OF OPTUM DELIVERABLES
The following is a list of specific deliverables that are to be provided by
OPTUM at each project phase.
2.1 Project Preparation Phase:
1. CLIENT System Sizing Model Output
2. Process Flow Samples
3. Standard MOVE Host Interface Specifications
2.2 Customer Empowerment Phase
1. PIR Briefing
2. Pilot Hardware and Third Party Software
3. MOVE System Software
2.3 System Configuration Phase:
1. SCRR Briefing
2. Configuration Workshop Document
3. Pilot Configuration & Mapping
4. Standard Loading Utilities
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5. Estimate Modifications
2.4 Implementation Phase
1. IRR Briefing
2. Initial set of Oracle operating tables
3. WMS Solution
4. Develop and incorporate MOVE enhancements and
modifications as defined in the configuration workshop
5. Certificate of SRT completion
6. MOVE System manuals
7. Example SRT Test Cases
2.5 Installation & Start-up Phase:
1. SIR Briefing
2. SRR Briefing
3. User Training
4. Start-up Support as defined in above Section 1.5 and the
Project Plan.
3.0 LIST OF CLIENT RESPONSIBILITIES
The following activities and deliverables are the specific responsibility of
CLIENT.
3.1 Project Preparation Phase
1. CLIENT Team Formation
2. Prepare Existing Process Flows
3. Telecoms Link to OPTUM
3.2 Customer Empowerment Phase
1. Host Interface Development Approach
2. Team Training Exercise Completion
3. Documentation of WMS Requirement
4. Authorization to purchase Hardware and Third Party
Software
5. Site Perpetration
6. Initiate site surveys with RF vendor
3.3 System Configuration Phase
1. Supply information on current and future processes,
work flows, and operational volumes
2. Supply warehouse mapping information
3. Complete Configuration & Mapping
4. Develop SRT Test Plan, Test Criteria, Test Cases and
Test Data
5. Approve the Configuration Workshop document
6. Develop the Start-up Plan
3.4 Implementation Phase:
1. Develop standard MOVE interfaces on Business Host system
2. Provide SRT test scenarios
3. Participate in execution of SRT
4. Sign-off of SRT
3.5 Installation and Start-up Phase:
1. Label locations
2. Provide operational Ethernet LAN at each operational
site
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3. Implement RF communications network at the CLIENT site
4. Provide power wiring and power connections for system
components
5. Provide personnel for training on system operations
6. Provide trained personnel for operational tests
7. Provide initial product, UOM, and inventory information
in standard MOVE format
8. Provide facilities for training
9. Provide facilities for OPTUM on-site personnel
4.0 PROJECT SCHEDULE
The Project Schedule provides OPTUM'S implementation plan for the CLIENT. After
discussions with CLIENT Project Schedule is developed as the base-line CLIENT
project plan. Contained in this base-line plan is the owner of the tasks and
what resources will be used to complete the task. The project schedule itemizes
the tasks to be completed, tests to be performed and manpower required. The
project plan will be update prior to each phase during the particular phase
review.
5.0 WORK BREAKDOWN STRUCTURE
The Work Breakdown Structure, specifies the basic tasks to be performed and the
resources, responsibilities, and cost information relation to these tasks.
6.0 LIST OF THIRD PARTY HARDWARE
Third Party Hardware and Software requirements, representative costs are
estimated and will be finalized at the conclusion of the Customer Empowerment
Phase. Prices are exclusive of all sales, use, and like taxes. CLIENT shall pay
or reimburse OPTUM for all such taxes. In addition to these fees, CLIENT shall
be billed for shipping, media, and insurance charges when OPTUM is required to
send materials to CLIENT. CLIENT shall also be billed for any telephone charges
incurred if modem connection is required.
7.0 CHANGE ORDERS
CLIENT and OPTUM may request changes to the scope of the project, Statement of
Work, Work Breakdown Structure, Project Plan, or other related items to this
project. When such changes occur both parties must agree to the changes in
writing prior to any work performed by either OPTUM or CLIENT. Once changes are
agreed upon the Statement of Work, Work Breakdown Structure, Project Plan or
other related documents will be revised and issued to both OPTUM and CLIENT.
8.0 STATUS REPORTING
OPTUM will distribute on a bi-monthly basis a report summarizing the status of
PROGRAM(S) delivery, development and system implementation.
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EXHIBIT B: ESTIMATED GAP ANALYSIS
The following is a summary of the initial gaps by function identified during
Optum Software's demonstration.
Receiving/Putaway
o The manual carton count verification prior to putaway.
As we understood from our discussions, they would "assume that what was reported
as "inside the carton" was actually inside the carton and product distribution
would not be responsible for detailed counts. For the number of cartons within a
container, this would be addressed by the following item. No modification has
been quoted for this item.
o Currently do not associate the physical cart with the ASN
The primary issue here was that our data structure did not accommodate the
downloaded association of a cart number as a part of the ASN. However, after
detailed discussions with the Systecon and Harris personnel, it was identified
that the creation of license plates could be performed by MOVE at the "end" of
the manufacturing process. This would allow MOVE to be installed without any
modification to the ASN data structure and would benefit Harris by avoiding
modifications in their manufacturing system to provide the ASN information to
MOVE. Harris is currently reviewing if there is any potential conflict between
organizations and their responsibilities (some costing issues would have to be
resolve between the internal organizations, however it was determined that with
MOVE'S time stamp of all receiving transactions that this may be accommodated).
No modification has been quoted for this item.
It was also confirmed internally at OPTUM that MOVE supports nested license
plates when the parent and child are indicated in the ER detail line and this
would probably allow implementation of the original scheme proposed to be
accommodated as well (although the option in the first paragraph is preferred).
Crossdocking
o Identifying crossdock opportunities based on comparing the open order lines
with incoming receipts.
It was determined that MOVE's newer cross-docking features that provide
"automatic" cross-docking based upon a demand did not constitute the style of
cross-docking that would be utilized by Harris. Rather, their desire is to
perform a "matching" function between the production schedule (expected
receipts) and the outstanding order pool. After reviewing these opportunities, a
decision wold be made to identify receipts that should be cross-docked. All
agreed that there would need to be additional definition and investigation as to
the best way to achieve this.
One possibility is to develop the "matching" function in an ODBC complaint tool
such as Excel or Access. With this type of tool, a manager could identify the
potential "matches" and then modify the orders and expected receipts to define a
cross-docking Material Status Code (MSC=XDK) that would cause all or a portion
of an ASN to be stored in a forward picking location (e.g., a set of locations
near the dock). While this is one alternative, there are other alternatives
which could imply modifications to the MOVE software. No modification has been
quoted for this time (but this item is identified for review at a later date).
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Order Management
o Maintaining a customer profile in support of unique customer date codes,
verification, and documentation.
Two approaches could be take to this. The "no modification" approach would be
for Harris to provide customer profile information as a part of the download
process. The "modification" approach would be for OPTUM to add a customer
profile table to the MOVE product that could be accessed either during the
download of orders (Option #1) or through the identification of customer
required date codes as well as messages for verification and documentation
(Option #2).
The estimate for Option #1 requires a modification to MOVE's "Enterprise" table
to add the field or fields required to specify the verification requirements.
This will also include the modification of the associated forms. During order
download, the host interface routines (modified) will access the enterprise ID
table and populate the order message with the verification requirements.
The estimate for Option #2 is base upon the fact that Harris may not perform a
traditional MOVE packing task as they pick into the shipping container. MOVE can
therefore use the packing stage to perform order verification instead of adding
a new task for order checking. One of our other clients also does not perform a
packing task and uses that step to do order verification.
The estimate for Options 1 & 2 is 156 hours.
o The ability to assign a pack and hold status on an as needed basis.
Several of OPTUM's clients have configured MOVE to use one of the generic fields
in the order header as a `Value Added' field. This is used to indicate the
requirement for value added processes. This field is one of the criteria in the
Task Plan Selector. This field can be edited in the GUI. MOVE can therefore use
the Value Added field to indicate that we want to use Plan 80 - this has a pack
& Hold step.
The estimate for this modification is approximately 34 hours.
Inventory Management
No modification has been quoted for this item.
Picking
No modification has been quoted for this item.
Replenishment
o The ability to batch multiple replenishment pull within pick area destination.
Verification
o No formal carton verification task.
MOVE has a license plate audit function which may facilitate this without a
modification. No modification has currently been quoted for this item.
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o Require a messaging table in support of unique verification requirements.
Please refer to customer profile response above.
o No verification complete or fail status.
MOVE has a license plate audit function which may facilitate this without a
modification. No modification has currently been quoted for this item. This
function will log discrepancies on the audit. Additionally, as stated
previously, the packaging function can be used for auditing which would not
require the development of a new task type.
Manifesting/Shipping
OPTUM Software has provided Harris with a number of options in terms of third
party packages which may meet Harris' functional requirements (e.g., TanData,
Clippership, and Aristo). Both Clippership and Aristo are interfaced using ODBC
connections to a standard MOVE table and it is assumed at this time that this
strategy could be used for other manifesting packages such as Syntra. No
modification has been quoted for this item.
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EXHIBIT A: PRICING DETAIL
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1. Requirements & Modifications may vary due to the clients operational
requirements and business practices, and suggested work arounds to achieve
desired requirements. These are reviewed during the Configuration
Workshop.
2. Interfaces to external systems are not included in this quote. They will
be defined during the Configuration Workshop and implemented on a Time &
Material estimate.
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ADDENDUM B/ATTACHMENT B:
HARDWARE PURCHASE OPTION
1.0 THIRD PARTY HARDWARE
OPTUM agrees to sell and CLIENT agrees to purchase the Third Party hardware
2.0 SHIPMENT F.O.B.
All equipment, components and documentation provided to CLIENT will be F.O.B
Hardware vendor's facility. CLIENT will be responsible for shipping, insurance,
risks of physical loss or damage occurring to the equipment and components
thereof at the installation sites and en route thereto after shipment from the
Hardware vendor's facility. OPTUM will be responsible for risks of physical loss
or damage occurring to the equipment and components in the event that the
equipment and components are received at OPTUM'S facilities.
3.0 TITLE, LICENSE & OWNERSHIP
Title to the Hardware shall vest in CLIENT upon payment of the purchase price of
such items by CLIENT.
4.0 THIRD PARTY MAINTENANCE
4.1 OPTUM herein shall pass through to CLIENT all warranty and maintenance
agreements offered by the manufacturers of the hardware purchased hereunder.
4.2 Upon expiration of vendor warranty and written approval by CLIENT, OPTUM
will place the Third Party Hardware under maintenance supplied by the vendor.
CLIENT will be invoiced and agrees to pay for maintenance as it comes due.
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OPTUM
SOFTWARE
ADDENDUM C
MAINTENANCE & SUPPORT TERMS & CONDITIONS
This Maintenance & Support Agreement, entered into by OPTUM and CLIENT, covers
in the run-time code PROGRAM(S) licensed to CLIENT by OPTUM.
1.0 TERM OF AGREEMENT
This AGREEMENT shall be effective when signed by an authorized representative of
CLIENT and accepted by OPTUM. The initial term of this Agreement shall be from
(90) days after SRT for the period specified below. The AGREEMENT will
automatically be renewed for additional annual periods at OPTUM'S then
prevailing support rate for the chosen Support Plan(s), as described in the
current Professional Services rate sheet. A new Professional Services rate
sheet, if any, will be sent to CLIENT at least thirty (30) days prior to the end
of any contract term. This Maintenance and Support AGREEMENT, or any portion
thereof, may be terminated, after term of initial Maintenance and Support
AGREEMENT, by CLIENT by delivery of ninety (90) days' written notice.
2.0 ELIGIBILITY OF SERVICE
The PROGRAM(S) must be in the accepted version based on the Client Acceptance
Test (SRT) and any additional OPTUM approved PROGRAM(S) updates or future
releases. The PROGRAM(S) is subject to inspection and approval by OPTUM before
becoming eligible for coverage. OPTUM will continue to support CLIENT for a
period of five (5) years from the installation date an old release, provided
CLIENT continues to maintain its annual Maintenance & Support Agreement.
3.0 UPGRADE/MAINTENANCE SERVICES
OPTUM shall, during the period of service, provide the following Upgrade and
Maintenance services under this AGREEMENT for an Annual Upgrade and Maintenance
Fee as specified in Addendum C/Attachment B.
3.1 Supply a temporary fix or make a reasonable attempt to make an emergency
bypass to the problem if the PROGRAM(S) yields incorrect results and if OPTUM
diagnoses the problem as a defect in a current, unaltered release of the
PROGRAM(S).
3.2 Provide CLIENT with bug fixes relating to the PROGRAM(S), as said solutions
become known to OPTUM. If the problem is due to other causes, such as
unauthorized modifications to the PROGRAM(S), OPTUM will advise CLIENT of the
cost required to upgrade the product.
3.3 Provide CLIENT with future releases of the PROGRAM(S), with no additional
license fees. OPTUM reserves the right to make changes in the operating
procedure, programming language, library modules, types of hardware
supportability, and other related programming and documentation improvements
required to maintain a current, competitive product.
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3.4 If, during the routing maintenance support provided under this AGREEMENT,
CLIENT causes the need to provide new PROGRAM(S) functionality, or
reconstruction of lost, altered or damaged data, CLIENT agrees to pay for such
services on a Time-and-Material basis. In the possible event of lost, altered,
damaged data or PROGRAM(S), caused by OPTUM'S personnel, OPTUM will make a best
effort attempt to reconstruct that data or PROGRAM(S) in accordance with the
Maintenance and Support AGREEMENT at its cost. CLIENT shall be responsible for
maintaining archive records.
4.0 SUPPORT LIMITATIONS
PROGRAM(S) support hereunder applies only to PROGRAM(S) developed, owned or
supplied by OPTUM or modification to PROGRAM(S) made by OPTUM. This Agreement
does not include non-licensed optional features and improvement, all of which
are subject to separately charged prevailing time and material fees.
5.0 CLIENT RESPONSIBILITIES
5.1 Problem Reporting: When reporting problems, CLIENT shall provide appropriate
problem documentation as outlined in OPTUM'S then current problem reporting
procedures. OPTUM will respond to the problem according to its Problem Reporting
& Resolution Manual. At OPTUM'S request, CLIENT shall provide media containing
system use data and related files sufficient to enable OPTUM and CLIENT to
reconstruct the reported problem. CLIENT shall provide an OPTUM
approved/specified modem by which OPTUM may access CLIENT's system. CLIENT shall
be responsible for performing routine preventative maintenance of the system.
5.2 Designated Contacts: CLIENT will designate people at each CLIENT site to be
eligible to contact OPTUM for support. Names of these contacts will be supplied
to OPTUM. Contacts must be certified by OPTUM, where such certification
typically requires OPTUM supplied system training. The number of Designated
Contacts will depend on the Support Plan(s) chosen an whether the CLIENT has
elected to add additional Designated Contacts for an additional fee. The
Designated Contacts per CLIENT site are described in Attachment A.
Approvals:
OPTUM CLIENT
By: /s/ Paul A. Crist By: /s/ Karl McCelley
-------------------------- ------------------------
Acceptance Date: 12/12/97 Acceptance Date: 1-20-98
------------- -----------
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ADDENDUM C/ATTACHMENT A:
SUPPORTED CLIENT SITES
Total Number of Sites: 1
Site 1: Address Kuala Lumpur
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Number of Designated Contacts at this Site:
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Site 2: Address
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Number of Designated Contacts at this Site:
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Site 3: Address
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Number of Designated Contacts at this Site:
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Site 4: Address
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Number of Designated Contacts at this Site:
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Site 5: Address
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Number of Designated Contacts at this Site:
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Site 6: Address
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Number of Designated Contacts at this Site:
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Site 7: Address
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Number of Designated Contacts at this Site:
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Attach additional sheets if necessary
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ADDENDUM C/ATTACHMENT B:
MAINTENANCE & SUPPORT FEES
FOR THIS AGREEMENT
DESCRIPTION OF SUPPORT PLAN(S)
1.0 PRODUCTS
OPTUM offers several Support Products to fit our customer's needs. OPTUM also
offers a Partner Program that provides a higher degree of customer service.
Maintenance releases are included as part of all the Support programs. Emergency
help and on-site support are also available. Annual maintenance fee increases,
if any, will be capped at a maximum of a three 3% percent increase.
PLAN A (5X8)
Plan A allows customers to choose any eight consecutive hours of support between
the hours of 2 AM to 6 PM, Monday through Friday, Australian Time. Customers may
designate two people as their Central Contacts for communicating with OPTUM
Support. One alternate Central Contact may also be designated. All Central
Contacts must be OPTUM certified. The certification training for three people
per site is included in Plan A. Training classes are held at OPTUM headquarters
on a periodic basis. Travel-related expenses for attendees are not included.
Support calls to OPTUM outside of the contractual time range are considered
"Emergency Calls" and are subject to Time & Material charges with a four hour
minimum. Plan A includes three free "Emergency Calls" per quarter.
PLAN B (5X16)
Plan B provides sixteen hours of support coverage, 2 am to 6 pm Australian Time,
Monday through Friday. Customers may designate two people as their Central
Contacts for communicating with OPTUM Support. One alternate Central Contact may
also be designated. All Central Contacts must be OPTUM certified. The
certification training for three people per site is included in Plan B. Training
classes are held at OPTUM headquarters on a periodic basis. Travel-related
expenses for attendees are not included. Support calls to OPTUM outside of the
contractual time range are considered "Emergency Calls" and are subject to Time
& Material charges with a four hour minimum. Plan B includes five free
"Emergency Calls" per quarter.
PLAN C (7X24)
Plan C is complete, around-the-clock coverage. OPTUM engineers are available
seven days a week, twenty-four hours a day. Engineers are immediately available
sixteen hours a day. Engineers are immediately available sixteen hours a day.
For off-hours and weekends, a one-hour response time is provided. Customers may
designate four people as their Central Contacts for communicating with OPTUM
Support. Two alternate Central Contacts may also be designated. All Central
Contacts must be OPTUM certified. The certification training for six people per
site is included in Plan C. Training classes for six or more people may be held
at the customer sited or at OPTUM headquarters. Travel-related expenses for the
trainer &/or attendees are not included.
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EMERGENCY CALLS
For customers choosing Plan A or Plan B, emergency support is available for time
outside of the Support contract. A minimum of four hours is charged for
emergency support at OPTUM' current Time & Material rates. The current rate for
emergency calls is $150 per hour.
ON-SITE SUPPORT
Based on engineer availability, on-site support is available at a daily rate,
subjected to a two day minimum.
MOVE ANNUAL SUPPORT PLAN OPTIONS:
Plan A 5X8 Plan B 5X16 Plan C 7X24
$29,250 $40,938 $51,188
ALL THREE PLANS ASSUME THE FOLLOWING:
1. A three year contract, with Harris Option to terminate
2. Annual payments
3. Less than $50,000 in modifications
4. Harris Certified Help Desk (25% discount)
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<PAGE>
EXHIBIT 10.17
PURCHASE AGREEMENT
BETWEEN
HARRIS SEMICONDUCTOR
AND
PRAXAIR, INC.
THIS AGREEMENT numbered PRAXHO92FINO4O1 is entered into as of the
fourteenth (14th) day of March, 1997, by and between Harris Semiconductor, a
Delaware corporation, having an office at 1700 Fostoria Road, Findlay, Ohio
45840, hereinafter referred to as "Buyer" and PRAXAIR, INC., a Delaware
corporation, having an office at 39 Old Ridgebury Road, Danbury, Connecticut
06810-5113 hereinafter referred to as "Seller").
WITNESSETH:
In consideration of the mutual promises contained herein, the parties intending
to be legally bound agree as follows:
I. SCOPE
Seller agrees to sell and Buyer agrees to purchase from Seller, on the terms and
conditions herein after set forth, Buyer's total requirements (at all locations
listed in Exhibit "A", (except Mountaintop's Existing Fab 8) of Silane as listed
on Exhibit "A" (hereinafter, "Product"). This Agreement will be in effect from
the date hereof for a term of six (6) years beginning March 14, 1997.
II. PRICING
All prices for locations listed in Exhibit "A" are F.O.B. delivered to Buyer's
locations for Findlay, Ohio and Mountaintop, Pennsylvania and F.O.B. Seller's
location for Palm Bay, Florida. In the event the parties agree to add additional
locations to Exhibit "A", said prices may be adjusted up or down to reflect any
additional cost variance associated with supply to such additional locations.
Prices shall remain as stated in Exhibit "A" through March 13, 1999, thereafter
Seller will have the right to revise the Prices annually by giving Buyer not
less than sixty (60) days prior written notice of the effective date of such
revision; provided, however, that if said Prices are increased and Buyer, within
thirty (30) days after said notice, furnishes Seller with credible written
evidence that Buyer can purchase Product to which such increased Prices apply
from a responsible supplier for a specified term in like quantities and
qualities at lower prices under similar terms and conditions, and Seller, within
thirty (30) days thereafter, does not agree to either meet said lower prices or
rescind the notice of increased Prices, Buyer will have the right within ten
(10) days thereafter to terminate this Agreement as to the supply of Product for
which such lower prices are offered by giving Seller not less than ten (10) days
prior written notice. A subsequent
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reduction in overall volume caused by this action shall not be grounds for any
price adjustments described herein in Section IV QUANTITIES. If Seller agrees to
meet the lower prices or rescind the notice of increased Prices, Seller will
also have the right to extend the Basic Term of the Agreement covering such
Product, for a period equal to the term specified in the lower price offer.
Seller agrees that: (1) No material will be invoiced against this Agreement
number as it is intended for use by Buyer as a control number only; (2) All
charges with respect to purchase orders issued hereunder shall be issued in
accordance with the purchase orders issued hereunder; and (3) Payment terms
shall be thirty (30) days after receipt of invoice for Buyer's locations in
Findlay, Ohio and Mountaintop, Pennsylvania and monthly per Buyer's invoices as
set forth in Section X TRANSPORTATION AND WAREHOUSING.
III. BUYER'S DIVISIONS AND SUBSIDIARIES
Seller agrees that the term "Buyer" as referred to herein, includes all of
Buyer's divisions and subsidiaries, which now, or during the Agreement period,
may make purchases under the terms of this Agreement. All purchase orders issued
with a notation thereon to the effect that they are submitted pursuant to and
are to be governed by this Agreement and which otherwise comply with the terms
hereof, shall be accepted hereunder by Seller and shall be subject to and
receive the benefits of all the terms of this Agreement, included in Exhibit
"A".
IV. QUANTITIES
It is understood by both parties of this Agreement that quantities indicated
herein are strictly projections made by Buyer with the best information
available at the time. These quantities could be subject to change due to
economic conditions or other factors beyond Buyer's control. Buyer will strive
to meet these commitments but will not be penalized for their inability to meet
the quantities indicated. The prices set forth in Exhibit "A" are predicated on
the total estimated volume and of the locations listed in Exhibit "A". Should
such quantities increase or decrease during a period of nine (9) months by an
average amount greater than - twenty-five percent (25%) for reasons other than
Seller's inability to supply Buyer's requirements, and such increased or
decreased quantities are expected to remain at that level, then Buyer and Seller
agree to discuss the impact on the Seller's costs and adjust the prices listed
in Exhibit "A" accordingly.
In the event the quantities of Product are more economically supplied in bulk
quantities as agreed to by Buyer and Seller, then Buyer and Seller will
negotiate in good faith any necessary adjustments in pricing, terms and
conditions.
If a part or all of the quantities for a location listed in Exhibit "A" is no
longer required and is subsequently required at an additional location not
listed in Exhibit "A" and Buyer
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is not obligated to purchase that Product from another supplier, then Buyer and
Seller agree to negotiate in good faith for the supply of the transferred
quantity.
V. QUALIFICATION TESTING
Without in any way limiting its warranty or acceptance testing rights under this
Agreement, Buyer intends to from time to time subject samples of Product to be
purchased hereunder to additional testing by a mutually agreed upon testing
facility to assure that said Product meets requirements of the specifications
set forth in Exhibit "A." Buyer will reference the specifications listed in
Exhibit "A" on Buyer's Purchase Orders as a method of communication of the
specification of the Product to the Seller with each order for Product to be
delivered to the locations specified in Exhibit "A". Buyer shall notify Seller
of any deficiencies indicated by said testing and Seller shall at its own
expense alter said items to be delivered hereunder so that they will perform to
the requirement of the specifications as defined in Exhibit "A" (attached)
unless Buyer has elected in writing to waive said deficiency.
Buyer retains the right and option to purchase Product under this Agreement
prior to completion of its qualification testing of said Product. In the event
said qualification tests by a mutually agreed upon testing facility shall
disclose deficiencies (deficiencies meaning not meeting agreed upon
specification) in any Product to be purchased hereunder, Buyer at its options
may require Seller to suspend further deliveries of said Product until such time
as Seller shall have corrected said deficiencies at its own expense. o Seller
agrees that it will repair, modify or replace at no cost to Buyer all of said
nonconforming Product which has been delivered to Buyer pursuant to this
Agreement within 60 days of receipt of Buyer's notice of deficiency.
In the event that Seller shall fail to correct at its own expense any and all
deficiencies within a reasonable period of time after receiving notice thereof
from Buyer, Buyer shall have the right at its option to cancel all or any
portion of its outstanding or completed orders for said items without charge and
to return for full credit at Seller's expense all nonconforming Product
delivered to Buyer within 90 days prior to the date upon which Seller received
Buyer's notice of deficiency. Seller agrees that with respect to items now or
anytime hereafter subject to this Agreement, it will make available to Buyer at
no charge results of its quarterly SPC data, and in conjunction with each
delivery, Seller shall also supply at no charge to Buyer, a Certificate of
Compliance representing Product supplied hereunder. Buyer has the option, with
thirty (30) days prior written notice to audit Seller's ISO 9000 procedures
associated with such Product.
VI. SPECIFICATIONS AND PRODUCTION PROCESS CHANGES
Seller agrees that all Products to be delivered under this Agreement shall meet
the specifications described in Exhibit "A" as well as applicable drawings,
Buyer approved samples and other descriptions thereof agreed to by the parties.
Seller further agrees that in addition to the foregoing requirements, and
without limitation thereof, it will not
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make any such change in a Product specification without first having received
Buyer's prior written consent. Seller recognizes that Buyer is in an industry
which requires an ever increasing gas purity. If during the term of the
Agreement, Buyer believes that a higher purity product is beneficial and
necessary, Buyer agrees to contact Seller in writing and advise Seller of such
needs and a brief description of Buyer's rational.
In such event, if the Product, based on the new specification, which is
verifiable using generally acceptable industry test procedures (or which is
verifiable using SEMI or ASTM test procedures) and is commercially available in
the marketplace from an alternate source, Seller will have the option to provide
Buyer with a product that is comparable in overall price and is equivalent to or
superior than the product that is available from an alternate source. Buyer and
Seller will negotiate in good faith the adjustments necessary to supply such
Product to Buyer within sixty (60) days. If such Product is not commercially
available in the marketplace from an alternate source, Seller will provide Buyer
with an estimate of the additional costs and time required to supply such
Product with improved specifications within sixty (60) days. If acceptable to
Buyer, Buyer will notify Seller of its acceptance and Seller will begin the
steps necessary to supply such Product and this Agreement will be amended to
reflect the new specifications and prices agreed upon by the parties. Buyer will
limit such requests for Product with new specifications that is not commercially
available, to no more than one request per year per location.
In either event, if Seller is unable or unwilling to supply Buyer with Product
with new specifications, Buyer shall have the right to terminate this Agreement,
after thirty (30) days from notification from Seller of such inability or
unwillingness, with respect to the location and quantity relating to the new
specification. This Agreement will remain in effect for all locations not
effected by such new specifications.
VII. ADDITIONAL ITEMS
If at any time during the term of this Agreement, Buyer shall have a need for
items being commercially produced by Seller, which although not then listed on
Exhibit "A" are in the same general product line as the Products listed on
Exhibit "A", Buyer shall have a right upon thirty (30) days prior written notice
to Seller to have said items added to this Agreement for purchase according to
the terms hereof at prices that are mutually agreeable at that time.
VIII. RELEASES
A. Buyer will issue monthly releases of required quantity to be delivered.
IX. OTHER TERMS AND CONDITIONS
This Agreement supersedes any prior agreement or agreements between Buyer and
Seller covering the supply of Product to Buyer's locations listed in Exhibit
"A". The entire
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agreement is contained herein and in the Exhibits and attachments hereto. There
are no other promises, representations or warranties affecting this Agreement,
and any other or different terms or conditions in any purchase orders or other
documents issued or accepted hereunder will be deemed null and void. Any
headings contained in this Agreement are used only as a matter of convenience
and reference, and are in no way intended to define, limit, expand or describe
the scope of this Agreement. This Agreement will be governed by the laws of the
State of Florida.
X. TRANSPORTATION AND WAREHOUSING
Buyer and Seller have agreed to maintain an inventory, as set forth in Exhibit
"A", of Product at a Buyer's location in Palm Bay, Florida. Product for Palm
Bay, Florida will be transported by a carrier selected by and paid for by the
Buyer, and approved by the Seller, which approval will not be unreasonably
withheld. Buyer accepts receipt of the Product when it reaches the Buyer's
location and will notify Seller weekly of the Product removed from inventory.
Buyer will submit an invoice for all removed Product and pay such invoice each
month.
Buyer and Seller have agreed to maintain an inventory as set forth in Exhibit
"A", of Product at Seller's warehouse in Findlay, Ohio for Buyer's location in
Findlay, Ohio. Product for Findlay, Ohio will be transported by a carrier
selected by and paid for by the Seller. Buyer accepts receipt of the Product
when it reaches the Buyer's location. Seller will submit an invoice with each
order and Buyer will pay such invoice within thirty (30) days of receipt of such
invoice.
Buyer and Seller have agreed to maintain an inventory as set forth in Exhibit
"A", of Product at Seller's warehouse in Bethlehem, Pennsylvania for Buyer's
location in Mountaintop, Pennsylvania. Product for Mountaintop, Pennsylvania
will be transported by a carrier selected by and paid for by the Seller. Buyer
accepts receipt of the Product when it reaches the Buyer's location. Seller will
submit an invoice with each order and Buyer will pay such invoice within thirty
(30) days of receipt of such invoice.
Buyer and Seller agree to negotiate in good faith any further adjustments to
such transportation and warehousing arrangements as deemed necessary by both
parties.
XI. WARRANTY
Product delivered hereunder will meet the specifications as set forth in Exhibit
"A". If in the event Seller fails to supply product (ASiMI and MEMC) and/or
product that meets the specifications as set forth in Exhibit "A", Buyer shall
notify Seller in writing of such occurrence and Seller shall remedy the failure
through replacement of Product. In the event Seller is unable or unwilling to
provide replacement Product which meets applicable specifications, Buyer shall
have the right to temporarily secure a supply of Product for that location
outside of this Agreement at no cost to Seller. Seller will have thirty (30)
days to provide Buyer with its action plan to resolve the problem so that Seller
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can provide Buyer with Product that meets the specification. Subsequently,
should the occurrence of such failures continue unresolved over a continuous
period of thirty (30) days or intermittently over a period of six (6) months for
a total of thirty (30) days then Buyer may terminate this Agreement at no cost
for that quantity at that location listed in Exhibit "A". Buyer acknowledges
that it may obtain devices which have the capability of testing whether the
Products delivered hereunder meet such specifications. In the event any Product
delivered hereunder fails to meet the specifications as set forth in Exhibit "A"
and solely as a result of such failure Buyer's piping system, wafers, devices,
or chips being manufactured are damaged, in addition to Buyer's remedies set
forth above, Seller shall pay for such damage an amount not to exceed two (2)
times the price of the non-conforming Product. THERE ARE NO EXPRESS WARRANTIES
BY SELLER OTHER THAN THOSE SPECIFIED IN PARAGRAPH VI AND THIS PARAGRAPH. NO
WARRANTIES BY SELLER (OTHER THAN WARRANTY OF TITLE AS PROVIDED IN THE UNIFORM
COMMERCIAL CODE) SHALL BE IMPLIED OR OTHERWISE CREATED, INCLUDING BUT NOT
LIMITED TO WARRANTY OF MERCHANTABILITY AND WARRANTY OF FITNESS FOR A PARTICULAR
PURPOSE UNDER THE UNIFORM COMMERCIAL CODE.
XII. LIABILITY
Buyer acknowledges that there are hazards associated with Product, including
without limitation the storage, use and handling thereof, and Buyer agrees that
its personnel concerned with Product are aware of such hazards. Buyer assumes
all responsibility for the suitability and the results of using Product alone or
in combination with other articles or substances and in any manufacturing,
medical, or other process or procedures. Buyer will notify Seller of any hazards
and safety procedures at Buyer's Location(s) and Buyer will notify Seller in
advance of any anticipated construction, renovation, or change in operations in
the area of any Supply System site so that any hazards associated with same can
be minimized. Buyer will be responsible for complying with all relevant
reporting obligations under all applicable laws, including without limitation
the Emergency Planning and Community Right-to-Know Act of 1986, 42 U.S.C.
Sections 11001-11049 [EPCRA, also commonly known as Title III of the Superfund
Amendments and Reauthorization Act of 1986 (SARA Title III)], that result from
the presence at Buyer's Location(s) of Product supplied under this Agreement.
Buyer will warn and protect its employees, independent contractors and others
exposed to the hazards posed by Buyer's storage, use and handling of Product.
Seller will provide documents to Buyer containing Seller's safety and health
information pertaining to Product, including Seller's Material Safety Data
Sheet(s), and Buyer will incorporate such information into Buyer's safety
program. Seller shall not be liable under this Agreement for any incidental,
consequential, indirect or special damages. Each party hereby indemnifies and
holds harmless the other party from any actions, lawsuits, demands, claims,
losses, expenses, costs, including without limitation legal fees, and damages,
arising from the injury, illness or death of the indemnifying party's employees
in any way related to Product supplied by Seller under this Agreement, whether
or not such injury,
6
<PAGE>
illness, or death is claimed to have been caused by, resulted from, or was in
any way connected with the negligence of the party to be indemnified.
XIII. CONTINGENCIES
Seller will not be liable for default or delay in delivery or other performance
of any of its obligations hereunder due to acts of God, accident, fire, flood,
storm, riot, war, sabotage, explosion, strike, labor disturbance, national
defense requirement, governmental law, ordinance, rule or regulation, whether
valid or invalid, inability to obtain electricity or other type of energy, raw
material, labor, equipment or transportation, or any similar or different
contingency beyond its reasonable control which would make performance
commercially impracticable whether or not the contingency is of the same class
as those enumerated above.
XIV. ASSIGNMENT
Any assignment of this Agreement by either party without the prior written
consent of the other party, which consent will not be unreasonably delayed or
withheld, will be void; provided, however, that Seller will have the right
without Buyer's consent to assign this Agreement to any affiliate of Seller, or
any party obtaining all or substantially all of the business assets of Seller
and Buyer will have the right without Seller's consent to assign this Agreement
to any affiliate of Buyer, or any party obtaining all or substantially all of
the business assets of Buyer. This Agreement will inure to the benefit of, and
be binding upon, the respective heirs, representatives, successors, including
any by way of merger or consolidation, and permitted assigns of the parties.
XV. CONFIDENTIALITY
This Agreement, including the Exhibit(s) and any addendum hereto, and all
drawings, diagrams, specifications, operating data, pricing and costs and other
materials furnished by either party to the other in connection therewith, and
the information therein are proprietary to the disclosing party. Such materials
contain trade secrets and other confidential information of the disclosing
party. The receiving party may not reproduce or distribute such materials except
to the receiving party's employees for the purpose of performing the receiving
party's obligations under this Agreement. In the case of any of the
aforementioned disclosures, the receiving party will inform its employees that
such information is the confidential information of the disclosing party and is
to be treated accordingly. All such information (except information as may be
established to be in the public domain) will be received in confidence by the
receiving party, and the receiving party will exercise the same degree of care
to hold such information in confidence as it uses with respect to its own trade
secrets and/or confidential and proprietary information. Unless otherwise agreed
to by the parties, the receiving party will keep all such information
confidential for a period which will expire five (5) years after the termination
date of this Agreement. Notwithstanding anything herein to the contrary, Buyer
hereby grants to Seller the right to reasonably use the supply system(s) for
promotional purposes, including visits to the
7
<PAGE>
supply system site(s) by Seller with third parties. Each such promotional use,
however, will be subject to Buyer's approval, which approval will not be
unreasonably delayed or withheld.
XVI. AMENDMENTS
The provisions of this Agreement may not be and shall not be deemed or construed
to have been modified, amended, rescinded, canceled or waived in whole or in
part, except by written instruments signed by both parties. A waiver of any of
the terms and conditions hereof will not be deemed a continuing waiver, but will
apply solely to the instance to which the waiver is directed. IN WITNESS
WHEREOF, the parties have caused this Agreement to be executed as of _________,
1997.
Praxair, Inc. Harris Corp.
By: [illegible] By: /s/ Gene H. Wyckoff
------------------ ---------------------
Title: Sales Director Title: Sr. Mgr. Material
------------------ ---------------------
Date: 5/29/97 Date: 5-22-97
------------------ ---------------------
8
<PAGE>
Exhibit "A"
dated March 14, 1997
Palm Bay, Florida
Silane
Current ASiMI Silane:
<TABLE>
<CAPTION>
(Engineering Specification 210177-001 - dated 03/14/97)
Year 1 Year 2 Year 3-6 Inventory
Quantity Package Price/gram Price/gram Price/gram Level
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
2,500 grams 1,250 grams $0.221 $0.221 (See Article II) 0
165,000 grams 5,000 grams $0.175 $0.175 (See Article II) 4 to 10
Total: 167,000 grams
</TABLE>
Optional ASiMI Silane:
<TABLE>
<CAPTION>
(Engineering Specification 210177-001 - dated 03/14/97)
Year 1 Year 2 Year 3-6 Inventory
Quantity Package Price/gram Price/gram Price/gram Level
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
2,500 grams 1,250 grams $0.42 $0.42 (See Article II) 0
165,000 grams 5,000 grams $0.30 $0.30 (See Article II) 0
Total: 167,000 grams
</TABLE>
Cylinder rental costs have been integrated in base product charges based upon an
assumed cylinder residence time of one hundred and twenty (120) days. No
separate cylinder rental charges will be applied unless the residence time is
exceeded. In this event, cylinder rental charges shall be applied beginning on
the one hundred and twenty-first (121st) day at a rate then representative of
Seller's standard rental rates of such equipment.
9
<PAGE>
Exhibit "A"
dated March 14, 1997
Findlay, Ohio
Silane
Current MEMC Silane:
<TABLE>
<CAPTION>
(Engineering Specification 420-7174-52 - dated 03/14/97)
Year 1 Year 2 Year 3-6 Inventory
Quantity Package Price/gram Price/gram Price/gram Level
----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
510,360 grams 9,000 grams $0.31 $0.31 (See Article II) 4 to 10
</TABLE>
Optional AsiMI Silane:
<TABLE>
<CAPTION>
(Engineering Specification 420-7174-52 - dated 03/14/97)
Year 1 Year 2 Year 3-6 Inventory
Quantity Package Price/gram Price/gram Price/gram Level
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
510,360 grams 9,000 grams $0.175 $0.175 (See Article II) 0
</TABLE>
Cylinder rental costs have been integrated in base product charges based upon an
assumed cylinder residence time of one hundred and twenty (120) days. No
separate cylinder rental charges will be applied beginning on the one hundred
and twenty-first (121st) day at a rate then representative of Seller's standard
schedule rental rates for such equipment.
10
<PAGE>
Exhibit "A"
dated March 14, 1997
Mountaintop, Pennsylvania
Silane
Current MEMC Silane:
<TABLE>
<CAPTION>
Batch Analysis (Engineering Specification 210177-001 - dated 03/14/97)
Year 1 Year 2 Year 3-6 Inventory
Quantity Package Price/gram Price/gram Price/gram Level
------------------------ --------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
50,000 grams 5,000 grams $0.35 $0.35 (See Article II) 2 to 6
72,000 grams 12,000 grams $0.30 $0.30 (See Article II) 1 to 3
700,000 grams 14,000 grams $0.30 $0.30 (See Article II) 5 to 25
Total: 822,000 grams
</TABLE>
<TABLE>
<CAPTION>
Individual Analysis (Engineering Specification 210177-001 - dated 03/14/97)
Year 1 Year 2 Year 3-6 Inventory
Quantity Package Price/gram Price/gram Price/gram Level
----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
50,000 grams 5,000 grams $0.59 $0.59 (See Article II) 0
72,000 grams 12,000 grams $0.41 $0.41 (See Article II) 0
700,000 grams 14,000 grams $0.40 $0.40 (See Article II) 0
Total: 822,000 grams
</TABLE>
<TABLE>
<CAPTION>
Optional ASiMI Silane:
Batch Analysis (Engineering Specification 210177-001 - dated 03/14/97)
Year 1 Year 2 Year 3-6 Inventory
Quantity Package Price/gram Price/gram Price/gram Level
---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
50,000 grams 5,000 grams $0.21 $0.21 (See Article II) 0
72,000 grams 12,000 grams $0.186 $0.186 (See Article II) 0
700,000 grams 14,000 grams $0.186 $0.186 (See Article II) 0
Total: 822,000 grams
</TABLE>
<TABLE>
<CAPTION>
Individual Analysis (Engineering Specification 210177-001 - dated 03/14/97)
Year 1 Year 2 Year 3-6 Inventory
Quantity Package Price/gram Price/gram Price/gram Level
-----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
50,000 grams 5,000 grams $0.53 $0.53 (See Article II) 0
72,000 grams 12,000 grams $0.35 $0.35 (See Article II) 0
700,000 grams 14,000 grams $0.33 $0.33 (See Article II) 0
Total: 822,000 grams
</TABLE>
Cylinder rental costs have been integrated in base product charges based upon an
assumed cylinder residence time of one hundred and twenty (120) days. No
separate cylinder rental charges will be applied unless the residence time is
exceeded. In this event, cylinder rental charges shall be applied beginning on
the one hundred and twenty-first (121st) day at a rate then representative of
Seller's standard schedule rental rates for such equipment.
11
<PAGE>
EXHIBIT 10.19
Bill of Sale
THIS BILL OF SALE AND ASSIGNMENT is effective as of July 2, 1999 by Harris
Corporation, a Delaware corporation ("Seller"), acting through its Semiconductor
Business Unit, in favor of Align-Rite International, Inc., a California
corporation ("Parent") and Align-Rite, Inc., a Florida corporation ("Sub," and
together with Parent, "Buyer").
witnesseth
WHEREAS, pursuant to that certain Asset Purchase Agreement, dated as of July 2,
1999 (the "Asset Purchase Agreement"), by and among Buyer and Seller, Seller
agreed to sell to Buyer and Buyer agreed to purchase from Seller certain of the
assets of Seller.
NOW, THEREFORE, for good and valuable consideration, the receipt and adequacy of
which is hereby acknowledged and intending to be legally bound hereby, the
parties hereto agree as follows:
Definitions. As used in this Bill of Sale and Assignment and the Schedules
attached to this Bill of Sale and Assignment, the following definitions shall
apply:
"Business Technology" means Technology owned by Seller and in the possession of
the Photomask Business as of the Closing Date that is specific to operation of
the Photomask Business. Business Technology does not include Seller's Product
Mask Information.
"Closing" means the consummation of the transactions contemplated by the Asset
Purchase Agreement.
"Closing Date" means the date of the Closing.
"Contract" means any agreement, arrangement, bond, commitment, franchise,
indemnity, indenture, instrument, lease, license or understanding, whether or
not in writing.
"Copyrights" means rights in any and all United States and foreign copyright
registrations and applications therefor and unregistered copyrights owned by
Seller.
"Goodwill" means the expectation of patronage from customers of the Photomask
Business and the consumer identification and favorable consideration shown by
customers of the Photomask Business to the goods or services known to emminate
from the Photomask Business.
"Harris Patents" means and refers to all Patents owned by Harris as of the
Closing Date and covering activities performed in the course of business by the
Photomask Business prior to the Closing Date.
"Intangible Property" means any permits or other property other than personal
property, real property or Intellectual Property used in or pertaining to the
Photomask Business.
"Intellectual Property" means intellectual property covered by Copyrights,
Harris Patents or Trade Secret Rights as defined herein.
<PAGE>
"Intellectual Property Rights" means rights in Copyrights and Harris Patents and
Trade Secret Rights which (a) are owned by the Seller, (b) exist under laws
respecting Patents, Copyrights or Trade secrets, but not trademarks and (c)
cover the use of Business Technology.
"Inventory" has the meaning specified in Section 2.1(a)(iv) of the Asset
Purchase Agreement.
"Material Contract" means any Contract material to the Photomask Business as of
or after the effective date of the Asset Purchase Agreement as described in
Schedule 4.3 of the Asset Purchase Agreement.
"Patents" means issued patents, including United States and foreign patents and
applications therefor, petty patents, patents of importation, and divisions,
reissues, continuations, continuations-in-part, renewals and extensions of any
of the foregoing; certificates of addition and utility models and utility model
applications; but does not include License Agreements.
"Photomask Business" means the manufacture and sale of photomask products and
related photomask services by Seller regardless of the name under which any such
activity is conducted, and shall be deemed to include the Purchased Assets, the
rights and assets transferred pursuant to Section 7.5 of the Asset Purchase
Agreement, revenues and income, Assumed Liabilities, Assumed Contracts,
exclusive of cash, cash equivalents, accounts receivable, accounts payable and
any elements of the Retained Business or Excluded Assets.
"Real Property" means the real property located within the complex of buildings
known as the Semiconductor Sector located at 2401 Palm Bay Road, NE, Palm Bay,
Florida 32905 and known as Building 60 and a portion of Building 56 used in the
Photomask Business, appurtenances thereto, rights in connection therewith, and
the leasehold estates created as part of the transaction contemplated by the
Asset Purchase Agreement.
"Seller's Product Mask Information" means the product design data of Seller for
products designed or manufactured by or on behalf of Seller's Semiconductor
Business Unit from which photomasks are made, whether such data is in electronic
pattern media or Photomask tooling, and not otherwise used in the operation of
the Photomask Business.
"Site Services Agreement" has the meaning set forth in Section 8.2 of the Asset
Purchase Agreement.
"Software" means the manifestation of computer programs and databases in
tangible or physical form, including, but not limited to magnetic media,
firmware, and documentation in the form of source code, object code or
microcode; Software includes, but is not limited to management information
systems, computer aided design and/or engineering programs, computer aided
manufacturing programs, CADBUS programs, machinery control programs, and
personal computer programs, in each case that is owned by or licensed to Seller
and relevant to the Photomask Business. Software does not include any Technology
or any Intangible Property Rights.
"Software Licenses" means agreements concerning Software (other than Systems
Software) used in or on behalf of the Photomask Business including the
agreements identified on Schedule 7.6 attached hereto.
<PAGE>
"Software Type 1" means Software for which the Seller is sole owner of all right
title and interest and which is specific to the Photomask Business. Software
Type 1 does not include Systems Software.
"Software Type 2" means Software owned in whole or in part by the Seller and
licensable by Seller on a non-exclusive basis to Buyer, and which is not
specific to, but is used in, the operations of the Photomask Business. Software
Type 2 does not include Systems Software.
"Systems Software" means software not specific to the Photomask Business and not
specific to an individual personal computer.
"Technology" means the manifestation in tangible or physical form of all types
of technical information and data including, but not limited to, know-how;
product definitions and designs; research and development, engineering,
manufacturing, assembly, process, test, quality control, procurement, and
service specifications, procedures, standards, and reports; maskworks;
blueprints; drawings; materials specifications, procedures, standards, and
lists; catalogs; technical information and data relating to marketing and sales
activity; and formulae, in each case that is owned by or licensed to Seller and
relevant to routine operation of the Photomask Business. Technology does not
include any Software or any Intangible Property Rights.
All capitalized terms used herein, but not otherwise defined herein, shall have
the meanings ascribed in the Asset Purchase Agreement.
Transfer. Seller hereby sells, conveys, assigns, transfers and delivers to Sub,
and Sub shall purchase, acquire and accept from Seller, Seller's right, title
and interest in and to the assets specifically described in Section 2.1 (a) of
the Asset Purchase Agreement (the "Purchased Assets") and as set forth below:
All machinery, tools, supplies, apparatus, furniture and fixtures, supplies, and
computer hardware located at and used solely by the Photomask Business and other
equipment of every type as identified on Schedule 2.1(a)(i) attached hereto;
The cleanroom located within Building 60, including fixtures and improvements
attached thereto as set forth on Schedule 2.1(a)(ii) attached hereto;
All other fixtures and improvements attached to the Real Property used primarily
in connection with the Photomask Business as specified in Schedule 2. 1(a)(iii)
attached hereto;
All inventory of usable goods, including all merchandise, photomasks, raw
materials, work in progress, finished products and other tangible personal
property held for sale or used in connection with the Photomask Business as of
the Closing Date (the "Inventory"), together with any additions thereto and
subject to any reductions therefrom received or incurred by Seller in operating
the Photomask Business in the ordinary course and in compliance with Section 6.3
of the Asset Purchase Agreement through the Closing Date all as set forth in
Schedule 2.1(a)(iv) attached hereto;
All of Seller's rights and interests arising under or in connection with the
Contracts to which Seller is a party specified on Schedule 2. 1(a)(v) attached
hereto and which Buyer assumes (the "Assumed Contracts") including but not
limited to obligations to complete
<PAGE>
work on order from customers; provided, however, that except as otherwise
specified in the Asset Purchase Agreement, Buyer shall not assume any of the
obligations or liabilities of the Assumed Contracts arising prior to the Closing
or based on actions or inactions of Seller prior to the Closing;
Prepaid expenses and deposits as of the Closing Date (the "Prepaid Expenses") as
set forth in Schedule 2.1(a)(vi) attached hereto, together with any additions
thereto and subject to any reductions therefrom made or accrued by Seller in
operating the Photomask Business in the ordinary course and in compliance with
Section 6.3 of the Asset Purchase Agreement after the Closing Date;
Sales data and information, customer lists, information relating to customers,
suppliers' names, catalogs, sales literature, promotional materials, advertising
matter and all rights thereto relating specifically to the Photomask Business;
Intangible Property; the Goodwill associated with the Photomask Business; all of
Seller's books, records, files, documents, pay history papers and agreements
(including, but not limited to, those contained in computerized storage media)
used solely in the Photomask Business and related to its employees, except for
those employee records consisting of field folders, medical records and former
employee actions brought against the Seller, which actions have been settled or
adjudicated and the order of the court performed; all transferable Permits used
in the Photomask Business; unemployment compensation, workers' compensation and
other credits, reserves or deposits with applicable Governmental Entities
relating to Seller's employees of the Photomask Business who become Employees of
Buyer. Excluded Assets.
The Purchased Assets do not include the assets set forth below (the "Excluded
Assets"): No rights, properties or assets of Seller shall be included in the
Purchased Assets except to the extent specified in Section 2.1 (a) of the Asset
Purchase Agreement. As an example, no cash, receivables or Contracts not
expressly assumed hereunder by the Buyer are included as Purchased Assets. Buyer
shall not acquire under the terms of the Asset Purchase Agreement any title to
or interest in the name "Harris" or "Harris Semiconductor" or Seller's
monograms, logos, trademarks, or any variations or combinations thereof or
Seller's Product Mask Information. Buyer, however, shall be entitled to use all
of Seller's Product Mask Information solely for the purpose of making Photomasks
for Seller. Buyer shall use reasonable care in storing and maintaining Seller's
Product Mask Information. Seller acknowledges that Seller's Product Mask
Information is Seller's property and that Buyer shall have no liability for
damages or loss related thereto; provided, however, that Buyer shall be liable
for damages arising from Buyer's negligence or willful misconduct.
IN WITNESS WHEREOF, Seller has caused this Bill of Sale and Assignment to be
executed as of the day and year first above written.
HARRIS CORPORATION,
a Delaware corporation
By: /s/ W.R. Morcom
-------------------------------
W.R. Morcom
Vice President - General Manager Operations
<PAGE>
Schedule 2.1(a)(i)
<PAGE>
SCHEDULE 2.1(a)(i) Fixed Assets, Equipment, Machinery, Tools, and Computer
Hardware being purchased by Buyer - Continued
FIXED ASSETS P11 FY'99
BUILDING 60 - SORTED BY ASSET NUMBER
<TABLE>
<CAPTION>
- - ------------------------------------------------------------------------------------------------------------
BLDG. ASSET NUMBER DIV DEPT ASSET DESCRIPTION
- - ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
60 792031B OR 9460 STEAM HUMIDIFIER ORF
- - ------------------------------------------------------------------------------------------------------------
60 900111A OR 7150 APPLE LASERWRITER
- - ------------------------------------------------------------------------------------------------------------
60 908790F OR 7140 ETHERNET
- - ------------------------------------------------------------------------------------------------------------
60 913351B OR 7120 SOFTWARE, DBCS, CALMA
- - ------------------------------------------------------------------------------------------------------------
60 913489A OR 7140 CHAMBER, GCA, PBS
- - ------------------------------------------------------------------------------------------------------------
60 913489B OR 7140 INSTALL, CHAMBER, GC
- - ------------------------------------------------------------------------------------------------------------
60 913636B OR 7120 NIKON MEASURING INST
- - ------------------------------------------------------------------------------------------------------------
60 914496A OR 7120 HOTTANK, CORNING, VC
- - ------------------------------------------------------------------------------------------------------------
60 914536A OR 7120 REPAIR, QUANTRONICS I
- - ------------------------------------------------------------------------------------------------------------
60 914936A OR 7140 PROCESSOR, APT. 9155
- - ------------------------------------------------------------------------------------------------------------
60 915393A OR 7120 GRINDER BUEHLER, LXUT
- - ------------------------------------------------------------------------------------------------------------
60 916177A OR 7120 INSPECT, HORIBA, P1000
- - ------------------------------------------------------------------------------------------------------------
60 916177B OR 7120 FREIGHT
- - ------------------------------------------------------------------------------------------------------------
60 916259A OR 7120 CHAMBER, HORIBA
- - ------------------------------------------------------------------------------------------------------------
60 916400A OR 7120 MOTORIZED IMAGE ROTA
- - ------------------------------------------------------------------------------------------------------------
60 916400B OR 7120 UPG FOR MEASURE UNIT
- - ------------------------------------------------------------------------------------------------------------
60 920918A OR 7120 MICRO LASER PARTICLE
- - ------------------------------------------------------------------------------------------------------------
60 930187A OR 7140 CD, OSI, VIDEO
- - ------------------------------------------------------------------------------------------------------------
60 930187B OR 7140 RETROFIT KIT, OSI CC
- - ------------------------------------------------------------------------------------------------------------
60 940719A OR 7120 ISOLATION, BARRY, 219E
- - ------------------------------------------------------------------------------------------------------------
60 940758A OR 7120 CONTACT PRINTER
- - ------------------------------------------------------------------------------------------------------------
60 941637A OR 7120 INSPECT, KLA, 219E
- - ------------------------------------------------------------------------------------------------------------
60 941637B OR 7120 UPG TO RIA II
- - ------------------------------------------------------------------------------------------------------------
60 941637C OR 7120 7 X 7 MASK HOLDER
- - ------------------------------------------------------------------------------------------------------------
60 942964A OR 7120 PHOTOMASK CLEANER W/
- - ------------------------------------------------------------------------------------------------------------
60 952025A OR 7120 QC MASK INSPECT SYST
- - ------------------------------------------------------------------------------------------------------------
60 952301A OR 7120 PELLICLE MOUNTER
- - ------------------------------------------------------------------------------------------------------------
60 952981A OR 7120 NIKON 5i LASER MEASU
- - ------------------------------------------------------------------------------------------------------------
60 955104A OR 7140 TEKSCOPE
- - ------------------------------------------------------------------------------------------------------------
60 G10320078 OR 7140 MEBES, ETEC, M78
- - ------------------------------------------------------------------------------------------------------------
60 G10320078A OR 7140 REFURBISHED M78
- - ------------------------------------------------------------------------------------------------------------
60 G10320078C OR 7140 MEBES IV E-BEAM UPG
- - ------------------------------------------------------------------------------------------------------------
60 G10336548 OR 7140 MEBES, ETEC, M67
- - ------------------------------------------------------------------------------------------------------------
60 G10336548A OR 7140 ETHERNET
- - ------------------------------------------------------------------------------------------------------------
60 G10336572 OR 7150 AMPLIFIER SYSTEM
- - ------------------------------------------------------------------------------------------------------------
60 G10336580 OR 7140 AMPLIFIER, ROGERS, N
- - ------------------------------------------------------------------------------------------------------------
60 G10336603 OR 7120 COMPARATOR, NIKON, 2
- - ------------------------------------------------------------------------------------------------------------
60 G10336637 OR 7120 INSPECT, KLA 101
- - ------------------------------------------------------------------------------------------------------------
60 G10336653 OR 7120 CHAMBER
- - ------------------------------------------------------------------------------------------------------------
60 G10336661 OR 7140 PROCESSOR, APT, 915
- - ------------------------------------------------------------------------------------------------------------
60 G10336679 OR 7140 PROCESSOR, APT, 915
- - ------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
SCHEDULE 2.1(a)(i) Fixed Assets, Equipment, Machinery, Tools, and Computer
Hardware being purchased by Buyer - Continued
<TABLE>
- - ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
60 G1354467A OR 7130 PRINTER, TAMRACK, 1
- - ------------------------------------------------------------------------------------------------------------
60 G1354558A OR 7130 PRINTER, TAMARACK, 1
- - ------------------------------------------------------------------------------------------------------------
60 G1354777A OR 7130 TITLER, TAMARACK, CP
- - ------------------------------------------------------------------------------------------------------------
60 G1354813A OR 7140 PROCESSOR, APT. 914
- - ------------------------------------------------------------------------------------------------------------
60 G1354975A OR 7130 PROCESSOR, APT, 914
- - ------------------------------------------------------------------------------------------------------------
60 G1355180A OR 7130 STEPPER, GCA, 3696
- - ------------------------------------------------------------------------------------------------------------
60 G1355182A OR 7140 PROCESSOR, APT, 914
- - ------------------------------------------------------------------------------------------------------------
60 G1355238A OR 7120 REPAIR, QUANTRONICS, I
- - ------------------------------------------------------------------------------------------------------------
60 G1355239A OR 7120 INSPECT, KLA, 201
- - ------------------------------------------------------------------------------------------------------------
60 G1355239B OR 7120 HOLDER, KLA 5X5X0.0
- - ------------------------------------------------------------------------------------------------------------
60 G1355261A OR 7120 CD, LEITZ, MPVCD#1
- - ------------------------------------------------------------------------------------------------------------
60 G1355366A OR 7140 PLOTTER, VERDATEC, M
- - ------------------------------------------------------------------------------------------------------------
60 G1355435A OR 7120 INSP. REP., KLA/QUANT
- - ------------------------------------------------------------------------------------------------------------
60 G1355435B OR 7120 PAY, FINAL DRSII/22
- - ------------------------------------------------------------------------------------------------------------
60 G1355435C OR 7120 KLA 204 CONVERSION K
- - ------------------------------------------------------------------------------------------------------------
60 G1355435D OR 7120 UPGRADE TO DRS-II
- - ------------------------------------------------------------------------------------------------------------
60 G1355465A OR 7120 COMPUTER, IBM
- - ------------------------------------------------------------------------------------------------------------
60 G1355549A OR 7120 CD, LETIZ, MPVCD#2
- - ------------------------------------------------------------------------------------------------------------
60 G1355605A OR 7130 SCOPE, B&L STEREO
- - ------------------------------------------------------------------------------------------------------------
60 G1355606A OR 7130 SCOPE, B&L STEREO
- - ------------------------------------------------------------------------------------------------------------
60 G1355615A OR 7140 SURFSCAN
- - ------------------------------------------------------------------------------------------------------------
60 G1355618A OR 7120 CD, LEITZ, MPVCD#3
- - ------------------------------------------------------------------------------------------------------------
60 G1355668A OR 7150 COMPUTER, TANDY, 200
- - ------------------------------------------------------------------------------------------------------------
60 G1355669A OR 7120 COMPUTER, TANDY, 300
- - ------------------------------------------------------------------------------------------------------------
60 G1355690A OR 7120 INSPECT, KLA, 101
- - ------------------------------------------------------------------------------------------------------------
60 G1610325A OR 7130 CLEANER, UT, 603
- - ------------------------------------------------------------------------------------------------------------
60 G1610326A OR 7120 CLEANER, UT, 603
- - ------------------------------------------------------------------------------------------------------------
60 G1610327A OR 7120 CLEANER, UT, 603
- - ------------------------------------------------------------------------------------------------------------
60 G1900053A OR 7140 SCOPE, LEITZ, ERGOLUX
- - ------------------------------------------------------------------------------------------------------------
60 G1900074A OR 7140 COMPRESSOR, CHAMP #3
- - ------------------------------------------------------------------------------------------------------------
60 G1900075A OR 7140 COMPRESSOR, CHAMP #4
- - ------------------------------------------------------------------------------------------------------------
60 G1900076A OR 7140 COMPRESSOR, CHAMP #1
- - ------------------------------------------------------------------------------------------------------------
60 G1900077A OR 7140 COMPRESSOR, CHAMP #2
- - ------------------------------------------------------------------------------------------------------------
60 G1900079A OR 7140 N2 CABINET, OHIO, ET
- - ------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
SCHEDULE 2.1(a)(i) Fixed Assets, Equipment, Machinery, Tools, and Computer
Hardware being purchased by Buyer - continued
<TABLE>
<CAPTION>
- - ------------------------------------------------------------------------------------------------------------
AR- Asset Bldg. Div. Dept. Description
TAG
- - ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
79 No Tag 60 OR 7150 PT/HP 9-track tape/on Mask
- - ------------------------------------------------------------------------------------------------------------
80 No Tag 60 OR 7150 Disk Drive tower/on Mask
- - ------------------------------------------------------------------------------------------------------------
81 60 CONTROL ROBERTSHAW
- - ------------------------------------------------------------------------------------------------------------
103 910205A 60 OR 7120 WETDECK, 4'
- - ------------------------------------------------------------------------------------------------------------
104 60 WETDECK 4'
- - ------------------------------------------------------------------------------------------------------------
104 906340A 60 OR 7130 WETDECK 5'
- - ------------------------------------------------------------------------------------------------------------
105 G10314794 60 INSPECT, KLA201, 106
- - ------------------------------------------------------------------------------------------------------------
106 903698A 60 OR 5450 PRINTER, KLA, 70
- - ------------------------------------------------------------------------------------------------------------
107 920086 60 TERMINAL, VT330
- - ------------------------------------------------------------------------------------------------------------
108 60 HCM 100D, PMN9193
- - ------------------------------------------------------------------------------------------------------------
112 913496A 60 OR 7120 CAMERA, NIKON, 21
- - ------------------------------------------------------------------------------------------------------------
114 012101 60 MICROSCOPE, M&M
- - ------------------------------------------------------------------------------------------------------------
115 911499A 60 OR 7140 SCOPE, LEITZ, SMLUX
- - ------------------------------------------------------------------------------------------------------------
121 906344A 60 OR 7130 WETDECK, 6'
- - ------------------------------------------------------------------------------------------------------------
121 906343A 60 OR 7130 WETDECK 6'
- - ------------------------------------------------------------------------------------------------------------
126 914325A 60 OR 7120 ISOLATION,BARRY,KLA,69
- - ------------------------------------------------------------------------------------------------------------
127 SOM900110 60 PRINTER, KLA, 70
- - ------------------------------------------------------------------------------------------------------------
128 905979 60 PRINTER, DECWRITER II
- - ------------------------------------------------------------------------------------------------------------
131 906342A 60 OR 7140 WETDECK 4'
- - ------------------------------------------------------------------------------------------------------------
132 906341A 60 OR 7140 WETDECK 4'
- - ------------------------------------------------------------------------------------------------------------
135 916455 60 CD, OS12
- - ------------------------------------------------------------------------------------------------------------
136 907731A 60 OR 7140 PLASMA, LFE
- - ------------------------------------------------------------------------------------------------------------
136 907738A 60 OR 7140 PUMP, LFE, PLASMA
- - ------------------------------------------------------------------------------------------------------------
137 914183 60 CD, OS13
- - ------------------------------------------------------------------------------------------------------------
138 60 TABLE KINETIC
- - ------------------------------------------------------------------------------------------------------------
143 954255 60 PROCESSOR HME
- - ------------------------------------------------------------------------------------------------------------
145 905900A 60 OR 7130 PROCESSOR,APT,914,EB ETCH
- - ------------------------------------------------------------------------------------------------------------
148 012468 60 OVEN, BLUE M
- - ------------------------------------------------------------------------------------------------------------
150 906338 60 WETDECK, 4'
- - ------------------------------------------------------------------------------------------------------------
153 G10247040 60 PRINTER, TAMARACK, 5"
- - ------------------------------------------------------------------------------------------------------------
154 SOM900014 60 CLEANER, UT, 603
- - ------------------------------------------------------------------------------------------------------------
155 913401A 60 OR 7120 METER OAI EXPOSURE
- - ------------------------------------------------------------------------------------------------------------
158 909101B 60 OR 7120 MASK HOLDER, KLA, 100
- - ------------------------------------------------------------------------------------------------------------
158 909101A 60 OR 7120 INSPECT, KLA, 100
- - ------------------------------------------------------------------------------------------------------------
162 60 7120 MEBES LOADER -M78
- - ------------------------------------------------------------------------------------------------------------
164 G10269195 60 TITLER, TAMARACK, 153
- - ------------------------------------------------------------------------------------------------------------
167 914970 60 CLEANER, UT, 2066
- - ------------------------------------------------------------------------------------------------------------
168 913179 60 OVEN, BLUE M
- - ------------------------------------------------------------------------------------------------------------
169 G619932430 60 COMPARATOR, NIKON, CM6
- - ------------------------------------------------------------------------------------------------------------
170 906339A 60 OR 7130 WETDECK 4'
- - ------------------------------------------------------------------------------------------------------------
171 012463 60 INSPECT, CODE A, 012565
- - ------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
SCHEDULE 2.1(a)(i) Fixed Assets, Equipment, Machinery, Tools, and Computer
Hardware being purchased by Buyer - continued
MECHANICAL AND ELECTRICAL ROOM
Compressed Air Dryer (2)
Piping
Central Chiller (L96)
Central Chiller (L92)
Emergency Chiller
Chilled Water Pump (2)
Refrigerant Monitor
Steam Humidifier (AHU 1,2,3,4)
Boiler-Steam
Air Handlers (1,2,3,4, 5)
Air Handlers (6, 7)
Chillers Controls (CSI)
Vacuum Pump
DI Wafer Pumps/Filters
Exide Sys. 150
Installation Charges
Electrical Upgrade (1991)
MCC Model 5 Control
Elec. Switch Gears
Basic Lite Fixtures
VAX HARDWARE ASSETS
Harris Alias Model/Device
- - ------------ ------------
Vmsy2K VAX 4000 - 700 (128m of memory)
Chetah Alpha Server 2100
Mask Microvax 3800
Tiger/Felix Microvax 3100
Jaguar VAXstation 3100
Cougar/Lynx VAXstation 4000-60
Lion/Puma DECstation 3000-300X
HSSDEV ATL4/52 DLT Tape Silo
HSSDEV RZ28 2.L GB SCSI Disk
HSSDEV RZ29 4.3 GB SCSI Disk
HSSDEV BA350-JA SCSI Storage Shelf
HSSDEV TKZ09-VA (8mm Tape Drive)
<PAGE>
SCHEDULE 2.1(a)(i) Fixed Assets, Equipment, Machinery, Tools, and Computer
Hardware being purchased by Buyer - continued
Telecommunications Equipment, Personal Computer
and Related Equipment
Customer Service (Bldg. 56)
- - ---------------------------
HP Design Jet 455A Plotter
Cougar 4000-60 / Cougar
VAX 4000 CPU Upgrade
TAPE, DEC, on Cougar
VAX 3000 Puma/sn AB43800GCC
ULTRA 30 / Wildfire
8505XL EXABYTE / on Wildfire
SUN SPARC 2 / Starfire
VAX 3000/Lion/sn AB43800GWG
Plain Paper Fax
HP Laserjet Printer / Wildfire
Dell Optiplex/Cust. Data PC
Compaq DP SB / Ed Mills
Compaq Deskpro / Sue Umberger
Compaq DP 4000/Robert Quigley
Compaq DP 575/Debbie Fleming
Compaq Deskpro/Shiela Tyre
Compuadd 486/Lydia Guthridge
Compaq P166/Andra Nathanson
Compaq DP 575/Luis Pinto
Compaq 575/Phung Luu
Compaq DP4000/Dave Moffett
Portege 650CT Laptop/J Millspaugh
HP LaserJet III/J Millspaugh
Compaq DP5100/C Romano
HP Laserjet II Printer/C Romano
Compaq 266/Steven Suhling
Maintenance
- - -----------
Terminal, Dec, VT340/J Carter
Camera, 3M, Microfiche
CPQ Deskpro 2000/Pat Kervin
HP Laserjet 4si/Old Starfire Printer
Compaq DP/J Maciejewski
Compaq DP 4000/Scott Gallagher
Compq 575/Pat Schappert
Compaq DP SB/Walt Rauch
<PAGE>
SCHEDULE 2.1(a)(i) Fixed Assets, Equipment, Machinery, Tools, and Computer
Hardware being purchased by Buyer - continued
Telecommunications (Bldg. 56)
- - -----------------------------
Fastiron - 24 Ports
Chassis, Base T Conc
10 Base T Chassis
28115E 100M Stackable
Xyplex Server Chassi
10Baset Monitor Card
2115R 16 Port 100 BA
Base T Connector
3000 T Connector
3000 T Concentrator
Telecom & Computers - Building 60
- - ---------------------------------
Dell P75/ Bonnie Mitchell
Compaq DPSB/N Miller
Gateway 2000/Beth Morey
Lexmark Printer/B & Ship
Compaq DPSB/Bob Quinn
CPQ Deskpro 2000/F Trimboli
Compaq Prolinea 486/MEBES
Compaq/Robert Shaw Sys
Compaq 286/Particle Monitor
Add-on Costs/Particle Monitor
Compaq 486/Tom Thum box
CPQ 5166MMX/Bill & Ship
Compaq 386/R Manion/home
Compaq DP2000/Rick M
Compaq 5133 MMX/Robe
Lanier Fax 3800
Chassis, Base T Conc
Max 4500T Server
Vax Station Adapter
Terminal, VT240
Dell P75/Liz Helms
Compaq DP 575/Doug Quinn
Compaq DP/Charlie Burns
Compaq 386/MEBES
Compaq DP/Supervisors' PC
Compaq MT 466/Bay 2
HP LaserJet 4Plus/Prd Control
Compaq 433/Billie Hogan
<PAGE>
Schedule 2.1(a)(ii)
<PAGE>
SCHEDULE 2.1(a)(ii) Cleanroom Fixtures and Improvements
being purchased by Buyer
Recirc. CHW/CW Pumps (11)
Air Handling Unit 08 & 09
Air Handling Unit 10 & 11
Air Handling Unit 12,13,14 & 15 (Pace)
HVAC Upgrade
Hood Duct Filter System
Processing Piping System
DDC System Progrss
EPE Power Block 30KVA
Clean Room Flooring
Doors/Walls/Ceiling
Particle Meas. System (Less Facility View Software)
Under Raised Floor Fire Alarm (Vesda)
<PAGE>
Schedule 2.1(a)(iii)
<PAGE>
SCHEDULE 2.1(a)(iii) Fixtures and Improvements attached to the
Real Property being purchased by Buyer
Cooling Tower
Cooling Tower Pumps (2)
Cooling Tower Base
Chiller Plant Upgrades (1997)
Scrubber/Exhaust System
Generator/Fuel System
<PAGE>
Schedule 2.1(a)(iv)
<PAGE>
SCHEDULE 2.1(a)(iv) Inventory and Raw Materials being purchased by Buyer
Item Est. Value
- - ---- ----------
Raw Material - Photomask Blanks & Pellicles $226,000
Work-in-Progress (WIP) $15,000
Finished Goods
Chemicals $14,000
Mask Boxes $25,000
Equipment Spare Parts (see list below) $103,000
On-site Equipment Maintenance Spares
New parts:
QC Optics
- - --------------------------------------------------------------------------------
Microscope Drv. Bd. $ 1,600.00
- - --------------------------------------------------------------------------------
DMA BD $ 825.00
- - --------------------------------------------------------------------------------
I/O Bd.A $ 1,150.00
- - --------------------------------------------------------------------------------
Analog Bd. $ 4,250.00
- - --------------------------------------------------------------------------------
Sensor, Hammatsu $ 880.00
- - --------------------------------------------------------------------------------
PMT Tube $ 550.00
- - --------------------------------------------------------------------------------
Motor 22N $ 300.00
- - --------------------------------------------------------------------------------
Motor M1616C $ 340.00
- - --------------------------------------------------------------------------------
Laser, Pellicle $ 580.00
- - --------------------------------------------------------------------------------
Misc. Parts $ 1,600.00
- - --------------------------------------------------------------------------------
Ultra-Tech Plate Cleaner
- - --------------------------------------------------------------------------------
Pump, High Pressure $2,000.00
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
Robert-Shaw System
- - --------------------------------------------------------------------------------
DCM-UC $ 2,700.00
- - --------------------------------------------------------------------------------
DCM-GPC $ 2,640.00
- - --------------------------------------------------------------------------------
MSC-AC $ 550.00
- - --------------------------------------------------------------------------------
MSC-PO $ 286.00
- - --------------------------------------------------------------------------------
MSC-P1504 $ 450.00
- - --------------------------------------------------------------------------------
DMSA-848 $ 650.00
- - --------------------------------------------------------------------------------
DMSA-849 $ 610.00
- - --------------------------------------------------------------------------------
DMSA-850 $ 400.00
- - --------------------------------------------------------------------------------
MSC-U1000 $ 1,770.00
- - --------------------------------------------------------------------------------
DCM-10C $ 3,200.00
- - --------------------------------------------------------------------------------
Misc. Parts $ 1,400.00
- - --------------------------------------------------------------------------------
<PAGE>
On-site Equipment Maintenance Spares - continued
- - --------------------------------------------------------------------------------
Used Parts
- - --------------------------------------------------------------------------------
QC Optics
- - --------------------------------------------------------------------------------
Laser, Argon $ 9,350.00
- - --------------------------------------------------------------------------------
Laser Power Sup. $ 3,375.00
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
Ultra-Tech Plate Cleaner
- - --------------------------------------------------------------------------------
Pump, High Pressure $ 1,500.00
- - --------------------------------------------------------------------------------
Misc. Parts $ 4,000.00
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
MEBES
- - --------------------------------------------------------------------------------
H-P 8V Power Sup. $ 1,200.00
- - --------------------------------------------------------------------------------
M-III EBC $ 8,200.00
- - --------------------------------------------------------------------------------
M-III Vacuum System Cntrl $ 1,100.00
- - --------------------------------------------------------------------------------
M-III Stage Cntrl Interface $ 1,200.00
- - --------------------------------------------------------------------------------
M-III Electron Source Cntrl $ 1,400.00
- - --------------------------------------------------------------------------------
CVI Cryo-pump $ 6,000.00
- - --------------------------------------------------------------------------------
M-III column Electronic P.S. $ 1,100.00
- - --------------------------------------------------------------------------------
V-80 Plotter (2) $ 2,600.00
- - --------------------------------------------------------------------------------
LaB6 Gun $ 4,200.00
- - --------------------------------------------------------------------------------
Misc. Parts $ 8,900.00
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
KLA 100
- - --------------------------------------------------------------------------------
Printer Circuit Bds. $ 3,200.00
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
DRS-I & II
- - --------------------------------------------------------------------------------
Misc. parts $ 5,000.00
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
APT Processor
- - --------------------------------------------------------------------------------
Misc. parts $ 5,000.00
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
Tamarack Printer
- - --------------------------------------------------------------------------------
Misc. Parts $ 2,000.00
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
OSI/MPV Measuring Systems
- - --------------------------------------------------------------------------------
Misc. Parts $ 2,500.00
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
Nitrogen Booster System
- - --------------------------------------------------------------------------------
Haskel Pump (4) $ 2,600.00
- - --------------------------------------------------------------------------------
TOTAL $ 103,156.00
- - --------------------------------------------------------------------------------
<PAGE>
Schedule 2.1(a)(v)
<PAGE>
SCHEDULE 2.1(a)(v) Assumed Contracts
<TABLE>
<CAPTION>
- - ------------------------------------------------------------------------------------------------------------------------------------
Order Order Order Part
Div Dept Charge Vendor Date Number Status Number Description
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- - ------------------------------------------------------------------------------------------------------------------------------------
R 1999 510056 MICROLITHOGRAPHY 9/4/97 230799 O 710627-999999 PELLICLE, ENGINEERING
- - ------------------------------------------------------------------------------------------------------------------------------------
R 1999 510056 MICROLITHOGRAPHY 9/4/97 230801 O 710627-999999 PELLICLE, ENGINEERING
- - ------------------------------------------------------------------------------------------------------------------------------------
R 1999 510056 INKO INDUSTRIAL 7/10/98 238430 O 710627-0103 PELLICLE, ASM
- - ------------------------------------------------------------------------------------------------------------------------------------
R 1999 C10055 FISHER SCIENTIFIC CO. 7/14/98 238564 O 210549 DEVELOPER, AC-12350-2500 (250
ML)
- - ------------------------------------------------------------------------------------------------------------------------------------
R 1999 510055 FISHER SCIENT 7/14/98 238564 O 210549 DEVELOPER, AC-12350-2500
- - ------------------------------------------------------------------------------------------------------------------------------------
R 1999 C10055 FISCHER SCIENTIFIC CO. 7/14/98 238565 O 210548 DEVELOPER, AC149660025 (2.5
LI.)
- - ------------------------------------------------------------------------------------------------------------------------------------
R 1999 510055 FISCHER SCIENT 7/14/98 238565 O 210548 DEVELOPER, AC149660025
- - ------------------------------------------------------------------------------------------------------------------------------------
R 1999 510056 DUPONT PHOTOMASKS INC 7/24/98 238687 O 710627-999999 PELLICLE, ENGINEERING
- - ------------------------------------------------------------------------------------------------------------------------------------
R 1999 510056 DUPONT PHOTOMASKS INC 7/24/98 238688 O 710627-999999 PELLICLE, ENGINEERING
- - ------------------------------------------------------------------------------------------------------------------------------------
R 1999 510056 INKO INDUSTRIAL 10/21/98 240438 O 710627-0106 ASM17P-113-1015-H
- - ------------------------------------------------------------------------------------------------------------------------------------
R 1999 510056 HOYA CORPORATION USA 11/3/98 240644 O 710538-31603 5*5 .090-2UM-EHQ-AR-PBS-U
- - ------------------------------------------------------------------------------------------------------------------------------------
R 1999 510056 HOYA CORPORATION USA 11/2/98 240645 O 710538-61603 6*6 .250-2UM-EHQ-AR-PBS-U
- - ------------------------------------------------------------------------------------------------------------------------------------
R 1999 510056 MICROLITHOGRAPHY INC 11/23/98 241105 O 710627-0503 PELLICLE, PE
- - ------------------------------------------------------------------------------------------------------------------------------------
R 1999 510056 INKO INDUSTRIAL 11/23/98 241106 O 710627-0602 PELLICLE, UT
- - ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- - ------------------------------------------------------------------
Original Invoiced Dollars
Div Dept Charge Dollars Dollars Available
- - ------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
- - ------------------------------------------------------------------
R 1999 510056 $8,000 $2,400 $5,600
- - ------------------------------------------------------------------
R 1999 510056 $8,000 $2,400 $5,600
- - ------------------------------------------------------------------
R 1999 510056 $250,000 $175,625 $74,375
- - ------------------------------------------------------------------
R 1999 C10055 $26,569 $19,587 $6,982
- - ------------------------------------------------------------------
R 1999 510055 $26,569 $19,587 $6,982
- - ------------------------------------------------------------------
R 1999 C10055 $53,059 $39,640 $13,419
- - ------------------------------------------------------------------
R 1999 510055 $53,060 $39,640 $13,420
- - ------------------------------------------------------------------
R 1999 510056 $54,000 $15,525 $38,475
- - ------------------------------------------------------------------
R 1999 510056 $54,000 $15,525 $38,475
- - ------------------------------------------------------------------
R 1999 510056 $112,000 $35,455 $76,545
- - ------------------------------------------------------------------
R 1999 510056 $424,000 $182,850 $241,150
- - ------------------------------------------------------------------
R 1999 510056 $727,650 $417,725 $309,925
- - ------------------------------------------------------------------
R 1999 510056 $60,000 $32,820 $27,180
- - ------------------------------------------------------------------
R 1999 510056 $35,500 $30,530 $4,970
- - ------------------------------------------------------------------
</TABLE>
<PAGE>
SCHEDULE 2.1(a)(v) Assumed Contracts - Continued
<TABLE>
<CAPTION>
- - ------------------------------------------------------------------------------------------------------------------------------------
Order Order Order Part
Div Dept Charge Vendor Date Number Status Number Description
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- - ------------------------------------------------------------------------------------------------------------------------------------
R 1999 510056 DUPONT PHOTOMASKS INC 12/3/98 241296 O 710627-0307 PELLICLE:GN501G-5221H
- - ------------------------------------------------------------------------------------------------------------------------------------
R 1999 510056 DUPONT PHOTOMASKS INC 12/3/98 241297 O 710627-0306 PELLICLE:GN501P-5221H
- - ------------------------------------------------------------------------------------------------------------------------------------
R 1999 C10055 VWR SCIENTIFIC PRODUCTS 2/3/99 241979 O 210062-031 CHEMICAL, CERIUM AMMONIUM
NITRATE
- - ------------------------------------------------------------------------------------------------------------------------------------
R 1999 510056 HOYA CORP 2/2/99 242092 O 710538-03000 4 4 .060-10UM-SLW-AR-1350
- - ------------------------------------------------------------------------------------------------------------------------------------
R 1999 510056 HOYA CORPORATION USA 2/2/99 242093 O 710538-32400 5 5 .090-5UM-QZ-AR-1350-S
- - ------------------------------------------------------------------------------------------------------------------------------------
R 1999 510056 HOYA CORP 2/2/99 242094 O 710538-32103 5X5 .090-5UM-WC-AR-PBS-U
- - ------------------------------------------------------------------------------------------------------------------------------------
R 1999 510056 HOYA CORPORATION USA 2/2/99 242095 O 710538-31501 5 5 .090-2UM-EQZ-AR-1350-U
- - ------------------------------------------------------------------------------------------------------------------------------------
R 1999 510056 HOYA CORP 2/2/99 242096 O 710538-33000 5 5 .090-10UM-SLW-AR-1350-S
- - ------------------------------------------------------------------------------------------------------------------------------------
R 1999 510056 HOYA CORP 2/2/99 242097 O 710538-53000 6 6 .120-10UM-SLW-AR-1350-S
- - ------------------------------------------------------------------------------------------------------------------------------------
R 1999 510056 HOYA CORPORATION USA 2/2/99 242098 O 710538-33200 5 5 .090-5UM-NA-AR-1350-S
- - ------------------------------------------------------------------------------------------------------------------------------------
R 1999 510056 HOYA CORP 2/2/99 242100 O 710538-31501 5 5 .090-2UM-EQZ-AR-1350-U
- - ------------------------------------------------------------------------------------------------------------------------------------
R 1999 510056 IMAGEX 2/5/99 242101 O 710538-11503 4 4 .090-2UM-EQZ-AR-PBS-U
- - ------------------------------------------------------------------------------------------------------------------------------------
R 1999 510056 HOYA CORP 2/2/99 242102 O 710538-11412 4 4 .090-2UM-QZ-CT-PBS-U
- - ------------------------------------------------------------------------------------------------------------------------------------
R 1999 510056 HOYA CORP 2/2/99 242103 O 710538-02103 4X4 .060-5UM-WC-AR-PBS-U
- - ------------------------------------------------------------------------------------------------------------------------------------
R 1999 510056 IMAGEX 2/5/99 242104 O 710538-01503 4X4 .060-2UM-EQZ-AR-PBS-U
- - ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- - --------------------------------------------------------------------
Original Invoiced Dollars
Div Dept Charge Dollars Dollars Available
- - --------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
- - --------------------------------------------------------------------
R 1999 510056 $13,500 $12,825 $675
- - --------------------------------------------------------------------
R 1999 510056 $13,500 $12,825 $675
- - --------------------------------------------------------------------
R 1999 C10055 $34,040 $15,183 $18,857
- - --------------------------------------------------------------------
R 1999 510056 $1,300 $-- $1,300
- - --------------------------------------------------------------------
R 1999 510056 $18,000 $7,200 $10,800
- - --------------------------------------------------------------------
R 1999 510056 $8,700 $-- $8,700
- - --------------------------------------------------------------------
R 1999 510056 $42,250 $2,600 $39,650
- - --------------------------------------------------------------------
R 1999 510056 $2,600 $-- $2,600
- - --------------------------------------------------------------------
R 1999 510056 $3,300 $-- $3,300
- - --------------------------------------------------------------------
R 1999 510056 $155,000 $18,600 $136,400
- - --------------------------------------------------------------------
R 1999 510056 $42,250 $-- $42,250
- - --------------------------------------------------------------------
R 1999 510056 $12,000 $2,400 $9,600
- - --------------------------------------------------------------------
R 1999 510056 $7,250 $-- $7,250
- - --------------------------------------------------------------------
R 1999 510056 $6,300 $-- $6,300
- - --------------------------------------------------------------------
R 1999 510056 $5,750 $-- $5,750
- - --------------------------------------------------------------------
</TABLE>
<PAGE>
SCHEDULE 2.1(a)(v) Assumed Contracts - Continued
<TABLE>
<CAPTION>
- - ------------------------------------------------------------------------------------------------------------------------------------
Order Order Order Part
Div Dept Charge Vendor Date Number Status Number Description
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- - ------------------------------------------------------------------------------------------------------------------------------------
R 1999 510056 MICROLITHOGRAPHY INC 2/5/99 242105 O 710627-0204 PELLICLE, CANON
- - ------------------------------------------------------------------------------------------------------------------------------------
R 1999 510056 INKO INDUST 2/5/99 242106 O 710627-0208 PELLICLE, CANON
- - ------------------------------------------------------------------------------------------------------------------------------------
R 1999 510056 INKO INDUST 2/5/99 242107 O 710627-0207 PELLICLE, CANON
- - ------------------------------------------------------------------------------------------------------------------------------------
R 1999 510056 MICROLITHOGRAPHY 2/5/99 242108 O 710627-0206 PELLICLE, CANON
- - ------------------------------------------------------------------------------------------------------------------------------------
R 1999 510056 MICROLITHOGRAPHY 2/5/99 242109 O 710627-0205 PELLICLE, CANON
- - ------------------------------------------------------------------------------------------------------------------------------------
R 1999 510056 MICROLITHOGRAPHY 2/5/99 242110 O 710627-0200 PELLICLE, CANON
- - ------------------------------------------------------------------------------------------------------------------------------------
R 1999 510056 INKO INDUST 2/5/99 242111 O 710627-0301 PELLICLE, GCA
- - ------------------------------------------------------------------------------------------------------------------------------------
R 1999 510056 INKO INDUST 2/5/99 242112 O 710627-0001 PELLICLE, TRE
- - ------------------------------------------------------------------------------------------------------------------------------------
R 1999 510056 MICROLITHOGRAPHY 2/5/99 242114 O 710627-0201 PELLICLE, CANON
- - ------------------------------------------------------------------------------------------------------------------------------------
R 1999 510056 MICROLITHOGRAPHY 2/5/99 242115 O 710627-0202 PELLICLE, CANON
- - ------------------------------------------------------------------------------------------------------------------------------------
R 1999 510056 INKO INDUST 2/5/99 242116 O 710627-0209 PELLICLE, CANON
- - ------------------------------------------------------------------------------------------------------------------------------------
R 1999 510056 INKO INDUST 2/5/99 242117 O 710627-0210 PELLICLE, CANON
- - ------------------------------------------------------------------------------------------------------------------------------------
R 1999 510056 INKO INDUSTRIAL 2/5/99 242118 O 710627-0303 PELLICLE, GCA
- - ------------------------------------------------------------------------------------------------------------------------------------
R 1999 510056 INKO INDUSTRIAL 2/5/99 242119 O 710627-0304 PELLICLE, GCA
- - ------------------------------------------------------------------------------------------------------------------------------------
R 1999 510056 INKO INDUSTRIAL 2/5/99 242120 O 710627-0305 PELLICLE, GCA
- - ------------------------------------------------------------------------------------------------------------------------------------
R 1999 510056 INKO INDUST 2/5/99 242121 O 710627-0400 PELLICLE, NIK
- - ------------------------------------------------------------------------------------------------------------------------------------
R 1999 510056 INKO INDUST 2/5/99 242122 O 710627-0401 PELLICLE, NIK
- - ------------------------------------------------------------------------------------------------------------------------------------
R 1999 510056 MICROLITHOGRAPHY 2/5/99 242123 O 710627-0402 PELLICLE, NIK
- - ------------------------------------------------------------------------------------------------------------------------------------
R 1999 510056 MICROLITHOGRAPHY 2/5/99 242124 O 710627-0403 PELLICLE, NIK
- - ------------------------------------------------------------------------------------------------------------------------------------
R 1999 510056 MICROLITHOGRAPHY 2/5/99 242125 O 710627-0500 PELLICLE, PE
- - ------------------------------------------------------------------------------------------------------------------------------------
R 1999 510056 INKO INDUST 2/5/99 242126 O 710627-0504 PELLICLE, PE
- - ------------------------------------------------------------------------------------------------------------------------------------
R 1999 510056 INKO INDUSTRIAL 2/5/99 242127 O 710627-0505 PELLICLE, PE
- - ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- - --------------------------------------------------------------------
Original Invoiced Dollars
Div Dept Charge Dollars Dollars Available
- - --------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
- - --------------------------------------------------------------------
R 1999 510056 $49,500 $4,950 $44,550
- - --------------------------------------------------------------------
R 1999 510056 $3,400 $-- $3,400
- - --------------------------------------------------------------------
R 1999 510056 $5,600 $-- $5,600
- - --------------------------------------------------------------------
R 1999 510056 $2,750 $-- $2,750
- - --------------------------------------------------------------------
R 1999 510056 $2,750 $-- $2,750
- - --------------------------------------------------------------------
R 1999 510056 $60,000 $8,700 $51,300
- - --------------------------------------------------------------------
R 1999 510056 $64,000 $6,080 $57,920
- - --------------------------------------------------------------------
R 1999 510056 $32,000 $-- $32,000
- - --------------------------------------------------------------------
R 1999 510056 $48,000 $9,360 $38,640
- - --------------------------------------------------------------------
R 1999 510056 $44,800 $3,540 $41,260
- - --------------------------------------------------------------------
R 1999 510056 $3,500 $-- $3,500
- - --------------------------------------------------------------------
R 1999 510056 $3,500 $00 $3,500
- - --------------------------------------------------------------------
R 1999 510056 $9,600 $1,280 $8,320
- - --------------------------------------------------------------------
R 1999 510056 $6,500 $3,250 $3,250
- - --------------------------------------------------------------------
R 1999 510056 $6,500 $3,250 $3,250
- - --------------------------------------------------------------------
R 1999 510056 $3,450 $-- $3,450
- - --------------------------------------------------------------------
R 1999 510056 $3,450 $-- $3,450
- - --------------------------------------------------------------------
R 1999 510056 $6,500 $1,950 $4,550
- - --------------------------------------------------------------------
R 1999 510056 $6,500 $2,275 $4,225
- - --------------------------------------------------------------------
R 1999 510056 $4,500 $600 $3,900
- - --------------------------------------------------------------------
R 1999 510056 $11,550 $-- $11,550
- - --------------------------------------------------------------------
R 1999 510056 $19,200 $1,280 $17,920
- - --------------------------------------------------------------------
</TABLE>
<PAGE>
SCHEDULE 2.1(a)(v) Assumed Contracts - Continued
<TABLE>
<CAPTION>
- - ------------------------------------------------------------------------------------------------------------------------------------
Order Order Order Part
Div Dept Charge Vendor Date Number Status Number Description
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- - ------------------------------------------------------------------------------------------------------------------------------------
R 1999 510056 MICROLITHOGRAPHY 2/5/99 242128 O 710627-0600 PELLICLE, UT
- - ------------------------------------------------------------------------------------------------------------------------------------
R 1999 510056 MICROLITHOGRAPHY INC 2/5/99 242129 O 710627-0501 PELLICLE, PE
- - ------------------------------------------------------------------------------------------------------------------------------------
R 1999 510056 INKO INDUSTRIAL 2/5/99 242130 O 710627-0300 PELLICLE, GCA
- - ------------------------------------------------------------------------------------------------------------------------------------
R 7160 510056 RTD EXPRESS 2/2/99 242266 O SERVICE SERVICE, SEE BELOW PLEASE
- - ------------------------------------------------------------------------------------------------------------------------------------
R 1999 510056 HOYA CORPORATION USA 2/2/99 242287 O 710538-E1503 7.25 .150-2UM-EQZ-AR-PBSU
- - ------------------------------------------------------------------------------------------------------------------------------------
R 1999 510056 DUPONT PHOTOMASKS INC 2/11/99 242386 O 710627-0406 PELLICLE; NI522P-5211H
- - ------------------------------------------------------------------------------------------------------------------------------------
R 1999 510056 DUPONT PHOTOMASKS INC 2/11/99 242387 O 710627-0407 PELLICLE; NI522G-5211H
- - ------------------------------------------------------------------------------------------------------------------------------------
R 1999 510056 MICROLITHOGRAPHY INC 3/2/99 242728 O 710627-0203 PELLICLE, CANON
- - ------------------------------------------------------------------------------------------------------------------------------------
R 1999 510056 HOYA CORPORATION USA 3/24/99 243283 O 710538-51503 6 6 .120-2UM-EQZ-AR-PBSU
- - ------------------------------------------------------------------------------------------------------------------------------------
R 1999 510056 DUPONT PHOTOMASKS INC 3/30/99 243337 O 710627-0409 PELLICLE; NI609P-7043L
- - ------------------------------------------------------------------------------------------------------------------------------------
R 1999 510056 DUPONT PHOTOMASKS INC 3/30/99 243338 O 710627-0306 PELLICLE: GN501P-5221H
- - ------------------------------------------------------------------------------------------------------------------------------------
R 1999 510056 DUPONT PHOTOMASKS INC 3/30/99 243339 O 710627-0307 PELLICLE: GN501G-5221H
- - ------------------------------------------------------------------------------------------------------------------------------------
R 7150 568550 INSTRUMENTATION 5/5/99 244192 O 03-07720-02 PRINTER HEAD, STYLUS 6470
SERVICES
- - ------------------------------------------------------------------------------------------------------------------------------------
R 7140 568550 INTEGRATED SOFTWARE 5/7/99 244269 O SERVICE ON-TAP ALPHA DEPT. S
DESIGN INC 4000, 2100 SER. 5294A
- - ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- - --------------------------------------------------------------------
Original Invoiced Dollars
Div Dept Charge Dollars Dollars Available
- - --------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
- - --------------------------------------------------------------------
R 1999 510056 $3,100 $-- $3,100
- - --------------------------------------------------------------------
R 1999 510056 $31,050 $8,775 $22,275
- - --------------------------------------------------------------------
R 1999 510056 $30,500 $2,745 $27,755
- - --------------------------------------------------------------------
R 7160 510056 $500 $115 $385
- - --------------------------------------------------------------------
R 1999 510056 $520,000 $298,480 $221,520
- - --------------------------------------------------------------------
R 1999 510056 $14,500 $11,600 $2,900
- - --------------------------------------------------------------------
R 1999 510056 $14,500 $9,425 $5,075
- - --------------------------------------------------------------------
R 1999 510056 $81,000 $25,920 $55,080
- - --------------------------------------------------------------------
R 1999 510056 $240,000 $52,000 $188,000
- - --------------------------------------------------------------------
R 1999 510056 $94,000 $9,400 $84,600
- - --------------------------------------------------------------------
R 1999 510056 $54,000 $8,100 $45,900
- - --------------------------------------------------------------------
R 1999 510056 $54,000 $7,425 $46,575
- - --------------------------------------------------------------------
R 7150 568550 $220 $-- $220
- - --------------------------------------------------------------------
R 7140 568550 $795 $-- $795
- - --------------------------------------------------------------------
</TABLE>
<PAGE>
SCHEDULE 2.1(a)(v) Assumed Contracts - Continued
<TABLE>
<CAPTION>
- - ------------------------------------------------------------------------------------------------------------------------------------
Order Order Order Part
Div Dept Charge Vendor Date Number Status Number Description
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- - ------------------------------------------------------------------------------------------------------------------------------------
R 1999 510054 ASHLAND CHEMICAL CO 5/17/99 244458 O 210062-017 ACETIC ACID, (4 X 9 LB. PER
CASE)
- - ------------------------------------------------------------------------------------------------------------------------------------
R 1999 510053 FLUOROWARE INCORPORATED 5/21/99 244552 O 215494-012 BOX FOR FINISHED PHOTOMASK-5"
PA'S H60-60-0615 WHT
- - ------------------------------------------------------------------------------------------------------------------------------------
R 1999 510053 FLUOROWARE INCORPORATED 5/21/99 244553 O 215494-014 BOX FOR FINISHED PHOTO
- - ------------------------------------------------------------------------------------------------------------------------------------
R 7120 568202 ZEPHYRHILLS WATER 2/10/99 252032 O 1 DRINKING WATER SYSTEM AND
BOTTLED WATER
- - ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- - ------------------------------------------------------------------
Original Invoiced Dollars
Div Dept Charge Dollars Dollars Available
- - ------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
- - ------------------------------------------------------------------
R 1999 510054 $799 $396 $403
- - ------------------------------------------------------------------
R 1999 510053 $756 $378 $378
- - ------------------------------------------------------------------
R 1999 510053 $4,310 $2,155 $2,155
- - ------------------------------------------------------------------
R 7120 568202 $500 $243 $257
- - ------------------------------------------------------------------
</TABLE>
<PAGE>
Schedule 2.1(a)(vi)
<PAGE>
SCHEDULE 2.1(a)(v) Assumed Contracts
Schedule 2.1(a)(vi) Prepaid Expenses
Software - Est. Value $4,000
<PAGE>
SCHEDULE 2.1(a)(v) Assumed Contracts
Schedule 7.6
<PAGE>
SCHEDULE 2.1(a)(v) Assumed Contracts
Schedule 7.6(a) All Software Licenses used in or on behalf of the Photomask
Business
Facility View
Standard Client (Windows 95/NT, MS Office 97 Pro, Outlook, I.E., Onnet, McAfee)
Kea!
Adobe Acrobat 3.0
Corel PhotoPaint
PowerBuilder 6.0
Visio
Hub/Docs: Exceed 6.1
L-View Pro 2.0
WinZip
Visual Basic 5.0
Visual C++
Project
FrontPage98
Microsoft Developer
Wave Star 1.1.2
Pocket Logger
Perl
FedEx Shipping
Harvard Graphics 3.05
LabelWorks 2.0
Lotus 1-2-3, v3.1
Microsoft Liquid Motion
Omni Page (OCR software)
Paradox 4.0
Paradox 4.5
PGP 5.5 for Enterprise Security
ProComm Plus
Quick Books 4.0.2
Telemoney PC Batch 2.2 (VISA)
Cobol
Ontap
JSS
DECset
CDD/DBMS
DECForms
Diskeeper
Multinet
Pascal
DEC C
FMS
RS 1
Robomon
<PAGE>
SCHEDULE 2.1(a)(v) Assumed Contracts
Schedule 7.6(a) All Software Licenses used in or on behalf of the Photomask
Business (continued)
SLS
PGPOST
MIZER
MDECK
EYORE
TABBY
CATS GRAPHICS
CATS FRACTURE
MNET
MICE II
SARA
INGRESS
BILL AND SHIP
CASPER
PERF EVAL
CONNX
JSURVEY
PGP UNIX ENCRYP
LABELING
UCX TCP/IP
VMS 5.5-2 OS
VMS 5.4 OS
VMS 6.2 OS
VAX Watcher
VAX DW-MOTIF
Consilium Workstream
On Line SPC
Tom Thum
HITG Web Site
Customer Web Sites
Solaris Unix 2.5.1 OS
Sun 4.1.4 O
<PAGE>
EXHIBIT 10.20
Lease Agreement
by and among
Harris Corporation
Semiconductor Business Unit
and
Align-Rite, Inc.
<PAGE>
LEASE SUMMARY
Lessor: Harris Corporation
Semiconductor Business Unit
Notice Address: 2401 Palm Bay Road NE, m/s 53-205
Palm Bay, FL 32905
Attention: Tim Muth
Phone Number: (407) 724-7988
Fax Number: (407) 729-4887
with a copy to: Vice President Counsel
Harris Semiconductor Business Unit
2401 Palm Bay Road NE, m/s 53-216
Fax Number: (407) 729-5952
- - --------------------------------------------------------------------------------
Lessee: Align-Rite, Inc.
Notice Address: c/o 2428 Ontario Street
Burbank, CA 91504
Attention: Petar Katurich
Phone Number: (818)843-7220
Fax Number: (818 563-4902
with a copy to: J. Jay Herron, Esquire
Robert L. Davis, Esquire
O'Melveny & Myers
610 Newport Beach, California 92660
Phone Number: (949) 823-6906
Fax Number: (949) 823-6994
- - --------------------------------------------------------------------------------
Date of this Agreement: July 2, 1999
Description of Demised Premises: Building 60 and a portion of
Building 56, as described in
Exhibits "A" through "D" hereof
Gross Rentable Square Feet: Building 60: approx. 25,567 sq. ft.
Building 56: approx. 8,108 sq. ft.
2
<PAGE>
LEASE SUMMARY (continued)
Lessee's proportionate Share: Building 60: 100%
Building 56: 50.6% (4,101 sq. ft.)
with option to expand
to 95%
Rent: Years 1 - 2 $225,000.00 annually,
plus tax; adjusted if
the option to expand
the occupied portion of
building 56 is
exercised ("Adjusted
Rent") $225,000 or the
adjusted rent increased
by the increase, if
any, in the Producer
Price Index for the
month of July in the
year in which any
option to renew is
exercised over the
Producer Price Index
for July, 1999, if
option to renew is
exercised.
Term of Lease: Two (2) years
Option to Extend Term: Six (6) options of three (3) years
each
Commencement date: July 3, 1999
Liability Insurance: Lessor to provide for Building
Shells Lessee to provide for
Building contents
Security Deposit: None
3
<PAGE>
Table of Contents
1. Premises
2. Term
3. Rent
4. Additional Rent / Tax
5. Use of Premises
6. Utilities
7. Maintenance, Repairs & Alterations
8. Fixtures
9. Security
10. Services
11. Signs
12. Parking Spaces
13. Entry Way
14. Hazardous Material Storage Area
15. Stock Room
16. Telephone Communications Equipment
17. Condition of Premises
18. Insurance
19. Destruction of Premises
20. Condemnation
21. Default
22. Remedies Upon Event of Default
23. Option to Renew
24. Option to Expand
25. Hazardous Materials
26. Indemnification
27. Abandonment of Premises
28. Assignment and Subletting
29. Option to Cancel
30. Compliance with Law
31. Holding Over
32. Lessor's Right to Entry and Inspection
33. Lessor's Right to Perform Lessee's Covenants
34. Late Payment Charges
35. Liens
36. Notices
37. Quiet Enjoyment
38. Security Deposit
39. Successors and Assigns
40. Surrender of Premises
41. Transfer of Property by Lessor
42. Estoppel Certificate and Subordination
4
<PAGE>
Table of Contents - continued
43. General
44. Governing Law
45. Force Majeure
46. Entire Agreement
47. Attorneys' Fees
48. Authority
Exhibits
Exhibit A - Map of the Complex located at 2401 Palm Bay Road NE, Palm Bay, FL
32905
Exhibit B - Description of the demised Premises
Exhibit C - Layout of Building 56, first floor
Exhibit D - Layout of Building 56, second floor
5
<PAGE>
COMMERCIAL NET LEASE
This Lease Agreement is entered into this 2nd day of July, 1999 at Palm Bay,
Florida, by and among Harris Corporation, a Delaware Corporation, acting through
its Semiconductor Business Unit, 2401 Palm Bay Rd. NE, Palm Bay, FL 32905
("Lessor"), and Align-Rite, Inc., a Florida Corporation, c/o 2428 Ontario
Street, Burbank, CA 91504-3195 ("Lessee").
RECITALS
WHEREAS, Lessor and Lessee have or will enter into a separate Asset
Purchase Agreement ("Asset Purchase Agreement") of even date herewith for the
sale of certain assets to Lessee used in connection with Lessor's Photomask
Business; and
WHEREAS, Lessor and Lessee have or will enter into a separate Site
Services Agreement ("Site Service Agreement") of even date herewith for the
provision of certain services to Lessee used in connection with Lessor's
Photomask Business; and
WHEREAS, Lessor has agreed to lease the principal facilities used in the
Photomask Business ( as defined in the Asset Purchase Agreement) to Lessee.
AGREEMENT
In consideration of the premises, the mutual promises contained herein,
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, and intending to be legally bound hereby, the parties
agree as follows:
1. PREMISES:
Lessor hereby leases to Lessee and Lessee hires from Lessor for the Term,
at the rental, and upon all of the conditions set forth herein, a portion of the
complex situated in the City of Palm Bay, Brevard County, State of Florida,
located at 2401 Palm Bay Rd. NE, Palm Bay, FL 32905 (the "Complex", a map of
which is attached hereto and incorporated herein as Exhibit "A"), said portion
consisting of Building 60, which contains the Imaging Technology Group photomask
manufacturing facilities, and a portion of Building 56, which contains office
space, more particularly depicted in Exhibits "B" through "D" attached hereto
and incorporated herein by reference (the "Premises").
6
<PAGE>
2. TERM:
The term of this Lease shall be for twenty-four (24) months commencing
July 3, 1999, (the "Commencement Date") and terminating on July 2, 2001, The
term shall be automatically renewed for six extensions of three years each,
pursuant to Section 23, unless terminated pursuant to Section 29 (as so extended
the "Term").
3. RENT:
Rent shall be payable in advance on the first day of each month,
commencing on July 3, 1999 without abatement, deduction, offset, prior notice or
demand. Building 60 is a triple-net lease, whereby the monthly rent covers the
building shell only; real property taxes, utilities, site services and insurance
on the building shell are not included. Building 56 is a fully-burdened lease,
whereby the monthly rent includes all utilities, real property taxes, and
insurance on the building shell. The total rent for the Premises, consisting of
100% occupancy of building 60 and initially 50.6% occupancy of Building 56,
shall be $225,000.00 annually, which is $18,750.00 per month.
If the Commencement Date of this Lease is other than on the first of the
month, that month's rent shall be pro-rated accordingly. The rent for the last
month of the Lease, whether during the Term, shall also be pro-rated. Commencing
on the twenty-fifth (25th)month of the Term hereof and thereafter every three
(3) years, the annual rent shall be adjusted (as illustrated below) by adding to
the annual rent an amount calculated by multiplying Base Rent by the Increase in
PPI, if a positive number. As used herein: "Base Rent" means $225,000 or, if
Lessee has exercised its option to increase occupancy of Building 56 to 95% of
this area of the Building, $250,000; "Increase in PPI" means the amount obtained
by subtracting the Commencement PPI from the Final PPI and dividing such
difference by the Final PPI' "Commencement PPI" means the PPI for July 1999;
"Final PPI" means, with respect to the first renewal term, the PPI for June 2001
and, with respect to each successive renewal term, the PPI for the month
immediately preceding the first month of the applicable successive renewal term;
and "PPI" means the Producer Price Index for the month in question as published
by the United States Department of Commerce ("USDC"), or such substitute or
replacement index therefor as may be published by the USDC. In the event that
the PPI is discontinued and not replaced by an index published by the USDC, the
parties hereto shall agree to a reasonable replacement index to approximate the
results under the foregoing formulas that would be achieved through use of the
PPI.
Example of Rent Calculation
---------------------------
New Rent (1st Renewal Term) =
Base Rent + [(Base Rent) x ({PPI (6/01)} - {Commencement PPI}/Commencement PPI)]
New Rent (2nd Renewal Term) =
7
<PAGE>
Base Rent + [(Base Rent) x ({PPI (6/04)} - {Commencement PPI}/Commencement PPI)]
8
<PAGE>
Should Lessee exercise the option to expand as set forth in Section 23 herein,
the monthly rent of Building 56 will increase to reflect 95% occupancy, and the
total rent for the Premises shall be $250,000 annually, which is $20,833.33 per
month.
4. ADDITIONAL RENT / TAX:
a) In addition to the rent required to be paid under this Lease, Lessee
shall pay, as additional rent, the utilities charges as set forth in the
"Consumables" Section (provided to Align-Rite by Harris) on page 2 of Exhibit
"A" of the Site Services Agreement.
b) In addition to the rent required to be paid under this Lease, Lessee
shall pay, as additional rent, six percent (6%) Florida sales tax on the monthly
rental amount as required by Florida Statutes Section 212.031.
c) In addition to the rent required to be paid under this Lease, Lessee
shall pay, as additional rent, a monthly pro-rata portion of any and all Real
Property Taxes levied or assessed against Buildings 60 during the Term of this
Lease. The estimated real estate taxes in fiscal year 2000 for Building 60 is
$17,244.
d) For purposes of this Lease, Real Property Taxes shall be defined as
follows: (i) All real estate taxes, including but not limited to town, county
and school taxes payable (adjusted after protest or litigation, if any) for any
part of the term of this Lease including any extension period hereof on the
Premises, (ii) any taxes that shall be levied in lieu of the taxes described in
(i) above or that shall be levied on the gross rentals of the Premises but
excluding all income taxes of Lessor, (iii) any other governmental real estate
taxes, levies, impositions or charges of a similar or dissimilar nature, whether
general, special, supplemental, ordinary, extraordinary, foreseen or unforeseen
that may be assessed, levied or imposed upon all or any part of the Premises,
and (iv) the reasonable expense of contesting the amount or validity of any such
taxes, charges or assessments, such expense (including reasonable attorneys'
fees) to be applicable to the period of the item contested. If the method of
taxation of real estate utilized by the taxing jurisdictions having jurisdiction
over the Premises at the time of execution of this Lease shall be altered so as
to cause the whole or any part of the taxes now or hereafter levied, assessed or
imposed on real estate to be levied, assessed or imposed upon Lessor wholly or
partially, as a capital levy or other tax or otherwise, or on or measured by the
rents received therefrom, then such new or altered taxes attributable to the
Premises shall be included within the term "Real Estate Taxes."
e) Tax Hold-Harmless Clause: Lessee shall indemnify and hold Lessor and
the property of Lessor, including said Premises and any improvements now or
hereafter on said Premises, free and harmless from any liability, loss, or
damage resulting from any taxes, assessments, or other charges required by this
Article to
9
<PAGE>
be paid by Lessee and from all interests, penalties, and other sums imposed
thereon and from any sales or other proceedings to enforce collection of any
such increase in taxes, assessments, or other charges.
f) Payment by Lessor: Should Lessee fail to pay within the time specified
in this Article any taxes, assessments, or other charges required by this
Article to be paid by Lessee, Lessor may, but is not obligated to, without
notice to or demand on Lessee, pay, discharge, or adjust such tax, assessment,
or other charge for the benefit of Lessee. In such event, Lessee shall promptly
on written demand of Lessor reimburse Lessor for the full amount paid by Lessor
in paying, discharging, or adjusting such tax, assessment, or other charge
together with interest thereon at the rate of ten percent (10%) per annum from
the date of payment by Lessor until the date of repayment by Lessee. Where no
time within which any charge required by this Article to be paid by Lessee is
specified in this Article, such charge must be paid by Lessee before it becomes
delinquent.
g) Lessee shall pay all taxes assessed against or levied upon fixtures,
furnishings, equipment and all other personal property of Lessee located in the
Premises other than those furnished and paid for by Lessor.
5. USE OF PREMISES
The Premises shall be used and occupied by Lessee for its lawful business
consistent with the Photomask Business conducted on the Premises by Lessor prior
to the Closing Date and incidental uses thereto. Lessee is responsible to obtain
any and all licenses and/or permits required for the lawful operation of
Lessee's business.
6. UTILITIES:
Lessee shall pay or cause to be paid all charges for the furnishings of
utilities to Building 60 including, but not limited to, water, electricity,
nitrogen and deionized water to the Premises during the term of this Lease as
set forth in the Site Services Agreement. Lessor will provide utilities in
accordance with Lessor's specifications. Lessee hereby acknowledges that Lessor
is not in the business of providing the utilities herein and that Lessor does
not warrant the performance of providing utilities hereunder. In the event of an
error or omission in the provision of utilities which shall be established to be
principally caused by Lessor's performance hereunder, Lessor shall credit Lessee
for any previously invoiced charges in connection with such utilities. Such
adjustment shall be Lessee's only remedy. Lessor shall have no liability to
Lessee for any special, consequential, or incidental damages. Lessor shall
undertake to perform services hereunder for Lessee substantially in the same
manner as if it were performing such services for a Lessor business unit.
Lessor's obligations to provide any service hereunder is conditioned
10
<PAGE>
upon the responsible party obtaining prior to the commencement of such services
all necessary governmental licenses, approvals, and permits. The utility charges
shall be considered additional rent in accordance with Article 4 of this Lease.
7. MAINTENANCE, REPAIRS & ALTERATIONS:
a) Lessee agrees that the Premises are now in a tenantable and good
condition. Lessor shall maintain the building structure, all utility and
production supply piping up to the point of entry into the Premises or to the
meter, if applicable, windows, doors, landscaping, parking lot, fire detection
and alert system, and the interior sprinkler system of the Premises in good
condition and repair in accordance with the policies and procedures of Lessor,
whether written or oral, by which Lessor maintains the other buildings on the
Complex. Repairs will be performed in accordance with Lessor's standard
procedures for scheduling such work, using the same workmanship levels and
materials used for the adjacent buildings of the Complex as shown on Exhibit
"A". Lessee shall maintain the remainder of the Premises in good condition and
repair.
b) Lessee may use any contractor of Lessee's choice to complete any
repair, maintenance, alteration, or improvement to be completed under this
Section. All such contractors must submit required information to Lessor's
facility and security functions and be cleared and badged appropriately before
being admitted to the Complex. Information required to be submitted to the
Facilities department prior to the commencement of work includes the scope of
the work, detailed engineering drawings, and a bill of materials. In the
alternative, at Lessee's request, Lessor shall make available to Lessee,
Lessor's list of qualified contractors, which Lessee is free to hire to complete
any repair, maintenance, alteration, or improvement.
c) The Premises shall not be materially altered, repaired or changed
without the written consent of Lessor, which will not be unreasonably withheld.
Detailed descriptions or drawings ("Plans") of proposed alterations are to be
supplied to the Lessor ten (10) business days prior to the start of work. The
Lessor will respond in writing within ten (10) business days of its receipt of
any Plans; Lessor's failure to respond within such period shall be conclusively
deemed to be Lessor's approval of the applicable Plans.
d) Lessee may at Lessee's option and Lessee's expense submit a work order
to Lessor's facilities department to complete any repair, maintenance,
alteration, or improvement. In such event Lessor shall charge Lessee for the
work in accordance with the Site Services Agreement between Lessor and Lessee.
8. FIXTURES:
Only those fixtures and improvements set forth in Schedules to the Asset
Purchase Agreement shall belong to Lessee; all other fixtures and improvements
to the Premises shall remain the property of Lessor. All fixtures and
improvements other than Lessee's trade fixtures and equipment which are
installed or constructed
11
<PAGE>
upon or attached to the Premises by either the Lessor or the Lessee shall become
a part of the realty and belong to Lessor. Lessee may, at the termination or
expiration of this Lease, or at any other time, remove from the Premises all
trade fixtures, equipment, and other personal property owned by Lessee and not
permanently affixed to the Premises. Upon said removal, Lessee shall restore the
Premises to its original condition at the time of occupancy, normal wear and
tear and other casualty damage excepted.
9. SECURITY:
Building security will be supplied by the Lessor at the cost and terms set
forth in the Site Services Agreement. These services include:
(a) Guard Services:
o Periodic checks of the closed area: twice per day during 1st shift, and
every two hours during 2nd and 3rd shifts, weekends, and holidays.
(b) Badging:
o Badge Lessee's guests and employees with a badge different from that of
Lessor's employees, but permitting Lessee's employees unrestricted access
to all common areas of the Complex. Lessor's employees and agents shall
have unrestricted access to both Building 56 and 60.
o Lobby training and support for Building 60 receptionist
o Provide perimeter access control and interface with Cardkey systems
o Handle incoming and outgoing classified visits
(c) Clearances:
o Fingerprinting, paperwork processing, electronic submission to appropriate
government agencies, appointments for polygraphs, interviews with
government investigators.
(d) Briefings:
o Initial security briefings to all cleared employees, rebrief when
appropriate, debrief when employees terminate.
o Foreign travel briefing and reporting
o Computer Security briefings
(e) Security Education:
o Periodic reminders of security practice for cleared employees
(f) Locks and Combinations:
o Furnish "approved containers" and approved locks for classified storage,
maintain classified combinations. Change combinations when required.
12
<PAGE>
(g) Classified Material Control:
o Control and accountability of all classified materials (documents and
hardware).
o Shipping and Receiving of all classified material on the premises.
(h) Computer Security support
(i) CSSO (Contractor Special Security Officer) and COMSEC (Communications
Security) Custodian on premises.
(j) Liaison with Defense Security Service Reps. and NSA for internal audits
and inspections.
Lessee shall appoint a security officer responsible for all security
matters relating to Lessee's Photomask Business. The name of this person shall
be provided to Lessor within five (5) business days after the commencement of
this Lease. Lessee shall, at its sole cost, obtain a security clearance for the
Premises as required to handle classified materials in accordance with U.S.
Government Department of Defense requirements.
Lessee will have access to and use of the secure conference room located
in Building 52 as shown on Exhibit "A", subject to preemption by Lessor for
confidential meetings which necessarily take priority over said use by Lessee.
Lessee shall comply with Lessor's on-site hurricane preparedness and evacuation
plan as directed by the Complex Director of Emergency Operations. Lessee
acknowledges receipt of a copy of Lessor's Hurricane Plan.
10. SERVICES
Lessor will provide Lessee with site services in accordance with the cost
and terms set forth in the Site Services Agreement.
11. SIGNS
a) Lessee may install a suitable sign on the Complex which meets all
applicable signage codes, with the prior written approval of the Lessor, which
shall not be unreasonably withheld. Lessee shall not construct any projecting
sign or awning without the prior written consent of Lessor, which consent shall
not be unreasonably withheld. The cost of the sign, its installation, operation,
and maintenance expenses shall be Lessee's sole expense.
b) Lessee may install suitable signs which meet all applicable signage
codes for the six (6) designated parking spaces assigned in Section 12, subject
to the prior written approval of the Lessor, which consent shall not be
unreasonably withheld. Upkeep of the signs shall be at Lessee's sole expense.
13
<PAGE>
12. PARKING SPACES
Lessee shall be assigned and entitled to use at no additional cost six (6)
parking spaces in the parking lot located to the south of Building 54 and to the
east of Building 53 of the Complex as shown on Exhibit "A". Lessee may mark
these as designated spaces with signs as set forth in Section 11.
13. ENTRY WAY
Lessee may install a separate covered entry way to Building 60 from the
parking lot located to the south of Building 54 and to the east of Building 53
of the Complex as shown on Exhibit "A", with the prior written consent of the
Lessor, which consent shall not be unreasonably withheld. The cost of the entry
way, its installation, operation, and maintenance shall be at Lessee's sole
expense.
14. HAZARDOUS MATERIAL STORAGE AREA
Lessee may build a separate storage area for Hazardous Materials on the
west side of Building 60 adjacent to the loading dock with approximate
dimensions of twenty-four feet by twenty feet (24' x 20'), having access from
both inside and outside the building, subject to the prior written consent of
Lessor, which consent shall not be unreasonably withheld. The cost of
installation, operation, and maintenance of this storage area shall be at
Lessee's sole expense.
15. STOCK ROOM
Lessee shall have access to and use of the Building 61 stock room during
Lessor's normal operating hours for those materials necessary for operation of
Lessee's Photomask Business. Materials stored by Lessee shall be substantially
the same as those stored by Lessor for use in the Photomask Business prior to
the Closing Date. No material change in the type or kind of materials stored in
Building 61 after the Closing Date by Lessee is allowed without the prior
written approval of Lessor, which consent shall not be unreasonably withheld.
Lessee must furnish Material Safety Data Sheets with any new chemicals approved
for storage by Lessor. For the purposes of Sections 15 and 25 the introduction,
use, storage or disposal of any materials not used by the Photomask Business
prior to the Closing Date, which are toxic, corrosive, hazardous substances or
flammable (including solvents) constitutes a material change.
16. TELEPHONE COMMUNICATIONS EQUIPMENT
Lessee shall be allowed to use the local telephone service provider's external
telephone lines and network interface on the Complex for connecting their own
separate telephone system with the service provider. Lessor's telecommunications
personnel shall be consulted prior to any work relating to telephone connections
is
14
<PAGE>
performed. All work, equipment, connection fees, and usage fees for a separate
telephone system and account will be at Lessee's sole expense. If Lessee
exercises the option to expand as set forth in Section 24 herein, Lessor's
telecommunications personnel shall be allowed access to the sixty-nine (69)
square-foot Communications Equipment Room (CER) located in Building 56 as shown
in Exhibit "C" during the remainder of the Term, with reasonable prior notice to
Lessee. Lessor shall maintain possession and control of the four-hundred (400)
square-foot CER located in Building 56 as shown on Exhibit "C" throughout the
entire Term of this Lease, including renewal Terms.
17. CONDITION OF PREMISES:
Except as otherwise provided in this Lease, Lessee has inspected and
hereby accepts the Premises in their condition existing as of the Commencement
Date or the date that Lessee takes possession of the Premises, whichever is
earlier, subject to all applicable zoning, municipal, county and state laws,
ordinances and regulations governing and regulating the use of the Premises, and
any covenants or restrictions of record, and accepts this Lease subject thereto
and to all matters disclosed thereby and by all exhibits attached hereto. Lessee
acknowledges that neither Lessor nor Lessor's agent has made any representation
or warranty as to the present or future suitability of the Premises for the
conduct of Lessee's business, except as set forth in the Asset Purchase
Agreement.
Notwithstanding the foregoing, Lessor agrees to deliver the Premises to
Lessee with basic facilities equipment in repair and operational including those
mechanical, plumbing and electrical systems which were in place as of July 2,
1999. Lessor agrees to provide a knowledgeable individual to review the start-up
of the basic facility equipment and transfer the information to the appropriate
staff member of Lessee. This support will not exceed one week of time and will
be a one-time event.
18. INSURANCE
Lessor will obtain and keep in effect throughout the Term an insurance
policy providing general comprehensive property damage insurance for the
building shells, including floor, walls and ceiling (but not the cleanroom)
only. Lessee will obtain and keep in effect throughout the Term an insurance
policy providing bodily injury liability insurance with a limit amount of not
less than $2,000,000.00 per occurrence, which names Lessor as an additional
insured. The limits of said insurance shall not however limit the indemnity
provisions of Lessee hereunder.
(a) Lessee hereby agrees that Lessor shall not be liable for injury to
Lessee's business or any loss of income therefrom or for damage to the goods,
wares, merchandise or other property of Lessee, Lessee's employees, invitees,
customers or any person in, on, or about the Premises nor shall Lessor be liable
for injury to the
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person of Lessee, Lessee's employees, agents, invitees or contractors whether
such damage or injury is caused by or results from fire, wind, steam,
electricity, gas, water or rain or from the breakage, leakage, obstruction or
other defects of pipes, sprinklers, wires, appliances, plumbing, air
conditioning or lighting fixtures or from any other cause whether the same
damage or injury results from conditions arising upon the Premises or upon other
portions of the Complex of which the Premises are a part or from other sources
or places and regardless of whether the cause of such damage or injury or the
means of repairing the same is inaccessible to Lessee, unless such damage or
injury results from the gross negligence or willful acts of Lessor, Lessor's
employees, agents or contractors.
(b) Property Damage Insurance: Lessee agrees at its sole expense to
maintain in full force during the Term, a policy of property damage coverage for
any and all personal property of Lessee on the Premises in the amount of its
reasonable replacement value. Consistent with the foregoing, Lessee shall, at
Lessee's own cost and expense at all times herein, during the Term of this Lease
and any extended term thereof, keep the contents of the Premises, including the
cleanroom, improvements and other personal property on the Premises insured for
their full replacement cost against loss or destruction by fire, earthquake,
flood wind, and other perils, including vandalism and malicious mischief,
commonly covered under the standard extended coverage endorsement in Brevard
County, State of Florida.
"Full replacement cost" as used in this section shall mean the
actual cost of replacement for personal property and other improvements on the
Premises as determined from time to time. If at any time during the term of this
Lease, Lessor believes that the full replacement cost has increased, Lessor
shall notify Lessee in writing. If Lessee agrees with the increased full
replacement cost set forth in Lessor's notice, Lessee shall increase the amount
of insurance carried to the amount stated in the notice. If the parties are
unable to agree within that time period, the increased full replacement cost, if
any, shall be determined by the insurance carrier that is then carrying the
largest amount of fire and extended coverage on the Premises. That determination
shall be final and Lessee shall immediately increase the amount of insurance to
the amount determined by that carrier.
(c) Waiver of Subrogation Rights: Lessee and Lessor each hereby release
and relieve the other and waive their entire right of recovery against the other
for loss or damage arising out of or incident to all perils insured against,
which perils occur in, on or about the Premises whether due to the negligence of
Lessor or Lessee or their agents, employees, contractors or invitees. Lessee and
Lessor shall, upon obtaining the policies of insurance required hereunder, give
notice to the insurance carrier or carriers of the foregoing mutual waiver of
subrogation.
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19. DESTRUCTION OF PREMISES
(a) Duty to Repair or Restore: If any improvements, including buildings
and other structures, located on the Premises are damaged or destroyed during
the term of this Lease or any renewal or extension thereof, the damage shall be
repaired as follows:
(i) If the damage or destruction is caused by a peril against which
fire and extended coverage insurance is required to be carried by Section 18 of
this Lease, Lessor shall repair that damage as soon as reasonably possible and
restore the Premises and improvements to substantially the same condition as
existed before the damage or destruction, regardless of whether the insurance
proceeds are sufficient to cover the actual cost of repair and restoration.
(ii) If the damage or destruction is of personal property of Lessee
and is caused by a peril against which fire and extended coverage insurance is
required to be carried by Section 18 of this Lease, Lessee shall repair that
damage as soon as reasonably possible and restore the Premises and improvements
to substantially the same condition as existed before the damage or destruction,
regardless of whether the insurance proceeds are sufficient to cover the actual
cost of repair and restoration.
(iii) If the damage or destruction is caused by a peril against
which insurance is not required to be carried by this Lease, subject to their
rights to terminate this Lease described in this Section, Lessor shall repair
that damage to the buildings and Lessee shall repair that damage to its personal
property and any improvements to the Premises owned by Lessee, trade fixtures,
equipment and the like as soon as reasonably possible and restore the Premises
to substantially the same condition as existed before the damage or destruction.
(b) Termination of Lease for Certain Losses:
(i) Notwithstanding any other provision of this Lease, if any
improvements located on the Premises are damaged or destroyed to such an extent
it will cost more than $250,000.00 (as determined by Lessor in the exercise of
its reasonable discretion) to repair or replace them, and the damage or
destruction is caused by a peril against which insurance is not required to be
carried by this Lease, Lessor may terminate this Lease by giving Lessee written
notice of the termination. The notice must be given within thirty (30) days
after occurrence of the damage or destruction.
(ii) Lessee and Lessor shall each have the right in its respective
sole and absolute discretion, to terminate this Lease under either of the
following circumstances:
(A) If the Premises are damaged or destroyed from any cause
whatsoever, insured or uninsured, and the laws then in existence do not permit
the repair or restoration of the Premises provided for in this article; or
(B) If the Premises are destroyed from any cause whatsoever,
insured or uninsured, during the last twelve (12) months of the Term.
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(iii) Either party may terminate this Lease in accordance with
Section 18(b)(i) or (ii) by giving written notice of termination to the other
not later than thirty (30) days after occurrence of the event giving rise to the
termination under subsection (ii), and termination shall be effective as of the
date of the notice of termination. In the event of a termination under
subsection (ii), Lessee shall not be entitled to collect any insurance proceeds
attributable to insurance policies covering the Premises or improvements, except
those proceeds attributable to Lessee's personal property and trade fixtures.
(iv) If this Lease is terminated pursuant to either subsection (i)
or (ii) above, rent, taxes, assessments, and other sums payable by Lessee to
Lessor under this Lease shall be prorated as of the termination date. If any
taxes, assessments, or rent has been paid in advance by Lessee, Lessor shall
refund it to Lessee for the unexpired period for which the payment has been
made.
(c) Time for Construction of Repairs: Any and all repairs and restoration
of improvements required by this section shall be commenced by Lessor or Lessee,
as the case may be, within a reasonable time after occurrence of the damage or
destruction requiring the repairs or restoration, shall be diligently pursued
after being commenced, and shall be completed within a reasonable time after the
loss. If Lessor is required under this Lease to perform the repairs and
restoration, Lessor shall cause the repairs and restoration to be completed not
later than one hundred twenty (120) days after occurrence of the event causing
destruction or Lessee shall have the right to terminate this Lease. In the event
of damage or destruction to the Premises as described in this Section 18, rent
shall be abated in proportion to the extent that the Premises are rendered
untenantable by such damage or destruction from the date of such damage or
destruction to the date of substantial completion of all required repairs and
restoration.
20. CONDEMNATION:
(a) Total Condemnation Defined: The term "total condemnation" as used in
this section shall mean the taking by eminent domain or transfer under threat
thereof ("condemnation") by a public or quasi-public agency or other entity
having the power of eminent domain ("condemnor") of either:
(i) More than thirty-three percent (33%) of the ground
area of Building 60; or
(ii) Less than thirty-three percent (33%) of the ground
area of Building 60 at a time when the remaining portion of Building 60 or
improvements thereon cannot reasonably be restored in Lessor's reasonable
judgment to a condition suitable for Lessee's occupancy for the uses permitted
by this Lease within thirty (30) normal eight-hour working days under all laws
and regulations then applicable; or
(iii) Less than thirty-three percent (33%) of the ground
area of Building 60 in such a manner that Lessee is substantially prevented from
carrying
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on operations of a permitted use under this Lease on the remaining portion of
the Premises.
(iv) If Building 56 or any portion thereof is taken by
condemnation, Lessor shall provide Lessee substantially similar office space,
reasonably acceptable to Lessee, elsewhere on the Complex.
(b) Partial Condemnation Defined: The term "partial condemnation" as
used in this section shall mean any condemnation of a portion of the Premises
that is not a total condemnation under Section 20(a) of this Lease.
(c) Termination for Total Condemnation: In the event of a total
condemnation of the Premises during the term of this Lease, this Lease shall
terminate without further notice as of 12:01 A.M. on the date that Lessee
surrenders the Premises as a result of the order or decree of condemnation
("Surrender Date") All rent payable under this Lease shall be prorated as of
12:01 A.M. on said date and a prompt refund or payment of rent for the unexpired
period of this Lease shall be made by Lessor to Lessee. On the making of that
rent adjustment, both Lessor and Lessee will be released and discharged from any
and all further obligations under this Lease.
(d) Effect of Partial Condemnation: In the event of a partial
condemnation of the Premises, this Lease shall terminate as to the portion of
the Premises taken on Surrender Date, but shall remain in full force and effect
as to the remainder of the Premises; provided, however, that promptly after the
Surrender Date, Lessor shall restore, at Lessor's own cost and expense, the
improvements on the remainder of the Premises to a condition making the Premises
tenantable by Lessee for the uses permitted by this Lease. Any rent payable
under this Lease after the Surrender Date shall be reduced by the percentage the
ground area of the portion taken by eminent domain bears to the total ground
area of the Premises on the date of this Lease. In addition, the rent payable
under this Lease shall be further abated during the time and to the extent
Lessee is prevented from occupying all of the remainder of the Premises by the
work of restoration required by this section to be performed by Lessor.
(e) Lessor's Power to Sell in Lieu of Condemnation: Lessor may,
without any obligation or liability to Lessee and without affecting the validity
or continuation of this Lease other than as expressly provided in this section,
agree to sell or convey to the condemnor, without first requiring that an action
or proceeding for condemnation be instituted or tried, that portion of the
Premises sought by the condemnor, free from this Lease and the rights of Lessee
in the Premises other than as provided in this Section 20.
(f) Condemnation Award: All compensation and damages awarded or paid
for the condemnation of the Premises or any portion of the Premises, or for any
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sale in lieu of condemnation as authorized by Section 20(e) above, shall, except
as otherwise expressly provided in this section, belong to and be the sole
property of Lessor. Lessee hereby assigns to Lessor any claim Lessee might have
except for enforcement of this provision against Lessor, the leased Premises, or
condemnor for diminution in value of the leasehold estate created by this Lease
or the value of the unexpired term of this Lease; provided, however, that Lessee
is entitled to seek to recover from the condemnor, but not from Lessor:
(i) The cost of removing any trade fixtures, furniture,
or equipment from the portion of the Premises taken by condemnation;
(ii) The value of any improvements installed by Lessor
on the portion of the Premises taken by condemnation that Lessee has a right to
remove under this Lease but that Lessee elects not to remove; and
(iii) The then amortized value of all improvements made
by Lessee on the portion of the Premises taken by condemnation that could not be
removed by Lessee on expiration of this Lease because of provisions of this
Lease.
21. DEFAULT:
Lessor will provide Lessee advance written notice in the event of any
default. Lessee will have ten (10) days to cure said default in the event of a
monetary default, and thirty (30) days to cure said default in the event of a
non-monetary default` or such longer period as may be necessary to cure such
non-monetary default if not reasonably susceptible of cure within thirty (30)
days provided that Lessee diligently and continuously prosecutes such cure to
completion . Any one or more of the following, if not cured following notice by
Lessor within the periods specified in the foregoing sentence, will constitute
an event of default by Lessee hereunder, if Lessee during the Term:
a) Does not pay in full within ten (10) days after notice is given of all
base rent, additional rent, expenses and charges due under this Lease; or,
b) Violates, fails to perform, or otherwise breaches any term, covenant, or
condition of this Lease and the same is not cured after notice thereof;
or,
c) Permits leasehold estate or any property of Lessee to be exposed for sale
or judgment or execution process by sheriff, marshal, or constable; or,
d) Becomes insolvent, makes an assignment for the benefit of creditors, is
adjudicated bankrupt, files a bill in equity, or otherwise initiates
proceedings for the appointment of a receiver of its assets, files a
voluntary petition under the provisions of the United States Bankruptcy
Court or under the insolvency laws of any state, or has an involuntary
petition filed against it, which involuntary petition is not discharged
within ninety (90) days of filing; or,
e) Records or attempts to record this Lease in any office of public
recording; or,
f) Assigns or sublets this Lease, except as provided herein; or,
g) Fails to move into or take possession of the Leased Premises upon
commencement of the Term.
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h) Fails to abide by the Hazardous Materials storage, handling, and discharge
requirements set forth in Section 25 herein.
22. REMEDIES UPON EVENT OF DEFAULT:
Upon the occurrence of an event of default, Lessor may terminate Lessee's
right to possession of the Premises at any time by written notice to Lessee. If
the Lessor terminates this Lease as herein provided, Lessor may retake
possession, or pursue any other remedy afforded by law, provided that such
default and all other defaults at the time existing have not been fully cured,
and all reasonable expenses and costs incurred by Lessor, including all
reasonable attorneys' fees, in connection with enforcing this Lease, shall not
have been fully paid.
Any such termination shall apply to any extension or renewal of the term
herein demised, and to any right or option on the part of Lessee that may be
contained in this Lease or any agreement. Following an event of default as
defined herein or abandonment of the leased Premises by the Lessee, in addition
to all other remedies, Lessor shall have the option to declare immediately due
and payable the entire base rent, and such shall then become immediately due and
payable, including all applicable sales tax.
Nothing herein contained shall be construed as precluding Lessor from
having such remedy as may be and become necessary in order to preserve Lessor's
right or interest in the leased Premises and in this Lease, even before the
expiration of the grace or notice periods provided for in this Lease, if under
particular circumstances then existing the allowance of such grace or the giving
of such notice will prejudice or will endanger the rights and estate of Lessor
in this Lease and in the leased Premises.
23. OPTION TO RENEW
Provided no event of default exists and is continuing at the time of
giving notice of Lessee's exercise of its option, Lessor grants to Lessee an
option to renew the Lease for six (6) additional three (3) year periods,
commencing at the close of the initial lease Term and each succeeding option
period respectively.
24. OPTION TO EXPAND
Provided no event of default exists and is continuing at the time of
giving notice of Lessee's exercise of its option, Lessor grants to Lessee, on
July 3, 2000, an option to expand the leased Premises to include the 2,533
square foot portion of Building 56 presently occupied by Lessor's calibration
laboratory as identified on Exhibit "C". Lessee shall give Lessor ninety (90)
days written notice of its intent to exercise this option. The cost of
reconfiguring said portion of Building 56 to suit Lessee's needs shall be at
Lessee's sole expense. If Lessee does not exercise this option on July 3, 2000,
the next time it may be exercised is on July 3, 2001 and
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every subsequent anniversary thereof, if not already exercised, until the
termination date of this Lease as specified in Section 2 herein.
Upon the exercise of this option, the monthly base rent shall be increased
to reflect the total rentable square footage of Building 56 to be occupied by
Lessee, which is 7,708 square feet (95%). The 400 square-foot Communications
Equipment Room shown on Exhibit "C" is excluded from this Option, as set forth
in Section 15 herein. Lessor's employees, agents, and contractors shall be
allowed unrestricted access to and use of the hallway running east-west through
Building 56 for purposes of traversing the Complex.
25. HAZARDOUS MATERIALS
Lessee shall not use, generate, manufacture, produce, store, release,
discharge, or dispose of, on, under or about the Premises or any part of the
Complex, or transport to or from the Premises or any part of the Complex, any
Hazardous Materials or allow its employees, agents, contractors, invitees or any
other person or entity to do so except in material compliance with all Federal,
state and local laws, regulations and ordinances. The term "Hazardous Materials"
shall include without limitation:
(a) Those substances defined as a "Hazardous Substance" under Section 1.1 of
the Asset Purchase Agreement;
(b) Those substances included within the definition of "hazardous substances",
"hazardous materials", "toxic substances", or "solid wastes" under CERCLA,
RCRA, and the Hazardous Materials Transportation Act, 49 U.S.C. Section
1801 et seq., and in the regulations promulgated pursuant to said laws.
Lessee hereby acknowledges receipt of and agrees to comply with Lessor's
Stormwater Pollution Prevention Plan for the handling and storage of Hazardous
Materials. In addition to the foregoing, Lessee further agrees that except as
previously disposed of in the conduct of the Photomask Business by Lessor
without material variation, without Lessor's prior written consent which may be
given or withheld in Lessor's sole discretion, only ordinary domestic sewage is
permitted to be put into the sanitary waste drains of the Premises.
So long as the Photomask Business operations carried on by Lessee are
conducted substantially in the same way that Lessor conducted the Photomask
Business prior to the Closing Date, Lessee's industrial wastewater will be
treated in Lessor's wastewater treatment system and the effluent from that
system will be disposed of in Lessor's deep well. If Lessee desires to put any
substances other than what was disposed of prior to the Closing Date by Lessor
in the industrial wastewater drains, it shall first submit to Lessor a complete
description of each such substance, including its chemical composition, and a
sample of such substance
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suitable for laboratory testing. Lessor shall properly determine whether or not
the substance can be deposited into the drains and its determination shall be
absolutely binding on Lessee. Upon demand, Lessee shall reimburse Lessor for the
reasonable expenses incurred by Lessor in making such determination. Any change
in the type or kind of chemicals used by Lessee or a material change in the
volume of effluent produced by Lessee must first be approved in writing by
Lessor. Lessee must furnish Material Safety Data Sheets with any new chemicals
approved for use by Lessor.
Regardless of whether Lessor approves of Lessee's use, storage or disposal
of Hazardous Materials, Lessee shall be liable to Lessor for and indemnify and
hold Lessor harmless against all direct damages (including, but not limited to,
investigation, remedial costs, fines, and judgments), liabilities and claims to
the extent arising out of Lessee's activities associated with storing, handling,
using, or disposing of Hazardous Materials on the Complex. In the event Lessee's
activities with Hazardous Materials create a contamination problem on or
adjacent to the Premises or Complex, Lessee shall promptly commence
investigation and remedial activities to remedy the problem. If appropriate or
required by law, these activities shall be conducted in conjunction with
Federal, state and local oversight and approvals and in accordance with
applicable government regulations.
Lessee agrees immediately to report to Lessor any unlawful and material
release on or adjacent to the Premises or Complex by Lessee of any Hazardous
Materials in order to allow Lessor's Emergency Response Team ("ERT") to respond
to such release. Lessee and Lessee's employees shall follow directions from the
incident commander of Lessor's ERT in responding to such release. In addition,
Lessee shall provide Lessor with copies of any and all correspondence between
Lessee and any environmental regulatory agencies of any federal, state or local
governmental authorities relating to a violation or alleged violation of
environmental laws, rules or regulations by Lessee at the Premises. If Lessee
performs or causes to be performed any environmental testing of the Premises,
Lessee shall provide Lessor with a complete copy of the results of any such
tests and any reports analyzing such results. Any testing required by an
environmental regulatory agency because of a permit modification due to Lessee's
operations shall be at Lessee's expense.
Lessor shall have the right to enter on the Premises and any part thereof,
after reasonable notice and at reasonable times during normal business hours,
for the purpose of performing any of the work for which Lessor is responsible
under the Lease, or to engage in any other activities deemed reasonably
necessary by Lessor to ensure the compliance of the Premises with applicable
environmental laws and regulations, including the performance of any such
activities required to be performed by Lessee hereunder or under applicable laws
or regulations, following reasonable notice and an opportunity to Lessee to
cure, if appropriate in the light of
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the circumstances. In the event of a release or other environmental emergency at
the Premises Lessor shall have the right to enter the Premises for purposes of
responding to such release or emergency without giving Lessee notice in advance.
Lessor reserves the right to immediately stop any wrongful or unlawful discharge
by Lessee.
26. Indemnification
Lessee shall indemnify and hold Lessor harmless from and against any
claims arising from Lessee's use of the Premises or from the conduct of Lessee's
business or from any activity, work or things done, permitted or suffered by
Lessee in or about the Premises or elsewhere, including, but not limited to,
releases of Hazardous Materials or a violation of environmental laws. Lessee
shall further indemnify and hold harmless Lessor from and against any claims
arising from any breach or default in the performance of any obligation on
Lessee's part to be performed under the terms of this Lease, and Lessee hereby
waives all claims in respect thereof against Lessor.
Lessee shall indemnify and save Lessor harmless from any and all direct
liability, loss, damage, expense, causes of action, suits, claims, or judgments
arising from injury to person or property resulting from or based upon the
actual use of the Complex or Premises by Lessee's employees, agents,
contractors, or guests, and shall, at its own cost and expense, defend any and
all suits which may be brought against Lessor, either alone or in conjunction
with others upon any such liability or claim and shall satisfy, pay and
discharge any and all judgments and fines that may be recovered against Lessor
in any such action, provided that Lessor shall give Lessee prompt written notice
of any such claim or demand.
Lessor shall indemnify and hold Lessee harmless against all direct damages
(including investigation and remedial costs), liabilities and claims arising out
of any and all pre-Commencement Date activities related to the Premises
associated with Hazardous Materials or a violation of environmental laws
No indemnity provided by Lessee to Lessor hereunder shall apply to the
extent that the applicable claim, expense, liability, loss, damage, cause of
action, suit or judgment is caused by the negligence or willful misconduct of
Lessor, its agents or employees..
27. ABANDONMENT OF PREMISES
Lessee shall not vacate or abandon the Premises at any time during the
term hereof for a period exceeding 90 days, and if Lessee shall abandon or
vacate the Premises, or be dispossessed by process of law, or otherwise, any
personal property belonging to Lessee left upon the Premises shall be deemed to
be abandoned, at the option of Lessor. All rent due under the remaining term of
this Lease shall be due and payable immediately.
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28. ASSIGNMENT AND SUBLETTING
Lessee shall not assign this Lease, or any interest therein, and shall not
sublet the Premises, or any part thereof, or any right or privilege appurtenant
thereto, or suffer any other person (the agents and servants of Lessee excepted)
to occupy or use the Premises, or any portion thereof, without the written
consent of Lessor first had and obtained, except that Lessee may sublet office
space to their Sales Representatives for a term consistent with the Term of this
Lease, subject to the rights of Lessor and obligations of Lessee in this Lease.
Should Lessor cancel this Lease as provided in Section 29 herein, Lessee must
immediately cancel the sublease with the Sales Representative. Lessor shall not
be responsible to Lessee's Sales Representatives in any way for exercising the
option to cancel.
The consent to this or any other assignment, subletting, occupation or use
by any other person, shall not be deemed to be a consent to any subsequent
assignment, subletting, occupation or use by another person. Any such assignment
or subletting without such consent shall be void, and shall at the option of
Lessor, terminate this Lease. Notwithstanding the foregoing, Lessee may assign
without the prior consent of Lessor, its rights hereunder to any wholly -owned
subsidiary or Affiliate of Align-rite International, Inc., or to any
post-.Closing purchaser(s) of all of the capital stock of Align-Rite
International, Inc. or of substantially all of its assets, and except that
Lessor may assign, without the prior consent of Lessee, its rights hereunder to
any wholly-owned subsidiary or Affiliate of Harris Corporation or to any
post-Closing purchaser(s) of substantially all of the Semiconductor Business
Unit of Harris Corporation. Notwithstanding the above, Harris covenants and
agrees that in the event it sells all or substantially all of its assets related
to its semiconductor business (including, but not limited to, its June 3, 1999
announced sale of its semiconductor business to a subsidiary of Sterling Holding
Company, Citicorp Venture Capital investment portfolio company), it shall
require as a condition of completion of such transaction that the purchaser of
such assets, as well as any successors of any such purchaser, enters into an
express assumption of this Agreement, as if such purchaser or such successor
were the original party to this Agreement, and the form of any such assumption
agreements shall be reasonably acceptable to Align-Rite. In the event of any
such assignments, Harris shall be deemed to have guaranteed the performance of
such purchaser's or successor's obligations hereunder and be responsible
therefor. Align-Rite covenants and agrees that in the event it sells all or
substantially all of the Business Assets, it shall require that the purchaser of
such assets, as well as any successors of any such purchaser, enters into an
express assumption of this Agreement, as if such purchaser or such successor
were the original party to this Agreement, and the form of any such assumption
agreements shall be reasonably acceptable to Harris. In the event of any such
assignments, Align-Rite shall be deemed to have guaranteed the performance of
such purchaser's or successor's obligations hereunder and be responsible
therefor.
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In the event Lessor disposes of the Complex or that portion containing the
Premises, Lessor may assign its rights and delegate its obligations under this
Lease to the purchaser without consent of the Lessee, which purchaser shall be
bound by this Lease, including the obligations of the Lessor hereunder, provided
that such terms of assignment are accepted in writing by the purchaser.
29. OPTION TO CANCEL
Lessor agrees that Lessee may cancel its obligations under this Lease at
the beginning of the twenty-fifth (25th) month of the Term hereof after
providing Lessor with ninety (90) days written notice of Lessee's intent to
cancel. Lessor also agrees that Lessee may cancel its obligations under this
Lease at the beginning of the sixty-first (61st) month of the Term hereof after
providing Lessor with one hundred eighty (180) days written notice of Lessee's
intent to cancel. This option may also be exercised at the beginning of each
successive thirty-six (36) month period (e.g. 97th month, 133rd month, 169th
month, etc.)thereafter, including all renewal option terms, upon Lessee giving
Lessor one hundred eighty (180) days notice of its intent to cancel. . Upon
exercise of this option, Lessee shall pay Lessor the amount of four (4) times
the monthly rental for the month in which notice of cancellation was given,
payable upon notification to Lessor of Lease cancellation, as consideration for
Lessor's cancellation of the Lease Agreement between the parties. Lessee shall
vacate the Premises promptly within ninety (90) days following notification to
Lessor hereunder, and in the event Lessee does not vacate promptly, the rental
shall continue to be payable in accordance with the Lease, without credit for
said payment of four times the monthly rental, until such time as Lessee vacates
the Premises. Lessee shall vacate the Premises in the condition required under
Section 40 of this Lease.
Lessee agrees that Lessor may cancel its obligations under this Lease at
the beginning of the twenty-fifth (25th) month of the Term hereof after
providing Lessee with ninety (90) days written notice of Lessor's intent to
cancel. Lessee also agrees that Lessor may cancel its obligations under this
Lease at the beginning of the sixty-first (61st) month of the Term hereof after
providing Lessee with one hundred eighty (180) days written notice of Lessor's
intent to cancel This option may also be exercised at the beginning of each
successive thirty-six (36) month period (e.g. 97th month, 133rd month, 169th
month, etc.)thereafter, including the renewal option terms, upon Lessee giving
Lessor one hundred eighty (180) days notice of its intent to cancel. Upon
exercise of this option, Lessor shall pay Lessee the amount of four (4) times
the monthly rental for the month in which notice of cancellation was given,
payable upon notification to Lessee of Lease cancellation, as consideration for
Lessee's cancellation of the Lease Agreement between the parties. Upon
cancellation of this Lease by either party, Lessor shall have, and Lessee hereby
grants to Lessor, the option to repurchase all fixtures and improvements as set
forth in Schedule 2.1(a)(i) Attachment V (excluding the Exide 150 System and
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the Generator/Fuel system) of the Asset Purchase Agreement attached to the real
property at their fair market value.
30. COMPLIANCE WITH LAW
Lessee shall, at Lessee's expense, comply promptly and materially with all
applicable statutes, ordinances, rules, regulations, orders, covenants and
restrictions of record, and requirements in effect during the term or any part
of the term hereof, regulating the use by Lessee of the Premises. Lessee shall
not use or permit the use of the Premises in any manner that will create a waste
or a nuisance or unreasonably disturb use of the adjacent premises.
31. HOLDING OVER
Any holding over after the expiration of this Lease, with the consent of
Lessor, shall be construed as a month-to-month tenancy at the then existing
rental rate. If Lessee fails without the consent of Lessor to vacate the
Premises at the expiration of this Lease or any extension period thereof, if
extended, then Lessee shall pay Lessor at 150% of the then existing rental rate
for the time Lessee thus remains in possession and, in addition thereto, shall
be responsible for and reimburse Lessor for all direct damages sustained by
Lessor by reason of Lessee's retention of possession. The provisions of this
section do not exclude Lessor's rights of re-entry or any other right or remedy
of Lessor hereunder.
32. LESSOR'S RIGHT TO ENTRY AND INSPECTION
Lessee shall permit and shall cooperate with Lessor or Lessor's agents to
enter upon the Premises at reasonable times and upon reasonable notice, for the
purpose of inspecting and/or repairing the same, and during the last six months
of the Term, will permit persons desiring to purchase or lease the same to
inspect the Premises thereafter upon reasonable notice to Lessee, so long as
they do not disrupt Lessee's business activities.
Lessor reserves the right to retain at all times pass keys to the Premises
and, at any time and without notice in the event of an emergency, and otherwise
upon reasonable notice and at reasonable times, to enter onto the Premises and
any buildings or other improvements of the Premises to take any and all
measures, including inspections, repairs, alterations, additions and
improvements to the Premises, the buildings or to the land, as may be necessary
or desirable for the safety, protection or preservation of the Premises, the
buildings or the land or Lessor's interests, or as may be necessary or desirable
in the operation or improvement of the Premises, the buildings or the land or in
order to comply with all laws, order and requirements of governmental or other
authority.
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33. LESSOR'S RIGHT TO PERFORM LESSEE'S COVENANTS
If Lessee shall at any time fail to make any payment or perform any other
act on its part to be made or performed under this Lease, Lessor may, but shall
not be obligated to, and without waiving or releasing Lessee from any obligation
of Lessee under this Lease, make such payment or perform such other act to the
extent Lessor deems desirable, and in connection therewith, pay expenses and
employ counsel. All sums so paid by Lessor and all penalties, interest, and
costs in connection therewith shall be due and payable by Lessee on the next day
after Lessee receives notice of any such payment by Lessor, together with
interest thereon at the rate of 12 percent (12%) per annum, or the highest legal
rate of interest, whichever is lower, from such date to the date of payment
thereof by Lessee to Lessor plus collection costs and attorneys' fees. Lessor
shall have the same rights and remedies for the non-payment thereof as in the
case of default in the payment of rent.
34. LATE PAYMENT CHARGES
If the rent is not paid within ten (10) days from the date same is due,
Lessor, at its option, may charge a late fee of two percent (2%) per annum above
the prime interest rate published in the Wall Street Journal as of the date on
which payment was due, calculated on a daily basis. If the rent or any other
amount due hereunder becomes more than ninety (90) days past-due, Align-Rite
International, Inc. guarantees and will make payment of such amount on behalf of
Lessee.
35. LIENS
Lessee shall keep the Premises free from any liens arising out of any work
performed, materials furnished, or obligations incurred by or on behalf of
Lessee. Lessee shall cause any such lien imposed to be released of record by
payment or posting of a proper bond within ten (10) days after imposition of the
lien or written request by Lessor, or furnish other assurances for payment
reasonably acceptable to Lessor. Lessee shall give Lessor written notice of
Lessee's intention to perform work on the Premises which might result in any
claim of lien at least twenty (20) days prior to the commencement of such work
to enable Lessor to post and record a notice of non-responsibility or other
notice deemed proper before the commencement of any such work.
36. NOTICES
Any notice, demand, request, consent, approval or communication that
either party desires or is required to give to the other party under this Lease
shall be in writing and shall be served personally, delivered by independent
messenger or overnight courier service, or sent by U.S. certified mail, return
receipt requested,
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postage prepaid, in which event such notice shall be deemed to have been given
when seventy-two (72) hours have elapsed from the time when such notice was
deposited in the United States mail, addressed to the other party at the address
set forth in the Lease Summary herein.
Either party may change its address by giving notice of same in accordance
with this paragraph.
37. QUIET ENJOYMENT
Upon the performance by Lessee of all of the agreements herein set forth,
Lessee may quietly hold and occupy the Premises without any interruption (except
as expressly contemplated by this Lease) by Lessor or persons claiming through
or under Lessor. Lessor's liability under the covenants of this section is
limited to the abatement of rent, unless Lessee is dispossessed by an act of bad
faith on the part of Lessor or persons claiming through or under Lessor, in
which case Lessee shall be also entitled to reimbursement for actual documented
moving expenses up to a maximum of $150,000, but shall not include any
consequential or incidental damages incurred by Lessee. Nonetheless, Lessor
shall not be barred from bringing any valid action on the Lease. Any lawsuit
brought by Lessor to enforce the terms of this Lease or seeking a declaration of
Lessor's rights pursuant to this Lease shall not be deemed a violation of this
clause.
38. SECURITY DEPOSIT
No security deposit is required under this Lease.
39. SUCCESSORS AND ASSIGNS
The covenants and conditions herein contained shall, subject to the
provisions as to assignment, apply to and bind the heirs, successors, executors,
administrators and assigns of all of the parties hereto, and all of the
administrators and assigns of all of the parties hereto, and all of the parties
hereto shall be jointly and severally liable hereunder.
40. SURRENDER OF PREMISES
On the last day of the Term hereof, or on any sooner termination, Lessee
shall surrender the Premises to Lessor in the same condition as when received,
ordinary wear and tear excepted, clean and free of debris. Lessee shall repair
any damage to the Premises occasioned by the installation or removal of Lessee's
trade fixtures, furnishings and equipment. Lessee shall remove the cleanroom.
Lessee shall decontaminate Building 60 and remove all hazardous substances,
toxic substances, solid waste and hazardous materials (as described in Section
25(b) herein) from all ceilings, floors and walls and any permanent structures
remaining
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within Building 60. In the event Lessee is surrendering the premises due to
Lessor's expressed desire to reoccupy Building 60, Lessor shall be responsible
for decontaminating Building 60. Lessee shall remove all signs installed on the
Complex under Section 11 herein. Any clean-up and/or repairs required to restore
the Premises to the condition it was in at the commencement of this Lease not
performed by Lessee as of the last day of the term hereof shall be performed by
Lessor or Lessor's agent at Lessee's expense, unless otherwise provided herein..
41. TRANSFER OF PROPERTY BY LESSOR
Except as may be provided in Section 28, in the event of any conveyance of
the Complex and assignment by Lessor of this Lease, Lessor shall be and is
hereby entirely freed and relieved of all liability under any and all of its
covenants and obligations contained in or derived from this Lease occurring
after the consummation of such conveyance and assignment so long as Lessor's
successor agrees and covenants to assume all of Lessor's obligations under this
Lease occurring after the consummation of such conveyance assignment.
42. ESTOPPEL CERTIFICATE AND SUBORDINATION
a) Lessee shall upon Lessor's written request, promptly execute and deliver
to Lessor, without charge, a statement certifying that this Lease is in
full force and effect in its original form or is in full force and effect
as modified, and if applicable, the date to which the rent has been
prepaid and any other information as may be reasonably required by Lessor.
b) Lessee agrees to promptly execute and deliver to Lessor, upon written
request, without charge, in such form as may be reasonably required by any
prospective lender to Lessor, an instrument or instruments whereby Lessee
will agree to subordinate this Lease to the lien of said lender's mortgage
or deed of trust or other encumbrance, and in the case of foreclosure will
attorn to such mortgagee or holder acquiring title by foreclosure;
provided such new Lessor shall agree that Lessee may continue to occupy
the Premises in accordance with this Lease. As used herein, the term
"foreclosure" shall include both judicial proceedings and the exercise of
a power of sale under any mortgage or deed of trust without recourse to
judicial proceedings.
c) In the event such instruments are required for the sale of the Complex,
Lessee further agrees to promptly execute and deliver said instruments to
Lessor, upon which delivery Lessee shall attorn to the buyer of the
Complex.
43. GENERAL
a) The meaning of terms not defined in this Lease shall be the same as that
defined in said Asset Purchase Agreement or Site Services Agreement.
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b) The captions used in this lease are for the purpose of convenience only
and shall not be construed to limit or extend the meaning of any part of
this Lease.
c) Any executed copy of this Lease Agreement shall be deemed an original for
all purposes.
d) In case any one or more of the provisions contained herein shall for any
reason be held to be invalid, illegal, or unenforceable in any respect,
such invalidity, illegality, or unenforceability shall not affect any
other provision of this Lease, but this Lease shall be construed as if
such invalid, illegal, or unenforceable provision had not been contained
herein.
e) When the context of this Lease requires, the neuter gender includes the
masculine, the feminine, a partnership, corporation, or joint venture, and
the singular includes the plural.
f) The waiver by Lessor of any breach of any term, condition, or covenant of
this Lease shall not be deemed a waiver of such provision or any
subsequent breach of the same or any other term, condition, or covenant of
this Lease.
g) The words "herein", "hereof", "hereunder" and other words of similar
import refer to this Agreement as a whole and not to any particular
Article, Section or other subdivision.
44. GOVERNING LAW
This Lease and the relationship between Lessor and Lessee shall be
governed by and construed in accordance with the laws of the State of Florida.
45. FORCE MAJEURE
Neither party shall be liable in damages for any delay or default in the
performances of any or all obligations of this Lease, if such delay or default
is caused by conditions beyond its control, including, but not limited to: acts
of the elements, fires, explosions, floods or other casualties, governmental
orders or restrictions, and the inability despite diligent efforts to obtain
necessary governmental approvals. The party incurring the delay shall promptly
notify the other party in writing, and performance shall be extended one day for
each day of delay.
46. ENTIRE AGREEMENT
This Lease, together with the Asset Purchase Agreement and the Site
Services Agreement, contains all of the terms, covenants and conditions agreed
to by Lessor and Lessee, integrates all discussions and understandings leading
up to this Agreement, supersedes all prior agreements between the parties
pertaining to the subject matter herein, and may not be modified orally or in
any manner other
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than by an agreement in writing signed by all of the parties to this Lease or
their respective successors in interest.
47. ATTORNEYS' FEES
In case suit should be brought for recovery of the Premises, or for any
sum due hereunder, for the enforcement or interpretation of any of the terms or
conditions of this Lease, or because of any act which may arise out of the
possession of the Premises, by either party, the prevailing party shall be
entitled to all costs incurred in connection with such action, including a
reasonable attorney's fee.
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48. AUTHORITY
Lessee and Lessor warrant and represent that their respective
representatives executing this Lease each have the full power and authority to
execute this Lease on behalf of Lessee and Lessor, respectively, and that this
Lease, once executed by the signatory of Lessee or Lessor, as the case may be,
shall constitute a legal and binding obligation of that party and is fully
enforceable in accordance with its terms.
IN WITNESS WHEREOF, Lessor and Lessee have executed this Lease Agreement as of
the day and year first written above.
Harris Corporation Align-Rite, Inc.
Semiconductor Business Unit
/s/ W. Russ Morcom /s/ James L. Mac Donald
- - ----------------------------- --------------------------------------
By: W. Russ Morcom By: James L. Mac Donald
V.P.-GM Operations Chairman of the Board
As to the guarantees,
Align-Rite International, Inc.
/s/ James L. Mac Donald
--------------------------------------
By: James L. Mac Donald
Title: Chairman of the Board and Chief
Executive Officer
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[GRAPHIC OMITTED]
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Exhibit B
Description of demised Premises:
Building 60
Building 60 is part of the Complex located at 2401 Palm Bay Road NE, Palm
Bay, FL 32907, and is approximately fifty (50) feet north of Building 53, to the
east of Building 56 and to the west of Building 54 as shown on Exhibit "A". It
contains approximately 25,567 square feet of space, including 16,279 sq. ft.
under air, 4,883 sq. ft. of facilities service area on the first floor, and
4,405 sq. ft. of facilities service area on the second floor, and all
improvements thereon and appurtenances thereto.
Building 56
Building 56 is part of the Complex located at 2401 Palm Bay Road NE, Palm
Bay, FL 32907, and is adjacent to the north side of Building 53, to the east of
Building 52 and to the west of Building 60 as shown on Exhibit "A". It contains
approximately 8,108 square feet, of which ITG uses 4,170 rentable square feet as
shown on Exhibit "C". The rentable square foot area does not include the 400
square-foot Communications Equipment Room (CER) identified on Exhibit "C".
Lessee shall have access to and use of the 486 square-foot area located on the
second floor of Building 56 as identified on Exhibit "D", but shall not be
charged for such usage.
Lessor will retain title to the Real Property on which Buildings 56 and 60
are located, including all fixtures, improvements, and appurtenances thereto.
Lessor will also retain title to the Real Property on which an entry-way to
building 60 is constructed as set forth in Section 13 herein as well as the Real
Property on which the six parking spaces designated for use by Lessee are
located as set forth in Section 12 herein.
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[GRAPHIC OMITTED]
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[GRAPHIC OMITTED]
37
EXHIBIT 10.21
PHOTOMASK SUPPLY
AND STRATEGIC ALLIANCE AGREEMENT
BY AND AMONG
ALIGN-RITE INTERNATIONAL, INC.,
ALIGN-RITE, INC.
AND
HARRIS CORPORATION
DATED JULY 2, 1999
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE 1 Definitions..............................................1
ARTICLE 2 Supply of Products.......................................3
ARTICLE 3 Product Quality, Delivery, Service and Pricing...........4
ARTICLE 4 New and Derivative Products..............................7
ARTICLE 5 Product Orders...........................................8
ARTICLE 6 Manufacture..............................................9
ARTICLE 7 Delivery and Payment....................................10
ARTICLE 8 Strategic Alliance, Consultation and Cooperation
Arrangements ...........................................10
ARTICLE 9 Termination Rights And Obligations Upon Termination.....11
ARTICLE 10 Warranties..............................................12
ARTICLE 11 Dispute Resolution and Arbitration......................13
ARTICLE 12 Confidentiality.........................................15
ARTICLE 13 General.................................................15
13.1 Independent Contractors...........................15
13.2 Amendments; Waivers...............................15
13.3 Schedules; Exhibits; Integration..................15
13.4 Force Majeure.....................................16
13.5 Assignment........................................16
ARTICLE 14 Notices.................................................16
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PHOTOMASK SUPPLY AND STRATEGIC ALLIANCE AGREEMENT
This Supply Agreement is entered into as of July 2, 1999, (the
"Effective Date") by and among Align-Rite International, Inc., a California
corporation ("Align-Rite"), and Align-Rite, Inc., a Florida corporation ("Sub"),
on the one hand, and Harris Corporation, a Delaware corporation ("Harris"), on
the other acting through its Semiconductor Business.
RECITALS
WHEREAS, Sub has purchased the Photomask business unit of Harris
(the "Photomask Business Unit") on the date hereof pursuant to the terms of that
certain Asset Purchase Agreement, dated as of even date, by and among Align-Rite
and Sub, on the one hand, and Harris on the other (the "Asset Purchase
Agreement").
WHEREAS, the parties hereto have agreed that Align-Rite will
manufacture and supply to Harris, and Harris will purchase exclusively from
Align-Rite, 100% of Harris' Photomask requirements in accordance with the terms
of this Agreement for a period of 10 years from the Effective Date (the "Term").
WHEREAS, Harris shall use its commercially reasonable efforts to
promote Align-Rite's Photomask products and services to (i) the merchant
customers of the Photomask Business Unit, (ii) Harris' joint venture partners,
(iii) the semiconductor foundry businesses utilized by Harris which will or are
envisioned to require the purchase of Photomask (as defined below) products and
services, and (iv) other companies and foundries within the influence or under
the control of Harris, in each case in accordance with the terms of this
Agreement.
WHEREAS, Align-Rite shall strive to be the industry leader in
quality, delivery, service and price, and provide the benefit of such world
class operation to Harris.
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual promises and covenants set forth below, the parties mutually agree as
follows:
AGREEMENT
ARTICLE 1
Definitions
In this Agreement, unless the context otherwise requires, the
following expressions shall have the following meanings:
"Affiliates" shall mean (a) any company owned or controlled to the
extent of at least fifty percent (50%) of its issued and voting capital by a
party to this Agreement and any other company so owned or controlled (directly
or indirectly) by any such company or the owner of any such company, or (b) any
partnership, joint venture or other entity directly or indirectly controlled by,
controlling, or under common control of, to the extent of fifty percent (50%) or
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more of voting power (or otherwise having power to control its general
activities), a party to this Agreement, but in each case only for so long as
such ownership or control shall continue;
"Align-Rite" means Align-Rite International Inc., a California
corporation, and each of its subsidiaries from time to time;
"Business Assets" means those assets previously owned and used by
Harris to manufacture Photomasks which were purchased by Align-Rite pursuant to
the Asset Purchase Agreement, including equipment, materials, know-how, work in
progress, related inventory and goodwill used by and associated with the
Photomask business unit of Harris;
"Cosmetic Defects" means particles, scratches, stains and/or
imperfections in or on the photomask quartz or glass substrate which are outside
the active patterned area on the photomask quartz or glass substrate which the
customer uses to transfer the circuit patterns onto the silicon wafer;
"Derivative Products" means any Photomask product built on a
substrate, then currently being produced by Align-Rite for other customers,
which is required by Harris from time to time, which is not currently on the
Product and Services Pricing Schedule, or which is either a tightening of
specifications or a relaxing of specifications of an existing Product.
"Facility Lease" means the lease of the Premises entered into among
Sub and Hams on the date hereof;
"Force Majeure" means, in relation to any party, circumstances
beyond the reasonable control of that party including, without limitation, acts
of God, acts of any governmental or super-national authority, war or national
emergency, riots, civil commotion, fire, explosion, flood, epidemic, lock-outs
(whether or not by that party), strikes and other industrial disputes (in each
case, whether or not relating to that party's work force);
"Mask Order" means a written order from an authorized originator
employed by Harris specifying the Product(s) required, applicable
Specification(s), amount of Product(s), date(s) required and delivery
instructions (i.e. standard or expedited);
"New Products" means any Photomask product, other than a Product or
Derivative Product, built on a substrate, required by Harris from time to time,
which is not currently being produced by Align-Rite for other customers, is not
currently on the Product and Services Pricing Schedule, and which is neither a
tightening of specifications nor a relaxing of specifications of an existing
Product.;
"Photomask Business Unit" has the meaning set forth in the recitals.
"Photomasks" means precision photographic quartz or glass plates
containing microscopic images of integrated circuits for use as master images to
transfer circuit patterns
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onto semiconductor wafers during the fabrication of integrated circuits and
other semiconductor products;
"Premises" means the real property located within the complex of
buildings known as the Semiconductor Sector located at 2401 Palm Bay Road, N.E.,
Palm Bay, Florida 32905 and known as Building 60 and a portion of Building 56
used in the Photomask Business Unit, which are the subject of the Facility Lease
entered into among Sub and Harris on the date hereof;
"Product Period" means a continuous twelve month period, the first
such period ending on June 30, 2000.
"Products" means the Photomask products and services listed on the
Product and Services Pricing Schedule, as amended from time to time, or any
other Photomask Product or services purchased from Align-Rite by Harris;
"Product and Services Pricing Schedule" means a schedule listing the
Product and related services, together with the relevant Specification thereof
and applicable price based on anticipated demand for the Products, which
schedule shall be modified in accordance with Article 3 hereof (the first such
schedule being in the form set out in Schedule 1);
"Quarter" means a continuous calendar period of three months, the
first such period ending on September 30, 1999;
"Specification" means, in respect of any Product, the specification
agreed in writing between Harris and Align-Rite from time to time. A schedule
for the initial Specifications for Products, effective as of July 2, 1999, is
noted in and/or attached to Schedule 1;
"Standard Delivery" has the meaning specified in Section 5.5; and
"Term" shall mean the ten-year term of this Agreement
ARTICLE 2
Supply of Products
2.1 The parties hereby agree that, during the Term of the Agreement,
Harris shall satisfy 100% of its and its Affiliates' requirements for
Photomasks, or any other product with similar functional characteristics, solely
through its purchase of Products, Derivative Products and New Products from
Align-Rite; provided, however, that (i) Align-Rite manufactures and supplies
such Products, Derivative Products and New Products in accordance with the
competitive standards for quality, delivery, price and service as set forth in
Article 3, and (ii) such Products, Derivative Products and New Products are
within the capabilities of the Photomask technologies then utilized by
Align-Rite.
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2.2 Harris hereby confirms its intent to order and purchase during the
first three Product Periods, solely on its behalf or on behalf of its Affiliates
approximately Fifteen Million Dollars ($15,000,000) in aggregate of Products,
Derivative Products and New Products from Align-Rite at the Product prices set
forth on the Product and Services Pricing Schedule, as such Product and Services
Pricing Schedule is amended pursuant hereto.
2.3 Harris may purchase Photomasks from semiconductor foundry companies or
the Photomasks suppliers designated by such foundries, pursuant to its
agreements to facilitate the manufacturing of certain Harris integrated circuit
products at such foundries, but such Photomask purchases shall not decrease the
purchase requirements of Harris from Align-Rite hereunder or Harris' obligations
pursuant to Article 8.
ARTICLE 3
Product Quality, Delivery, Service and Pricing
3.1 Align-Rite shall be deemed to have satisfied the standards for quality
referred to in Section 2.1(i) herein by maintaining a 1% or less product return
rate during the first Product Period for non-compliance with Specifications,
excluding Cosmetic Defects which will be handled as a separate issue, as set
forth in applicable Mask Orders.
3.2 Align-Rite shall be deemed to have satisfied the standards for
delivery referred to in Section 2.1(i) herein by maintaining no less than a 90%
performance to schedule rating during the first Product Period with respect to
the products delivered pursuant to Section 5.5 herein.
3.3 Pricing.
3.3.1 Align-Rite shall be deemed to have satisfied the standards for
price referred to in Section 2.1(i) herein by satisfying the
provisions set forth in this Section 3.3.1. The parties agree that
for the first Product Period the price per unit for each Product
shall be, so long as Harris and Align-Rite are in compliance with
Article 2 hereof, as set forth in the Product and Services Pricing
Schedule. Within 30 days prior to the end of each Product Period,
Align-Rite and Harris shall agree to adjust the Product and Services
Pricing Schedule in effect at such time to provide that such new
product prices for the ensuing Product Period shall be 100% or less
of the then current lowest Photomask prices provided by Align-Rite
to its best top twelve customers (excluding ASM Lithography The
Netherlands and Temic/Atmel-Europe) with comparable product
specifications, annual mask purchases, unit volume levels and
cycletime requirements (provided, however, that with respect to the
E-Beam, 725_1XPA Quartz 7.25 x .150 Photomask Product, the purchase
price for such product during the second Product Period shall not
increase by more than 10% from the purchase price for such product
as set forth in the Product and Services Pricing Schedule and at no
time during the Term of this Agreement shall the purchase price for
such product be greater than the prices provided to Align-Rite's
best top twelve customers (excluding ASM Lithography The Netherlands
and Temic/Atmel-Europe) with comparable product
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specifications, annual mask purchases, unit volume levels and
cycletime requirements) so long as (i) Harris and Align-Rite are in
compliance with Article 2 hereof, and (ii) the aggregate product
volume required by Harris meets a minimum targeted amount to be
mutually agreed upon by the parties during the fourth through the
tenth Product Periods. For the sole purpose of providing Hams with
an opportunity to confirm Align-Rite's compliance with this Section
3.3.1 during the last two months of each Product Period, Align-Rite
shall, at a frequency of no more than once per Product Period
(commencing after the ten month of the first Product Period) and
upon thirty days written notice from Harris and at Harris' cost,
provide Harris' nominated accounting firm, which shall be an
accounting firm of national reputation, or reputable semiconductor
industry consultant, with access to and copies of all invoices,
records and other documents which relate to the Products and
Services Pricing for comparable products and services provided by
Align-Rite to its best top twelve customers (excluding ASM
Lithography The Netherlands and Temic/Atmel-Europe). Harris'
nominated accounting firm or reputable semiconductor industry
consultant shall be bound by Article 12 hereof as if such nominated
accounting firm or reputable semiconductor industry consultant is a
party hereto.
3.3.2 Beginning with the commencement of the second Product Period
and for each subsequent Product Period thereafter during the Term of
this Agreement, Align-Rite shall provide Harris with the following
volume discounts on Harris' purchases of Products, Derivative
Products and New Products aggregating in excess of $5 million in a
single Product Period:
---------------------------------------
Amounts in Excess of Amount of
$5 million Discount
---------------------------------------
$1 - $ 999,999 5.0%
---------------------------------------
$1,000,000 - $1,999,999 7.5%
---------------------------------------
Amounts in excess of 10.0%
$2,000,000
---------------------------------------
Any such discounts shall be calculated by Align-Rite and confirmed
by Harris at the end of each applicable Product Period and shall be
paid by Align-Rite to Harris within thirty (30) days of the end of
such Product Period.
3.3.3 During the first eighteen months of the Term, Align-Rite shall
provide Harris with a 20% discount to the then current foundry
Photomask prices with respect to Photomasks manufactured by
Align-Rite for use at Harris' semiconductor foundry companies or the
Photomask suppliers designated by such foundries. For purposes of
this Section 3.3.3, current foundry Photomask prices shall be
determined by Align-Rite's nominated accounting firm, which shall be
of national reputation or reputable semiconductor consultant,
through a review of Harris' purchase orders, records and other
documents which relate to such
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foundry Photomask products for comparable product specifications,
annual mask purchases, unit volume levels and cycletime
requirements. Following such eighteen-month period, the products
supplied by Align-Rite under this Section 3.3.3 shall be added to
the Product and Services Pricing Schedule and shall be treated as a
"Product" for purposes of this Agreement.
3.3.4 The price of the Products as set out in the Product and
Services Pricing Schedule is, and shall be, exclusive, of(i) any
costs of transport and insurance of the Products; and (ii) any value
added tax or other applicable sales tax or duty which may be
chargeable in respect of the manufacture and supply of the Products.
3.4 Align-Rite shall be deemed to have satisfied the standards for service
referred to in Section 2.1(i) herein during the first Product Period by
satisfying the provisions set forth in this Section 3.4. The parties agree that
at the commencement of the second Product Period, the parties will agree to a
set of written, reasonable, competitive, mutually agreeable, measurable and
quantifiable service goals.
3.5 Within thirty (30) days of the end of each Product Period during the
Term of this Agreement, an executive representative of each of Align-Rite and
Harris shall agree to a set of written, reasonable, competitive, mutually
agreeable, measurable and quantifiable goals with respect to product quality,
delivery and service for the ensuing Product Period. A status report on
Align-Rite's performance to goals shall be provided to Harris on a quarterly
basis. Align-Rite shall be deemed to have satisfied the standards for product
quality, delivery and service hereunder for such applicable Product Period by
materially satisfying such goals.
3.6 If, during the Term of the Agreement, Align-Rite does not satisfy the
provisions of Sections 3.1, 3.2, 3.3 and/or 3.4, Harris shall be entitled to
give written notice to Align-Rite within thirty (30) days of the relevant
event(s) specifying the details of such noncompliance and Align-Rite shall have
fifteen (15) calendar days following receipt of such notice to present Harris
with a plan and/or set of procedures to remedy such noncompliance. Such planned
remedies and/or procedures shall meet with Harris' satisfaction and Harris'
satisfaction shall not be unreasonably withheld. Such planned remedies and/or
procedures shall be completed within a subsequent forty five (45) calendar day
period. During the period of sixty (60) days or less following receipt by
Align-Rite of such noncompliance notice from Harris describing the points of
noncompliance, Harris shall have the right on an as necessary basis to procure
only such applicable Photomask products and services from third parties as it
deems necessary to support its semiconductor manufacturing activities which are
limited to the Products and or services covered in the notice of noncompliance.
Harris agrees to resume satisfying 100% of its and its Affiliates requirements
for Photomasks pursuant to Section 2.1 immediately upon Align-Rite's completing
its plan and/or set of procedures to Harris' reasonable satisfaction and such
reasonable satisfaction shall not be unreasonably withheld to remedy such
noncompliance. In the event that Align-Rite fails to remedy any and all such
noncompliance(s) during the sixty (60) day period from the date of notice of
such noncompliance by Harris then Harris shall have the right
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to procure from third parties only such applicable non-compliant Photomask
products or services as the case may be on a continuous basis for the remainder
of the Term of this Agreement or until such time as Align-Rite may provide a
written request that Harris requalify Align-Rite for the supply of the
applicable product(s) or service(s) with such requalification not to be
unreasonably delayed. Following such requalification, Harris shall again be
bound by Section 2.1.
ARTICLE 4
New and Derivative Products
4.1 In the event Harris anticipates a requirement for a Derivative
Product, it shall (i) notify Align-Rite as soon as practicable, (ii) provide
Align-Rite with the Specification for such Derivative Product together with an
estimate of its anticipated annual demand for such Derivative Product, and (iii)
request Align-Rite to provide a quotation for the manufacture and supply of such
Derivative Product.
4.2 Align-Rite shall provide a quotation for the Derivative Product at an
amount equal to 100% or less of the then current lowest Photomask prices
provided by Align-Rite to its best top twelve customers (excluding ASM
Lithography The Netherlands and Temic/Atmel-Europe) for comparable volume levels
and product specifications, and subject to verification as provided in Section
3.3, Hams shall place its orders for such Derivative Product.
4.3 Upon acceptance of the quotation by Harris and the placing of the
first order for any Derivative Product, such Derivative Product and the unit
price shall be added to the Product and Services Pricing Schedule and the
Derivative Product shall be treated as a "Product" for the purposes of this
Agreement.
4.4 In the event Harris anticipates a requirement for a New Product, it
shall (i) notify Align-Rite as soon as practicable, (ii) provide Align-Rite with
the specification for the New Product together with an estimate of its
anticipated annual demand for such New Product, and (iii) request Align-Rite
provide a quotation for the manufacture and supply of such New Product.
4.5 Upon acceptance of the quotation by Harris and the placing of the
first order for any New Product, such New Product and the unit price shall be
added to the Product and Services Pricing Schedule and the New Product shall be
treated as a "Product" for the purposes of this Agreement.
4.6 In the event Harris does not accept the quotation given by Align-Rite,
it shall be entitled to obtain bona fide quotes from at least two nationally
recognized, third party manufacturers of Photomasks for the manufacture and
supply of the New Product and the provisions of Section 4.7 shall apply.
4.7 In the event that the average of the quotations received by Harris
pursuant to Section 4.6 results in a price for a New Product which is less than
the price quoted for such New
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Product by Align-Rite. If Align-Rite reduces its quotation to the lower of the
quotations received by Harris for said New Product, then the provisions of
Section 4.5 shall apply.
4.8 Harris shall provide Align-Rite's accounting firm with access to, and
copies of, all quotations obtained pursuant to Section 4.6 (and relevant
supporting documents) for verification in the same manner as Harris verification
under Section 3.3.
ARTICLE 5
Product Orders
5.1 Harris shall, no later than five (5) days before the beginning of each
month, give Align-Rite written notice of its anticipated requirements for
Products for the forthcoming month.
5.2 In order to facilitate the purchase of Products, all applicable
Business Units of Harris which require Photomask Products shall issue to
Align-Rite upon the execution of this Agreement, a blanket purchase order
regarding its anticipated Photomask requirements for the first Product Period.
At the end of the first Product Period new blanket purchase orders will be
issued for each succeeding Product Period.
5.3 All applicable Photomask Business Units of Harris which require
Photomask Products shall issue Mask Orders for Products in writing.
5.4 Align-Rite shall provide Harris with expedited Product services at an
additional charge, which shall be in addition to the Product prices set forth in
the Product and Services Pricing Schedule, and shall be payable by Harris in
accordance with Section 7.3. Such additional charge shall be calculated as
follows: (i) for 24-hour Product delivery cycletime, Harris shall pay Align-Rite
an additional amount equal to 65% of the Product prices set forth in the Product
and Services Pricing Schedule, as such Product and Services Pricing Schedule is
amended pursuant to Section 3.1, and (ii) for 48-hour Product delivery
cycletime, Harris shall pay Align-Rite an additional amount equal to 32.5% of
the Product prices set forth in the Product and Services Pricing Schedule, as
such Product and Services Pricing Schedule is amended pursuant to Section 3.1;
provided, however, that during the first Product Period of the Agreement,
Align-Rite shall provide Harris with such expedited product services at no
additional charge to Harris for up to an aggregate amount not to exceed $28,354
per month, which monthly amount shall be calculated using the formulae set forth
in items (i) and (ii) above.
5.5 Unless Harris requests expedited Product delivery service pursuant to
Section 5.4, Align-Rite shall provide its standard delivery ("Standard
Delivery") service pursuant to which it shall ship the first 2 Photomask levels
within three working days from receipt of the Mask Order and relevant data,
excluding the period from the time Align-Rite sends the completed array of
patterns to appear on the applicable Photomask product to the appropriate Harris
engineer until approval from said appropriate Harris engineer is received by
Align-Rite, and ship the remaining sequential Photomask levels at a rate of one
Photomask level per successive working day thereafter.
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5.6 During the Term, Align-Rite shall use the Business Assets to provide
Harris' purchase orders and/or Mask Orders first priority among the other mask
orders received by Align-Rite from third parties so long as Harris is in
compliance with Article 2 hereof. In the event Align-Rite is unable to satisfy
Harris' purchase orders and/or Mask Orders using the Business Assets, Align-Rite
shall use commercially reasonable efforts to utilize such other Photomask
manufacturing facilities as are then owned by Align-Rite to satisfy the purchase
orders and/or Mask Orders in accordance with Standard Delivery or expedited
delivery, if applicable, or as otherwise may be agreed between the parties in
writing from time to time. If the purchase orders and/or Mask Orders for
Products exceed the output capacity of the Business Assets and the other
Photomask manufacturing facilities as are then owned by Align-Rite, Align-Rite
shall, as soon as practicable, notify Harris, and Align-Rite shall have the
right to contract with such third party Photomask manufacturers for a period of
time as agreed between the parties, until Align-Rite establishes the requisite
capacity.
5.7 During the Term, Align-Rite shall, as it deems appropriate, make the
capital expenditures at its own expense necessary to accommodate the manufacture
of all Photomask products required by Harris or its subsidiaries.
5.8 Cancellations and Schedule Changes.
5.8.1 Harris may cancel without charge any purchase order and/or
Mask Order or portion thereof for a Product at any time prior to the
date on which Align-Rite has started manufacturing such Product.
5.8.2 In the event Harris cancels a purchase order and/or Mask Order
for a Product after Align-Rite has purchased custom raw materials
for such Product, but before Align-Rite has started manufacturing
such Product, Harris shall reimburse Align-Rite for the cost of such
custom raw materials.
5.8.3 In the event Harris cancels a purchase order and/or Mask Order
for a Product after Align-Rite has started manufacturing the
Product, Harris shall pay one hundred percent (100%) of the price of
such Product. Payment of amounts due under this Section shall be
made within thirty (30) days of the date of each invoice.
ARTICLE 6
Manufacture
6.1 Each Product sold by Align-Rite to Harris pursuant to this Agreement
shall conform in all respects to its Specification as set forth on the
applicable purchase order and/or Mask Order.
6.2 Align-Rite and Harris shall consult with one another annually (or more
frequently if appropriate or desirable) during the Term in order to ensure that
the Specifications of the Products are mutually acceptable to both parties.
Align-Rite shall agree to any reasonable change
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to a Specification requested by Harris provided that such change is capable of
being made by Align-Rite and that the price of the Product in question is
increased or decreased to cover any increased or decreased cost of manufacture.
ARTICLE 7
Delivery and Payment
7.1 Align-Rite shall use commercially reasonable efforts to fulfill Mask
Orders received from Harris for the Products on the date specified in the
purchase order and/or Mask Order and shall give Harris as much advance notice as
reasonably possible if despite its commercially reasonable efforts it is unable
for any reason to fulfill any purchase order and/or Mask Order on the specified
date.
7.2 Align-Rite shall deliver the Products to the designated ship address
set forth on each purchase order and/or Mask Order, FOB/CIP Align-Rite's
manufacturing sites located in the United States. Harris shall be responsible
for all shipping and other costs of delivery from the manufacturing sites
located in the United States. Align-Rite shall retain a security interest and
right of possession in the Products and Harris hereby grants such security
interest therein to Align-Rite until Harris makes full payment. Title and risk
of loss or damage to Products shall pass to Harris at the FOB/CIP point.
7.3 Harris shall pay for the Products which are supplied under this
Agreement in full within thirty (30) days of the date of the applicable invoice.
ARTICLE 8
Strategic Alliance, Consultation and Cooperation Arrangements
8.1 During the Term, Harris and Align-Rite shall make their respective
representatives available once every Quarter in order for:
8.1.1 Harris to advise Align-Rite of its Product development
programs and its anticipated needs for Products and New Products;
8.1.2 Align-Rite to inform Harris of its capacity and technological
capabilities relating to Photomask products and services offered by
it from time to time; and
8.1.3 Harris to review Align-Rite's performance in supplying Harris'
Product requirements.
8.2 During the Term, Harris shall use its commercially reasonable efforts
to maintain for Align-Rite the good will of the business of the Photomask
Business Unit at the Closing Date (including, without limitation, merchant
Photomask customers, suppliers and other parties having relationships with the
Photomask Business Unit).
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8.3 During the Term, Harris agrees at Align-Rite's expense as set forth in
the Site Services Agreement to cooperate and to provide such assistance as
Align-Rite may require from time to time in maintaining the Photomask Business
Unit's current ability to manufacture Products which meet Department of Defense
("DOD") Secret and Top Secret status, provided such cooperation and assistance
is permitted under DOD and NSA regulations and is acceptable to DOD and NSA.
Harris shall allow Align-Rite the use of Harris' Classified Material Control
Center (CMCC) for processing, storing and shipping classified material pursuant
to DD254 requirements, if such use is permissible under DOC and NSA regulations.
8.4 During the Term of the Agreement, Harris shall use its commercially
reasonable efforts to promote Align-Rite's Photomask products and services to
(i) the merchant customers of the Photomask Business Unit, (ii) Harris' joint
venture partners, (iii) the semiconductor foundry businesses utilized by Harris
which will or are envisioned to require the purchase of Photomask products and
services, and (iv) other companies and foundries within the influence or under
the control of Harris, in each case in accordance with the terms of this
Agreement.
ARTICLE 9
Termination Rights And
Obligations Upon Termination
9.1 Unless otherwise terminated pursuant to the provisions of this Article
9, this Agreement shall continue in effect for the Term. The Term may be
extended on terms mutually acceptable to the parties.
9.2 This Agreement may be terminated at any time before the end of the
Term as follows and in no other manner:
9.2.1 By mutual agreement in writing by Align-Rite and Harris;
9.2.2 By Align-Rite upon Harris' failure to pay when due any amounts
required to be paid to Align-Rite after reasonable notice under this
Agreement;
9.2.3 By Harris upon the entry of any order for relief under any
provision of any applicable bankruptcy code in any bankruptcy
proceedings initiated by or against Align-Rite or the presentation
of a petition or convening of a meeting for the purpose of winding
up Align-Rite's business, or entering into liquidation whether
compulsory or voluntarily, or compounding with its creditors
generally, or the appointment of a receiver of any part of all of
either party's assets, or either party taking or suffering any
similar action in consequence of debt;
9.2.4 By Align-Rite upon the entry of any order for relief under any
provision of any applicable bankruptcy code in any bankruptcy
proceedings initiated by or against Harris or the presentation of a
petition or convening of a meeting for the purpose of winding up
Harris' business, or entering into liquidation whether compulsory or
voluntarily, or compounding with its creditors generally, or the
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appointment of a receiver of any part of all of either party's
assets, or either party taking or suffering any similar action in
consequence of debt;
9.2.5 By Harris upon Align-Rite's material breach of any of the
terms or conditions of this Agreement after written notice thereof
and a failure by Align-Rite to then cure such breach within thirty
(30) days except as otherwise provided in Section 3.6; and
9.2.6 By Align-Rite upon Harris' material breach of any of the terms
or conditions of this Agreement after written notice thereof and a
failure by Harris to then cure such breach within thirty (30) days.
9.3 In addition to any other remedies available to Align-Rite, in the
event Align-Rite terminates the Agreement, it shall have the following rights:
(i) if the Product has been delivered, Align-Rite may recover, together with any
incidental damages, any unpaid portion of the purchase price of the Product; and
(ii) if the Product has not been delivered, Align-Rite may withhold delivery of
such Product.
9.4 The failure of either party to enforce any provision of this Agreement
shall not be deemed a waiver of such provision.
ARTICLE 10
Warranties
10.1 Harris shall as soon as practicable, and in any event within thirty
(30) working days of the delivery of a Product at its premises, notify
Align-Rite in writing of any noncompliance with applicable Specifications.
10.2 If Harris fails to give notice in accordance with Section 10.1, then
except in respect of any noncompliance with applicable Specifications which is
such that it would not be apparent upon a reasonable visual inspection, the
Product in question shall be conclusively presumed to be in all respects in
accordance with its Specification, and Harris shall be deemed to have accepted
the quality of such Product, and Align-Rite shall have no liability to Harris
with respect to that Product and the warranties made in Section 10.4 shall not
apply thereafter.
10.3 If Harris rejects any delivery of a Product which it believes is not
in accordance with its Specification, then Align-Rite shall as soon as
practicable and in any event within five (5) working days of being requested to
do so by Harris supply a replacement Product which is in accordance with its
Specifications or shall notify Harris that it is unable to do so whereupon
Harris shall be entitled to obtain such replacement Product from a third party.
10.4 Align-Rite warrants that Products delivered hereunder shall be free
and clear of liens and encumbrances arising from actions or inactions of
Align-Rite and shall have been manufactured to the applicable Harris
Specification. This warranty shall terminate in accordance with Section 10.2 or
for any noncompliance which is not apparent upon reasonable visual
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inspection upon expiration of 135 calendar days following receipt by Harris or
its designee of a shipment. In the event a problem occurs or is discovered after
receipt by Harris, Align-Rite and Harris agree to discuss and resolve such
problem in good faith.
10.5 The liability of Align-Rite hereunder is solely and exclusively
limited to replacement, or repair, or credit of the purchase price, at Harris'
option, for any Product which is returned by Harris during the applicable
warranty period and which is found by Harris to be subject to adjustment under
this warranty.
10.6 THIS WARRANTY EXTENDS TO HARRIS ONLY. THIS WARRANTY IS IN LIEU OF ALL
OTHER WARRANTIES WHETHER EXPRESS, IMPLIED OR STATUTORY, INCLUDING IMPLIED
WARRANTIES OF MERCHANTABILITY OR FITNESS FOR PARTICULAR PURPOSE. THIS WARRANTY
DOES NOT APPLY TO DEFECTS ARISING AS A RESULT OF HARRIS' DESIGN OR FORMULA. IN
NO EVENT SHALL ALIGN-RITE BE LIABLE FOR ANY INCIDENTAL OR CONSEQUENTIAL DAMAGES
DUE TO BREACH OF THIS WARRANTY. HARRIS' SOLE REMEDY FOR ANY BREACH SHALL BE
LIMITED TO THE REMEDIES SET FORTH IN SECTION 10.5.
ARTICLE 11
Dispute Resolution and Arbitration
11.1 In the event that any dispute arises among the parties pertaining to
the subject matter of this Agreement, and the parties, through Align-Rite's
senior management and Harris' senior management are unable to resolve such
dispute within a reasonable time through negotiations and mediation efforts by
senior executives of both parties, such dispute shall be resolved as set forth
in this Article.
11.1.1 The following procedures may be initiated by written notice
("Dispute Notice") given by one party ("Claimant") to the other, but
not before thirty (30) days have passed during which the parties
have been unable to reach a resolution as described above. The
Dispute Notice shall be accompanied by (i) a statement of the
Claimant describing the dispute in reasonable detail and (ii)
documentation, if any, supporting the Claimant's position on the
dispute. Within twenty (20) days after the other party's
("Respondent") receipt of the Dispute Notice and accompanying
materials, the parties shall submit the dispute to mediation in the
Orlando, Florida area under the rules of the American Arbitration
Association. All negotiations and mediation procedures pursuant to
this paragraph 11.1.1 shall be confidential and treated as
compromise and settlement negotiations and shall not be admissible
in any arbitration or other proceeding.
11.1.2 If the dispute is not resolved as provided in Section 11.1.1
within sixty (60) days after the Respondent's receipt of the Dispute
Notice, the dispute shall be resolved by binding arbitration. Within
the sixty-day period referred to in the immediately preceding
sentence, the parties shall agree on a single arbitrator to resolve
the dispute. If the parties fail to agree on the designation of an
arbitrator
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within said sixty-day period, the American Arbitration Association
in the Orlando, Florida area shall be requested to designate the
single arbitrator. If the arbitrator becomes disabled, resigns or is
otherwise unable to discharge the arbitrator's duties, the
arbitrator's successor shall be appointed in the same manner as the
arbitrator was appointed.
11.1.3 Except as otherwise provided in this Article, the arbitration
shall be conducted in accordance with the Commercial Rules of the
American Arbitration Association, which shall be governed by the
United States Arbitration Act.
11.1.4 Any resolution reached through mediation and any award
arising out of arbitration (i) shall be binding and conclusive upon
the parties; (ii) shall be limited to a holding for or against a
party, and affording such monetary remedy as is deemed equitable,
just and within the scope of this Agreement; (iii) may not include
special, incidental, consequential or punitive damages; (iv) may in
appropriate circumstances include injunctive relief and (v) may be
entered in court in accordance with the United States Arbitration
Act.
11.1.5 Arbitration shall not be deemed a waiver of any right of
termination under this Agreement, and the arbitrator is not
empowered to act or make any award other than based solely on the
rights and obligations of the parties prior to termination in
accordance with this Agreement.
11.1.6 The arbitrator may not limit, expand or otherwise modify the
terms of this Agreement.
11.1.7 The laws of the State of Florida shall apply to any
mediation, arbitration, or litigation arising under this Agreement.
11.1.8 Each party shall bear its own expenses incurred in any
mediation, arbitration or litigation, but any expenses related to
the compensation and the costs of any mediator or arbitrator shall
be borne equally by the parties to the dispute.
11.1.9 A request by a party to a court for interim measures
necessary to preserve a party's rights and remedies for resolution
pursuant to this Article shall not be deemed a waiver of the
obligation to mediate or of the agreement to arbitrate.
11.1.10 The parties, their representatives, other participants and
the mediator or arbitrator shall hold the existence, content and
result of mediation or arbitration in confidence.
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ARTICLE 12
Confidentiality
12.1 During the course of this Agreement each party may obtain possession
of information belonging to the other parties which contains confidential or
secret information (e.g. inventions, know-how, trade secrets, future product
plans). As far as such information is disclosed by one party to the other party
it shall be clearly labeled "Confidential" or the like.
12.2 The party which obtains possession of such confidential information
shall maintain all such information in confidence and shall not disclose it to a
third party without the prior written consent of the other party. These
non-disclosure obligations shall terminate ten (10) years after receipt of such
information.
12.3 These non-disclosure obligations shall not apply with respect to any
information which: (i) now or hereafter, through no act or failure to act on the
part of the obtaining party, becomes generally known or available; (ii) is known
by the party at the time of obtaining it from the other party; (iii) is
furnished to third parties by the party without restriction on disclosure; (iv)
is independently developed by the obtaining party; or (v) is furnished to the
obtaining party by a third party as a matter of right and without restriction on
disclosure. The obligations of this Article 12 shall survive the expiration or
any termination of this Agreement.
ARTICLE 13
General
13.1 Independent Contractors. Both parties are independent contractors
under this Agreement. Nothing contained in this Agreement is intended nor is to
be construed so as to constitute Align-Rite and Harris as partners, agents or
joint venturers with respect to this Agreement. Neither party hereto shall have
any express or implied right or authority to assume or create any obligations on
behalf of or in the name of the other party or to bind the other party to any
contract, agreement or undertaking with any third party.
13.2 Amendments; Waivers. This Agreement and any schedule or exhibit
attached hereto may be amended only by agreement in writing of the parties to
the Agreement. No waiver of any provision nor consent to any exception to the
terms of this Agreement or any agreement contemplated hereby shall be effective
unless in writing and signed by the party to be bound and then only to the
specific purpose, extent and instance so provided.
13.3 Schedules; Exhibits; Integration. Each Schedule and Exhibit delivered
pursuant to the terms of this Agreement shall be in writing and shall constitute
a part of this Agreement, although Schedules need not be attached to each copy
of this Agreement. This Agreement, together with such Schedules and Exhibits,
and the Asset Purchase Agreement constitutes the entire agreement among the
parties pertaining to the subject matter hereof and supersedes all prior
agreements and understandings of the parties in connection therewith, including,
but not limited to, the letter of intent dated April, 20, 1999, between Harris
and Align-Rite.
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13.4 Force Majeure. No party to this Agreement shall be deemed to be in
breach of this Agreement or otherwise liable to any other party in any manner
whatsoever for any failure or delay in performing its obligations under this
Agreement due to Force Majeure. If a party's performance of its obligations
under this Agreement is affected by Force Majeure, then: (i) it shall give
written notice to the other parties, specifying the nature and extent of the
Force Majeure, as soon as reasonably practicable on becoming aware of the Force
Majeure and will at all times use its reasonable endeavors to mitigate the
severity of the Force Majeure; (ii) the date for performance of such obligation
shall be deemed suspended only for a period equal to the delay caused by such
event; and (iii) it shall not be entitled to payment from the other party in
respect of extra costs and expenses incurred by virtue of the Force Majeure
event.
13.5 Assignment. Neither Align-Rite nor Harris may assign this Agreement
without the prior written consent of the other, except that Align-Rite may
assign its rights hereunder to any wholly-owned subsidiary or Affiliate of
Align-Rite or to any post-Closing purchaser(s) of all of the capital stock of
Align-Rite or of substantially all of its assets, and except that Harris may
assign its rights hereunder to any wholly-owned subsidiary or Affiliate of
Harris or to any post-Closing purchaser(s) of substantially all of the
Semiconductor Business Unit of Harris. Notwithstanding the above, Harris
covenants and agrees that in the event it sells all or substantially all of its
assets related to its semiconductor business (including, but not limited to, its
June 3, 1999 announced sale of its semiconductor business to a subsidiary of
Sterling Holding Company, Citicorp Venture Capital investment portfolio
company), it shall require as a condition of completion of such transaction that
the purchaser of such assets, as well as any successors of any such purchaser,
enters into an express assumption of this Agreement, as if such purchaser or
such successor were the original party to this Agreement, and the form of any
such assumption agreements shall be reasonably acceptable to Align-Rite. In the
event of any such assignments, Harris shall be deemed to have guaranteed the
performance of such purchaser's or successor's obligations hereunder and be
responsible therefor. Align-Rite covenants and agrees that in the event it sells
all or substantially all of the Business Assets, it shall require that the
purchaser of such assets, as well as any successors of any such purchaser,
enters into an express assumption of this Agreement, as if such purchaser or
such successor were the original party to this Agreement, and the form of any
such assumption agreements shall be reasonably acceptable to Harris. In the
event of any such assignments, Align-Rite shall be deemed to have guaranteed the
performance of such purchaser's or successor's obligations hereunder and be
responsible therefor.
ARTICLE 14
Notices
14.1 Any notice or any other information required or authorized by this
Agreement to be given by any party to the other must be given in writing by U.S.
mail, facsimile or overnight courier to the other party at the address for
service notified in Section 14.3 or to such other address as any party may
notify to the others from time to time in writing as being the address for
service.
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14.2 To be a valid and enforceable notice, evidence of receipt by the
recipient of such notice shall be required.
14.3 The addresses and contact numbers of those persons who are authorized
to accept service on behalf of the parties to this Agreement are set out below:
On behalf of Align-Rite and Sub to:
Mr. James MacDonald
Mr. Petar Katurich
Align-Rite International, Inc.
2428 Ontario Street
Burbank, California 91504
USA
Telephone No:(818)843-7220
Facsimile No: (818)563-4902
With a copy to:
J. Jay Herron, Esq.
Robert L. Davis, Esq.
O'Melveny & Myers LLP
610 Newport Center Drive, Suite 1700
Newport Beach, California 92660
Telephone No:(949)760-9600
Facsimile No: (949)823-6994
On behalf of Harris to:
Harris Corporation
Semiconductor Sector
Attention: Gregory L. Williams
2401 Palm Bay Road N.E.
Mail Stop 53-198
Palm Bay, FL 32905
Telephone No:(407) 729-5756
Facsimile No: (407) 729-5773
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With a copy to:
Harris Corporation
Leslie J. Hart
Vice President-Counsel
2401 Palm Bay Road N.E.
Mail Stop 53-198
Palm Bay, FL 32905
Telephone No:(407)729-5395
Facsimile No: (407)729-5392
IN WITNESS WHEREOF, this agreement is entered into by duly
authorized representatives of the parties hereto on the date first above
written.
ALIGN-RIGHT INTERNATIONAL, INC.,
a California corporation
By: /s/ James L. MacDonald
-----------------------------------------
James L. MacDonald
Chairman of the Board and Chief Executive
Officer
ALIGN-RITE, INC.,
a Florida corporation
BY: /s/ James L. MacDonald
-----------------------------------------
James L. MacDonald
Chairman of the Board
HARRIS CORPORATION,
a Delaware corporation
BY: /s/ W.R. Morcum
-----------------------------------------
W.R. Morcom
Vice President-General Manager Operations
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EXHIBIT 10.22
Site Services Agreement
by and among
Harris Corporation
Semiconductor Business Unit
and
Align-Rite, Inc.
<PAGE>
This Site Services Agreement ("Agreement") is entered into this 2nd day of July,
1999 by and between Harris Corporation, a Delaware Corporation, acting through
its Semiconductor Business Unit ("Harris"), Align-Rite Inc., a Florida
Corporation, ("Align-Rite").
RECITALS
WHEREAS, Harris and Align-Rite have or will enter into a separate Asset
Purchase Agreement of even date herewith for the sale of certain assets to
Align-Rite in connection with Harris' Photomask Business; and
WHEREAS, Harris and Align-Rite have or will enter into a separate Lease
Agreement of even date herewith for the lease of facilities to Align-Rite used
in connection with Harris' Photomask Business; and
WHEREAS, Align-Rite desires to purchase certain services from Harris
pertaining to the operation of the Photomask Business in the leased facilities
and Harris is willing to provide these services.
AGREEMENT
In consideration of the premises, the mutual promises contained herein,
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, and intending to be legally bound hereby, the parties
agree as follows:
1. SCOPE OF CONTRACT
Align-Rite hereby contracts with Harris to purchase the following services
from Harris, and Harris hereby agrees to provide Align-Rite with said services
through the action of employees of the Semiconductor Business Unit:
a) Facilities SystemsIEquipment Maintenance
b) Utilities
c) Training & Development
d) Calibration
e) Factory Control Systems & VMS Administration
f) Desktop Computing Services
g) Emergency Response Team
h) Occupational Health Services
i) Hazardous Waste Operations
j) Security
k) Purchasing, Stockroom, Receiving, Shipping, IQC
l) Telecommunications
m) Quality Engineering
n) Internal Quality Audit
<PAGE>
2. TERM:
The term of this Agreement shall commence on July 3, 1999 and shall
continue in effect until either (a) the Lease Agreement expires or is cancelled,
or (b) this Agreement is terminated as provided in Section 8 herein, whichever
occurs first.
3. PAYMENT
Services will be billed to Align-Rite on a monthly basis. Services which
commence or end on other than the first or last day of the month, respectively,
shall be billed pro-rata accordingly. Align-Rite shall pay the invoiced amount
for the services provided within thirty (30) days from the date of Harris'
invoice. Any payment or part thereof remaining unpaid after thirty (30) days
shall, in the absolute discretion of Harris, carry interest thereon at the rate
of two percent (2%) per annum above the prime interest rate published in the
Wall Street Journal as of the date on which payment was due, calculated on a
monthly basis. Payment made by check shall be drawn on a U.S. Bank.
Alternatively, direct wire payments shall be made to an account designated by
Harris. In the event payment becomes more than ninety (90) days past due,
Align-Rite International, Inc. agrees to pay for services rendered. Rates on the
services provided to Align-Rite are subject to review by Harris and may change
on each anniversary of this Agreement, except that if a utility rate changes,
Harris shall adjust said rate in the "Consumables (provided to Align-Rite by
Harris) Section" on page 2 of Exhibit "A" hereto and the new rate shall become
effective immediately and shall be shown at the new rate on the next monthly
invoice.
4. DESCRIPTION OF SERVICES
Harris agrees to provide the following services at the specified intervals
and cost in substantially the same manner as provided to Harris employees and
other buildings on the Complex. If a service provided to Harris employees or
other buildings on the Complex is modified, Harris reserves the right to modify
such service provided to Align-Rite accordingly.
a) Facilities Systems & Equipment Maintenance
Harris shall make available to Align-Rite maintenance and repair
services for the equipment and systems set forth in Exhibit "A". Harris shall
use its standard procedures for scheduling work, and shall use the same
workmanship levels and materials used for the adjacent buildings of the Complex
owned by Harris. Harris will provide coverage every day of the year except two
days, July 4th and December 23rd. In the event of an emergency, Harris will be
able to respond within two (2) hours.
The systems and equipment maintenance services for the Photomask
Business systems is divided into three programs: the Harris Preventive
Maintenance (HPM) Program, Contract Preventive Maintenance (CPM) Program, and
Time and Materials (T&M) Program as described in Exhibit "A". The HPM and T&M
Programs will be performed by Harris employees and/or their selected qualified
contractors, and the CPM Program will be performed by outside contractors who
specialize in the type of equipment and services set forth in Exhibit "A". Under
the HPM Program, Harris shall provide all the material and labor required to
maintain the systems identified in Exhibit "A" in good operating conditions.
This includes, but is not limited to, all the preventive maintenance and regular
repair.
Systems modifications, upgrades, equipment/tool installations, or
other work that might be requested by Align-Rite will be performed under the T&M
Program. The HPM, CPM
<PAGE>
and T&M hours and costs listed in Exhibit "A" are estimates. Harris will bill
Align-Rite based on actual hours expended and costs plus applicable mark-ups as
stated in Exhibit "A". Align-Rite reserves the right to change the type of the
maintenance program on a piece of equipment, or to remove a piece of equipment
from the maintenance program after giving Harris thirty (30) days written
notice. The cost of the services shall be adjusted accordingly.
b) Utilities
Harris shall make available to Align-Rite metered electricity,
nitrogen, deionized water, and city water in accordance with the costs set forth
in Exhibit "A". Align-Rite shall pay a one-time charge not to exceed in the
aggregate thirteen thousand dollars ($13,000.00) for the purchase and
installation of all four meters. Harris will also provide clean, dry compressed
air in exchange for chilled water from Align-Rite to cool the Centac air
compressor owned and operated by Harris. In addition to the actual metered
amount for each utility, Align-Rite shall pay one hundred twenty-five dollars
($125.00) per month per each of the four utilities, which includes the
administrative costs for meter reading, maintenance, and billing.
c) Training & Development
Harris shall provide Align-Rite with general training and
development skills in accordance with the description and costs as set forth in
Exhibits "B" and "C". While Harris' standard policy is to require a minimum of
five (5) persons attending a training class before commencing with said
training, Harris will make available to Align-Rite the training classes listed
on said exhibits only without imposing a minimum number of attendees. Emergency
Response Team training and Occupational Health Services training are as set
forth in Exhibits "J" and "K", subject to the minimum five (5) person standard
attendance policy. Training may occur simultaneously with other Harris employees
at such dates and times established by Harris, or may occur at a separate time
and date for Align-Rite employees only.
d) Calibration
Harris shall provide Align-Rite with calibration and repair services
for equipment used in the Photomask Business in accordance with the costs set
forth in Exhibit "D" on the equipment and schedules set forth in Exhibit "E".
e) Factory Control Systems & VMS Administration
Harris shall provide Align-Rite with Factory Control System and VMS
administration services in accordance with the description and costs as set
forth in Exhibit "F".
f) Desktop Computing Services
Harris shall provide Align-Rite with Desktop Computing Services
("DCS") in accordance with the description, purpose and frequency as set forth
in Exhibit "G", for assets listed in Exhibit "H" at the cost listed in Exhibit
"I". If Align-Rite deviates from the standard software support model used by all
other Harris employees, DCS reserves the right to discontinue support services
immediately.
g) Emergency Response Team
<PAGE>
Harris shall provide Align-Rite with Emergency Response Team ("ERT')
services in accordance with the description and costs as set forth in Exhibit
"J".
h) Occupational Health Services
Harris shall provide Align-Rite with Occupational Health Services in
accordance with the description and costs as set forth in Exhibit "K".
i) Hazardous Waste Operations
Harris shall provide Align-Rite with Hazardous Waste Operation
services in accordance with the description and costs as set forth in Exhibit
"L".
j) Security
Harris shall provide Align-Rite with Security services in accordance
with the description as set forth in Section 9 of the Lease Agreement and cost
as set forth in Exhibit "M" of this Agreement.
k) Purchasing, Stockroom, Receiving, Shipping, IQC
Harris shall provide Align-Rite with Purchasing, Stockroom,
Receiving, Shipping, and Incoming Quality Control (IQC) in accordance with the
description and costs as set forth in Exhibit "N".
l) Telecommunications
Harris shall provide Align-Rite with Telecommunication services in
accordance with the description and costs as set forth in Exhibit "O".
m) Quality Engineering
Harris shall provide Align-Rite with Quality Engineering services to
Align-Rite in accordance with the description and costs as set forth in Exhibit
"P".
n) Internal Quality Audit
Harris shall provide Align-Rite with Internal Quality Audit services
in accordance with the description and costs as set forth in Exhibit "Q".
5. GENERAL
a) The meaning of terms not defined in this Site Services Agreement
shall be the same as that defined in said Asset Purchase Agreement
or Lease Agreement.
b) The captions used in this agreement are for the purpose of
convenience only and shall not be construed to limit or extend the
meaning of any part of this Agreement.
c) All Exhibits attached hereto are incorporated herein by reference.
d) In case any one or more of the provisions contained herein shall for
any reason be held to be invalid, illegal, or unenforceable in any
respect, such invalidity, illegality, or unenforceability shall not
affect any other provision of this Agreement, but this Agreement
shall be construed as if such invalid, illegal, or unenforceable
provision had not been contained herein.
<PAGE>
e) When the context of this Agreement requires, the neuter gender
includes the masculine, the feminine, a partnership, corporation, or
joint venture, and the singular includes the plural.
f) The waiver by either party of any breach of any term, condition, or
covenant of this Agreement shall not be deemed a waiver of such
provision or any subsequent breach of the same or any other term,
condition, or covenant of this Agreement.
g) The words "herein", "hereof", "hereunder" and other words of similar
import refer to this Agreement as a whole and not to any particular
Article, Section or other subdivision.
6. CANCELLATION OF SERVICES
Either Align-Rite or Harris may cancel any one or more of the
aforementioned services other than utilities with ninety (90) days written
notice to the other party, except that maintenance services may be modified with
thirty (30) days notice as stated in Section 4(a) herein. Utility delivery and
termination is provided under the terms and conditions of Section 6 of the
Facility Lease Agreement.
7. SUCCESSORS AND ASSIGNS
The covenants and conditions herein contained shall, subject to the
provisions as to assignment, apply to and bind the heirs, successors, executors,
administrators and assigns of all of the parties hereto, and all of the
administrators and assigns of all of the parties hereto, and all of the parties
hereto shall be jointly and severally liable hereunder.
8. TERMINATION
In the event Harris or its successor ceases substantially all operations
at the Complex, Harris may terminate this Agreement in its entirety with one
hundred eighty (180) days written notice to Align-Rite.
9. ASSIGNMENT
Neither Align-Rite nor Hams may assign this Agreement without the prior
written consent of the other, except that Align-Rite may assign its rights
hereunder to any wholly-owned subsidiary or Affiliate of Align-Rite or to any
post-Closing purchaser(s) of all of the capital stock of Align-Rite or of
substantially all of its assets, and except that Harris may assign its rights
hereunder to any wholly-owned subsidiary or Affiliate of Harris or to any
post-Closing purchaser(s) of substantially all of the Semiconductor Business
Unit of Harris. Notwithstanding the above, Harris covenants and agrees that in
the event it sells all or substantially all of its assets related to its
semiconductor business (including, but not limited to, its June 3, 1999
announced sale of its semiconductor business to a subsidiary of Sterling Holding
Company, Citicorp Venture Capital investment portfolio company), it shall
require as a condition of completion of such transaction that the purchaser of
such assets, as well as any successors of any such purchaser, enters into an
express assumption of
<PAGE>
this Agreement, as if such purchaser or such successor were the original party
to this Agreement, and the form of any such assumption agreements shall be
reasonably acceptable to Align-Rite. In the event of any such assignments,
Harris shall be deemed to have guaranteed the performance of such purchaser's or
successor's obligations hereunder and be responsible therefor. Align-Rite
covenants and agrees that in the event it sells all or substantially all of the
Business Assets, it shall require that the purchaser of such assets, as well as
any successors of any such purchaser, enters into an express assumption of this
Agreement, as if such purchaser or such successor were the original party to
this Agreement, and the form of any such assumption agreements shall be
reasonably acceptable to Harris. In the event of any such assignments,
Align-Rite shall be deemed to have guaranteed the performance of such
purchaser's or successor's obligations hereunder and be responsible therefor.
10. TRANSFER OF PROPERTY BY HARRIS
In the event of any conveyance of the Complex or Premises and assignment
by Harris of this Agreement, Harris shall be and is hereby entirely freed and
relieved of all liability under any and all of its covenants and obligations
contained in or derived from this Agreement occurring after the consummation of
such conveyance and assignment so long as Harris' successor agrees and covenants
to assume all of Harris' obligations under this Agreement occurring after the
consummation of such conveyance assignment.
11. NOTICES
Any notice, demand, request, consent, approval or communication that
either party desires or is required to give to the other party under this
Agreement shall be in writing and shall be served personally, delivered by
independent messenger or overnight courier service, or sent by U.S. certified
mail, return receipt requested, postage prepaid, in which event such notice
shall be deemed to have been given when seventy-two (72) hours have elapsed from
the time when such notice was deposited in the United States mail, addressed to
the other party at the address set forth below:
If to Harris:
Harris Corporation
Semiconductor Business Unit
Notice Address: 2401 Palm Bay Road NE, m/s 53-205
Palm Bay, FL 32905
Attention: Tim Muth
Phone Number: (407) 724-7988
Fax Number: (407) 729-4887
with a copy to: Harris Corporation
Semiconductor Business Unit
2401 Palm Bay Road NE, m/s 53-216
Palm Bay, FL 32905
Attention: Vice President Counsel
Fax Number: (407) 729-5952
- - --------------------------------------------------------------------------------
If to Align-Rite: Align-Rite, Inc.
Notice Address: c/o 2428 Ontario Street
Burbank, CA 91504
Attention: Petar Katurich
Phone Number: (818) 843-7220
<PAGE>
Fax Number: (818) 563-4902
with a copy to: J. Jay Herron, Esquire
Robert L. Davis, Esquire
O'Melveny & Myers
610 Newport Center Drive
Newport Beach, California
Phone Number: (949) 823-6906
Fax Number (949) 823-6994
Either party may change its address by giving notice of same in accordance with
this paragraph.
12. RESPONSIBILITY OF HARRIS
Align-Rite hereby acknowledges that Harris is not in the business of
providing the services herein and that Harris does not warrant the performance
of services hereunder. In the event of an error or omission in the provision of
a service which shall be established to be principally caused by Harris'
performance hereunder, Harris shall credit Align-Rite for any previously
invoiced charges in connection with such service. Such adjustment shall be
Align-Rite's only remedy. Harris shall have no liability to Align-Rite for any
special, consequential, or incidental damages. Harris shall undertake to perform
services hereunder for Align-Rite substantially in the same manner as if it were
performing such services for a Harris business unit. Harris' obligations to
provide any service hereunder is conditioned upon the responsible party
obtaining prior to the commencement of such services all necessary governmental
licenses, approvals, and permits.
13. GOVERNING LAW
This Agreement and the relationship between Harris and Align-Rite shall be
governed by and construed in accordance with the laws of the State of Florida.
14. DISPUTE RESOLUTION AND ARBITRATION
In the event that any dispute arises among the parties pertaining to the
subject matter of this Agreement, and the parties, through Align-Rite's senior
management and Harris' senior management are unable to resolve such dispute
within a reasonable time through negotiations and mediation efforts by senior
executives of both parties, such dispute shall be resolved as set forth in this
Section.
a) The following procedures may be initiated by written notice
("Dispute Notice") given by one party ("Claimant") to the other, but
not before thirty (30) days have passed during which the parties
have been unable to reach a resolution as described above. The
Dispute Notice shall be accompanied by (i) a statement of the
Claimant describing the dispute in reasonable detail and (ii)
documentation, if any, supporting the Claimant's position on the
dispute. Within twenty (20) days after the other party's
("Respondent") receipt of the Dispute Notice and accompanying
materials, the parties shall submit the dispute to mediation in the
Orlando, Florida area under the rules of the American Arbitration
Association. All negotiations and mediation procedures pursuant to
this Section 14(a) shall be
<PAGE>
confidential and treated as compromise and settlement negotiations
and shall not be admissible in any arbitration or other proceeding.
b) If the dispute is not resolved as provided in Section 14(a) within
sixty (60) days after the Respondent's receipt of the Dispute
Notice, the dispute shall be resolved by binding arbitration. Within
the sixty-day period referred to in the immediately preceding
sentence, the parties shall agree on a single arbitrator to resolve
the dispute. If the parties fail to agree on the designation of an
arbitrator within said sixty-day period, the American Arbitration
Association in the Orlando, Florida area shall be requested to
designate the single arbitrator. If the arbitrator becomes disabled,
resigns or is otherwise unable to discharge the arbitrator's duties,
the arbitrator's successor shall be appointed in the same manner as
the arbitrator was appointed.
c) Except as otherwise provided in this Section, the arbitration shall
be conducted in accordance with the Commercial Rules of the American
Arbitration Association, which shall be governed by the United
States Arbitration Act.
d) Any resolution reached through mediation and any award arising out
of arbitration (i) shall be non-binding upon the parties; (ii) shall
be limited to a holding for or against a party, and affording such
monetary remedy as is deemed equitable, just and within the scope of
this Agreement; (iii) may not include special, incidental,
consequential or punitive damages; (iv) may in appropriate
circumstances include injunctive relief; and (v) may be entered in
court in accordance with the United States Arbitration Act.
e) Arbitration shall not be deemed a waiver of any right of termination
under this Agreement, and the arbitrator is not empowered to act or
make any award other than based solely on the rights and obligations
of the parties prior to termination in accordance with this
Agreement.
f) Each party shall bear its own expenses incurred in any mediation,
arbitration or litigation, but any expenses related to the
compensation and the costs of any mediator or arbitrator shall be
borne equally by the parties to the dispute.
g) A request by a party to a court for interim measures necessary to
preserve a party's rights and remedies for resolution pursuant to
this Section shall not be deemed a waiver of the obligation to
mediate or of the agreement to arbitrate.
h) The parties, their representatives, other participants and the
mediator or arbitrator shall hold the existence, content and result
of mediation or arbitration in confidence.
15. FORCE MAJEURE
Neither party shall be liable in damages for any delay or default in the
performances of any or all obligations of this Agreement, if such delay or
default is caused by conditions beyond its control, including, but not limited
to: acts of the elements, fires, explosions, floods or other
<PAGE>
casualties, governmental orders or restrictions, and the inability to obtain
necessary governmental approvals. The party incurring the delay shall promptly
notify the other party in writing, and performance shall be extended one day for
each day of delay.
16. AMENDMENT
This Agreement may be amended or any provision of this Agreement may be
waived only if set forth in writing, executed by both parties to this Agreement.
17. ENTIRE AGREEMENT
This Agreement, the Asset Purchase Agreement and the Facility Lease
Agreement contains all of the terms, covenants and conditions agreed to by
Harris and Align-Rite, integrates all discussions and understandings leading up
to this Agreement, supersedes all prior agreements between the parties
pertaining to the subject matter herein, and may not be modified orally or in
any manner other than by an agreement in writing signed by all of the parties to
this Agreement or their respective successors in interest.
18. ATTORNEYS' FEES
In case suit should be brought for any sum or services due hereunder, for
the enforcement or interpretation of any of the terms or conditions of this
Agreement, or because of any act which may arise out of the operation of the
Photomask Business on the Complex, by either party, the prevailing party shall
be entitled to all costs incurred in connection with such action, including a
reasonable attorney's fee.
19. AUTHORITY
Harris and Align-Rite warrant and represent that their respective
representatives executing this Agreement each have the full power and authority
to execute this Agreement on behalf of Harris and Align-Rite, respectively, and
that this Agreement, once executed by the signatory of Harris or Align-Rite, as
the case may be, shall constitute a legal and binding obligation of that party
and is fully enforceable in accordance with its terms.
IN WITNESS WHEREOF, Harris and Align-Rite have executed this Site Services
Agreement as of the day and year first written above.
Harris Corporation Align-Rite, Inc.
Semiconductor Business Unit
/s/ W. Russell Morcom /s/ James L. MacDonald
By: W. Russell Morcom By: James L. MacDonald
V.P.-GM Operations Chairman of the Board
<PAGE>
Exhibit A
Facilities Systems/Equipment Maintenance and Utilities - Page 1 of 4
<TABLE>
<CAPTION>
- - ------------------------------------------------------------------------------------------------------------------------------------
HSS PM T&M Contract PM
----------------------------------------------------------------------------------
Bldg. 60: Facilities Systems/ HSS Contract Contract HSS HSS
Equipment Itemized Maintenance Property (@) Plus EST Hrs. and/or Work Est. Cost Est. Est.
Owner PM EST Material Cost Contractor Freq $(K)/YR Cost Total
Freq. HRS/YR Cost+ Plus 20% +20% Cost
10%
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Champion Air Compressors (4) AR S 12 $384 X - $0 $0
------------------------------------------------------------------------------------
Air Dryers, for Champion Air AR S 3 $96 X A $5,500 $6,600
------------------------------------------------------------------------------------
Chillers (3) AR W 52 $1,664 X M/A $14,000 $16,800
------------------------------------------------------------------------------------
Chiller Water Circulation Pumps (2) AR S 3 $96 X - $0 $0
------------------------------------------------------------------------------------
Chilled Water piping (pipe, valve) AR - 0 $0 X - $0 $0
------------------------------------------------------------------------------------
Chilled/Cooling water pumps (11) AR S 12 $384 X - $0 $0
------------------------------------------------------------------------------------
Cooling Tower (1) AR S/SA/A 28 $896 X - $0 $0
------------------------------------------------------------------------------------
Cooling Tower Pumps (2) AR S 3 $96 X - $0 $0
------------------------------------------------------------------------------------
Make-up Water Piping (for scrubber, AR/HSS1 - 0 $0 X - $0 $0
cooling tower, chilled water)
------------------------------------------------------------------------------------
Chiller Plant Controls, DDC (CSI)*** AR - 0 $0 X A $1,900 $2,280
------------------------------------------------------------------------------------
Environmental Control DDC (Robert Shaw) AR - 0 $0 X - $0 0
------------------------------------------------------------------------------------
Process Vacuum Pumps (2) AR S 3 $96 X - $0 0
------------------------------------------------------------------------------------
Boiler (1) AR - 0 $0 X A $2,000 $2,400
------------------------------------------------------------------------------------
Air Handling Units (AHUs), (14) AR S 24 $768 X - $0 $0
------------------------------------------------------------------------------------
Humidifiers, duct mounted (4) AR A 4 $128 X - $0 $0
------------------------------------------------------------------------------------
Filters (prefilters and recirculation AR - 0 $0 X M/Q $6,000 $7,200
filters for AHUs, excluding
Hi-Efficiency filters)
------------------------------------------------------------------------------------
Air Dist. Sys. (ductwork, Canopies, AR - 0 $0 X - $0 $0
HEPAs)
------------------------------------------------------------------------------------
Heat Exhaust for mech, electrical & AR S 2 $64 X - $0 $0
UPS rooms (4)
------------------------------------------------------------------------------------
HEPA Hood Certification (Canopies) NA SA 16 $512 X - $0 $0
------------------------------------------------------------------------------------
Particle Measurement System (less AR M 6 $192 X A $700 $840
Facility View Software)***
------------------------------------------------------------------------------------
Fume Scrubber (1) AR W/S 28 $896 X - $0 $0
------------------------------------------------------------------------------------
Fume Exhaust Ductwork AR S 2 $64 X - $0 $0
------------------------------------------------------------------------------------
General Bldg. Interior (ceiling, AR - 0 $0 X - $0 $0
walls, floor/raised floor, light bulbs)
------------------------------------------------------------------------------------
Fire Extinguishers Inspection AR - 0 $0 X M $600 $720
- - ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Exhibit A
Facilities Systems/Equipment Maintenance and Utilities - Page 2 of 4
<TABLE>
<CAPTION>
- - ------------------------------------------------------------------------------------------------------------------------------------
HSS PM T&M Contract PM
----------------------------------------------------------------------------------
Bldg. 60: Facilities Systems/ HSS Contract Contract HSS HSS
Equipment Itemized Maintenance Property (@) Plus EST Hrs. and/or Work Est. Cost Est. Est.
Owner PM EST Material Cost Contractor Freq $(K)/YR Cost Total
Freq. HRS/YR Cost+ Plus 20% +20% Cost
10%
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
House Cleaning Vacuum, Supplied from AR/HSS1 S 2 $64 X - $0 $0
bldg 54 (1/3 sys cost)
------------------------------------------------------------------------------------
Process Piping (CDA, N2, PV, IWW, etc. AR/HSS1 - 0 $0 X - $0 $0
------------------------------------------------------------------------------------
DI water Booster Pumps/Filters (2) AR S 3 $96 X - $0
------------------------------------------------------------------------------------
VESDA Fire Alarm (under raised floor, AR - 0 $0 X A $500 $600
MEBES and Console)
------------------------------------------------------------------------------------
Emergency Generator (1) AR W 52 $1,664 X A $5,000 $6,000
------------------------------------------------------------------------------------
UPS (1) AR - 0 $0 X SA $1,200 $1,440
------------------------------------------------------------------------------------
Electrical Distribution Sys AR W 120 $3,840 X $0 $0
(switchgear, elect dist panel)
- - ------------------------------------------------------------------------------------------------------------------------------------
HSS Owned, Maintained and Operated
Systems/Equip/Structure:
- - ------------------------------------------------------------------------------------------------------------------------------------
15 KV Transformers (2) HSS W 60 $1,920 X A $1,500 $1,800
------------------------------------------------------------------------------------
Bldg. Shell (ext. walls & roof) & HSS $0 $0
Concrete Floor
------------------------------------------------------------------------------------
Fire Alarm (less the VESDA system) HSS A 16 $512 $0
------------------------------------------------------------------------------------
Fire Sprinkler HSS Q 32 $1,024 Q $500 $600
------------------------------------------------------------------------------------
Bathroom(s) and Under Slab Plumbing HSS - 0 $0 $0
- - ------------------------------------------------------------------------------------------------------------------------------------
Consumables: (provided to AR by HSS)
- - ------------------------------------------------------------------------------------------------------------------------------------
Electricity (present rates 0.043 $/KWH) $0 $0
--------------------------------------------------------------------
Nitrogen ($1.80 per 1000 cubic feet; $0 $0
$2.60 per 1000 cubic feet if Nitrogen
plant is not operational)
--------------------------------------------------------------------
DI Water $28 per 1,000 Gallon $0 $0
--------------------------------------------------------------------
City Water (present rate $3.55 per $0 $0
1,000 gallon)
--------------------------------------------------------------------
Clean Dry Comp. Air (trade air for $0 $0
chilled water to cool Harris' Centac
air compressor)
--------------------------------------------------------------------------------------------
HSS will add a fixed administrative $0 $0
cost of $125 per month per each
metered consumable
- - ------------------------------------------------------------------------------------------------------------------------------------
483 $15,456 $39,400 $47,280
- - ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Exhibit A
Facilities Systems/Equipment Maintenance and Utilities - Page 3 of 4
DEFINITIONS:
AR = Align-Rite W = Weekly S = Every 4 Months
HSS = Harris Semiconductor Sector M = Monthly SA = Semi Annual
PM = Preventive Maintenance Q = Quarterly A = Annual
CPM = Contractor Preventative Maintenance
T&M = Time & Materials
AR/HSS1 = AR owns inside the building and HSS owns outside the building. If
meter exists then AR owns downstream of meter and HSS owns meter and upstream of
meter
Estimated costs based upon straight time.
(@) = bill for actual hours
HSS owned system: the cost for maintaining and operating these systems is part
of the Lease. (not services to AR)
T&M HSS/Contractor: This will cover any work outside the PM or contracted-out
work. Example: Break downs, system modification, upgrades, Work Orders
Coverage = 7x24x363
The particle measurement system in bldg. 60 is owned by AR but the front end
software (PMS Facility View) is owned by HSS. DI Water Cost includes: Cooling
Tower Water, Scrubber Water, Waste Water Treatment, Electric, Chemicals, N2,
Labor and Material to run the system.
<PAGE>
Exhibit A
Facilities Systems/Equipment Maintenance and Utilities - Page 4 of 4
- - --------------------------------------------------------------------------------
HSS Skilled Trades
- - --------------------------------------------------------------------------------
Job Category FY99 Rate/hr. Overtime Premium
- - --------------------------------------------------------------------------------
Administration $26.00 $39.00 $52.00
Mechanic $32.00 $48.00 $64.00
Drafting $32.50 $48.75 $65.00
Engineer $58.50
Construction Mgt. $39.00 $58.50 $78.00
- - --------------------------------------------------------------------------------
HSS Non-Skilled Trades
- - --------------------------------------------------------------------------------
Job Category FY99 Rate/hr. Overtime Premium
- - --------------------------------------------------------------------------------
Janitor $11.02 $16.54 $22.05
Record Retention $19.50 $29.25 $39.00
Mover $25.53 $38.30 $51.06
- - --------------------------------------------------------------------------------
Rates are: avg. actual plus fringe plus 30% overhead
- - --------------------------------------------------------------------------------
Job Category FY99 Rate/hr. Materials Contractor
- - --------------------------------------------------------------------------------
Administration $26.00 Cost + 10% Administrative + 20%
Mechanic $32.00
Drafting $32.50
Engineer $58.50
- - --------------------------------------------------------------------------------
Construction Mgt. $39.00
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- - --------------------------------------------------------------------------------------------------------------
HSS Skilled Trades (Mechanics) FY 99 Age Rates HSS Non-Skilled Trades
- - --------------------------------------------------------------------------------------------------------------
Trade Avg.$/hr plus Rate plus 30% Trade Avg.$/hr plus Rate plus 30%
fringe fringe
- - --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Bldg. Mgt. Sys. $25.34 $32.94 Janitor $8.48 $11.02
Electrician $24.25 $31.53 Record Retention $15.00 $19.50
HVAC $22.33 $29.03 Mover $19.64 $25.53
Plumber $24.98 $32.47
Hi-Purity Gas Weld $29.20 $37.96
Multi-Skilled Crafts $21.35 $27.76
Glass Blower $26.09 $33.92
- - --------------------------------------------------------------------------------------------------------------
AVERAGE RATE $24.58 $32.23 AVERAGE RATE $14.37 $18.69
- - --------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Exhibit B
Training & Development
- - --------------------------------------------------------------------------------
Services Description
- - --------------------------------------------------------------------------------
1. New Hire Orientation
- - --------------------------------------------------------------------------------
2. Dept. Transfer Orientation
- - --------------------------------------------------------------------------------
3. Training Coordination for Teams
- - --------------------------------------------------------------------------------
4. Team Meeting Facilitation
- - --------------------------------------------------------------------------------
5. Knowledge Broker to Teams and Management
- - --------------------------------------------------------------------------------
6. Internal and External Audit Support
- - --------------------------------------------------------------------------------
7. Coordination/Maintenance of TRACS; SAFIRE; PACE; DOCS; HUB
- - --------------------------------------------------------------------------------
8. Presentation Coaching to Teams
- - --------------------------------------------------------------------------------
9. Required Platform Team Training
- - --------------------------------------------------------------------------------
10. Compliance Training
- - --------------------------------------------------------------------------------
11. Operator Certification Program Coordination
- - --------------------------------------------------------------------------------
12. Goal Deployment process
- - --------------------------------------------------------------------------------
13. Team Interventions to Improve Behaviors
- - --------------------------------------------------------------------------------
14. Experiential Learning Intervention Expertise
- - --------------------------------------------------------------------------------
15. Team Development Program Coordination
- - --------------------------------------------------------------------------------
16. Local Steering Committee Membership
- - --------------------------------------------------------------------------------
17. Site Communications, Palm Bay Pulse Team Member
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
Itemized Services Approx. Cost ($)
- - --------------------------------------------------------------------------------
1. Training Classes, see Exhibit "C" $12.50 /hr/person plus materials
- - --------------------------------------------------------------------------------
2. Facilitation $320.00 / day
- - --------------------------------------------------------------------------------
3. Technical Training Center $12.50 /hr/person plus materials
- - --------------------------------------------------------------------------------
See Exhibit "C" for a list of classes provided and the cost. Additional classes
will be added to this list, as well as terminated and updated classes.
Align-Rite will be informed of class additions, terminations and updating. Any
costing changes will be reviewed with Align-Rite before any increase in charges
are occurred.
Continental Breakfasts, Lunches and afternoon snacks for the longer classes will
be the responsibility of Align-Rite.
<PAGE>
Exhibit C
Training & Development - Page 1 of 2
Palm Bay Manufacturing Training Department
Course Costs
(These are per student charges.)
<TABLE>
<CAPTION>
- - -----------------------------------------------------------------------------------------------------------
PACE # Manufacturing CORE Course Classes HRS Material $ Tuition $ Total $
- - -----------------------------------------------------------------------------------------------------------
TECHNICAL
- - -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
AD8X-42 HARRIS 8D ROADMAP (no experience) 8 $60.00 $100.00 $160.00
- - -----------------------------------------------------------------------------------------------------------
TBD HARRIS 8D ROADMAP (review) 4 $40.00 $50.00 $90.00
- - -----------------------------------------------------------------------------------------------------------
AD85-05 WORKSTREAM 4 $30.00 $50.00 $80.00
- - -----------------------------------------------------------------------------------------------------------
AD8R-34 CAPA/CARS 2 $20.00 $25.00 $45.00
- - -----------------------------------------------------------------------------------------------------------
AD8Y-06 TPM OVERVIEW 1 $10.00 $12.50 $22.50
- - -----------------------------------------------------------------------------------------------------------
AD8R-42 TOC OVERVIEW 2 $20.00 $25.00 $45.00
- - -----------------------------------------------------------------------------------------------------------
AD8P-01 SPC for NEW HIRES 12 $25.00 $150.00 $175.00
- - -----------------------------------------------------------------------------------------------------------
AD8P-15 FUNCTIONAL SPC 20 $50.00 $250.00 $300.00
- - -----------------------------------------------------------------------------------------------------------
AD8R-46 IYM OVERVIEW 2 $20.00 $25.00 $45.00
- - -----------------------------------------------------------------------------------------------------------
AD8N-11 GOAL DEPLOYMENT 8 $50.00 $100.00 $150.00
- - -----------------------------------------------------------------------------------------------------------
AD8R-01 5 S CAND0 2 $20.00 $25.00 $45.00
- - -----------------------------------------------------------------------------------------------------------
AEU4-15 PRODUCT SUBSTITUTION 2 $20.00 $25.00 $45.00
- - -----------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Exhibit C
Training & Development - Page 2 of 2
Course Costs (cont.)
<TABLE>
<CAPTION>
- - -----------------------------------------------------------------------------------------------------------
PACE # Manufacturing CORE Course Classes HRS Material $ Tuition $ Total $
- - -----------------------------------------------------------------------------------------------------------
SOCIAL
- - -----------------------------------------------------------------------------------------------------------
AD8X-06 TEAM DYNAMICS (4-2 hour sessions optional) 8 $50.00 $100.00 $150.00
- - -----------------------------------------------------------------------------------------------------------
AD8N-21 MEETING DYNAMICS 4 $30.00 $50.00 $80.00
- - -----------------------------------------------------------------------------------------------------------
AD8X-11 CONFLICT 101 2 $20.00 $25.00 $45.00
- - -----------------------------------------------------------------------------------------------------------
AD8X-06 TEAM BEST PRACTICES 4 $30.00 $50.00 $80.00
- - -----------------------------------------------------------------------------------------------------------
AD8X-16 EFFECTIVE COMMUNICATIONS 2 $20.00 $25.00 $45.00
- - -----------------------------------------------------------------------------------------------------------
AD8M-28 SEMISPEAKS 4 $30.00 $50.00 $80.00
- - -----------------------------------------------------------------------------------------------------------
<CAPTION>
- - -----------------------------------------------------------------------------------------------------------
PACE # Manufacturing CORE Course Classes HRS Material $ Tuition $ Total $
- - -----------------------------------------------------------------------------------------------------------
SAFETY
- - -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
AEU4-17 HAZARD COMMUNICATION/RIGHT TO KNOW 1 $10.00 $12.50 $22.50
- - -----------------------------------------------------------------------------------------------------------
AD8T-01 HAZARDOUS ENERGY CONTROL (level 2) 2 $20.00 $25.00 $45.00
- - -----------------------------------------------------------------------------------------------------------
LEADERSHIP
- - -----------------------------------------------------------------------------------------------------------
AD8N-48 EFFECTIVE COACHING BEHAVIORS 8 $50.00 $100.00 $150.00
- - -----------------------------------------------------------------------------------------------------------
AD8N-04 FACILITATION SKILLS WORKSHOP 101 8 $50.00 $100.00 $150.00
- - -----------------------------------------------------------------------------------------------------------
AD8N-23 ADVANCED FACILITATION SKILLS 8 $75.00 $100.00 $175.00
- - -----------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Exhibit D
Calibration
- - --------------------------------------------------------------------------------
Itemized Services Approx. Monthly Cost ($)
- - --------------------------------------------------------------------------------
1. Calibration and repair service
- - --------------------------------------------------------------------------------
2. Repair $78/hr as requested
- - --------------------------------------------------------------------------------
3. Calibration $78/hr (estimate is 88hrs/year or approximately $572.00
$6864.00/yr)
- - --------------------------------------------------------------------------------
<PAGE>
Exhibit E - Calibration - Page 1 of 3
<TABLE>
<CAPTION>
- - --------------------------------------------------------------------------------------------------------------------------------
PROP. ID MFR. MFR. EQ. MFR DUE ROOM CAL CAL
NAME MODEL DESC. SER. NO DATE LOC STATUS INTVL.
- - --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
920918 PMS 110 PTCL COUNT 0688-116 4/17/99 MASK IP 365
- - --------------------------------------------------------------------------------------------------------------------------------
014104 PREC INV CONTROLLER 9155 CHMB 4/21/99 MASK XX 182
- - --------------------------------------------------------------------------------------------------------------------------------
930187 OSI NIKON MEAS SYS 5354 5/1/99 MASK XX 365
- - --------------------------------------------------------------------------------------------------------------------------------
010299 NIKON 6 COMPARATOR BAY 3 5/1/99 MASK XX 365
- - --------------------------------------------------------------------------------------------------------------------------------
912243 OAI 316/365NM EXPOS MTR C399 C551 5/19/99 MASK XX 182
- - --------------------------------------------------------------------------------------------------------------------------------
011698 HONWLL 612X9 T-RH-REC 378033 5/20/99 MASK XX 182
- - --------------------------------------------------------------------------------------------------------------------------------
010096 SOLOMAT 455 T-RH-MTR 5/25/99 MASK XX 182
- - --------------------------------------------------------------------------------------------------------------------------------
004098 BACH T-SCRIBE TEMP REC 5/26/99 MASK XX 182
- - --------------------------------------------------------------------------------------------------------------------------------
012468 BLEUM TOUCH MST OVEN 6/1/99 BAY2 XX 365
- - --------------------------------------------------------------------------------------------------------------------------------
012465 KLA 101 INSP STA 6/1/99 BAY1 XX 365
- - --------------------------------------------------------------------------------------------------------------------------------
012470 QUANTRONIX DRS 21 RPR STA 108 6/1/99 BAY3 XX 365
- - --------------------------------------------------------------------------------------------------------------------------------
012466 QUANTRONIX DRS 1 RPR STA 64 6/1/99 BAY1 XX 365
- - --------------------------------------------------------------------------------------------------------------------------------
014484 OHAUS 700/1610 3 BALANCE 6/4/99 MASK XX 182
- - --------------------------------------------------------------------------------------------------------------------------------
913401 OAI 316 EXPOS MTR C438 C279 6/9/99 MASK XX 182
- - --------------------------------------------------------------------------------------------------------------------------------
006576 KLA INSP STA 6/15/99 MASK XX 365
- - --------------------------------------------------------------------------------------------------------------------------------
013971 FLUKE 8021B DMM 4855155 6/22/99 SHOP XX 365
- - --------------------------------------------------------------------------------------------------------------------------------
012462 ATC SEC TIMER BAY # 1 7/7/99 MASK XX 182
- - --------------------------------------------------------------------------------------------------------------------------------
014292 ATC TIMER 7/7/99 MASK XX 182
- - --------------------------------------------------------------------------------------------------------------------------------
014294 ATC TIMER 7/7/99 MASK XX 182
- - --------------------------------------------------------------------------------------------------------------------------------
013279 ATC SEC TIMER BAY #1 7/7/99 MASK XX 182
- - --------------------------------------------------------------------------------------------------------------------------------
014291 ATC TIMER 7/19/99 MASK XX 182
- - --------------------------------------------------------------------------------------------------------------------------------
014293 ATC TIMER 7/19/99 MASK XX 182
- - --------------------------------------------------------------------------------------------------------------------------------
014295 ATC TIMER 7/19/99 MASK XX 182
- - --------------------------------------------------------------------------------------------------------------------------------
014296 ATC TIMER 7/19/99 MASK XX 182
- - --------------------------------------------------------------------------------------------------------------------------------
955104 TEK THS730A DIG OSCOPE B012042 7/21/99 MASK XX 365
- - --------------------------------------------------------------------------------------------------------------------------------
910608 TEK AM503 C PROBE AMP B052654 7/22/99 MASK XX 182
- - --------------------------------------------------------------------------------------------------------------------------------
909643 TEK FG 502 FUNC GEN B050365 7/22/99 MASK XX 182
- - --------------------------------------------------------------------------------------------------------------------------------
910211 TEK DC 503A COUNTER B022152 7/22/99 MASK XX 182
- - --------------------------------------------------------------------------------------------------------------------------------
013615 TEK 2236 OSCOPE B016189 7/29/99 MASK XX 182
- - --------------------------------------------------------------------------------------------------------------------------------
010287 LEITZ ERGOLUX COMPARATOR BAY2 8/26/99 MASK XX 365
- - --------------------------------------------------------------------------------------------------------------------------------
010279 B&L 4X MICROSCOPE 8/26/99 MASK XX 365
- - --------------------------------------------------------------------------------------------------------------------------------
010283 B&L 6X MICROSCOPE 8/26/99 MASK XX 365
- - --------------------------------------------------------------------------------------------------------------------------------
012565 MANN S MICROSCOPE 8/26/99 MASK XX 365
- - --------------------------------------------------------------------------------------------------------------------------------
010455 LEITZ MICROSCOPE 8/26/99 MASK XX 365
- - --------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
PROP. ID CAL CAL REP CAL CAL REP Defect
CODE HOURS HOURS DATE TIMES TIMES Rate
- - -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
920918 IOPP 0.5 0 4/17/98 5 1 20%
- - --------------------------------------------------------------------------------------------------------------------
014104 HIP 0.5 0 10/21/98 10 0 0%
- - --------------------------------------------------------------------------------------------------------------------
930187 HIP 1 0 5/1/98 9 0 0%
- - --------------------------------------------------------------------------------------------------------------------
010299 HIP 1 0 5/1/98 10 0 0%
- - --------------------------------------------------------------------------------------------------------------------
912243 VCAL 1 0 11/18/98 10 1 30%
- - --------------------------------------------------------------------------------------------------------------------
011698 HCAL 2 0 11/19/98 20 0 0%
- - --------------------------------------------------------------------------------------------------------------------
010096 HCAL 6 0 11/24/98 20 0 0%
- - --------------------------------------------------------------------------------------------------------------------
004098 HCAL 1 0.5 11/25/98 19 4 21%
- - --------------------------------------------------------------------------------------------------------------------
012468 HIP 0.5 0 6/1/98 9 0 0%
- - --------------------------------------------------------------------------------------------------------------------
012465 HIP 0.5 0 6/1/98 9 0 0%
- - --------------------------------------------------------------------------------------------------------------------
012470 IOPP 0.5 0 6/1/98 9 0 0%
- - --------------------------------------------------------------------------------------------------------------------
012466 IOPP 0.5 0 6/1/98 9 0 0%
- - --------------------------------------------------------------------------------------------------------------------
014484 HCAL 1 0 12/4/98 7 0 0%
- - --------------------------------------------------------------------------------------------------------------------
913401 VCAL 1 0 12/9/98 12 0 8%
- - --------------------------------------------------------------------------------------------------------------------
006576 HIP 1 0 6/15/98 9 0 0%
- - --------------------------------------------------------------------------------------------------------------------
013971 HCAL 1 0 6/22/98 6 0 0%
- - --------------------------------------------------------------------------------------------------------------------
012462 HIP 0.5 0 1/6/99 17 0 0%
- - --------------------------------------------------------------------------------------------------------------------
014292 HIP 0.5 0 1/6/99 9 0 0%
- - --------------------------------------------------------------------------------------------------------------------
014294 HIP 0.5 0 1/6/99 10 0 0%
- - --------------------------------------------------------------------------------------------------------------------
013279 HIP 0.5 0 1/6/99 15 0 0%
- - --------------------------------------------------------------------------------------------------------------------
014291 HIP 0.5 0 1/18/99 9 0 0%
- - --------------------------------------------------------------------------------------------------------------------
014293 HIP 0.5 0 1/18/99 10 0 0%
- - --------------------------------------------------------------------------------------------------------------------
014295 HIP 0.5 0 1/18/99 9 0 0%
- - --------------------------------------------------------------------------------------------------------------------
014296 HIP 0.5 0 1/18/99 9 0 0%
- - --------------------------------------------------------------------------------------------------------------------
955104 HCAL 2 0 7/21/98 2 0 0%
- - --------------------------------------------------------------------------------------------------------------------
910608 HCAL 1 0 1/21/99 19 0 0%
- - --------------------------------------------------------------------------------------------------------------------
909643 HCAL 1 0 1/21/99 19 00 0%
- - --------------------------------------------------------------------------------------------------------------------
910211 HCAL 1 0 1/21/99 19 00 0%
- - --------------------------------------------------------------------------------------------------------------------
013615 HCAL 2 0 1/28/99 9 00 0%
- - --------------------------------------------------------------------------------------------------------------------
010287 HIP 0.5 0 8/26/98 6 1 17%
- - --------------------------------------------------------------------------------------------------------------------
010279 PM 1 0 8/26/98 25 0 0%
- - --------------------------------------------------------------------------------------------------------------------
010283 PM 1 2 8/26/98 24 1 4%
- - --------------------------------------------------------------------------------------------------------------------
012565 PM 1 1 8/26/98 22 1 5%
- - --------------------------------------------------------------------------------------------------------------------
010455 PM 1 0 8/26/98 23 0 0%
- - --------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
911499 LEITZ ORTHOLUX MICROSCOPE 8/26/99 MASK XX 365
- - ---------------------------------------------------------------------------------------------------------------------------------
011054 OSI NIKON MICROSCOPE 5345 8/28/99 MASK XX 365
- - ---------------------------------------------------------------------------------------------------------------------------------
012100 LEITZ ORTHOLUX MICROSCOPE 8/28/99 MASK XX 365
- - ---------------------------------------------------------------------------------------------------------------------------------
010289 LEITZ ERGOLUX MICROSCOPE 8/28/99 MASK XX 365
- - ---------------------------------------------------------------------------------------------------------------------------------
010290 LEITZ POLOROID CAMERA 8/28/99 MASK XX 365
- - ---------------------------------------------------------------------------------------------------------------------------------
012563 LEITZ POLOROID CAMERA 8/28/99 MASK XX 365
- - ---------------------------------------------------------------------------------------------------------------------------------
012096 LEITZ METALLOPLN MICROSCOPE 8/28/99 MASK XX 365
- - ---------------------------------------------------------------------------------------------------------------------------------
009619 SOLOMAT 455 T-RH-MTR 51509 9/16/99 MASK XX 182
- - ---------------------------------------------------------------------------------------------------------------------------------
906733 OLYMPUS BHMJL MICROSCOPE 200059 9/30/99 MASK XX 365
- - ---------------------------------------------------------------------------------------------------------------------------------
015109 ASHCROFT 1009 PRES. GUAGE 10/11/99 MASK XX 182
- - ---------------------------------------------------------------------------------------------------------------------------------
501234 KEITHLEY 178 DMM 10139 12/9/99 PHMK XX 365
- - ---------------------------------------------------------------------------------------------------------------------------------
012559 NIKON 2-1 LASER MEAS BAY #4 1/18/00 MASK XX 365
- - ---------------------------------------------------------------------------------------------------------------------------------
014289 FLUKE 8020B DMM 4155192 1/28/00 MASK XX 365
- - ---------------------------------------------------------------------------------------------------------------------------------
014300 FLUKE 8021B DMM 4920167 2/1/00 MASK XX 365
- - ---------------------------------------------------------------------------------------------------------------------------------
014290 FLUKE 8021B DMM 4915075 2/1/00 MASK XX 365
- - ---------------------------------------------------------------------------------------------------------------------------------
014288 FLUKE 8020B DMM 4660116 2/1/00 MASK XX 365
- - ---------------------------------------------------------------------------------------------------------------------------------
907713 KEITHLEY 179 DMM 28969 2/11/00 MASK XX 365
- - ---------------------------------------------------------------------------------------------------------------------------------
911739 OLYMPUS BHMJL MICROSCOPE 203562 3/24/00 ANAL XX 365
- - ---------------------------------------------------------------------------------------------------------------------------------
010284 WILD M-450 MICROSCOPE 3/31/00 LAB XX 365
- - ---------------------------------------------------------------------------------------------------------------------------------
913752 OLUMPUS BHMJL MICROSCOPE 203594 4/4/00 1113 XX 365
- - ---------------------------------------------------------------------------------------------------------------------------------
011407 OMEGA 871 K DIG TEMP 4/13/00 MASK XX 365
- - ---------------------------------------------------------------------------------------------------------------------------------
904903 B&L 7X MICROSCOPE 4/15/00 MASK XX 365
- - ---------------------------------------------------------------------------------------------------------------------------------
012095 LEITZ ERGOLUX MICROSCOPE 027542 4/15/00 OFFI XX 365
- - ---------------------------------------------------------------------------------------------------------------------------------
012101 B&L MICROZOOM MICROSCOPE 61187 4/15/00 MASK XX 365
- - ---------------------------------------------------------------------------------------------------------------------------------
014816 FLUKE 8060A DMM 6486034 4/20/00 MASK XX 365
- - ---------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
PROP. ID CAL CAL REP CAL CAL REP Defect
CODE HOURS HOURS DATE TIMES TIMES Rate
--------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
911499 PM 1 2 8/26/98 25 2 8%
- - ---------------------------------------------------------------------------------------------------------------------------------
011054 HIP 1 0 8/28/98 9 0 0%
- - ---------------------------------------------------------------------------------------------------------------------------------
012100 PM 1 0 8/28/98 22 0 0%
- - ---------------------------------------------------------------------------------------------------------------------------------
010289 PM 1 4 8/28/98 16 2 13%
- - ---------------------------------------------------------------------------------------------------------------------------------
010290 PM 1 0 8/28/98 22 0 0%
- - ---------------------------------------------------------------------------------------------------------------------------------
012563 PM 1 0 8/28/98 22 0 0%
- - ---------------------------------------------------------------------------------------------------------------------------------
012096 PM 1 1 8/28/98 21 1 5%
- - ---------------------------------------------------------------------------------------------------------------------------------
009619 HCAL 3.5 0.5 3/18/99 20 2 10%
- - ---------------------------------------------------------------------------------------------------------------------------------
906733 PM 1 4 9/30/98 17 7 41%
- - ---------------------------------------------------------------------------------------------------------------------------------
015109 RCAL 1 4/12/99 1 0 0%
- - ---------------------------------------------------------------------------------------------------------------------------------
501234 HCAL 1 1 12/9/98 10 1 10%
- - ---------------------------------------------------------------------------------------------------------------------------------
012559 HIP 1 0 1/18/99 9 0 0%
- - ---------------------------------------------------------------------------------------------------------------------------------
014289 HCAL 1 0 1/28/99 5 0 0%
- - ---------------------------------------------------------------------------------------------------------------------------------
014300 HCAL 1 0 2/1/99 5 0 0%
- - ---------------------------------------------------------------------------------------------------------------------------------
014290 HCAL 1 0 2/1/99 5 0 0%
- - ---------------------------------------------------------------------------------------------------------------------------------
014288 HCAL 1 0 2/1/99 5 0 0%
- - ---------------------------------------------------------------------------------------------------------------------------------
907713 HCAL 1 0 2/11/99 10 1 10%
- - ---------------------------------------------------------------------------------------------------------------------------------
911739 PM 1 1 3/25/99 23 2 9%
- - ---------------------------------------------------------------------------------------------------------------------------------
010284 PM 1 0 4/1/99 17 0 0%
- - ---------------------------------------------------------------------------------------------------------------------------------
913752 PM 1 1 4/5/99 19 1 5%
- - ---------------------------------------------------------------------------------------------------------------------------------
011407 HCAL 0.75 0.5 4/14/99 11 2 18%
- - ---------------------------------------------------------------------------------------------------------------------------------
904903 PM 1 0 4/16/99 25 0 0%
- - ---------------------------------------------------------------------------------------------------------------------------------
012095 PM 1 1 4/16/99 28 3 11%
- - ---------------------------------------------------------------------------------------------------------------------------------
012101 PM 1 0 4/16/99 25 0 0%
- - ---------------------------------------------------------------------------------------------------------------------------------
014816 HCAL 1 4/21/99 2 0 0%
- - ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Exhibit F
Factory Control Systems & VMS Administration - Page 1 of 2
1. Factory Control Application Services:
a) 24x7x365 Coverage for Application Problem Resolution
b) Application-level Security Administration
c) WorkStream Database Administration
d) WorkStream Application Modeling
e) Application Performance Monitoring and Tuning
f) Job Scheduling
g) Rules-based Event Monitoring for Applications, Databases and Batch
Jobs
h) Enhancements to Internally-developed Systems
i) Product Upgrades for existing Commercial Software Packages
j) Development of Custom Software Solutions
k) Deployment and Maintenance of new Commercial Software Packages
Service Cost
$1,500/Month + $85/Hour Weekdays 8AM-5PM; $105/Hour Weekdays 5PM-8AM, Weekends
or National Holidays
Conditions:
1. Align-Rite will be charged a 2 hour minimum for any call received weekdays
between 5PM-8AM or on weekends or national holidays.
2. Harris reserves the right to terminate or change this service with (90)
days advance notice to Align-Rite.
3. Align-Rite reserves the right to terminate or change this service with
(90) days advance notice to Harris.
4. The service fees are valid from July 4, 1999 through June 30, 2000.
5. Harris will bill Align-Rite at most monthly.
6. Harris will require Align-Rite stay current with Harris revisions of
commercial and internally developed systems for applications used by both
companies. Timing of upgrades will be negotiated with Align-Rite.
Definitions/Explanations:
1. The $1,500/month flat fee covers management overhead and separate accounts
payable/receivable services associated with providing this outside
service.
2. VMS Administration Services:
The Harris Computing and Communications Services group will provide
Align-Rite with the following VMS administration services:
a) 24x7x365 Coverage for VMS Problem Resolution
b) Rules-based Event Monitoring
c) System Security Administration
d) Account Administration
<PAGE>
e) File and Print Services
f) VMS Network Administration (TCP/IP, DECnet)
g) VAX-Mail Services
h) VMS Capacity Planning
i) Help Desk Problem Tracking and Call Routing
j) Hardware and Software Installation and Upgrades
Service Cost:
$2,000/Month + $85/Hour Weekdays 8AM-5PM; $105/Hour Weekdays 5PM-8AM, Weekends
or National Holidays
Conditions:
1. Align-Rite will be charged for 2 hour minimum for any call received
weekdays between 5PM-8AM or on weekends or national holidays.
2. Harris reserves the right to terminate or change this service with (90)
days advance notice to Align-Rite.
3. Align-Rite reserves the right to terminate or change this service with
(90) days advance notice to Harris.
4. Align-Rite will be billed for a minimum 20 hours/week at $85/hour from the
time the definitive agreement is signed through the completion of the VAX
cluster re-configuration project.
5. Align-Rite will be billed for a minimum 10 hours/week at $85/hour after
the VAX cluster reconfiguration project.
6. The service fees are valid from July 4, 1999 through June 30, 2000. 7.
Harris will bill Align-Rite at most monthly. 8. Harris will require
Align-Rite stay current with Harris revisions of VMS layered and 3rd-party
products on the Align-Rite Factory Control Systems VAX. Timing of upgrades
will be negotiated with Align-Rite.
Definitions/Explanations:
1. The $2,000/month flat fee covers Help Desk and Accounts
Payable/Receivables services along with VMS administration management
overhead.
2. The hour rate will only be applied to VMS administration labor.
3. UNIX Voyage website ordering Service costs.
a) One time set up fee of $120.00
b) $216.00 per month utilization charge.
<PAGE>
Exhibit G
Desktop Computing Services (DCS) - Page 1 of 2
- - --------------------------------------------------------------------------------
Services Description Frequency
- - --------------------------------------------------------------------------------
1. Help Desk first level support for hardware and/or As needed.
software issues (we purchase from Corporate).
- - --------------------------------------------------------------------------------
2. DCS on-site second level support for hardware As needed.
and/or software issues.
- - --------------------------------------------------------------------------------
3. Purchasing of all hardware and/or software. As needed.
- - --------------------------------------------------------------------------------
4. Asset Tracking, compliance, licensing On-going.
for all computing Assets.
- - --------------------------------------------------------------------------------
5. Software Distribution for software upgrades, As needed.
McAfee .dat file Updates, Y2K issues, fixes,
etc...
- - --------------------------------------------------------------------------------
6. File/Print Services (we purchase from 24 x 7
Corporate).
- - --------------------------------------------------------------------------------
7. Messaging Services, i.e. Exchange (we purchase 24 x 7
from Corporate)
- - --------------------------------------------------------------------------------
8. Installations/configurations of all Standard Client As needed.
computing Assets, i.e. labtops, PC's, printers,
scanners, etc...
- - --------------------------------------------------------------------------------
9. Loaner labtops/PC's. As needed.
- - --------------------------------------------------------------------------------
10. WinFrame server capabilities. As needed.
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- - ----------------------------------------------------------------------------------------------
Name Purpose (Include Qty Ownership Annual
Computing Platform) Licenses Service
Contract Cost
- - ----------------------------------------------------------------------------------------------
ITG Non-ITG
- - ----------------------------------------------------------------------------------------------
Client End:
- - ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1. Win 95 or NT Wkstn Operating Systems All Non-Transferable
- - ----------------------------------------------------------------------------------------------
2. MS Office Pro 95 Word, Excel, All Non-Transferable
Powerpoint, Access
- - ----------------------------------------------------------------------------------------------
3. MS Project Project Scheduling All Non-Transferable
- - ----------------------------------------------------------------------------------------------
4. Internet Explorer Internet Access All Non-Transferable
- - ----------------------------------------------------------------------------------------------
5. Outlook 97 E-mail (going to 98 All Non-Transferable
August)
- - ----------------------------------------------------------------------------------------------
6. Onnet 4.0 Mainframe Emulation All See attached
- - ----------------------------------------------------------------------------------------------
7. Exceed Unix emulation All Non-Transferable
- - ----------------------------------------------------------------------------------------------
8. KeaTerm Vax emulation All See attached
- - ----------------------------------------------------------------------------------------------
9. McAfee AntiVirus Virus Protection All (Corp Site Lic)
- - ----------------------------------------------------------------------------------------------
10. Adobe Acrobat 3.0 Writer - document 1 No maint - License
exchange Transfer
- - ----------------------------------------------------------------------------------------------
11. PGP (Enterprise Sec.)
- - ----------------------------------------------------------------------------------------------
12. Labelworks Mask box labels 2 No maint - License
transfer
- - ----------------------------------------------------------------------------------------------
13. ProComm Plus W/modem for incoming 1 No maint - License
data PC transfer
- - -----------------------------------------------------------------------------------------------
14. Visual Basic Programming Language 2 Non-Transferable
- - -----------------------------------------------------------------------------------------------
15. Pearl Scripting Language 1
- - -----------------------------------------------------------------------------------------------
16. VISA Billing
w/modem
- - -----------------------------------------------------------------------------------------------
17. ConnX Connectivity to
WorkStream
- - -----------------------------------------------------------------------------------------------
18. Front Page Web Page Administration
- - -----------------------------------------------------------------------------------------------
19. Visio Drawings/Presentations See attached
- - -----------------------------------------------------------------------------------------------
20. Lview Graphics Viewer 1 No maint - license
transfer
- - -----------------------------------------------------------------------------------------------
21. WinZip File compression No maint - license
transfer
- - -----------------------------------------------------------------------------------------------
22. Various Single See attached
apps
- - -----------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Exhibit G
Desktop Computing Services (DCS) - Page 2 of 2
- - --------------------------------------------------------------------------------------------
Name Purpose (Include Qty Ownership Annual
Computing Platform) Licenses Service
Contract Cost
- - --------------------------------------------------------------------------------------------
Server End:
- - --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1. NT Server File/Print Services 1 Non-Transferable
- - --------------------------------------------------------------------------------------------
2. Exchange Server E-mail messaging 1 Non-Transferable
- - --------------------------------------------------------------------------------------------
3. Server Backup SW Server tape backup
- - --------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Exhibit H
Desktop Computing Services (DCS) - Page 1 of 2
<TABLE>
<CAPTION>
- - ------------------------------------------------------------------------------------------------------------------------------------
Asset # Description Div Dept Class Bldg SN Model Present?
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
930811A COMPAQ 433 B HOGAN R 7120 W 60 A336HGN52720 486/33DXS YES
- - ------------------------------------------------------------------------------------------------------------------------------------
931193A COMPAQ 386/R MANION (AT HOME) R 7150 W 60 4850HSEH1296 386/20E YES
- - ------------------------------------------------------------------------------------------------------------------------------------
940553A COMPAQ 286 CLEAN ROOM PARTICLE MONITOR R 7120 W 60 4925HZ1H1491 286E YES
- - ------------------------------------------------------------------------------------------------------------------------------------
940553B ADD ON COSTS R 7110 Z 60
- - ------------------------------------------------------------------------------------------------------------------------------------
942361A GATEWAY 2000/E MOREY R 7150 W 60 1141494 486-33 YES
- - ------------------------------------------------------------------------------------------------------------------------------------
942605A COMPAQ 575 L PINTO R 7150 W 56 6533HMY60497 575 YES
- - ------------------------------------------------------------------------------------------------------------------------------------
942606A COMPAQ 575 PHUNG LUU R 7150 W 56 D533HMY6E997 575 YES
- - ------------------------------------------------------------------------------------------------------------------------------------
942658A COMPUADD 486 L GUTHRIDGE R 7150 W 56 746038 486-33V YES
- - ------------------------------------------------------------------------------------------------------------------------------------
943988A COMPAQ 486/MASK SHOP/TOM THUM BOX R 7150 W 60 A507HNC3H712 PROLINEA MT 4/6 YES
- - ------------------------------------------------------------------------------------------------------------------------------------
952070A DELL P75/E HELMS R 7110 W 60 4YLZF DIMENSION P75 YES
- - ------------------------------------------------------------------------------------------------------------------------------------
952074A DELL P75/B MITCHELL R 7150 W 60 4YLZF DIMENSION P75 YES
- - ------------------------------------------------------------------------------------------------------------------------------------
952292A DELL OPTIPLEX/CUST SVC DATA PC "MORRIS" R 7150 W 56 52PTV 466/MT YES
- - ------------------------------------------------------------------------------------------------------------------------------------
952566A COMPAQ DESKPRO575/D FLEMING R 7150 W 56 6533HMY60608 575 YES
- - ------------------------------------------------------------------------------------------------------------------------------------
952705A COMPAQ DESKPRO - SHEILA TYRE R 7150 W 56 6533HMY6D442 575 YES
- - ------------------------------------------------------------------------------------------------------------------------------------
952796A COMPAQ DESKPRO 575/DOUG QUINN R 7110 W 60 G540HMY70498 575MT YES
- - ------------------------------------------------------------------------------------------------------------------------------------
952825A COMPAQ 575/PATRICK SCHAPPERT R 7120 W 60 D533HMY6322 575MT YES
- - ------------------------------------------------------------------------------------------------------------------------------------
953139A COMPAQ 486/W KERVIN/ MEBES SYSTEM R 7140 W 56 6422HKD30305 575MT YES
- - ------------------------------------------------------------------------------------------------------------------------------------
953651A COMPAQ DP5100/CARMEN ROMANO R 7120 W 56 6602HNX7D297 Apr-66 YES
- - ------------------------------------------------------------------------------------------------------------------------------------
953666A COMPAQ DESKPRO - SUSAN UMBERGER R 7150 W 60 D533HMY60732 5100 YES
- - ------------------------------------------------------------------------------------------------------------------------------------
953785A COMPAQ - "ROBERT SHAW" SYSTEM R 7110 W 60 6650HVX66505 575 YES
- - ------------------------------------------------------------------------------------------------------------------------------------
954441A CPQ DESKPRO 2000 - W. KERVIN R 9120 W 56 8639HVX60805 P133 YES
- - ------------------------------------------------------------------------------------------------------------------------------------
954466A CPQ DESKPRO 2000 - F TRIMBOLI R 7120 W 60 8639HVX60506 2000 YES
- - ------------------------------------------------------------------------------------------------------------------------------------
954808A HP LASERJET PRINTER/CUSTOMER SERVICE R 7150 Y 56 USB1031636 2000 YES
- - ------------------------------------------------------------------------------------------------------------------------------------
955241A COMPAQ P166/ A NATHANSON R 7120 W 56 6740BPN3D689 5000N YES
- - ------------------------------------------------------------------------------------------------------------------------------------
955632A COMPAQ DP4000/ROBERT QUIGLEY R 7150 S 56 6751BPN3P960 DP4000 YES
- - ------------------------------------------------------------------------------------------------------------------------------------
Robert Quigley is no longer with Harris. His PC is in ITG Customer Service.
- - ------------------------------------------------------------------------------------------------------------------------------------
955678A COMPAQ DP4000/D MOFFETT R 7150 S 56 6750BPN3P648 DP4000 YES
- - ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
955680A COMPAQ DP4000/SCOTT GALLAGHER R 7140 S 56 6750BPN3P546 DP4000 YES
- - ------------------------------------------------------------------------------------------------------------------------------------
955820A LEXMARK PRINTER/ BILL AND SHIP R 7150 Y 60 11-HW870 DP4000 YES
- - ------------------------------------------------------------------------------------------------------------------------------------
955860A COMPAQ 266/STEVE SUHLING R 7156 W 56 6825BZD2J052 S1855 YES
- - ------------------------------------------------------------------------------------------------------------------------------------
955915A COMPAQ DP SB/ED MILLS R 7150 W 56 6821BZG2J232 P266 YES
- - ------------------------------------------------------------------------------------------------------------------------------------
955916A COMPAQ DB/WALTER RAUCH R 7150 W 56 6821BZG2J184 P300 YES
- - ------------------------------------------------------------------------------------------------------------------------------------
955938A COMPAQ DP SB/BOBBY QUINN R 7110 S 60 P300 YES
- - ------------------------------------------------------------------------------------------------------------------------------------
955947A COMPAQ DP SB/NORM MILLER R 7120 S 60 6824BYS2J132 P300 YES
- - ------------------------------------------------------------------------------------------------------------------------------------
PCs not on original list: P2 350
- - ------------------------------------------------------------------------------------------------------------------------------------
955033 COMPAQ DP/C BURNS R 7110 60 6719HVX6B059 YES
- - ------------------------------------------------------------------------------------------------------------------------------------
955073 COMPAQ DP/R MANION (AND OTHERS) R 7120 60 6552HVX6H820 ? YES
- - ------------------------------------------------------------------------------------------------------------------------------------
955153 COMPAQ DP/"BILL AND SHIP" SYSTEM R 7150 60 6735BPN3D223 ? YES
- - ------------------------------------------------------------------------------------------------------------------------------------
94446A Protege 650 CT laptop/Jim Millspaugh R ?
- - ------------------------------------------------------------------------------------------------------------------------------------
940786A Laserjet III / Jim Millspaugh R
- - ------------------------------------------------------------------------------------------------------------------------------------
- - ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Exhibit I
Desktop Computing Services (DCS)
ITG DCS Services and Costs Overview - FY '00
Chuck Palmer - 5/10/99
- - --------------------------------------------------------------------------------
$ Per User ITG ITG Total Cost per Year
Users per Month
- - --------------------------------------------------------------------------------
NT Ops - 24x7 NT services support 23.00 32 $8,832
of Semi managed servers for APP,
WF, DBS, and NAS services. Note:
Rates based on $34.6k/year local,
27.9k/year remote, $7/GB/week
- - --------------------------------------------------------------------------------
HelpDesk - Standard Client Help 17.00 32 $6,528
Desk support, and call center
services on other computing
services based on 12 minutes of
service with a client contacting
the Help Desk, 1.2 times per month
- - --------------------------------------------------------------------------------
Domain (2.75) - Domain Control 2.75 32 $1,056
application support, virus
management depoyment to remote
servers, and tally management
- - --------------------------------------------------------------------------------
Domain Security - Account 4.30 32 $1,651
administration, and security event
monitoring. Ths cost recovered at
the Palm Bay Site for the entire
Semi Sector
- - --------------------------------------------------------------------------------
HEMS - Harris Enterprise Messaging 10.00 32 $3,840
Service - Email services
operational support, and NT server
support for Exchange servers. Cost
reflects <20MB personal store
- - --------------------------------------------------------------------------------
Microsoft Software - Corporate 13.75 32 $5,280 Note: Current
agreement for client and applicable M/S licenses are
server Microsoft licenses. non-transferable.
Cost reflects
current HSS
M/S Enterprise
Agreement.
- - --------------------------------------------------------------------------------
Desktop Break-Fix Support Services 62.00 32 $23,808 Non-reoccuring
- - - Desktop Procurement, software workorder
compliance, break-fix, software charges - $65
distribution, asset tracking per desktop
services visit.
- - --------------------------------------------------------------------------------
Printer Break-Fix Support Services 60.00 2 $1,440
- - --------------------------------------------------------------------------------
Internet Access 1.57 32 $603
- - --------------------------------------------------------------------------------
Total 194.37 $53,038
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
Notes: *HEMS costs per month = $17/month if 20-50MB message store, $24/month if
50-100MB store.
- - --------------------------------------------------------------------------------
<PAGE>
Exhibit J
Emergency Response Team
<TABLE>
<CAPTION>
- - -----------------------------------------------------------------------------------------------------------------------------
Services Description Frequency
- - -----------------------------------------------------------------------------------------------------------------------------
<S> <C>
Services Description Frequency
1. Emergency Response to support As needed. (presently <5 per year at B60; <30 per year
o Fire Alarms total on the Complex)
o Chemical Spills
- - -----------------------------------------------------------------------------------------------------------------------------
2. Training
o 40 hour initial Hazardous Material training o One Time
o 8-16 hours refresher training o Annual
- - -----------------------------------------------------------------------------------------------------------------------------
Itemized services Approx. Monthly Cost ($)
- - -----------------------------------------------------------------------------------------------------------------------------
1. Replacement of used supplies (mats, neutralizer, etc.) Per response at appropriate - market price
- - -----------------------------------------------------------------------------------------------------------------------------
2. External Services (e.g., spill response contractor - current Per response at necessary - market price
contracts with Florida Spill Response and Canaveral Marine Services)
- - -----------------------------------------------------------------------------------------------------------------------------
3. Periodic training sessions (4 sessions, 4/year, 4 hours each) $25/person per session
- - -----------------------------------------------------------------------------------------------------------------------------
4. External training (e.g. Incident Commander, gas systems, etc.) Market price - per person
- - -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
Please note the following conditions:
o Align-Rite ERT employees must attend periodic ERT Training sessions to
maintain certification.
o At a minimum, Align-Rite must maintain one trained ERT responder per work
shift.
o Contracted ERT training will be billed at market price.
o Replacement supplies to B60 ERT responses will be billed at market price.
o Contracted ERT Services (e.g., spill response) will be billed at market
price.
o Align-Rite ERT employees must maintain physical requirements and receive
annual ERT physical exams.
o Harris EHS On Call services available for ERT responses only.
o Building 56 ERT responses are included in this service.
o Harris EHS/DEO must be aware of any changes of chemicals and volumes
(e.g., gallons to drum delivery, installation of compressed gases, etc.)
to accurately and efficiently respond to ERT incidents and to ensure the
ERT manual is accurate.
o A 10% management overhead cost will be added for costs of licensing,
certifications, training, insurance, and regulatory compliance activities.
<PAGE>
o Align-Rite ERT employees shall respond to all ERT calls on the Complex,
and Harris ERT employees shall respond to all ERT calls on the Premises.
<PAGE>
Exhibit K
Occupational Health Services - Page 1 of 2
Harris Semiconductor Occupational Health Services places top priority on
employee health by providing quality occupational health services. Services
provided to Align-Rite will include:
o Medical Surveillance: audiometric exams, pulmonary function testing,
baseline and placement physical assessments and periodic assessments as
indicated by job classification.
o Occupational Health Care: initial occupational injury and illness
treatment, initiation of First Report of Injury and referral to acute
medical provider within Align-Rite identified network.
o On site medical response for Emergency Response Team and Medical
Emergencies (first shift only): including training for backshift personnel
in First AID, CPR and obtaining emergency medical assistance. (5 hour
class)
o Maintenance of Medical Records: maintaining medical records observing
guidelines for confidentiality and providing employee access as required
by ADA.
- - --------------------------------------------------------------------------------
Services Description Frequency
- - --------------------------------------------------------------------------------
1. Medical Surveillance Exams Annual
- - --------------------------------------------------------------------------------
o Respirator Exams (9 current) Annual
- - --------------------------------------------------------------------------------
o Emergency Response Team Exams (6 current) Annual
- - --------------------------------------------------------------------------------
o Forklift Exams (1 current) Annual
- - --------------------------------------------------------------------------------
o Chemical Handler/Maintenance Worker (4 current) Annual
- - --------------------------------------------------------------------------------
o Laser Eye Exams (4 current) Baseline, Exit and Post
Event
- - --------------------------------------------------------------------------------
o Audiometric Testing + Hearing Conservation Annual
Training (1 Current)
- - --------------------------------------------------------------------------------
o Baseline/Placement As Needed for New Hires
- - --------------------------------------------------------------------------------
2. Occupational Health Care (Avg. 1-2 Accidents
Per Year) As Needed
- - --------------------------------------------------------------------------------
3. Emergency Medical Response (Avg. 5 per Year) As Needed
- - --------------------------------------------------------------------------------
4. Maintenance of Medical Records Ongoing
- - --------------------------------------------------------------------------------
5. Non-Occupational Health Care (Approximately 10 As Needed
per month)
- - --------------------------------------------------------------------------------
6. Training Annual (5 hours total)
- - --------------------------------------------------------------------------------
o CPR - AD8T-02
- - --------------------------------------------------------------------------------
o First Aid - AD8T-45
- - --------------------------------------------------------------------------------
o Bloodborne Pathogens - AEU4-32
- - --------------------------------------------------------------------------------
<PAGE>
- - --------------------------------------------------------------------------------
o Emergency Procedures (Supervisor Training) -
AD8T-44
- - --------------------------------------------------------------------------------
Currently, there are five Health Services employees. Estimated time for ITG
needs would be 120 hours of Nursing Time Plus 12 hours of Medical Director time
for review of physical assessments and consultation on Occupational Issues.
Laser Eye exams would be scheduled by Occupational Health with appropriate
Ophthalmologist and charged at the market price.
<PAGE>
Exhibit K
Occupational Health Services - Page 2 of 2
Detail specialized education and skills required to provide this service:
Registered Nurse licensed to practice in the State of Florida having physical
assessment skills. Completion of a NIOSH approved training in Occupational
Pulmonary Function Testing is required. COAHC certification is required for
Audiometric Testing. Nurses operated under the direction of an Medical Doctor
licensed in the State of Florida, possessing certification in Occupational
Medicine. This physician reviews all ERT physical assessments, as required per
OSHA, and other abnormal findings.
- - --------------------------------------------------------------------------------
Itemized services Approx. Cost ($)
- - --------------------------------------------------------------------------------
1. Respirator exam $90 each
- - --------------------------------------------------------------------------------
2. Emergency Response Team Exams $100 each
- - --------------------------------------------------------------------------------
3. Forklift Exam $50 each
- - --------------------------------------------------------------------------------
4. Audiometric Testing and Training $80 each
- - --------------------------------------------------------------------------------
5. Laser Eye Exams $150 each
- - --------------------------------------------------------------------------------
6. Chemical Handler/Maintenance exams $90 each
- - --------------------------------------------------------------------------------
7. Pre-placement/baseline exams $90 each
- - --------------------------------------------------------------------------------
8. Occupational Health Care $30 per visit
- - --------------------------------------------------------------------------------
9. Emergency Medical Response $30 per call
- - --------------------------------------------------------------------------------
10. Maintenance of Medical Records $100 per month
- - --------------------------------------------------------------------------------
11. Training (First Aid, CPR, BBP, Emergency $62.50 each plus $10 materials
Procedures = 5 hours)
- - --------------------------------------------------------------------------------
Please note the following conditions:
o Proposed services to be contracted annually on a fiscal year basis.
Pricing reflects FY '00 costs. If an extension to this contract beyond FY
"00 is desired, anticipate a 10% price increase per fiscal year.
o A 10% management overhead cost will be added for costs of licensing,
certifications, insurance, training, insurance and regulatory compliance
activities.
o Current medical records of HSS employees transitioning to Align-Rite will
be retained by HSS.
o Desired EHS training can be scheduled through the HSS Training Department,
as appropriate. A minimum of five (50 employees are required for each
class, including Harris employees.
<PAGE>
o Maintenance of Medical Records is closely related to the medical exams and
Occupational Health care. HSS would not choose to provide medical records
maintenance if not selected to provide medical surveillance and
occupational health services.
<PAGE>
Exhibit L
Environmental, Health & Safety
- - --------------------------------------------------------------------------------
Services Description Frequency
- - --------------------------------------------------------------------------------
1. Collect acid and solvent "RCRA empty" one Daily
gallon containers and prepare for disposal
(triple rinse acid bottles, crush all
bottles, and prepare for disposal)
- - --------------------------------------------------------------------------------
2. Delivery empty drums to B60 as needed for waste As needed
accumulation.
- - --------------------------------------------------------------------------------
EHS Environmental Operators have been trained in the following areas:
o RCRA Hazardous Waste Management
o DOT
o Hazardous Materials/ERT
o Hazard Communication
- - --------------------------------------------------------------------------------
Itemized services Approx. Monthly Cost ($)
- - --------------------------------------------------------------------------------
1. Bottle collection and disposal $100
- - --------------------------------------------------------------------------------
2. Empty drum purchase, storage, and disposition Market price of drum ($15-30
to B60 depending on drum type)
- - --------------------------------------------------------------------------------
EHS offers to provide the above listed services with the following conditions:
o All RCRA empty bottles sent to Building 55 must be emptied to the maximum
extent possible and caps must be tightly screwed on.
o Acid and solvent bottles must be segregated in separate collection
containers provided by Harris.
o Pricing relfects FY '00 costs. If an extension to this proposal beyond FY
"00 is desired, anticipate a 10% price increase per fiscal year
o A 10% management overhead cost will be added for costs of certifications,
administrative work training, insurance and regulatory compliance
activities.
o Anticipate that all billing will be conducted on a quarterly basis.
<PAGE>
Exhibit M
Security
- - --------------------------------------------------------------------------------
Itemized services Approx. Monthly Cost ($)
- - --------------------------------------------------------------------------------
1. All services as set forth in Section 9 of the $834.00
Lease Agreement
- - --------------------------------------------------------------------------------
Harris will not be able to provide computer security services for at least
the next two years. It takes specialized technical expertise to write security
plans for the equipment in the Mask Fab. Due to a recent greatly diminished
capability of the EES computer security staff, Harris no longer has the ability
to tap into that pool of expertise.
Harris will help Align-Rite find a consulting firm capable of working with
both the Department of Defense and the National Security Agency. Such a firm can
provide the technical expertise necessary to write computer security plans and
support government audits on an "as needed" basis. This service would only be
required occasionally when there are changes to already existing computer
security plans and when new equipment with memory needs to be used for
classified processing.
**Please note, there may be a period of time while the government is doing
its investigation when Align-Rite will not have the ability to process
classified information.
Harris has no control over how long this process will take. While Harris
is doing everything it can to get ready ahead of time, officially nothing can
happen until after the Closing Date.
<PAGE>
Exhibit N
Purchasing/Stockroom/Receiving/Shipping/IQC
- - --------------------------------------------------------------------------------
Services Description Frequency
- - --------------------------------------------------------------------------------
1. Purchasing: order placement and administration twice per week
- - --------------------------------------------------------------------------------
2. Maintain stockroom inventory once per week
- - --------------------------------------------------------------------------------
3. Receive and deliver to stock and ITG daily
- - --------------------------------------------------------------------------------
4. Incoming Quality Control (chemicals only) twice per month
- - --------------------------------------------------------------------------------
5. Shipping (miscellaneous items/non-customer) twice per week
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
Itemized services Approx. Monthly Cost ($)
- - --------------------------------------------------------------------------------
1. MIMS - MITI SYSTEM, INVENTORY MANAGEMENT, $1000.00
PROCUREMENT, BUILDING STORAGE, MATERIAL
DELIVERY TO BUILDING 60
- - --------------------------------------------------------------------------------
2. Lanier Copier Service (includes full
maintenance and toner-no paper) $232.00
Model 6745 $200.00
Model 6725
- - --------------------------------------------------------------------------------
3. CAFETERIA SERVICES WILL BE DIRECT BILLED TO AR
- - --------------------------------------------------------------------------------
<PAGE>
Exhibit O
Telecommunications - Page 1 of 3
The services provided include Data and Voice Communications Services. The
support provided includes design, installation, daily support, and problem
resolution of data networks, voice mail, PBX services, domain name services etc.
Also supported by this group are items such as pagers, cell phones, wireless and
desktop phones, fax machines, Internet service, remote access, local and long
distance calling, DHCP and boot services.
- - --------------------------------------------------------------------------------
Services Description Frequency
- - --------------------------------------------------------------------------------
1. NETWORK MONITORING CONSTANT
- - --------------------------------------------------------------------------------
2. NETWORK MOVES, ADDS, AND CHANGES (MAC'S) RUN RATE = 5 PER MONTH
- - --------------------------------------------------------------------------------
3. NETWORK PROBLEM RESOLUTION, LEVEL 1
- - --------------------------------------------------------------------------------
4. NETWORK PROBLEM RESOLUTION, LEVEL 2 25-50 hours annually
- - --------------------------------------------------------------------------------
5. NETWORK INFRASTRUCTURE
- - --------------------------------------------------------------------------------
6. INTERNET SERVICE A-R responsibility
- - --------------------------------------------------------------------------------
7. DOMAIN NAME SERVICE A-R responsibility
- - --------------------------------------------------------------------------------
8. DHCP SERVICE A-R responsibility
- - --------------------------------------------------------------------------------
9. BOOTP and TFTP SERVICES A-R responsibility
- - --------------------------------------------------------------------------------
10. REMOTE ACCESS
- - --------------------------------------------------------------------------------
11. VIDEO CONFERENCING
- - --------------------------------------------------------------------------------
12. EQUIPMENT MAINTENANCE - see note #1 on page 3
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
Services Description - VOICE Frequency
- - --------------------------------------------------------------------------------
1. PBX SERVICES
- - --------------------------------------------------------------------------------
2. LOCAL EXCHANGE SERVICE
- - --------------------------------------------------------------------------------
3. LONG DISTANCE CALLING
- - --------------------------------------------------------------------------------
4. VOICE MAC'S
- - --------------------------------------------------------------------------------
5. VOICE PROBLEM RESOLUTION
- - --------------------------------------------------------------------------------
6. VOICE MAIL
- - --------------------------------------------------------------------------------
7. PAGERS, LOCAL and NATIONAL,
NUMERIC/ALPHA-NUMERIC
- - --------------------------------------------------------------------------------
8. FAX MACHINES
- - --------------------------------------------------------------------------------
9. WIRELESS PHONES
- - --------------------------------------------------------------------------------
10. CELLULAR PHONES
- - --------------------------------------------------------------------------------
<PAGE>
- - --------------------------------------------------------------------------------
11. MEET-ME AUDIO CONFERENCING
- - --------------------------------------------------------------------------------
12. BILLING
- - --------------------------------------------------------------------------------
<PAGE>
Exhibit O
Telecommunications - Page 2 of 3
<TABLE>
<CAPTION>
- - -------------------------------------------------------------------------------------------
Equipment Description Vendor Ownership Current Book Annual
Value (Non- Service
ITG only) Contract Cost
- - -------------------------------------------------------------------------------------------
ITG Non-ITG
- - -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1. 10/100M ETHERNET FOUNDRY $3864.95 $695
SWITCH, FASTIRON, 24 NETWORKS
PORTS
- - -------------------------------------------------------------------------------------------
2. 10M SHARED HUB, 72 SYNOPTICS
PORTS, 3030 WITH 3313SA'
- - -------------------------------------------------------------------------------------------
3. 10M SHARED HUB, 72 SYNOPTICS
PORTS, 3030 WITH 3313SA
- - -------------------------------------------------------------------------------------------
4. RACK MOUNT UPS APC
- - -------------------------------------------------------------------------------------------
5. RACK MOUNT UPS APC
- - -------------------------------------------------------------------------------------------
6. ASYNCHRONOUS TERMINAL XYPLEX
SERVER, 32 PORTS
- - -------------------------------------------------------------------------------------------
7. 10M ETHERNET SWITCH, 8 NETGEAR
PORTS
- - -------------------------------------------------------------------------------------------
</TABLE>
- - --------------------------------------------------------------------------------
Equipment Description Ownership Network Annual
Connection Service
Contract
Cost
- - --------------------------------------------------------------------------------
ITG Non-ITG
1. 2 NATIONAL PAGERS X $718.80
- - --------------------------------------------------------------------------------
2. 7 LOCAL ALPHA-NUMERIC PAGERS X $630.00
- - --------------------------------------------------------------------------------
3. 22 LOCAL NUMERIC PAGERS X $594.00
- - --------------------------------------------------------------------------------
<PAGE>
- - --------------------------------------------------------------------------------
4. 6 CELLULAR PHONES X $2400.00
- - --------------------------------------------------------------------------------
5. 8 WIRELESS PHONES X $2112.00
- - --------------------------------------------------------------------------------
6. 26 DIGITAL OPTIC PHONE SETS X $6864.00
- - --------------------------------------------------------------------------------
7. 23 ANALOG POTS PHONES X $6072
- - --------------------------------------------------------------------------------
8. 16 VOICE LINES (MODEMS, ALARM X $4224
CIRCUITS, AND FAXES.)
- - --------------------------------------------------------------------------------
9. 3 VOICE MAIL BOXES X included
- - --------------------------------------------------------------------------------
10. 2 FAX MACHINES X $792
- - --------------------------------------------------------------------------------
11. 1 HOME PHONE LINE X $192
- - --------------------------------------------------------------------------------
12. 12 REMOTE ACCESS ACCOUNTS X $1728
<PAGE>
Exhibit O
Telecommunications - Page 3 of 3
- - --------------------------------------------------------------------------------
Itemized services Approx. Monthly Cost ($)
- - --------------------------------------------------------------------------------
1. NETWORK PORTS - 76 PORTS $20 PER PORT
- - --------------------------------------------------------------------------------
2. VOICE AND DATA MAC'S $90 PER DEVICE MAC REQUEST
- - --------------------------------------------------------------------------------
3. NETWORK TROUBLESHOOTING, LEVEL 2 $100 PER HOUR
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
Itemized voice services Ownership Network Monthly
------------------
ITG Non-ITG Connection Cost($)
- - --------------------------------------------------------------------------------
1. 2 NATIONAL PAGERS X see note #2 $59.90
- - --------------------------------------------------------------------------------
2. 7 LOCAL ALPHA-NUMERIC PAGERS X see note #2 $52.50
- - --------------------------------------------------------------------------------
3. 22 LOCAL NUMERIC PAGERS X see note #2 $49.50
- - --------------------------------------------------------------------------------
4. 6 CELLULAR PHONES X see note #2 $200
- - --------------------------------------------------------------------------------
5. 8 WIRELESS PHONES X $176
- - --------------------------------------------------------------------------------
6. 26 DIGITAL OPTIC PHONE SETS X $572
- - --------------------------------------------------------------------------------
7. 23 ANALOG POTS PHONES X $506
- - --------------------------------------------------------------------------------
8. 16 VOICE LINES (MODEMS, ALARM X $352
CIRCUITS, AND FAXES.)
- - --------------------------------------------------------------------------------
9. 3 VOICE MAIL BOXES X included
- - --------------------------------------------------------------------------------
10. 2 FAX MACHINES X $44
- - --------------------------------------------------------------------------------
11. 1 HOME PHONE LINE X $16
- - --------------------------------------------------------------------------------
12. 12 REMOTE ACCESS ACCOUNTS X $144
- - --------------------------------------------------------------------------------
Notes
1) Align-Rite must maintain ethernet switch spares if they discontinue annual
maintenance agreements (e.g., Foundry Networks)
2) Align-Rite must obtain their own separate account(s) with local service
provider(s) for pagers and cell phones. Requests for repair service may
still go through Harris Telecommunications group.
<PAGE>
3) Align-Rite will be charged a 2 hour minimum for any call received weekdays
between 5PM-8AM or on weekends or national holidays. The rate for overtime
is $105/Hour Weekdays 5PM-8AM, Weekends, or National Holidays.
4) The service fees are valid from July 4, 1999 through June 30, 2000.
<PAGE>
Exhibit P
Quality Engineering
Measure bacteria levels in deionized water used in the manufacture of mask
plates. Bacterial measurement water samples are taken at a port entering Bldg.
60 and from the clean room area within the mask fab.
- - --------------------------------------------------------------------------------
Services Description Frequency
- - --------------------------------------------------------------------------------
1. Measure bacteria levels at the entering port Every 2 weeks
to Bldg. 60
- - --------------------------------------------------------------------------------
2. Measure bacteria levels in mask fab Every 4 weeks
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
Itemized services Approx. Monthly Cost ($)
- - --------------------------------------------------------------------------------
1. D.I. Water Testing $310.00
- - --------------------------------------------------------------------------------
Additional requirements are for Align-Rite to perform this testing:
o Align-Rite notification system and contact for out of tolerance to let
Harris know of water issues
o Safety shower/eye wash
o D.I. Water Source
o Solvent Sink
<PAGE>
Exhibit Q
Internal Quality Audit Group
- - --------------------------------------------------------------------------------
Services Description Frequency
- - --------------------------------------------------------------------------------
1. Audit HITG for compliance to QML and ISO 1 time a year
9002. Prepare audit report and distribute
to auditee and management. Follow up on
corrective action.
- - --------------------------------------------------------------------------------
2. Support ISO 9002 Periodical audit 2 times a year
- - --------------------------------------------------------------------------------
Itemized services Approx. Monthly Cost ($)
- - --------------------------------------------------------------------------------
1. Internal Quality Audit Labor = 160 hrs. @ 2040 annually
12.75/hr.
- - --------------------------------------------------------------------------------
2. System time for Audit reports @ 10.25/hr for 102.50 annually 10 hrs.
- - --------------------------------------------------------------------------------
Align-Rite will schedule time for audit and support personnel as needed by
Auditor. Identify corrective action and completion date and schedule follow up
date.
EXHIBIT 10.23
HARRIS CORPORATION
SOFTWARE LICENSE AGREEMENT
This Agreement entered into as of the 31st day of July, 1984 by and between
Consilium Associates, Inc. having an office at 2479 E. Bayshore Road, Suite 700,
Palo Alto, California 94303, (hereinafter "Licensor") and Harris Corporation,
having an office at P.O. Box 883, Melbourne, Florida, 32901, (hereinafter
"Licensee").
WHEREAS, the Licensor has developed, and is owner of the right, title and
interest in a certain computer program and is desirous of licensing such
computer program to others; and
WHEREAS, Licensee is desirous of obtaining a license for the installation and
the use of said computer program at a selected computer cluster for providing
computer processing locally at the computer cluster and remotely through the use
of computer terminals.
NOW, THEREFORE, it is agreed as follows:
1. Annexes
The Annexes to this Agreement, all of which form an integral part of this
Agreement, are as follows:
a. Annex A - Description of the Licensed Program
b. Annex B - List of Documentation and Software
c. Annex C - Specifications for Licensed Programs
d. Annex D - Installation and Training
e. Annex E - Maintenance and Enhancement
f. Annex F - Modification to Licensed Program
g. Annex G - Acceptance Test Program
2. Licensed Program
The computer program of Licensor called COMETS as further described in Annex A
is to be licensed hereunder (hereinafter called `Licensed Program').
3. Documentation and Software
The list of documentation software, i.e. human readable information, for the
Licensed Program set forth In Annex B (hereinafter called "Licensed Software")
is to be delivered by Licensor at no cost to Licensee.
<PAGE>
4. Program Specifications
The specifications for the Licensed Program (hereinafter called `Program
Specifications') are set forth in Annex C.
5. License
Licensor agrees to grant, and hereby grants, to Licensee a non-exclusive,
perpetual, license to use the Licensed Program in computer clusters of Licensee.
Computer cluster No. 1 to be located at Digital Products Division, Melbourne,
Florida. Computer cluster No. 2 to be located at Melbourne, Florida and used by
the Analog and Custom Integrated Circuits Divisions of Harris Corporation.
Computer Clusters No. 3 and No. 4 locations to be determined prior to delivery.
A Computer Cluster is defined as one or more Digital Equipment Corporation
(`DEC') VAX 780 or 785 mini-computers or other identified VAX family computers
operating together in one location through the use of a network. In the event
the above identified computers are replaced by another DEC computer or any third
party equipment fulfilling the same function, such networked combination of
equipment will be deemed a Computer Cluster. Licensee may access a Computer
Cluster by remote terminals without affecting the number of Computer Clusters.
If Licensee discontinues use of the Licensed Program on Computer Cluster No. 2
through the merger of Clusters Nos. 1 and 2, Licensee may continue the use of
Computer Cluster No. 2 at another location upon payment to Licensor of $100,000.
6. Delivery of Licensed Program
The first Licensed Program shall be delivered within sixty (60) days after
execution of this Agreement. All other Licensed Programs will be delivered
within thirty (30) days after receipt of order by Licensor. The above mentioned
period of time for the delivery of the Licensed Program shall not apply due to
events and conditions beyond Licensor's control. All shipping and freight
charges shall be paid by Licensor.
7. License Fee
a. The license fee for the license ran d hereunder is one million two
hundred thirty-one thousand five hundred ($1,231,500.00) for four
(4) copies of the Licensed Program adjusted by changes due to
modular configuration of each copy of the Licensed Program.
b. The license fees referred to above do not include any amount for
sales, use, excise, or similar taxes which may be imposed by
Federal, State or local governments. If any such taxes (other than
taxes imposed upon Licensor's net income or taxes imposed for
Licensor's personal property) are found at any time to be required,
they will be paid by Licensee as an additional charge.
8. Payment Schedule
The license fee shall be payable in accordance with the following schedule:
-2-
<PAGE>
a. Twenty percent (20%) being two hundred forty-six thousand and three
hundred dollars ($246,300)
b. Twenty percent (20%) upon acceptance of the first (1st) copy the
Licensed Program; and
c. Twenty percent (20%) upon delivery of each additional Licensed
Program.
All Licensed Programs must be scheduled for delivery within two (2) years after
the effective date of this Agreement.
9. Retroactive Pricing
In the event Licensee does not purchase all four (4) copies of the Licensed
Programs within two (2) years of the effective date of this Agreement, Licensee
shall pay Licensor the difference between payments previously made by Licensee
and:
If 1 copy delivered $ 550,000
If 2 copies delivered 935,000
If 3 copies delivered 1,210,000
10. Discount Structure
Purchase of Cluster No. 5 and thereafter or any additional modules purchased
independently will be priced at a discount of twenty percent (20%) from the
standard discounted price list of Licensor as then in effect except for modules
that Consilium Associates OEM's. All discounts will be based on the cumulative
level of systems of Licensed Programs purchased since the effective date of this
Agreement.
11. Hardware Interface
Licensor and Licensee agree that, after an exhaustive study, Licensee has chosen
Licensor's Licensed Program to provide a computer aided manufacturing system for
its semiconductor facilities. Implicit in that choice is the operation of the
Licensed Program on computer equipment manufactured by Digital Equipment
Corporation. Without accepting the responsibility for the performance,
manufacture or maintenance of that equipment, Licensor accepts the
responsibility for the ongoing operation of the equipment and Licensed Program
as a system, and within the bounds set by the terms and conditions herein
accepts the obligation of maintaining that system.
12. Completed Installation
For the purpose of this Agreement, "Complete Installation" of the program shall
constitute:
a. The delivery of the Licensed Program to Licensee;
b. Installation of the Licensed Program on Computer Cluster No. 1; and
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c. Completion of the mutually acceptable performance tests for the
Licensed Programs set forth in Annex G, which tests are to include
data provided by Licensee with predetermined results which have been
mutually agreed upon to represent a reasonable measurement of the
Licensed Program capabilities. Acceptance of Computer Cluster No. 1
shall be completed within thirty (30) days.
If the Licensed Program is unable to pass the acceptance test, Licensee has the
option of giving Licensor written notice within thirty (30) days thereafter to
terminate its license to such Licensed Program. In such event all payments
previously made by Licensee to Licensor in respect of such Licensed Program
shall be refunded by Licensor to Licensee, and Licensee shall have no obligation
to make any further payments, and the Licensed Program shall be returned by
Licensee to Licensor pursuant to Paragraph 16(c); or Licensee may elect to
extend the acceptance period to give Licensor additional opportunity to correct
the nonconformance; or both parties may mutually negotiate an adjustment to the
price.
13. Limited Warranty
If, at any time within twelve (12) months from the date of Complete
Installation, the Licensed Program is considered by Licensee not to be in
conformance with the Program Specifications, Licensee shall promptly notify
Licensor in writing of such alleged nonconformance, and Licensor shall, within
thirty (30) days of receipt of such written notification, correct such
deficiency at no cost to Licensee or begin corrective action and diligently
pursue the same to completion.
Under no circumstances shall Licensor be responsible for changes made to the
Licensed Program by Licensee unless such changes were reviewed and approved in
writing by Licensor. If it is determined that a deficiency is due to changes
made by Licensee in the Licensed Program not approved by Licensor, time and
expense associated with the correction of the deficiency by Licensor shall be
billable by Licensor at its then current rates.
During this warranty period, Licensor shall provide, at no added cost to
Licensee, all changes, improvements, modifications, enhancements, and otherwise
maintain the Licensed Program in the same manner and to the same extent as
provided in the maintenance contract attached hereto as Annex E.
THE FOREGOING WARRANTY IS IN LIEU OF ALL OTHER WARRANTIES EXPRESSED OR IMPLIED,
INCLUDING, BUT NOT LIMITED, TO THE IMPLIED WARRANTIES OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE.
14. Confidentiality
The Licensed Programs, Documentation and Software are and remain at all times
the property of Licensor. Licensee recognizes that the Licensed Programs,
Documentation and Software constitute confidential information of Licensor.
Licensee shall not provide, or otherwise make available, any Licensed Programs,
Documentation or Software to any third party without prior written consent from
Licensor. However, it is understood that this requirement for confidentiality
does not apply to:
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a. Any information that is presently in the public domain, or
b. Any information in the future that becomes public without breach of
this Agreement, or
c. Any information that is received by Licensee from a third party
without a similar restriction and without breach of this Agreement,
or
d. Any information that is already known by Licensee prior to the
receipt of the Licensed Program, Documentation or Software or
e. Any information that is in the future independently developed by
Licensee without the use of the Licensed Programs, Documentation and
Software.
The requirement of confidentiality shall extend for a period of seven (7) years
after the termination of this Agreement.
Licensee shall use its reasonable efforts to keep the Licensed Programs,
Documentation and Software confidential including having Licensee's employees
execute Licensee's standard employee agreement. Notwithstanding the above,
Licensee shall not be liable for, nor shall this Licensee be terminated for, an
inadvertent disclosure, or improper use of, the Licensed Program, Documentation
and Software provided that (1) the same degree of care is used in safeguarding
the Licensed Program as is used by Licensee for safeguarding its own information
of like importance and (2) upon discovery of such Inadvertent disclosure or use
Licensee endeavors to prevent any further inadvertent disclosure or use.
15. Permission to Copy Licensed Programs and Documentation and Software
The Licensee shall not copy, in whole or in part, any portion of the Licensed
Programs, Documentation and Software except for Licensee's needs for training,
using, maintaining and modifying the Licensed Programs. The original and any
copies of the Licensed Programs, Software and Documentation, in whole or in
part, shall be the property of the Licensor. The Licensee shall keep no more
than three (3) copies and the original of the Licensed Programs and the
Documentation and Software at the computer cluster of installation. Harris
agrees to affix to each and every copy of the Licensed Programs, Documentation
and Software the Consilium proprietary notices affixed to the original materials
delivered to Harris.
16. Installation and Training
Licensor shall install the Licensed Program. Licensor shall provide up to
twenty-five (25) days of training as part of the installation of Computer
Cluster No. 1. Any additional installation and training shall be charged at six
hundred dollars ($600) per day and provided by Licensor as set forth in Annex D
or otherwise requested by Licensee.
17. Maintenance and Enhancement
Maintenance shall be provided by Licensor in accordance with the Agreement
attached hereto as Annex E. The first year of maintenance is provided at no
charge in fulfillment of Licensor's
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warranty hereunder. The second year of maintenance shall be provided for each
site by Licensor for a sum equal to ten percent (10%) of the undiscounted,
published license fee at the time of execution of this Agreement. Thereafter for
each additional year of maintenance, Licensee shall pay Licensor the previous
year's maintenance fee increased by the amount of increase, if any, of the Index
of Average Weekly Earnings for computer and data processing services, all
cities, (as published by the U.S. Department of Labor) for the month of the
commencement of the annual maintenance period, over the value of said index for
the month of commencement of the annual maintenance period for the previous
year. In the event the computer and data processing services portion of the
Index of Average Weekly Earnings or the Index itself is discontinued by the
Department of Labor, Licensor and Licensee agree to the substitution herein of
any substitute Index published by the Department of Labor. In the event no such
substitute is published, Licensor and Licensee shall agree in a mutually
acceptable alternative Index.
18. Modifications
Licensee has the right, at its own discretion, to modify the Licensed Program,
however, Licensor shall not be responsible for any such modification unless such
modifications were received and approved by Licensor. Licensor shall provide one
copy of source code with each copy of the Licensed Programs. All modifications
of the Licensed Program remain subject to the terms and conditions of this
Agreement. Licensor shall have the right to sublicense any such modification by
Licensee under reasonable terms and conditions and at a royalty rate to be
negotiated.
19. Indemnification
Licensor warrants that Licensor has full right to license the use of the
Licensed Program to Licensee. Licensor hereby agrees to indemnify Licensee, and
undertakes to hold Licensee harmless, from any claims, suits, losses, attorneys'
fees and damages arising out of any claim that the use of the Licensed Program
by Licensee infringes any U.S. Patent, copyright or trademark, provided,
however, that prompt notice is given to Licensor of any such claim of suit; and
provided further, that Licensor shall have the opportunity to control the
defense and/or settlement of such claim with the reasonable cooperation of
Licensee.
20. Termination
a. This Agreement and any license granted hereunder may be terminated
as follows:
i. By Licensee for nonconformance of the Licensed Program to the
Program specifications pursuant to Paragraph 10, or
ii. By either party by notice in writing, provided the basis for
such termination is a material failure by the other party to
perform its responsibilities and obligations under this
Agreement.
b. Termination of this Agreement for reasons of a material failure by
either party as described above in subparagraph 17(a)(ii) will be
made in accordance with the following provisions:
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i. The party alleging the material failure must submit the facts
of the alleged material failure In writing and in full detail
to the other party.
ii. The party whose material failure is alleged shall be allowed
sixty (60) days after such written notice is given in which to
take steps to correct the material failure or otherwise
satisfy the complaining party.
iii. If at the end of such sixty (60) day period the complaining
party is not satisfied that the material failure has been
corrected and that performance is proceeding as promised, and
assuming the uncured material failure did, in fact, exist as
described, termination without liability on the part of the
terminating party will be effective on the sixty-first (61st)
day after such notification.
c. In the case of termination of this Agreement, Licensee may, at its
discretion, continue to use the Licensed Program and Licensed
Software for a period of not more than four (4) months after the
effective date of termination thereof. This right to continue use of
the Licensed Program is granted by Licensor to permit Licensee to
continue its on-going business with a minimum of interruption while
in the process of converting to another means of satisfying such
requirements, and is not to be construed as an authorization or
acceptance on the part of either party of the other's material
failure or non-conformance or a waiver, in whole or in part, by
either party of any claim for damages. Thereafter, Licensee shall
deliver to Licensor the Licensed Program, and all software
documentation and any copies thereof or destroy the Licensed Program
and copies thereof and certify, in writing, such destruction by an
officer of Licensee thereby terminating the obligations of
confidentiality.
21. Jurisdiction
It is the intention of the parties hereto that this Agreement shall be
construed, interpreted and applied in accordance with the laws of the State of
Florida.
22. Entire Agreement Modification
This Agreement states the entire agreement between the parties hereto with
respect to the subject matter hereof, and all prior and contemporaneous
understandings, representations and agreements are merged herein or superseded
hereby. No alteration, modification, release, or waiver, of this Agreement or
any of the provisions hereof shall be effective unless in writing, executed by
the parties hereto.
23. Construction
Wherever possible, each provision of this Agreement and each related document
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement or any related document
shall be prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity
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without invalidating the remainder of such provision or the remaining provisions
of this Agreement.
24. Relationship of the Parties
Each party will be and act as an independent contractor and not as agent or
partner of, or joint venturer with, the other party for any purpose, the
relationship of the parties being solely that of Licensor and Licensee and
neither party by virtue of this Agreement shall have any right, power, or
authority to act or create any obligation, express or implied, on behalf of the
other party. Except as otherwise provided herein or as may hereafter be
established by an agreement in writing executed by authorized representatives of
the parties, all expenses incurred by authorized representatives of the parties,
shall be borne by the party incurring the expense.
25. Non-Waiver Default
Licensee's or Licensor's failure to insist upon the performance of any of the
terms, convenants or conditions of this Agreement or to exercise any rights or
remedies hereunder shall not be construed as a waiver or relinquishment of the
future performance of any such right or remedy unless otherwise provided for
herein.
26. Notices
Notices for all purposes under this Agreement shall be sent by registered or
certified mail and such notices shall be deemed to have been properly served
upon proof of posting by registered or certified mall and are deemed to be
received five (5) days after posting. Notice shall be mailed in the case of
Licensee to:
Harris Corporation, Semiconductor Sector
P.O. Box 883
Melbourne, Florida 32901
Attention:
or in the case of Licensor to:
Consilium Associates Inc.
2479 E. Bayshore Road
Suite 700
Palo Alto, California 94303
27. Successors
All covenants, stipulations and promises in this Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective successors,
assigns and legal representatives. Except as otherwise provided, neither party
shall have the right to assign or otherwise transfer its rights or obligations
under this Agreement except with the written consent of the other party;
provided, however, that except as otherwise provided, a successor in interest by
merger, by operation of law, assignment, purchase, or otherwise of the entire
business of either party, shall
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<PAGE>
acquire all interest of such party hereunder, without the necessity of obtaining
prior written consent.
28. Force Majeure
Neither Licensor nor Licensee shall be liable for any delay or default in
performance of all or any part of this Agreement, if such delay or default is
caused by conditions beyond its control, including but not limited to: acts of
the elements, fires, floods or other casualties, accidents, strikes, work,
stoppages, inability to obtain equipment, materials, skilled labor or compatible
technology, transportation difficulties, U.S. Governmental interference,
regulation or restriction; and continuing domestic or international `problems
such as war, riot, insurrection, revolution, acts of the public enemy, sabotage,
government instability, or change In government without the benefit of
constitution. In such an event, the party claiming excuse from performance shall
notify the other party within five (5) business days of the occurrence, and the
time for performance shall be extended for the length of any delay.
29. Employment
Licensor and Licensee mutually agree to refrain from soliciting those employees
of the other who possess key knowledge of a proprietary nature regarding the
Licensed Programs or supporting software until twelve (12) months have elapsed
following either:
a. Termination of this Agreement, or
b. Termination of employment with the other party.
30. Export Licensing
Licensor and Licensee acknowledge that the laws and regulations of the United
States restrict the export and re-export of the commodities and technical data
of United States origin, including the Licensed Programs and Documentation
("hereinafter Technical Data"). Licensee represents that it will not export or
re-export any of the Technical Data in any form without the appropriate licenses
of the United States Government. Licensee warrants that the Technical Data will
not be shipped directly or indirectly to Afghanistan or any country listed in
the Country Groups P, Q, S, W, Y or Z now or hereafter specified in Supplement
No. 1 Section 370 of the Export Administration Regulations. Licensee further
warrants that the Technical Data shall not be exported or re-exported to the
Republic of South Africa or Namibia, if it is to be used for or delivered to
military or police entities or is for use in servicing equipment owned,
controlled or used by such entities. All such Technical Data that is exported or
re-exported to the Republic of South Africa or Namibia shall be accompanied by a
written notice to the consignee that the data or its direct products may not be
sold or otherwise made available directly or indirectly to the military or
police entities in these destinations. Licensee further agrees that in the event
any such export includes all or any portion of the Licensed Program source code,
Licensee shall notify Licensor in writing thirty (30) days prior to any such
export.
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<PAGE>
31. Damages
Licensor shall not be liable for any incidental, consequential or special
damages, including lost profit due to systems failure.
IN WITNESS WHEREOF, the parties have executed this Agreement by their duly
authorized authorized representatives.
Licensee
Attest Harris Corporation
By: /s/ H.E. Rothman By: [illegible]
---------------- -----------
Date: 8/29/84 Title: Sr. V.P. Sector Executive
------- -------------------------
Date: 8/29/84
-------
Attest Licensor
Consilium, Inc.
By: [illegible] By: /s/ Jonathan Golovin
----------- --------------------
Date: 7/31/84 Title: President
------- ---------
Date: 7/31/84
-------
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ANNEX A
Description of Licensed Program
COMETS MODULES:
ADVANCED WIP TRACKING
SPECIFICATIONS
ENGINEERING DATA COLLECTION
RS1 STATISTICAL ANALYSIS
FACTORY COMMUNICATION
NON-LOT DATA COLLECTION
ACTIVITY PLANNER
FACILITY MONITORING
PROCESS AUTOMATION
STANDARD COST EXTRACT
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ANNEX B
List of Documents and Software
Licensor shall provide Licensee with the source code for the Licensed Program.
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ANNEX C
Program Specifications
Software will perform as represented by Licensor* when executed on Digital
Equipment Corporation hardware configuration as follows:
VAX - 11/780 Processor
- 8 MB MOS Memory
- DMF32 Com. Controllers
RAB1 - AA Disk Drives
TEU - 78 Tape Drives
* The phrase "represented by Licensor" implies functional content of their
software equal to or better than their proposal to Harris Semiconductor
dated February 20, 1984, their system response time as measured on April
11, 1984, their proposals for custom real time control charts dated April
29, 1984, and any system descriptive language contained in Licensor
supplied COMETS documentation and user manuals.
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<PAGE>
ANNEX D
Installation and Training
Licensor shall provide up to twenty-five (25) days of direct assistance to be
used by Licensee at its discretion for either installation assistance, or
training of the Licensee's technical or clerical staff in the use of the
Licensed Program. Licensee shall pay Licensor's reasonable travel and living
expenses in providing such assistance. Licensee, at its option, can request
Licensor to make the entire installation of the Licensed Program, or any portion
thereof. Licensor shall charge Licensee for such installation on in excess of
twenty-five (25) days assistance its standard hourly rates then in effect plus
reasonable travel and living expenses.
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<PAGE>
ANNEX E
MAINTENANCE AGREEMENT
THIS AGREEMENT is made by and between CONSILIUM ASSOCIATES, INC. having its
principal place of business at Suite 700, 2470 E. Bayshore Road, Palo Alto,
California 94303 (hereinafter referred to as "Consilium") and HARRIS CORPORATION
acting through its Semiconductor Sector with a principal place of business at
P.O. Box 883, Melbourne, Florida 32901 (hereinafter referred to as "Licensee").
1. Term. The term of this Agreement shall commence on the effective date
of this Agreement and shall extend for an initial period of twelve (12) months.
This Agreement shall then automatically extend for renewal terms of twelve (12)
months until terminated by either party upon sixty (60) days written notice
prior to the end of any twelve (12) month term.
2. Consilium Services. Consilium agrees for the charges stated herein and
during the term of this Agreement, to furnish Licensee the following software
product services for the Licensed Programs and Documentation as defined in Annex
A of the Software License Agreement July 31, 1984 (the License Agreement):
(a) To correct, to the extent reasonably possible, any defects
in the Licensed Programs which cause the Licensed Programs not to operate in
accordance with the description of the Licensed Programs' function in the
Documentation. If Consilium determines that such defects are due to errors in
such description, Consilium shall issue corrections to the Documentation and
shall not be required to alter the Licensed Programs.
(b) To use all possible speed to effect a remedy where such
defects in the Licensed Programs affect the Licensee's day to day operations.
(c) To provide reasonable written and telephone consultation
pertaining to operation and application of the Licensed Programs.
(d) To provide modifications and enhancements to the Licensed
Programs which are designated by Consilium as "internal improvements". Such
modifications and enhancements do not include new modules which Consilium
designates as software products for which Consilium charges separately.
(e) To provide updates to the Documentation as available.
3. Service Limitations. The following services are outside the scope of
this Agreement:
(a) Service for Consilium Custom Programs or other products
not set forth in "Annex E" of the License Agreement.
(b) Service for Licensed Programs which have been subject to
unauthorized modification by Licensee.
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(c) Service for Licensed Programs not maintained to the latest
revision or to the revision prior to the latest revision.
(d) Service due to failure of computer hardware or equipment,
or programs not covered by this Agreement; catastrophe, negligence of Licensee,
operator error, or improper use of hardware or software; but such exclusion does
not exclude Consilium's responsibility to maintain the Interface between the
Licensed Programs and the computer hardware.
4. Licensee Responsibilities.
(a) Licensee, in connection with the services to be furnished
hereunder, shall be responsible for implementing, at Licensee's expense,
Licensed Program corrections and Licensed Program enhancements furnished though
delivery of updates.
(b) Licensee agrees to maintain the Licensed Program to the
latest revision (or revision prior to latest revision) level and to incorporate
all revisions, enhancements, updates and corrections to the Licensed Programs
provided by Consilium. Licensee understands that its failure to incorporate
Consilium Licensed Program updates will cause the Licensed Program. to be
non-conforming and that subsequent Licensed Program updates may be unusable.
(c) Licensee acknowledges that all Licensed Programs, and
changes, improvements or updates to the Licensed Programs provided by Consilium
are subject to the conditions of the License Agreement and Licensee agrees to
abide by those conditions.
5. Charges.
(a) Maintenance shall be provided by Licensor in accordance
with the Agreement attached hereto as Annex E. The first year of maintenance is
provided at no charge in fulfillment of Licensor's warranty hereunder. The
second year of maintenance shall be provided for each site by Licensor for a sum
equal to ten percent (10%) of the undiscounted, published license fee at the
time of execution of this Agreement. Thereafter for each additional year of
maintenance, Licensee shall pay Licensor the previous years maintenance fee
increased by the amount of increase, if any, of the Index of Average Weekly
Earnings for computer and data processing services, all cities, (as published by
the Department of Labor) for the month of the commencement of the annual
maintenance period, over the value of said index for the month of commencement
of the annual maintenance period for the previous year. In the event the
computer and data processing services portion of the Index of Average Weekly
Earnings or the Index itself is discontinued by the Department of Labor,
Licensor and Licensee agree to the substitution herein of any substitute Index
published by the Department of Labor. In the event no such substitute is
published, Licensor and Licensee shall agree in a mutually acceptable
alternative Index.
(b) When, at Licensee's request, Consilium provides on-site
service or service where travel is required, Licensee agrees to pay actual
travel, lodging and meal expenses reasonably incurred by Consilium.
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(c) All charges under this Agreement shall be exclusive of any
amount for sales, use, excise or similar taxes imposed by foreign, federal,
state or local governments. If any such taxes (other than taxes imposed upon
Consilium's net income or personal property) are levied at any time, Licensee
agrees to pay such taxes and, when applicable, such taxes will appear as
separate Items on Consilium invoices.
(d) Licensee agrees to pay for any data-related communications
charges including telephone expenses, telex, air express service, and expenses
for conversion to a storage medium other than magnetic tape for delivery.
6. Designated Equipment Relocation. Consilium shall be under no obligation
to furnish continued service under this Agreement if the Licensed Programs are
moved from their location of initial installation or reinstallation without
prior written notice to Consilium, or if Licensee is otherwise in breach of the
License Agreement.
7. Eligibility. A Licensed Program is eligible for inclusion under this
Agreement immediately upon installation by Consilium or upon expiration of any
Licensed Program warranty.
8. Limitation of Liability. The total of Consilium's liabilities under or
in connection with this Agreement (whether arising from contract or otherwise)
is limited to the total amount of fees paid by Licensee under this Agreement.
CONSILIUM SHALL NOT BE LIABLE FOR ANY DIRECT, INDIRECT, SPECIAL, INCIDENTAL, OR
CONSEQUENTIAL DAMAGES, WHETHER BASED UPON CONTRACT, TORT OR ANY OTHER LEGAL
THEORY, ARISING FROM ITS PERFORMANCE OR NON-PERFORMANCE UNDER THIS AGREEMENT.
9. General.
(a) Assignment. Neither party shall assign or mortgage or
pledge or in any other way part with or dispose of its interest in this
Agreement in whole or in part to any third person other than a subsidiary,
parent or affiliate of Licensee or the purchaser of substantially all the
business being supported by the Licensed Programs without the prior written
consent of the other.
(b) Entire Agreement. This Agreement represents the entire
agreement between the parties, may only be amended by a written agreement signed
by both parties, and supersedes all prior agreements and understandings with
respect to the matters covered by this Agreement.
(c) Delays. Consilium is not responsible for failure to
fulfill Its obligations under this Agreement due to causes beyond its control.
(d) Invalid Provisions. If any provision of this Agreement is
declared to be Invalid under any applicable status or rule of law, the parties
agree that such invalidity shall not affect the remaining portions of this
Agreement.
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<PAGE>
(e) Waiver. The failure of either party to exercise any right
or option that is granted herein or to require the performance of any term of
this Agreement or the waiver by either party of any breach of this Agreement,
shall not prevent a subsequent exercise or enforcement of such term or be deemed
a waiver of any subsequent breach of the same or any other term of this
Agreement.
(f) Notice. Any notice required or permitted to be sent under
this Agreement shall be delivered by hand, by cable, charges prepaid, or mailed
by registered mail, postage prepaid, return receipt requested, to the addresses
of the parties set forth above or to such other address as may be furnished in
writing to the other party. Notice so sent shall be deemed effective on personal
delivery or on the third day following the date sent.
(g) Prior Consent. Where reference is made to prior consent
neither party shall unreasonably withhold or delay such consent from the other
party.
(h) Third Parties. For the purposes of this Agreement third
parties shall be deemed not to include employees of either party to this
Agreement.
(i) Substantive Law. Any differences or disputes arising from
the Agreement shall be settled in accordance with Section(s) _____________of the
original Software License Agreement which shall be deemed to be incorporated
herein.
(j) Effective Date. The effective date of this Agreement is
July 31, 1984.
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<PAGE>
IN WITNESS WHEREOF, this Maintenance Agreement has been executed and delivered
to be effective as of the date written above.
CONSILIUM:
CONSILIUM ASSOCIATES, INC.
BY: /s/ Jonathan Golovin
--------------------------------------
TITLE: President
-----------------------------------
DATE: 7/31/84
------------------------------------
LICENSEE:
HARRIS CORPORATION
Semiconductor Sector
BY: illegible
--------------------------------------
Senior Vice President
TITLE: Sector Executive
-----------------------------------
DATE: 8/29/84
------------------------------------
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<PAGE>
ANNEX F
Modifications
Licensor shall modify the Licensed Program as set forth below. Such
modifications shall be made for the sum of _____________________ dollars ($ ).
The Licensed Program, as modified, shall be delivered with in ______________ ( )
days after the execution of this Agreement.
After Complete Installation of the Licensed Program, modifications to the
Licensed Program made by Licensor pursuant to a request by Licensee shall be
made at Licensor's standard hourly rate then in effect, plus reasonable travel
expenses and living expenses. Licensor shall respond to any written request of
Licensee for modifications to the Licensed Program within thirty (30) days after
receipt thereof indicating whether Licensor shall provide such modification, and
a timetable for implementing the modifications if Licensor agrees to provide the
same. Licensor shall invoice Licensee each thirty (30) days for services
performed pursuant to such modifications and Licensee agrees to pay for such
services within forty-five (45) days of receipt of invoice provided installation
is Complete pursuant to Paragraph 9.
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ESCROW
Licensor agrees to maintain a current copy of source code for Licensed Program
with an escrow agent whose name and address is:
and the escrow agent shall provide the source code to Licensee under any of the
following conditions and in accordance with the attached escrow agreement.
At the Licensee's option, source code for the Licensed Program is to be made
available to Licensee at no cost for Licensee's use in the event that:
i. Licensor voluntarily or involuntarily goes into bankruptcy, becomes
bankrupt, goes into receivership, makes an assignment for the
benefit of creditors or otherwise ceases to conduct business;
ii. Licensor decides not to maintain the Licensed Programs; or Licensor
defaults in providing maintenance by:
1. Failing to provide a consultant at Licensee's site for
corrections of problems for more than seven (7) days beyond
the required time as set forth in Paragraph 10 and thereafter
in the maintenance agreement, provided the problem was in the
Licensed Program, or
2. Failing to adhere to the procedures and time provisions
therein of Paragraph 10 and thereafter in the maintenance
agreement for corrections of problems 4 times in a 3 month
period or 6 times in any 12 month interval, provided that the
problems were in the Licensed Programs.
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Schedule A
Computer Installation
Manufacturer and Model________________________Operating System__________________
CPU Serial Number__________________________Location_____________________________
Software Products Product
Product Fee
------- ---
Engineering Data Analysis (RS/1) $15,000.00
3rd site copy
-22-
EXHIBIT 10.24
CONSILIUM
Addendum Software License and Maintenance Agreement
This addendum (the "Addendum") to the Consilium, Inc., Software
License. and Maintenance Agreements is entered Into between ConsiIium, Inc.,
("Consilium") and Harris Corporation ("License.") and is effective October 27,
1995.
Recitals
A. The parties have entered into a Software License and Maintenance
Agreement dated July 31, 1984, (the "Agreement").
B. The parties wish to modify the Agreement in certain respects as
follows:
Addendum
1. Amended and Restated License Grant
Consilium agrees to grant to Licensee a conversion to and upgrade of the
existing license grant to an equivalent of a one thousand five hundred (1,500)
Concurrent User License level for the Licensed Programs set forth below. In
addition Licensee shall have the right to designate the hardware platform on
which the Licensed Programs will be used, from any platform then currently
supported by Consilium, at no additional transfer lee.
WorkStream License Programs
---------------------------
Activity Planner/Dispatch
Custom Data Collection
Engineering Data Collection, Advanced
Factory Communications
Process Automation Management
Resource Tracking, Advanced
Rule. Based Dispatch
Specifications
Statistical Quality Control
Work in Process Tracking, Advanced (Includes inventory Tracking)
WorkStream Interface Tools
Total Conversion and Upgrade Fee: $207,000
Payment Term.: 100% due on execution of this Addendum and receipt by
Consilium of Licensee'. Purchase Order In favor of Consilium, arid payable by
Licensee net thirty (30) day. following receipt by Licensee of a connect
Consilium invoice.
2. Amended and Restated Scope of Use.
(a) Licensee shall have the right to us. the Licensed Programs solely for
Licensee's worldwide Internal operation., for the designated number of licensed
Concurrent Users as set forth above. All users of the Licensed Programs must be
physically located at authorized sites of Licensee. The Licensed Programs shall
not be used to monitor or control operations at any other physical locations.
For the purpose of the Agreements:
I. An authorized she of Licensee shall be considered any subsidiaries or
affiliates of Licensee which directly or indirectly control or are controlled
by, or at. under the common control of Licensee. Control means, "the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and operating policies of the subsidiary or affiliate in respect of
which the determination it being made, through the ownership of voting
securities (of greater than 50% of its voting securities or the maximum as allow
or required by law), contract, voting bust or otherwise, or if a partnership. as
to which Licenses is a general partner, or that Licensee otherwise control In
matter. of management and operations".
II. A Concurrent User shall mean a person or application that accesses the
database directly or indirectly through the WorkStream Licensed Program's
module/application.
<PAGE>
(b) Licensee is authorized to use the Licensed Programs on a backup
computer(s) of its choice at an authorized site or such temporary alternate
location as may be required until which time U the designated computer(s) is
operable and processing on the backup computer Is completed.
(c) Licensee shall use the Licensed Programs solely and exclusively for
its own purposes and shall not, Without the prior within approval of Consilium,
either allow any third party, person, firm or corporation to use the Licensed
Programs, or Itself use the Licensed Programs for the purposes of any such third
party, whether or not Licensee is compensated therefor. Access to the Licensed
Program by any Such third party, person, firm or corporation for the direct
benefit of Licensee may be granted subject to confidentiality obligations
substantially similar to those which are set forth in Paragraph 14 of the
Software License Agreement dated July 31, 1984.
(d) The parties agree that on a biannual basis (the actual dates to be
mutually agreed upon by the parties), a Concurrent User or Connection count
and/or audit of usage will take place to determine. that the current level of
use is consistent with the 1,500 Concurrent User license level and/or then
current Concurrent license level. Licensee shall be obligated to purchase
additional user and/or connection licenses for the Licensed Programs that are
beyond the 1,500 Concurrent User or then current connection license level limit.
In the event adjustments to the actual Concurrent User or Connection license
levels are necessary, the timing of any such adjustments shall be as mutually
agreed upon by the parties.
3. WorkStream DFS/A Licensed Program
(a) Licensee currently has a ten (10) Connection object code license to
WorkStream Connection and Station Controller. Consilium agrees to grant to
Licensee subject to the fees set forth below and in accordance with additional
terms and conditions herein and as set forth in 2(a)i, 2(b), 2(c), 2(d), an
object code only license to the following additional Licensed Programs at the
one hundred (100) Connection license level;
(i) Licensed Programs available for delivery on or before 10/31/95 List Price
-------------------------------------------------------------- ----------
Station Controller $ 140,000
Recipe Management Server 182,000
---------
Subtotal List Price $ 322,000
less discount (applicable Is Addendum signed and Purchase (128,800)
Order received on or before October 31, 1995)
---------
Total License Fees Due $193,200
Payment Terms: 100% due on delivery of the Licensed Program(s) by
Consilium and payable net 90 days following Licensee's receipt of a correct
Consilium Invoice.
The annual Maintenance Fee shall be based on fifteen percent (15%) of
Consilium's then current list price ($322,000 x 15% = $48,300). For the first
year the Maintenance Fees shall be pro-rated for a term effective February 1,
1996 (expiration data of the ninety (90) day warranty period) through July 30,
1996 in the amount of $24,150, and shall be due and payable in advance, net
thirty (30) days following the effective date and receipt by Licensee of a
correct Consilium invoice
(b) For the purpose of the Agreement 1) "Object Code" shall mean the
Programs assembled or compiled in magnetic or electronic binary form on software
media, which are readable and usable by machines, but riot generally readable by
human. without reverse assembly, reverse compiling or reverse engineering, and
2) "Source Code" means the Programs written In programming languages (such as
COBOL or O++), including all comments and procedural code, such as job control
language, statements, In a form Intelligible to trained programmers and capable
of being translated into Object Code for operation on computer equipment through
assembly or compiling, and accompanied by documentation in sufficient detail to
enable a trained programmer through the study of such documentation to modify
the Programs without undue experimentation.
(c) Licensee may reproduce the Object Code and translate its form when
such recompilation or reverse engineering is indispensable In obtaining the
necessary information to achieve the interoperability of other computer programs
with the Licensed Programs, but only if: 1) the Source Code has bean requested
from Consilium by Licensee and Consilium has advised such Source Code Is not
otherwise readily available, and 2) the acts are confined to the parts of the
Object Code Programs which are necessary to achieve interoperability, and 3)
such Source Code is not used for the development, production or marketing of a
computer program substantially similar expression or used In a manner which
unreasonably prejudices Consilium's interest, rights or title in or to its
Licensed Programs.
(d) Consilium grants to Licensee the right to trade in existing licensed
WorkStream Programs, for an equal number of Concurrent User licenses to
WorkStream-DFS Application Server Programs, at no additional license fee charge,
which contain equivalent and/or similar functionality and are intended to
replace the existing WorkStream Program(s) as Consillium's next generation
Application Server Program(s). This does not include any embedded third party
software which Cosilium utilizes in the Application Server Program(s), and for
which Consilium would be required to pay royalties to the third party vendor. In
this event
<PAGE>
Licensee agrees to pay either Consilium or the third party vendor (as directed
by Consilium) any applicable fees which would be due.
(e) Licensee may at their option and at their sole discretion license or
otherwise purchase software products or programs from any third party vendor.
Licensee acknowledges that such rights In no way obligate Consilium to ensure or
otherwise guarantee the computability of such products or programs with the
Consilium provided Licensed Programs.
(f) Consilium will offer Licensee a minimum thirty percent (30%) discount
from the then current list price for any additional Licensed Programs to be
licensed by Licensee. The 30% discount applies only to the License Fees for any
such additional Licensed Programs.
4. Maintenance
(a) For the Licensed Programs set forth in section 1., and the ten (10)
Connection License Programs referenced In section 3(a), and/or the converted
WorkStream DFS licenses referenced in section 3(d), the annual baseline
Maintenance Fee for each of the next five (5) years shall be as follows and
shall be payable annually in advance;
Effective July 31, 1996 through July 30, 1997 $162,628
Effective July 31, 1997 through July 30, 1998 $189,810
Effective July 31. 1998 through July 30. 1999 $216,697
Effective July 31, 1999 through July 30, 2000 $243,785
Effective July 31, 2000 through July 30, 2001 $270,672
and, for each year thereafter $270,872
<PAGE>
5. All other terms of the Agreements shall remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this Addendum on the date
first written above.
CONSILIUM, INC. HARRIS CORPORATION
Consilium: Licensee:
/s/ Debbie S. Petillo /s/ Edward Dimbero
- - --------------------------------- --------------------------------------
Signature Signature
Debbie S. Petillo Edward Dimbero
- - --------------------------------- --------------------------------------
Printed Name Printed Name
Manager, Contract Administration/
General Legal Services Manager, Manufacturing Systems
- - --------------------------------- --------------------------------------
Title Title
EXHIBIT 10.25
SPECIALTY GAS SUPPLY AGREEMENT
This Agreement, made as of the 15th day of October 1996, between Air Products
and Chemicals, Inc. ("Seller") and Harris Corporation ("Buyer")
_________________________ Mountaintop _________________________ PA _____ 18707
_____ ("Buyer").
1. Sale and Purchase
Seller hereby agrees to sell to Buyer and Buyer hereby agrees to purchase
from Seller, Buyer's requirements of specialty gases listed in Attachment
1, for use at Buyer' location namely Fab 8, Mountaintop, Pa.
2. Designated Locations
This Agreement shall be applicable to all Buyer's activities carried on at
the location(s) set forth in Section 1 above and if the operations at any
such locations are expanded or relocated to new locations then, at
Seller's and Buyer's option, this Agreement shall be applicable at such
locations ("Designated Locations(s)").
3. Terms and Termination
3.1. This Agreement shall be effective as of the date first set forth
above (Contract commencement Date). The initial term of this
Agreement, as to each Product in attachment 1 at each Designated
Location shall be ten years ("Initial Term"), from the Contract
Commencement Date.
3.2. Either party may terminate this Agreement with respect to each
Product at each Designated Location as of the expiration date of the
Initial Term with respect to such Product at such Designated
Location.
3.3. In addition to any other rights which the Buyer may have, it
reserves the right to cancel this contract in any portion thereof,
if material furnished pursuant to this contract is not as specified
or if delivery is not made per mutually agreed expectation when and
as specified, through no fault of Buyer and without advance notice
from the Seller and acceptance by Buyer. Buyer may cancel this
contract or any portion thereof if the Seller is adjudicated a
bankrupt, if a petition under the bankruptcy Act is filed and not
vacated within sixty days, if the Seller makes an assignment for the
benefits of creditors, if a Receiver of the property of the
<PAGE>
Seller is appointed or if action under any law for the relief of
debtors is taken in respect of the Seller.
4. Ownership of Cylinders and Containers
Except as otherwise stated herein, all cylinders and other containers,
including tank trucks and tube trailers, in which the Products are
delivered hereunder shall be and remain the property of Seller and are
returnable, at Buyer's risk and expense and in good condition, promptly
after being emptied.
5. Delivery
5.1. Title and risk of loss of all Products sold hereunder shall pass to
Buyer upon Seller's delivery at Seller's production facility as
provided herein. Seller's quantity measurements taken at shipping
point shall govern.
5.2. Buyer shall inspect the products furnished hereunder immediately
after delivery. Buyer's failure to give notice of any claim within
30 days from date of delivery shall constitute an unqualified
acceptance of such Products and a waiver by Buyer of all claims with
respect thereto.
6. Pricing and Adjustments to Price
6.1. The price for products delivered to Buyer by Seller is defined in
Attachment 1.
6.2. Current Specialty Gas pricing and requirements defined in Attachment
1 are based on "open standard specification" and have been
established for baseline purposes only. Final requirements and
specifications will be determined prior to installation. Some
adjustment to final purchase pricing may be required at that time
and subsequent to startup.
6.3. Harris anticipates purchase of those specialty gases defined on
Attachment 1 for a fixed price of $218,643 per year for Phase 1
(based on an estimated 225 water starts per day through calendar
year 97-98) and $587,510 per year for Phase II (based on water
starts at 600 per day after calendar year 98). Pricing may be
adjusted upward over the life of the agreement due to Air Products;
substantiated cost increases in raw materials including but not
limited to feedstocks. No profits shall be added to incremental
increases.
6.4. If any Price adjustment pursuant to Section 6.3 shall be prohibited
by any valid law or regulation of the united States or any state,
then Seller may, at its option and by not less than 90 days' prior
written notice to Buyer, terminate this Agreement as to the affected
Designated Location.
7. Taxes
7.1. Seller shall bear and pay all federal, state and local taxes based
upon or measured by its net income, and all franchise taxes based
upon its corporate existence, or its general corporate right to
transact business.
-2-
<PAGE>
7.2. Any other tax, howsoever denominated and howsoever measured, imposed
upon the storage, inventory, sale, transportation, delivery, use or
consumption of Product shall be paid directly by Buyer, or if paid
by Seller shall be invoiced to Buyer as a separate item and paid by
Buyer to Seller.
8. Payment
All payments due Seller hereunder shall be made to Seller at the location
indicated on the invoice. All invoices shall be payable net 30 days. The
timely payment by Buyer of all amounts due and owing to Seller hereunder
is an express-condition to the continued performance by Seller of its
obligations hereunder.
9. Seller's Warranty
Seller warrants that the Product shall conform to the specifications and
express warranties set forth herein and that at the time of delivery,
Seller shall have good title and right to transfer the same and that the
same shall be delivered free of encumbrances. THE FOREGOING WARRANTY IS
THE SOLE WARRANTY AND IS IN LIEU OF ALL OTHER WARRANTIES, EXPRESS OR
IMPLIED, IN FACT OR BY LAW, INCLUDING, WITHOUT LIMITING THE GENERALITY OF
THE FOREGOING, ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE.
10. Limitation of Liability
10.1. Buyer acknowledges that there are hazards associated with the use of
the Product, that it understands such hazards, and that it is the
responsibility of Buyer to warn and protect its employees and others
exposed to such hazards through Buyer's storage and use of the
Product. Seller shall provide Buyer with copies of Material Safety
Date Sheets relating to the Product for Buyer to make such warnings,
and Buyer shall hold harmless, indemnify and defend Seller from and
against any liability incurred by Seller because such warnings were
not made Buyer assumes all risk and liability for loss, damages or
injury to persons or to property of Buyer or others arising out of
the presence or use of the Product as a result of Buyer's failure to
warn. Unless such loss damage or injury is due to negligence of
seller or due to defective product or equipment.
10.2. No claim of any kind with respect to nondelivery of Product shall be
greater than the Unit Price payable hereunder for the Product in
respect to which such claim is made and Buyer's remedy (except for
the remedy of cancellation for material default) for delivery of
nonconforming Product shall be replacement by Seller of a like
quantity of conforming product at no additional cost to Buyer and
reimbursement to Buyer for any damages directly related to such
nonconforming product.
10.3. Except in the case of a willful and wrongful act or omission of
Seller, Seller shall not be liable in contract or tort for any
indirect, special, incidental or
-3-
<PAGE>
consequential damages arising out of its performance or
nonperformance hereunder; provided, however, Seller shall be liable
for injury or death to third parties and for direct and immediate
physical damage to the buildings, machinery and equipment of Buyer
where such injury, death or damage occurs during the term of this
Agreement which is proximately caused by, and to the extent of
Seller's negligence at the Designated Location.
11. Force Majeure
11.1. Neither party hereto shall be considered in default in the
performance of its obligations hereunder (other than its obligation
to make any payment of money hereunder), or be liable in damages or
otherwise for any failure or delay in performance which is due to
strike, lockout, concerted act of workers or other industrial
disturbance, fire, explosion, flood or other natural catastrophe,
civil disturbance, riot or armed conflict whether declared or
undeclared, curtailment, shortage, rationing or allocation of normal
sources of supply of labor, materials, transportation, energy, or
utilities, accident, act of God, delay of subcontractors or vendors,
sufferance of or voluntary compliance with act of government and
government regulations (whether or not valid), embargo, machinery or
equipment breakdown, or any other cause whether similar or
dissimilar to any of the causes or categories of causes described
above and which is beyond the reasonable control of the party
claiming excuse hereunder.
11.2. Neither party hereto shall be required to make any concession or
grant any demand or request to brink to an end any strike or other
concerted act of workers.
11.3. Either party affected by an event described in Section 11.1, shall,
promptly upon learning of such event and ascertaining that it has or
will affect its performance hereunder, give notice to the other
party, stating the nature of the event, its anticipated duration and
any action being taken to avoid or minimize its effect.
11.4. If any event within Section 11.1 shall only partially reduce
Seller's ability to produce or deliver Product, then Seller may
prorate its available supply among Buyer and Seller's other
customers in a fair and equitable manner.
12. Impairment of Credit
Unless otherwise required by law, if a petition is brought by or against
Buyer under any present or future bankruptcy or insolvency laws seeking
any reorganization, arrangement, readjustment, liquidation, dissolution or
similar relief with respect to Buyer, or its Buyer shall make any
assignment for the benefit of creditors or if a receiver is appointed for
Buyer, or if Buyer shall fail to make payments in accordance with the
terms of this Agreements, or if in Seller's opinion Buyer's credits has
been impaired
12.1. Seller may, at its option, terminate this Agreement by written
notice to Buyer or impose such new payment terms, including cash on
delivery, as it deems adequate to protect its interest.
-4-
<PAGE>
12.2. The election of any option under Section 12 shall not preclude the
exercise of any other option.
13. General Provisions
13.1. This Agreement is subject to acceptance by an executive officer of
Seller.
13.2. This instrument together with any terms and conditions of Seller's
Attchment(s) hereto constitutes the entire agreement between the
parties. No terms and conditions in any form of purchase order,
order acknowledgment or other acceptance forms of Buyer issued with
respect to this transaction shall alter the terms hereof and
objection is hereby made to all such additional or different terms.
Acceptance is expressly limited to the terms offered herein. No
modification or waiver of this agreement shall bind Seller unless in
writing and signed and accepted by an executive officer of Seller.
13.3. This Agreement may not be assigned by either Buyer or Seller without
the prior written consent of the other party, which consent shall
not be unreasonably withheld. It shall inure to the benefit of and
be binding upon the successors and, if properly assigned, the
assigns of both parties.
13.4. If any provision of this Agreement is held invalid by any law and/or
regulation, all other provisions hereof shall continue in full force
and effect.
13.5. This Agreement shall be governed by and construed according to the
laws of the place of performance without giving effect to its
conflicts of law provisions.
13.6. In the event of conflict between the terms of this Agreement and any
of its Attachments/Exhibits, the terms of the Attachments/Exhibits
shall govern.
13.7. Compliance With Laws. Seller warrants that all goods or services
called for herein shall be produced or performed in compliance with
all applicable federal and state laws, rules and regulations.
13.8. Patent Indemnification. Seller warrants that it will defend at its
expense any suit against Buyer respecting infringement (including
contributory infringement) if any United States or other patent
covering all or part of the material furnished under this contract,
its manufacture, and/or its se if such use is inducted by Seller or
if there is no practical noninfringing use, and will pay costs,
fees, and/or damages awarded against Buyer for such infringement by
and final court decision; provided Buyer promptly notifies Seller of
and charge of and use it for such infringement and tenders to Seller
the defense of such suit, Buyer having the right to be represented
in such defense at its own expense. Buyer extends a like warranty to
Seller with respect to unavoidable infringement by Seller in
complying with Buyer's specifications, except to the extent that
such specification are derived from Seller or Seller has notice of
such infringement.
Submitted by /s/ Barbara A. Dutch
-------------------------
Barbara A. Dutch
-5-
<PAGE>
ACCEPTED by: ACCEPTED by:
HARRIS CORPORATION AIR PRODUCTS AND CHEMICALS, Inc.
/s/ Jim Poe illegible
- - ----------------------------- ---------------------------------------
By Jim Poe By illegible
------------------------- -----------------------------------
NAME
Sr. Mgr. Cont. Admin. GM Electronics US
- - ----------------------------- ---------------------------------------
TITLE TITLE
11-8-96
- - ----------------------------- ---------------------------------------
DATE
- - -----------------------------
TITLE
- - -----------------------------
DATE
-6-
<PAGE>
ATTACHMENT 1 TO PRODUCT SUPPLY AGREEMENT
DATED OCTOBER 7, 1996, BETWEEN
AIR PRODUCTS AND CHEMICALS, INC. ("SELLER")
AND HARRIS SEMICONDUCTOR CORP. ("BUYER")
[REDACTED]
EXHIBIT 10.26
MITSUBISHI SILICON AMERICA
SILICON WAFER PURCHASE AGREEMENT
This Purchase Agreement ("Agreement") is made as of January 1, 1997, between
Mitsubishi Silicon America Corporation ("Seller"), a California Corporation, and
Harris Corporation, a Delaware Corporation ("Buyer").
I. Scope/Duration
A. The purpose of this Agreement is to continue and enhance the mutually
beneficial relationship for Seller to sell, and Buyer to purchase, silicon
wafers in accordance with the terms and conditions hereinafter specified. Both
Parties will make every effort to mutually define and concentrate resources to
manage costs, exchange information and strive toward the highest level of
Buyer/Seller cooperation.
B. This Agreement covers the Findlay, Ohio; Mountaintop, Pennsylvania; and
Palm Bay, Florida, Harris locations. This coverage may be expand to include
other Harris facilities at Buyer's request, upon Seller's acceptance of same.
C. This Agreement will govern the terms and conditions for such sale,
purchase, and shipment of silicon wafers during the period of January 1, 1997,
through December 31, 2001.
D. This Agreement constitutes the entire agreement between the parties and
supersedes any and all agreements and understandings between them relating to
the subject matter herein.
E. In addition, both Buyer and Seller agree to meet at least six (6)
months prior to the expiration of this Agreement to determine if a new agreement
is desirable.
II. Volume Commitment
A. Seller intends to provide, and Buyer intends to purchase, wafers in all
diameters per the Purchase Plan shown on Attachment A, made part of this
Agreement.
B. Each year a forecast will be added by August 31. The prior Forecast
will be reviewed by both parties and changed into a firm Purchase Plan by
October 1 of the year prior to commencement.
C. Forecasts and Purchase Plans represent a percentage of Buyer's
anticipated business share by location as follows:
C1. Findlay and Palm Bay: Forecasts and Purchase Plans, as shown on Attachment
A, represent a minimum of 33% of Buyer's anticipated business share, for
parts shown on Schedule 1.
<PAGE>
Wafer Purchase Agreement
C2. Mountaintop: Forecast and Purchase Plans, as shown on Attachment A,
represent a minimum of 50% of Buyer's anticipated business share of 100,
125, 150, and 200 mm prime polished wafers; a minimum of 65% of Buyer's
anticipated business share for 200 mm merchant epitaxial wafers in 1997
-1999; and a minimum of 50% in 2000 and 2001, for parts shown on Schedule
1.
D. Seller's quantity commitments are made subject to adequate purchase
order and forecast coverage defined by Section V, Paragraph A.
E. Any quantity commitments are made subject to adequate purchase order
and forecast coverage defined by Section V, Paragraph A.
F. Seller intends to provide Buyer's various wafer diameter requirements
for the entire contract duration. Although both parties will meet annually to
set volumes by diameter and part number, both parties agree the total volumes
for all but 200 mm will be approximately equal to those agreed to for 1997.
Increases or decreases from this benchmark year must be agreed to by mutual
consent. Seller will make a reasonable effort to accommodate any agreed to
changes.
G. Seller assumes Buyer will continue to purchase 200 mm merchant
epitaxial wafers in the same ratio to 200 mm polished wafers as specified for
the benchmark year in this Agreement. Should buyer decide to reduce or totally
eliminate merchant epitaxial purchases, Seller will have the option to negotiate
new percentages/volumes for the other wafer diameters. Should Buyer and Seller
not agree on new percentage/volumes for other wafer diameters, either party may
terminate the Agreement giving ninety days notice.
III. Parts and Product Pricing
A. Parts included on this Agreement are shown on Schedule 1, made part of
this Agreement. Parts may be added or deleted from Schedule 1 at any time by
mutual agreement.
B. Prices for wafers shipped between January 1, 1997, and December 31,
1997, are firm as shown on Schedule 1.
C. Prices for wafers shipped each subsequent calendar year, are subject to
mutual agreement by August 31 of the year prior to commencement.
D. Buyer agrees to allow Seller the opportunity to quote on and qualify
all new parts developed at each Buyer location. Part qualification is dependent
on acceptable/competitive pricing.
E. In the event that unforeseen conditions in the market cause an
unusually large increase in the price of Seller's raw material(s), Seller
reserves the right to pass along a price increase that is warranted by a
substantiated and documented increase in the cost of Seller's raw materials.
Ninety (90) day written notice of such price increase shall be given to Buyer
from
2
<PAGE>
Wafer Purchase Agreement
Seller. Buyer can choose to decline this price increase; Seller then has the
option to terminate this Agreement sixty (60) days after written notice was
provided.
IV. Quality/Specifications
A. Seller shall advise Buyer of any major changes in processes, raw
materials, specifications and/or manufacturing locations. Buyer's approval of
same must be received by Seller prior to shipping wafers incorporating such
changes to the Buyers.
B. Changes to the existing wafer specifications and/or the addition of new
parts must be mutually agreed to in writing and Seller has the option to requote
prices and/or delivery terms accordingly for each part affected. If Buyer and
Seller cannot agree on such requoted terms, such wafer(s), may be removed from
this Agreement.
C. Buyer has the option to advise Seller when any part(s) is/are yielding
significantly lower than average. Seller has 60 days to initiate an action plan
to correct the identified deficiency(ies). If, after a reasonable time, the
action plan proves not to meet the mutually agreed upon goals, Buyer may reduce
Seller's share of the part(s) in question. This reduction may also affect
Buyer's total commitment to Seller.
V. Schedules /Inventory
A. Buyer will maintain a minimum of twelve (12) week purchase order
releases plus twelve (12) week forecast on a rolling basis. Seller shall
manufacture only to the specific firm releases as defined by the Buyers monthly
release schedule.
B. All schedules are firm for the six (6) week time period immediately
preceding the scheduled shipping date, unless otherwise agreed to by Seller.
C. Releases scheduled for shipment outside the six (6) week time period,
but within the WIP liability of eight (8) weeks, may be rescheduled for shipment
by Buyer within sixty (60) days of the original ship date.
D. Shipments outside the eight (8) week time period may be delayed,
reduced, or canceled by Buyer without liability, as required.
E. Seller agrees to make a reasonable effort to accommodate a request by
the Buyer to advance or move up or reduce a schedule and to respond promptly to
these requests.
F. Each Buyer location has a separate support plan shown on Attachment A.
At Buyer's request. Seller will make a reasonable effort to shift support
between dopants, parts, and diameters, as well as redistribute the total support
plan quantity amongst Buyer's locations.
G. Should a specific order within this Agreement or the entire Agreement
be terminated for any reason, Buyer's liability will be limited to eight (8)
weeks for scheduled
3
<PAGE>
Wafer Purchase Agreement
work-in-process material. This material shall be delivered to and accepted by
the Buyer within ninety (90) days of such termination. Seller, in turn, agrees
to make a reasonable effort to minimize Buyer's liability in this regard by
seeking to identify other customers for the product in question no longer needed
by the Buyer.
VI. Other Terms
A. Term of payment in Net 30 days from invoice date. All Sales are made
FOB Salem, Oregon.
B. In the event there is a conflict between Seller's Terms and Conditions
as they appear on Seller's quotes or order acknowledgments, and Buyer's Terms
and Conditions as they appear on Buyer's purchase orders or acceptance
documents, or between any of the previously mentioned documents and this
Agreement, then the Terms and Conditions of this Agreement shall prevail.
C. Neither Buyer nor Seller shall be responsible for any failure to
perform arising from causes beyond its control. These causes shall include, but
not restricted to accident, war, rebellion, labor disputes, labor shortages,
transportation embargoes, or failure or delays in transportation, inability to
secure raw materials or machinery for the manufacture of its devices, act of
God, acts of the Federal Government or any agency thereof, acts of any state or
local government agency thereof, and judicial action.
D. Failure of either party to insist, in any instance, upon strict
performance by the other party of any of the provisions of this Agreement shall
not be construed or deemed to be a permanent waiver of such or any other
provision herein.
E. Based on continued non-performance which has been brought, in writing,
to the attention of the non-performing party by the other party in this
Agreement, this Agreement may be canceled by either party with ninety (90) days
written notice. This cancellation does not excuse the Buyer from work-in-process
inventory liability for product conforming to Buyer's specifications as
described in Section V, Paragraph G of this Agreement.
F. All changes and/or amendments to this Agreement must be made in writing
and agreed to in writing by both parties.
G. For the duration of the contract period, both parties will refrain from
knowingly disclosing proprietary information received from the other party for a
period of five years from receipt to third parties in the normal course of
business relationship. This obligation survives the expiration of the contract.
H. All notices, demands, and other communications required or permitted
herein shall be made in writing and shall be deemed to have been given if
delivered by hand or mailed, postage prepaid, certified or registered, return
receipt requested, and addressed to Seller at:
4
<PAGE>
Wafer Purchase Agreement
Mitsubishi Silicon American Corporation
2445 Faber Place, Suite 100
Palo Alto, California 94303
Attn: Walt Kasianchuk
Executive Vice President
and to Buyer at:
Harris Corporation
Semiconductor Group
Building 59
Palm Bay Road
Palm Bay, Florida 32905
Attn: Gene Wyckoff
Mitsubishi Silicon America Corporation Harris Corporation
- - -------------------------------------- ------------------
(Seller) (Buyer)
By: /s/ Walt Kasianchuk By: /s/ Gene H. Wyckoff
---------------------------------- ----------------------------------
Name: Walt Kasianchuk Name: Gene H. Wyckoff
-------------------------------- --------------------------------
Title: EVP Marketing & Sales Title: SR. MGR. MATERIALS
------------------------------- -------------------------------
Date: 4/8/97 Date: 4-3-97
-------------------------------- --------------------------------
5
<PAGE>
Wafer Purchase Agreement
Attachment A
1997 Purchase Plan/1998 Forecast - Findlay, Ohio
<TABLE>
<CAPTION>
Q1 1997 Q2 1997 Q3 1997 Q4 1997 Total 1997 Total 1998
<S> <C> <C> <C> <C> <C> <C>
Prime Polished Wafers:
I. 100 mm
A. Phosphorus doped 24k 24k 24k 24k 96k 96k
B. Other dopants 9k 9k 9k 9k 36k 36k
II. 125 mm
A. Phosphorus doped 3.78k 3.78k 3.78k 3.75k 15k 15k
B. Other dopants 3k 3k 5k 7k 18k 42k
</TABLE>
Notes:
(1) This support plan represents a minimum of 33% of Buyer's anticipated
business share.
(2) The maximum quantity per quarter for phosphorus doped 100 mm prime
polished wafers is 24k. Buyer may convert dopant from phosphorus to boron,
with Seller's consent. The maximum quantity per quarter for the converted
phosphorus doped primed polished wafers is 36k per quarter or 132k per
year.
6
<PAGE>
Wafer Purchase Agreement
Attachment A
1997 Purchase Plan/1998 Forecast - Findlay, Ohio
Individual Part Number Notes for 1997:
P/N WT 3073 and WT 3167 combined maximum quantity 8k/month, 96k/year.
P/N WX 3010 maximum 1250/month and maximum 15k/year.
P/N WT 0261 maximum 750/month and 9k/year.
Volumes for P/N WT 3167 represents 45% of the combined total of WT 3073 and WT
3167.
7
<PAGE>
Wafer Purchase Agreement
Attachment A
1997 Purchase Plan/1998 Forecast - Mountaintop, Pennsylvania
<TABLE>
<CAPTION>
Q1 1997 Q2 1997 Q3 1997 Q4 1997 Total 1997 Total 1998
<S> <C> <C> <C> <C> <C> <C>
Prime Polished Wafers:
I. 100 mm 21k 21k 21k 21k 84k 84k
II. 125 mm 25k 25k 25k 25k 100k 100k
III. 150 mm 25k 25k 25k 25k 100k 100k
IV. 200 mm 7.5k 3.75k 3.75k 4.5k 19.5k 18.5k
Epitaxial Wafers:
V. 200 mm 7.5k (3) 4.87k 4.87k 9k 26.24k 36.65k
</TABLE>
Notes:
(1) Items I, II, III, and IV of this support plan represent a minimum of 50%
of Buyer's anticipated business share for 100 mm, 125 mm, 150 mm, and 200
mm prime polished wafers.
(2) Item V of this support plan represents a minimum of 65% of Buyer's
anticipated business share for 200 mm epitaxial wafers.
(3) This quantity represents 100% of Buyer's anticipated business share for
Q1.
(4) The minimum order quantity for 200 mm wafers is 100 wafers.
8
<PAGE>
Wafer Purchase Agreement
Attachment A
1997 Purchase Plan/1998 Forecast - Mountaintop, Pennsylvania
Specific terms and conditions for 200 mm material:
A. The supply of antomony-doped substrate and epi wafers is contingent upon
the successful development of such material by MSA.
9
<PAGE>
Wafer Purchase Agreement
Attachment A
1997 Purchase Plan/1998 Forecast - Palm Bay, Florida
<TABLE>
<CAPTION>
Q1 1997 Q2 1997 Q3 1997 Q4 1997 Total 1997 Total 1998
<S> <C> <C> <C> <C> <C> <C>
Prime Polished Wafers:
100 mm 12k 12k 12k 12k 48k 48k
125 mm 5k 6k 6.5k 6.5k 24k 24k
150 mm 6k 8k 15k 15k 44k 60k
</TABLE>
Notes:
(1) This support plan represents a minimum of 33% of Buyer's anticipated
business share.
10
<PAGE>
Mitsubishi Silicon America Quotation Q871B
Schedule 1
1997 - Findlay, Ohio
Prime Wafers:
<TABLE>
<CAPTION>
Specification
Part Specification Response Resistivity Price Price
Number & Revision Date Type (ohm-cm) Features A B
------ ---------- ---- ---- -------- -------- - -
<S> <C> <C> <C> <C> <C> <C> <C>
WT 0261 409-010-5/35 1/20/97 N04 2.3 - 3.0 PB $16.65 $17.25
WT 3052 409-010-5/35 1/20/97 N04 1.4 - 1.8 $16.65 $17.25
WT 3068 409-010-5/35 1/20/97 A04 .008 - .018 $15.35 $15.90
WT 3073 409-010-5/35 1/20/97 N04 .65 - .95 $16.15 $16.75
WT 3167 409-010-5/35 1/20/97 N04 .30 - .65 $14.20 $14.70
WW 0244 409-010-8/17 1/20/97 P05 38 - 63 $20.60 $21.35
WW 0254 409-010-5/35 1/20/97 P14 10 - 20 $13.65 $14.15
WW 3056 409-010-5/35 1/20/97 P04 4 - 8 $13.20 $13.70
WW 3087 409-010-5/35 1/20/97 P04 10 - 15 $13.55 $14.05
WX 3010 409-010-8/17 1/20/97 N05 .65 - .95 $24.85 $25.70
WY 3019 409-010/8/17 1/20/97 P05 4 - 8 $19.95 $20.65
WY 3025 409-010-5/35 1/20/97 P05 6 - 9 $20.20 $20.90
</TABLE>
11
<PAGE>
Mitsubishi Silicon America Quotation Q871B
Schedule 1
1997 - Findlay, Ohio
Notes:
(1) Quotation Q870 supersedes quotation Q749.
(2) Price A = shipments of wafers from January 1, 1997, through June 30, 1997
(3) Price B = shipments of wafers from July 1, 1997, through December 31,
1997.
(4) Revision A of quotation Q871 issues revised terms and conditions, support
plans, and pricing as negotiated by Harris Semiconductor and Mitsubishi
Silicon America.
(5) Revision B of quotation Q871 updates specifications 409-010-5, to revision
35, and 409-010-8, to revision 17; and add part numbers WT 0261 and WY
3025.
12
<PAGE>
Mitsubishi Silicon America Quotation Q871B
Schedule 1
1997 - Mountaintop, Pennsylvania
Prime Wafers:
<TABLE>
<CAPTION>
Specification
Part Specification Response Resistivity Price Price
Number & Revision Date Type (ohm-cm) Features A B
------ ---------- ---- ---- -------- -------- - -
<S> <C> <C> <C> <C> <C> <C> <C>
WT 1001 409-4-WT1001/05 6/20/96 R14 .0015 - .004 LTO $16.90 $17.50
WX 1001 409-4-WX1001/06 9/9/94 A15 .009 - .020 LTO $23.70 $24.55
WX 3007 409-4-WX3007/03 2/10/92 A05 .008 - .020 $20.80 $21.55
WX 3110 409-4-WX3110/02 2/14/96 R05 .0015 - .004 LTO $28.65 $29.70
WX 3014 409-4-WX3014/09 1/26/95 R05 .0015 - .007 LTO $28.65 $29.70
WX 3043 409-4-WX3043/02 1/26/95 A05 .008 - .020 LTO $23.10 $23.95
WX 3500 409-4-WX3500/01 11/8/95 R05 <= .007 LTO $29.80 $30.85
WX 3501 409-4-WX3501/0 4/26/96 A05 .008 - .020 LTO $24.25 $25.10
WY 1001 409-4-WY1001/04 9/9/94 P15 .01 - .02 LTO $22.15 $22.95
WY 3004 409-4-W23004/06 9/9/94 P05 .009 - .020 LTO $22.05 $22.85
WY 3042 409-4-WY3042/01 10/9/92 P05 .005-.020 LTO $22.25 $23.05
WI 3007 409-4-W13007/03 6/20/96 A06 .008 - .020 LTO, PB $38.30 $39.50
WI 3014 409-4-W13014/05 3/31/95 R06 .0015 - .007 LTO, PB $50.65 $52.20
</TABLE>
13
<PAGE>
Mitsubishi Silicon America Quotation Q871B
Schedule 1
1997 - Mountaintop, Pennsylvania
<TABLE>
<CAPTION>
Specification
Part Specification Response Resistivity Price Price
Number & Revision Date Type (ohm-cm) Features A B
------ ---------- ---- ---- -------- -------- - -
<S> <C> <C> <C> <C> <C> <C> <C>
W2 3004 409-4-W23004/03 9/9/94 P06 .009 - .020 LTO, PB $35.25 $36.30
W3 3007 409-4-W33007/03 9/4/96 A08 .008 - .020 LTO, PB $145.00 $145.00
W3 3014 409-4-W33014/03 9/4/96 R08 .0015 - .007 LTO, PB $160.00 $160.00
W4 3004 409-4-W43004/03 9/4/96 P08 .009 - .020 LTO, PB $120.00 $120.00
</TABLE>
Epitaxial Wafers:
<TABLE>
<CAPTION>
Specification
Part Specification Response Sub Epi Layer Epi Layer Price Price
Number & Revision Date Type Resistivity Thickness A B
------ ---------- ---- ---- ----------- --------- - -
<S> <C> <C> <C> <C> <C> <C> <C>
W3 3002 409-4-W33002/0 9/4/96 A08 1.6 - 2.0 12.6 - 15.4 $215.00 $215.00
W3 3005 409-4-W33005/0 9/4/96 A08 12.5 - 14.0 36 - 42 $260.00 $260.00
W3 3015 409-4-33015/0 9/4/96 R08 .63 - .77 7.2 - 8.8 $220.00 $220.00
W3 3025 409-4-W33025/0 9/4/96 A08 19.5 - 22.0 55.0 - 65.0 $265.00 $265.00
W3 3026 409-4-W33026/0 9/4/96 R08 1.71 - 2.09 12.1 - 14.9 $220.00 $220.00
W3 3037 409-4-W33037/0 9/4/96 A08 0.63 - 0.77 7.2 - 8.8 $215.00 $215.00
W3 3048 409-4-W33048/0 9/4/96 R08 .189 - .231 5.4 - 6.6 $220.00 $220.00
</TABLE>
14
<PAGE>
Mitsubishi Silicon America Quotation Q871B
Schedule 1
1997 - Mountaintop, Pennsylvania
<TABLE>
<CAPTION>
Specification
Part Specification Response Sub Epi Layer Epi Layer Price Price
Number & Revision Date Type Resistivity Thickness A B
------ ---------- ---- ---- ----------- --------- - -
<S> <C> <C> <C> <C> <C> <C> <C>
W3 3053 409-4-W33053/0 10/22/96 R08 .67 - .77 7.2 - 8.8 $220.00 $220.00
W4 3001 409-4-W43001/0 9/4/96 P08 4.5 - 5.5 14.4 - 17.6 $160.00 $160.00
W4 3011 409-4-W43011/0 9/4/96 P08 12.6 - 15.4 20.7 - 25.3 $160.00 $160.00
W4 3016 409-4-W43016/01 11/14/96 P08 1.68 - 2.06 9 - 11 $160.00 $160.00
W4 3045 409-4-W43045/01 11/14/96 P08 .06 - .10 17 - 22 $285.00 $285.00
W4 3046 409-4-W43046/0 9/4/96 P08 .045 - .061 8 - 10 $285.00 $285.00
</TABLE>
Notes:
(1) Quotation Q870 supersedes quotation Q753.
(2) Price A = shipments of wafers from January 1, 1997, through June 30, 1997.
(3) Price B = shipments of wafers from July 1, 1997, through December 31,
1997.
(4) Revision A of quotation Q870 issued to revise terms and conditions,
support plans, and pricing as negotiated by Harris Semiconductor and
Mitsubishi Silicon America.
(5) Revision B of quotation Q870 issues final terms and conditions, support
plans and pricing.
(6) Revision C of quotation Q870 issues final pricing for 200 mm wafers.
15
EXHIBIT 10.27
NITROGEN SUPPLY AGREEMENT
BETWEEN
HARRIS CORPORATION SEMICONDUCTOR SECTOR
MOUNTAINTOP, PENNSYLVANIA FACILITY
AND
LIQUID AIR CORPORATION
MERCHANT GASES DIVISION
<PAGE>
HARRIS SEMICONDUCTOR NITROGEN SUPPLY AGREEMENT
MOUNTAINTOP, PENNSYLVANIA
Table of Contents
1.0 DEFINITIONS
2.0 CONSTRUCTION
3.0 PURCHASE, DELIVERY AND TITLE
4.0 PRICING
5.0 PRICE ADJUSTMENTS
6.0 OWNERSHIP
7.0 OPERATIONS - MAINTENANCE - IMPROVEMENTS
8.0 HSS'S DISTRIBUTION SYSTEM
9.0 SPECIFICATIONS:
10.0 TAXES
11.0 SHUTDOWNS & GUARANTEES
12.0 METERING
13.0 UTILITIES
14.0 INSURANCE
15.0 DEFAULT
16.0 WARRANTIES
17.0 INDEMNIFICATION
18.0 FORCE MAJEURE
19.0 TERM
20.0 ASSIGNMENT
21.0 NOTICE
22.0 GENERAL
APPENDIX A INDENTURE TO LEASE
EXHIBIT 1 METES AND BOUNDS DESCRIPTION OF LEASED
PREMISES
APPENDIX B ESTIMATED UTILITY REQUIREMENTS
APPENDIX C DESCRIPTION OF NORMAL ATMOSPHERIC AIR
APPENDIX D SAMPLE HARRIS CALENDAR YEAR
APPENDIX E PLOT PLAN FOR LAC FACILITY
<PAGE>
NITROGEN SUPPLY SYSTEM
THIS AGREEMENT made and effective as of the 22nd day of Sept., 1992 (hereinafter
referred to as the "Effective Date").
BETWEEN: LIQUID AIR CORPORATION, MERCHANT GASES DIVISION, a corporation duly
incorporated under the laws of the State of Delaware, having its
main office at 2121 North California Boulevard, Walnut Creek,
California 94596 (hereinafter referred to as "LAC")
AND HARRIS CORPORATION, SEMICONDUCTOR SECTOR, a corporation duly
incorporated under the laws of the State of Delaware, having offices
at Melbourne, Florida (hereinafter referred to as "HSS").
WHEREAS, HSS requires substantial quantities of Nitrogen for use at HSS's Plant
Facilities, and
WHEREAS, under agreements executed previously LAC has installed, owned, operated
and maintained LAC Plant Facilities on the Leased Premises for the supply by LAC
to HSS of HSS's requirements of Nitrogen for HSS's Plant Facilities, and
WHEREAS, except for such obligations for payment for product and facility fees
as may be due on account thereunder, neither party is aware of any claim against
the other under the said previously executed agreements, and
3
<PAGE>
WHEREAS, under this Agreement, LAC is willing to continue to install, own,
operate and maintain the LAC Plant Facilities (including certain expansions
thereof to be made per this Agreement) for the continued supply by LAC to HSS of
HSS's said Nitrogen requirements,
NOW THEREFORE, the parties covenant and agree as follows:
1.0 - DEFINITIONS
As used in this Agreement:
1.1 HSS's Distribution System shall refer to the system of trunk and service
pipelines leading from the battery limits of the LAC Plant Facility HPH-18
(the #2 plant) and HPN-65 (the #1 plant) for the distribution of Nitrogen
to the various use points within HSS's Plant Facilities.
1.2 HSS's Plant Facilities shall mean the Mountaintop semiconductor operation
located at Mountaintop, Pennsylvania which is and shall be owned and
operated by HSS or any successor to HSS's interest in such plant,
including any alterations or expansion of such facilities made during the
term of this Agreement.
1.3 Completion Date shall mean eight (8) months after the Effective Date or an
earlier date if LAC notifies HSS that the expanded #1 plant is complete
and operational.
4
<PAGE>
1.4 Contract Year shall mean the period of twelve (12) consecutive months
beginning on the Completion Date, and every period of twelve (12)
consecutive months thereafter during the term of this Agreement.
1.5 Gaseous Nitrogen shall mean all quantities of Nitrogen produced in gaseous
form by the LAC Plant Facility, HPN-18 (#2 plant) and HPN-65 (#1 plant),
and made available for delivery to HSS.
1.6 Hauled-In Liquid Nitrogen shall mean all quantities of Nitrogen in liquid
form which is hauled in from off-site production facilities by LAC and
delivered to HSS.
1.7 LAC Plant Facility shall mean all equipment and facilities previously or
to be installed, owned and operated by LAC on the Leased Premises for the
production, storage, vaporization, compression, and delivery of Nitrogen
in accordance with this Agreement, including any alterations or expansion
of such facilities during the term hereof. The LAC Plant Facility shall be
capable of producing and compressing a maximum of eighteen thousand
(18,000) SCF per hour of Gaseous Nitrogen (plant #2) at ninety (90) PSIG
and an expected maximum after the #1 plant expansion (before the #1 plant
expansion the maximum is forty seven thousand (47,000) SCF per hour) of
sixty-five thousand + /- (65,000 + /-) SCF per hour of Gaseous Nitrogen at
ninety five (95) PSIG,(the "Plant Maximums") and shall include the Liquid
BackUp System.
5
<PAGE>
1.8 Leased Premises shall mean the property owned by HSS and leased to LAC
pursuant to the terms and conditions of a separate "Indenture of Lease"
attached hereto and made part hereof as Appendix A, on which property the
LAC Plant Facility are or will be located.
1.9 Liquid Back-Up System shall mean at the #2 plant a nine thousand (9,000)
and a six thousand (6,000) gallon liquid Nitrogen storage vessel with
vaporizers, associated piping, valves, and other related equipment capable
of vaporizing up to eighteen thousand (18,000) SCF per hour of Nitrogen.
At the #1 plant, after the plant expansion, the Liquid Back-Up System
shall mean two (2) eleven thousand (11,000) and a nine thousand (9,000)
gallon liquid Nitrogen storage vessel with vaporizers, associated piping,
valves, and other related equipment capable of vaporizing up to an
estimated sixty-five thousand +/- (65,000 +/-) SCF per hour of Nitrogen.
1.10 Major Equipment shall mean main air compressor, heat exchangers, and the
turbine expander, column, metallic structures, main breakers and motors.
1.11 Major Equipment Failure shall mean failure of piece of a Major Equipment
for reasons other than due to LAC's failure to perform reasonable
maintenance as specified in the vendors manuals or for reasons of LAC's
negligence.
1.12 Month or Monthly shall mean a Harris calendar month. Harris will always
pay 12 facility fee payments per legal calendar year. An example of a
Harris calendar for the year is in Appendix C.
6
<PAGE>
1.13 Nitrogen shall mean all quantities of all types of bulk liquid and gaseous
Nitrogen (except cylinder gases) used in the HSS Plant Facilities.
1.14 Point(s) of Delivery in the case of Gaseous Nitrogen shall be the point on
the Nitrogen pipelines immediately downstream of the gas-phase flow meters
at the point of connection between the LAC Plant Facility and the HSS's
Distribution System. In the case of Hauled-In Liquid Nitrogen, Point of
Delivery shall be the point or points at which said Nitrogen enters the
storage vessel being part of the Liquid Back-up System.
1.15 PSIG shall mean pounds per square inch gauge.
1.16 Standard Cubic Foot (SCF) shall mean the unit of measurement for all
purposes hereunder, representing that quantity of dry gas which would
occupy a volume of one cubic foot at seventy (70) degrees Fahrenheit
temperature and 14.696 pounds per square inch absolute pressure.
1.17 SCFH shall mean standard cubic feet per hour.
2.0 - CONSTRUCTION
2.1 Upon the Effective Date LAC shall commence its efforts to obtain and
maintain all permits and licenses necessary for the construction expansion
of the LAC #1 Plant Facility. HSS shall use all reasonable efforts to
assist LAC in obtaining and maintaining
7
<PAGE>
such permits and licenses. Should LAC, despite exerting every reasonable
effort, be unable to obtain all permits and licenses necessary for the
construction of the expansion of the LAC #1 Plant (HPN-65) as contemplated
hereunder within one hundred and twenty (120) days of the Effective Date,
LAC shall so notify HSS in writing, and those parts of this Agreement
relating to the plant expansion may then be suspended by either party by
written notice to the other at any time thereafter until such time as all
such permits and licenses have been obtained. Unless otherwise agreed upon
in writing by LAC and HSS, LAC shall not, during the period prior to
obtaining all necessary permits and licenses, undertake or commence any
work on the design, engineering, fabrication, procurement or construction
of the LAC Plant Facility.
2.2 Promptly upon LAC obtaining all necessary permits and licenses, LAC shall,
at its sole expense, make necessary and appropriate preparations for, and
thereafter proceed with design, engineering, fabrication, procurement, and
construction of the LAC #1 Plant Facility expansion upon the Leased
Premises. Liquid Air Engineering Corporation (LAEC) has recommended to
Liquid Air that the existing #1 plant functioning at 47,000 SCFH can be
expanded to an expected 65,000 +/- SCFH. LAC will use all reasonable
efforts to have the LAC #1 Plant Facility operational within eight months
of the Effective Date.
2.3 During the preparation for and construction of the expansion of the #1
Plant within the LAC Plant Facility and at all times as applicable during
the Term hereof as set forth in Section of this Agreement, LAC shall:
8
<PAGE>
a. Designate a competent superintendent who, on behalf of LAC, shall
have complete charge of all work on and operation of the LAC Plant
Facilities.
b. Comply with all laws, ordinances, codes, statutes and regulations
applicable to the construction, installation and operation of the
LAC Plant Facilities.
c. Indemnify and hold harmless HSS from all mechanics' and suppliers'
liens arising out of the labor and materials furnished by or to LAC
or its subcontractors in connection with the construction and
operation of the LAC Plant Facilities on the Leased Premises, except
for all such liens resulting from the acts of HSS, including its
employees, agents or assigns.
d. Take all reasonable precautions to keep the Leased Premises and the
lands contiguous thereto free from accumulation of waste materials
caused by LAC's activities hereunder (including those of LAC's
subcontractors), and upon completion of all work, remove all surplus
materials.
e. Take all reasonable precautions to protect HSS's property from
damage arising from acts of LAC, its subcontractors, or employees;
LAC shall not however, be responsible for any damage to HSS's
property caused by acts of HSS, its contractors, employees, agents
or assigns.
2.4 At all times during the Term of this Agreement (including the period of
construction of the #1 Plant within the LAC Plant Facility) HSS shall:
9
<PAGE>
a. make available to LAC space on the premises of the HSS's Plant
Facilities adjacent to the Leased Premises for use by LAC for
temporary storage of construction materials and equipment, on the
condition however, that all risk of damage to and loss of such
materials and equipment shall lie with LAC, except with respect to
damage or loss caused by the negligence or otherwise wrongful
conduct of HSS, its employees, agents or assigns.
b. Provide LAC free and clear access appropriate to LAC's use of the
Leased Premises via hard-surface roadways, from a public access
highway to the Leased Premises and on HSS's lands contiguous thereto
at all times without charge, obstruction, or delays and provide LAC
with rights-of-way across HSS's contiguous lands for installation
and operation of utilities and services necessary or appropriate to
the operation of the LAC Plant Facility on the Leased Premises.
c. Prevent unauthorized persons from tampering with, repairing, moving
or having access to the LAC Plant Facility.
d. Install and maintain, at its cost and expense, the HSS's
Distribution Systems as required for the safe and proper receipt and
handling of Nitrogen supplied by LAC hereunder.
e. Notify LAC immediately of any damage to or malfunction of any
component of the LAC Plant Facility whether real or apparent.
10
<PAGE>
f. Provide to LAC the additional property needed at the #1 Plant for
the new liquid nitrogen vaporization system as included in APPENDIX
A, EXHIBIT 1 DESCRIPTION OF LEASED PREMISES. Additionally, the plot
plan for #1 plant is included as APPENDIX E.
3.0 - PURCHASE, DELIVERY AND TITLE
3.1 As of the Effective Date, and continuing through the end of the Term as
set forth in Section 19.1 hereof, LAC will continue to sell and deliver to
HSS and HSS will continue to purchase and receive from LAC HSS's entire
requirements for Nitrogen (both bulk liquid and gaseous forms, except
cylinder gases) for use by HSS at its plant Facilities as follows:
a. Gaseous Nitrogen will be produced and delivered by LAC up to the
Plant Maximums (either, as applicable, the current Maximums as of
the Effective Date, or the increased Maximums as of the commencement
of operations of the expanded #1 Plant within the LAC Plant
Facility) during periods when the production and compression
equipment of the LAC Plant Facility are in normal operation to meet
HSS's instantaneous Gaseous Nitrogen requirements, which shall not
exceed the Plant Maximums.
b. Hauled-In Liquid Nitrogen will be withdrawn from the Liquid Back-Up
System, to the extent available, vaporized and supplied in its
gaseous form as follows:
11
<PAGE>
i. Whenever HSS's instantaneous gaseous Nitrogen requirements exceed
the actual instantaneous Gaseous Nitrogen capacity of either plant within
the LAC Plant Facility, and
ii. Whenever all or part of the LAC Plant Facility are inoperative.
c. Hauled-In Liquid Nitrogen such as liquid nitrogen for dewars to
supply other HSS's requirements as may exist and the price shall be
according to 4.1(b).
3.2 Delivery of all Nitrogen to HSS hereunder shall be made at the Points of
Delivery. Title and risk of loss to all Nitrogen supplied hereunder will
pass to HSS at said Points of Delivery. Risk of loss shall remain with LAC
until such time.
4.0 - PRICING
4.1 Subject to the provisions of Paragraph 5.0 hereunder, in consideration of
the costs LAC shall/has incurred to install, own, operate and maintain the
LAC Plant Facility (and of the additional costs that it will incur for
such purposes) for the delivery of Nitrogen to HSS, HSS shall pay to LAC
each and every month during the Term of this Agreement, notwithstanding
anything else to the contrary contained herein (including Paragraph 18.0)
in accordance with the following schedule:
(a) [REDACTED]
(b) For all quantities of Hauled-In Liquid Nitrogen delivered by LAC,
except for liquid nitrogen used within the LAC Facility for plant
operation and except for
12
<PAGE>
special price provided for in subpart (c) below which shall apply
during non-operation of Plant #1 in connection with the expansion
thereof, HSS shall pay LAC a unit price equal to LACs prevailing
Demand Schedule Price in effect for Liquid Nitrogen plus
transportation charges per LAC's current standard cartage rates from
LAC's nearest point of manufacture (This will not include the
facility fee listed in the demand schedule, as that charge is
covered in the facility fee for the #1 and #2 plants nor the demand
charge listed in the demand schedule). Said price shall be adjusted
by LAC from time to time to reflect changes in LAC's Schedule Price
and such new price shall become effective upon thirty (30) days
written notice to HSS. Upon HSS's request, LAC shall provide
documentation on a confidential basis that said pricing for
Hauled-In Liquid Nitrogen is consistent with the price charged to
other similar LAC customers, corrected for local conditions such as
energy and distribution costs and local supply and demand conditions
and local competitive factors.
(a) [REDACTED]
4.2 Payment terms for all amounts due and payable by HSS to LAC hereunder
shall be net twenty five (25) days from date of invoice. LAC shall have
the right to charge HSS late payment fees on any past due amount at an
interest rate of one percent (1%) per month. Any billing dispute must be
made in writing within twenty-five (25) days after the date of invoice;
otherwise, the amounts indicated on invoice shall be considered by both
parties to be final and binding.
13
<PAGE>
5.0 - PRICE ADJUSTMENTS
5.1 [REDACTED]
6.0 - OWNERSHIP
It is understood and Agreed that the LAC Plant Facilities, including any
improvements, additions, expansions, or modifications made thereto is and shall
remain absolutely the property of LAC at all times. HSS shall promptly remove
any liens, claims or encumbrances caused by HSS including their employees,
agents and contractors against the LAC Plant Facility.
7.0 - OPERATIONS - MAINTENANCE - IMPROVEMENTS
7.1 LAC shall, at its own cost, operate and perform such maintenance and
repair work on the LAC Plant Facility as required to maintain the facility
in good working order and condition. LAC shall perform such work and
operate the LAC Plant Facility in a prudent and efficient manner in
accordance with generally accepted industry standards.
7.2 Subject to written approval by HSS, and HSS's agreement therein to the
costs thereof, LAC shall make capital improvements and/or replace Major
Equipment of the LAC Plant Facility from time to time as may be (i)
requested by HSS, (ii) mandated by governmental authorities, (iii)
necessitated because of changes in HSS's requirements for product, or (iv)
required by the air quality surrounding the LAC Plant Facility. Such work
shall be performed by LAC for the account of HSS by the parties' agreeing
in advance to a fair and reasonable increase in the Monthly Facility Fee
as necessary to provide for any
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increases in LAC's operating cost (including, but not limited to, the
additional cost of taxes and insurance) and for the amortization over the
remaining term of this Agreement of all agreed upon costs of LAC to
perform such work. Should HSS not agree to pay said costs, LAC shall have
no obligation to run the Plant Facility if its operation is deemed by LAC
to be dangerous or in violation of any law or regulation.
7.3 While the purity specifications set forth in Paragraph 9.0 herein are
sufficient for the current needs of HSS, the parties hereto acknowledge
that LAC is currently capable of supplying Gaseous Nitrogen with greater
purity specifications than set forth in Paragraph 9.0. LAC also
recognizes, that HSS is in an industry which requires ever increasing
industrial gas purity, and consequently agrees to review any written
request by HSS to improve the purity of the Gaseous Nitrogen produced by
the LAC Plant Facility. Providing LAC is able to modify the LAC Plant
Facility to meet such additional purity requirements and HSS agrees to pay
for such additional costs as set forth in Paragraph 7.2, LAC shall so
inform HSS and, following completion of the plant modifications and
payment therefor by HSS, such specification shall become a part of this
agreement.
In the event that HSS requires a new facility to produce Gaseous Nitrogen
of significantly higher purity, HSS shall have the right and option to
contract for the purchase thereof from a new facility, and in connection
therewith, to terminate this agreement by making a payment to LAC
calculated in accordance with Section 19.2 hereof and by complying with
the following conditions:
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1. HSS shall issue a Request for Quotation ("RFQ") to LAC and such other parties
as HSS deems to be capable and qualified, requesting that such parties submit a
proposal for supplying HSS's Gaseous Nitrogen requirements in accordance with
the specifications and other terms and conditions specified in the RFQ. HSS
agrees to send LAC an identical copy of the RFQ including all amendments
thereof.
2. If LAC fails to submit a proposal within the period specified in any RFQ
(which period shall be at least 30 days), LAC shall be considered
non-responsive, and HSS shall be free to conclude a new supply agreement with
any other party pursuant to the RFQ which LAC failed to respond to. In such case
this agreement shall terminate upon the date the new supplier of Gaseous
Nitrogen commences delivery of Gaseous Nitrogen and HSS makes the payment set
forth in Paragraph 19.2.
3. If LAC submits a proposal and HSS deems LAC's proposal to be most favorable,
the parties shall enter into a new Nitrogen Supply Agreement based on the terms
of LAC's proposal and HSS shall make the payment set forth in paragraph 19.2
upon start up of the new facility.
8.0 - HSS'S DISTRIBUTION SYSTEM
HSS shall be responsible, at its cost, for maintaining HSS's Distribution System
in a condition suitable for receiving gaseous Nitrogen at working pressures up
to one hundred ten (110) PSIG for the #2 plant and up to one hundred twenty
(120) PSIG for the #1 plant at all times during the term of this Agreement. The
pre-expansion working pressures will be the same as the post expansion working
pressures.
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9.0 - SPECIFICATIONS
9.1 All Gaseous Nitrogen delivered by LAC hereunder at a flow rate not
exceeding eighteen thousand (18,000) SCFH for the #2 Plant and at a flow
rate not exceeding forty seven thousand (47,000) SCFH for the existing
pre-expansion Plant and an expected sixty five thousand + /- (65,000 + /-)
SCFH after the expansion for the #1 Plant, shall be in accordance with the
following specifications:
Nitrogen
--------
1. PURITY (Vol % Minimum) 99.999 (incl. inerts)
2. IMPURITIES
COMBINED O(2) & MOISTURE (PPM MAXIMUM) 1.0
HYDROGEN (PPM EXPECTED) 1.0
CARBON DIOXIDE (PPM MAXIMUM) 1.0
HYDROCARBON (AS METHANE) (PPM MAXIMUM) 1.0
CARBON MONOXIDE (PPM EXPECTED) 1.0
3. PRESSURE AT POINT OF DELIVERY (PSIG)#2 PLANT 90
PRESSURE AT POINT OF DELIVERY (PSIG)#1 PLANT 95
9.2 All Hauled-In Liquid Nitrogen shall comply with the Compressed Gas
Association's standards and LAC's standard specifications.
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9.3 The design and operation of the LAC Plant Facility by LAC hereunder is
predicated on the use of atmospheric air containing only commonly
occurring atmospheric contaminants and corrosive components. If due to new
or changed operations at HSS Plant Facilities, the purity of the
atmosphere at HSS Plant Facilities decreases below the atmosphere that is
defined in the typical air analysis attached hereto as Appendix D to such
an extent that, in the opinion of LAC, operation of the LAC Plant
Facilities is hazardous, then HSS will correct the condition, or if HSS
does not correct the condition, then LAC may alter the LAC Plant Facility
to eliminate the hazards and HSS will pay for any equipment needed by LAC
and the installation, operation and maintenance of same. To the extent
practicable, LAC will use the most cost effective and environmentally
compliant required means to eliminate the hazards.
10.0 - TAXES
10.1 Effective upon the Effective Date, HSS shall pay directly or shall be
obligated to reimburse to LAC upon demand the amount of any taxes (other
than net income or excess profit taxes or like taxes related to income or
excess profits), including but not limited to sales, excise and property
taxes, or charges and fees paid by LAC which may be imposed by the United
States Government or any state or local governmental authority upon, or
measured by (i) the acquisition cost or assessed value of equipment
installed as part of the LAC Plant Facility or (ii) the production,
delivery, or use of the equipment or (iii) the sale or use of Nitrogen
sold to HSS hereunder. It is self evident that Harris shall not have to
pay any tax twice.
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10.2 If at any time after the Effective Date any new net income or excess
profit taxes or like taxes related to income or excess profits is imposed
on LAC by any governmental authority or if the rate, provided by law, of
any existing net income or excess profit taxes or like taxes related to
income or excess profits is increased over current levels, then LAC shall
have the right to increase the monthly Facility Fee to HSS to the degree
that LAC can reasonably demonstrate to an independent auditor, acceptable
to both parties, that the profitability to LAC is directly decreased
thereby. LAC shall only have the right to one such increase during the
term of this Agreement and said increase shall become effective on the
date the notice is received by HSS.
11.0 - SHUTDOWNS
11.1 LAC will have the right, from time to time, to shut down the production
and compression facilities of the LAC Plant Facilities for such periods of
time as may be necessary for LAC to perform scheduled plant turnarounds
consistent with proper operation. LAC shall cooperate with HSS by
notifying HSS in advance and when possible to schedule shutdowns for
maintenance so as to coincide with HSS's period of least demand for
Nitrogen. During any such downtime period, LAC will deliver HSS's gaseous
Nitrogen requirements by vaporizing Hauled-In Liquid Nitrogen from the
Liquid Back-Up System.
11.2 In the event that downtime of the LAC Plant Facility, for reasons other
than force majeure, solely attributable to LAC, exceeds 350 hours for the
#1 plant and 350 hours for the #2 plant in any sliding two year period of
the Agreement, commencing with the Completion Date, then during any
downtime exceeding 350 hours per plant in any said
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two year period, LAC's price to HSS for vaporized Hauled-In Liquid
Nitrogen, up to 47,000 SCFH for Plant #1 before the expansion thereof is
made operational and 65,000 SCFH after it is made operational, and up to
18,000 SCFH for Plant #2, shall be equal to the average power cost to HSS
for the production of a like quantity of Gaseous Nitrogen at the LAC Plant
Facility during the most recent on-stream month. All other conditions of
the Agreement including payment of the monthly Facility Fees shall remain
in full force and effect. However any monthly Facility Fee adjustment
called for and pursuant to Paragraph 5.1 shall also be made during such
downtime periods. Said price adjustment(s) shall be the sole remedy of HSS
for any downtime. Downtime due to the #1 plant rebuild is not to be
figured in the 350 hrs in any two year period.
12.0 - METERING
LAC, at its expense, will install and maintain metering equipment as part of the
LAC Plant Facility to measure the quantity of Gaseous Nitrogen delivered to HSS.
HSS shall have the right, at its cost and upon reasonable notice to LAC, to test
the accuracy of the meters at any time. Deliveries of Hauled-In Liquid Nitrogen
shall be measured by LAC, using the method it regularly uses for the type of
delivery made.
13.0 - UTILITIES
HSS shall be responsible for providing to the battery limits of the Leased
Premises, at no expense to LAC, all electrical power, cooling water, steam and
other utilities necessary for the construction, operation and maintenance of the
LAC Plant Facilities by LAC in accordance with
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the terms hereof. Such utilities as needed by LAC, which are the responsibility
of HSS, are set forth and attached on Appendix B.
14.0 - INSURANCE
14.1 During the term of this Agreement, LAC and HSS shall each purchase and
maintain at their respective expense a General Liability insurance policy,
for such amounts as they may consider adequate to protect their respective
interests with the following minimums:
a. Comprehensive General and Automobile Liability -
Bodily Injury and Property Damage $1,000,000 per occurrence Combined
Single Limit;
b. Worker's Compensation and Employer Liability within statutory
limits.
14.2 LAC shall take and maintain at its expense over the term of this Agreement
Fire and `Multiple Risk insurance coverage on the LAC Plant Facility. The
terms of such insurance coverage shall be and remain consistent with the
insurance coverage LAC typically carries on its own plants.
15.0 - DEFAULT
15.1 If a voluntary or involuntary petition is filed by or against LAC under
any bankruptcy law (including a petition for reorganization, extension of
payment, composition or adjustment of liabilities), or if a receiver
should be appointed for LAC, or if any adjustment or execution is levied
against all or part of the property of LAC, or if LAC
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shall default in the performance of any material covenant to be performed
by it under this Agreement and, within thirty (30) days after written
notice thereof from HSS, shall not cure such default, bankruptcy, levy, or
receivership within thirty days (or, in the case of non-monetary defaults
which are of such type that they cannot reasonably be cured within thirty
days, shall not commence to cure such default within thirty (30) days and
thereafter diligently pursue such cure), HSS may, without prejudice to any
other right or remedy it might have, terminate this Agreement by written
notice and the payments set forth in Paragraph 4.0 and 5.0 herein shall
cease as of the date set for termination in said written notice.
15.2 If a voluntary or involuntary petition be filed by or against HSS under
any bankruptcy law (including a petition for reorganization, extension of
payment, or adjustment of liabilities), or if a receiver should be
appointed for HSS, or if an adjustment or execution is levied against all
or part of the property of HSS, or if HSS shall default in the performance
of any material covenant to be performed by it under this Agreement,
including but not limited to HSS's obligation to make certain fixed
monthly Facility Fee payments to LAC as set forth in Paragraph 4.1(a), and
within thirty (30) days after written notice thereof from LAC, shall not
cure such default, bankruptcy, levy, or receivership within thirty days
(or, in the case of non-monetary defaults which are of such type that they
cannot reasonably be cured within thirty days, shall not commence to cure
such default within thirty (30) days and thereafter diligently pursue such
cure), LAC may, without prejudice to any other right or remedy it might
have and without relieving HSS of its obligations to make fixed monthly
Facility Fee payments to LAC as set forth in Paragraph 4.1 (a) until the
expiration of the term hereof, terminate this Agreement with
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the exception of the Indenture of Lease which shall continue at LAC's
option until the earlier of the date LAC removes its Plant Facility from
the Leased Premises or its stated expiration date.
15.3 Should LAC be in material default under this Agreement and should this
Agreement be terminated by HSS as provided elsewhere herein, then the
Indenture of Lease attached hereto as Appendix A shall be subject to
termination or shall terminate, as the case may be.
15.4 LAC shall have the right to terminate this Agreement at any time on notice
to HSS in the event of any termination of the Indenture of Lease Agreement
attached hereto.
16.0 - WARRANTIES
LAC MAKES NO GUARANTEE OR WARRANTY OF ANY KIND, EXPRESS OR IMPLIED, AND
SPECIFICALLY BUT WITHOUT LIMITING THE GENERALITY OF THE FOREGOING MAKES NO
WARRANTY OF MERCHANTABILITY OR OF FITNESS FOR ANY PARTICULAR PURPOSE, EXCEPT
THAT THE NITROGEN DELIVERED HEREUNDER SHALL CONFORM TO THE SPECIFICATIONS HEREIN
PROVIDED FOR. LAC assumes no responsibility for events resulting from the use or
non-suitability for any purpose of any Nitrogen delivered hereunder.
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17.0 - INDEMNIFICATION
17.1 HSS and LAC covenant and agree, subject to 17.2 below, to indemnify and
hold one another harmless from and against any and all claims, losses,
demands actions or causes of action, including any and all cost or expense
of any nature or kind related thereto, suffered by or brought against LAC
or HSS, as the case may be, resulting from the negligence of the
indemnifying party, their employees, agents or assigns and arising from or
incidental to the maintenance and operation of the LAC Plant Facility, in
the case of LAC's indemnity obligations, and HSS's Plant Facilities in the
case of HSS's indemnity obligations, except to the extent that any such
claim, loss demand, action or cause of action results from or is
attributable to the negligent acts or omissions of HSS or LAC, its
employees, agents or assigns, as the case may be.
17.2 Notwithstanding anything else to the contrary contained in this Agreement,
neither LAC nor HSS shall be liable to each other for SPECIAL, INDIRECT,
CONSEQUENTIAL, OR INCIDENTAL DAMAGES, howsoever occurring.
18.0 - FORCE MAJEURE
18.1 If the performance of the obligations hereunder of either party (other
than the obligations to make payment) are prevented, delayed, restricted,
or interfered with by reason of:
a. Act of God, fire, explosion, strike, lockout, labor dispute,
casualty or accident, lack or failure of transportation facilities,
epidemic, cyclone, flood, earthquake, drought, lack or failure of
sources of supply of labor, power, cooling water or
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materials, Major Equipment failure (LAC will maintain all equipment
according to vendor specifications and industry accepted standards),
environmental contamination (except if environmental contamination
is caused by the fault of the party claiming force majeure. LAC will
follow all industry accepted standards for environmental
considerations); or,
b. War, revolution, civil insurrection, acts of public enemies,
blockage or embargo; or,
c. Any law, order, proclamation, regulation, ordinance, demand or
requirement of any government or of any subdivision, authority, or
representatives of any government, whether subsequently declared
valid or invalid; or,
d. Any other causes similar or dissimilar to those above enumerated
beyond the reasonable control of the party invoking force majeure,
provided however, adverse economic or business conditions shall not
be considered reasons of force majeure hereunder, then the party so
prevented, provided it gives prompt written notice to the other
party, shall be excused from all performance of its obligations
hereunder to the extent its obligations are so prevented, delayed,
interfered with, or restricted as a result of such force majeure
event. Neither party shall be required to make any concession or
grant any demand or request in order to bring to an end any strike
or other concerted act of workers, but each party shall exert its
best efforts to continue in the performance of its obligations under
this
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Agreement, and to bring the period of force majeure to an end as
expeditiously as possible.
18.2 If for any period a force majeure covered by Paragraph 18.1 reduces or
fully interrupts the production, compression, or delivery of Gaseous
Nitrogen from the LAC Plant Facilities, LAC shall use its best effort to
supply and deliver HSS's Nitrogen requirements to the extent necessary by
means of vaporized Hauled-In Liquid Nitrogen in accordance with Paragraph
3.1.
19.0 - TERM
19.1 The Term of this agreement shall (as indicated above) begin on the
Effective Date and, except as otherwise herein specifically provided,
shall continue for an Initial Period beginning on the said Effective date
and continuing until the end of 120th month following the Completion Date.
After the end of the said 120th month the Term shall further continue for
one year terms unless written notice of termination is given by either
party at least twelve (12) months prior to the end of the said 120th month
or of any anniversary thereof. It is further understood, however, that if,
as of August 15, 1993, the expanded #1 Plant has not been completed and
made operational (unless its not having been completed or become
operational is for reasons of force majeure, in which case, at LAC's
option, the August 15th, 1993 date shall be further extended by the period
of force majeure), HSS or LAC shall have the right, by notification of the
other party within 30 days following the August 15th, 1993 date (such
notice to be effective within 12 months thereafter) to terminate this
Agreement insofar as it relates to Plant #1.
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19.2 HSS shall have the option of terminating this agreement subject to the
conditions set forth in paragraph 7.3, at any time after two (2) years
from the Completion Date and prior to the expiration of the Initial Period
hereof, by giving LAC at least a twelve (12) months prior written notice
of termination. Upon the effective date of such termination and as a
condition thereof, HSS shall pay to LAC a lump sum cancellation fee
(prorated for fractional parts of a year) calculated as follows:
Residual Life Cancellation Fee Expressed As
of the The Monthly Facility
Initial Period Fee Multiplied By
-------------- -----------------------------
8 Years 30 Months
7 Years 26 Months
6 Years 22 Months
5 Years 17 Months
4 Years 14 Months
3 Years 10 Months
2 Years 5 Months
1 Year 3 Months
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20.0 - ASSIGNMENT
Neither LAC nor HSS shall assign this Agreement or any rights or obligations
contained herein without the prior written consent of the other party, which
consent shall not be unreasonably withheld; provided however, that: (i) without
requesting HSS's approval, LAC may assign this Agreement or all or any part of
the payments due it hereunder to any subsidiary or affiliate, or to any bank,
leasing company, insurance company, investment syndicate, or other, similar
financial entity, although in either case LAC shall remain liable to HSS for all
of its obligations hereunder and payment to an assignee of any amount hereunder
shall be subject to set off or recoupment for any present or future claim(s)
which HSS may have against LAC, and (ii) without requesting LAC's approval, HSS
may assign this Agreement in its entirety to any financially responsible, wholly
owned subsidiary of HSS operating HSS's Plant Facilities provided that HSS shall
remain primarily liable to LAC for all obligations hereunder. LAC has the right
to require that HSS's obligations hereunder shall inure to and be binding upon
any successor in interest to HSS's Plant Facilities.
21.0 - NOTICE
All notices, orders, statements, reports, payments or other communications
between the parties hereto required or made necessary by the terms of this
Agreement shall be in writing and shall be considered as having been delivered
on the date of delivery if delivered personally or on the third day after
mailing if sent by regular or certified mail, to:
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HARRIS CORPORATION SEMICONDUCTOR SECTOR
125 Crestwood Road
Mountaintop, Pennsylvania 18707-2189
Attention: Purchasing Manager
COPY: Sector Counsel
LIQUID AIR CORPORATION
Merchant Gases Division
2121 North California Boulevard
Walnut Creek, California 94596
Attention: Business Manager, On-Site Gases
COPY: Vice President - Legal and Corporate Affairs
22.0 - GENERAL
22.1 This Agreement between the parties hereto shall supersede all previous and
contemporaneous writings, oral understandings and negotiations with
reference to the subject matter hereof, and replaces and supersedes the
following agreements between the parties (and the related indentures of
lease thereunder) except for moneys owing on account by HSS to LAC for
product purchases (including Facility Fees but not termination fees for
the #2 plant contract replaced by this contract) prior to termination of
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the previous agreements. Neither party is aware of any claim that it has
or is intending to assert against the other under the said previous
agreements.
- - - Agreement entitled Nitrogen Supply Agreement dated March 28, 1990 relating
to #2 plant:
- - - Agreement entitled Nitrogen Supply Agreement dated January 1st, 1987
relating to #1 plant.
22.2 Should any provision of this Agreement become unenforceable, invalid or be
declared illegal, then that provision shall be considered severed from the
rest of this Agreement and shall not affect the validity of the remainder
of this Agreement.
22.3 It is agreed that LAC is an independent contractor for the performance of
all work and the supply of all products and services under this Agreement
and that for accomplishment of the desired result with respect to the
performance of all work and supply of the products and services hereunder.
HSS is not to exercise any control over LAC's methods or means of
accomplishment, or independent contractors, except as specifically set
forth herein.
22.4 This Agreement can be modified only by written instrument executed by duly
authorized representatives of both LAC and HSS.
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22.5 This Agreement shall be governed and construed and the rights of the
parties hereto shall be enforced according to the laws of the State of
Pennsylvania.
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IN WITNESS WHEREOF, the parties hereto have signed before the witnesses as of
the date and year first above written.
HARRIS CORPORATION SEMICONDUCTOR SECTOR
/s/ Howard E. Rothman PER: [illegible]
- - ------------------------------------ -----------------------------------
WITNESS:
TITLE: VP - General Manager,
Manufacturing
---------------------------------
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LIQUID AIR CORPORATION
MERCHANT GASES DIVISION
[illegible] PER: [illegible]
- - ------------------------------------ -----------
WITNESS:
TITLE: President - Merchant Gases
---------------------------------
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APPENDIX A
INDENTURE OF LEASE
THIS LEASE, is made as of the _____ day of __________, 19___, between HARRIS
CORPORATION SEMICONDUCTOR SECTOR, a corporation under the laws of the State of
Delaware, having offices at Melbourne, Florida, hereinafter called "Lessor" and
LIQUID AIR CORPORATION, a corporation duly incorporated under the laws of the
State of Delaware with a place of business at 2121 North California Boulevard,
Walnut Creek, California 94596, hereinafter called "Lessee".
WITNESSETH
WHEREAS:
The Lessor has entered into an agreement dated __________, 19___, with the
Lessee providing for the on-site supply of Nitrogen by the Lessee to the Lessor
("Nitrogen Supply Agreement").
Whereas the said Nitrogen Supply Agreement replaces and supersedes two similar
supply agreements between Lessee and Lessor, and
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Whereas each of the said previous supply agreements included within it an
Indenture of Lease covering premises occupied by Lessee in connection with its
production and supply activities under the said supply agreements, and
Whereas Lessor and Lessee wish to continue through this one, new Indenture of
Lease, without interruption, the lease relationship established under the
aforesaid prior Indentures of Lease
NOW, THEREFORE, the parties hereto agree as follows:
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1.0 - AGREEMENT TO LEASE
The Lessor hereby agrees to lease to the Lessee the Property described in
Exhibit I (comprising the land previously leased plus a small addition thereto)
hereof in consideration of payment of One Dollar ($1.00) by Lessee, receipt of
which is hereby acknowledged by Lessor. This lease supersedes and replaces the
Indentures of Lease referred to hereinabove and continues the lease relationship
set forth therein. The Lessee hereby accepts the leased premises "as is" having
made the rental payment set forth herein.
2.0 - TERM
The initial term of this Lease shall commence on the Effective Date of the
Nitrogen Supply Agreement and continue until the end of the one hundred
twentieth month following the Completion Date referred to in the said Nitrogen
Supply Agreement ("Initial Term"), except as provided in Paragraph 7.3 or 19.2
of the said Nitrogen Supply Agreement. Subject to the Initial Term, the term of
this Lease shall be extended for such further periods as may be necessary to
conform with any extensions of the Nitrogen Supply Agreement.
3.0 - LESSEE'S IMPROVEMENTS
3.1 The Lessor and the Lessee agree that the Property shall be used by the
Lessee to operate and maintain thereon a Nitrogen generating facility and
associated equipment for the purpose of supplying Lessor with gaseous
Nitrogen. Lessee is prohibited from using the premises for anything other
than the purpose stated herein. Lessee will obtain any
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necessary permits or licenses required to conduct its business on the
property described in this Agreement and agrees to comply with all laws
applicable to its manner of use.
3.2 The Lessor acknowledges and covenants that the Nitrogen generating
facility placed on the Property including without limitation any and all
buildings, machinery, storage tanks and equipment, and all supplies and
spare parts stored on the Property (the Nitrogen generating facility and
all supplies and spare parts thereof are collectively referred to
hereinafter as "Lessee's Improvements") shall be and shall remain at all
times personal property of the Lessee without regard to the manner of
affixation of the Lessee's Improvements. The Lessee's Improvements include
those already in existence and in place (which Lessee may continue to
locate and operate on the Property notwithstanding the superseding of the
prior leases pursuant to which the said Lessee Improvements were placed on
the Property) by Lessee in connection with the intended expansion thereof
by Lessee.
3.3 The Lessor shall permit the Lessee to erect a fence around the property
and to post one or more signs in conspicuous places on the property and on
the Lessee's Improvements identifying the Lessee's Improvements as
belonging to the Lessee. Without limiting the generality of the foregoing,
the Lessee may firmly affix to any Lessee's Improvement on the Property
one or more decalcomania or metal plates showing the Lessee as the owner.
3.4 The Lessor will not deliver or indirectly create, incur, assume or suffer
to exist any mortgage, security interest, pledge, lien, charge,
encumbrance or claim on or with respect to Lessee's leasehold interest or
Lessee's Improvements, title thereto or any interest
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therein, and the Lessor shall promptly at its own expense, take such
action as may be necessary duly to discharge any such mortgage, security
interest, pledge, lien, charge, encumbrance or claim, except where such
relates to fixtures which are part of the heating, plumbing and sewage
disposal, water supply, air conditioning and power and lighting systems,
none of which will, in the considered judgment of Lessor significantly
interfere with Lessee's use of the LAC Plant Facility. If the Lessor fails
to promptly discharge any such mortgage, security interest, pledge, lien,
charge, encumbrance of claims, except where such relates to fixtures which
are part of the heating, plumbing and sewage disposal, water supply, air
conditioning and power and lighting systems, the Lessor shall deliver to
the Lessee a payment bond, in form and substance satisfactory to the
Lessee, covering the claim, failing which Lessee shall secure same for
cost of Lessor.
3.5 The Lessor covenants that it will at all times waive any claim it may have
against the Lessee's Improvements, including without limitation any claim
based on the laws of the state in which the Lessee's Improvements are
fixtures and form a part of the realty.
3.6 The Lessor shall not permit any indebtedness of the Lessor to be secured
by an interest in the Lessee's Improvements or the Property and shall
indemnify and save harmless the Lessee from any loss, cost, damage, injury
or expense suffered by reason of any claim of third persons whomsoever
(whether as purchaser, secured party or otherwise) who assert rights in
the Lessee's leasehold interest, the Property, or the Lessee's
Improvements.
3.7 The Lessee will not directly or indirectly create, incur, assume or suffer
to exist any mortgage, security interest, pledge, lien, charge,
encumbrance or claim on or with respect
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to the Property, or, title thereto or any interest therein, and the Lessee
shall promptly at its own expense, take such action as may be necessary
duly to discharge any such mortgage, security interest, pledge, lien,
charge, encumbrance or claim. If Lessee fails to promptly discharge any
such mortgage, security interest, pledge, lien, charge, encumbrance of
claims, the Lessee shall deliver to the Lessor a payment bond, in form and
substance satisfactory to the Lessor, covering the claim, failing which
Lessor shall secure same for cost of Lessee.
3.8 The Lessee shall not permit any indebtedness of the Lessee to be secured
by an interest in the Property and shall indemnify and save harmless the
Lessor from any loss, cost, damage, injure or expense suffered by reason
of any claim of third persons whomsoever (whether as purchaser, secured
party or otherwise) who assert rights in the Property.
4.0 - UTILITIES AND TAXES
4.1 The Lessor agrees to pay for the installation, maintenance and cost of all
utilities necessary for the Lessee's operation of the Lessee's LAC Plant
Facility on the Property as set forth in the Nitrogen Supply Agreement.
4.2 The Lessor shall pay or cause to be paid all taxes, assessments
(including, but not limited to, all assessments for public improvement or
benefit), rates and charges for public utilities, excises, levies, license
and permit fees and other governmental charges, general and special,
ordinary and extraordinary, of any kind and nature whatsoever,
(hereinafter referred to collectively as the "Taxes") which at any time
during the term of this Lease
39
<PAGE>
may have been or may be assessed, levied, imposed upon or become due or
payable out of, or in respect of, or become a lien on, the Property or the
Lessee's Improvements, or both, or this Lease. If the Lessor shall fail to
pay any Taxes when due, the Lessee may pay such Taxes then due provided
Lessee has furnished Lessor a minimum of thirty days notice to pay such
taxes and the Lessor shall promptly reimburse Lessee. Nothing herein is
intended to impose upon the Lessee an obligation to pay any such Taxes.
5.0 - ACCESS
The Lessor hereby grants the Lessee for the term of this Lease and any extension
or renewal thereof, a non-exclusive, irrevocable right-of-way over existing
roads on Lessor's property for the purpose of providing ingress and egress to
and from the Property for the Lessee and any of its employees, contractors,
agents, representatives, business visitors, vehicles, equipment, and pipelines.
Lessee agrees that its employees, agents, and representatives shall observe and
comply with all safety rules and regulations established by Lessor and delivered
to Lessee while such individuals are on or in the vicinity of Lessor's property.
6.0 - TERMINATION
6.1 Except as provided in the Nitrogen Supply Agreement, neither party shall
terminate this Lease during the period the Nitrogen Supply Agreement
remains in force. The Lessor further covenants that during the term of
this Lease it shall not disturb the quiet enjoyment of the Lessee on the
Property, provided that Lessee is not in default under this Agreement.
40
<PAGE>
6.2 Upon expiration or termination of this Lease, the Lessee shall remove the
Lessee's Improvements from the Property as soon as practical but no later
than twelve (12) months after such expiration or termination date, and
shall surrender the Property to the Lessor in a generally level and clear
condition.
6.3 If the Lessee fails to remove the Lessee's Improvements after twelve (12)
months of the expiration or termination of this Lease, as applicable, the
Lessor may at its option remove the Lessee's Improvements upon giving ten
(10) days' notice to the Lessee and at the expense of the Lessee and such
expense shall become due and payable upon presentation of satisfactory
evidence of such expense having been incurred by Lessor.
6.4 If the Property and the Lessee's Improvements are taken by right of
eminent domain or other authority of law during the term of this Lease,
this Lease shall immediately terminate. Any compensation paid for the
taking of the Property and the Lessee's Improvement shall be prorated in
the ratio of the value of the Property to the value of the Lessee's
Improvements and that amount attributable to the Lessee's Improvements
shall be paid promptly to the Lessee.
7.0 - GOVERNING LAW
This Lease shall be governed by and construed under the laws of the State of
Pennsylvania.
41
<PAGE>
8.0 - NOTICES
Any notice required or permitted by the terms of this Lease or otherwise shall
be deemed to have been duly given if securely sealed in a postpaid envelope and
mailed by certified mail, return receipt requested, and if to be given to the
Lessor, addressed as follow:
HARRIS CORPORATION SEMICONDUCTOR SECTOR
125 Crestwood Road
Mountaintop, Pennsylvania 18707-2189
Attention: Purchasing Manager
and, if to be given to the Lessee, addressed as follows:
LIQUID AIR CORPORATION
Merchant Gases Division
2121 North California Boulevard
Walnut Creek, California 94596
Attention: Vice President - Legal and Corporate Affairs
Any party may change its address by giving notice in the manner provided herein.
9.0 - GENERAL
9.1 This Lease shall not be assignable by either party, except in Accordance
with the Nitrogen Supply Agreement.
42
<PAGE>
9.2 Subject to Paragraph 9.1, the terms, covenants and conditions of this
Lease shall be binding upon and shall be enforceable by the Lessor and the
Lessee and their respective successors and assigns.
9.3 If any one or more of the provisions contained in this Lease shall be
invalid, illegal or unenforceable in any respect under any applicable law,
the validity, legality and enforceability of the remaining provisions
contained herein shall not in any way be affected or impaired.
9.4 This Lease shall not be amended, altered or changed except by written
agreement signed by both parties.
9.5 The Lessor and the Lessee agree that this Lease may be recorded with the
recorder's office for the Mountaintop, Pennsylvania, area at any time
after the date hereof, and the parties agree to execute at the request of
either party of all other documents or instruments necessary or
appropriate to perfect the Lessee's rights and interest hereunder and/or
for registration of this Lease.
9.6 This lease is part of the Nitrogen Supply Agreement and in the event of
conflict, the terms of the Nitrogen Supply Agreement shall prevail.
IN WITNESS WHEREOF, the parties hereto have caused this Lease to be duly and
properly executed as of the day and year first above written.
43
<PAGE>
HARRIS CORPORATION SEMICONDUCTOR SECTOR
PER:
- - ------------------------------------ -----------------------------------
ATTEST: LESSOR
TITLE:
---------------------------------
LIQUID AIR CORPORATION
MERCHANT GASES DIVISION
PER:
- - ------------------------------------ -----------------------------------
ATTEST: LESSOR
TITLE:
---------------------------------
ADD ACKNOWLEDGEMENTS
44
<PAGE>
EXHIBIT I TO APPENDIX A
METES AND BOUNDS DESCRIPTION OF PROPERTY
Note: Exhibit I to Appendix A consisting of the metes and bounds of the
Property covered by the Indenture of Lease as depicted on Appendix E to the
Product Supply Agreement, shall be furnished by Buyer to Seller in form
satisfactory to Seller, by no later than the 30th day following the Effective
Date of the Agreement. If Buyer fails to do so, Seller shall have the right, in
addition to all other rights it then has, to terminate the Product Supply
Agreement for default, in accordance with Section 15.0 thereof. Upon receipt of
the said Exhibit I by Seller from Buyer, Seller shall be authorized to attach it
to the original of the Indenture of Lease for use in making recordation thereof.
Agreed:
SELLER - Liquid Air Corporation
By
-----------------------------------
BUYER - Harris Corporation Semiconductor Sector
By
-----------------------------------
45
<PAGE>
ACKNOWLEDGEMENT
State of California )
) ss.:
County of Contra Costa )
On this _____ day of September, 1992, before me, the undersigned notary,
personally appeared _________________________ who acknowledged herself/himself
to be the an officer, namely the _________________________ of Liquid Air
Corporation, and that, as such, she/he, being authorized to do so, executed the
foregoing Indenture of Lease for the said corporation for the purposes therein
contained.
In witness whereof, I have sent my hand and official seal hereto.
X
----------------------------------------
Name
-----------------------------------
Notary Public, Contra Costa County
State of California
Seal of Notary
Date________________________________
46
<PAGE>
ACKNOWLEDGEMENT
State of Florida )
) ss.:
County of Brevard )
On this _____ day of September, 1992, before me, the undersigned,
personally appeared Jeffrey D. Peters who acknowledged himself to be an officer,
namely the Vice President-General Manager Manufacturing of Harris Corporation,
Semiconductor Sector, and that, as such, he being authorized to do so, executed
the foregoing Indenture of Lease for the said corporation for the purposes
therein contained.
In witness whereof, I have set my hand and official seal hereto
----------------------------------------
Name: Daniel J. Heneghan
Title: Controller and Assistant Secretary
Harris Corporation
Semiconductor Sector
Seal of Notary
WITNESS my hand and seal this ___ day of __________ 1992.
Signed _____________________________
My Commission Expires:
47
<PAGE>
ACKNOWLEDGEMENT
State of Pennsylvania )
) ss.:
County of ________________ )
On this _____ day of June, 1992, before me, the undersigned, personally
appeared __________________________ who acknowledged herself/himself to be the
an officer, namely the ____________________________ Harris Corporation, and
that, as such, she/he, being authorized to do so, executed the foregoing
Indenture of Lease for the said corporation for the purposes therein contained.
In witness whereof, I have sent my hand and official seal hereto.
X
----------------------------------------
Name
-----------------------------------
Title
----------------------------------
Seal of Notary
Date _______________________________
48
<PAGE>
APPENDIX B
ESTIMATED UTILITY REQUIREMENTS
HSS shall supply LAC Plant Facility with its entire Plant design utility
requirements at no charge to LAC. Said utilities shall be delivered to the
battery limits of the LAC Plant Facility. The estimated requirements at the
plant design conditions are as follows:
A. ELECTRIC POWER
1. 480 volt, 3 phase, 60 cycle
2. Expected Total Operating Demand:
#2 facility = 195 KW for 18,000 SCFH
#1 facility = 705 KW for 65,000 SCFH
B. COOLING WATER
#2 Plant = 10 gallons per minute
#1 Plant = 6.0 gallons per minute
C. POTABLE WATER AND SEWAGE
Hookups to be provided by HSS for fire fighting capability and personnel
requirements. Expected sewer load is nominal.
49
<PAGE>
APPENDIX C
SAMPLE HARRIS CALENDAR YEAR
50
<PAGE>
APPENDIX "D"
Normal Atmospheric Air
Gas Concentration
Nitrogen 78.11%
Oxygen 20.96%
Argon 0.93%
C0(2) 350 ppm
Neon 18 ppm
Helium 5 ppm
Methane 2 to 6 ppm
Hydrocarbons (C2 +) <2 ppm
Nitrogen Oxides <1 ppm
Carbon Monoxide <1 ppm
Krypton 1.1 ppm
Hydrogen 0.3 to 0.5 ppm
Ozone, 0(3) <0.2 ppm
Xenon 0.09 ppm
Water according to ambient humidity
S0(x) Nil
51
<PAGE>
APPENDIX E
Plot Plan for LAC Facility
52
EXHIBIT 10.28
NITROGEN SUPPLY SYSTEM AGREEMENT
AMENDMENT NUMBER 1
THIS AMENDMENT made and effective as of the 15th day of September, 1996
(hereinafter referred to as the "Amended Effective Date"),
BETWEEN: AIR LIQUIDE AMERICA CORPORATION, successor to LIQUID AIR
CORPORATION, MERCHANT (GAS DIVISION, a corporation duly incorporated under the
laws of the State of Delaware, having its main office at 2700 Post Oak Street,
Houston, Texas 77056 (hereinafter referred to as AIR LIQUIDE). References in
this Amendment and in the Agreement to Liquid Air and "LAC" shall mean "Air
Liquide".
AND HARRIS CORPORATION, SEMICONDUCTOR SECTOR, a corporation duly
incorporated under the laws of the State of Delaware, having offices at 2401
Palm Bay Road, Palm Bay, Florida (Hereinafter referred to as "HSS")
WHEREAS, HSS AND AIR LIQUIDE entered into that certain NITROGEN SUPPLY
SYSTEM AGREEMENT dated as of the 22nd day of September, 1992 (hereinafter
referred to as the Agreement); and
WHEREAS, HSS is presently expanding the HSS Plant Facilities (as that term
is defined in the Agreement); and
WHEREAS HSS to increase the capacity of Gaseous Nitrogen it wishes to
purchase from AIR LIQUIDE in accordance with Paragraph 3.1 of the Agreement: and
WHEREAS, HSS also desires to purchase Compressed Dry Air from AIR LIQUIDE;
and
WHEREAS, AIR LIQUIDE desires to increase its delivery capacity of Gaseous
Nitrogen by installing Plant #3 (see description below) and pursuant to
Paragraph 3.1 of the Agreement sells to HSS its entire requirement for Nitrogen;
and
WHEREAS, AIR LIQUIDE is desirous of adding the capacity to provide HSS
with Compressed Dry Air,
NOW THEN, in order to bring Plant #3 and the Compressed Dry Air System
under the coverage of the Agreement, AIR LIQUIDE and HSS agree to amend and
supplement the Agreement in the manner as mutually agreed and set forth below:
<PAGE>
I. Definitions
As used in the Amendment, all of the defined terms as used in the
Agreement shall have the same meaning as used in the Agreement except and
to the extent modified below:
1. HSS's Distribution System shall also refer to the system of trunk
and service pipelines leading from the battery limits of the AIR
LIQUIDE Plant Facility for the distribution of Nitrogen to the
various use points within HSS's Plant Facilities.
2. Completion Date shall mean with respect to Plant #3 and with respect
to the Compressed Dry Air System December 31, 1996 (or such later
date as may result from events beyond Air Liquide's reasonable
control) or an earlier date, if AIR LIQUIDE notifies HSS that Plant
#3 and the Compressed Dry Air System is available, operating and on
line.
3. Compressed Dry Air System shall mean all equipment and facilities to
be installed, owned and operated by AIR LIQUIDE on the Leased
Premises capable of producing compressed dry air meeting the
specifications set forth on Exhibit A to this Amendment.
4. Plant #3 shall mean the new nitrogen generator (APSA6 type) capable
of producing 40,000 SCF per hour of Gaseous Nitrogen.
5. Gaseous Nitrogen shall mean all quantities of Nitrogen produced in
gaseous form by the AIR LIQUIDE Plant Facility; HPN-l 8 (Plant #2).
HPN-65 (Plant #1) and APSA 6 (Plant #3) and made available for
delivery to HSS.
6. AIR LIQUIDE Plant Facility shall mean all equipment and facilities
previously or to be installed, owned and operated by AIR LIQUIDE on
the Leased Premises for the production, storage, vaporization,
compression and delivery of Nitrogen in accordance with the
Agreement, including any alteration or expansion of such facilities
during the term hereof. The AIR LIQUIDE Plant Facility shall be
capable of producing and compressing a maximum of eighteen thousand
(18,000) SCF per hour of Gaseous Nitrogen (Plant #2) at ninety (90)
PSIG, sixty-five thousand (65,000) SCF per hour of Gaseous Nitrogen
(Plant #1) at ninety-five (95) PSIG and forty thousand (40,000) SCF
per hour of Gaseous Nitrogen (Plant #3) at ninety (90) PSIG, (the
"Plant Maximums") and shall include the Liquid Back-up system and
the Compressed Dry Air System.
II. Construction
A. Upon the Amended Effective Date AIR LIQUIDE shall commence its
efforts to obtain and maintain all permits and licenses necessary
for the construction of the
<PAGE>
Plant #3 and the Compressed Dry Air System. HSS shall use all
reasonable efforts to assist AIR LIQUIDE in obtaining and
maintaining such permits and licenses. Should AIR LIQUIDE, despite
exerting every reasonable effort, be unable to obtain all permits
and licenses necessary for the construction of Plant #3 (APSA 6) or
the Compressed Dry Air System as contemplated hereunder within three
hundred (300) days of the Amended Effective Date. AIR LIQUIDE shall
so notify HSS in writing; and those parts of this Amendment relating
to the construction of Plant #3 or the Compressed Dry Air System as
the case may be, may then be suspended by either party by written
notice to the other at any time thereafter until such time as all
such permits and licenses have been obtained. Unless otherwise
agreed in writing by AIR LIQUIDE and HSS, AIR LIQUIDE shall not,
during the period prior to obtaining all necessary permits and
licenses, undertake or commence any work on the design, engineering,
fabrication, procurement or construction of the AIR LIQUIDE #3 Plant
Facility or the Compressed Dry Air System, as the case may be.
B. Promptly upon AIR LIQUIDE obtaining all necessary permits and
licenses, AIR LIQUIDE shall at its sole expense, make necessary and
appropriate preparations for, and thereafter proceed with design,
engineering, fabrication, procurement, and construction of the Plant
#3 and the Compressed Dry Air System described in Exhibit B to this
amendment, upon the Leased Premises.
C. During the preparation for and the construction of Plant #3 and the
Compressed Dry Air System, and at all times as applicable during the
Term, of the Amendment, AIR LIQUIDE shall fulfill the obligations
set forth in Paragraph 2.3 a through and including Paragraph 2.3 e
of the Agreement.
D. During the preparation for and the construction of Plant #3 and the
Compressed Dry Air Systems, and at all times as applicable during
the Term of the Amendment, HSS shall fulfill the obligations set
forth in Paragraph 2.4 a through and including Paragraph 2.4 c of
the Agreement HSS will provide concrete foundations per Air Liquide
specifications for the support of the systems, as well as, lighting,
fencing underground electrical conduits to the points of connection
of the systems and a grounding grid. In addition HSS shall provide
to AIR LIQUIDE the additional utilities set forth on Exhibit C to
this amendment and the additional property needed for Plant #3, the
new liquid nitrogen vaporization system and the Compressed Dry Air
System, all as more fully set forth in an amended Appendix A to
Exhibit 1 of the Agreement, Description of Leased Premises. HSS
shall also provide to AIR LIQUIDE promptly (and in any event no
later than October 1, 1996) after the execution of this amendment, a
fully executed and recordable memorandum of lease reflecting the
increase of the area covered by the 1992 Indenture of lease to
include the area to be occupied by Plant #3 and the Compressed Dry
Air System. Additionally, the plot plan for Plant #3 and the
Compressed Dry Air System is included as Exhibit D to this
Amendment.
<PAGE>
III. Pricing
A. Paragraph 4.1(a) is hereby amended by adding two new subparagraphs
at the end of the existing subparagraphs reading as follows:
"A monthly Facility Fee for the Plant #3 of $20,000 starting on
completion date of Plant #3. Said monthly Facility Fee shall be
payable regardless of HSS requirements or consumption up to the
Plant Maximums set forth in Paragraph A.f of the Amendment."
"A monthly Facility Fee for the Compressed Dry Air System of $9,500
starting on completion date of the compressed dry air system. Said
monthly Facility Fee shall be payable regardless of HSS requirements
or consumption up to the Plant Maximums set forth in Exhibit A of
the Amendment."
B. Paragraph 4.1 [c] is hereby amended to read as follows:
"For all quantities of Hauled-In Liquid Nitrogen delivered by AIR
LIQUIDE to HSS, on or after July 1, 1996, HSS shall pay AIR LIQUIDE
a unit price of thirty five cents per hundred standard cubic feet
($0.35/100 scf). For all quantities of Hauled-In Liquid Nitrogen
delivered by AIR LIQUIDE to HSS, prior to July 1, 1996. HSS shall
pay the present price being paid by HSS under the unamended
Agreement."
IV. Price Adjustments
A. Paragraph 5.1 is hereby amended to read as follows:
The price of Hauled-In Liquid Nitrogen (Para 3.2) shall be adjusted
on the first anniversary and every subsequent anniversary of the
Amended Effective Date in direct proportion to changes in the
Producer Price Index (PPI), Table 3. Industry code 2813 (Industrial
Gases) baselined in 1981. The adjusted Hauled-In Liquid Nitrogen
price shall be calculated by multiplying $0.35/100 scf by the latest
known PPI index at the time of the adjustment minus 163.1 (Index of
January 1996) divided by 163.1
V. HSS's Distribution System
The Agreement is hereby amended by substituting the following for
Paragraph 8.0: "HSS shall be responsible, at its own costs, for
maintaining HSS's Distribution System in a condition suitable for
receiving Gaseous Nitrogen at working pressures up to the one hundred ten
(110) PSIG for the Plant #2, and up to one hundred twenty (120) PSIG for
the #1 and #3 Plants at all times during the term of this Amendment. AIR
LIQUIDE agrees to install, construct and connect the necessary
vaporization and filtration
<PAGE>
equipment and tie-ins with the existing HSS Distribution System need to
supply MOS 8 with vaporized Liquid."
VI. Specifications
The Agreement is hereby amended by substituting the following for the
first sentence of Paragraph 9.1:
"All Gaseous Nitrogen delivered by AIR LIQUIDE hereunder at a flow rate
not exceeding eighteen thousand (18,000) SCFH for the #2 Plant, sixty-five
thousand (65,000) SCFH for the #1 Plant and forty thousand (40,000) SCFH
for the #3 Plant, shall be in accordance with the following
specifications:"
In addition add the following line to item 3 of the specifications:
"PRESSURE AT POINT OF DELIVERY (PSIG) #3 PLANT 90"
VII. Shutdowns
The Agreement is hereby amended by substituting the following for
Paragraph 11.2. "In the event that downtime of the AIR LIQUIDE Plant
Facility, for reasons other than force majeure, solely attributable to AIR
LIQUIDE exceeds 350 hours for the #1 Plant, 350 hours for the #2 plant and
350 hours for the #3 Plant in any sliding two year period of the
Agreement, commencing with the Completion date, then during any downtime
exceeding 350 hours per plant in any said two year period. AIR LIQUIDE's
price to HSS for vaporized Hauled-In Liquid Nitrogen, up to sixty-five
thousand (65,000) SCFH for the #1 Plant, eighteen thousand (18,000) SCFH
for the #2 Plant and forty thousand (40,000) SCFH for the #3 Plant shall
be equal to the average power cost to HSS for the production of a like
quantity of Gaseous Nitrogen at the AIR LIQUIDE Plant Facility during the
most recent on-stream month. All other conditions of the Agreement
including payment of the monthly Facility Fee adjustment called for (the
pursuant to Paragraph 5.1 (as amended) shall also be made during such
downtime periods. Said price adjustment(s) shall be the sole remedy of HSS
for any downtime.
VIII. Warranties
The Agreement is hereby amended to extend this limitation of warranty
referred to in Section 16 to Nitrogen and Compressed Dry Air.
IX. Term
A. "The Term of this Amendment (with respect to Plant #3 and the
Compressed Dry Air System (only) begins on the Amended Effective Date and,
except as otherwise herein specifically provided shall continue for an Initial
Period beginning on the said Amended Effective date and continuing until the end
of 120th month following the Completion Date for #3 Plant and Compressed Dry Air
System. After the end of the said 120th month the Term shall
<PAGE>
further continue for five year terms unless written notice of termination is
given by either party ax least twelve (12) months prior to the end of the said
120th month.
B. The agreement is hereby amended by adding the following Paragraph
after Paragraph 19.2:
With regards to Plant #3 and Compressed Dry Air System, "HSS shall
have the option of terminating this Agreement for those plants
subject to the conditions set forth in paragraph 7.3, at any time
after two (2) years from the Completion Date for each Plant and
prior to the expiration of the Initial Period hereof, by giving AIR
LIQUIDE at least a twelve (12) months prior written notice of
termination. Upon the effective date of such termination and as a
condition thereof, HSS shall pay to AIR LIQUIDE a lump sum
cancellation fee (prorated for fractional parts of a year)
calculated as follows:
Residual Life of the Initial Period Cancellation Fee Expressed As the
- - ----------------------------------- Monthly
-------
From the Plant Completion Date Facility Fee Multiplied By
- - ------------------------------ --------------------------
8 years 30 Months
7 years 26 Months
6 years 22 Months
5 years 17 Months
4 years 14 Months
3 years 10 Months
2 years 5 Months
1 year 3 Months
X. Amendment
Except as amended herein above the Agreement dated as of the 22nd day of
September, 1992 remains in full force and effect, as if set forth and
incorporated herein.
IN WITNESS WHEREOF, the parties have hereunto set their hand before
witnesses as of the date and year first above written.
HARRIS CORPORATION AIR LIQUIDE AMERICA
SEMICONDUCTOR SECTOR CORPORATION ELECTRONICS
PER: [illegible] PER: [illegible]
------------------------------- -----------------------------------
TITLE: Sr. Mgr. Cont. Admin. TITLE: VP - Electronics
----------------------------- ---------------------------------
WITNESS: [illegible] WITNESS: /s/ Linda S. Broadfoot
--------------------------- -------------------------------
<PAGE>
Exhibit A
Compressed Dry Air Specifications
Flow Rate: 2,000 scfm +/- 4%
Pressure: 125 psig +/- 5 psig
Purity: -70 degrees F dew point
<PAGE>
Exhibit B
o List of major equipment
o Two identical Sullair Air Compressor with 600 HP motors (one for
compressed dry air, one for the nitrogen generator (Plant #3)
o Two compressed dry air dryers sets
o Warm skid for air pretreatment for nitrogen generator
o Air Distillation cold box
o Back-up vaporizer for nitrogen
o Filter skid for nitrogen
<PAGE>
Exhibit C
Estimated Utilities provided by HSS to Air Liquide Plant #3 and Compressed Dry
Air System
o Electrical Power
o at 4160 volts 3 phases, 60 cycles and at 480 volts 3 phase 60 cycles
o Expected total Operating demand: 900 KW +/- 4% for 40,000 scfh of
nitrogen and 2,000 scfm of compressed dry air.
o Cooling Water None
o Liquid Nitrogen 780 scfh
o Potable water, sewage, telephone and data lines
EXHIBIT 10.29
SITE SUBSCRIPTION AGREEMENT
BETWEEN
HARRIS
Semiconductor Sector
of Harris Corporation
and
CADENCE
Cadence Design Systems, Inc.
<PAGE>
SITE SUBSCRIPTION AGREEMENT
BETWEEN
HARRIS
Semiconductor Sector
of Harris Corporation
and
CADENCE
Cadence Design Systems, Inc.
Effective Date: 01 July 1993
Agreement No. SSVP - 93E24TP
2
<PAGE>
INDEX
Section Description Page
- - ------- ----------- ----
RECITAL 3
1.0 DEFINITIONS 3
2.0 SCOPE AND BACKGROUND 4
3.0 FROZEN CONFIGURATION 4
4.0 TERM AND TERMINATION 5
5.0 PRODUCTS AND PRICES 5
6.0 ORDERING AND REPORTING 6
7.0 SHIPMENT AND ACCEPTANCE 6
8.0 INSTALLATION AND TRAINING 6
9.0 PAYMENT 6
10.0 TAXES 6
11.0 LICENSES 6
12.0 MAINTENANCE SERVICES 7
13.0 [ RESERVED ] 7
14.0 MISCELLANEOUS 7
SCHEDULES:
Schedule A - Product List
Schedule B - Site Subscription Charges
Schedule C - Software Rental Agreement
Schedule D - Maintenance Agreement - Short Term
Schedule E - Frozen Configuration
3
<PAGE>
HARRIS CADENCE
SITE SUBSCRIPTION AGREEMENT
Agreement No. SSVP - 93E24TP
Effective Date: 01 July 1993
This Site Subscription Agreement ("Agreement") is entered into effective as of
the date set forth above ("Effective Date") by and between the Semiconductor
Sector of Harris Corporation ("Harris-Semiconductor"), having a place of
business at 1301 Woody Burke Road, Melbourne, FL 32901 and Cadence Design
Systems, Inc., a Delaware corporation having a principal place of business at
555 River Oaks Parkway, San Jose, California, 95134 ("Cadence").
RECITALS
WHEREAS, Harris-Semiconductor and Cadence are party to a certain Fixed Fee
Agreement number 2470-187-067 (the "FFA") which outlined the conditions under
which Cadence, during the duration of the FFA, licensed various application
software packages to Harris-Semiconductor and the FFA, per its terms and as
extended, expires in June of 1994; and,
WHEREAS, Harris-Semiconductor and Cadence jointly desire to replace the FFA with
this Agreement to have in place an arrangement under which Harris-Semiconductor
can acquire licenses and/or obtaining product related services from Cadence for
its internal use or performance world-wide; and,
WHEREAS, to eliminate repetitive negotiations on individual transactions and
thereby enable the parties to more quickly consummate the individual
transactions, the parties desire to enter into this Agreement to succeed and
replace the FFA and to establish the prices, terms and conditions applicable to
all such transactions,
NOW THEREFORE, in consideration of the mutual promises set forth, the parties
hereto agree as follows;
1.0 DEFINITIONS
1.1 "Cadence Software" means any applications programming code furnished
to Harris-Semiconductor by or on behalf of Cadence which is not remarketed by
Cadence from a third party.
1.2 "Documentation" means any and all information, written or otherwise,
provided to Harris-Semiconductor by Cadence describing Cadence Software, its
operation and matters related to its use and any updated, improved or modified
version(s) of such materials, in published written material, on magnetic media
or communicated by electronic means.
4
<PAGE>
1.3 "Licensed Materials" - Is a general term which can mean any Cadence
Software and Documentation collectively.
1.4 "Service(s)" shall mean any maintenance services, installation
assistance, training, consulting or similar assistance which Cadence may consent
to provide to Harris-Semiconductor related to the Licensed Materials.
1.5 "Subsidiary" means a corporation company or other entity: (i) where
more than fifty percent (50%) of whose outstanding shares or securities
(representing the right to vote for the election of directors or other managing
authority are; or, (ii) which does not have outstanding shares or securities, as
may be the case in a partnership, joint venture or unincorporated association,
but more than fifty percent (50%) or the ownership interest representing the
right to make decisions for such corporation, company or entity is now or
hereafter, owned or controlled, directly or indirectly, by a party hereto, but
such corporation, company or entity shall be deemed to be a Subsidiary only so
long as such ownership or control exists.
1.6 Definitions contained in the Schedules to this Agreement shall, within
the context of each such Schedule, have the meanings ascribed to them therein.
2.0 SCOPE AND BACKGROUND:
2.1 This Agreement will put in place the mechanism whereby
Harris-Semiconductor can temporarily license Cadence Software under a limited
duration subscription scenario. Under this scenario, Harris-Semiconductor will
purchase subscription licenses having the following characteristics: (i) only
Cadence Software can be licensed under this scenario, (ii) the duration of all
such licenses is limited to the Term of this Agreement, (iii) maintenance
service charges are deemed covered as part of the subscription fee; and, (iv)
any Cadence Software licensed under this scenario can, for the subscription's
duration, be used internally within Harris-Semiconductor in unlimited quantity.
If Harris-Semiconductor desires to acquire a license to use any third party
program marketed by Cadence, such acquisitions shall be a separate licensing
transaction outside the scope of this Agreement. Further, this Agreement is
intended for the internal benefit of and use by Harris-Semiconductor. Any
requirements for Cadence products by Harris-Semiconductor's parent, the Harris
Corporation or of any other sector, component, subsidiary or affiliate of the
Harris Corporation are beyond the scope of this Agreement.
2.2 Section 2.1 notwithstanding, Cadence recognizes that
Harris-Semiconductor may have requirements for designing Harris-Semiconductor
Products which exceed the capacity of Harris-Semiconductor's existing
engineering design resources. Harris-Semiconductor may subcontract with
third-party design contractors and/or independent individual contractors
("Design Subcontractors ") to supplement Harris-Semiconductor's internal design
engineering capacity and Cadence agrees that, while performing such services for
Harris-Semiconductor, said Design Subcontractors' may access and use the
Licensed Materials as set forth in this Agreement. Such Design Subcontractors'
use of the Licensed Materials shall be governed by the terms and conditions of
this Agreement and may not utilize the Licensed Materials or technical knowledge
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obtained at Harris-Semiconductor for any purpose other than developing
Harris-Semiconductor Products on behalf of Harris-Semiconductor. Development of
products by such Design Subcontractors which are not intended to be
Harris-Semiconductor Products, and manufacturing of such Design Subcontractors'
products by Harris-Semiconductor are beyond the scope of this Agreement and
strictly prohibited.
2.3 Harris-Semiconductor shall provide Cadence with written notice prior
to engaging any Design Subcontractor as described in Section 2.2. Such notice
shall include, as a minimum, the name of the company (if applicable), name of
employee to be contracted, and expected duration of project(s).
Harris-Semiconductor shall not proceed with such engagement until ten (10)
business days after Cadence has confirmed its receipt of Harris-Semiconductor's
written notice (which confirmation may initially be made orally by the Cadence's
Account Manager or District Sales Manager). However should Cadence determine
there exists a potential conflict of interest in Harris-Semiconductor's engaging
a proposed Design Subcontractor, Harris-Semiconductor agrees to refrain from
engaging such Design Subcontractor until Cadence's issues can be addressed and
mutually resolved. If the issues cannot be resolved between Harris-Semiconductor
and Cadence, the contract with the Design Subcontractor will not be placed and
Harris-Semiconductor will seek a contract with an alternative source.
3.0 FROZEN CONFIGURATION:
3.1 The term ("Frozen Configuration") means the current version of any
Cadence Software or third party program (collectively a "Licensed Program") for
which Harris-Semiconductor separately purchased from Cadence a license having a
term of 99 years. Examples of such situations are: (i) licenses acquired before
30 June 1990; or, (ii) acquired between 01 July 1990 and the Effective Date of
this Agreement, but where the license fee was paid as a separate licensing
transaction wholly outside the scope of the FFA: or, (iii) acquired during the
Term of this Agreement, but where a 99 year license, and support for same, is
separate transaction wholly outside the scope of this Agreement.
3.2 Schedule E identifies the Frozen Configuration as of the Effective
Date of this Agreement. Harris-Semiconductor shall maintain at all times a
record of the number and Location of all Licensed Programs that are or become
part of the Frozen Configuration, including Licensed Programs that have been
merged with other programs and make such record available to Cadence upon
request. Licenses for Cadence Software which are or become part of the Frozen
Configuration as described in this Section 3 are unaffected by termination of
this Agreement.
4.0 TERM AND TERMINATION
4.1 Term:
4.1.1 Initial Term: This Agreement is effective as of the Effective
Date specified on the first page and, except as otherwise provided in Section
4.2, continues through the period ending 30 June 1998 (the "Initial Term").
Thereafter, its shall automatically expire, unless Harris
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Semiconductor has by express written agreement and prior to such expiration
date, exercised the options set forth in Section 4.1.2.
4.1.2 Option Term: Harris Semiconductor may extend this Agreement
for an additional five (5) year period ending 30 June 2003 by giving Cadence
written notice not less than one (1) year prior to the expiration of the Initial
Term.
4.2 Termination or Renegotiation:
4.2.1 Termination for Cause: Either party may terminate this
Agreement and or any individual orders hereunder at any time if the other party:
(i) assigns or attempts to assign this Agreement or any of its rights hereunder
except as provided in this Agreement; or, (ii) fails to perform or observe any
of its material obligations under this Agreement, and such condition is not
remedied within ninety (90) days after written notice thereof has been given by
the aggrieved party describing the nature of the Default and demanding its cure.
4.2.2 Termination for Convenience: Either party may, at any time and
for its convenience, elect to terminate this Agreement effective as of 01 July
of any calendar year of either the Initial or Option Term by giving the other at
least two (2) years' prior written notice of such election.
4.2.3 Re-Negotiation: The parties recognize that over the Term of
this Agreement: (i) technology and market conditions will evolve; and, (ii) that
as a result of such evolving circumstances, either or both parties may desire to
renegotiate or revise this Agreement or portions thereof so that the Agreement
continues to reflect an equitable business arrangement for both parties under
the then current circumstances. Accordingly, either party may propose
adjustments to the Agreement along with its rationale for same. The parties each
agree they will negotiate in good faith the merits of any adjustment proposed to
it by the other. If the parties jointly decide it is appropriate to adjust the
Agreement or portions thereof, the Agreement shall be so modified provided that
no modification shall apply except to the extent it is fully contained in a
written amendment to the Agreement duly signed by authorized representative of
each party. If the parties are unable to mutually agree on the merits or
implementation of a proposed adjustment within such period of time as the
proposing party considers reasonable, the proposing party may elect to terminate
the Agreement for its convenience in accordance with Section 4.2.2. Nothing in
this Section 4.2.3 shall be deemed to operate as a condition precedent to either
party's election to exercise its rights under Section 4.2.2
4.3. Effect of Termination:
4.3.1 Termination of this Agreement for any reason shall
automatically and simultaneously terminate: (i) Harris-Semiconductor's usage
rights for all licenses acquired by Harris-Semiconductor under the provisions of
this Agreement, excluding licenses converted to the Frozen Configuration
pursuant to Section 4.3.2, and (ii) Cadence's support obligations for all
Cadence Software whose licenses are so terminated.
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4.3.2 Within 30 days of termination of this Agreement,
Harris-Semiconductor may elect to convert any Cadence Software licensed under
this Agreement to become a part of the Frozen Configuration.
Harris-Semiconductor may exercise this conversion option by purchasing, within
said 30 day period, a 99 year license for each copy of Cadence Software it
wishes to convert. Purchase of a 99 year license shall be at Cadence's then
current license fees and subject to execution of Cadence's then standard form of
software license and maintenance agreements. Within the same 30 day period,
Cadence and Harris-Semiconductor shall also jointly reverify the then current
make-up of the Frozen Configuration. For those Licensed Programs comprising the
Frozen Configuration for which Cadence then offers maintenance services and
which Harris-Semiconductor desires to place under maintenance support,
Harris-Semiconductor may purchase such maintenance services by paying Cadence's
then current maintenance rates for such Licensed Programs.
4.3.3 Within 45 days after termination of this Agreement,
Harris-Semiconductor shall furnish to Cadence written notice certifying that the
original and all copies, including partial copies, of the Licensed Materials
received from Cadence or made by Harris-Semiconductor as permitted by this
Agreement and not converted to the Frozen Configuration pursuant to Section
4.3.2, have either been returned to Cadence or destroyed and no copies or
portions thereof remain in the possession of Harris-Semiconductor, its employees
or agents and Harris-Semiconductor shall additionally make prompt payment in
full to Cadence for all amounts due and owing as of the effective date of
termination.
4.4 Survival: The provisions of Sections 10.0 and 14.4 shall survive
termination or expiration of this Agreement.
5.0 PRODUCTS AND PRICES: The Licensed Materials and Services available under
this Agreement, and the associated prices for same shall be as set forth in the
applicable Schedules. The charge for Harris-Semiconductor's subscription license
to internally use Cadence Software and to obtain maintenance Services therefore
during the Term of this Agreement shall be deemed included in the Site
Subscription fee set forth in Schedule B. The Site Subscription fee is a lump
sum and no unit, volume or other discounting of any nature or description shall
be applicable to it.
6.0 ORDERING AND REPORTING
6.1 Procedures: Where Cadence has the capability to do so, Cadence will
provide Harris-Semiconductor with a "golden master" copy of the Licensed
Materials, from which Harris-Semiconductor can replicate additional copies for
Hams-Semiconductor's internal use. Cadence Software replicated by
Harris-Semiconductor from a "golden master" shall still require Cadence security
keys to be activated on a computer system. Whenever possible, Cadence shall
provide Harris-Semiconductor the capabilities to programmatically generate the
security keys necessary for the use of the Licensed Material. In doing so,
Harris-Semiconductor will provide information to Cadence for tracking the
configuration (intended installation computer and
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location, Cadence software and quantity thereof to be activated, etc.). For
Cadence Software which Cadence lacks the capability to provide
Harris-Semiconductor a "golden master" copy, Harris-Semiconductor's request for
security keys (a "Key Request ") shall be processed as a separate request for an
individual shipment of such Licensed Material.
6.2 Reporting: Harris-Semiconductor shall provide Cadence a Quarterly
Status Report. The report shall be forwarded to Cadence's Orlando, FL Sales
Office, with a copy to Cadence corporate as specified in Section 14.1, at the
end of each Harris-Semiconductor fiscal quarter and will provide the currently
installed configurations of all Licensed Materials by product number, product
name, quantity and currently installed computer
7.0 SHIPMENT AND ACCEPTANCE: When shipments by Cadence are required, they shall
be F.O.B. Cadence's facilities, freight collect, or alternatively Cadence shall
prepay and invoice freight charges separately. Cadence will ship by the carrier
and method specified by Harris-Semiconductor or, if not specified, by the means
Cadence deems appropriate. Shipment dates are estimates dependent, in part, on
Harris-Semiconductor's timely furnishing order documents or Key Requests in good
order and providing any other information reasonably required by Cadence. Title
to Licensed Materials shall remain at all times with Cadence and its grantors.
Risk of loss or damage to the Licensed Materials shall pass to
Harris-Semiconductor upon Cadence's conveyance of same to the carrier (the
"Delivery Date "). Licensed Materials shall be deemed accepted by
Harris-Semiconductor as of the Delivery Date.
8.0 INSTALLATION AND TRAINING: The Site Subscription fee does not include
installation or training. Installation or training Services, where commercially
offered by Cadence, may be obtained by ordering as a separate line item at
Cadence's then current rates.
9.0 PAYMENT: The Site Subscription fee is non-refundable and for each 12 month
period shall be payable in advance in annual installments. The first installment
is due on the Effective Date of this Agreement. Each subsequent installments due
on 01 July of calendar years 1994 through 2001 respectively. Past due amounts
shall be subject to a monthly service charge of three quarters of a percent
(.75%) per month of the unpaid balance or the highest allowed by law if less.
10.0 TAXES: All specified charges are net and exclude all taxes now existing or
later arising based on or measured by a transaction between Harris-Semiconductor
and Cadence, (exclusive of taxes based on Cadence's net income). All such
charges are for Harris-Semiconductor's account. Harris-Semiconductor shall
promptly pay the full amount thereof including any interest or penalties
assessed thereon, or furnish Cadence with evidence acceptable to the taxing
authority to sustain an exemption therefrom.
11.0 LICENSES: All Cadence Software provided under the provisions of this
Agreement, including any subsequent updates, shall be provided and may be used
and copied solely in accordance with the Software Rental Agreement (the current
version of which is attached as Schedule C) prevailing at the time an order is
accepted. If there arises, with respect to a Cadence
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Software whose license was acquired under this Agreement, any conflict or
inconsistency between the provisions of this Agreement and the provisions of
Schedule C, such conflict or inconsistency shall be resolved by giving
precedence to the Agreement.
12.0 MAINTENANCE SERVICES: Maintenance Services for Cadence Software acquired
under the provisions of this Agreement shall be provided solely in accordance
with the Software Maintenance Agreement - Short Term (the current version of
which is attached as Schedule D) prevailing at the time an order for maintenance
Service is accepted. If there arises, with respect to furnishing of maintenance
Services for any Cadence Software so acquired, a conflict or inconsistency
between the provisions of this Agreement and the provisions of Schedule D, such
conflict or inconsistency shall be resolved by giving precedence first to the
Agreement.
13.0 RESERVED: [Section Not Used.].
14.0 MISCELLANEOUS
14.1 Notices: All notices and other communications hereunder shall be in
writing and shall be deemed properly delivered when duly mailed by registered or
certified letter to the other party at its address as first set forth above
(and, in the case of notices to Cadence, to the attention of Contracts
Administration), or at such other address as either party may by written notice
designate to the other.
14.2 Assignment: Neither this Agreement, nor any of the rights and
obligations hereunder may be assigned, delegated or transferred by either party
in whole or in part, without the express prior written consent of the other
party, except however an assignment or delegation by Cadence associated with the
sale of all or substantially all of its business(es), assets, or product line(s)
or through acquisition, merger, consolidation or operation of law shall not
require Harris-Semiconductor's consent.
14.3 Waiver: Failure by either party to enforce at any time any of the
provisions of this Agreement, or to exercise any election of options provide
herein, shall not constitute a waiver of such provision or option, nor affect
the validity of this Agreement or any part thereof, or the right of the waiving
party to thereafter enforce each and every such provision.
14.4 Export: Harris-Semiconductor shall not export or transfer, whether
directly or indirectly, the Licensed Materials and related technical data or any
portion thereof or any product containing such items without first obtaining a
license from the U.S. Department of Commerce, Office of Export Administration or
any other agency of the United States government as required.
Harris-Semiconductor shall promptly furnish any written assurance or
certifications Cadence may reasonably require to evidence compliance with this
requirement.
14.5 Excusable Delays: Except for payments due Cadence by
Harris-Semiconductor, neither party shall be liable to the other for delays in
performing its obligations due to
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circumstances beyond its reasonable control. In the event of any such delay the
time for performance shall be extended by the amount of time lost by reason of
such delay.
14.6 Jurisdiction, Arbitration: This Agreement is made under, governed by,
and shall be construed in accordance with the laws of the state of California,
excluding the California choice of laws rule, as applied to contracts between
California corporations entered into and to be performed entirely in California.
Any unresolved dispute arising pursuant to this Agreement shall be settled by
arbitration, provided that nothing in this Section 14.6 shall restrict the right
of either party to apply to a court of competent jurisdiction for emergency
relief pending final determination of a claim by arbitration in accordance with
this Section 14.6. Such arbitration shall be held in the city of San Jose,
California U.S.A. in accordance with the then existing commercial arbitration
rules of the American Arbitration Association. The decision of the arbitrator
shall be binding upon the parties and judgment in accordance with that decision
may be entered in any court having jurisdiction thereof. The prevailing party in
any arbitration or judicial action brought to enforce or interpret this
Agreement or for relief for its breach shall be entitled to recover its costs
(including its share of arbitration fees) and its reasonable attorney(s)' fees
therein incurred.
14.7 Except for payments due Cadence hereunder, no action, regardless of
form, arising out of the transactions under this Agreement may be brought by
either party more than two (2) years after the cause of action has accrued.
14.8 Entire Agreement: This Agreement and the Schedules attached hereto
constitute the complete agreement of the parties respecting the subject matter
hereof and supersedes and replaces all previous understandings, commitments or
agreements, oral or written, including without limitation the FFA which shall be
deemed simultaneously terminated as of the Effective Date of this Agreement. Any
additional or different terms contained or incorporated by reference on the face
or reverse of any Harris-Semiconductor Key Request, purchase order,
acknowledgement or other document are hereby objected to and shall be of no
effect nor in any circumstance binding upon Cadence.
IN WITNESS WHEREOF, THE PARTIES HERETO HAVE EXECUTED THIS AGREEMENT EFFECTIVE AS
OF THE DATE FIRST SET FORTH ABOVE.
HARRIS CADENCE
Semiconductor Sector Cadence Design Systems, Inc.
of Harris Corporation
BY: /s/ K. McCalley BY: /s/ H. Raymond Bingham
----------------------------- --------------------------------
NAME: K. McCalley NAME: H. Raymond Bingham
----------------------------- --------------------------------
TITLE: Vice President-Systems TITLE: Executive Vice President & CFO
----------------------------- --------------------------------
DATE: 3-24-94 DATE: 21 - MAR - 94
----------------------------- --------------------------------
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HARRIS CADENCE
SCHEDULE A
Product List
REF: Site Subscription
Agreement No. SSVP - 93E24TP
Effective Date: 01 July 1993
1. Licensed Materials and Services:
1.1 Current Offerings: Harris-Semiconductor may place Key Requests or
orders with Cadence for any Cadence Software marketed by Cadence as a standard
commercial product offering as of the Effective Date of this Agreement,
excluding applications of Cadence's Comdisco Systems business operation.
1.2 Subsequent Offerings - Internally Developed: Likewise
Harris-Semiconductor may place Key Requests or orders with Cadence for Cadence
Software, internally developed by Cadence, and subsequently marketed by Cadence
as a standard commercial product offering at any time during the Term of this
Agreement after the Effective Date, excluding applications of Cadence's Comdisco
Systems business operation.
1.3 Acquired Technology: Cadence will promptly notify Harris-Semiconductor
when Cadence expands its portfolio of Cadence Software through permanent
acquisition of a third party or of a third party's technology (a "New Program").
Within 15 days of receipt of Cadence's notice, Harris-Semiconductor shall advise
Cadence in writing if Hams-Semiconductor wishes the New Programs to be added to
the Cadence Software that can be licensed by Harris-Semiconductor as part of
this Agreement. The parties agree that any enlargement of the Cadence Software
offerings to include such New Programs may require an adjustment in the Site
Subscription Fee set forth in Schedule B and that no New Program shall be
eligible for licensing under this Agreement until such adjustment of the Site
Subscription Fee has been agreed upon as solely evidenced by a written
modification to Schedule B.
1.4 Commercial Availability: As used throughout, the phrase "standard
commercial product offering" means the version(s) of the Cadence Software which
has been through all Cadence's internal testing, QA and manufacturing cycles and
Cadence has designated as having reached production release status and therefore
offered for general licensing to all customers. The term does not refer to
pre-production versions of the Cadence Software (e.g., alpha or beta releases)
that are only licensed on a restricted basis for limited pre-production
evaluations or beta testing.
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2. Prices: License and support charges for Licensed Materials shall be deemed
included in the Site Subscription fee set forth in Schedule B.
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HARRIS CADENCE
SCHEDULE B
Site Subscription Charges
REF: Site Subscription
Agreement No. SSVP - 93E24TP
Effective Date: 01 July 1993
1.0 SITE SUBSCRIPTION FEE:
1.1 Initial Term: Harris-Semiconductor Site Subscription fee for the
Initial Term shall be as follows. Said Site Subscription fee covers the
licensing and maintenance Services of Cadence Software for the period indicated
and in accordance with the license and maintenance provisions of Schedule C and
Schedule D respectively.
For the 1st Period: Effective Date through 30 June 1994 $ 3,480,000.00
For the 2nd Period: 01 July 1994 through 30 June 1995 $ 3,480,000.00
For the 3rd Period: 01 July 1995 through 30 June 1996 $ 3,480,000.00
For the 4th Period: 01 July 1996 through 30 June 1997 $ 3,480,000.00
For the 5th Period: 01 July 1997 through 30 June 1998 $ 3,480,000.00
Total for Initial Term $ 17,400,000.00
===============
1.1.1 Any payments received by Cadence from Harris-Semiconductor
under the FFA which, per the express terms of the FFA, were to be allocable to a
period of time after 30-JUN-1993 shall be credited against the payment due
hereunder for the 1st Period of the Initial Term.
1.2 Option Term: Harris-Semiconductor Site Subscription fee for the Option
Term shall be as follows. Said Site Subscription fee covers the licensing and
maintenance Services of Cadence Software for the period indicated and in
accordance with the license and maintenance provisions of Schedule C and
Schedule D respectively.
For the 1st Period: 01 July 1998 through 30 June 1999 $ 3,688,800.00
For the 2nd Period: 01 July 1990 through 30 June 2000 $ 3,910,128.00
For the 3rd Period: 01 July 2000 through 30 June 2001 $ 4,144,735.00
For the 4th Period: 01 July 2001 through 30 June 2002 $ 4,398,419.00
For the 5th Period: 01 July 2002 through 30 June 2003 $ 4,657,024.00
Total For the Term $ 20,794,106.00
===============
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2.0 EXCLUDED ITEMS: The Site Subscription fee specified in Section 1.0 above
does not apply to and does not include: (1) licenses for applications of
Cadence's Comdisco Systems business operation; or, (ii) licenses for third-party
programs; (iii) Services (other than maintenance); (iv) Licensed Materials which
are not yet standard commercial production offerings of Cadence as described in
Schedule A and/or Services with respect thereto.
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HARRIS CADENCE
SCHEDULE C
Software Rental Agreement
REF: Site Subscription
Agreement No. SSVP - 93E24TP
Effective Date: 01 July 1993
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HARRIS CADENCE
SOFTWARE RENTAL AGREEMENT
STANDARD TERMS AND CONDITIONS
Agreement No. SRA - 93E24TP
THIS SOFTWARE RENTAL AGREEMENT ("Rental Agreement") is made as of the Effective
Date (identified below) between Semiconductor Sector of Harris Corporation
("Customer") having a place of business at 1301 Woody Burke Road, Melbourne FL
32901, and Cadence Design Systems, Inc. ("Cadence"). Cadence and Customer have
entered into a certain Site Subscription Agreement (the "SSVP Agreement")
pursuant to which Cadence will temporarily furnish certain computer software
programs to Customer. All Products Cadence makes temporarily available to
Customer in accordance with the SSVP Agreement, shall be deemed licensed under
the Terms and Conditions of this Rental Agreement. Unless otherwise defined
herein, capitalized terms used in this Rental Agreement shall have the same
meaning ascribed to them in the SSVP Agreement. Therefor, Cadence and Customer
agree as follows:
1. DEFINITIONS: The following definitions apply herein:
(a) "Product Quotation" or "Quotation" means a written quote from Cadence
to Customer identifying the Licensed Programs, quantity, charges, and other
information relevant to a specific transaction which Cadence is quoting to
Customer.
(b) "Licensed Program(s)" means each software program and any updated,
improved or otherwise modified version(s) thereof furnished by Cadence pursuant
to a Product Quotation or an order from Customer solely for Customer's internal
purposes only.
(c) "Use" means copying all or any portion of a Licensed Program into the
Designated Equipment or transmitting it to the Designated Equipment for
processing of the instructions contained in the Licensed Program and/or
displaying, loading, or operating any portion of the Licensed Program for the
purpose of Customer's design and manufacture of electronic circuits and systems.
(d) "Designated Equipment" means a computer or workstation located within
Customer's facilities and its associated Cadence supported operating system
software as identified by manufacturer, make, model, serial number, host I.D.
number, operating software version level and customer network and upon which a
Licensed Program is to operate.
(e) "Documentation" means any and all information, written or otherwise,
provided to Customer by Cadence describing a Licensed Program, its operation and
matters related to its Use and any updated, improved or modified version(s) of
such materials, in published written material, on magnetic media or communicated
by electronic means.
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(f) "Designated Site" means the specific address of Customer's facility
consisting of one or more buildings within a one mile radius of one another,
where the Designated Equipment, upon which a Licensed Program is first installed
and put into productive Use, is physically located.
2. LICENSE GRANT: Subject to Customer's timely payment of the Subscription Fee
set forth in Schedule B of the SSVP Agreement, Cadence hereby grants and
Customer accepts, pursuant to the provisions of this Rental Agreement and for
the term hereof, a non-transferable, non-exclusive, personal, limited license
to: (i) Use each Licensed Program in machine readable form, only for Customer's
internal Use and at the Designated Site on any unit of Designated Equipment
owned or leased by Customer provided the Licensed Program is only Used on one
unit of Designated Equipment at a time (a "License"); and, (ii) to utilize the
Documentation at the Designated Site as is reasonably necessary for Customer's
licensed Use of the Licensed Program. Customer shall not sublicense, modify or
permit third parties to Use the Licensed Programs or Documentation. Customer
shall not receive, use or have access to source code relating to any Licensed
Program. No license, rights or interest in any trademark, trade name or service
mark of Cadence or its licensors is granted to Customer. All rights, title and
interest in the Licensed Programs and Documentation shall remain exclusive
property of Cadence or its licensors.
3. LOCATION AND TRANSFER: Each License granted hereunder authorizes only
Customer's Use of a Licensed Program on specifically identified Designated
Equipment at the Designated Site. The Licensed Program may be moved from the
Designated Site or the Designated Equipment only if the Designated Equipment
malfunctions, and only with Cadence's consent. Customer will provide Cadence's
Rehost Certificate when the Licensed Program is moved from the previously
identified Designated Equipment or Designated Site and completely remove the
Licensed Program from such equipment. Customer may make a reasonable number of
copies of a Licensed Program for archival purposes and for Use as back-up when
the Licensed Program is not operational. All legends, trademarks, trade names,
copyright marks and other identifications must also be copied when copying the
Licensed Program for archival or back-up purposes. Documentation may not be
copied except for a reasonable number of printed copies produced by Customer for
internal use only from Documentation provided in electronic form.
4. TERM AND TERMINATION: This Rental Agreement shall commence on the Effective
Date set forth below. The term of this Rental Agreement and of each individual
License granted hereunder shall, subject to the termination provisions of this
Section, terminate automatically and simultaneously with termination of the SSVP
Agreement. Cadence may also immediately terminate this Rental Agreement or any
License granted hereunder if Customer breaches or fails to perform any of its
obligations under this Rental Agreement or under the SSVP Agreement. Within 30
days after the termination of any License or this Rental Agreement for any
reason, Customer shall: (i) return all Products to Cadence, F.O.B. Cadence's
facilities, freight prepaid; and, (ii) furnish Cadence written certification
attesting that the original and all copies, including partial copies, of the
corresponding Licensed Program, any Documentation and
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any material received from Cadence or made in connection with such License have
been returned or destroyed; and, (iii) make prompt payment in full to Cadence
for all amounts due and owing as of the effective date of termination. Customer
shall be liable for payment to Cadence of Cadence's then current list price for
any Product not returned to Cadence within thirty (30) days of the termination
or expiration of this Rental Agreement. Sections 5(b), 6, 8, 12, 13 and 16 shall
survive expiration or termination of this Rental Agreement.
5. LIMITED WARRANTY: (a) Cadence warrants for 30 days after shipment that the
recording media by which a Licensed Program is furnished is free of
manufacturing defects and shipping damage, if the media has been properly
installed by Customer on the designated equipment. Cadence does not warrant that
any Licensed Program will meet Customer's requirements or will be error free. As
Customer's sole remedy for breach of the warranty herein, Cadence will provide a
replacement magnetic media containing the Licensed Program ordered by Customer;
(b) EXCEPT AS PROVIDED ABOVE, CADENCE MAKES NO WARRANTY, EXPRESS OR IMPLIED, AND
DISCLAIMS ANY WARRANTIES WITH RESPECT TO THE LICENSED PROGRAM OR DOCUMENTATION,
INCLUDING, WITHOUT LIMITATION, ANY WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE
OR MERCHANTABILITY, NONINFRINGEMENT OR ARISING FROM A COURSE OF DEALING OR USAGE
IN TRADE.
6. LIMITATION OF LIABILITY: CADENCE'S CUMULATIVE LIABILITY UNDER THIS RENTAL
AGREEMENT FOR ALL CAUSES OF ACTION SHALL BE LIMITED TO AND NOT EXCEED THE
SUBSCRIPTION FEE PAID BY CUSTOMER FOR THE LICENSED PROGRAM(S). REGARDLESS OF
WHETHER CADENCE HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES OR ANY
REMEDY SET FORTH HEREIN FAILS OF ITS ESSENTIAL PURPOSE OR OTHERWISE. CADENCE
SHALL NOT BE LIABLE FOR COSTS OF PROCUREMENT OF SUBSTITUTES. LOSS OF PROFITS,
INTERRUPTION OF BUSINESS, OR FOR ANY OTHER SPECIAL, CONSEQUENTIAL OR INCIDENTAL
DAMAGES. HOWEVER CAUSED, WHETHER FOR BREACH OF WARRANTY, CONTRACT, TORT,
NEGLIGENCE, STRICT LIABILITY OR OTHERWISE. CUSTOMER ACKNOWLEDGES THAT THE
SUBSCRIPTION FEE REFLECTS THIS ALLOCATION OF RISK. In no event shall Cadence's
liability for property damage exceed the greater of $50.000 or the license fee
paid by Customer for the Licensed Program that caused such damage.
7. FEES AND TERMS OF PAYMENT: The charges set forth in Schedule B of the SSVP
Agreement shall apply unless specified otherwise in a Product Quotation. Payment
of the total amount invoiced is due 30 days after the date of invoice.
8. TAXES: Customer will pay or reimburse all federal, state and local taxes
(exclusive of taxes on Cadence's net income), duties and assessments arising on
or measured by amounts payable to Cadence under this Agreement.
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9. SHIPMENT: Delivery is to be made F.O.B, shipping point and transportation
charges, including insurance, shall be paid by Customer, or if prepaid, shall be
invoiced as a separate item. Licensed Programs and Documentation shall be
configured, packaged and labeled in accordance with Cadence's standard
practices.
10. MAINTENANCE, INSTALLATION AND TRAINING: License Program Site Subscription
charges set forth in Schedule B of the SSVP Agreement do not include
installation or training. Maintenance is available under terms of Software
Maintenance Agreement appended as Schedule D to the SSVP Agreement. Installation
services and training, where commercially offered by Cadence, may be ordered
under separate agreement at Cadence's then current rates. Any installation
assistance provided by Cadence hereunder shall be without liability or risk to
Cadence.
11. PROPRIETARY RIGHTS INDEMNITY: If any Licensed Program supplied hereunder
becomes the subject of a claim of infringement of a U.S. patent or copyright,
Cadence will indemnify Customer against such claim provided that Customer gives
Cadence prompt written notice of such claim, allows Cadence to direct the
defense and settlement of the claim, and cooperates with Cadence as necessary
for defense and settlement of the claim. If an injunction is obtained against
Customer's Use of a Licensed Program, or if in Cadence's opinion such an
injunction is likely to be obtained, Cadence shall have the right to obtain for
Customer the right to continue using the Licensed Program, replace or modify the
Licensed Program so that it becomes noninfringing, or terminate the License
granted hereunder to such Licensed Program with refund to Customer of the
license fee paid for such Licensed Program, less a reasonable charge for the
period during which Customer has had availability of such Licensed Program for
Use. Cadence will have no liability for any infringement claim to the extent it
is based on modification of a Licensed Program other than by Cadence, with or
without authorization, results from failure of Customer to utilize an updated or
modified Licensed Program provided by Cadence, or results from compliance by
Cadence with designs, plans or specifications furnished by Customer. THE
FOREGOING STATES CADENCE'S ENTIRE LIABILITY AND CUSTOMER'S EXCLUSIVE REMEDIES
FOR PROPRIETARY RIGHTS INFRINGEMENT.
12. PROTECTION OF LICENSED MATERIALS: Each Licensed Program and Documentation
are the confidential and proprietary property of Cadence or third parties from
whom Cadence has obtained marketing rights. Customer receives no rights to and
will not sell, assign, lease, market, transfer, encumber or suffer to exist any
lien or security interest (other than those of Cadence) on, nor allow any
person, firm or corporation to copy, reproduce or disclose, in whole or in part
in any manner, the Licensed Program or Documentation. Customer receives no
rights to and shall not create or attempt to create by reverse engineering,
reverse assembly, reverse compiling or otherwise all or part of the source
programs from any Licensed Program or Documentation or permit third party to do
so. Customer shall take all reasonable steps, both during and after the term of
this Agreement to insure that no unauthorized person shall have access to the
Licensed Program or Documentation and that no unauthorized copy, in whole or in
part, in any form shall be made.
20
<PAGE>
13. EXPORT: The Licensed granted hereunder does not permit export of the
Licensed Programs or Documentation. In addition, Customer warrants that Customer
shall comply with all U.S. laws regarding export and all necessary approval and
license requirements of the U.S. Dept. of Commerce and other agencies or
departments of the U.S. Government.
14. NO ASSIGNMENT: Customer may not assign this Agreement or the License granted
hereunder and any attempt to do so shall be void, Customer agrees that this
Agreement binds Customer and each of its employees, agents, representatives, and
persons associated with it, and Customer's affiliated and subsidiary firms,
corporations and other organizations.
15. NOTICES: Notices to Customer shall be sent to the address specified beneath
Customer's signature below and to Cadence, to 555 River Oaks Parkway, San Jose,
California 95134-1937, Attn: Contract Department, or such new address as a party
specifies to the other in writing.
16. ARBITRATION: Any unresolved dispute arising pursuant to this Rental
Agreement shall be settled by arbitration, provided that nothing in this Section
16 shall restrict the right of either party to apply to a court of competent
jurisdiction for emergency relief pending final determination of [a] claim by
arbitration in accordance with this Section 16. Such arbitration shall b~ held
in the city of San Jose, California U.S.A. in accordance with the then-existing
commercial arbitration rules of the American Arbitration Association. The
decision of the arbitrator shall be binding upon the parties and judgment in
accordance with that decision may be entered in any court having jurisdiction
thereof. The prevailing party in any arbitration or judicial action brought to
enforce or interpret this Rental Agreement or for relief for its breach shall be
entitled to recover its costs (including its share of arbitration fees) and its
reasonable attorney(s)' fees therein incurred.
17. GENERAL: This Rental Agreement is governed by the laws of the State of
California U.S.A. It is the complete and exclusive statement of the agreement
between the parties and supersedes all proposals, oral or written, and all other
communications between the parties relating to the subject matter of this Rental
Agreement. Any terms and conditions of any purchase order or other instrument
issued by Customer in connection with this Rental Agreement which are in
addition to, inconsistent with or different from the terms and conditions of
this Rental Agreement shall be of no force or effect This Rental Agreement may
be modified only by a written instrument duly executed by authorized
representatives of Cadence and Customer. Any waiver by either party of any
condition, part, term or provision of this Rental Agreement shall not be
construed as a waiver of any other condition, part, term or provision or a
waiver of any future event or circumstance. If any provision of this Rental
Agreement is held invalid or unenforceable, the remainder of the Rental
Agreement shall continue in full force and effect.
18. GOVERNMENT USE: If Customer is a part of the U.S. Government, Customer
agrees that (i) if a Licensed Program is supplied to the Department of Defense
(DoD), the Government agrees that the Licensed Program is classified as
`Commercial Computer Software' and that the
21
<PAGE>
Government is acquiring only `restricted rights" in the Licensed Program and
Documentation as that term is defined in DFARS Clause 252.227-7013(c)(1), (ii)
if a Licensed Program is supplied to a part of the Government other than DoD,
the Government agrees that it's rights in the Licensed Program and Documentation
will be as defined in FAR Clause 52.227-19(c)(2) and (iii) use, duplication, or
disclosure by the Government is subject to restrictions as set forth in DFARS
Clause 252.227.70l3(c)(l)(ii).
This Rental Agreement shall be effective and binding on the parties only after
acceptance at Cadence's offices in California by an officer of Cadence.
HARRIS
Semiconductor Sector
of Harris Corporation
- - -----------------------------------------
(Customer)
By: /s/ Karl McCally 3-24-94
--------------------------------------
(Signature)
Name: K. McCalley
------------------------------------
(Print)
Title: Vice President-Systems
-----------------------------------
CADENCE
Cadence Design Systems, Inc.
By: /s/ H. Raymond Bingham
--------------------------------------
H. Raymond Bingham
Executive Vice President & CFO
Effective Date: 21 - MAR - 94
--------------------
22
<PAGE>
HARRIS CADENCE
SCHEDULE - D
Software Maintenance Agreement - Short Term
REF: Site Subscription
Agreement No. SSVP - 93E24TP
Effective Date: 01 July 1993
23
<PAGE>
HARRIS CADENCE
SOFTWARE MAINTENANCE AGREEMENT - Short Term
STANDARD TERMS AND CONDITIONS
Agreement No. SMA-93E24TP
THIS SOFTWARE MAINTENANCE AGREEMENT ("Agreement") is made as of the Effective
Date set forth below between Cadence Design Systems, Inc. ("Cadence") and the
undersigned customer ("Customer"). Cadence and Customer have entered into a
certain Site Subscription Agreement (the "SSVP Agreement") pursuant to which
Cadence will temporarily furnish certain computer software programs to Customer.
Customer and Cadence desire and intend that this Agreement establish the terms
and conditions governing maintenance services of software products made
available to Customer by Cadence under the provisions of the SSVP Agreement and
the Software Rental Agreement which is appended as Schedule C thereto (the
"SRA"). Unless otherwise defined herein, capitalized terms used in this
Agreement shall have the same meaning ascribed to them in the SSVP Agreement or
SRA. Therefor, Cadence and Customer agree as follows:
1. MAINTENANCE SERVICES:
(a) Subject to the provisions hereof, Cadence will use commercially
reasonable efforts to perform or have performed the services ("Maintenance
Services") described in this Agreement with respect to each Licensed Programs
(licensed to Customer under the SRA). Cadence will provide Customer all
modifications to the Licensed Programs in the form of fixes and further releases
that Cadence makes available on a general commercial basis to other end-users
who have purchased maintenance services from Cadence for the same Licensed
Programs used on the same hardware platform as Customer.
(b) Cadence will keep available telephone assistance to Customer between
8:00 a.m. and 6:00 p.m., prevailing local time, Monday through Friday (excluding
Cadence recognized holidays).
(c) Cadence will provide appropriate assistance to Customer within a
reasonable period after Customer adequately describes a Licensed Program and/or
Documentation problem to Cadence's Customer Support Organization. Such
assistance will be at Cadence's expense where it determines that the reported
problem is due to defects in an unaltered most current version of the Licensed
Program and/or Documentation. If it determines that the reported problem is not
due to the Licensed Program, if Customer requests and Cadence agrees to provide
the requested service, Customer agrees to pay Cadence's then current prices for
services Cadence provides to correct such problem.
(d) If Customer makes modifications, interfaces, and/or other changes to
the Licensed Program and Documentation as permitted under the SRA, Customer
shall promptly inform
24
<PAGE>
Cadence in writing and provide such information as Cadence determines necessary
to properly maintain the Licensed Program and Documentation.
(e) Cadence's obligation to provide Maintenance Services pursuant to this
Agreement is dependent upon 1) the continuance in effect between Cadence and
Customer of both the SSVP Agreement and the SRA; 2) Customer's continued good
repair of the Designated Equipment; and 3) the performance by Customer of all of
its obligations set forth in the SSVP Agreement, the SRA and in this Agreement.
(f) Cadence shall not be obligated to provide Maintenance Services
pursuant to this Agreement that are required by any of the following:
(1) abuse, misuse, accident or neglect;
(2) repairs, alterations, and/or modifications which are not
permitted under the SRA and which are performed by other than Cadence or its
agents;
(3) use of supplies or materials not meeting Cadence's requirements;
(4) Use of the Licensed Program for other than the intended purpose
for which licensed and designated;
(5) malfunction, modification or relocation of the Designated
Equipment;
(6) where inadequate backups are supplied.
(g) Cadence may refuse to provide Maintenance Services where, in Cadence's
opinion, a condition exists that represents a hazard to the safety of its
employees or agents.
2. TERM AND TERMINATION:
(a) This Agreement shall commence on the Effective Date set forth below.
The term of Maintenance Services for each Licensed Program supported by Cadence
for Customer per the terms of this Agreement shall begin upon issuance of the
License to Customer and, unless sooner terminated as provided herein,
simultaneously and automatically cease with the termination of the SSVP
Agreement or termination of the License granted under the SRA for the Licensed
Program in question, whichever occurs first.
(b) Where a new version of a Licensed Program has been offered to
Customer, Cadence may terminate Maintenance Services under this Agreement for
all prior versions of said Licensed Program six months after Cadence's first
commercial production shipment of such newer version if Customer has not
installed such newer version within that time. Cadence may also immediately
terminate Maintenance Services for a Licensed Program supported under this
Agreement or this Agreement generally if Customer breaches or fails to perform
any of its obligations (a "Default') under this Agreement, the SSVP Agreement or
the SRA, which Default
25
<PAGE>
is not cured within 30 days after Cadence has given Customer written notice
describing the nature of the Default and demanded its cure.
3. PRICES TERMS AND PAYMENT: The fees for Maintenance Services to be provided
under this Agreement shall be considered included in the Site Subscription
charges set forth in Schedule B of the SSVP Agreement, unless specified
otherwise in a Product Quotation. Payment of the total amount invoiced is due 30
days after the date of invoice.
4. TAXES: Customer will pay or reimburse all federal, state and local taxes
(exclusive of taxes on Cadence's net income), duties and assessments arising on
or measured by amounts payable to Cadence under this Agreement.
5. ADDITIONAL SERVICES: If Cadence agrees to perform services requested by
Customer which are not included as part of this Agreement, such services shall
be billed to Customer at prices and terms determined by Cadence.
6. UPDATES: Updates, consisting of one copy of modifications and improvements to
each Licensed Program and/or Documentation which Cadence determines are required
to achieve the specifications established by Cadence for the Licensed Program
and/or Documentation will be provided at no additional cost. Customer
acknowledges that Cadence will maintain only the most current version of the
Licensed Program. Cadence shall maintain prior versions until the earlier of 6
months from the release of each new version release, or termination of this
Agreement. Upon receipt and installment of an update to a Licensed Program,
Customer may keep one copy of the previous version of the Licensed Program for
archival purposes only and shall destroy all other copies of the previous
version of the Licensed Program.
7. EXCLUDED SERVICES: The following are excluded from this Agreement:
(a) Services connected with relocation of the Licensed Program from the
Designated Equipment or reconfiguration of, or Customer induced problems
associated with, the Designated Equipment, such as its relocation;
(b) Services connected with the maintenance of the Designated Equipment
and its operating system. Cadence does not itself provide hardware maintenance
and, in those cases where it arranges hardware maintenance for a fee,
immediately assigns the contract to its agent without recourse;
(c) The cost of tools, supplies, accessories, media and other expendables
required by Cadence to perform the Maintenance Services;
(d) Maintenance services outside the contiguous United States that would
otherwise be covered by this Agreement.
8. CUSTOMER RESPONSIBILITIES: Customer shall:
26
<PAGE>
(a) Notify Cadence promptly by Cadence electronic problem reporting
software or telephone of Licensed Program problems and provide follow-up reports
in writing. Cadence will confirm receipt of any electronic problem report within
24 hours of receipt and, in the absence of such a confirmation, Customer shall
promptly retransmit such report:
(b) Allow Cadence full access to all Designated Equipment and
communication facilities subject to Customers site security and safety
procedures and provide Cadence reasonable work space and storage and other
normal and customary facilities;
(c) Provide Cadence with reasonable assistance, as requested and ensure
that an employee of Customer is present during all service;
(d) Provide sufficient support and test time on Customer's computer system
to duplicate the problem, certify that the problem is due to a Licensed Program,
and when corrections are complete, certify that the problem has been remedied;
(e) Provide the same standard of care for Licensed Programs and/or
Documentation that it applies to its own products or data of like value to its
business and return any defective Licensed Program and/or Documentation or
attest in writing to the destruction of same as directed by Cadence;
(f) Provide sufficient data to enable Cadence to replicate the problem on
another computer at Cadence's Customer Support Center.
9. RELOCATION OF DESIGNATED EQUIPMENT: Customer shall notify Cadence in writing
30 days prior to moving the Designated Equipment as to its intended new
location. Cadence shall be under no obligation to provide any services under
this Agreement during or as a result of such relocation.
10. PROTECTION OF LICENSED MATERIALS: Each Licensed Program and Documentation
are the confidential and proprietary property of Cadence or third parties from
whom Cadence has obtained marketing rights, Customer receives no rights to and
will not sell, assign, lease, market, transfer, encumber or suffer to exist any
lien or security interest (other than those of Cadence) on, nor allow any
person, firm or corporation to copy, reproduce or disclose, in whole or in part
in any manner, the Licensed Program or Documentation. Customer receives no
rights to and shall not create or attempt to create by reverse engineering,
reverse assembly, reverse compiling or otherwise all or part of the source
programs from any Licensed Program or Documentation or permit any third party to
do so, Customer shall take all reasonable steps, both during and after the term
of this Agreement to insure that no unauthorized person shall have access to the
Licensed Program or Documentation and that no unauthorized copy, in whole or in
part, in any form shall be made.
27
<PAGE>
11. FORCE MAJEURE: Cadence shall not be liable for any loss, damage, or penalty
resulting from delay due to causes beyond its reasonable control, including,
without limitation, delay by its suppliers.
12. NO ASSIGNMENT: Customer may not assign this Agreement and any attempt to do
so shall be void. Customer agrees that this Agreement binds Customer and
Customer's parent, subsidiaries and affiliates and each of their employees,
agents and representatives.
13. DISCLAIMER: IN CONNECTION WITH MAINTENANCE SERVICES RENDERED AND COMPUTER
SOFTWARE AND DOCUMENTATION SUPPLIED UNDER THIS AGREEMENT, NEITHER CADENCE NOR
ANY OF ITS SUBCONTRACTORS OR SUPPLIERS MAKES ANY WARRANTY, EXPRESS OR IMPLIED,
INCLUDING, WITHOUT LIMITATION, ANY WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE
OR OF MERCHANTABILITY OR NONINFRINGEMENT OR ARISING FROM A COURSE OF DEALING OR
USAGE IN TRADE.
14. LIMITATIONS OF LIABILITY:
(a) In no event shall the total cumulative liability of Cadence and its
subcontractors and suppliers to Customer for any reason exceed, to the extent
collected by Cadence, the Site Subscription fee set forth in Schedule B of the
SSVP Agreement for a twelve month period.
(b) CADENCE SHALL NOT BE LIABLE FOR COSTS OF PROCUREMENT OF SUBSTITUTE
GOODS, PROPERTY DAMAGE, PERSONAL INJURY, LOSS OF PROFITS, INTERRUPTION OF
BUSINESS OR ANY OTHER SPECIAL, CONSEQUENTIAL OR INCIDENTAL DAMAGES, HOWEVER
CAUSED, WHETHER FOR BREACH OF WARRANTY, CONTRACT, TORT, NEGLIGENCE, STRICT
LIABILITY OR OTHERWISE. Customer acknowledges that the fees specified to be paid
to Cadence for Maintenance Services reflect this allocation of risk.
15. NOTICES: Notices to Customer shall be sent to the address specified beneath
Customer's signature below and to Cadence shall be sent to 555 River Oaks
Parkway, San Jose, California 95134-1937, Attn: Contract Department, or such new
address as a party specifies to the other in writing.
16. ARBITRATION: Any unresolved dispute arising pursuant to this Agreement shall
be settled by arbitration, provided that nothing in this Section 16 shall
restrict the right of either party to apply to a court of competent jurisdiction
for emergency relief pending final determination of a claim by arbitration in
accordance with this Section 16. Such arbitration shall be held in the city of
San Jose, California U.S.A, in accordance with the then existing commercial
arbitration rules of the American Arbitration Association. The decision of the
arbitrator shall be binding upon the parties and judgment in accordance with
that decision may be entered in any court having jurisdiction thereof. The
prevailing party in any arbitration or judicial action brought to enforce
28
<PAGE>
or interpret this Rental Agreement or for relief for its breach shall be
entitled to recover its costs (including its share of arbitration fees) and its
reasonable attorney(s)' fees therein incurred.
17. GENERAL: This Agreement is governed by the laws of the State of California,
U.S.A. It is the complete and exclusive statement of the agreement between the
parties and supersedes all proposals, oral or written, and all other
communications between the parties relating to the subject matter of this
Agreement. Any terms and conditions of any purchase order or other instrument
issued by Customer in connection with this Agreement which are in addition to,
inconsistent with or different from the terms and conditions of this Agreement
shall be of no force or effect. This Agreement may be modified only by a written
instrument duly executed by authorized representatives of Cadence and Customer.
Any waiver by either party of any condition, part, term or provision of this
Agreement shall not be construed as a waiver of any other condition, part, term
or provision or a waiver of any future event or circumstance. If any provision
of this Agreement is held invalid or unenforceable, the remainder of the
Agreement shall continue in full force and effect.
This Agreement and any supplement to it shall be effective binding on the
parties only after acceptance at Cadence's offices in California by an officer
of Cadence.
29
<PAGE>
HARRIS
Semiconductor Sector
- - -----------------------------------------
of Harris Corporation
(Name of Customer)
By: /s/ Karl McCalley 3-24-94
--------------------------------------
(Signature)
K. McCalley, Vice President-Systems
- - -----------------------------------------
(Name & Title)
Address: 1301 Woody Burke Road
---------------------------------
(Street)
Melbourne, FL 32901
---------------------------------
(City, State, Zip Code)
CADENCE
Cadence Design Systems, Inc.
By: /s/ H. Raymond Bingham
- - -----------------------------------------
H. Raymond Bingham
Executive Vice President & Chief Financial Officer
Effective Date: 21 - MAR - 94
-----------------
30
<PAGE>
SCHEDULE - E
Frozen Configuration
REF: Site Subscription
Agreement No. SSVP - 93E24TP
Effective Date: 01 July 1993
31
<PAGE>
SCHEDULE E
FROZEN CONFIGURATION
<TABLE>
<CAPTION>
Qty Frozen Product Description Current/Equivalent Product Description
<S> <C> <C> <C> <C>
94 151-SUL Design Framework-Color 111-SUL Design Framework
183 200-SUL Design Entry 200-SUL Design Entry
2 203-SUL Low Cost Schematics Color 111 .SUL Design Framework
200-SUL Design Entry
206-SUL Simulation Environment
207-SUL Waveform
178 206-SUL Simulation Environment 206-SUL Simulation Environment
207-SUL Waveform
57 211-SUL Timing Analyzer 211-SUL Timing Analyzer
22 213-SUL Silos II Logic Simulator 26000 (VXL)-SJL Verilog-XL Logic Simulator
17 214-SUL Silos II Fault Simulator 26500 (VFT)-SJL Verifault-XL Fault Simulator
8 240-SUL Remote Cadence Silos II Interface EOL Contact SimuCAD
8 243-SUL Remote HSPICE 276-SUL HSPICE Interface
45 270-SUL Silos Logic Interface EOL Contact SimuCAD
36 271-SUL Silos Fault Interface EOL Contact SimuCAD
45 274-SUL SPICE Interface w/SPICE 2G.6 274-SUL SPICE Interface w/SPICE 2G.6
5 275-SUL SPICE Interface 274-SUL SPICE Interface w/SPICE 2G.6
17 276-SUL HSPICE Interface 276-SUL HSPICE Interface
28 279-SUL Simulation & Test Language (STL) 279-SUL Simulation & Test Language (STL)
16 283-SUL Open System Simulation (OSS) 283-SUL Open System Simulation (OSS)
1 285-SUL STL Sentry Code Generator 285-SUL STL Sentry Code Generator
12 295-SUL Testability Analyzer 279-SUL Simulation & Test Language (STL)
113 300-SUL Virtuoso Polygon Layout Editor 300-SUL Virtuoso Layout Editor
61 310-SUL PDcheck 312-SUL Diva/iDRC
56 315-SUL PDextract 316-SUL Diva/iLPE
55 320-SUL PDcompare 322-SUL Diva/iLVS
11 325-SUL ERC 314-SUL Diva/iERC
1 330-SUL PDverify 334-MUL Remote Diva
1 335-SUL Remote PDV Server 334-MUL Remote Diva
9 31000-SUL Analog Artist Electrical Upgrade 31000-SUL Analog Artist Design System
9 32110-SUL Analog Artist Opamp Modeler 32110-SUL Analog Artist Opamp & Comparator
Macromodel Generator
9 32120-SUL Analog Artist Statistical Package 32120-SUL Analog Artist Statistical Package
1 33160-SUL Analog Artist PDcompare Back Annotation 33301-SUL Analog Artist Verification Upgrade
25 400-SUL Cell Ensemble 14100-SUL Cell Ensemble with Preview Basic
1 470-MUL Gate Ensemble 50K 470-MUL Gate Ensemble 50K
1 471-MUL Clock Tree Synthesis 50K 471 -MUL Clock Tree Synthesis 50K
1 472-MUL Timing Assurance 472-MUL Timing Assurance
1 500-SUL Module Maker Development 501-SUL Module Maker Upgrade
31 550-SUL Structure Compiler 550-SUL Structure Compiler
2 650-SUL Floor Planner (FP) 14000-SUL Preview Front End Floor Planner
2 660-SUL Standard Cell Block Ensemble (SBB) 14000-SUL Preview Front End Floor Planner
2 670-SUL Block Place & Route (BPR) 14400-SUL DLM Place & Route System with Preview Expert
2 731-MUL Dracula II/DRC 731-MUL Dracula II/DRC
2 732-MUL Dracula II/ERC 732-MUL Dracula II/ERC
2 733-MUL Dracula II/LVS 733-MUL Dracula II/LVS
2 734-MUL Dracula II/LPE 734-MUL Dracula II/LPE
1 739-MUL EBEAM(1)/MEBES 780-MUL Dracula PG/E(4) All Formats
1 742-MUL Plot/Versatec 772-MUL Plot/Versatec
1 743-MUL Port Layde 773-MUL Dracula/Layde (Dracula II and Dracula III)
1 745-MUL TLAYDE/4106 773-MUL Dracula/Layde (Dracula II and Dracula III)
1 750-MUL PG/E(4)/All 4 formats 780-MUL Dracula PG/E(4) All Formats
</TABLE>
32
<PAGE>
<TABLE>
<CAPTION>
Qty Frozen Product Description Current/Equivalent Product Description
<S> <C> <C> <C> <C>
3 769-MUL EBEAM(1)/MEBES 780-MUL Dracula PG/E(4) All Formats
2 774-MUL SLAYDE 773-MUL Dracula/Layde (Dracula II and Dracula III)
3 781-MUL Dracula III/CORE 761-MUL Dracula III/HDRC
65 900-SUL SKILL Development Environment 900-SUL SKILL Development Environment
5 905-SUL dbAccess 900-SUL SKILL Development Environment
10 940-SUL EDIFIN (200) 940-SUL EDIFIN (200)
7 945-SUL EDIFOUT (200) 945-SUL EDIFOUT (200)
75 960-SUL STREAM To/From Cadence 960-SUL STREAM To/From Cadence
19 971-SUL EDIT to Cadence 940-SUL EDIF1N (200)
114 975-SUL B&W Versatec/Plot 991-SUL Hardcopy Intermediate File Generator
992-SUL Versatec Hardcopy Output
31 967-SUL Daisy to Cadence full Schematic Transfer 995-SUL HP-GL Hardcopy Output
28 978-SUL Color Versatec 991-SUL Hardcopy Intermediate File Generator
992-SUL Versatec Hardcopy Output
126 980-SUL Apple Laser Writer Postscript 994-SUL PostScript Hardcopy Output
3 985-SUL Versatec RPM Plotting 991-SUL Hardcopy Intermediate File Generator
992-SUL Versatec Hardcopy Output
9 89011-SUL Remote PDV Interface
1 IF965
1 IF985
1 LIP923V
4 VT910 ValidGED FET22 Concept Schematic
2 VT912 ValidTIME 26400 Veritime Timing Analyzer
2 VT916 Logic Workbench Framework VT16 Logic Workbench Framework
2 VT917 RapidSIM VT17 RapidSIM
2 VT922 ValidCOMPILER VT22 ValidCOMPILER
2 VT923 ValidPACKAGER VT23 ValidPACKAGER
</TABLE>
Legend:
EOL End of Life (Discontinued)
Note:
Product 213 & 218 (Silos Logic Simulator) and product 214 & 219 (Silos Fault
simulator) were upgraded to Verilog-XL and Verifault in accordance with memo
dated 8/6/91.
33
EXHIBIT 10.30
HARRIS Cadence
SEMICONDUCTOR
SITE SUBSCRIPTION ADDENDUM
Effective Date: 12-19-97
This Site Subscription Addendum ("Addendum") made between Cadence Design
Systems, Inc. ("Cadence") and Harris Corporation acting through its
Semiconductor Sector ("Harris"), provides adjustments and clarifications to the
terms of Site Subscription Agreement No. SSVP - 93E24TP effective 01 July 1993
(the "Agreement") entered into by the parties.
================================================================================
1. Precedence: The provisions of this Addendum shall take precedence in the
event of a conflict or inconsistency with provisions of the Agreement and
its Schedules, which, subject to the modifications and clarifications set
forth herein, are hereby confirmed in their entirety.
2. Definitions: Unless defined otherwise herein, capitalized terms defined in
the Agreement, when used in this Addendum or one of the Exhibits hereto,
shall have the meanings ascribed to them in the Agreement. The following
definitions and all definitions set forth in the Exhibits to this Addendum
are controlling with respect to any interpretation of the terms of this
Addendum as well as any further modification to the Agreement. To the
extent any definition herein conflicts with a term defined in the
Agreement the definition as set forth herein shall apply to this Addendum
and any further modification to the Agreement.
(a) "Update" means one copy of those modifications and improvements to
one of the Licensed Materials which Cadence determines is required
to achieve the specifications established by Cadence for the
Licensed Material and which Cadence releases as a standard
commercial product offering and under its standard maintenance terms
to its other commercial customers having the same version of Cadence
Software used on the same type of Designated Equipment as Harris.
(b) "New Product" and "Upgrade" are synonymous terms each meaning a
Licensed Material which is a new product or enhancement or addition
to a Licensed Material other than a Category M product, a Category D
product or any Update which Licensed Material Cadence has not yet
made available to Harris or other commercial customers based on
predetermined standard support service charges associated with a
software maintenance contract, and which Licensed Material shall
only be made available under the Agreement by payment of an
additional license fee or upgrade charge. To the extent such
products are developed or acquired by Cadence after the effective
date of the Addendum they will be added to the List of Commercially
Available Cadence Products set forth in Section 5 of Exhibit A.
(c) "Minimal Differences" with respect to a Licensed Material and a New
Product or Upgrade is a determination by the Gray Team that any
differences between the Licensed Material and the New Product or
Upgrade in terms of price, functionality, or features are so minimal
that they do
Page 1
<PAGE>
not rise to a level which warrants payment of a fee upon exchange of
the Licensed Material for the New Product or Upgrade.
(d) "Licensed Material" means a Cadence Product licensable under the
Agreement and for which Harris has acquired or will acquire a
license to use the Cadence Product under the Agreement.
(e) "Gray Team" means a methodology team formed of representatives from
both Cadence and Harris having authority as further defined in
Paragraph 5 of Exhibit A to this Addendum, which team is authorized
by both parties to determine additional fees payable by Harris for
license of certain Licensed Materials set forth in the List of
Currently Available Cadence Products.
(f) "List of Commercially Available Cadence Products" means the listing
of Cadence Products set forth in Section 5 of Exhibit A herein and
from time to time revised by the Gray Team.
(g) "Price Book" means a list of standard prices for Cadence Products as
published from time to time by Cadence, including but not limited to
listing 1C4.42 with 97A and 97AW additions.
3. Licensed Materials as set out according to Schedule A of the Agreement are
superceded by the List of Commercially Available Cadence Products as
modified from time to time by the Gray Team. See Paragraph 5 of Exhibit A.
4. Designated Customer Site and Design Subcontractors: Licensed Materials
licensed to Harris under Article 2 of the Agreement are licensed according
to the terms of the Software Rental Agreement (SRA) attached to the
Agreement as Schedule C except as follows:
(a) Designated Site means any Hams Semiconductor facility operated under
the control of Harris.
(b) Use of Licensed Materials by Design Subcontractors under Paragraphs
2.2 and 2.3 of the Agreement includes authorized use of Licensed
Materials at locations other than Designated Sites and on equipment
other than Designated Equipment at no additional charge. All such
uses shall be in accord with the terms of a Product Loan Agreement
executed by Harris and each Design Subcontractor substantially in
accord with terms of Exhibit B, which shall be approved in advance
by Cadence and Cadence shall not withhold such approval provided
such terms are reasonable, but which terms may be more specifically
defined or adjusted as the parties may agree upon through good faith
negotiation.
5. Termination for Convenience: Section 4.2.2 of the Agreement is deleted
and, except in accord with the Options provided to Harris under Paragraph
10 of this Addendum, neither party has the right to terminate the
Agreement for convenience.
6. Dedicated Support; IC TF Participation and Technical Support: Effective
January 12, 1998 Cadence shall provide to Harris, under the Agreement, one
full-time on-site technical engineering support individual (the "ATM") at
no additional charge and pursuant to the terms of a Professional Services
Agreement substantially in the form of Exhibit C, the terms of which shall
be more specifically defined or adjusted as the parties may agree upon
through good faith negotiation prior to providing the
Page 2
<PAGE>
ATM. Also at no additional cost to Harris, Harris is entitled to
participate in Cadence's IC Technology Forums of interest to Harris.
7. No Recruitment: Each party agrees that it shall not actively or directly
solicit or recruit employees of the other party who have been physically
present at a Designated Site as defined in this Addendum. This undertaking
shall not preclude an employee of either party from independently pursuing
and securing employment opportunities with the other on such employee's
own initiative except that the party hiring such employee shall not pay
its other employees incentives in conjunction with such hiring.
8. Effective Date and Term of the Addendum: This Addendum shall take effect
on December 31, 1997 and the term of this Addendum shall be commensurate
with the term of the Agreement.
9. Modification of Exhibit A Provisions: On January 1, 2001 the following
modifications shall take effect.
(a) Definition 2.2 of Exhibit A shall be replaced with the following:
"Category I" products means New Products and Updates that have been
developed internally by Cadence, including all derivative products,
and which have more than Minimal Differences from the related
Category M or D products of Section 5, and all such products are
available to Harris under the Agreement for no additional license
fee.
(b) Definition 2.5 of Exhibit A shall be replaced with the following:
"Category B2" products means: New Products and Updates that have
been acquired by Cadence from a third party, replace a Current
Offering and contain more than Minimal Differences with respect to
the Current Offering; or New Products and Updates for which Cadence
pays a third party a royalty. If such additional technology is
desired, licenses are available for an incremental fee of from 0 to
20% of the then-current price book.
(c) Definition 2.6 of Exhibit A shall be replaced with the following:
"Category B3" products mean: New Products and Updates that have been
acquired from a third parry, are not currently licensed but are
within the scope of the applications offered under this Agreement
and Addendum. This Category also includes any new Cadence product
that is introduced by Cadence as a result of a third party
outsourcing or sub-contract activity. Such licenses are available
for an incremental fee of from 0 to 20% of the then current price
book.
(d) All Licensed Materials of Categories I, A and B1 become Category M
products for which no additional fees are due under the Agreement
provided that the selection of the products to be re-categorized is
consistent with the Exhibit A definitions of product categories.
Cadence and Harris shall negotiate in good faith new fees and usage
rights for all other Licensed Materials identified on the most
current version of the List of Commercially Available Cadence
Products for the remaining term of the Agreement.
10. Options: By providing Cadence written notice at least six months
beforehand that it elects to do so, Harris shall exercise either Option A
or Option B below, effective January 1, 2001.
Page 3
<PAGE>
(a) Option A. At its sole discretion, Harris may terminate the Agreement
at no cost or liability and may elect to convert any Licensed
Materials identified in the List of Commercially Available Cadence
Products to become part of the Frozen Configuration in accord with
the terms of Paragraph 4.3.2 of the Agreement.
(b) Option B. The modifications of Paragraph 9 shall not take effect;
all Licensed Materials of Categories I, A and B1 become Category M
products for which no fees are due, provided that the selection of
the products to be re-categorized is consistent with the Exhibit A
definitions of product categories; and Cadence and Harris shall
negotiate in good faith new fees and usage rights for all other
Licensed Materials identified on the most current version of the
List of Commercially Available Cadence Products for the remaining
term of the Agreement.
11. Frozen Configuration Conversion: Upon expiration of the Agreement or
termination of the Agreement in accord with any operative terms set forth
in the Agreement as modified by this Addendum, the current version of all
Licensed Materials for which Harris has acquired a fully paid-up 99-year
license shall be released to Harris.
IN WITNESS WHEREOF, the Parties hereto have entered into this Addendum as of its
Effective Date first set forth above upon final execution by the last signatory
hereto.
Harris Corporation Cadence Design Systems, Inc.
Semiconductor Sector
By: /s/ James A. Martin By: /s/ R. L. Smith McKeithen
-------------------------------- ------------------------------------
(date) (date)
Typed: James A. Martin Typed: R. L. Smith McKeithen
----------------------------- ---------------------------------
Title: Director, Contracts Title: VP and General Counsel
----------------------------- ---------------------------------
Exhibits follow: Exhibit A - Addendum 1 Fee Methodology
Exhibit B - Product Loan Agreement
Exhibit C - Professional Services Agreement
Page 4
<PAGE>
Cadence
Exhibit A of Site Subscription Addendum to Site Subscription Agreement No. SSVP
- - - 93E24TP
================================================================================
1. This Exhibit A to the above-identified Addendum defines fee-based
categories for current and future Licensed Materials; identifies all
Licensed Materials as of December 31, 1997 and sets forth an agreed-upon
methodology to classify new Licensed Materials according to the categories
defined below. As of the effective date of this Addendum, Harris has
licensed only the Category M and D products in section 5 of Exhibit A for
those fees in Schedule B of the Agreement. New Products, Upgrades or other
products not currently licensed can be licensed for the incremental fees
in section 2 of Exhibit A.
2. Unless defined otherwise herein, capitalized terms used in this Exhibit A
shall have the meanings ascribed to them in the Agreement. New Products
that meet the definitions of Categories A or B1 in this section shall upon
request of Harris be provided at no additional fee in exchange for
corresponding Category M or Category D products on the List of
Commercially Available Cadence Products. Licenses for products that meet
the criteria of other categories can be acquired for the additional fees
shown below, based on List Prices current at the time of request.
2.1 "Category M" products means products identified in the List of
Commercially Available Cadence Products as Category M Products and
Updates thereto all of which are available at no additional fee
under the Agreement.
2.2 "Category I" products means New Products and Updates that have been
developed internally, including all derivative products, and which
have more than Minimal Differences from the related Category M or D
products of List of Commercially Available Cadence Products, and can
be licensed for an incremental fee of 2% of the then current price
book.
2.3 "Category A" products means New Products and Updates that have been
acquired from a third party and have no more than Minimal
Differences from the related Category M or D product of the List of
Commercially Available Cadence Products.
2.4 "Category B1" products means New Products and Updates that have been
acquired from a third party to replace a Current Offering entirely,
and that contain more than Minimal Differences with respect to the
Current Offering. Harris represents to Cadence it shall not utilize
the additional functionality and features considered to have more
than Minimal Differences contained within any Category B1 product.
If Harris desires to license additional functionality or features
contained within the Category B1 product, then such licenses are
available as Category B2 products, for an incremental fee of from 2
to 20% of the then current price book.
2.5 "Category B2" products means: New Products and Updates that have
been acquired from a third party, replace a Current Offering and
contain more than Minimal Differences with respect to the Current
Offering; or New Products and Updates for which Cadence pays a third
party a royalty. If such additional technology is desired, licenses
are available for an incremental fee of from 2 to 20% of the
then-current price book.
Page 5
<PAGE>
2.6 "Category B3" products means New Products and Updates that have been
acquired from a third party, are not currently licensed but are
within the scope of the applications offered under this Agreement
and Addendum. This Category also includes any new Cadence product
that is introduced by Cadence as a result of a third party
outsourcing or sub-contract activity. Such licenses are available
for an incremental fee of from 2 to 20% of the then current price
book.
2.7 "Category C" products means products identified in the List of
Commercially Available Cadence Products and any New Products and
Updates that are outside the scope of the applications licensable
under this Agreement and Addendum all of which are hereby licensable
for an incremental fee of 20% of the then current price book.
2.8 "Category D" products means Current Offerings and Updates thereto
that during the term of the Agreement are divested by Cadence to
third parties who continue to support the products for no
incremental fee to the Base Fees as described in Schedule B of the
Agreement.
3. Harris and Cadence have established a Gray Team, which Team has
determined, with respect to Category B2 and B3, additional fees to be paid
for use of Licensed Materials such as required according to Paragraph 5
below. Each party hereby authorizes its representatives on the Gray Team
to agree by consensus with representatives of the other party, (a) on
binding additional fees for Licensed Materials for which the fees are to
be determined from a stated range; and (b) with respect to any new
Licensed Material: (i) whether any Minimal Differences exist; and (ii) on
binding additional fees or ranges of fees payable by Harris for use of the
new Licensed Materials added to the List of Currently Available Cadence
Products. Factors which the Gray Team shall consider in setting the fees
shall include as a minimum: (a) current status of functionality
development at Cadence as of the date of functionality acquisition, (b)
future plans of Cadence for functionality development as of the date of
functionality acquisition, and (c) status of Current Offerings the new
functionality replaces, both at Cadence and Harris. Upon request of either
party the Gray Team shall meet to determine such fees with respect to new
products in categories B1, B2 or B3 products at any time during the term
of this Agreement.
4. Notwithstanding any fees set forth herein for products of Categories B2 or
B3 of Section 5 below, the following Licensed Materials having annual
license fees totaling $101,438 are hereby licensed to Harris without
charge under the terms of the Agreement for the term beginning January 1,
1998 and ending December 31, 2000.
Page 6
<PAGE>
<TABLE>
<CAPTION>
Product # Description of Products Unit Extended Yearly Net
Qty. List List Cost(*) Fee
- - -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
JYMO1 ICC Journeyman 6 $85,000 $510,000 10.0% $51,000
MST01 ICC Master 1 $120,000 $120,000 12.5% $15,000
PRT01 Power Routing Option (requires Journeyman
or better) 1 $6,000 $6,000 10.0% $600
GRT01 Global Routing Option (requires Journeyman
or better) 1 $30,000 $30,000 15.0% $4,500
EF01 EditFast Option (requires Apprentice or better) 1 $10,000 $10,000 15.0% $1,500
LD01 LEF/DEF Interface 1 $6,000 $6,000 15.0% $900
SP2200 SPECCTRA Expert Autorouter 1 $40,000 $40,000 10.0% $4,000
SP2100 SPECCTRA Designer Autorouter 2 $25,000 $50,000 10.0% $5,000
VT2200UG2 Allegro Designer (VT2100) to Allegro Expert 1 $20,000 $20,000 10.0% $2,000
(VT2200) Upgrade
H315 Physical DP (Pillar) 1 $85,000 $85,000 15.0% $12,750
32710 Pearl Cell 1 $36,250 $36,250 5.0% $1,813
32700 Pearl Full-Custom 1 $47,500 $47,500 5.0% $2,375
-------------------------------------- -------- --------
Products comprising $-100,000 "credit" $960,750 $101,438
Per "Gray Team" (*)
</TABLE>
Page 7
<PAGE>
5. List of Currently Available Cadence Products (December 31, 1997).
List of Currently Available Cadence Products (December 31, 1997)
<TABLE>
<CAPTION>
Yearly Costs @ Categories (per "Gray Team") Unit List Yearly Fee
Locked Floating
M A B1 B2 B3 C D Product # Product Name (Title) Release Price Price Locked Floating
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
20% ATM ATM Verification DES $25,000 n/a $5,000
Environment 3.6
20% ATMALB ATM Network Module DES $12,000 n/a $2,400
Library 3.6
20% BDE Block Diagram Editor for SPW $12,000 n/a $2,400
SPW 4.0
20% CGS32C Code Generation System SPW $12,000 n/a $2,400
(CGS) using AT&T DSP32C 4.0
20% CGS96K Code Generation System SPW $12,000 n/a $2,400
(CGS) using Motorola 4.0
CSM96002
20% CGSC Code Generation System SPW $12,000 n/a $2,400
(CGS) Generic 4.0
20% CGSC30 Code Generation System SPW $12,000 n/a $2,400
(CGS) using TI TMS320C30 4.0
20% CGSC40 Code Generation System SPW $12,000 n/a $2,400
(CGS) using TI 4.0
TMS320C40
20% CGSDSP Porting Kit: DSP ICs SPW $18,000 n/a $3,600
4.0
20% CGSMPX Porting Kit: SPW $6,000 n/a $1,200
CGS/MultiProx Interface 4.0
20% COMFLT Floating - Point SPW $6,000 n/a $1,200
Communication Library 4.0
20% COMFXP Fixed-Point SPW $9,600 n/a $1,920
Communication Library 4.0
20% DES BONeS DESIGNER 4.0 $18,000 n/a $3,600
DES
20% DESB01 BONeS DES University DES $6,000 n/a $1,200
Bundle (FL) for S4 3.6
20% DESC05 CSMA/CD MAC Module DES $5,400 n/a $1,080
3.6
20% DESC06 Token Ring MAC Module DES $5,400 n/a $1,080
3.6
20% DESC07 FDDI MAC Module DES $5,400 n/a $1,080
3.6
20% DESC08 Logical Link Control DES $3,600 n/a $720
Protocol Module 3.6
20% DESC09 ATM MAC Library DES $12,000 n/a $2,400
3.6
</TABLE>
Page 8
<PAGE>
List of Currently Available Cadence Products (December 31, 1997)
<TABLE>
<CAPTION>
Yearly Costs @ Categories (per "Gray Team") Unit List Yearly Fee
Locked Floating
M A B1 B2 B3 C D Product # Product Name (Title) Release Price Price Locked Floating
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
20% DESPRO BONeS DESIGNER PRO DES $36,000 n/a $7,200
3.6
20% DMSPW Data Management SPW $6,000 n/a $1,200
4.0
20% DPMA16 Processor Model for AT&T SPW $9,000 n/a $1,800
16xx Product Family 4.0
20% DPMDGR Processor Model for DSP SPW $9,000 n/a $1,800
Group's Oak & Pine Cores 4.0
20% DPMM30 Processor Model for SPW $9,000 n/a $1,800
Motorola's 563xx Product 4.0
Family
20% DPM595 Processor Model for SGS SPW $9,000 n/a $1,800
THOMPSON D950 4.0
20% DPMT50 Processor Model for TI SPW $9,000 n/a $1,800
C5c Product Family 4.0
20% DPMT54 Processor Model for TI SPW $9,000 n/a $1,800
C54x Product Family 4.0
20% EXT Extendible Network DES $12,000 n/a $2,400
Module Toolkit 3.6
20% FDS Filter Design System SPW $4,800 n/a $960
4.0
20% FSMDES Finitre State Machine DES $6,000 n/a $1,200
Editor for BONeS 3.6
20% FSMSPW Finite State Machine SPW $12,000 n/a $2,400
Editor for SPW 4.0
20% FXP Fixed Point Optimizer SPW $24,000 n/a $4,800
4.0
20% HDS Hardware Design System: SPW $12,000 n/a $2,400
Main 4.0
20% HLBMIC Hardware Design System SPW $4,800 n/a $960
Micro Library 4.0
20% HLKHVH HDS VHDL Link SPW $12,000 n/a $2,400
4.0
20% HLKHVR5 HDS Verilog Link SPW $12,000 n/a $2,400
4.0
20% HLS Visual Architect SPW $70,000 n/a $14,000
4.0
20% INTBLB Bridge Library DES $3,600 n/a $720
3.6
20% INTRLB Router Library DES $9,000 n/a $1,800
3.6
20% ISL Interactive Simulation SPW $3,600 n/a $720
Library 4.0
</TABLE>
Page 9
<PAGE>
List of Currently Available Cadence Products (December 31, 1997)
<TABLE>
<CAPTION>
Yearly Costs @ Categories (per "Gray Team") Unit List Yearly Fee
Locked Floating
M A B1 B2 B3 C D Product # Product Name (Title) Release Price Price Locked Floating
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
20% ISM Interactive Simulation DES $6,000 n/a $1,200
Manager 3.6
20% LANELB Ethernet Switch Library DES $9,000 n/a $1,800
3.6
20% LANETH Ethernet Segment DES $1,200 n/a $240
3.6
20% LANFDI FDDI Segment DES $2,400 n/a $480
3.6
20% LANHBT 100Base-T Segment DES $2,400 n/a $480
3.6
20% LANTBT 10Base-T Segment DES $1,200 n/a $240
3.6
20% LANTNR Token Ring Segment DES $2,400 n/a $480
3.6
20% MDMSPW SPW Model Manager SPW $12,000 n/a $2,400
4.0
20% MPX MultiProx SPW $18,000 n/a $3,600
4.0
20% MTL SPW Interface with MATLAB SPW $6,000 n/a $1,200
4.0
20% PJED Project Editor DES $6,000 n/a $1,200
3.6
20% RDRRFL Radar & RF Library SPW $6,000 n/a $1,200
4.0
20% SAT SatLab DES $12,000 n/a $2,400
3.6
20% SDE Signal Calculator for SPW SPW $9,600 n/a $1,920
4.0
20% SMKCLF HDS Co-Simulation Link SPW $6,000 n/a $1,200
to Leapfrog 4.0
20% SMKCXL HDS Co-Simulation Link SPW $6,000 n/a $1,200
to Verilog-XL 4.0
20% SMKSVS HDS Co-Simulation Link SPW $6,000 n/a $1,200
to VSS 4.0
20% SPB Signal Flow Simulator SPW $12,000 n/a $2,400
for SPW 4.0
20% SPW Signal Processing SPW $30,000 n/a $6,000
WorkSystem (SPW) 4.0
20% SPWPRO SPW Pro SPW $57,600 n/a $11,520
4.0
20% TRGABT Analyzer Based Traffic DES $3,600 n/a $720
Generator 3.6
20% TRGATG Application Traffic DES $4,800 n/a $960
Generator 3.6
</TABLE>
Page 10
<PAGE>
List of Currently Available Cadence Products (December 31, 1997)
<TABLE>
<CAPTION>
Yearly Costs @ Categories (per "Gray Team") Unit List Yearly Fee
Locked Floating
M A B1 B2 B3 C D Product # Product Name (Title) Release Price Price Locked Floating
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
20% TRGSBT Statistical/Bursty DES $1,200 n/a $240
Traffic Generator 3.6
20% WANFRL Frame Relay Cloud DES $4,800 n/a $960
3.6
20% WANWNL WAN Links DES $3,600 n/a $720
3.6
20% WANX25 X.25 Cloud DES $4,800 n/a $960
3.6
20% WSL095 IS-95 Wireless Standard, SPW $36,000 n/a $7,200
System-level 4.0
Verification Environment
20% WSL136 IS - 54/136 Wireless SPW $36,000 n/a $7,200
Standard, System-level 4.0
Verification Environment
20% WSLGSM GSM Wireless Standard, SPW $36,000 n/a $7,200
System-level 4.0
Verification Environment
0% 111 Design Framework IC 4.42 $10,000 $12,500 $0 $0
0% 206 Simulation Environment IC 4.42 $5,000 $6,250 $0 $0
0% 207 Waveform IC 4.42 $3,000 $3,750 $0 $0
0% 276 HSPICE Interface IC 4.42 $5,000 $6,250 $0 $0
0% 278 Composer-to-Spectre IC 4.42 $12,000 $15,000 $0 $0
Simulation Environment
0% 279 Simulation & Test IC 4.42 $5,000 $6,250 $0 $0
Language
0% 300 Virtuoso Layout Editor IC 4.42 $30,000 $37,500 $0 $0
0% 302 Schematic Option for IC 4.42 $5,000 $6,250 $0 $0
Layout (300)
0% 305 Virtuoso Compactor IC 4.42 $20,000 $25,000 $0 $0
0% 312 Diva/iDRC IC 4.42 $18,000 $22,500 $0 $0
0% 314 Diva/iERC IC 4.42 $18,000 $22,500 $0 $0
0% 316 Diva/iLPE IC 4.42 $18,000 $22,500 $0 $0
0% 318 Diva/iPRE IC 4.42 $12,000 $15,000 $0 $0
0% 322 Diva/iLVS IC 4.42 $18,000 $22,500 $0 $0
0% 365 InQuery IC 4.42 $15,000 $18,750 $0 $0
0% 370 Virtuoso Layout IC 4.42 $50,000 $62,500 $0 $0
Synthesizer
0% 373 Timing Assurance IC 4.42 $20,000 $25,000 $0 $0
Placement Option for
Virtuoso Layout
Synthesizer (370)
0% 374 Cell Optimizer Option IC 4.42 $40,000 $50,000 $0 $0
for Layout Synthesizer
</TABLE>
Page 11
<PAGE>
List of Currently Available Cadence Products (December 31, 1997)
<TABLE>
<CAPTION>
Yearly Costs @ Categories (per "Gray Team") Unit List Yearly Fee
Locked Floating
M A B1 B2 B3 C D Product # Product Name (Title) Release Price Price Locked Floating
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
0% 550 Structure Compiler IC 4.42 $15,000 $18,750 $0 $0
0% 581 Vampire HDRC IC 4.42 $85,000 $106,250 $0 $0
0% 582 Vampire MP IC 4.42 $50,000 $62,500 $0 $0
0% 583 Vampire HLVS IC 4.42 $75,000 $93,750 $0 $0
0% 585 Vampire RCX IC 4.42 $110,000 $137,500 $0 $0
0% 589 VampView IC 4.42 $15,000 $18,750 $0 $0
0% 681 ConcICe IC 4.42 $25,000 $31,250 $0 $0
0% 727 Dracula ERC IC 4.42 $17,000 $21,250 $0 $0
0% 728 Dracula LPE IC 4.42 $43,000 $53,750 $0 $0
0% 729 Dracula PRE IC 4.42 $25,000 $31,250 $0 $0
0% 730 Dracula PLOT - IC 4.42 $10,000 $12,500 $0 $0
Calcomp/Versatec
0% 731 Dracula II/DRC IC 4.42 $60,000 $75,000 $0 $0
0% 733 Dracula II/LVS IC 4.42 $47,000 $58,750 $0 $0
0% 761 Dracula III/HDRC IC 4.42 $70,000 $87,500 $0 $0
0% 763 Dracula III/HLVS IC 4.42 $62,000 $77,500 $0 $0
0% 780 Dracula PG/E - 4 Formats IC 4.42 $62,000 $77,500 $0 $0
0% 792 Distributed Dracula IC 4.42 $50,000 $62,500 $0 $0
Option
0% 900 SKILL Development IC 4.42 $15,000 $18,750 $0 $0
Environment
0% 940 EDIFIN (200) IC 4.42 $5,000 $6,250 $0 $0
0% 945 EDIFOUT (200) IC 4.42 $5,000 $6,250 $0 $0
0% 952 EDIF PAK Netlist IC 4.42 $8,000 n/a $0
0% 953 EDIF PAK Schematic IC 4.42 $18,000 n/a $0
0% 960 STREAM to/from Cadence IC 4.42 $3,000 $3,750 $0 $0
0% 963 CIFIN IC 4.42 $3,000 $3,750 $0 $0
0% 964 CIFOUT IC 4.42 $3,000 $3,750 $0 $0
0% 11400 Virtuoso Mask Design IC 4.42 $45,000 $56,250 $0 $0
System
0% 11701 Dracula III Basic Bundle IC 4.42 $125,000 $156,250 $0 $0
(DRC, ERC, LVS)
0% 11702 Dracula III Advanced IC 4.42 $135,000 $168,750 $0 $0
Bundle (DRC, ERC, LVS,
LPE)
0% 11703 Dracula III RC IC 4.42 $155,000 $193,750 $0 $0
Extraction Bundle
EOL1 11710 Dracula II Distributed IC 4.42 $30,000 $0 $0
Slave
0% 12110 Communications Manager IC 4.42 n/a n/a
</TABLE>
Page 12
<PAGE>
List of Currently Available Cadence Products (December 31, 1997)
<TABLE>
<CAPTION>
Yearly Costs @ Categories (per "Gray Team") Unit List Yearly Fee
Locked Floating
M A B1 B2 B3 C D Product # Product Name (Title) Release Price Price Locked Floating
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
0% 12111 Communications Manager IC 4.42 $50,000 n/a $0
API
0% 12141 Integrator's Toolkit - IC 4.42 $120,000 n/a $0
Database
0% 21060 Composer: VHDL Interface IC 4.42 $5,000 $6,250 $0 $0
0% 21400 Composer: Analysis IC 4.42 $5,500 $6,875 $0 $0
Environment
0% 21920 STL Tester Code IC 4.42 $15,000 $18,750 $0 $0
Generators
0% 32100 OASIS Simulation IC 4.42 $5,000 $6,250 $0 $0
Interface
0% 32120 Analog Artist IC 4.42 $10,000 $12,500 $0 $0
Statistical Analysis
0% 32130 Resolve Optimizer for IC 4.42 $14,400 $18,000 $0 $0
Analog Artist
0% 32140 Mixed-Signal Simulation IC 4.42 $10,000 $12,500 $0 $0
Interface Option
0% 32150 Cadence-SPICE IC 4.42 $5,000 $6,250 $0 $0
0% 32500 Spectre Advanced Circuit IC 4.42 $30,000 $37,500 $0 $0
Simulator
0% 32501 Spectre User Compiled IC 4.42 n/a n/a
Model Interface Option
for Spectre CS (34500)
0% 32510 SpectreHDL IC 4.42 $20,000 $25,000 $0 $0
0% 32520 Spectre RF Option to IC 4.42 $28,000 $35,000 $0 $0
Spectre (32500)
0% 32760 Meta-Software's HSPICE IC 4.42 $5,000 $6,250 $0 $0
Interface
0% 33010 Device-Level Editing IC 4.42 $12,000 $15,000 $0 $0
Option for Layout (300)
0% 33011 Device Level Placer IC 4.42 $12,000 $15,000 $0 $0
Option for Device Level
Editor (33010)
0% 33015 Circuit Optimizer IC 4.42 $100,000 $125,00 $0 $0
0% 33016 Block Characterizer IC 4.42 $50,000 $62,500 $0 $0
0% 33301 Mixed-Signal IC 4.42 $10,000 $12,500 $0 $0
Back-Annotation Interface
0% 34500 Composer: IC Design IC 4.42 $14,500 $18,125 $0 $0
Entry
0% 34510 Analog Artist Design IC 4.42 $12,000 $15,000 $0 $0
Environment
0% 34511 Substrate Coupling IC 4.42 $30,000 $34,000 $0 $0
Analysis
</TABLE>
Page 13
<PAGE>
List of Currently Available Cadence Products (December 31, 1997)
<TABLE>
<CAPTION>
Yearly Costs @ Categories (per "Gray Team") Unit List Yearly Fee
Locked Floating
M A B1 B2 B3 C D Product # Product Name (Title) Release Price Price Locked Floating
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
0% 34515 CheckPlus for Composer IC 4.42 $7,000 n/a $0
0% 34520 CheckPlus Toolkit for IC 4.42 $25,000 n/a $0
Composer
0% 34525 CheckPlus Electrical IC 4.42 n/a n/a
Rule Set for Composer
0% 37500 Device Level Router IC 4.42 $20,000 $25,000 $0 $0
0% 40020 EEsof Libra Simulator IC 4.42 $5,000 $6,250 $0 $0
Interface
0% 40030 HP MNS Interface IC 4.42 $5,000 $6,250 $0 $0
0% 40040 Compact Software IC 4.42 $5,000 $6,250 $0 $0
Microwave Harmonica
Interface
0% 41000 Microwave Layout IC 4.42 $5,000 $6,250 $0 $0
Component Extractor
APT01 Apprentice ICC $35,000 $35,000 $0 $0
3.2
CV01 Cadence Virtuoso ICC $6,000 $6,000 $0 $0
Interface 3.2
DGEN01 Device Generator Option ICC $10,000 n/a $0
(requires Inspector or 3.2
better)
DPL01 Device Placement Option ICC $40,000 n/a $4,000
(requires Apprentice or 3.2
better)
EF01 EditFast Option ICC $10,000 $10,000 $1,500 $1,500
(requires Apprentice or 3.2
better)
GE01 GDSII/EDIF Interface ICC $6,000 $6,000 $900 $900
3.2
GRT01 Global Routing Option ICC $30,000 $30,000 $4,500 $4,500
(requires Journeyman or 3.2
better)
INS01 Inspector ICC $12,000 $12,000 $0 $0
3.2
JYM01 Journeyman ICC $85,000 $85,000 $8,500 $8,500
3.2
LD01 LEF/DEF Interface ICC $6,000 $6,000 $900 $900
3.2
MS01 Mentor SDL Interface ICC $6,000 $6,000 $900 $900
3.2
12.5% MST01 Master ICC $120,000 $120,000 $15,000 $15,000
3.2
PGE01 Polygon Edit ICC $0 $0 $0 $0
3.2
</TABLE>
Page 14
<PAGE>
List of Currently Available Cadence Products (December 31, 1997)
<TABLE>
<CAPTION>
Yearly Costs @ Categories (per "Gray Team") Unit List Yearly Fee
Locked Floating
M A B1 B2 B3 C D Product # Product Name (Title) Release Price Price Locked Floating
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRT01 Power Routing Option ICC $6,000 $6,000 $600 $600
(requires Journeyman or 3.2
better)
0% 252 SmartBlocks IC 4.42 $9,600 $12,000 $0 $0
0% 460 Gate Ensemble UL IC 4.42 $184,000 $230,000 $0 $0
0% 461 Clock Tree Synthesis IC 4.42 $36,800 $46,000 $0 $0
Option for Gate Ensemble
UL (460)
0% 462 Timing Assurance Option IC 4.42 $46,000 $57,500 $0 $0
for Gate Ensemble UL
(460)
0% 463 Open System Executable IC 4.42 $18,400 $23,000 $0 $0
Option for Gate Ensemble
UL (460)
0% 464 Open System Development IC 4.42 n/a n/a
Option for Gate Ensemble
UL (460)
0% 14000 Preview Front-End IC 4.42 $20,000 $25,000 $0 $0
Floorplanner System
0% 14010 Preview Basic IC 4.42 $20,000 $25,000 $0 $0
Floorplanner System
0% 14020 Preview Expert IC 4.42 $32,000 $40,000 $0 $0
Floorplanner System
0% 14020UG1 Preview Front-End IC 4.42 $12,000 $15,000 $0 $0
(14000) to Expert
(14020) Upgrade
0% 14020UG2 Preview Basic (14010) to IC 4.42 $12,000 $15,000 $0 $0
Expert (14020) Upgrade
EOL1 14040 Preview Timing Budgeter IC 4.42 $12,000 $15,000 $0 $0
0% 14060 Smartpath IC 4.42 $32,000 $40,000 $0 $0
0% 14065 Smartpath Compiler for IC 4.42 $12,000 $15,000 $0 $0
Verilog
0% 14066 Smartpath Compiler for IC 4.42 $12,000 $15,000 $0 $0
VHDL
0% 14101 Cell Ensemble Option for IC 4.42 $48,00 $60,000 $0 $0
Preview Basic (14010) or
Expert (14020)
0% 14111 Block Ensemble Option IC 4.42 $40,000 $50,00 $0 $0
for Preview Basic
(14010) or Expert (14020)
0% 14120 Three-Layer Routing IC 4.42 $40,000 $50,00 $0 $0
Option for Block
Ensemble (14111)
0% 14130 Timing Driven Option for IC 4.42 $24,000 $30,000 $0 $0
Block Ensemble (14111)
</TABLE>
Page 15
<PAGE>
List of Currently Available Cadence Products (December 31, 1997)
<TABLE>
<CAPTION>
Yearly Costs @ Categories (per "Gray Team") Unit List Yearly Fee
Locked Floating
M A B1 B2 B3 C D Product # Product Name (Title) Release Price Price Locked Floating
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
0% 14300 Timing Driven Chip IC 4.42 $236,000 $295,000 $0 $0
Assembly Solution
0% 14400 DLM Place and Route IC 4.42 $112,000 $140,000 $0 $0
System with Preview
Expert
0% 14410 Three-Layer Channel IC 4.42 $60,000 $75,000 $0 $0
Routing Option for Cell
Ensemble (14101)
0% 22800 PBS Option for Silicon IC 4.42 $65,000 n/a $0
Ensemble, Gate Ensemble
and Cell3
0% 22800UG2 CT-Gen (22810) to PBS IC 4.42 $20,000 n/a $0
(22800) Upgrade
0% 22810 CT-Gen Optio for Silicon IC 4.42 $45,000 n/a $0
Ensemble, Gate Ensemble
and Cell3
0% 22830 Silicon Synthesis QPBS IC 4.42 $96,000 $120,000 $0 $0
0% 22840 PBO Optimization IC 4.42 $33,750 $45,000 $0 $0
32700 Pearl Full-Custom IC 4.42 $38,000 $47,000 $1,900 $2,375
32700UG1 Pearl Cell (32710) to IC 4.42 $9,000 $11,250 $1,800 $2,250
Pearl Full-Custom
(32700) Upgrade
32710 Pearl Cell IC 4.42 $29,000 $36,250 $1,450 $1,813
0% 49468 Advanced Routing Option IC 4.42 $96,000 $120,000 $0 $0
for Gate Ensemble UL
(460)
0% 49480 Timing Assurance Option IC 4.42 $22,560 $28,200 $0 $0
for Gate Ensemble UL
End (49480)
0% 49481 Clock Tree Synthesis IC 4.42 $18,000 $22,500 $0 $0
Option for Gate Ensemble
Low End (49480)
0% 49482 Timing Assurance Option IC 4.42 $22,560 $28,200 $0 $0
for Gate Ensemble Low
End (49480)
0% 49500 Universal QPlace IC 4.42 $57,600 $72,00 $0 $0
0% 49500UG1 Hyperplace (H330C - IC 4.42 $26,400 $33,000 $0 $0
3.4A) to Universal
QPlace (49500) Upgrade
0% 49500UG2 Hyperplace (H330G - IC 4.42 $16,000 $20,000 $0 $0
3.4A) to Universal
QPlace (49500) Upgrade
0% 49560 Universal Smartpath IC 4.42 $40,000 $50,000 $0 $0
0% 49600 Gate Ensemble DSM IC 4.42 $356,000 $445,000 $0 $0
</TABLE>
Page 16
<PAGE>
List of Currently Available Cadence Products (December 31, 1997)
<TABLE>
<CAPTION>
Yearly Costs @ Categories (per "Gray Team") Unit List Yearly Fee
Locked Floating
M A B1 B2 B3 C D Product # Product Name (Title) Release Price Price Locked Floating
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
0% 49600UG1 Universal QPlace (49500) IC 4.42 $268,000 $335,000 $0 $0
to Gate Ensemble DSM
(49600) Upgrade
0% 49600UG2 Gate Ensemble (460) to IC 4.42 $144,000 $180,000 $0 $0
Gate Ensemble DSM
(49600) Upgrade
0% 49600UG3 Gate Ensemble (460) & IC 4.42 $100,000 $125,000 $0 $0
Universal QPlace (49500)
to Gate Ensemble DSM
(49600) Upgrade
0% 49600UG4 Gate Ensemble (460) IC 4.42 $36,000 $45,000 $0 $0
Universal QPlace
(49500), GE ARO
(49468), GE TA (462)
to Gate Ensemble DSM
(49600) & GE
Crosstalk (49610)
Upgrade
0% 49610 Crosstalk Option for IC 4.42 $76,000 $95,000 $0 $0
Gate Ensemble DSM (49600)
0% 49700 Silicon Ensemble IC 4.42 $196,000 $245,000 $0 $0
0% 49700UG1 Universal QPlace (49500) IC 4.42 $132,000 $165,000 $0 $0
to Silicon Ensemble
(49700) Upgrade
0% 49700UG2 Cell3 (410) to Silicon IC 4.42 $72,000 $90,000 $0 $0
Ensemble (49700) Upgrade
0% 49700UG3 Cell3 (410) & Universal IC 4.42 $20,000 $25,000 $0 $0
QPlace (49500) to
Silicon Ensemble (49700)
Upgrade
0% 49730 Opensys Executable IC 4.42 $11,600 $14,500 $0 $0
Option for Silicon
Ensemble Series
(49700/49800)
0% 49760 Opensys Development IC 4.42 $120,000 $150,000 $0 $0
Option for Silicon
Ensemble Series
0% 49800 Silicon Ensemble DSM IC 4.42 $316,000 $395,000 $0 $0
0% 49800UG1 Universal QPlace (49500) IC 4.42 $236,000 $295,000 $0 $0
to Silicon Ensemble DSM
(49800) Upgrade
0% 49800UG2 Cell3 (410) to Silicon IC 4.42 $176,000 $220,000 $0 $0
Ensemble DSM (49800)
Upgrade
0% 49800UG3 Cell3 (410) & Universal IC 4.42 $124,000 $155,000 $0 $0
QPlace (49500) to
Silicon Ensemble DSM
(49800) Upgrade
</TABLE>
Page 17
<PAGE>
List of Currently Available Cadence Products (December 31, 1997)
<TABLE>
<CAPTION>
Yearly Costs @ Categories (per "Gray Team") Unit List Yearly Fee
Locked Floating
M A B1 B2 B3 C D Product # Product Name (Title) Release Price Price Locked Floating
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
0% 49800UG4 Silicon Ensemble (49700) IC 4.42 $136,000 $170,000 $0 $0
to Silicon Ensemble DSM
(49800) Upgrade
0% 49800UG5 Cell3 (410), Universal IC 4.42 $52,000 $65,000 $0 $0
QPlace (49500), Cell3
ARO (49418), Cell3 TA
(412) to Silicon
Ensemble DSM (49800) &
SE Crosstalk (49810)
Upgrade
0% 49810 Crosstalk Option for IC 4.42 $76,000 $95,000 $0 $0
Silicon Ensemble DSM
(49800)
H301 Physical DP Base (Pillar) HLD $52,000 $65,000 $7,800 $9,750
3.4a
H301DF Physical DP Base (DFII) HLD $52,000 $65,000 $7,800 $9,750
3.4a
H315 Physical DP (Pillar) HLD $68,000 $85,000 $10,200 $12,750
3.4a
H315DF Physical DP (DFII) HLD $68,000 $85,000 $10,200 $12,750
3.4a
H325 Logic DP HLD $46,800 $58,500 $7,020 $8,775
3.4a
H325B Logic DP SC & GA HLD $35,000 $45,500 $5,250 $6,825
3.4a
H337 HyperExtract with HLD $52,000 $65,000 $7,800 $9,750
HyperRule 3.4a
H338 Standalone HyperExtract HLD $67,600 $84,500 $10,140 $12,675
Package 3.4a
H340T Fasnet Timing Loop HLD $20,800 $26,000 $3,120 $3,900
3.4a
H341 Fasnet Delay Calculator HLD $17,600 $22,000 $2,640 $3,300
3.4a
H345 DP Interface to Synopsys HLD $12,000 $15,000 $1,800 $2,250
3.4a
H347 Epic Interface HLD $10,400 $13,000 $1,560 $1,950
3.4a
H377 SVR P&R Interfaces HLD $20,000 $25,000 $3,000 $3,750
3.4a
H387 Mentor P&R Interfaces HLD $20,000 $25,000 $3,000 $3,750
3.4a
H397 Avant Aquarius BV P&R HLD $15,600 $19,500 $2,340 $2,925
Interface 3.4a
H415 Physical DP DSM (Pillar) HLD $94,000 $125,000 $14,100 $18,750
3.4a
</TABLE>
Page 18
<PAGE>
List of Currently Available Cadence Products (December 31, 1997)
<TABLE>
<CAPTION>
Yearly Costs @ Categories (per "Gray Team") Unit List Yearly Fee
Locked Floating
M A B1 B2 B3 C D Product # Product Name (Title) Release Price Price Locked Floating
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
H415UG1 Physical DP Pillar HLD $30,000 $40,000 $0 $0
(H315) to Physical DP 3.4a
DSM Pillar (H415) Upgrade
H415UG2 Physical DP Base Pillar HLD $45,000 $60,000 $6,750 $9,000
(H301) to Physical DP 3.4a
DSM Pillar (H415) Upgrade
H425 Logic DP DSM HLD $78,800 $98,500 $11,820 $14,775
3.4a
H425UG1 Logic DP (H325) to Logic HLD $32,000 $40,000 $0 $0
DP DSM (H425) Upgrade 3.4a
H528 GDSII In (Pillar) HLD $5,200 $6,500 $780 $975
3.4a
H529 GDSII Out (Pillar) HLD $5,200 $6,500 $780 $975
3.4a
(not available to Order) HR200 Pillar DB/Lisp HLD $50,000 n/a $0
Development System 3.4a
0% 32600 Dantes Design & Test IC 4.42 $80,000 $100,000 $0 $0
System
0% 32610 Dantes Teradyne A510 IC 4.42 $15,000 $18,750 $0 $0
Module
0% 32620 Dantes Teradyne A520 IC 4.42 $15,000 $18,750 $0 $0
Module
0% 32630 Dantes LTX Synchromaster IC 4.42 $15,000 $18,750 $0 $0
Module
0% 32640 Dantes HP9480 Model IC 4.42 $15,000 $18,750 $0 $0
0% 250 Synergy HDL Synthesizer IC 4.42 $9,600 $12,000 $0 $0
0% 251 Synergy Optimizer IC 4.42 $24,000 $30,000 $0 $0
0% 253 ASIC Designer Option for IC 4.42 $25,600 $32,000 $0 $0
FPGA Designer Composer
(51070/51170)
0% 570 Cadence to Snyopsys IC 4.42 $7,000 $8,750 $0 $0
Interface III
0% 20400 Logic Modeling Interface IC 4.42 n/a n/a
Package
0% 20600 Cadence Model Manager IC 4.42 $20,000 $25,000 $0 $0
for Quickturn
0% 22650 VHDL Synthesizer IC 4.42 $9,600 $12,000 $0 $0
25000 SimVision IC 4.42 $4,000 $5,000 $0 $0
25300 VeriSure IC 4.42 $15,000 n/a $3,000
25310 VeriSure Sim Driver IC 4.42 $5,000 n/a $1,000
25320 VHDL Cover IC 4.42 $15,000 n/a $3,000
25330 VHDL Cover Sim Driver IC 4.42 $5,000 n/a $1,000
0% 26000 Verilog-XL IC 4.42 $20,000 $25,000 $0 $0
</TABLE>
Page 19
<PAGE>
List of Currently Available Cadence Products (December 31, 1997)
<TABLE>
<CAPTION>
Yearly Costs @ Categories (per "Gray Team") Unit List Yearly Fee
Locked Floating
M A B1 B2 B3 C D Product # Product Name (Title) Release Price Price Locked Floating
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
0% 26010 Verilog-XL Turbo IC 4.42 $28,000 $35,000 $0 $0
0% 26010UG1 Verilog-XL (26000) to IC 4.42 $12,000 $15,000 $0 $0
Verilog-XL Turbo (26010)
Upgrade
0% 26010UG2 VXL Turbo with NCV IC 4.42 $0 $0 $0 $0
Option (26010NCV) to
Verilog-XL Turbo (26010)
0% 26020 Switch-RC Option for IC 4.42 $10,000 $12,500 $0 $0
Verilog-XL (26000)
0% 26030 VHDL Model Import Option IC 4.42 $10,000 $12,500 $0 $0
for Verilog-XL (26000)
0% 26310 EDIF to Verilog Netlist IC 4.42 n/a n/a
Translator
0% 26320 Verilog to EDIF Netlist IC 4.42 $5,000 $6,250 $0 $0
Translator
0% 26110 Verilog-XL Turbo NT IC 4.42 $28,000 $35,000 $0 $0
0% 26500 Verifault-XL Fault IC 4.42 $40,000 $50,000 $0 $0
Simulator
0% 26510 Verifault-XL Salve Node IC 4.42 $10,000 $12,500 $0 $0
License
0% 27000 Leapfrog VHDL Simulator IC 4.42 $20,000 $25,000 $0 $0
0% 27010 Leapfrog Model Import IC 4.42 $12,000 $15,000 $0 $0
Package Option
0% 28200 NC-Verilog IC 4.42 $32,000 $40,000 $0 $0
0% 28200UG1 VXL Turbo with NCV IC 4.42 $0 $0 $0 $0
option (26010NCV) to
NC-Verilog (28200)
Upgrade
0% 28200UG2 Verilog-XL Turbo (26010) IC 4.42 $12,000 $15,000 $0 $0
to NC-Verilog (28200)
Upgrade
0% 28200UG3 Verilog-XL (26000) to IC 4.42 $20,000 $25,000 $0 $0
NC-Verilog (28200)
Upgrade
0% 28500 Cobra Cycle Simulator IC 4.42 $60,000 n/a $0
0% 51000 PIC Designer (Composer) IC 4.42 $18,400 $23,000 $0 $0
0% 51060 PLD Designer (Composer) IC 4.42 $12,000 $15,000 $0 $0
0% 51070 FPGA Designer (Composer) IC 4.42 $12,000 $15,000 $0 $0
0% 51100 PIC Designer (Concept) IC 4.42 $18,400 $23,000 $0 $0
0% 51160 PLD Designer (Concept) IC 4.42 $12,000 $15,000 $0 $0
</TABLE>
Page 20
<PAGE>
List of Currently Available Cadence Products (December 31, 1997)
<TABLE>
<CAPTION>
Yearly Costs @ Categories (per "Gray Team") Unit List Yearly Fee
Locked Floating
M A B1 B2 B3 C D Product # Product Name (Title) Release Price Price Locked Floating
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
0% 51170 FPGA Designer (Concept) IC 4.42 $12,000 $15,000 $0 $0
0% 52000 FPGA Optimizer IC 4.42 $12,000 $15,000 $0 $0
0% 61400 Test Synthesizer IC 4.42 $20,000 $25,000 $0 $0
0% 61500 VHDL Test Synthesizer IC 4.42 $20,000 $25,000 $0 $0
0% ASIC1 ASIC Vendor Aliance 97A $17,000 n/a $0
Program
0% 20135 All Composer Part IC 4.42 n/a n/a
Libraries
0% 20235 All Composer Part & IC 4.42 n/a n/a
Verilog Model Libraries
0% 21200 Physical Interface IC 4.42 $18,000 $22,500 $0 $0
Environment
0% 24015 DF/Thermax 97A $21,000 n/a $0
0% 24025 DF/Thermax Expert 97A $40,000 n/a $0
0% 24025UG1 DF/Thermax (24015) to 97A $22,000 n/a $0
DF/Thermax Expert
(24025) Upgrade
0% 24100 DF/Thermax Model Library 97A $3,000 n/a $0
0% 24205 Thermax/Flomerics 97A $3,000 n/a $0
Bi-directional Interface
0% 50000 System Workbench IC 4.42 $18,000 $22,500 $0 $0
0% 50010 Upgrade Composer for IC 4.42 $6,000 $7,500 $0 $0
System Workbench
0% 50110 Delay Backannotation IC 4.42 $0 $0 $0 $0
from Allegro
0% 50200 System Workbench Library IC 4.42 $4,000 $5,000 $0 $0
Developer
0% AI2000 CAD Interface Bundle 97AW $5,000 n/a $0
0% AI2000A CAD Interface Bundle 97A $5,000 n/a $0
0% AI2000U PCB Interface Bundle 97AW $1,250 n/a $0
G9 UNIX (AI2001) to CAD 97AW $1,250 n/a $0
Interface Bundle
(AI2000) Upgrade
0% AI2100 PCB Interface Bundle 97AW $3,000 n/a $0
0% AI2100A PCB Interface Bundle 97A $3,000 n/a $0
0% AI2100U PCB Interface Bundle 97AW $750 n/a $0
G9 UNIX (AI2101) to PCB
Interface Bundle
(AI2100) Upgrade
0% AS1100A Spectre/Profile Expert 97A $20,000 n/a $0
Bundle
</TABLE>
Page 21
<PAGE>
List of Currently Available Cadence Products (December 31, 1997)
<TABLE>
<CAPTION>
Yearly Costs @ Categories (per "Gray Team") Unit List Yearly Fee
Locked Floating
M A B1 B2 B3 C D Product # Product Name (Title) Release Price Price Locked Floating
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
0% AT1100A Analog Analysis Expert 97A $25,000 n/a $0
Bundle
0% AX1100A Analog Workbench Expert 97A $25,000 n/a $0
0% AX1200A Mixed-Signal Workbench 97A $75,000 n/a $0
Expert
0% AX1200A Analog Workbench Expert 97A $50,000 n/a $0
UG1 (AX1100A) to
Mixed-Signal Workbench
Expert (AX1200A) Upgrade
0% CKK1100A Nihongo-Concept Expert 97A $6,000 n/a $0
System
0% CKK1100 Concept Expert System 97A $1,500 n/a $0
AUG1 (FET1100A) to
Nihongo-Concept Expert
System (CKK1100A) Upgrade
0% FET1000A Design Access Bundle 97A $5,000 n/a $0
0% FET1000 Bi-directional EDIF 200 97A $2,000 n/a $0
AUG1 Schematic Interface
(IF30) to Design Access
Bundle (FET1000) Upgrade
0% FET1000 Bi-directional EDIF 200 97A $2,000 n/a $0
AUG2 Netlist Interface (IF31)
to Design Access Bundle
(FET1000) Upgrade
0% FET1100 Concept-HDL 97AW $6,000 n/a $0
0% FET1100A Concept Expert System 97A $6,000 n/a $0
0% FET1100 Concept Expert Sytems 97AW $1,500 n/a $0
UG9 UNIX (FET1101) to
Concept-HDL (FET1100)
Upgrade
0% FET1200 CheckPlus-HDL 97AW $7,000 n/a $0
0% FET1200A CheckPlus Expert System 97A $7,000 n/a $0
0% FET1200 CheckPlus Expert System 97AW $1,750 n/a $0
UG9 UNIX (FET1201) to
CheckPlus-HDL (FET1200)
Upgrade
0% LID23 Extended Verilog Model 97A n/a n/a
Library
0% LID33 Base Verilog Model 97A n/a n/a
Library
0% LWB20 Logic Workbench/SE 97A $15,000 n/a $0
0% LWB22 OpenSim Backplane 97A $10,000 n/a $0
Multi-Engine Access
0% PE2100 BoardQuest Designer 97AW $19,000 n/a $0
0% PE2100A BoardQuest Designer 97A $19,000 n/a $0
</TABLE>
Page 22
<PAGE>
List of Currently Available Cadence Products (December 31, 1997)
<TABLE>
<CAPTION>
Yearly Costs @ Categories (per "Gray Team") Unit List Yearly Fee
Locked Floating
M A B1 B2 B3 C D Product # Product Name (Title) Release Price Price Locked Floating
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
0% PE2100U BoardQuest Designer 97AW $4,750 n/a $0
G9 UNIX (PE2101) to
BoardQuest Designer
(PE2100) Upgrade
0% PE2200 BoardQuest Expert 97AW $40,000 n/a $0
0% PE2200A BoardQuest Expert 97A $40,000 n/a $0
0% PE2200A BoardQuest Designer 97A $25,000 n/a $0
UG1 (PE2100A) to BoardQuest
Expert (PE2200A) Upgrade
0% PE2200 BoardQuest Designer 97AW $25,000 n/a $0
UG1 (PE2100) to BoardQuest
Expert (PE2200) Upgrade
0% PE2200 BoardQuest Expert UNIX 97AW $10,000 n/a $0
UG9 (PE2201) to BoardQuest
Expert (PE2200) Upgrade
0% PE2400 SigNoise 97AW $35,000 n/a $0
0% PE2400A SigNoise 97AW $35,000 n/a $0
0% PE2400 SigNoise UNIX (PE2401) 97AW $8,750 n/a $0
UG9 to SigNoise (PE2400)
Upgrade
0% PE2500 SigNoise Standard 97AW n/a n/a
Digital Parts Library
0% PE2500A SigNoise Standard 97A $10,000 n/a $0
Digital Parts Library
0% PE2600A EMControl 97A $25,000 n/a $0
SP2000 SPECCTRA PCB Autorouter 97AW $3,000 n/a $0
SP2100 SPECCTRA Designer 97A $25,000 n/a $2,500
Autorouter
SP2100 SPECCTRA PCB Autorouter 97A $14,000 n/a $1,400
UGI (SP2000) to SPECCTRA
Designer Autorouter
(SP2100) Upgrade
SP2100 AutoRoute (AR) to 97A $14,000 n/a $1,400
UG2 SPECCTRA Designer
Autorouter (SP2100)
Upgrade
SP2100 SPECCTRA Designer UNIX 97AW $6,250 n/a $0
UG9 (SP2101) to SPECCTRA
Designer (SP2100) Upgrade
SP2200 SPECCTRA Expert 97A $40,000 n/a $4,000
</TABLE>
Page 23
<PAGE>
List of Currently Available Cadence Products (December 31, 1997)
<TABLE>
<CAPTION>
Yearly Costs @ Categories (per "Gray Team") Unit List Yearly Fee
Locked Floating
M A B1 B2 B3 C D Product # Product Name (Title) Release Price Price Locked Floating
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SP2200 SPECCTRA PCB Autorouter 97A $37,000 n/a $3,700
UG1 (SP2200) to SPECCTRA
Expert Autorouter
(SP2200) Upgrade
SP2200 AutoRoute (AR) to 97A $29,000 n/a $2,900
UG2 SPECCTRA Expert
Autorouter (SP2200)
Upgrade
SP2200 SPECCTRA Designer 97AW $15,000 n/a $1,500
UG3 Autorouter (SP2100) to
SPECCTRA Expert
Autorouter (SP2200)
Upgrade
SP2200 SPECCTRA Expert UNIX 97AW $10,000 n/a $0
UG9 (SP2201) to SPECCTRA
Expert (SP2200) Upgrade
SP2300 SPECCTRA EditRoute 97A $11,000 n/a $1,100
SP2300 SPECCTRA EditRoute 97A $2,750 n/a $0
UG9 UNIX (SP2301) to
SPECCTRA EditRoute
(SP2300) Upgrade
SP2400 SPECCTRA Fast Circuit 97A $7,500 n/a $750
Option For EditRoute
SP2400 SPECCTRA Fast Circuit 97AW $1,875 n/a $0
UG9 Option UNIX (SP2401) to
SPECCTRA Fast Circuit
Option (SP2400) Upgrade
0% TW01 Team Design Manager IC 4.42 $4,800 n/a $0
0% TW02 Team Design Project IC 4.42 $18,500 n/a $0
Administrator
0% VT1000 PE Librarian 97AW $5,000 n/a $0
0% VT1000A PE Librarian 97A $5,000 n/a $0
0% VT1000 PE Librarian UNIX 97A $1,250 n/a $0
UG9 (VT1001) to PE Librarian
(VT1000) Upgrade
0% VT2000 Allegro PCB 97AW $10,000 n/a $0
0% VT2000A Allegro PCB 97A $10,000 n/a $0
VT2100 Allegro Designer 97AW $25,000 n/a $0
VT2100A Allegro Designer 97A $25,000 n/a $0
VT2100A Allegro PCB (VT2000A) to 97A $15,000 n/a $0
UG1 Allegro Designer
(VT2100A) Upgrade
VT2100 Allegro PCB (VT2000) to 97AW $15,000 n/a $0
UG1 Allegro Designer
(VT2100) Upgrade
</TABLE>
Page 24
<PAGE>
List of Currently Available Cadence Products (December 31, 1997)
<TABLE>
<CAPTION>
Yearly Costs @ Categories (per "Gray Team") Unit List Yearly Fee
Locked Floating
M A B1 B2 B3 C D Product # Product Name (Title) Release Price Price Locked Floating
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
VT2100 Allegro Designer UNIX 97AW $6,250 n/a $0
UG9 (VT2101) to Allegro
Designer (VT2100) Upgrade
10% VT2200 Allegro Expert 97AW $45,000 n/a $4,500
10% VT2200A Allegro Expert 97AW $45,000 n/a $4,500
10% VT2200A Allegro PCB (VT2000A) to 97A $35,000 n/a $3,500
UG1 Allegro Expert (VT2200A)
Upgrade
10% VT2200A Allegro Designer 97A $20,000 n/a $2,000
UG2 (VT2100A) to Allegro
Expert (VT2200A) Upgrade
10% VT2200A SPECCTRA EditRoute 97A $34,000 n/a $3,400
UG4 (SP2300) to Allegro
Expert (VT2200A) Upgrade
10% VT2200A Allegro Designer 97A $9,000 n/a $900
UG6 (VT2100A) and SPECCTRA
EditRoute (SP2300) to
Allegro Expert (VT2200A)
Upgrade
10% VT2200 Allegro PCB (VT2200) to 97AW $35,000 n/a $3,500
UG1 Allegro Expert (VT2200)
Upgrade
10% VT2200 Allegro Designer 97AW $20,000 n/a $2,000
UG2 (VT2100) to Allegro
Expert (VT2200) Upgrade
10% VT2200 SPECCTRA EditRoute 97AW $34,000 n/a $3,400
UG4 (SP2300) to Allegro
Expert (VT2200) Upgrade
10% VT2200 SPECCTRA EditRoute 97AW $26,500 n/a $2,650
UG5 (SP2300) & SPECCTRA Fast
Circuit Option (SP2400)
to Allegro Expert
(VT2200)
10% VT2200 Allegro Designer 97AW $9,000 n/a $900
UG6 (VT2100) & SPECCTRA
EditRoute (SP2300) to
Allegro Expert (VT2200)
Upgrade
</TABLE>
Page 25
<PAGE>
List of Currently Available Cadence Products (December 31, 1997)
<TABLE>
<CAPTION>
Yearly Costs @ Categories (per "Gray Team") Unit List Yearly Fee
Locked Floating
M A B1 B2 B3 C D Product # Product Name (Title) Release Price Price Locked Floating
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
VT2200 Allegro Designer 97AW $1,500 n/a $0
UG7 (VT2100), SPECCTRA
EditRoute (SP2300), and
SPECCTRA Fast Circuit
Option (SP2400) to
Allegro Expert (VT2200)
Upgrade
VT2200 Allegro Expert UNIX 97AW $11,250 n/a $0
UG9 (VT2201) to Allegro
Expert (VT2200)
0% VT50 Advanced Package 97A $39,000 n/a $0
Designer Interactive
</TABLE>
Page 26
<PAGE>
- END OF SITE SUBSCRIPTION ADDENDUM -
Page 27
<PAGE>
Exhibit B - to the Addendum to the SSA
PRODUCT LOAN AGREEMENT
THIS PRODUCT LOAN AGREEMENT ("Agreement") is entered into as of the first date
set forth below ("Effective Date") by and among Cadence Design Systems, Inc.
("Cadence"), Harris Semiconductor Sector of Harris Corp[oration ("Customer"),
and the undersigned independent contractor of Customer ("Independent
Contractor"). Whereas, Customer and Cadence have entered into a Site
Subscription Agreement ("SSA"); Whereas, Customer desires by this Agreement to
permit Independent Contractor to use, solely and exclusively for Customer's
benefit, certain Software that customer licensed from Cadence pursuant to the
SSA; and Whereas, pursuant to the SSA, Customer hereby requests that Cadence
consent to Independent Contractor's limited use of the Software identified
below, which use shall be solely and exclusively for Customer's benefit and
which shall be limited in scope and application to the North Americas; Now,
therefore, in consideration of the mutual obligations described below, the
parties agree as follows:
Page 1
<PAGE>
1. Definitions.
(a) "Software" means the specific Cadence software products identified on
Exhibit A of the Addendum which Customer licensed from Cadence pursuant to the
SSA. The Cadence product number, product description, and the security device
serial number for each Cadence software product loaned to Independent Contractor
hereunder shall be provided to Cadence by indicating such information on Exhibit
A hereto.
(b) "Use" means copying all or any portion of an item of Software into a
computer for processing of the instructions contained in the Software and/or
loading data into or displaying, viewing or extracting output results from or
otherwise operating any portion of the Software for the purpose of Customer's
design and manufacture of electronic circuits and systems.
2. Authorized Use. Independent Contractor is permitted to use the Software
identified on Exhibit A solely for the exclusive benefit of Customer and not for
the benefit of any other person or entity. Independent Contractor agrees to use
the Software solely and exclusively for the benefit of Customer and not for the
benefit of any other person or entity. CUSTOMER AND INDEPENDENT CONTRACTOR
ACKNOWLEDGE AND UNDERSTAND THAT ANY UNAUTHORIZED USE OF THE SOFTWARE BY
INDEPENDENT CONTRACTOR, INCLUDING, BUT NOT LIMITED TO, USING THE SOFTWARE FOR
THE BENEFIT OF ANY PERSON OR ENTITY OTHER THAN CUSTOMER, IS A VIOLATION OF THIS
AGREEMENT AND SHALL RESULT IN THE IMMEDIATE TERMINATION OF THIS AGREEMENT. IN
THE EVENT OF ANY SUCH UNAUTHORIZED USE OF THE SOFTWARE, CADENCE MAY, IN ADDITION
TO ITS OTHER REMEDIES AND IN ITS SOLE AND ABSOLUTE DISCRETION, DEMAND THE
IMMEDIATE RETURN OF ALL CADENCE SOFTWARE LICENSED TO INDEPENDENT CONTRACTOR
UNDER THIS AGREEMENT, AND CUSTOMER SHALL NOT BE ENTITLED TO A REFUND OF ANY
LICENSE FEES PAID THEREFOR. ANY SUCH UNAUTHORIZED USE SHALL FURTHER SUBJECT
INDEPENDENT CONTRACTOR TO LEGAL LIABILITY AND PROSECUTION TO THE FULL EXTENT OF
THE LAW.
3. License. All Software loaned to Independent Contractor by Customer under this
Agreement is provided pursuant to a personal, temporary, non-exclusive,
nontransferable license by Cadence whereby Independent Contractor may internally
use the Software and related documentation solely for the purposes described
herein. Independent Contractor shall not: (a) disassemble, reverse engineer,
decompile or translate the Software, or permit others to do so; or, (b) remove
or alter any copyright and/or proprietary notices appearing on or in the
Software and documentation; or, (c) provide or otherwise make available the
Software, documentation or any portion thereof, in any form, to any third party.
4. Term and Termination. This Agreement commences on the Effective Date and
shall remain effective until terminated. This Agreement shall automatically
terminate upon the termination or expiration of the SSA. Furthermore, either
Customer or Independent Contractor may terminate this Agreement at any time, for
its convenience, upon written notice to the other
Page 2
<PAGE>
party. Cadence may also terminate this Agreement effective immediately in the
event of (a) Customer's or Independent Contractor's breach of any of its
obligations under this Agreement; or, (b) Customer's breach of any of its
obligations under the SSA. Upon termination of this Agreement for any reason,
Independent Contractor shall return the Software to Customer, F.O.B. Customer's
facilities, freight to be paid by Customer, and in the same condition in which
they were provided, reasonable wear and tear excepted.
5. Software License Agreement. To the extent relevant Independent Contractor has
read same, both Independent Contractor and Cadence agree to be bound by the
applicable terms and conditions of the Software Rental Agreement of the SSA,
with the exception that Independent Contractor may not transfer possession,
custody or control of the Software to any third party to this Agreement.
6. Disclaimer. Products are provided to Customer on an "AS IS" basis. Neither
Cadence nor its subcontractors or suppliers makes any warranty with respect to
any Product, service, advice or assistance furnished hereunder. EXCEPT AS
PROVIDED ABOVE, CADENCE MAKES NO WARRANTY TO INDEPENDENT CONTRACTOR, EXPRESS OR
IMPLIED, AND DISCLAIMS ANY WARRANTIES WITH RESPECT TO THE LICENSED PROGRAM OR
DOCUMENTATION, INCLUDING, WITHOUT LIMITATION, ANY WARRANTY OF FITNESS FOR A
PARTICULAR PURPOSE, MERCHANTABILITY, OR NON-INFRINGEMENT.
7. Notices. All notices required under this Agreement shall be in writing, in
the English language, and, in the case of Cadence, shall be addressed to:
Cadence Design Systems, Inc., 555 River Oaks Parkway, San Jose, California
95134, U.S.A., Attention: Contracts Administrator; and, in the case of Customer,
shall be addressed to the Customer address specified below; and, in the case of
Independent Contractor, shall be addressed to the Independent Contractor address
specified below. Any notice shall be deemed given upon receipt of such notice by
the recipient.
8. No Assignment. Neither Customer nor Independent Contractor shall assign,
delegate, or subcontract any portion of its respective rights, duties, or
obligations under this Agreement except to the extent Customer is permitted to
assign rights under the SSA, and any attempt to do so shall be void.
9. Arbitration. Any unresolved dispute arising pursuant to this Agreement shall
be settled by arbitration before one arbitrator for disputes of under $50,000,
otherwise before three arbitrators, provided that nothing in this Section shall
restrict any party hereto from applying for emergency relief pending final
determination of a claim by arbitration or restrict Cadence from bringing action
against Customer or Independent Contractor for infringement of any of Cadence's
intellectual property rights or for breach of any of the obligations of Customer
or Independent Contractor hereunder. All arbitration shall be conducted in San
Jose, California, U.S.A, in accordance with the rules and regulations of the
American Arbitration Association. Each party shall pay its own expenses
associated with such arbitration, including 50% of the expenses of the neutral
arbitrator(s). The judgment of the arbitrators shall be binding and entered in
any court having jurisdiction thereof.
Page 3
<PAGE>
10. Capitalized Terms. All capitalized terms not otherwise defined herein shall
have the same meaning as ascribed to them in the SSA, as appropriate.
11. Ratification and Confirmation of Agreement. Nothing in this agreement
modifies the terms and conditions of the SSA or SRA and to the extent that a
conflict between this Agreement and the SSA exists, the SSA as modified as of
the date of this Agreement is entered into shall take precedence.
12. General. This Agreement is governed by the laws of the State of California,
U.S.A. This Agreement together with the SSA constitute the complete and
exclusive statement of the agreement between the parties and supersedes all
proposals, oral or written, and all other communications between the parties
relating to the subject matter of this Agreement. This Agreement may be modified
only by a written instrument duly executed by all of the parties hereto. Any
waiver by any party of any condition, part, term or provision of this Agreement
shall not be construed as a waiver of any other condition, part, term or
provision or a waiver of any future event ore circumstance. If any provision of
this Agreement is held invalid or unenforceable, the remainder of the Agreement
shall continue in full force and effect.
In Witness Whereof, the parties hereto have executed this Agreement as of the
first date set forth below.
Harris Semiconductor Sector Cadence Design Systems, Inc.
By: ________________________________ By: ____________________________________
Title: _____________________________ Title: _________________________________
Date: ______________________________ Date: __________________________________
Independent
Contractor:
By: ________________________________
Title: _____________________________
Date: ______________________________
Page 4
<PAGE>
INSTALLMENT PAYMENT AGREEMENT
CADENCE DESIGN SYSTEMS, INC.
<TABLE>
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Customer: Harris Semiconductor Executed by Customer (authorized signature):
Sector of Harris Corporation By: /s/ James A. Martin
--------------------------------------------------------------------
Name: James A. Martin
Address: P.O. Box 883 Title: Director, Contracts
Melbourne, FL 32902
By: /s/ Daniel J. Heneghan
--------------------------------------------------------------------
Phone: 407 724-7000 Name: Daniel J. Heneghan
Billing Contact: Jim Martin (407) 724-7744 Title: Vice President-Controller
IPA Effective Date: 10/1/98
License Agreement: Site Subscription Agreement Executed by Cadence Design Systems, Inc.:
No. SSVP-93E24TP By:
--------------------------------------------------------------------
Name:
------------------------------------------------------------------
Title:
-----------------------------------------------------------------
Address:
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
- - ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- - ------------------------------------------------------------------------------------------------------------------------------------
License Fee: $ 5,117,928.96 Payment Schedule:
Payment Amount Due Date
<S> <C> <C>
$ 841,894.83 6/01/99
$ 841,894.83 9/01/99
$ 841,894.83 12/01/99
$ 841,894.83 3/01/00
$ 875,174.82 6/01/00
$ 875,174.82 9/01/00
$5,117,928.96
- - ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
THIS INSTALLMENT PAYMENT AGREEMENT ("IPA") is made as of the IPA Effective Date
set forth above, between the Customer named above and CADENCE DESIGN SYSTEMS,
INC., a Delaware corporation ("Cadence") with respect to the following facts:
Customer and Cadence have entered into a Site Subscription Agreement described
above (the "License Agreement") in connection with the licensing of certain
software products (the "Licensed Software") to Customer. Payment obligations
associated with the License Agreement and Licensed Software are specified in the
Payment Schedule dated as of October 1, 1998, and attached hereto (the "Payment
Schedule"). Pursuant to the Payment Schedule Customer is obligated to pay
Cadence the license fee described above (the "License Fee") plus applicable
maintenance service fees and taxes. Subject to the terms of this IPA, Cadence
and Customer have agreed that Customer shall make installment payments to
Cadence as set forth herein, and that by doing so Customer will satisfy the
obligation in the License Agreement to pay the License Fee. Any fees set forth
in the Payment Schedule other than the License Fee shall be due and payable at
the times and in the manner set forth in the Payment Schedule. Except as
Page 5
<PAGE>
provided under this IPA, Customer's rights and remedies against Cadence under
the License Agreement, including Cadence's warranty provision, shall not be
affected.
1. PAYMENT SCHEDULE: In consideration of Cadence entering into the License
Agreement, Customer irrevocably promises to pay the License Fee to Cadence or
order in accordance with the payment schedule set forth above, with each payment
amount ("Installment Payment") due and payable on the applicable due date. If
full payment of each Installment Payment is not received by Cadence on each due
date, Customer agrees to pay to Cadence interest on the overdue amount at the
lower of two percent (2%) per month or the maximum amount allowed by law until
paid. Unless stated otherwise, Installment Payments exclude any applicable
sales, use, property or any other tax allocable to the License Agreement or this
IPA. Customer acknowledges and agrees that the License Fees were fully earned by
Cadence when the Licensed Software was delivered. As a result, Customer's
obligation to remit Installment Payments to Cadence in accordance with the
payment schedule set forth herein shall be absolute, unconditional,
noncancellable and nonrefundable, and shall not be subject to any of the
following (collectively, "Claims"): any abatement, set-off, claim, counterclaim,
adjustment, reduction, or defense for any reason, including, but not limited to,
any claims that Cadence failed to perform under the License Agreement or
termination of the License Agreement.
2. ASSIGNMENT: Customer consents to Cadence's assignment of its rights and
interests in and to this IPA to one or more third-parties ("Assignee"). Upon
notice to Customer of any such assignment, Assignee shall have and be entitled
to exercise any and all rights and remedies of Cadence hereunder, and all
references herein to Cadence shall include Assignee. Customer and Cadence agree
that Assignee shall not, because of such assignment, assume any of Cadence's
obligations to Customer. Customer shall not assert against Assignee any Claims
that Customer may have against Cadence. Customer waives all rights to make any
claim against Assignee for any loss or damage to the Licensed Software or breach
of any warranty, express or implied, as to any matter whatsoever, including but
not limited to the Licensed Software and service performance, functionality,
features, merchantability or fitness for a particular purpose, or any indirect,
incidental or consequential damages or loss of business. Customer shall pay
Assignee all amounts due and payable under this IPA, but shall pursue any claims
under any License Agreement against only Cadence. Except as provided for an
Event of Default below, neither Cadence nor its Assignees will interfere with
Customer's quiet enjoyment or use of the Licesed Software in accordance with the
License Agreement's terms and conditions. Customer shall not assign or transfer
this Agreement or permit any lien or encumbrance upon this Agreement.
3. DEFAULT: Each of the following events shall constitute an "Event of Default";
(i) Customer fails to pay when due all or any portion of any Installment Payment
or any other amounts payable hereunder, and such failure is not cured within
thirty (30) days after written notice; (ii) any representation or warranty
herein made by Customer or any guarantor proves to be false in any material
respect when made; (iii) a material breach by Customer of any provision of this
IPA (other than a breach covered by (i) above) where Customer fails to correct
such breach within thirty (30) days of its receipt of written notice thereof;
(iv) Customer or any
Page 6
<PAGE>
guarantor shall cease doing business as a going concern or becomes insolvent or
makes an assignment for the benefit of creditors, or a trustee or receiver is
appointed for Customer or any guarantor or for a substantial part of its assets,
or bankruptcy, reorganization or insolvency proceedings shall be instituted by
or against Customer or any guarantor.
4. RIGHTS AND REMEDIES. If under this IPA an Event of Default has occurred and
is continuing, Cadence may: (a) require all Installment Payments and any other
amounts then due plus the present value (discounted at the lesser of (i) the
then current One-Year U.S. Treasury Bill rate, or (ii) the One-Year U.S.
Treasury Bill rate as of the date of the IPA) of the unpaid balance of the
Installment Payments, to become immediately due and payable by Customer; (b)
terminate all of the Customer's rights to use the Licensed Software or any
related support services; and (c) pursue any rights or remedies available at law
or in equity. In the event Cadence shall institute any action for the
enforcement of the collection of Installment Payments, there shall be
immediately due from Customer, in addition to the amounts due above, all costs
and expenses of such action, including reasonable attorney's fees. No failure or
delay on the part of Cadence to exercise any right or remedy hereunder shall
operate as a waiver thereof. All remedies are cumulative and not exclusive. To
the extent permitted by law, Customer agrees that Cadence shall not be required
to license, lease, transfer, or use any Licensed Software in mitigation of any
damages resulting from Customer's default.
5. REPRESENTATIONS, WARRANTIES, AND COVENANTS: Customer acknowledges that (a) it
has independently ordered the Licensed Software from Cadence based on its own
judgment, and expressly disclaims any reliance upon statements made by Assignee
to Customer, if any, with regards to such Licensed Software; and (b) this IPA is
separate and distinct from the License Agreement with Cadence, and such License
Agreement is not incorporated into nor made a part hereof. Customer represents
and warrants that: (i) Customer is a corporation in good standing under
applicable state law; (ii) this IPA has been duly authorized and constitutes a
legal, valid and binding obligation of Customer and its enforceable against
Customer in accordance with its terms; (iii) the execution, delivery and
performance of this IPA will not violate or create a default under any law
(including any applicable usury law), regulation, judgment, order, instrument
agreement or charter document binding on Customer or its property; (iv) each
signatory of this IPA has the authority to bind Customer to this IPA; and (v)
any and all information furnished herewith is and will be true and correct in
all material respects and prepared in accordance with generally accepted
principles (GAAP).
6. MISCELLANEOUS: This IPA constitutes the entire agreement regarding the
subject matter herein between Customer and Cadence and shall supersede any
inconsistent terms set forth in the License Agreement and all prior oral and
written understandings. This IPA shall be governed by the laws of the State of
California, without regard to conflict of laws principles, and shall be deemed
executed in San Jose, California. All notices, requests, demands and other
communications shall be delivered by fax or mail to each party at the address as
set forth above. In the event of a conflict between the terms of this IPA and
the License Agreement, the terms of this IPA shall prevail. If any term,
provision, covenant or restriction of this IPA is held by a court of competent
jurisdiction to be invalid, void or unenforceable, the remainder of the terms,
Page 7
<PAGE>
provisions, covenants and restrictions of this IPA will remain in full force and
effect and in no way will be affected, impaired or invalidated. No term or
provision of this IPA will remain in full force and effect and in no way will be
affected, impaired or invalidated. No term or provision of this IPA may be
amended, waived, discharged or terminated except by a written instrument signed
by Cadence and Customer. The parties hereto agree that, on demand of the other
party, each shall execute and deliver any instrument, furnish any information,
or perform any other act reasonably necessary or convenient to carry out the
provisions of this IPA.
Page 8
<PAGE>
Payment Schedule
Date: October 1, 1998
Payment Schedule as related to License Agreement between Harris Semiconductor of
Harris Corporation
License Agreement: Site Subscription Agreement No. SSVP-93E24TP
Listed below are original and revised payment obligations solely for the period
through August 2000 related to the above referenced License Agreement.
Original Payment Obligation:
<TABLE>
<CAPTION>
Due Date License Fee Maintenance Fee Service Fee Total Amount
- - -------- ----------- --------------- ----------- ------------
<S> <C> <C> <C> <C>
7/01/99 $3,367,579.32 $459,215.36 $83,333.33 $3,910,129.00
7/01/00 $1,750,349.63 $238,684.04 $83,333.33 $2,072,367.00*
</TABLE>
*Represents half of annual payment due to termination clause in License
Agreement.
Revised Payment Obligation:
<TABLE>
<CAPTION>
Due Date License Fee Maintenance Fee Service Fee Total Amount
- - -------- ----------- --------------- ----------- ------------
<S> <C> <C> <C> <C>
6/01/99 $841,894.83 $114,803.84 $20,833.33 $ 977,532.00
9/01/99 $841,894.83 $114,803.84 $20,833.33 $ 977,532.00
12/01/99 $841,894.83 $114,803.84 $20,833.33 $ 977,532.00
3/01/00 $841,894.83 $114,803.84 $20,833.33 $ 977,532.00
6/01/00 $875,174.82 $119,342.02 $41,666.66 $1,036,183.50
9/01/00 $875,174.82 $119,342.02 $41,666.66 $1,036,183.50
$5,982,495.00
</TABLE>
Acknowledge By Customer
By: /s/ Daniel J. Heneghan
--------------------------------
Name: Daniel J. Heneghan
------------------------------
Title: VP-Controller
-----------------------------
Page 9
EXHIBIT 10.31
HMCD - HSS Memorandum of Agreement
Montreal Design Center
Consistent with ongoing discussions between Harris Microwave Communication
Division ("MCD") and Harris Semiconductor Sector ("HSS"), business units within
Harris Corporation, a Delaware corporation, the two parties hereby enter into a
Memorandum of Understanding ("MOU") establishing the basic business agreement
Whereas the Montreal Design Center (MDC) is expected to become an extension of
HSS' R&D capability in Canada after a period of two years, and;
Whereas at that point the MDC should have a stable operating and strategic plan,
and be a viable design center for Harris MCD Integrated Circuit requirements,
and;
Whereas HSS would then be able to add incremental resources to the MDC above and
beyond Harris MCD Integrated Circuit needs to develop Integrated Circuits for
HSS based on core competencies developed at the MDC.
THEREFORE, and in consideration of the mutual promises set forth herein, the
parties agree on the following convenants:
HSS-and MCD Roles and Responsibilities
The following items list the roles and responsibilities of each party in this
relationship:
Operating Agreements
This proposal will follow the agreements set forth in the Technology
Partnerships Canada (TPC) Project Number: 721-459846 and Project Number:
720-459847.
Physical location
The MDC will be located in the Harris MCD Montreal facilities. Sufficient office
space will be available in this facility to support planned staffing through
FY'03.
Capital Equipment
Capital equipment will be procured for the MDC using Harris MCD's capital
equipment approval process during the first two fiscal years of operation. At
the time HSS assumes financial control of the MDC, HSS will procure capital
using the HSS approval process. Such equipment would consist of items such as
Sun work stations, design verification, laboratory equipment and other equipment
defined as capital per the Harris Corporation guidelines.
Software Tools
The MDC will have access to the Cadence suite of IC software design tools
through the HSS site subscription agreement. In addition, the Cadence tools will
include access to tool libraries for all the wafer fabrication processes which
HSS supports for design-active (meaning the tool sets and processes are
maintained and up to date) processes. This includes the Taiwan Semiconductor
Manufacturing Company (TSMC) wafer fab processes at 0.6u, 0.5u and 0.35u. As
additional libraries are developed and made design-active, these will also be
made available to the MDC. Additional development tools such as Synopsis,
Hardware/Software Co-design and Co-verification tools will need to be purchased
specifically for the MDC by HMCD, as HSS has no site subscription agreement for
these tools. However, the MDC will leverage HSS' purchase agreements for
software where possible.
Management
The MDC will be directly managed by a resident on-site manager, who shall report
directly to Tim Overcash, Director of Engineering, HSS. The MDC manager will
also report dotted line to Larry Zakaib, Director of Engineering, Harris MCD.
All MDC staff will report directly to the MDC manager.
<PAGE>
Accountability
Per the TPC agreements, the MDC manager will conduct twice yearly reviews with
the Canadian government TPC liaison. In addition, detailed business plan reviews
will be held jointly with Harris MCD and HSS prior to individual IC project
approval and using the HSS design methodology (ACTPTM).
Funding
Funding for expense items and capital such as payroll, supplies, software,
training, travel, phones, workstations, personal computers, out-sourced test
development and laboratory equipment will be provided by Harris MCD through the
end of FY'01. Beginning with the start of FY'02, HSS will assume responsibility
for directly funding the MDC and HSS will allocate expenses for MCD's share of
the MDC back to HMCD through inter-company billing. HMCD agrees that in FY'02
they will purchase back services from the MDC to at least a value of 90% of the
total operating expenses of the MDC from FY'01, the previous fiscal year. HMCD
agrees that in FY'03 they will purchase back services from the MDC to at least a
value of 75% of the total operating expenses of the MDC from FY'01. This will
insure a continuity of demand from HMCD and allow HSS time to absorb the
expenses of the MDC. The budget and AOP for MDC will be approved by the General
Managers of both HSS-CPB and HMCD. HSS and HMCD agree that fiscal year funding
(Canadian dollars) for the MDC will be as follows:
FY'99 FY'00 FY'01 FY'02 FY'03
$726K $2211K $3788K $4636K $4582K
Financial Structure
A single department number will be used by the MDC for budgeting and planning
purposes. At the time which HSS assumes financial responsibility for the MDC in
FY'02, an HSS department number will be assigned and all capital, labor,
expenses items, etc. will be moved into the HSS accounting system.
Design and 1P Ownership
All IP and development work will be owned by HSS. Any release of Intellectual
Property, disclosure of development work, or data related to this agreement
shall not occur without the written consent of HSS.
Resource Staffing
The initial resource staffing will be seeded by Harris MCD. The MDC manager will
be responsible for recruiting additional staff as set forth in the staffing
plan. Staffing requests will be approved by general managers of both HSS and
Harris MCD. It is expected that virtually all initial staffing will be recruited
in the Montreal area.
Training
HSS will provide, or will facilitate training for all CAD tools and design
methodology. It is anticipated that training will occur at the HSS facility in
Palm Bay, Florida, or at the tool vendor's site. This will allow for maximum
exposure of the trainee to the HSS design methodology.
Detailed IC Design Business Plans
Each integrated circuit will require its own detailed business plan as outlined
by the HSS development process methodology. The business plans must be approved
by a Director-Engineering at HSS and a Director-Engineering at Harris MCD.
Projects deviating from the approved strategic roadmap must be approved by a
General Manager from HSS and a General Manager from HMCD.
Manufacturing
HSS will facilitate wafer fab manufacturing through the TSMC or HSS wafer fab
and through HSS assembly or subcontract assembly. HSS will also put in place the
appropriate manufacturing structures to allow MDC to order wafer fab runs,
assemble design verification (DV) units and package testing. Material expenses
in manufacturing such as wafer fab runs, wafer fab masks, package lead frames,
DV packages and production test fixtures shall be
<PAGE>
paid for by Harris MCD. Test development shall be either out-sourced by the MDC
at MDC's expense, or completed using HSS resources if prior agreement is
obtained between HSS and the MDC.
Sales of MDC Designed Products to HMCD
HSS will manufacture, or will facilitate manufacture, of those devices designed
at the MDC for HMCD. HSS agrees to sell these devices to HMCD in accordance with
Corporate guidelines regarding inter-company sales.
Commercialization
HSS may elect to commercialize MDC-developed ICs for the merchant market, or may
elect to make modifications to MDC-developed ICs for the merchant market. In the
event that HMCD requires exclusivity rights for some period of time, or would
not want the ICs made available to the merchant market at all, then such
provisions must be defined in the detailed IC business plan prior to approval.
Public Announcements
Except as may be required by law, neither party shall make any public
announcements or press releases with respect to the terms and relationship of
this agreement with out the consent and concurrence of the other party.
Entire agreement
This agreement constitutes the entire agreement between the parties with respect
to the subject matter and supersedes any previous understandings,
representations, commitments or agreements, oral or written. No provision of
this Agreement may be waived except by a writing signed by the party to be
charged nor may this Agreement be amended except by writing executed by both
parties.
IN WITNESS WHEREOF, the parties have caused this agreement to be duly executed
by the authorized representatives,
Harris Corporation, Harris Corporation
Semiconductor Sector Communications Sector
Communications Products Business Microwave Communications Division
By: /s/ Ron Van Dell By: /s/ Richard Peabody
-------------------------------- ------------------------------------
Name: Ron Van Dell Name: Richard Peabody
------------------------------ ----------------------------------
Title: Vice President-General Manager Title: UP/GM
----------------------------- ---------------------------------
Date: 3/5/99 Date: 3/26/99
------------------------------ ----------------------------------
EXHIBIT 10.32
INVESTMENT AGENCY APPOINTMENT
AND
PARTICIPATION AUTHORIZATION
This INVESTMENT AGENCY APPOINTMENT and PARTICIPATION AUTHORIZATION (the
"Agreement") is dated as of the 3rd day of September, 1999, by and between
Intersil Corp. Master Trust ("Participating Trust"), and T. Rowe Price Trust
Company (the "Trustee") as investment agent with respect to certain assets of
the Participating Trust to be managed by the Trustee ("Account").
By execution of this Agreement, the Participating Trust and the Trustee hereby
agree to the following terms and conditions:
I. DEFINITIONS
Whenever used in this Agreement, unless the context clearly indicates
otherwise, the following words shall have the following meanings:
a. "ERISA" means the Employee Retirement Income Security Act of 1974 and
any amendments thereto.
b. "Fiduciary" means the undersigned person or persons who control the
investment of the Participating Trust.
c. "Prohibited Transaction" means any transaction which is a prohibited
transaction within the meaning of Section 406 of ERISA or Section 4975 of the
Internal Revenue Code of 1986, as amended (the "Code").
d. "Qualified Trust" means:
(1) A trust which forms part of an employees' pension, profit
sharing, or other benefit plan, which may include a common trust fund or
commingled investment fund consisting solely of such plans, (i) which is exempt
from taxation under Section 501(a) of the Code by reason of qualifying (or
treated as qualifying) under Section 401(a) of the Code (or corresponding
section of amendments thereto or statutes enacted hereafter); (ii) which is
permitted by existing or future rulings of the United States Comptroller of the
Currency or the Commissioner of Financial Regulation of the State of Maryland to
pool its funds in a group trust; (iii) which is administered under an agreement
which authorizes part or all of the assets of the Participating Trust to be
commingled, for investment purposes, with the assets of other such trusts by
investing such assets in a common or collective trust fund; and (iv) of which T.
Rowe Price Trust Company is acting as trustee, co-trustee, agent for the trustee
or trustees, or investment agent; and
(2) A governmental pension plan, the assets of which may be invested
in a group trust as provided in Section 401(a)(24) of the Code.
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e. "Trust" means the T. Rowe Price Stable Value Common Trust Fund
established pursuant to the Trustees Plan and Declaration of Trust dated July
29, 1988, as Last amended and restated as of May 19, l998 ("Declaration of
Trust"), the terms of which are incorporated herein by reference. The Trust is
intended to quality as a group trust under Internal Revenue Service Revenue
Ruling 81-100, 1981-C.B. 326, or any successor ruling, regulation. or similar
pronouncement, and this Declaration of Trust shall be construed, and the Trust
shall be administered. to give effect to that intention.
II. APPOINTMENT OF INVESTMENT AGENT
AND INVESTMENT AUTHORIZATION
The Fiduciary hereby appoints the Trustee as investment agent of the
Account. By acceptance hereof, the Trustee acknowledges that it is an investment
manager, as defined in Section 3(38) of ERISA, and a fiduciary with regard to
the Account. The Trustee is authorized to invest such Account in the Trust
maintained by the Trustee pursuant to the Declaration of Trust. The Trustee
shall not he authorized to take custody or possession of any assets of the
Account except to the extent that the Trustee shall invest the Account in the
Trust, or in the T. Roe Price Prime Reserve Fund, Inc. ("Prime Reserve"), as
authorized hereinafter in Section IV.
III. REPRESENTATIONS BY THE FIDUCIARY
The Fiduciary named below hereby represents that: (i) it is a Fiduciary
with respect to the Participating Trust; (ii) it is authorized to determine the
investments to be made available under the Participating Trust's plan and trust
document; (iii) it has received a copy of the Declaration of Trust and is aware
of the nature and objectives or the Trust; (iv) the Participating Trust is a
Qualified Trust as defined in Section [.d herein; (v) the Participating Trust is
administered under a plan or trust document which authorizes the investment of
plan assets in common, collective, or commingled trust fund such as the Trust
and adopts the trust document of any such commingled fund as an integral part
thereof to the extent of the Participating Trust's investment in the Trust; (vi)
the Participating Trust has specifically adopted the terms of the Declaration of
Trust, as it may be subsequently amended from time to time, to the extent of the
Participating Trust's investment in the Trust; and (vii) the Fiduciary is
authorized to make the appointments and give the authorizations provided for
herein.
In accordance with Article I, Section 1.3 of the Declaration of Trust, a
Fiduciary that is the trustee of any Qualified Trust that is a common trust fund
or commingled investment fund ("CIF") shall only provide representations on
behalf of such CIF and not on behalf of each employee pension plan invested in
such CIF. Therefore, the Fiduciary of any CIF represents that, to the best of
its knowledge, the CIF is a Qualified Trust as defined in Section in I.d.
herein.
The Fiduciary named below further represents that the Participating Trust
is not a Keogh Plan other than a Keogh Plan qualified to invest in a collective
trust fund pursuant to Rule 180 under the Securities Act of 1933; a plan funded
by an annuity contract as described in Section 403(b) of the Code; or an
Individual Retirement Account.
2
<PAGE>
With regard to an eligible deferred compensation plan sponsored by a state
or local government pursuant to Section 457 of the Code ("457 Plan"), the
Fiduciary hereby represents and certifies that: (i) the 457 Plan is for the
exclusive benefit of the employer's employees or their beneficiaries; (ii) the
purpose of the 457 Plan is the distribution of corpus and income funds, if any,
accumulated under such 457 Plan to the employer's employees or their
beneficiaries; (iii) no part of the corpus or income of the 457 Plan shall be
used for or diverted to any purpose other than the exclusive benefit of the
employer's employees or their beneficiaries prior to the satisfaction of all the
457 Plan's liabilities to such employees and beneficiaries, except as noted
below with regard to certain 457 Plans created prior to August 20, 1996; (iv)
the 457 Plan is not funded by an annuity contract described in Section 403(b) of
the Code; and (v) no employee contributions to the 457 Plan will be invested by
the 457 Plan in securities of the employer or its controlled or commonly
controlled entities.
With regard to 457 Plans created prior to August 20, 1996, and until
January 1, 1999, or such earlier time as the plan document is amended in
accordance with the requirements of the Small Business Job Protection Act of
1996, assets of such plans shall remain subject to the claims of the general
creditors of the employer solely to the extent necessary to maintain
qualification under Section 457 of the Code. As long as assets remain subject to
the general creditors of the employer pursuant to Section 457 of the Code, the
Fiduciary shall provide the Trustee with written notification of reasons for
withdrawal of plan assets from the Trust, the person to whom assets will be
transferred and verification that assets will not be subject to the employer's
use. Assets may only be withdrawn (i) to pay benefits to participating
employees, (ii) to transfer assets to the plan's custodian or other person
designated by the sponsoring employer in connection with the selection of
alternative investment arrangements, (iii) to distribute plan assets to
participating employees in the event the plan is terminated pursuant to a plan
of liquidation, (iv) to reimburse an employer for plan benefits paid out of
employer assets or to correct excess deferral or other mistaken investments in
the Trust, (v) to transfer plan assets to a trustee in bankruptcy or other
authorized agent in the event of the employer's insolvency or bankruptcy, or
(vi) to satisfy the claims of the employer's general creditors in the event of
the employer's insolvency or bankruptcy. In the event assets of such 457 Plans
are to be withdrawn from the Trust to transfer assets to a trustee in bankruptcy
or to satisfy the general creditors of the employer, the Fiduciary shall provide
the Trustee with evidence of the formal determination of insolvency after a
public hearing.
The Fiduciary hereby commits that: (i) upon termination or discontinuance
of the Trust, assets of the Participating Trust are to be invested in Prime
Reserve unless and until the Fiduciary instructs the Trustee to the contrary in
writing; (ii) the Participating Trust will not offer as an investment option
under the Participating Trust's plan document any guaranteed investment
contract(s), bank investment contract(s), or synthetic investment contract(s)
which are open to new deposits other than those purchased through the Trust, and
(iii) the Participating Trust will not allow direct transfers from the Trust to
a competing investment option.
By participating in the Trust, the Fiduciary also hereby agrees:
1. A total Participating Trust withdrawal from the Trust at book value
requires a 12-month waiting period before distribution of funds. With respect to
a CIF, the 12-month notice
3
<PAGE>
period will also apply to each of its participating plans. The 12-month notice
period may be waived by the Trustee in its sole discretion in certain limited
circumstances. Generally, the notice period will be waived when withdrawal will
not violate the Trust's minimum requirements for cash reserves and when market
yields for comparable investments are less than the Trust's yield.
A market value withdrawal is permitted upon a partial or complete
termination of the Participating Trust, as evidenced by: (i) an Internal Revenue
Service determination letter, the Plan Sponsor's board of directors' resolution,
and a Pension Benefit Guaranty Corporation letter of sufficiency, if applicable;
or (ii) such other evidence as shall be acceptable to the Trustee in its sole
discretion and consistent with its fiduciary duties to the Trust.
2. The Participating Trust will follow the procedures for purchases and
redemptions as contained in the Administrative Procedures attached hereto.
Business days will be defined as the days that the Trustee is open for business.
Trustee reserves the right to waive any or all of terms of the Administrative
Procedures when circumstances warrant, so long as neither the Trust nor any
Participating Trust is disadvantaged as a result of such withdrawal.
3. No attempt will be made in any manner or fashion to influence
participant investment choices or benefit withdrawals. This representation is
not intended to preclude the dissemination of information regarding
participants' investment choices or benefit withdrawals in the normal course of
plan communications or if otherwise required by law or by a court of competent
jurisdiction.
4. 100% of contributions designated for investment in the Trust,
including, if applicable, any rollover amounts, will be remitted to the Trustee.
Administrative expenses that may lawfully be deducted from participant
contributions prior to investment in the Trust shall be excluded.
5. Proper and authenticated documentation will be provided to the Trustee
in the event that the Participating Trust's administrative procedures are
changed in a manner which could have a detrimental impact on participants in the
Trust.
6. The Fiduciary consents to the Trustee investing assets of the Trust in
group trusts and common or collective trust funds, including those for which the
Trustee, or an affiliate of the Trustee, may act as trustee and/or investment
adviser, in Prime Reserve and the Reserve Investment Fund ("Reserve Fund"), an
underlying series of the T. Rowe Price Reserve Investment Funds, Inc., for which
affiliates of the Trustee act as adviser and service provider. The purchase or
sale of shares of Prime Reserve and the Reserve Fund are subject to the terms of
the current applicable prospectus. The Fiduciary: (i) acknowledges that it is a
fiduciary for the Participating Trust; (ii) acknowledges receipt of a current
prospectus of Prime Reserve and the Reserve Fund which prospectuses include
necessary information for the Trustee's conclusion that investments in the funds
are appropriate for the liquid assets of the Trust; (iii) approves the fees
payable directly to the Trustee hereunder regarding assets invested in the
Reserve Fund (in addition to the non-advisory fees and expenses disclosed in the
Reserve Fund's prospectus which include fees paid indirectly to affiliates of
the Trustee); and approves the fees payable indirectly to affiliates of the
Trustee through Prime Reserve and acknowledges that the rate payable by
4
<PAGE>
Prime Reserve may differ from, and may be greater than, the rate otherwise
payable under the Trust. In the event assets are invested in Prime Reserve, no
fees shall be charged hereunder with regard to such assets.
The T. Rowe Price Personal Strategy Income Fund and the T. Rowe Price Retirement
Strategy Trust-Income Plus are exempt from the competing investment option
restriction.
IV. NOTIFICATION OF DISQUALIFICATION
Within 15 days after the receipt by the Fiduciary or the plan sponsor of a
notice of determination from the Internal Revenue Service that a Participating
Trust's exemption letter will not be issued or has been revoked, terminated, or
otherwise modified so that a Participating Trust is no longer exempt from
taxation, as specified above, or after the agreement under which a Participating
Trust is administered has been amended or altered so as to no longer permit
investment in a collective investment trust, the Fiduciary shall deliver to the
Trustee a copy of such determination letter, if applicable, or amendment and
documents representing all of the Participating Trust's interest for purpose of
withdrawal. Such withdrawal shall be effected in accordance with the provisions
of Article V of the Declaration of Trust including Section 5.3 which may require
a reduction of the value of the Participating Trust's units of the Trust in
certain circumstances.
V. ADMINISTRATION AND MANAGEMENT OF THE TRUST
It is understood and agreed that the Trustee shall administer the Trust in
accordance with the provisions of the Declaration of Trust. The Trustee has
retained the services of an investment adviser, T. Rowe Price Stable Asset
Management, Inc. ("Stable Asset Management"), an affiliate of the Trustee, to
assist it in the investment of assets of the Trust, such investment adviser
being compensated by the Trustee for such services. Stable Asset Management will
delegate responsibility for management of certain fixed income investments to T.
Rowe Price Associates, Inc., the parent of Stable Asset Management and the
Trustee.
VI. BROKERAGE AUTHORIZATION
The Trustee shall be authorized to effect transactions for the
Participating Trust with or through such brokers, dealers, and other financial
institutions as it shall determine from time to time in its sole discretion.
VII. DISCLOSURE OF CERTAIN INFORMATION
Prior to or simultaneously with the execution of this Agreement and,
thereafter, upon request by the Trustee from time to time, the Fiduciary shall
disclose such information, including but not limited to financial statements,
which will enable the Trustee to determine whether the Trust has entered into a
Prohibited Transaction. If such information reveals to the Trustee that assets,
liabilities, transactions, agreements, obligations or undertakings on behalf of
a Participating Trust would result, or have resulted, in the Trust being treated
as having entered into a Prohibited Transaction, then the Fiduciary shall either
(i) upon request of the Trustee, immediately dispose of any such assets or
liabilities and/or terminate such obligation, agreement,
5
<PAGE>
or undertaking, or (ii) deliver to the Trustee documents representing all of the
Participating Trust's beneficial interest so that it may be withdrawn in
accordance with the provisions of Article V of the Declaration of Trust.
VIII. ADMISSION AND WITHDRAWAL; PROHIBITIONS ON TRANSFER
Admissions and withdrawals to the Trust shall be effected in accordance
with the provisions of Article V of the Declaration of Trust and the attached
Administrative Procedures.
Units of beneficial interest shall not be assignable and the Fiduciary
shall not assign or otherwise transfer or pledge or otherwise encumber any or
all of the Participating Trust's interest in the Trust, other than upon
withdrawal in accordance with the aforesaid provisions of Article V of the
Declaration of Trust.
IX. FEES
The Trustee shall receive, as full compensation for services rendered as
investment agent, investment agent's fees ("Fees"), in accordance with the
provisions of the Schedule of Fees attached to and made a part of this
Agreement. The Fiduciary approves the Fees for the Trust. Fees shall accrue
daily. The Trustee is hereby instructed to withdraw units of the Trust from the
Account monthly to pay Fees and other permissible expenses unless the Fiduciary
notifies the Trustee to bill the plan sponsor quarterly in accordance with the
attached Fee Schedule.
X. NOTICE
Any notice, advice or report to be given pursuant to this Agreement shall
he delivered or mailed to:
o the Trustee at --
T. Rowe Price Trust Company
100 East Pratt Street
Baltimore, Maryland 21202
Attention: Stable Value Fund Administrator
o the Fiduciary at --
Intersil Corporation Retirement Plan Committee
2041 Palm Bay Road, NE
Palm Bay, FL 32905
Attn: Steve Cusick
XI. CONSTRUCTION OF AGREEMENT
To the extent state laws shall not have been preempted by the provisions
of ERISA, regulations of the Office of the Maryland Commissioner of Financial
Regulation or any other laws of the United States heretofore or hereinafter
enacted, as the same may be amended from
6
<PAGE>
time to time, this Agreement shall be construed and the rights and obligations
of the parties hereunder enforced in accordance with the laws of the State of
Maryland.
IN WITNESS WHEREOF, the undersigned has executed this Investment Agency
Appointment and Participation Authorization as of the day and year first above
written.
Daniel J. Heneghan
----------------------------------------------
Fiduciary (Print/Type)
By: /s/ Daniel J. Heneghen
------------------------------------------
(Signature)
Title: Vice President, Secretary and Treasurer
---------------------------------------
(Print/Type)
Plan Sponsor: Intersil Corporaton
--------------------------------
(Print/Type)
This Investment Agency Appointment and
Participation Authorization is hereby
ACCEPTED and agreed to as of the date hereof:
T. ROWE PRICE TRUST COMPANY
By: __________________________
Vice President
7
<PAGE>
T. ROWE PRICE STABLE VALUE COMMON TRUST FUND
PLAN INFORMATION
Plan Name: _____________________________________________________________________
Plan Sponsor. __________________________________________________________________
Address: _______________________________________________________________________
_______________________________________________________________________
Type of Plan: _________________________ Plan Tax Identification No. __________
Date of Initial Investment: ___________ No. of Eligible Employees: ___________
Estimated contributions:* _____________
Rollover/Lump Sum: $_________________ Net Contributions (Annual): $ ________
Source of Rollover: _________________ Match (Annual): $ ____________________
Expected Date: ______________________ Other $ ______________________________
Plan Administrator: ____________________________________________________________
Address: _______________________________________________________________________
Primary Contact for plan/account-related questions: ____________________________
Address: _______________________________________________________________________
Phone: _________________________________________________________________________
Plan Trustee: __________________________________________________________________
Address: _______________________________________________________________________
Please complete information below only if T. Rowe Price Retirement Plan
Services, Inc. is not the plans recordkeeper.
Monthly statement and transaction Wire transfer instructions for plan
advices to: depository:
_________________________________ ___________________________________
_________________________________ ___________________________________
_________________________________ ___________________________________
_________________________________ ___________________________________
If additional space is needed, please attach a separate sheet.
*Estimates are provided for information only and will not be binding upon the
plan sponsor.
8
<PAGE>
ADMINISTRATIVE PROCEDURES
T. ROWE PRICE STABLE VALUE COMMON TRUST FUND
The following procedures set forth the guidelines for making purchases and
redemptions of units of the T. Rowe Price Stable Value Common Trust Fund (the
"Trust") sponsored by T. Rowe Price Trust Company (the "Trustee"). All terms and
definitions in these procedures are the same as the terms and definitions in the
Investment Agency Appointment and Participation Authorization (the "Agreement").
A. Valuation
Interests of the Trust will be divided into and represented by units of
participation ("Units"). For information regarding valuation of the Trust, see
Article IV of the Declaration of Trust.
B. Cash Inflows/Investments
1. The Trust will accept all contributions directed to it by participants
of Participating Trusts that are (a) plans qualified pursuant to IRC Section
401(a) or (b) plans of state and local governments defined under IRC Section
457. Plan sponsor-directed contributions will also be accepted by the Trust.
2. The Trust will accept participant-directed transfers from other
investment options offered under a Participating Trust's plan documents.
Existing assets of Participating Trusts may be rolled into the Trust as directed
by either the plan participants or the plan sponsor.
3. Plan participants or plan sponsors may redirect future contributions in
accordance with the administrative procedures of the Participating Trust.
4. The Trust may not be used as a short-term investment vehicle for
Participating Trust assets pending the rollover or conversion of such assets to
designated investment options; nor may it be used as the Participating Trust's
forfeiture or default investment option without the express permission of the
Trustee.
C. Cash Outflows/Redemptions
1. Benefit payments and in-service withdrawals will be made in accordance
with the provisions of the Participating Trust's plan documents. These include
payments in the event of death, retirement, termination or disability, and
authorized in-service withdrawals.
2. Transfers may he made from the Trust only to an eligible investment
option in accordance with plan provisions and the following requirements of the
Trust as specified in the Agreement. Transferred amounts must be held in an
eligible investment option for 90 days before subsequent transfer into a
competing investment option can occur. An "eligible" investment option includes
most common stock funds and any fixed income fund which has a duration* that
- - ----------
* Duration measures a fund's price sensativity to interest rate changes.
9
<PAGE>
is equal to or greater than three years. In addition, any balanced fund whose
fixed income component has a duration that is equal to or greater than three
years will also be deemed to be eligible. Money market funds and certain bond
funds that have a duration of less than three years will be deemed to be
competing funds and, therefore, are not eligible investment options.**
3. In cases where the Trust represents one investment in a Participating
Trust's portfolio of multiple investments that are not participant-directed,
withdrawals for participant benefits must be made at least pro rata according to
the ratio of the Participating Trust's account balance in the Trust to the
Participating Trust's total plan assets. The pro-rata percentage is determined
by dividing the Participating Trust's account balance in the Trust by the total
assets of the Participating Trust. The plan sponsor must provide satisfactory
evidence that the withdrawal is pro rata at the time the redemption is
requested. The Participating Trust has the option to withdraw funds from other
Participating Trust investments without withdrawing Units from its Account.
In the event the Trust is part of a portfolio of multiple or blended
guaranteed investment contracts, synthetic investment contracts, or similar
stable value investments ("Stable Value Investments") offered by either a
Participating Trust or CIF, withdrawals will be honored provided they represent
not more than the Trust's pro-rata share of all of the Stable Value Investments
in the portfolio after cash reserves or short-term holdings, if any, are
depleted.
4. In the event of the Participating Trust's plan termination or
disqualification under IRC section 401(a), withdrawal from the Trust may be at
the lesser of book or market value (See Article V, Sections 5.2(a) and 5.3 of
the Declaration of Trust). Evidence of termination or disqualification must be
provided in a form satisfactory to the Trustee pursuant to the terms of the
Agreement.
5. A Participating Trust may suspend participation in the Trust and
withdraw all balances at the Trust's Unit value with a 12-month notice in
writing to the Trustee. (See Article V, Section 5.2 of the Declaration of
Trust). With respect to a CIF, the 12-month notice period will also apply to
each of its participating plans. Generally, the notice period will be waived
when withdrawal will not violate the Trust's minimum requirements for cash
reserves and when market yields for comparable investments are less than the
Trust's yield. Unless express permission is given by the Trust, a Participating
Trust may not contribute funds to invest in additional Units during the notice
period, but the Participating Trust may continue to request participant-directed
benefit withdrawals and investment transfers.
D. Fees and Expenses
At the direction of the Participating Trust, Units will be withdrawn
from its Account to pay such Trustee's fee as shall be agreed upon by the
Trustee and the Participating Trust. Fees
- - ----------
** The T. Rowe Price Personal Strategy Income Fund and the T. Rowe Price
Retirement Strategy Trust Income Plus are exempt from the competing
investment option restriction.
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<PAGE>
will be charged against the Trust daily, but the withdrawal of Units will occur
no less frequently than once per month.***
The Trustee shall deduct from and charge against the Trust any taxes or
other charges paid by it which may be imposed upon the Trust, or which the
Trustee may be required to pay with respect to the interest of any person
therein by any present or future laws of any jurisdiction or taxing authority.
The Trustee will pay normal operating expenses of the Trust consisting of
custodian, investment adviser and servicing agent fees, audit fees, insurance
expenses, and legal fees for establishing and maintaining the Trust (but not
legal fees for certain types of litigation or other unanticipated or
extraordinary expenses). For more information regarding expenses and
compensation, refer to Article VII of the Declaration of Trust.
The Trustee's fee will not be charged against Trust assets invested in
Prime Reserve but will be charged against Trust assets invested in the Reserve
Fund in accordance with the Agreement.
E. Miscellaneous
The Fiduciary agrees that all plan participant-directed transactions will
be made in accordance with the administrative practices established by the
Participating Trust. The Fiduciary further agrees to execute all necessary
documents and to provide other appropriate backup and certifications as
requested by the Trustee to effect all purchases and redemptions. If a market
value adjustment is assessed against the Trust by one or more issuers because of
the Fiduciary's failure to abide by the terms of these Administrative
Procedures, the value of the Participating Trust's Units may be reduced
accordingly. See Article V of the Declaration of Trust.
F. Purchase and Redemption Instructions
All Trust investments should be wired to:
First National Bank of Maryland
25 South Charles Street
Baltimore, MD 21202
Account #153-9029-1
T. Rowe Price Trust Company Agency Account
ABA #052 000 113
For Participating Trusts that utilize the services of T. Rowe Price
Retirement Plan Services, Inc. (RPS), please follow standard instructions.
Processing of investments and withdrawals will be handled in the normal course
along with your T. Rowe Price Mutual Fund transactions.
- - ----------
*** Fees can be billed directly to the plan sponsor on a quarterly basis. For
further information, please inquire.
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For Participating Trusts that are not clients of RPS, investment and
redemption orders can be made by phone but must be confirmed by facsimile
transmission. Telephone orders received by 4:00 p.m. eastern time will be
processed on the first business day following receipt of funds or redemption
instructions. You will be provided with an account number and phone facsimile
instructions by an assigned T. Rowe Price Financial Institution Services
Representative after the Trustee has processed your signed Agreement. Exception
(same day) trading requires the express written permission of the Trustee.
G. Amendments to Procedures
These Administrative Procedures may be amended at any time in any respect
by the Trustee. Notice of any such material amendment shall be provided to
Participating Trusts. In the event of a conflict between these Administrative
Procedures and the Agreement and Declaration of Trust, the provisions of the
Agreement and Declaration of Trust will control.
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AMENDED AND RESTATED PLAN AND DECLARATION OF TRUST
T. ROWE PRICE STABLE VALUE COMMON TRUST FUND
WHEREAS, T. Rowe Price Trust Company (hereinafter referred to as the
"Trustee" when it is acting, or is to act, as Trustee hereunder), established a
trust known as the T. ROWE PRICE MANAGED GIC COMMON TRUST FUND, now known as the
T. ROWE PRICE STABLE VALUE COMMON TRUST FUND (the "Fund") pursuant to the Plan
and Declaration of Trust dated July 29, 1988, as subsequently amended and
restated, which is now amended and restated in this Amended and Restated Plan
and Declaration of Trust dated as of May 19, 1998.
WHEREAS, the Fund is intended to qualify as a group trust under Sections
401(a) and S01(a) of the Internal Revenue Code of 1986, as amended (the "Code"),
and as a common trust fund under Section 3-501 of the Financial Institutions
Article of the Annotated Code of Maryland, and all provisions of the Declaration
of Trust shall be so construed;
NOW, THEREFORE, the Trustee declares that it will hold and administer in
trust all money and property acceptable to it and received or purchased by it as
Trustee hereunder, together with the income and proceeds thereof, upon the
following terms, conditions and trusts:
ARTICLE I.
DEFINITIONS
Wherever used in the Declaration of Trust, unless the context clearly
indicates otherwise, the following words shall have the following meanings:
Section 1.1. "Trust(s)" means one or more of the separate investment trusts
established pursuant to Article II to which the particular provisions hereof are
being applied.
Section 1.2. "Qualified Trust" means:
a. A trust which forms part of an employees' pension benefit plan, which
may include a common trust fund or commingled investment fund consisting solely
of such plans, (1) which is exempt from taxation under Section 501(a) of the
Code by reason of qualifying (or treated as qualifying) under Section 401(a) of
the Code (or corresponding sections of amendments thereto or statutes enacted
hereafter); or which is maintained by a state or local governmental body or
instrumentality and defined as an Eligible Deferred Compensation Plan by Section
457 of the Code; (2) which is permitted by existing or future rulings of the
United States Treasury Department and the Bank Commissioner of the State of
Maryland to pool its funds in a group trust; (3) which is administered under an
agreement which authorizes part or all of the assets of the trust to be
commingled, for investment purposes, with the assets of other such trusts by
investing such assets in a common trust fund; (4) which has been authorized and
directed to participate in and transfer assets to the Fund by a resolution, or
other appropriate instrument, of the Fiduciary that incorporates by reference
the terms and provisions of the Declaration of Trust and of any amendment
thereto; arid (5) of which T. Rowe Price Trust Company is acting as trustee,
co-trustee, agent for the trustee or trustees, or investment agent; and
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b. A governmental pension plan, the assets of which may be invested in a
group trust, as provided in Section 401(a)(24) of the Code.
Section 1.3. "Participating Trust" means a Qualified Trust which, with the
consent of the Trustee, has (1) executed a participation authorization agreement
acceptable to the Trustee which, inter alia, sets forth that it is fully aware
of the nature and purpose of the Fund and the Trust(s), and (2) placed Assets
with T. Rowe Price Trust Company in a fiduciary capacity described in Section
1.2 (a) (5) hereof, all or a part of which are transferred to the Fund for
investment. With respect to a Qualified Trust which is a common trust fund or a
commingled investment fund (collectively referred to as "CIF"), the trustee of
such CIF shall execute a participation authorization agreement on behalf of such
CIF only and not on behalf of each employee pension benefit plan invested in
such CIF.
Section 1.4. "Fiduciary" means the person or persons who control the investments
of the Participating Trust.
ARTICLE II.
ESTABLISHMENT OF SEPARATE TRUSTS
Section 2.1. Trusts. The Fund shall consist of Trusts, detailed below, which
shall be invested, or reinvested, in the class or classes of property specified
below, and of such additional Trusts as may be established, from time to time,
as provided in Section 2.2; provided, however, that the Trustee may elect that
any or all of the Trusts described in this Section may be placed in operation
subsequent to the date hereof; and provided further, that the Trustee may, from
time to time, invest such portion of any of the Trusts, as it may deem
advisable, in temporary investments, investment companies and in any other
property, as provided by Section 3.2, or as part of any other Trust.
The Trustee's determination as to whether or not any investment is within
the class or classes of property in which any Trust is to be invested shall be
conclusive. The Trustee shall hold, manage, administer, value, invest, reinvest,
distribute, account for and otherwise deal with each Trust separately. Any
Participating Trust may have an interest in more than one Trust and the
proportion of its assets which is invested in each Trust may be changed from
time to time.
a. Stable Value Trust. The investment objectives of this Trust shall be to
maximize current income consistent with the maintenance of principal and to
provide for withdrawals for certain participant-initiated transactions under a
plan without penalty or adjustment. The Trust will attempt to obtain these
objectives by investing and reinvesting amounts transferred to this Trust
principally in guaranteed investment contracts ("GICs") (both simple and
compound interest contracts) issued by insurance companies, investment contracts
issued by banks ("BICs"), structured or synthetic investment contracts issued by
banks and insurance companies and other issuers ("SICs") and securities
supporting such SICs, and other similar instruments which are intended to
maintain a constant net asset value while permitting participant initiated
benefit-responsive withdrawals for certain events (herein collectively referred
to as "Investment Contracts"), selected by the Trustee. The Trust may also
invest in other insurance and bank
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instruments, including but not limited to annuities, group annuities and funding
agreements issued by insurance companies and banks (collectively referred to as
"Other Contract(s)").
The Trust may establish and maintain reserves to meet liquidity needs or
for other purposes. Reserves of the Trust may be invested in money market
securities, e.g., U.S. Government securities, obligations of banks and savings
and loans, such as bankers acceptances, certificates of deposit, prime
commercial paper or unrated commercial paper determined by the Trustee to be of
comparable quality, corporate debt obligations and regulated investment
companies and group or common or collective trust funds which invest in money
market securities and for which the Trustee, or an affiliate of the Trustee may
act as sponsor. trustee or investment adviser (whether or not incorporated and
whether or not registered under the Investment Company Act of 1940), and
Investment Contracts with enhanced liquidity features.
Section 2.2. Establishment of Other Trusts. At any time, and from time to time,
the Trustee may establish, within the Fund, one or more additional Trusts.
Section 2.3. Termination of Trusts. The Trustee may at any time in its sole and
absolute discretion, terminate any Trust. In that event, the assets held in such
Trust shall be distributed to the Participating Trusts having interests therein,
or at the Trustee's discretion, shall be liquidated for their benefit in the
same manner as it such Trust were a liquidating account, as provided in Section
5.5.
ARTICLE III.
INVESTMENT AND ADMINISTRATION
Section 3.1. Responsibility and Authority of Trustee. The Trustee shall be
solely and exclusively responsible for, and shall have exclusive authority and
discretion for, the management and control of the Fund and of each Trust
thereunder. Subject to the provisions of the preceding sentence, the Trustee may
at its expense retain the services of such investment or other advisers and
consultants (including affiliates of the Trustee) as it may deem desirable to
assist it in carrying out its responsibilities, including its responsibilities
as Trustee under the Declaration of Trust. Subject to the foregoing, the
Trustee, in order to implement the investment purpose of any Trust, may divide
any Trust into sub-accounts (hereinafter referred to as "Advisory Portfolios'),
which may be operated and administered according to such guidelines and
utilizing the advice of such investment and insurance advisers or consultants as
the Trustee may, in its sole discretion at its expense, deem advisable.
Notwithstanding the establishment of any Advisory Portfolio, the Trustee shall
retain full authority to manage such Advisory Portfolio and each Trust shall be
valued pursuant to Section 4.2 as a unit and the interests of the Participating
Trusts therein shall be established and adjusted with respect to the entire
Trust.
Section 3.2. Investment Powers and Duties of Trustee. The Trustee shall have,
with respect to any property at any time held by it as part of the Fund and
constituting part of any Trust, power in its discretion to invest and reinvest
in any investment contracts issued by an insurance company, bank or other
issuer, including but not limited to GICs and BICs and other investment
contracts and similar instruments; SICs issued by banks, insurance companies,
and other issuers; securities or other assets supporting such structured or
synthetic investment contracts including,
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but not limited to, corporate, U.S. government, and U.S. government agency debt
obligations, asset-backed and mortgage-backed securities issued by U.S.
government agencies and private issuers and obligations of multilateral and
supranational agencies; contracts for the immediate or future delivery of
financial instruments; certificates of deposit; demand or time deposits
(including any such demand deposit with the Trustee of funds awaiting investment
or distribution); bills; certificates; acceptances; repurchase agreements;
commercial paper; variable rate or amount notes; interests in group trusts and
common or collective trust funds including those for which the Trustee, or an
affiliate of the Trustee, may act as trustee and/or investment adviser;
interests in or shares of regulated investment companies or other investment
companies. including investment companies for which the Trustee, or an affiliate
of the Trustee, may act as investment adviser (whether or not incorporated and
whether or not registered under the Investment Company Act of 1940); evidences
of dollar denominated indebtedness in domestic or foreign corporations or other
enterprises; and indebtedness of foreign governments, foreign agencies and
international organizations; without being limited to classes of property in
which trustees are authorized to invest trust funds by any law or any rule of
court of any state and without regard to the proportion any such property or
interest may bear to the entire amount of the Fund or of any Trust.
Section 3.3. Additional Investment Powers and Duties of Trustee. While, in the
normal course of events, the Trustee shall invest and reinvest the assets of the
Trust as set forth in Section 3.2 above, the Trustee, with respect to any
properties at any time held by it as part of the Fund and constituting part of
any Trust, reserves the right and shall have the power in its discretion:
a. Retention of Property. To retain any property at any time received by
it;
b. Authority to Sell Property. To sell or exchange any property at public
or private sale for cash or on credit; to grant options for the purchase or
exchange of any property; or otherwise to sell, exchange, convey, transfer or
dispose of any property;
c. Participation in Reorganization, Mergers, etc. To participate in any
plan of reorganization, consolidation, merger, combination, liquidation or other
similar plan relating to such property and to consent to, or to oppose, any such
plan or any action thereunder, or any contract, lease, mortgage, purchase, sale
or other action by any person or corporation;
d. Participation in Protective Reorganizations. To the extent permitted by
applicable Federal and Maryland state law, to deposit any property with any
protective, reorganization or similar committee; to delegate discretionary power
thereto and to pay or agree to pay part of the expense and compensation of any
such committee and any assessments levied with respect to any such property so
deposited;
e. Exercising Conversion Rights. To exercise all conversion, subscription
or other rights, whether or not discretionary and including rights to vote and
grant proxies pertaining to any property held by it;
f. Payment Extensions. To extend the time of payment of any obligation;
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g. Stand-by Agreements. To enter into stand-by agreements or forward
commitments for future investment, either with or without a stand-by fee;
h. Cash Balances. To hold part or all of any Trust uninvested, without
liability for interest;
i. Borrowing. To borrow money from any source as may be necessary or
advisable to protect the Fund in the event of a temporary net cash overdraft or
similar event; provided, however, that any such borrowing shall be made only in
accordance with applicable regulations and examination procedures of the Bank
Commissioner of the State of Maryland and that no such loan shall be made by the
Trustee individually other than a temporary advance on a net cash overdraft
basis;
j. Lending. To lend any securities to brokers or dealers and to secure the
same in any manner and, during the term of any such loan, to permit the
securities so lent to be transferred in the name of, and voted by, the borrower
or others;
k. Custody of Assets. To register or cause to be registered any investment
held by it pursuant to the Declaration of Trust in the name of a nominee, with
or without the addition of words indicating that such securities are held in a
fiduciary capacity, or in the name of a nominee of any custodian bank acting
pursuant to paragraph (p) of this Section 3.3, or of a depository or clearing
corporation, or other system for the central handling of securities, either
domestic or foreign; to hold any such investment in bearer form; and to maintain
the indicia of ownership of assets outside the United States of America in
conformity with regulations of the United States Department of Labor;
l. Collection of Monies Due. To collect and receive any and all money and
other property due to the Fund or any Trust and to give full discharge
therefore;
m. Litigation. To settle, compromise or submit to arbitration any claims,
debts or damages due or owing to or from the Fund or any Trust; to commence or
defend suit or legal proceedings whenever, in its judgment, any interests of the
Fund or any Trust require it; and to represent the Fund or any Trust in all
suits or legal proceedings in any court or before any other body or tribunal;
n. Management of Real Property. To retain, manage, operate, repair,
develop, preserve, improve, mortgage or lease for any period, any real property
held by the Trustee or by any entity organized by it pursuant to paragraph (o)
of this Section 3.3 upon such terms and conditions as the Trustee deems proper,
either alone or by joining with others, using other trust assets for any such
purposes as it deems advisable; to modify. extend, renew, waive or otherwise
adjust any or all of the provisions of any such mortgage or lease, including the
waiver of rentals; and to make such provisions for the amortization of the
investment in, or the depreciation of the value of, such property as it may deem
advisable;
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o. Organizing Corporations. Partnerships and Trusts. To organize
corporations, partnerships or trusts for the purpose of acquiring and holding
title to any property which the Trustee is authorized to acquire under Article
III;
p. Employment of Agents. To employ suitable agents, including custodians,
recordkeepers auditors, depositories and counsel, domestic or foreign. and to
pay their reasonable expenses and compensation; and to transfer any assets of
any Trust to any custodian or subcustodian employed by the Trustee;
q. Employment of Investment Advisers. To employ at its expense such
investment advisers and consultants, domestic or foreign, as the Trustee, in its
sole discretion, shall deem advisable, including, but not limited to, entities
which are affiliates of the Trustee; and
r. General Powers. Generally, to do all acts, whether or not expressly
authorized, which the Trustee may deem necessary or desirable to carry out the
purposes of the foregoing powers or for the protection of the Fund or any Trust.
Section 3.4. Dealings with Other Persons. Persons dealing with the Trustee shall
be under no obligation to see to the proper application of any money paid or
property delivered to the Trustee or to inquire into the Trustee's authority as
to any act or transaction.
ARTICLE IV.
INTERESTS OF PARTICIPATING TRUSTS
Section 4.1. Units of Participation. Each Trust shall be invested and
administered as a single investment fund. The beneficial interests of each
Participating Trust in each Trust shall be divided into and represented by units
of participation (hereinafter referred to as "Units"). Each Unit of a Trust
shall be of equal value to every other and shall represent an undivided
proportionate interest in all assets and liabilities of such Trust and all
income, profits and losses of such Trust shall be allocated to all Units
equally. No certificates representing Units shall be issued, but the Trustee
shall keep books in which shall be recorded the number of Units and fractions
thereof, standing to the credit of each Participating Trust. The Trustee may,
from time to time, divide the Units of a Trust into a greater number of Units of
lesser value, or a lesser number of Units of greater value, provided that the
proportionate interest of each Participating Trust in the Trust shall not
thereby be changed.
Section 4.2. Valuation of the Trusts. At such intervals and as of such dates
(each of which is herein referred to as a "Valuation Date(s)") as the Trustee
may designate, from time to time, but not less frequently than once during each
period of three (3) months, the Trustee shall determine the value of the assets
held in each Trust. Each valuation shall be made, to the extent reasonably
practicable, within two (2) business days after the Valuation Date as of which
it is made. All assets will be valued at fair value as determined by the
Trustee. Generally, fair value for Investment Contracts will be book value
unless the Trustee determines that book value does not represent the fair value
of these contracts. Generally, fair value for other assets will be market values
at the close of business on the Valuation Date, or, in the absence of readily
ascertainable market values, at such values as the Trustee shall determine, in
accordance with methods
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consistently followed and uniformly applied. At the discretion of the Trustee,
certain securities and other investments may be valued on the basis of
valuations provided by an independent pricing service when such prices are
believed to reflect fair value. Prices provided by a pricing service may be
determined without exclusive reliance on quoted prices and take into account
appropriate factors, such as institutional-size trading in similar groups of
securities, yield. quality, coupon rate, maturity, type of issue, trading
characteristics and other market data.
a. Listed Securities. Stocks, bonds and other securities and investments
listed on security or other exchanges shall be valued at their closing sale
prices on the Valuation Date, or, if no sale was made on the Valuation Date, at
their recorded bid prices. Prices for securities or investments whose principal
trading markets are within the United States shall be obtained from the
Composite Transaction Tape, where applicable, or from the records of the
exchanges, newspapers of general circulation or periodicals. Prices for
securities or investments whose principal trading markets are not within the
United States shall be determined from the published records of the exchanges
where such principal trading markets are located or from such other sources as
the Trustee shall determine to be the best qualified available sources.
b. Securities Not Listed. Securities and other investments which are not
listed on any exchange shall, if possible, be valued at the last sale price on
the Valuation Date, or if there has been no such sale, at the bid price on such
Valuation Date, each as reported in newspapers of general circulation published
domestically or abroad or by recognized investment and security dealers or
quotation services.
c. Marketable U.S. Government Obligations. Obligations of the United
States Government for which no valuation prices are available from recognized
pricing services shall be valued at the dealer bid prices appearing on the
Valuation Date reported in Federal Reserve publications.
d. Investment Contracts. Guaranteed investment contracts, bank investment
contracts, and structured or synthetic investment contracts will be valued at
fair value. The Trustee anticipates that fair value for GICs, BICs and SICs will
generally be book value. Book value is cost plus accrued income minus
redemptions. In the sole discretion of the Trustee, and under circumstances that
the Trustee deems appropriate, GICs, BICs and SICs may be valued at less than
book value.
e. Short-Term Securities. Short-term securities will be valued at cost
plus accrued interest.
Section 4.3. Valuation of Units. The initial value of each Unit shall be
established by the Trustee. Except as provided in Sections 5.2 and 5.3, the
value of each Unit of each Trust shall be determined as of each Valuation Date
by subtracting total liabilities from the total value of the assets, including
accrued income, of such Trust, as established pursuant to Section 4.2, and
dividing the amount remaining by the number of Units outstanding on such
Valuation Date. Trust income required to be distributed by such Trust shall
constitute a liability of such Trust.
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Section 4.4. Apportionment of Trust Income. "Trust Income" as of any Valuation
Date shall mean the total of amounts (representing dividends, capital gains,
interest, rents, royalties and all such other income which the Trustee may
determine, under uniform rules, properly to be included in Trust Income)
collected or accrued with respect to a Trust during the period since the last
Valuation Date, adjusted to reflect any charge, reserve, liability or debited
item which is an appropriate deduction under accepted accounting principles. The
determination of the Trustee as to the allocation of such expenses among the
Trusts shall be conclusive.
The interest of each Participating Trust in Trust Income of a Trust shall
be determined as of each Valuation Date by dividing the total amount of Trust
Income as of the Valuation Date by the total number of Units in such Trust as of
the date following the preceding Valuation Date and multiplying the resulting
per Unit Trust Income by the number of Units beneficially owned by such
Participating Trust as of the date following the preceding Valuation Date. The
interest of each Participating Trust in the Trust Income of a Trust shall, as of
such Valuation Date, be reinvested in new Units of such Trust, unless otherwise
directed by the Fiduciary.
Section 4.5. Records. The Trustee shall keep such records as it may deem
necessary or appropriate, in its sole discretion, to record the assets
transferred to each Trust by each Participating Trust and to show the interest
of each Participating Trust in each Trust.
ARTICLE V.
ADMISSIONS AND WITHDRAWALS
Section 5.1. Admission to Participation. Pursuant to notice entered in the
records of the Trustee on or before any Valuation Date, or within two days
thereafter any Qualified Trust which has executed a participation authorization
acceptable to the Trustee may become a Participating Trust as of such Valuation
Date upon the transfer of all or part of the assets held for its account to the
Trustee for one or more of the Trusts. Pursuant to similar notice, additional
assets may be admitted to any Trust from time to time. Assets shall be accepted
for admission to a Trust at the discretion of the Trustee and only as of a
Valuation Date and on the basis of the Unit value of such Trust as of the
Valuation Date, as provided in Section 4.3. Assets other than money accepted by
the Trustee shall be valued at their fair value, as determined by the Trustee at
the close of business on the Valuation Date. No notice of admission may be
cancelled or countermanded after the Valuation Date to which it relates. While
any assets of arty Participating Trust are held in the Fund, the Declaration of
Trust shall be a part of the plan or plans of which such Participating Trust is
part.
Section 5.2. Withdrawals. Except with respect to the termination of a
Participating Trust, any Participating Trust may, as of any Valuation Date,
withdraw Units valued pursuant to Section 4.3 from a Trust pursuant to written
notice received by the Trustee at least twelve (12) months ("12 Month Notice")
prior to such Valuation Date and entered into the records of the Trustee. No
notice of withdrawal may be cancelled or countermanded after the Valuation Date
to which it relates. Notwithstanding the above, governmental plans, as defined
in section 457 of the Code arid established prior to August 20, 1996, may be
subject to additional notification and withdrawal requirements until January 1,
1999, as described in the agreement with each such Participating Trust. The sum
shall be distributed in cash or in kind, or partly in cash and partly in
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kind, as the Trustee, in its sole discretion, shall determine; provided, that
all distributions as of any one Valuation Date shall be made on the same basis.
At no time prior to the satisfaction of all liabilities with respect to
participants and their beneficiaries under any Participating Trust shall that
part of the corpus or income of the Trust which equitably belongs to such
Participating Trust be used for, or diverted to, purposes other than for the
exclusive benefit of such participants arid their beneficiaries, except that
solely to the extent necessary to maintain qualification under section 457 of
the Code, assets of 457 plans established prior to August 20, 1996 may be
subject to the claims of the general creditors of the employer until January 1,
1999. All distributions from the Fund to the Fiduciary of a Participating Trust
shall be deemed to be for the exclusive benefit of participants and their
beneficiaries under such Participating Trust, except for assets of 457 plans
established prior to August 20, 1996 and withdrawn prior to January 1, 1999.
Notwithstanding the above, the 12 Month Notice shall be reduced to one (1)
day for withdrawals to pay a Participating Trust's participant's distributions
in accordance with the Participating Trust's plan documents which may allow for
distribution for loans, death, disability, severance of employment, in-service
withdrawals authorized by the plan, and/or investment exchanges. At the
Trustee's sole discretion, the 12 Month Notice required for
non-participant-directed withdrawals may be reduced.
The Trustee may purchase Investment Contracts which contain limitations of
withdrawals for the purpose of transferring such proceeds to certain other
investment options under the Participating Trusts. Therefore, participant
withdrawals for purposes of investment exchanges may be limited in certain
instances.
a. Plan Terminations. Notwithstanding the above, when a Participating
Trust terminates for reasons other than disqualification as set forth below, the
sponsor of the Participating Trust or its designee may elect to withdraw Units
as of the next Valuation Date which is more than thirty (30) days from the date
written notice is given to the Trustee. The Trustee shall value Units withdrawn
pursuant to this subsection at a value which may be less than the value of other
Units in the Trust. If the Trustee, in its sole discretion, "cashes in" an
Investment Contract and pursuant to such contracts terms receives less than book
value as proceeds, the value of the Units being withdrawn will be valued
accordingly.
Section 5.3. Distribution on Disqualification. Notwithstanding Section 5.2, if,
at any time, it should he determined that any Participating Trust is no longer a
Qualified Trust, the Trustee shall distribute to such Participating Trust its
entire participation in the Fund (other than any interest it may have in any
liquidating account) as of the next Valuation Date which is not more than thirty
(30) days after the date upon which the Trustee is apprised of such
disqualification. To the extent that the Trust must value one or more of its
portfolio Investment Contracts or other contracts or assets at less than book
value as a result of a distribution under this Section 5.3, the value of a
Participating Trust's Units will be reduced accordingly.
Section 5.4. Payments. Within a reasonable time following the applicable
Valuation Date, the Trustee shall distribute to the Participating Trust making
such withdrawal a sum in cash or in kind determined by multiplying the number of
Units withdrawn by the value of each Unit on the Valuation Date, as provided in
Section 4.3.
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Section 5.5. Liquidating Accounts. Any asset held by the Fund may be transferred
to a liquidating account (hereinafter referred to as a "Liquidating Account")
when the Trustee, in its sole discretion, decides that the investment should not
continue to be part of a Trust. The Trustee may distribute such asset in kind or
liquidate it for the benefit of the Participating Trusts. In determining the
basis upon which admissions to and withdrawals from a Trust shall be made
pursuant to this Article V, the value of any asset which has been transferred to
a Liquidating Account shall be excluded. Any investment held in a Liquidating
Account shall be segregated and shall be administered or realized upon solely
for the benefit ratably of those Participating Trusts which were participants in
the Trust from which such asset has been transferred at the time of the transfer
of such investment to a Liquidating Account.
ARTICLE VI.
ACCOUNTING
Section 6.1. Trustee's Accounts. The Trustee shall keep full accounts of all of
its receipts and disbursements. Its books and records, with respect to any
Trust, shall be open to inspection at all reasonable times during business hours
of the Trustee by the authorized representative of any person to whom a regular
periodic accounting of any Participating Trust having an interest in such Trust
would ordinarily be rendered.
Section 6.2. Judicial Accounting. Except to the extent otherwise provided by
applicable laws of the State of Maryland, only the Trustee and any person
entitled to a regular periodic accounting under the provisions of any
Participating Trust, may require the judicial settlement of the Trustees
account, or bring any other action against the Trustee with respect to the Fund,
or its action as such Trustee. In any such action or proceeding, it shall be
necessary to join as parties only the Trustee and such persons, and any judgment
or decree which may be entered therein shall be conclusive.
Section 6.3. Audits and Reports of Trusts. At least once during each period of
twelve (12) months, the Trustee shall cause a suitable audit to be made of each
Trust by an independent certified public accountant responsible only to the
Board of Directors of the Trustee. After the close of each fiscal year of each
Trust, and also after the termination of a Trust, the Trustee shall render a
written report, without charge, to each person entitled to regular periodic
accountings under the provisions of any Participating Trust having an interest
in such Trust. based upon such audit. and shall furnish a copy of the report,
upon request, to any person for a reasonable charge Such report shall: (1) list
the investments held in the Trust, (2) list the cost and current `air `value of
each such investment at the close of such fiscal year or upon such termination.
(3) state all purchases. with costs, sales, with profit or loss, income and
disbursements, and any other investment changes in the Trust for the period
since the previous report, and (4) contain an appropriate notation as to any
investments in default in the Trust.
ARTICLE VII.
TAXES, EXPENSES AND COMPENSATION
Section 7.1. Taxes. The Trustee shall deduct from and charge against the Fund,
or appropriate Trust, any taxes or other charges paid by it which may be imposed
upon the Fund or any Trust or
22
<PAGE>
the income thereof, or which the Trustee may be required to pay with respect to
the interest of any person therein by any present or future laws of any
jurisdiction or taxing authority.
Section 7.2. Expenses and Compensation. The Trustee may pay from the Fund, or
appropriate Trust, counsel fees and expenses of litigation, which would have
been chargeable to the Participating Trusts if incurred in their separate
administration. The Trustee shall not charge any management fees or compensation
to the Fund. The Trustee, upon receiving written instructions from the
Fiduciary, may withdraw Units of the Trust(s), to pay the fees and expenses of
the Participating Trust.
Section 7.3. Allocation. The Trustee shall allocate among the Trusts the
deductions, charges and expenses described in this Article in such manner as it
shall deem equitable and such allocation shall be conclusive and binding.
ARTICLE VIII.
MISCELLANEOUS
Section 8.1. Amendment. The Declaration of Trust, other than Section 8.3, may be
amended by the Trustee at any time, or from time to time, and in any respect;
provided, however, that any such amendment shall be approved by a resolution of
the Board of Directors of the Trustee. Notice of any such amendment which may
affect a Participating Trust shall be sent to each person entitled to regular
periodic accountings under the provisions of the Participating Trust.
Notwithstanding the foregoing, this Declaration of Trust is adopted subject to
the condition that it will be amended to the extent required or deemed desirable
by the Trustee in order to qualify as a group trust under Section 401(a) of the
Code, and to be exempt from taxation under Section 501(a) of the Code.
Section 8.2. Duty of Trustee. The Trustee shall discharge its duties hereunder
with the care, skill, prudence and diligence under the circumstances then
prevailing that a prudent man acting in a like capacity and familiar with such
matters would use in the conduct of an enterprise of a like character and with
like aims. The Trustee shall not be liable for arty loss sustained by the Fund
or any Trust by reason of the purchase, retention, sale or exchange of any
investment in good faith and in accordance with the provisions of the
Declaration of Trust and in accordance with the laws of the State of Maryland
and o any applicable Federal law.
Section 8.3. Exclusive Benefit of Participating Trusts; Non-Transferability.
Notwithstanding anything to the contrary contained in the Declaration of Trust,
or in any amendment thereto, no part of the Fund which equitably belongs to a
Participating Trust, other than that portion required for fees, taxes and
expenses and Trustee compensation, shall be used or diverted for any purpose
other than the exclusive benefit of the Participating Trust participants or
their beneficiaries who are entitled to benefits under such Participating Trust,
except that solely to the extent necessary to maintain qualification under
section 457 of the Code, assets of 457 plans established prior to August 20,
1996 may be subject to the claims of the general creditors of the employer until
January 1, 1999. No Participating Trust may assign or transfer all or any
portion of its interest in the Fund or in any Trust.
23
<PAGE>
Section 8.4. Reliance of Communications. The Trustee shall be fully protected in
acting upon any instrument, certificate or paper believed by it to be genuine
and to be signed or presented by the proper person or persons, and the Trustee
shall be under no duty to make any investigation or inquiry as to a statement
contained in any such writing, but may accept the same as conclusive evidence of
the truth and accuracy of the statements therein contained.
Section 8.5. Termination. The Fund created hereby may he terminated at any time
by the Trustee. Notice of such termination shall be sent to all persons entitled
to regular periodic accountings under the provisions of any Participating Trust.
After such termination, all distributions from each Trust shall be as if it were
a Liquidating Account.
Section 8.6 Governing Law. Except as otherwise provided by the Employee
Retirement Income Security Act of 1974, as amended, the Declaration of Trust
shall be construed and regulated by the laws of the State of Maryland. In the
event of conflict between the provisions of the Declaration of Trust and the
laws of the State of Maryland dealing with common trust funds, the latter shall
prevail. The Fund is organized in the United States and will be maintained at
all times as a domestic trust in the United States.
Section 8.7. Availability of Copies of Declaration of Trust. A copy of the
Declaration of Trust shall be kept on file at the principal office of the
Trustee, available for inspection during regular business hours. A copy of the
Declaration of Trust shall be sent, upon request, to each person entitled to
regular periodic accountings under the provisions of any Participating Trust,
and will be furnished to any other person, upon request, for a reasonable
charge.
Section 8.8. Titles and Headings. The titles and headings in the Declaration of
Trust are for convenience and reference only and shall not limit or affect in
any manner any provisions contained herein.
24
<PAGE>
IN WITNESS WHEREOF, T. Rowe Price Trust Company has caused its name to be
hereunto signed by its proper officer thereunto duly authorized.
ATTEST: T. ROWE PRICE TRUST COMPANY
/s/ Linda C. Cosby BY: /s/ Nancy M. Morris
- - ------------------------------- -------------------------------------
Witness Vice President
25
EXHIBIT 10.33
INVESTMENT AGENCY APPOINTMENT
and
PARTICIPATION AUTHORIZATION
This INVESTMENT AGENCY APPOINTMENT AND PARTICIPATION AUTHORIZATION
(the "Agreement") dated as of the 3rd day of September, 1999, by and between
Intersil Corporation ("Plan Sponsor"), Intersil Corporation Master Trust
("Participating Trust"), and T. Rowe Price Trust Company (the "Trustee") as
investment agent with respect to certain assets of the Participating Trust to be
managed by the Trustee ("Account").
By execution of this Agreement, the Plan Sponsor, the Participating
Trust and the Trustee hereby agree to the following terms and conditions:
I. DEFINITIONS
Wherever used in this Agreement, unless the context clearly
indicates otherwise, the following words shall have the following meanings:
a. "ERISA" means the Employee Retirement Income Security Act of
1974 and any amendments thereto.
b. "Fiduciary" means the undersigned person or persons who
control the investments of a Participating Trust.
c. "Prohibited Transaction" means any transaction which is a
prohibited transaction within the meaning of Section 406 of
ERISA or Section 4975 of the Internal Revenue Code of 1986, as
amended (the "Code").
d. "Qualified Trust" means:
(1) A trust which forms part of an employees' pension,
profit sharing, or other benefit plan, which may include
a common trust fund or commingled investment fund
consisting solely of such plans, (1) which is exempt
from taxation under Section 50 1(a) of the Code by
reason of qualifying (or treated as qualifying) under
Section 401(a) of the Code (or corresponding sections of
amendments thereto or statutes enacted hereafter); and
(ii) which is permitted by existing or future rulings of
the United States Comptroller of the Currency or the
Office of the Maryland Commissioner of Financial
<PAGE>
2
Regulation to pool its funds in a group trust; and (iii)
which is administered under an agreement which
authorizes part or all of the assets of the trust to be
commingled for investment purposes with the assets of
other such trusts by investing such assets in a common
trust fund; and (iv) of which T. Rowe Price Trust
Company is acting as trustee, co-trustee, agent for the
trustee or trustees, or investment agent;
(2) A governmental pension plan, the assets of which may be
invested in a group trust, as provided in Section
401(a)(24) of the Code; or
(3) A Trust established pursuant to Article II of the
Declaration of Trust, as defined below, which is
authorized to invest in other Trusts created under said
Article II.
e. "Trust(s)" means one or more of the separate investment trusts
established pursuant to Article II of the Trustee's Plan and
Declaration of Trust dated September 30, 1992, establishing
the T. Rowe Price Institutional Common Trust Fund (the
"Institutional Fund"), as last amended and restated in the
Amended and Restated Declaration of Trust dated December 1,
1998 ("Declaration of Trust"), the terms of which are
incorporated herein by reference. Each Trust is intended to
qualify as a group trust under Internal Revenue Service
Revenue Ruling 81-100, 1981-C.B. 326, or any successor ruling,
regulation, or similar pronouncement, and this Declaration of
Trust shall be construed, and the Trust(s) shall be
administered, to give effect to that intention.
II. APPOINTMENT OF INVESTMENT AGENT AND INVESTMENT AUTHORIZATION
The Fiduciary hereby appoints the Trustee as investment agent of the
Account. By acceptance hereof, the Trustee acknowledges that it is an investment
manager, as defined in Section 3(38) of ERISA, and a fiduciary with regard to
the Account. The Trustee is authorized to invest such account in the T. Rowe
Price Equity Index Trust, the T. Rowe Price Bond Index Trust, and the T. Rowe
Price Retirement Strategy Trust - Balanced, which are Trusts maintained by the
Trustee pursuant to the Declaration of Trust. The Trustee shall not be
authorized to take custody or possession of any assets of the Account except to
the extent that the Trustee shall make investments in the Institutional Fund.
<PAGE>
3
III. QUALIFICATION OF PARTICIPATING TRUST
The investment in any Trust which forms a part of the Institutional
Fund is conditioned upon the Participating Trust being a Qualified Trust.
Simultaneously with the execution of this Agreement, the Fiduciary will furnish
to the Trustee a copy of the determination letter issued by the Internal Revenue
Service, if applicable, pursuant to which an exemption from taxation under
Section 501(a) of the Code as a qualified trust under Section 401(a) of the Code
has been granted to the Participating Trust. The Trustee may, in its sole
discretion, accept an opinion of counsel satisfactory to it as to the tax exempt
status of the Participating Trust.
IV. REPRESENTATIONS BY THE FIDUCIARY
The Fiduciary hereby warrants and represents that (i) it is a
Fiduciary with respect to the Participating Trust, (ii) it is authorized to
determine the investments permissible for the Participating Trust (iii) it has
received a copy of the Declaration of Trust establishing the Institutional Fund
and its Trusts and is aware of the nature and investment objectives of the
Trusts; (iv) the Participating Trust is a Qualified Trust as defined in Section
I.d. herein; and (v) the Participating Trust is administered under a trust
agreement or plan document which authorizes the investment of plan assets in
common, collective or commingled trust funds such as the Trusts and adopts the
trust document of any such commingled fund as an integral part thereof to the
extent of the Participating Trust's investment in such commingled fund; (vi) the
Participating Trust has specifically adopted the terms of the Declaration of
Trust, as it may be subsequently amended from time to time, to the extent of the
Participating Trust's investment in the Trust(s); (vii) it is authorized to make
the appointments and give the authorizations provided for herein, and (viii) the
Fiduciary, its heirs, personal representatives, successors, and assigns agree to
be bound by the terms of this Agreement.
In accordance with Article I, Section 1.3 of the Declaration of
Trust, a Fiduciary that is the trustee of any Qualified Trust that is a common
trust fund or commingled investment fund ("CIF") shall only provide
representations on behalf of such CIF and not on behalf of each employee pension
plan invested in such CIF. Therefore, the Fiduciary of any CIF represents that,
to the best of its knowledge, the CIF is a Qualified Trust as defined in Section
I.d herein.
The Fiduciary further represents that the Participating Trust is not
a Keogh Plan other than a Keogh Plan qualified to invest in a collective trust
fund pursuant to Rule 180 under the Securities Act of 1933; a plan funded by an
annuity contract as described in Section 403(b) of the Code; or an Individual
Retirement Account.
With regard to an eligible deferred compensation plan sponsored by a
state or local government pursuant to Section 457 of the Code ("457 Plan"), the
Fiduciary hereby represents and certifies that: (i) the 457 Plan is for the
exclusive benefit of the employer's employees or their beneficiaries, (ii) the
purpose of the 457 Plan is the distribution of corpus and income funds, if any,
accumulated under such 457 Plan to the employer's employees or their
beneficiaries, (iii) no part of the corpus or income of the 457 Plan shall be
used for or diverted to
<PAGE>
4
any purpose other than the exclusive benefit of the employer's employees or
their beneficiaries prior to the satisfaction of all the 457 Plan's liabilities
to such employees and beneficiaries, except as noted below with regard to
certain 457 Plans created prior to August 20, 1996, (iv) the 457 Plan is not
funded by an annuity contract described in Section 403(b) of the Code, and (v)
no employee contributions to the 457 Plan will be invested by the 457 Plan in
securities of the employer or its controlled or commonly controlled entities.
With regard to 457 Plans created prior to August 20, 1996, and until
January 1, 1999, or such earlier time as the plan document is amended in
accordance with the requirements of the Small Business Job Protection Act of
1996, assets of such 457 Plans shall remain subject to the claims of the general
creditors of the employer solely to the extent necessary to maintain
qualification under Section 457 of the Code. As long as assets remain subject to
the general creditors of the employer pursuant to Section 457 of the Code, the
Fiduciary shall provide the Trustee with written notification of reasons for
withdrawal of plan assets from the Trust(s), the person to whom assets will be
transferred and verification that assets will not be subject to the employer's
use. Assets may only be withdrawn (i) to pay benefits to participating
employees, (ii) to transfer assets to the 457 Plan's custodian or other person
designated by the sponsoring employer in connection with the selection of
alternative investment arrangements, (iii) to distribute plan assets to
participating employees in the event the 457 Plan is terminated pursuant to a
plan of liquidation, (iv) to reimburse an employer for plan benefits paid out of
employer assets or to correct excess deferral or other mistaken investments in
the Trust(s), (v) to transfer plan assets to a trustee in bankruptcy or other
authorized agent in the event of the employer's insolvency or bankruptcy, or
(vi) to satisfy the claims of the employer's general creditors in the event of
the employer's insolvency or bankruptcy. In the event assets of such 457 Plans
are to be withdrawn from the Trust(s) to transfer assets to a trustee in
bankruptcy or to satisfy the general creditors of the employer, the Fiduciary
shall provide the Trustee with evidence of the formal determination of
insolvency after a public hearing.
The Fiduciary consents to the Trustee investing assets of the T.
Rowe Price Equity Index Trust, the T. Rowe Price Bond Index Trust, and the T.
Rowe Price Retirement Strategy Trust - Balanced in group trusts and common or
collective trust funds, including the T. Rowe Price U.S. Treasury Money Market
Trust and others for which the Trustee, or an affiliate of the Trustee, acts as
trustee and/or investment adviser, in the T. Rowe Price Prime Reserve mutual
fund ("Prime Reserve"), and the Reserve Investment Fund ("Reserve Fund"), an
underlyrng series of the T. Rowe Price Reserve Investment Funds, Inc., for which
affiliates of the Trustee act as adviser and service provider. The purchase or
sale of shares of Prime Reserve and the Reserve Fund are subject to the terms of
the current applicable prospectus. The purchase or sale of units of U.S.
Treasury Money Market Trust are subject to the terms of the current Declaration
of Trust. The Fiduciary (i) acknowledges that it is a fiduciary for the
Participating Trust; (ii) acknowledges receipt of a current prospectus of Prime
Reserve and the Reserve Fund and the Declaration of Trust which include
necessary information for the Trustee's conclusion that investments in the
mutual funds and U.S. Treasury Money Market Trust are appropriate for the liquid
assets of the Trust; and (iii) approves the fees payable directly to the Trustee
hereunder regarding assets
<PAGE>
5
invested in the Reserve Fund (in addition to the non-advisory fees and expenses
disclosed in the Reserve Fund's prospectus which includes fees paid indirectly
to affiliates of the Trustee); and approves the fees payable indirectly to
affiliates of the Trustee through Prime Reserve and acknowledges that the rate
payable by Prime Reserve may differ from, and may be greater than, the rate
otherwise payable under the Trust(s). In the event assets of the Trust(s) are
invested in Prime Reserve, no fees shall be charged hereunder with regard to
such assets. Fees payable with regard to any assets of a Trust invested in the
U.S. Treasury Money Market Trust shall be paid in accordance with Section X
hereunder and the attached Schedule of Fees.
V. NOTIFICATION OF DISQUALIFICATION
Within 15 days after the receipt by the Fiduciary or the Plan
Sponsor of a notice of determination from the Internal Revenue Service that the
Participating Trust's exemption letter will not be issued or has been revoked,
terminated, or otherwise modified so that the Participating Trust is no longer
exempt from taxation, as specified above, or after the agreement under which the
Participating Trust is administered has been amended or altered so as to no
longer permit investment in a collective investment trust, the Fiduciary or Plan
Sponsor shall deliver to the Trustee a copy of such determination letter, if
applicable, or amendment and documents representing all of the Participating
Trust's interest for purpose of withdrawal. Such withdrawal shall be effected in
accordance with the provisions of Article V of the Declaration of Trust.
VI. ADMINISTRATION AND MANAGEMENT OF THE INSTITUTIONAL FUND
It is understood and agreed that the Trustee is the Trustee of the
Institutional Fund and any Trust which forms a part thereof, and that the
Trustee shall administer such Trusts in accordance with the provisions of the
Declaration of Trust. The Trustee has retained the services of an investment
adviser, T. Rowe Price Associates, Inc., the parent of the Trustee, to assist it
in the investment of assets of the Trust, such investment adviser being
compensated by the Trustee for its services.
VII. BROKERAGE AUTHORIZATION
The Trustee shall be authorized to effect transactions for the
Participating Trust with or through such brokers, dealers, and other financial
institutions as it shall determine from time to time in its sole discretion. So
long as the provisions of Section 28(e) of the Securities Exchange Act of 1934
are met, the Trustee may cause a broker or dealer to be paid commissions in
excess of those another broker or dealer would charge.
<PAGE>
6
VIII. DISCLOSURE OF CERTAIN INFORMATION
Prior to or simultaneously with the execution of this Agreement and,
thereafter, upon request by the Trustee from time to time, the Fiduciary or Plan
Sponsor shall disclose such information, including but not limited to financial
statements, which will enable the Trustee to determine whether the Institutional
Fund or any Trust which forms a part thereof has entered into a Prohibited
Transaction. If such information reveals to the Trustee that assets,
liabilities, transactions, agreements, obligations or undertakings on behalf of
the Participating Trust would result, or has resulted, in the Institutional Fund
or any Trust being treated as having entered into a Prohibited Transaction, then
the Fiduciary shall either (i) upon request of the Trustee, immediately dispose
of any such assets or liabilities and/or terminate such obligation, agreement,
or undertaking, or (ii) deliver to the Trustee documents representing all of the
Participating Trust's beneficial interest so that it may be withdrawn in
accordance with the provisions of Article V of the Declaration of Trust.
IX. ADMISSION AND WITHDRAWAL; PROHIBITIONS ON TRANSFER
Admissions and withdrawals to the Trust(s) shall be effected in
accordance with the provisions of Article V of the Declaration of Trust.
Units of beneficial interest shall not be assignable and the
Fiduciary shall not assign or otherwise transfer or pledge or otherwise encumber
any or all of the Participating Trust's interest in the Institutional Fund,
other than upon withdrawal in accordance with the aforesaid provisions of
Article V of the Declaration of Trust.
X. FEES
The Trustee shall receive, as full compensation for services
rendered as investment agent, investment agent's fees ("Fees"), in accordance
with the provisions of the Schedules of Fees attached to and made a part of this
Agreement. The Fiduciary approves the fees for the T. Rowe Price Equity Index
Trust, the T. Rowe Price Bond Index Trust, and the T. Rowe Price Retirement
Strategy Trust -- Balanced.
XI. NOTICE
Any notice, advice or report to be given pursuant to this Agreement
shall be delivered or mailed to:
o the Trustee at --
T. Rowe Price Trust Company
100 East Pratt Street
Baltimore, Maryland 21202
Attn: Legal Department
<PAGE>
7
o the Fiduciary at --
Intersil Corporation Retirement Plan Committee
Attn: Stephen K. Cusick
2041 Palm Bay Road NE
Palm Bay, Florida 32905
XII. CONSTRUCTION OF AGREEMENT
To the extent state laws shall not have been pre-empted by the
provisions of ERISA, regulations of the Office of the Maryland Commissioner of
Financial Regulation or any other laws of the United States heretofore or
hereinafter enacted, as the same may be amended from time to time, this
Agreement shall be construed and the rights and obligations of the parties
hereunder enforced in accordance with the laws of the State of Maryland.
<PAGE>
8
IN WITNESS WHEREOF, the undersigned have executed this Agreement
effective as of the day and year first above written.
INTERSIL CORPORATION
PLAN SPONSOR
By: /s/ Daniel J. Heneghan
-------------------------------------
Daniel J. Heneghan
Title: Vice President, Secretary and
----------------------------------
Treasurer
INTERSIL CORPORATION
RETIREMENT PLAN COMMITTEE
FIDUCIARY
By: /s/ Daniel J. Heneghan
-------------------------------------
Daniel J. Heneghan
Title: Vice President, Secretary and
----------------------------------
Treasurer
This Agreement is hereby
ACCEPTED and agreed to as of the date hereof:
T.ROWE PRICE TRUST COMPANY, TRUSTEE
BY: [illegible]
--------------------------------------
Vice President
Exhibit 10.34
INVESTMENT ADVISORY AGREEMENT
Between
T. ROWE PRICE ASSOCIATES, INC.
and
INTERSIL CORPORATION RETIREMENT COMMITTEE
INVESTMENT ADVISORY AGREEMENT (hereinafter called the "Agreement") made as
of the 3rd day of September, 1999 by and between T. Rowe Price Associates, Inc.,
a corporation organized and existing under the laws of the State of Maryland
(hereinafter called the "Adviser") and the Intersil Corporation Retirement
Committee, a fiduciary of the Intersil Retirement Plan (Nonunion) and the
Intersil Retirement Plan (Union) (hereinafter called the "Client") regarding
designated assets of the Intersil Corporation Master Trust (such designated
assets hereinafter called the "BCG Account").
WHEREAS, the Client wishes to engage the Adviser to render investment
advice with respect to the BCG Account;
NOW, THEREFORE, in consideration of the premises and the mutual promises
hereinafter set forth, the parties hereto agree as follows:
1. Appointment. The Client hereby appoints the Adviser as investment
adviser with respect to the BCG Account, which BCG Account shall consist of such
sums of money and other property, or part interests therein as shall be agreed
upon by the Adviser and the Client and such earnings, profits, increments and
accruals thereon (less losses, deductions and withdrawals) as may occur from
time to time. The BCG Account shall at all times remain in the name of, and be
the property of, the Intersil Corporation Master Trust.
2. Authority. Adviser will supervise and direct investments for the BCG
Account, subject to such limitations as Client may impose. Without prior
consultation with Client, Adviser will make investment decisions with respect to
stocks, bonds and other securities (including money market instruments), and
place transaction orders with brokers, dealers and issuers selected by Athiser
3. Investment Objectives and Restrictions. Client has provided Adviser
with the investment objectives of the BCG Account, attached as Exhibit A,
including any applicable restrictions and cash flow requirements. Client will
notify Adviser in writing of any modifications to Exhibit A and will give
Adviser prompt notice if the Client considers any investment listed on a
quarterly inventory provided by Adviser pursuant to paragraph 6 hereof to be in
violation of such objectives or restrictions. Unless Client notifies Adviser to
the contrary in writing, investments for the BCG Account shall be deemed not
restricted by any instrument affecting the BCG Account to which Client is a
party. The Adviser shall at all times conform to
<PAGE>
-2-
the restrictions contained in the investment objectives set forth in Exhibit A,
as may be amended in writing from time to time by the parties.
4. Investment Powers. Except to the extent inconsistent with any provision
of this Agreement or the Trust, the Adviser shall have the following express
powers with respect to the BCG Account:
(a) To invest and reinvest the BCG Account in whatever form of
investment, consistent with the investment objectives set forth in
Exhibit A then in effect, as the Adviser may determine, including
investments which yield little or no current income.
(b) To exercise subscription, conversion and other rights and
options, and to direct payments from the BCG Account in connection
therewith.
(c) To take any action and to abstain from taking any action
with respect to any reorganization, consolidation, merger,
dissolution, recapitalization, refinancing, and any other plan or
change affecting any property, and in connection therewith, to
delegate its discretionary powers and to direct the payment of
assessments, subscriptions and other charges from the BCG Account.
(d) The Adviser further shall have authority to instruct the
Custodian (i) to pay cash for securities and other property
delivered to the Custodian for the BCG Account, (ii) to deliver
securities and other property against payment for such BCG Account,
and (iii) transfer assets and funds to such brokerage accounts as
the Adviser may designate. The Adviser shall not have the authority
to cause the Custodian to deliver securities and other property, or
to pay cash, to the Adviser.
The investment authority granted to the Adviser shall
include the authority to exercise whatever powers the Custodian or
Trustee may possess with respect to any of its assets held in the
BCG Account, including, but not limited to, the power to exercise
rights, options, warrants, conversion privileges, and redemption
privileges, and to tender securities pursuant to a tender offer.
(e) The Client agrees that the Adviser shall be solely
responsible for voting all proxies related to assets in the BCG
Account. The Adviser shall maintain a record of how the Adviser
voted and such record shall be available to the Client upon its
request. It is further understood that the Adviser need not and is
not required to accept any direction concerning the voting of
proxies from the Client. The right of the Adviser to vote proxies
shall continue until the earlier of the termination of the Agreement
or such time as the Client specifically revokes the Adviser's
authority to vote proxies and specifically reserves such right to
the named fiduciary or to another. Client represents that such
delegation of voting rights is consistent with the plan documents
relating to the plans whose assets are held in the Intersil
Corporation Master Trust. The plans' trustee shall instruct the
<PAGE>
-3-
Custodian (as hereinafter defined) to forward all proxy materials to
the Adviser upon receipt. Adviser shall not be liable with regard to
voting of proxies in the event proxy materials are not received by
the Adviser in a timely manner.
5. Custodian. Adviser will not take custody of any assets of the BCG
Account, but will issue settlement instructions to the custodian designated by
Client, or by the trustee as directed by the Client ("Custodian"). All
directions given by the Adviser to the Custodian in connection with the
investment and reinvestment of the BCG Account shall either be in writing, or
made orally and then promptly confirmed in writing, by an authorized
representative of the Adviser, or be transmitted by such other means of
communication as the Adviser and Custodian may deem appropriate.
6. Brokerage. So long as the provisions of Section 28(e) of the Securities
Exchange Act of 1934 and Title I of ERISA are met, Adviser may cause a broker or
dealer to be paid commissions in excess of those another broker or dealer would
charge provided that, in the best judgment of Adviser, the execution of
transactions for the BCG Account will result in the best execution, taking into
consideration all relevant factors, including the selection of such brokers and
dealers, the available prices and rates of brokerage commissions, as well as
execution capabilities, research and other services provided by such brokers.
The Adviser shall maintain a log of all transactions placed through all
securities brokerage firms, including the name of the firm, a description of
each transaction, the date of the transaction and the amount of fees or
commissions paid.
7. Account Information. Adviser will furnish Client at least quarterly a
written inventory of the BCG Account and, upon request, information regarding
the valuation method used by the Adviser to value any asset of the BCG Account
pursuant to paragraph 8 hereof. Client will provide, or instruct Custodian to
provide, Adviser with information Adviser may reasonably request.
8. Valuation. In computing the market value of any equity security held in
the BCG Account which is listed on a national securities exchange, such security
will be valued at the last quoted sale price on the valuation date on the
principal exchange on which the security is traded. Equity securities listed on
a national exchange but not traded on a valuation date and all other securities
and assets will be valued in a manner determined in good faith by the Adviser to
reflect fair market value.
9. Compensation. The compensation of Adviser shall be calculated and paid
in accordance with the Schedule of Fees attached as Exhibit B.
10. Investment in Adviser-Sponsored Investment Companies. It is understood
that, on a temporary basis, Adviser will invest assets of the BCG Account in the
T. Rowe Price Blue Chip Growth Fund, Inc. (the "BCG Fund"), for which Adviser
acts as adviser. The purchase or sale of shares of the BCG Fund is subject to
the terms of the BCG Fund's current prospectus. Adviser is authorized to open an
account with the BCG Fund in the Client's name and to establish telephone
services for such BCG Fund account. The person signing this Agreement on behalf
of Client (a) acknowledges that he is (or is authorized to act for) a fiduciary
for the BCG Account;
<PAGE>
-4-
(b) acknowledges receipt of a copy of the current prospectus for the BCG Fund
which includes the reasons Adviser considers the BCG Fund investment appropriate
for the BCG Account; and describes the advisory fee (and other expenses) payable
indirectly through the BCG Fund investment. Client acknowledges that such
advisory fee may be higher or lower than the rate otherwise payable under this
Agreement.
In accordance with Exhibit A, and unless advised in writing to the
contrary, Adviser may invest the cash reserves of the BCG Account in the Reserve
Investment Fund (the "Reserve Fund") for which Adviser provides advisory
services. Adviser is authorized to open an account with the Reserve Fund in the
Client's name and to establish telephone services for such account. The person
signing this Agreement on behalf of Client (a) acknowledges that he is (or is
authorized to act for) a fiduciary for the BCG Account; and (b) acknowledges
receipt of a copy of the current prospectus for the Reserve Fund which includes
the reasons Adviser considers Reserve Fund investments appropriate for the BCG
Account and describes the non-advisory fees and expenses disclosed in the
Reserve Fund's prospectus, which non-advisory fees and expenses include fees
paid indirectly to affiliates of Adviser.
11. Service to Other Clients. It is understood that Adviser and its
affiliates may give advice and take action for other clients, including
investment companies, which differs from advice given or the timing or nature of
action taken for the BCG Account. Adviser is not obligated to initiate
transactions for the BCG Account in any security which Adviser, its principals,
affiliates or employees may purchase or sell for their own accounts or for other
clients.
12. Confidential Relationship. Information furnished by either party to
the other, including their respective agents and employees, is confidential and
shall not be disclosed to third parties unless requested by a regulatory
authority or otherwise required by law. If the Adviser is requested by
Department of Labor to disclose any information regarding the Client, the
Adviser shall notify the Client before responding to the request to the extent
permitted by law.
13. Bond. Client agrees to include Adviser under Client's bond obtained
pursuant to Section 412 of ERISA.
14. Termination; Assignment. This Agreement may be terminated by either
party at any time upon written notice to the other. Fees will be prorated to the
date of termination. No assignment (as defined in the Investment Advisers Act of
1940) of this Agreement by Adviser shall be effective without the consent of
Client.
15. Notices. Notices under this Agreement shall be in writing, or
facsimile thereof and confirmed in writing within seven (7) business days, and
shall be delivered at the addresses specified herein, or at such other address
as either party may specify by notice given in accordance herewith. Adviser may
rely upon any notice reasonably believed to be genuine and authorized.
16. Representations. Adviser represents that it is registered as an
investment adviser under the Investment Advisers Act of 1940 and that it is a
fiduciary as defined in Section 3(2 1)
<PAGE>
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of ERISA with respect to the BCG Account. Adviser shall promptly notify Client
if Adviser shall cease to be registered as an investment adviser under the
Investment Advisers Act of 1940. Adviser represents and warrants that its
investment of cash reserves of the BCG Account in the Reserve Fund will not
constitute a non-exempt prohibited transaction under Section 406 of ERISA or
Section 4975 of the Internal Revenue Code of 1986, as amended. Client represents
that this Agreement has been duly authorized and will be binding upon Client in
accordance with its terms.
17. Disclosure Statement. Client acknowledges receipt of Adviser's SEC
Form ADV, Part II dated April 16, 1999, which includes a description of the
Adviser's brokerage practices in Item 12 of Schedule F, more than 48 hours prior
to the execution of this Agreement. Client has received a copy of Form ADV, Part
II dated August 10, 1999 prior to execution of this Agreement.
18. Covenants. By execution of this Agreement, each of the parties hereto
represents and warrants that the terms hereof do not violate any obligation by
which such party is bound, whether arising by contract, operation of law or
otherwise, and that (a) this Agreement has been duly authorized by appropriate
action and when so executed and delivered will be binding upon such party, in
accordance with its terms, and (b) such party will deliver to the other party
such evidence as such other party may reasonably require, whether by way of a
certified resolution or otherwise.
19. Other Documents. This Agreement constitutes the entire agreement
between the parties. The Adviser and the Client agree that from time to time, at
each other's request, they may agree to execute and deliver to each other
further documents as may be reasonably required to carry out the purposes
hereof.
20. Binding Upon Successors. This Agreement shall be binding upon and
enforceable by the successor to the parties hereto.
21. Applicable Law. To the extent that State law shall not have been
preempted by the provisions of ERISA or any other laws of the United States
heretofore or hereinafter enacted, as the same may be amended from time to time,
this Agreement shall be administered, construed and enforced according to the
laws of the State of Maryland.
<PAGE>
-6-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed by their respective signatories hereunto duly authorized as of the day
and year first above written.
INTERSIL CORPORATION
RETIREMENT COMMITTEE
2401 Palm Bay Road, N.E.
Palm Bay, Florida 32905
By: /s/ Daniel J. Heneghan
-------------------------
Daniel J. Heneghan
(Name)
Title: Vice President, Secretary
and Treasurer
Date: 9/3/99
T. ROWE PRICE ASSOCIATES, INC.
100 East Pratt Street
Baltimore, Maryland 21202
By: /s/ Pepi E. Almond
---------------------
Vice President
Date: 9/3/99
<PAGE>
EXHIBIT A
INVESTMENT OBJECTIVE AND GUIDELINES
FOR THE BCG ACCOUNT OF THE
INTERSIL CORPORATION MASTER TRUST
OBJECTIVES:
The Adviser will seek long-term capital growth with income as a secondary
objective. The BCG Account will be invested primarily in common stocks of large-
and medium-sized blue chip companies that have the potential for above-average
growth in earnings and are well established in their respective industries.
PERMITTED INVESTMENTS:
o Permitted investments include all equity securities traded on major
U.S. exchanges or in the over-the-counter market (Nasdaq). Equity
securities include common stock, common stock equivalents,
convertible securities, American Depository Receipts (ADRs) and
foreign securities.
In addition, foreign securities traded on major foreign markets may
be utilized. Currency contracts may be purchased for settlement
purposes only.
o Adviser may invest cash reserves of the BCG Account in the T. Rowe
Price Reserve Investment Fund.
o 144A securities up to 5%.
o Adviser will temporarily invest assets in the T. Rowe Price Blue
Chip Growth Fund, Inc. pending full funding of the BCG Account.
RESTRICTIONS; DIVERSIFICATION:
o Foreign securities and ADRs will not comprise more than 20% of the
BCG Account.
o No one issuer shall represent more than 5% of the BCG Account at the
time of purchase.
o No one industrial sector shall represent more than 25% of the BCG
Account at the time of purchase.
<PAGE>
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o Issuer positions shall not represent more than 5% of the outstanding
shares of the issuer at the time of purchase.
o Cash reserves will not represent more than 10% of the BCG Account.
PROHIBITED INVESTMENTS:
o The BCG Account is not expected to invest in, or otherwise engage
in:
o direct investment in real estate
o direct investment in commodities (except as authorized above
regarding foreign currency contracts)
o short sales
o margin purchases
o derivatives
<PAGE>
EXHIBIT B
T. ROWE PRICE ASSOCIATES, INC.
SCHEDULE OF FEES
For: The BCG Account of the Intersil Corporation Master Trust
Effective Date: For purposes of Exhibit B, the Effective Date will
be the date the BCG Account is fully* funded.
Billing Dates: January 1, April 1, July 1, October 1
Advisory fees will be calculated and accrued daily by Custodian on the
basis of the total market value of BCG Account assets. Fees will be calculated
at the following annual rate, and the appropriate portion thereof will be
payable to the Adviser from the Account as of each Billing Date:
Market Value of Assets Annual Fee
---------------------- ----------
All Assets 50/100 of 1%
*While assets are temporarily invested in the T. Rowe Price Blue Chip Growth
Fund, Inc., no direct fees will be charged thereunder. However, fees will be
indirectly paid to Adviser through investment in the Blue Chip Growth Fund
pursuant to the terms of the prospectus.
EXHIBIT 10.35
INVESTMENT ADVISORY AGREEMENT
Between
T. ROWE PRICE ASSOCIATES, INC.
and
INTERSIL CORPORATION RETIREMENT COMMITTEE
INVESTMENT ADVISORY AGREEMENT (hereinafter called the "Agreement") made as
of the 3rd day of September, 1999 by and between T. Rowe Price Associates, Inc.,
a corporation organized and existing under the laws of the State of Maryland
(hereinafter called the "Adviser") and the Intersil Corporation Retirement
Committee, a fiduciary of the Intersil Retirement Plan (Nonunion) and the
Intersil Retirement Plan (Union) (hereinafter called the "Client") regarding
designated assets of the Intersil Corporation Master Trust (such designated
assets hereinafter called the "LCV Account").
WHEREAS, the Client wishes to engage the Adviser to render investment
advice with respect to the LCV Account;
NOW, THEREFORE, in consideration of the premises and the mutual promises
hereinafter set forth, the parties hereto agree as follows:
1. Appointment. The Client hereby appoints the Adviser as investment
adviser with respect to the LCV Account, which LCV Account shall consist of such
sums of money and other property, or part interests therein as shall be agreed
upon by the Adviser and the Client and such earnings, profits, increments and
accruals thereon (less losses, deductions and withdrawals) as may occur from
time to time. The LCV Account shall at all times remain in the name of, and be
the property of, the Intersil Corporation Master Trust.
2 Authority. Adviser will supervise and direct investments for the LCV
Account, subject to such limitations as Client may impose. Without prior
consultation with Client, Adviser will make investment decisions with respect to
stocks, bonds and other securities (including money market instruments), and
place transaction orders with brokers, dealers and issuers selected by Adviser.
3. Investment Objectives and Restrictions. Client has provided Adviser
with the investment objectives of the LCV Account, attached as Exhibit A,
including any applicable restrictions and cash flow requirements. Client will
notify Adviser in writing of any modifications to Exhibit A and will give
Adviser prompt notice if the Client considers any investment listed on a
quarterly inventory provided by Adviser pursuant to paragraph 6 hereof to be in
violation of such objectives or restrictions. Unless Client notifies Adviser to
the contrary in writing, investments for the LCV Account shall be deemed not
restricted by any instrument affecting the LCV Account to which Client is a
party. The Adviser shall at all times conform to
<PAGE>
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the restrictions contained in the investment objectives set forth in Exhibit A,
as may be amended in writing from time to time by the parties.
4. Investment Powers. Except to the extent inconsistent with any provision
of this Agreement or the Trust, the Adviser shall have the following express
powers with respect to the LCV Account:
(a) To invest and reinvest the LCV Account in whatever form of
investment, consistent with the investment objectives set forth in
Exhibit A then in effect, as the Adviser may determine, including
investments which yield little or no current income.
(b) To exercise subscription, conversion and other rights and
options, and to direct payments from the LCV Account in connection
therewith.
(c) To take any action and to abstain from taking any action
with respect to any reorganization, consolidation, merger,
dissolution, recapitalization, refinancing, and any other plan or
change affecting any property, and in connection therewith, to
delegate its discretionary powers and to direct the payment of
assessments, subscriptions and other charges from the LCV Account.
(d) The Adviser further shall have authority to instruct the
Custodian (i) to pay cash for securities and other property
delivered to the Custodian for the LCV Account, (ii) to deliver
securities and other property against payment for such LCV Account,
and (iii) transfer assets and funds to such brokerage accounts as
the Adviser may designate. The Adviser shall not have the authority
to cause the Custodian to deliver securities and other property, or
to pay cash, to the Adviser.
The investment authority granted to the Adviser shall
include the authority to exercise whatever powers the Custodian or
Trustee may possess with respect to any of its assets held in the
LCV Account, including, but not limited to, the power to exercise
rights, options, warrants, conversion privileges, and redemption
privileges, and to tender securities pursuant to a tender offer.
(e) The Client agrees that the Adviser shall be solely
responsible for voting all proxies related to assets in the LCV
Account. The Adviser shall maintain a record of how the Adviser
voted and such record shall be available to the Client upon its
request. It is further understood that the Adviser need not and is
not required to accept any direction concerning the voting of
proxies from the Client. The right of the Adviser to vote proxies
shall continue until the earlier of the termination of the Agreement
or such time as the Client specifically revokes the Adviser's
authority to vote proxies and specifically reserves such right to
the named fiduciary or to another. Client represents that such
delegation of voting rights is consistent with the plan documents
relating to the plans whose assets are held in the Intersil
Corporation Master Trust. The plans' trustee shall instruct the
<PAGE>
-3-
Custodian (as hereinafter defined) to forward all proxy materials to
the Adviser upon receipt. Adviser shall not be liable with regard to
voting of proxies in the event proxy materials are not received by
the Adviser in a timely manner.
5. Custodian. Adviser will not take custody of any assets of the LCV
Account, but will issue settlement instructions to the custodian designated by
Client, or by the trustee as directed by the Client ("Custodian"). All
directions given by the Adviser to the Custodian in connection with the
investment and reinvestment of the LCV Account shall either be in writing, or
made orally and then promptly confirmed in writing, by an authorized
representative of the Adviser, or be transmitted by such other means of
communication as the Adviser and Custodian may deem appropriate.
6. Brokerage. So long as the provisions of Section 28(e) of the Securities
Exchange Act of 1934 and Title I of ERISA are met, Adviser may cause a broker or
dealer to be paid commissions in excess of those another broker or dealer would
charge provided that, in the best judgment of Adviser, the execution of
transactions for the LCV Account will result in the best execution, taking into
consideration all relevant factors, including the selection of such brokers and
dealers, the available prices and rates of brokerage commissions, as well as
execution capabilities, research and other services provided by such brokers.
The Adviser shall maintain a log of all transactions placed through all
securities brokerage finns, including the name of the finn, a description of
each transaction, the date of the transaction and the amount of fees or
commissions paid.
7. Account Information. Adviser will furnish Client at least quarterly a
written inventory of the LCV Account and, upon request, information regarding
the valuation method used by the Adviser to value any asset of the LCV Account
pursuant to paragraph 8 hereof. Client will provide, or instruct Custodian to
provide, Adviser with information Adviser may reasonably request.
8. Valuation. In computing the market value of any equity security held in
the LCV Account which is listed on a national securities exchange, such security
will be valued at the last quoted sale price on the valuation date on the
principal exchange on which the security is traded. Equity securities listed on
a national exchange but not traded on a valuation date and all other securities
and assets will be valued in a manner determined in good faith by the Adviser to
reflect fair market value.
9. Compensation. The compensation of Adviser shall be calculated and paid
in accordance with the Schedule of Fees attached as Exhibit B.
10. Investment in Adviser-Sponsored Investment Companies. It is understood
that, on a temporary basis, Adviser will invest assets of the LCV Account in the
T. Rowe Price Equity Income Fund (the "Equity Income Fund"), for which Adviser
acts as adviser. The purchase or sale of shares of the Equity Income Fund is
subject to the terms of the Equity Income Fund's current prospectus. Adviser is
authorized to open an account with the Equity Income Fund in the Client's name
and to establish telephone services for such Equity Income Fund account. The
person signing this Agreement on behalf of Client (a) acknowledges that he is
(or is authorized to
<PAGE>
-4-
act for) a fiduciary for the LCV Account; (b) acknowledges receipt of a copy of
the current prospectus for the Equity Income Fund which includes the reasons
Adviser considers the Equity Income Fund investment appropriate for the LCV
Account; and describes the advisory fee (and other expenses) payable indirectly
through the Equity Income Fund investment. Client acknowledges that such
advisory fee may be higher or lower than the rate otherwise payable under this
Agreement.
In accordance with Exhibit A, and unless advised in writing to the
contrary, Adviser may invest the cash reserves of the LCV Account in the Reserve
Investment Fund (the "Reserve Fund") for which Adviser provides advisory
services. Adviser is authorized to open an account with the Reserve Fund in the
Client's name and to establish telephone services for such account. The person
signing this Agreement on behalf of Client (a) acknowledges that he is (or is
authorized to act for) a fiduciary for the LCV Account; and (b) acknowledges
receipt of a copy of the current prospectus for the Reserve Fund which includes
the reasons Adviser considers Reserve Fund investments appropriate for the LCV
Account and describes the non-advisory fees and expenses disclosed in the
Reserve Fund's prospectus, which non-advisory fees and expenses include fees
paid indirectly to affiliates of Adviser.
11. Service to Other Clients. It is understood that Adviser and its
affiliates may give advice and take action for other clients, including
investment companies, which differs from advice given or the timing or nature of
action taken for the LCV Account. Adviser is not obligated to initiate
transactions for the LCV Account in any security which Adviser, its principals,
affiliates or employees may purchase or sell for their own accounts or for other
clients.
12. Confidential Relationship. Information furnished by either party to
the other, including their respective agents and employees, is confidential and
shall not be disclosed to third parties unless requested by a regulatory
authority or otherwise required by law. If the Adviser is requested by
Department of Labor to disclose any information regarding the Client, the
Adviser shall notify the Client before responding to the request to the extent
permitted by law.
13. Bond. Client agrees to include Adviser under Client's bond obtained
pursuant to Section 412 of ERISA.
14. Termination; Assignment. This Agreement may be terminated by either
party at any time upon written notice to the other. Fees will be prorated to the
date of termination. No assignment (as defined in the Investment Advisers Act of
1940) of this Agreement by Adviser shall be effective without the consent of
Client.
15. Notices. Notices under this Agreement shall be in writing, or
facsimile thereof and confirmed in writing within seven (7) business days, and
shall be delivered at the addresses specified herein, or at such other address
as either party may specify by notice given in accordance herewith. Adviser may
rely upon any notice reasonably believed to be genuine and authorized.
<PAGE>
-5-
16. Representations. Adviser represents that it is registered as an
investment adviser under the Investment Advisers Act of 1940 and that it is a
fiduciary as defined in Section 3(21) of ERISA with respect to the LCV Account.
Adviser shall promptly notify Client if Adviser shall cease to be registered as
an investment adviser under the Investment Advisers Act of 1940. Adviser
represents and warrants that its investment of cash reserves of the LCV Account
in the Reserve Fund will not constitute a non-exempt prohibited transaction
under Section 406 of ERISA or Section 4975 of the Internal Revenue Code of 1986,
as amended. Client represents that this Agreement has been duly authorized and
will be binding upon Client in accordance with its terms.
17. Disclosure Statement. Client acknowledges receipt of Adviser's SEC
Form ADV, Part II dated April 16, 1999, which includes a description of the
Adviser's brokerage practices in Item 12 of Schedule F, more than 48 hours prior
to the execution of this Agreement. Client has received a copy of Form ADV, Part
II dated August 10, 1999, prior to execution of this Agreement.
18. Covenants. By execution of this Agreement, each of the parties hereto
represents and warrants that the terms hereof do not violate any obligation by
which such party is bound, whether arising by contract, operation of law or
otherwise, and that (a) this Agreement has been duly authorized by appropriate
action and when so executed and delivered will be binding upon such party, in
accordance with its terms, and (b) such party will deliver to the other party
such evidence as such other party may reasonably require, whether by way of a
certified resolution or otherwise.
19. Other Documents. This Agreement constitutes the entire agreement
between the parties. The Adviser and the Client agree that from time to time, at
each other's request, they may agree to execute and deliver to each other
further documents as may be reasonably required to carry out the purposes
hereof.
20. Binding Upon Successors. This Agreement shall be binding upon and
enforceable by the successor to the parties hereto.
21. Applicable Law. To the extent that State law shall not have been
preempted by the provisions of ERISA or any other laws of the United States
heretofore or hereinafter enacted, as the same may be amended from time to time,
this Agreement shall be administered, construed and enforced according to the
laws of the State of Maryland.
<PAGE>
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed by their respective signatories hereunto duly authorized as of the day
and year first above written.
INTERSIL CORPORATION
RETIREMENT COMMITTEE
2401 Palm Bay Road, N.E.
Palm Bay, Florida 32905
/s/ Daniel J. Heneghan
-----------------------------------
By: Daniel J. Heneghan
(Name)
Title: Vice President, Secretary and Treasurer
Date: 9/3/99
T. ROWE PRICE ASSOCIATES, INC.
100 East Pratt Street
Baltimore, Maryland 21202
By: /s/ Pegi E. Almond
--------------------------
Vice President
Date: 9/3/99
<PAGE>
EXHIBIT A
INVESTMENT OBJECTIVE AND GUIDELINES
FOR THE LCV ACCOUNT OF THE
INTERSIL CORPORATION MASTER TRUST
OBJECTIVES:
To seek to provide substantial dividend income as well as capital appreciation
by investing primarily in dividend-paying stocks of established companies. In
pursuing the LCV Account's objective, the Adviser shall emphasize companies with
favorable prospects for increasing dividend income, and secondarily, capital
appreciation, as determined by the Adviser. To enhance capital appreciation
potential, the Adviser may use a value-oriented approach, which means the
Adviser shall invest in stocks it believes are currently undervalued in the
marketplace.
PERMITTED INVESTMENTS:
Adviser will temporarily invest assets in the T. Rowe Price Equity Income Fund,
Inc. pending full funding of the LCV Account.
Equity Securities:
Under normal circumstances, the Adviser will invest at least 80% of its assets
in income producing common stocks. The Adviser may also invest in other equity
securities, including preferred stock, convertibles and warrants.
Subject to the limitation stated below, investments in foreign securities are
permitted, including non dollar-denominated securities traded outside the U.S.
and dollar-denominated securities traded in the U.S. (such as ADRs). The Adviser
may use currencies to gain exposure to international markets prior to investing
in non dollar-denominated securities.
Debt Securities:
Subject to the limitation stated below, debt securities of any type are
permitted without regard to quality or rating provided such securities are
issued by companies or municipalities that meet the investment criteria for the
LCV Account. Such securities may include securities rated below investment grade
(e.g., securities rated Ba or lower by Moody's or BB or lower by S&P).
Cash Reserves:
Securities which may be held as cash reserves include liquid short-term
investments with maturities of one year or less (including repurchase
agreements) rated in the two highest rating
<PAGE>
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categories by at least one established rating organization or, if not rated by
any one such organization, of equivalent investment quality as determined by T.
Rowe Price. In addition, cash reserves may be invested in the Reserve Investment
Fund.
RESTRICTIONS:
Foreign Securities:
The Adviser may invest up to 25% of LCV Account assets in foreign securities.
Debt Securities:
The Adviser will not purchase debt securities rated below investment grade if,
immediately after such purchase the LCV Account would have more than 10% of its
total assets invested in such securities.
Industry Limitation:
The Adviser may not make an investment in any one industry if, when added to its
other investments at the time of purchase, total investments in the same
industry would exceed 25% of the value of the LCV Account's assets.
Issuer Limitation:
The Adviser will not purchase the securities of any one issuer if, immediately
after such purchase, more than 5% of the value of total LCV Account assets would
be invested in the securities of such issuer (other than obligations issued or
guaranteed by the U.S. Government, its agencies or instrumentalities).
<PAGE>
EXHIBIT B
T. ROWE PRICE ASSOCIATES, INC.
SCHEDULE OF FEES
For: The LCV Account of the Intersil Corporation Master Trust
Effective Date: For purposes of Exhibit B, the Effective Date will
be the date the LCV Account is fully* funded.
Billing Dates: January 1, April 1, July 1, October 1
Advisory fees will be calculated and accrued daily by Custodian on the
basis of the total market value of LCV Account assets. Fees will be calculated
at the following annual rate, and the appropriate portion thereof will be
payable to the Adviser from the Account as of each Billing Date:
Market Value of Assets Annual Fee
---------------------- ----------
First $20 Million 50/100 of 1%
Next $30 Million 40/100 of 1%
*While assets are temporarily invested in the T. Rowe Price Equity Income Fund,
Inc., no direct fees will be charged thereunder. However, fees will be
indirectly paid to Adviser through investment in the Equity Income Fund pursuant
to the terms of the prospectus.
EXHIBIT 10.36
INTERSIL CORPORATION
RETIREMENT PLAN
(NON-UNION)
<PAGE>
TABLE OF CONTENTS
ARTICLE I DEFINITIONS.........................................................1
1.1. Accounts .........................................................1
1.2. Affiliate ........................................................1
1.3. After-Tax Account ................................................1
1.4. After-Tax Contributions ..........................................1
1.5. Basic Account ....................................................1
1.6. Beneficiary ......................................................1
1.7. Break-in-Service .................................................2
1.8. Code .............................................................2
1.9. Compensation .....................................................2
1.10. Corporation ......................................................3
1.11. Disability .......................................................3
1.12. Early Retirement Age .............................................3
1.13. Effective Date ...................................................3
1.14. Employee .........................................................3
1.15. Employer .........................................................4
1.16. ERISA ............................................................4
1.17. Excess Compensation ..............................................4
1.18. Full-Time Employee ...............................................4
1.19. Harris Stock Fund ................................................4
1.20. Harris Stock After-Tax Account ...................................5
1.21. Harris Stock Matching Account ....................................5
1.22. Harris Stock Pre-Tax Account .....................................5
1.23. Highly Compensated Employee ......................................5
1.24. Hour of Service ..................................................5
1.25. Investment Funds .................................................5
1.26. Layoff ...........................................................6
1.27. Leave of Absence .................................................6
1.28. Matching Account .................................................6
1.29. Matching After-Tax Contributions .................................6
1.30. Matching Contributions ...........................................7
1.31. Matching Pre-Tax Contributions ...................................7
1.32. Military Service .................................................7
1.33. Normal Retirement Age ............................................7
1.34. Participant ......................................................7
1.35. Period of Service ................................................7
1.36. Period of Severance ..............................................8
1.37. Plan .............................................................8
1.38. Plan Year ........................................................8
1.39. Predecessor Company ..............................................8
1.40. Predecessor Plan .................................................8
1.41. Pre-Tax Account ..................................................8
i Intersil Retirement Plan (Non-Union)
<PAGE>
1.42. Pre-Tax Contributions ............................................8
1.43. Profit-Sharing Account ...........................................8
1.44. Profit-Sharing Contributions .....................................8
1.45. Retirement Committee .............................................8
1.46. Rollover Account .................................................9
1.47. Savings Account ..................................................9
1.48. SERP .............................................................9
1.49. Severance from Service Date ......................................9
1.50. Supplemental Account .............................................9
1.51. Taxable Wage Base ................................................9
1.52. Trust Agreement .................................................10
1.53. Trust Fund ......................................................10
1.54. Trustee .........................................................10
1.55. Valuation Date ..................................................10
ARTICLE II PARTICIPATION.....................................................11
2.1. In General.......................................................11
2.2. Renewal of Participation on Reemployment.........................11
2.3. Periods of Service on Reemployment...............................12
2.4. Service with an Acquired Company.................................12
2.5. Employment by Non-Participating Affiliates.......................13
2.6. Military Service.................................................13
ARTICLE III CONTRIBUTIONS AND ALLOCATIONS....................................15
3.1. Profit-Sharing Contributions.....................................15
3.2. Allocation of Profit-Sharing Contribution to Participants........15
3.3. Pre-Tax Contributions............................................17
3.4. Matching Pre-Tax Contributions...................................18
3.5. After-Tax Contributions for Participants Credited with at least
a One-Year Period of Service.....................................18
3.6. Matching After-Tax Contributions.................................19
3.7. Elections to Make Pre-Tax and After-Tax Contributions............19
3.8. Rollover Contributions...........................................20
3.9. Employer's Obligation to Make Contributions......................21
3.10. Treatment of Forfeited Amounts...................................22
3.11. Finality of Allocations..........................................22
ARTICLE IV LIMITATIONS ON CONTRIBUTIONS......................................23
4.1. In General.......................................................23
4.2. Pre-Tax Contributions............................................23
4.3. Limitations on Contributions for Highly Compensated Employees....23
4.4. Limitations on Annual Additions..................................33
ii Intersil Retirement Plan (Non-Union)
<PAGE>
ARTICLE V VESTING AND FORFEITURES............................................35
5.1. In General.......................................................35
5.2. Vesting on Retirement, Death or Disability.......................35
5.3. Vesting on Other Termination of Employment.......................35
5.4. Effect of In-Service Withdrawals on a Participant's Vested
Percentage.......................................................36
5.5. Forfeitures......................................................37
ARTICLE VI ACCOUNTS AND INVESTMENTS..........................................38
6.1. Establishment of Accounts........................................38
6.2. Investment of Accounts...........................................40
6.3. Allocation of Earnings and Losses................................42
6.4. Special Rules Concerning Harris Stock Fund.......................42
ARTICLE VII DISTRIBUTIONS....................................................44
7.1. In General.......................................................44
7.2. Small Benefit Cash-out...........................................44
7.3. Form of Payment..................................................45
7.4. Time of Payment..................................................46
7.5. Direct Rollover..................................................46
7.6. Payments on Death................................................47
7.7. Benefit Amount and Withholding...................................48
7.8. Order of Distributions...........................................48
7.9. Statutory Requirements...........................................49
7.10. Designating Beneficiaries........................................52
7.11. Inability to Locate Participant..................................53
ARTICLE VIII LOANS...........................................................53
8.1. In General, Loans to Participants................................53
ARTICLE IX IN-SERVICE WITHDRAWALS............................................55
9.1. Withdrawals from Savings Account and After-Tax Account...........55
9.2. Withdrawals from Rollover, Pre-Tax and Profit Sharing Accounts...55
9.3. Conditions Applicable to All Withdrawals.........................57
9.4. Reduction of Investment Fund Balances............................58
ARTICLE X TOP-HEAVY PROVISIONS...............................................58
10.1. In General.......................................................58
10.2. Minimum Allocation...............................................58
10.3. Minimum Vesting..................................................59
10.4. Definitions......................................................59
iii Intersil Retirement Plan (Non-Union)
<PAGE>
ARTICLE XI ADMINISTRATION....................................................63
11.1. Named Fiduciaries................................................63
11.2. Retirement Committee.............................................63
11.3. Powers and Duties of Retirement Committee........................63
11.4. Actions of Retirement Committee..................................64
11.5. Finality of Decisions............................................64
11.6. Immunities of Retirement Committee...............................64
11.7. Advisers and Agents..............................................64
11.8. Retirement Committee Member who is Participant...................65
11.9. Information Provided by Employer.................................65
11.10. Expenses.........................................................65
11.11. Trust............................................................66
11.12. Trust Fund Available to Pay All Plan Benefits....................66
11.13. Corporation as Agent for Employers...............................66
ARTICLE XII AMENDMENT AND TERMINATION........................................67
12.1. Amendment........................................................67
12.2. Termination of Plan..............................................67
12.3. Discontinuance of Contributions..................................68
12.4. Vesting on Termination or Discontinuance of Contributions........68
12.5. Distribution on Termination......................................68
ARTICLE XIII MISCELLANEOUS PROVISIONS........................................69
13.1. Restrictions on Alienation: Qualified Domestic Relations Orders..69
13.2. Exclusive Benefit Requirement....................................70
13.3. Return of Contributions..........................................70
13.4. No Contract of Employment........................................71
13.5. Payment of Benefits on Incapacity................................71
13.6. Merger...........................................................71
13.7. Construction.....................................................71
13.8. Governing Law....................................................72
13.9. Mistaken Payments................................................72
iv Intersil Retirement Plan (Non-Union)
<PAGE>
INTRODUCTION
The title of the Plan shall be the Intersil Corporation Retirement Plan
(Non-union).
The Plan is designated as a "profit sharing plan" within the meaning of
U.S. Treasury Regulation Section 1.401(a)(2)(ii) that contains a qualified cash
or deferred arrangement under section 401(k) of the Code.
In order to implement the establishment of this Plan and the related
transfer of employment of certain employees of the Predecessor Company to the
Corporation, notwithstanding any provision of the Plan to the contrary, during a
transition period beginning on August 14, 1999 and ending on the date determined
by the Retirement Committee, loans, withdrawals, distributions and investment
elections under the Plan will be subject to such rules and restrictions as may
be established by the Retirement Committee.
1 Intersil Retirement Plan (Non-Union)
<PAGE>
ARTICLE I
DEFINITIONS
1.1. Accounts -- means the accounts established under Section 6.1, and any
other account that may be established under the Plan on behalf of a Participant.
1.2. Affiliate -- means (a) any corporation that is a member of the same
controlled group (within the meaning of section 414(b) of the Code) as an
Employer, (b) a trade or business (whether or not incorporated) under common
control (within the meaning of section 414(c) of the Code) with an Employer, (c)
any organization (whether or not incorporated) that is a member of an affiliated
service group (within the meaning of section 414(m) of the Code) that includes
an Employer, a corporation described in clause (a) of this subdivision or a
trade or business described in clause (b) of this subdivision, or (d) any other
entity that is required to be aggregated with an Employer pursuant to final
regulations promulgated by the U.S. Treasury Department under section 4 14(o) of
the Code.
1.3. After-Tax Account -- means the Account established for a Participant
under Section 6.1(c).
1.4. After-Tax Contributions -- means the contributions described in
Section 3.5.
1.5. Basic Account -- means the Account established for a Participant
under Section 6.1(a)(1).
1.6. Beneficiary -- means the person or persons entitled to receive any
benefits payable under the Plan on account of a Participant's death.
2 Intersil Retirement Plan (Non-Union)
<PAGE>
Miscellaneous Provisions
1.7. Break-in-Service -- means a Period of Severance, as defined in
Section 1.37.
1.8. Code -- means the Internal Revenue Code of 1986, as amended from time
to time.
1.9. Compensation -- means the total earnings paid by an Employer to an
Employee and properly reportable for federal income tax purposes on Form W-2 for
a Plan Year (including overtime and bonuses); provided that:
(a) the Employee's Compensation shall also include amounts that
would have been so paid and reported on Form W-2 but for the Employee's election
to have compensation reduced pursuant to the Plan or any other qualified cash or
deferred arrangement described in section 401(k) of the Code or a cafeteria plan
as described in section 125 of the Code; and
(b) the Employee's Compensation shall not include the following
items (even if properly reportable for federal income tax purposes on Form W-2):
(i) any extraordinary compensation of a non-recurring
nature;
(ii) any award made or amount paid pursuant to an Employer's
equity-based compensation arrangement including, but not
limited to, performance shares, stock options (including
any exercise thereof), restricted stock, stock
appreciation rights (including any exercise thereof),
and dividend equivalents;
(iii) severance pay or special retirement pay;
(iv) imputed compensation, such as Employer-paid group
insurance premiums; and
(v) reimbursements or other allowances for automobile,
relocation, tax-equalization, travel or educational
expenses.
3 Intersil Retirement Plan (Non-Union)
<PAGE>
Miscellaneous Provisions
In no event shall an Employee's Compensation in excess of $160,000 (as adjusted
for increases in the cost of living pursuant to section 401(a)(17) of the Code)
be taken into account for any purpose under the Plan. In addition, in the year
in which an Employee becomes a Participant, only Compensation received after he
becomes a Participant shall be taken into account. For purposes of any test
imposed under any section of the Code, the Plan authorizes the use of any
definition of compensation, provided that such definition satisfies the
requirements of such section.
1.10. Corporation -- means Intersil Corporation, a Delaware corporation.
1.11. Disability -- means a disability that qualifies a Participant for
disability benefits under Title II or Title XVI of the Federal Social Security
Act; such disability for Plan purposes shall be deemed to occur on the effective
date determined by the Social Security Administration.
1.12. Early Retirement Age -- means an individual's attainment of age 55
while an Employee.
1.13. Effective Date -- means, except as provided elsewhere herein, August
14, 1999 with respect to the Corporation and each other entity that is an
Employer on such date, and with respect to any other Employer, the date
designated by such Employer and agreed to by the Corporation.
1.14. Employee -- means an individual whose employment relationship with
an Employer is, under common law, that of an employee unless the individual's
employment relationship is covered by a collective bargaining agreement which
does not provide for such individual's participation in the Plan.
Notwithstanding the foregoing, no individual who renders services to an Employer
shall be considered an Employee for purposes of the Plan if such
4 Intersil Retirement Plan (Non-Union)
<PAGE>
Miscellaneous Provisions
individual renders such services pursuant to (i) a written agreement providing
that such services are to be rendered by the individual as an independent
contractor, (ii) a written agreement with an entity, including a leasing
organization within the meaning of section 414(n)(2) of the Code, that is not an
Employer, or (iii) a written agreement that contains a waiver of participation
in the Plan. A leased employee shall be treated as an Employee only for purposes
of applying the requirements described in section 414(n)(3) of the Code and
determining the number and identity of Highly Compensated Employees.
1.15. Employer -- means the Corporation, Choice Microsystems, Inc. or any
other entity that, with the consent of the Corporation, elects to participate in
the Plan and any successor entity that adopts the Plan. If any such entity
withdraws from participation in the Plan or terminates its participation in the
Plan, such entity shall thereupon cease to be an Employer. If an entity that is
an Employer ceases to be an Affiliate, such entity shall cease to be an Employer
unless the Corporation consents to such entity's continued participation in the
Plan.
1.16. ERISA -- means the Employee Retirement Income Security Act of 1974.
as amended from time to time.
1.17. Excess Compensation -- means the portion of a Participant's
Compensation that exceeds the Taxable Wage Base for the year in which the
Compensation is received.
1.18. Full-Time Employee -- means an Employee who is regularly scheduled
by an Employer to work 30 or more hours per week and who is not classified by
the Employer as an intern.
5 Intersil Retirement Plan (Non-Union)
<PAGE>
Miscellaneous Provisions
1.19. Harris Stock Fund -- means the Investment Fund that is designed to
be invested in qualifying employer securities (within the meaning of section 407
of ERISA) issued by the Predecessor Company.
1.20. Harris Stock After-Tax Account -- means the Account established for
a Participant under Section 6.1(g).
1.21. Harris Stock Matching Account -- means the Account established for a
Participant under Section 6.1(h).
1.22. Harris Stock Pre-Tax Account -- means the Account established for a
Participant under Section 6.1(f).
1.23. Highly Compensated Employee -- means, for a Plan Year, any Employee
who is:
(a) a 5-percent owner (as determined under section 416(i)(1) of the
Code) of an Employer at any time during the Plan Year or the preceding Plan
Year; or
(b) paid Compensation in excess of $80,000 (as adjusted for
increases in the cost of living pursuant to section 414(q)(1)(B)(ii) of the
Code) from an Employer for the preceding Plan Year. The Employees taken into
account under this paragraph (b) for each Plan Year shall be limited to those
Employees who were members of the top-paid group (as defined in section
414(q)(3) of the Code) for the preceding Plan Year, unless otherwise elected by
the Corporation for such Plan Year in accordance with applicable law.
1.24. Hour of Service -- means each hour for which an Employee is paid or
entitled to payment for the performance of duties for an Employer.
1.25. Investment Funds -- means the investment funds designated by the
Retirement Committee from time to time.
6 Intersil Retirement Plan (Non-Union)
<PAGE>
Miscellaneous Provisions
1.26. Layoff -- means a temporary suspension of the active employment of
an Employee with the understanding that the Employee will be recalled to active
employment if and when his services are again required. A period of Layoff
terminates, and the Severance from Service Date of a Participant who is not
recalled or otherwise employed by an Employer is deemed to occur, on the
earliest of the following dates:
(a) the expiration date specified in a notice of recall delivered to
the Employee;
(b) the first anniversary of the date the Layoff began in accordance
with clause (b) of the definition of "Severance from Service Date" contained in
Section 1.49; and
(c) the election of an Employee to terminate the Layoff by written
notice delivered to the Employer.
1.27. Leave of Absence -- means a period of interruption of the active
employment of an Employee granted by an Employer with the understanding that the
Employee will return to active employment at the expiration of the period of
time. A Leave of Absence as originally granted may be extended by the Employer
for additional periods. The term "Leave of Absence" does not include a period of
Military Service
1.28. Matching Account -- means the Account established for a Participant
under Section 6.1(d).
1.29. Matching After-Tax Contributions -- means the contributions made on
behalf of a Participant under Section 3.6.
1.30. Matching Contributions -- means the aggregate of the Matching
After-Tax Contributions and the Matching Pre-Tax Contributions made on behalf of
a Participant.
7 Intersil Retirement Plan (Non-Union)
<PAGE>
Miscellaneous Provisions
1.31. Matching Pre-Tax Contributions -- means the contributions made on
behalf of a Participant under Section 3.4.
1.32. Military Service -- means the performance of duty by an individual
on a voluntary or involuntary basis in a uniformed service, within the meaning
of the Uniformed Services Employment and Reemployment Rights Act, for which the
individual is entitled to reemployment rights under such Act.
1.33. Normal Retirement Age -- an individual's attainment of age 65 while
an Employee.
1.34. Participant -- means an Employee who satisfies the requirements of
Section 2.1. An individual shall cease to be a Participant upon the complete
distribution or forfeiture of his Accounts.
1.35. Period of Service -- means the period of time that begins on an
Employee's employment or reemployment date, whichever is applicable, and ends on
his Severance from Service Date. An Employee's employment date is the date on
which the Employee first performs an Hour of Service; an Employee's reemployment
date is the date on which the Employee first performs an Hour of Service after
his most recent Severance from Service Date. Notwithstanding the foregoing, the
Period of Service of an Employee who was an employee of the Predecessor Company
immediately prior to the Effective Date and who becomes an Employee on or before
December 31, 1999, shall include such Employee's "period of service" under the
Predecessor Plan.
8 Intersil Retirement Plan (Non-Union)
<PAGE>
Miscellaneous Provisions
1.36. Period of Severance -- means the period of time commencing on the
Severance from Service Date and ending on the date on which the Employee again
performs an Hour of Service.
1.37. Plan -- means the Intersil Corporation Retirement Plan (Non-union)
herein set forth, as amended from time to time.
1.38. Plan Year -- means the fiscal year of the Corporation.
1.39. Predecessor Company -- means Harris Corporation, a Delaware
corporation.
1.40. Predecessor Plan -- means the Harris Corporation Retirement Plan.
1.41. Pre-Tax Account -- means the Account established for a Participant
under Section 6.1(b).
1.42. Pre-Tax Contributions -- means the contributions made on behalf of a
Participant under Section 3.3.
1.43. Profit-Sharing Account -- means the Account established for a
Participant under Section 6.1(a).
1.44. Profit-Sharing Contributions -- means the contributions described in
Section 3.1.
1.45. Retirement Committee -- means the committee established under
Section 11.2.
1.46. Rollover Account -- means the Account established for a Participant
under Section 6.1(i).
9 Intersil Retirement Plan (Non-Union)
<PAGE>
Miscellaneous Provisions
1.47. Savings Account -- means the Account established for a Participant
under Section 6.1(e).
1.48. SERP -- means the Intersil Corporation Supplemental Executive
Retirement Plan, as it may be amended from time to time.
1.49. Severance from Service Date -- means, with respect to an Employer,
the earlier of (a) the date on which the Employee quits, retires, is discharged
or dies, and (b) the first anniversary of the first date of a period in which an
Employee remains absent from service (with or without pay) for any reason other
than quitting, retirement, discharge or death; provided, however, that "second
anniversary" shall be substituted for "first anniversary" if the absence is due
to maternity or paternity reasons as defined in section 410(a)(5)(E) of the
Code. The period between the first and the second anniversary shall not be a
Period of Service or a Period of Severance.
1.50. Supplemental Account -- means the Account established for a
Participant under Section 6. 1(a)(2).
1.51. Taxable Wage Base -- means the maximum amount of earnings that may
be considered wages under section 3121(a)(1) of the Code for purposes of section
3101(a) of the Code, as in effect on the first day of the Plan Year. In the case
of an Employee who was a Participant for only a portion of a particular Plan
Year, the Taxable Wage Base shall be multiplied by the ratio of the number of
calendar months (including a fraction of a month as a full month) in the Plan
Year during which he was a Participant to 12 months.
10 Intersil Retirement Plan (Non-Union)
<PAGE>
Miscellaneous Provisions
1.52. Trust Agreement -- means the trust agreement relating to the Plan,
entered into between the Corporation and the Trustee, as it may be amended from
time to time.
1.53. Trust Fund -- means the assets held by the Trustee in accordance
with the Trust Agreement.
1.54. Trustee -- means T. Rowe Price Trust Company, or such successor (or
successors) thereto designated by the Retirement Committee to act as trustee
under the provisions of the Trust Agreement, who shall agree to act as such by
executing the Trust Agreement.
1.55. Valuation Date -- means each day the New York Stock Exchange is
open, and any other day as the Retirement Committee may determine.
11 Intersil Retirement Plan (Non-Union)
<PAGE>
Miscellaneous Provisions
ARTICLE II
PARTICIPATION
2.1. In General.
(a) Employees who were Participants in the Predecessor Plan. Each
individual who was an active participant in the Predecessor Plan immediately
prior to the Effective Date and who is an Employee on the Effective Date shall
become a Participant in the Plan on the Effective Date.
(b) Other Employees. Each other Employee shall become a Participant
in the Plan on the date he completes a one-year Period of Service.
Notwithstanding the preceding sentence, and solely for purposes of making
Pre-Tax Contributions, After-Tax Contributions and Rollover Contributions, a
Full-Time Employee shall become a Participant in the Plan on the date he first
performs an Hour of Service for an Employer.
2.2. Renewal of Participation on Reemployment. An Employee who terminates
employment with the Employers after he completes a one-year Period of Service
and is reemployed by an Employer shall become a Participant as of the effective
date of such Employee's reemployment. An Employee who terminates employment with
the Employers before he completes a one-year Period of Service and is reemployed
by an Employer shall become a Participant as provided in Section 2.1(b),
provided that his Period of Service prior to such reemployment shall be used to
satisfy the one-year Period of Service requirement imposed by Section 2.1(b) to
the extent provided under Section 2.3.
12 Intersil Retirement Plan (Non-Union)
<PAGE>
Miscellaneous Provisions
2.3. Periods of Service on Reemployment. The following rules shall apply
to an Employee who terminates employment with the Employers before he completes
a one-year Period of Service and is reemployed by an Employer:
(a) Credit for Prior Period of Service. If the Employee is
reemployed by an Employer before his Period of Severance equals or exceeds the
greater of (i) his Period of Service before he terminated employment and (ii)
five years, then his Period of Service before he terminated employment with the
Employers shall be taken into account in determining whether the Employee has
completed a one-year Period of Service for purposes of Section 2.1 and for
purposes of determining a Participant's Period of Service under Section 5.3.
(b) Credit for Period of Severance. If the Employee terminates
employment with the Employers due to quitting, discharge, or retirement and is
reemployed by an Employer within 12 months of his termination date, his Period
of Severance shall be taken into account in determining whether the Employee has
completed a one-year Period of Service for purposes of Section 2.1 and for
purposes of determining a Participant's Period of Service under Section 5.3. If
the Employee terminates employment with the Employers for any reason other than
quitting, discharge, or retirement, and subsequently quits, is discharged, or
retires, his Period of Severance shall be taken into account in determining
whether the Employee has completed a one-year Period of Service for purposes of
Section 2.1 and for purposes of determining a Participant's Period of Service
under Section 5.3 only if he is reemployed by an Employer within 12 months of
the date of his termination of employment.
2.4. Service with an Acquired Company. In the case of a corporation (other
than an Employer or an Affiliate) with respect to which substantially all of the
assets of a trade or
13 Intersil Retirement Plan (Non-Union)
<PAGE>
Miscellaneous Provisions
business of such corporation are acquired by an Employer or an Affiliate, an
Employee's Period of Service shall include employment with such corporation only
to the extent expressly provided in the corporate documents effecting the
acquisition.
2.5. Employment by Non-Participating Affiliates. If an individual is
employed by an Affiliate that is not an Employer, then any period of employment
by the Affiliate shall be taken into account to the same extent it would have
been had such period of employment been as an Employee of an Employer solely for
the purposes of (i) determining whether and when such individual is eligible to
participate in the Plan under this Article II upon becoming an Employee, (ii)
measuring such individual's Period of Service and (iii) determining when such
individual has retired or otherwise terminated employment for purposes of
Article VII. If a Participant is transferred from an Employer to another
Employer or from an Employer to an Affiliate that is not an Employer, such
transfer shall not terminate the Participant's participation in the Plan and
such Participant shall continue to participate in the Plan until an event occurs
that would have terminated his participation had he continue in the service of a
Employer until the occurrence of such event; provided, however, that a
Participant shall not be entitled to make or receive an allocation of any
contributions during any period of employment with an Affiliate that is not an
Employer. Payments received by a Participant from an Affiliate that is not an
Employer shall not be treated as Compensation for any purposes under the Plan.
2.6. Military Service. Notwithstanding any provision of the Plan to the
contrary, (i) a Participant who returns to employment after a period of Military
Service may elect to make Pre-Tax Contributions and After-Tax Contributions to
the Plan in respect of such Military Service and (ii) the Employer that
reemploys such a Participant shall make any Profit-Sharing Contributions and
Matching Contributions on behalf of such Participant to the Plan upon the
14 Intersil Retirement Plan (Non-Union)
<PAGE>
Miscellaneous Provisions
Participant's reemployment to the extent required by law and in accordance with
section 414(u) of the Code.
15 Intersil Retirement Plan (Non-Union)
<PAGE>
Miscellaneous Provisions
ARTICLE III
CONTRIBUTIONS AND ALLOCATIONS
3.1. Profit-Sharing Contributions.
(a) Basic. Subject to the limitations set forth in Sections 3.9, 4.4
and 13.3, the Employers may contribute a Profit Sharing Contribution for each
Plan Year in such amounts as the Corporation shall determine.
(b) Special. Subject to the limitations set forth in Sections 3.9,
4.4 and 13.3, the Corporation, in its discretion, may provide for an additional
Profit-Sharing Contribution in a specified dollar amount or pursuant to a
formula with respect to any Plan Year.
(c) Apportionment Between the Plan and the Union Plan. The amount of
Profit-Sharing Contributions to the Plan for a Plan Year shall be determined by
apportioning the aggregate profit sharing contributions designated by the
Corporation for such Plan Year between the Plan and the Intersil Corporation
Retirement Plan (Union), based on the ratio of the "Compensation" plus "Excess
Compensation" (as such terms are defined in the plans) for the Plan Year of the
participants in each such plan to the aggregate "Compensation" plus "Excess
Compensation" of all participants in such plans for the Plan Year.
3.2. Allocation of Profit-Sharing Contribution to Participants.
(a) In General. Profit-Sharing Contributions for a Plan Year shall
be allocated among the eligible Participants described in paragraph (c) who are
employed by the Employers based on the ratio of each such Participant's
Compensation plus Excess Compensation for the
16 Intersil Retirement Plan (Non-Union)
<PAGE>
Miscellaneous Provisions
Plan Year to the Compensation plus Excess Compensation of all such Participants
for the Plan Year.
(b) Limitation On Amount. Notwithstanding paragraph (a), the amount
allocated to an eligible Participant pursuant to paragraph (a) for any Plan Year
shall not cause such Participant's "excess contribution percentage" to exceed
such Participant's "base contribution percentage" for such Plan Year by more
than the lesser of (i) the base contribution percentage, and (ii) the greater of
(A) 5.7 % and (B) the percentage equal to the portion of the rate of tax under
section 3111(a) of the Code as in effect as of first day of the Plan Year which
is attributable to old-age insurance. For purposes of the immediately preceding
sentence, the term "excess contribution percentage" shall mean the percentage of
the Participant's Compensation which is allocated to the Participant pursuant to
paragraph (a) with respect to such Participant's Excess Compensation, and the
term "base contribution percentage" shall mean the percentage of the
Participant's Compensation which is allocated to the Participant pursuant to
paragraph (a) with respect to that portion of the Participant's Compensation
which is not Excess Compensation. Any remaining amount shall be allocated based
on the ratio of each such eligible Participant's Compensation for the Plan Year
to the Compensation of all eligible Participants for the Plan Year.
(c) Limitation On Eligibility. A Participant shall be eligible to
receive an allocation of Profit-Sharing Contributions for a Plan Year if he has
completed a one-year Period of Service and either (i) the Participant is an
Employee on the earlier of (A) the last day of the Plan Year and (B) the June 30
nearest to the last day of the Plan Year or (ii) the Participant terminated
employment with the Employers during the Plan Year on or after Early Retirement
17 Intersil Retirement Plan (Non-Union)
<PAGE>
Miscellaneous Provisions
Age or Normal Retirement Age, or due to Disability, death, Layoff, Leave of
Absence or Military Service.
3.3. Pre-Tax Contributions.
(a) Contribution Election. A Participant may elect to defer a
portion of his Compensation payable for each payroll period by an amount equal
to any whole percentage which does not exceed twelve percent (12%), and the
amount by which his Compensation is so reduced shall be contributed to the Plan
on his behalf as a Pre-Tax Contribution. Each Participant shall be deemed to
have elected to defer six percent (6%) of his Compensation payable for each
payroll period in the form of Pre-Tax Contributions, to become effective as of
the first payroll period as soon as administratively practicable following his
satisfaction of the participation requirements set forth in Section 2.1, unless
the Participant affirmatively elects otherwise prior to such payroll period in
the time and manner prescribed by the Retirement Committee. A Participant who
elects not to make Pre-Tax Contributions to the Plan in accordance with the
foregoing sentence may subsequently elect to make Pre-Tax Contributions to the
Plan in accordance with Section 3.7, and such Participant's election to make
Pre-Tax Contributions shall become effective as of the first payroll period
commencing immediately after the date of the election or such later date as may
be administratively practicable. An election shall remain in effect until
revised or revoked. The sum of the Pre-Tax Contributions and other elective
deferrals (within the meaning of section 402(g)(3) of the Code) made on behalf
of the Participant to the Plan and any other plan of an Employer for any
calendar year shall not exceed $10,000 (as adjusted in accordance with section
402(g)(5) of the Code for increases in the cost of living).
18 Intersil Retirement Plan (Non-Union)
<PAGE>
Miscellaneous Provisions
(b) Contributions in Excess of the Maximum. If the Pre-Tax
Contributions on behalf of a Participant for a calendar year reach the limit for
such year described in paragraph (a), then any additional contributions to be
made during the calendar year pursuant to the Participant's election shall be
made as After-Tax Contributions and any Matching Pre-Tax Contributions with
respect to that amount shall be made as Matching After-Tax Contributions.
Notwithstanding the preceding sentence, if the Pre-Tax Contributions for a
calendar year on behalf of a Participant who is eligible to participate in the
SERP are to reach the limit described in paragraph (a), such Participant may
elect that any contributions previously designated to be made as Pre-Tax
Contributions are made after such limit is reached either (i) be made as
After-Tax Contributions with the result that any Matching Pre-Tax Contributions
in respect of such contributions will be made as Matching After-Tax
Contributions, or (ii) be credited to the Participant's account under the SERP,
as well as an amount equal to any Matching Pre-Tax Contributions that would have
been made in respect of such contributions but for the fact that the limit
designated in paragraph (a) has been reached. Such election shall be made at the
time and in accordance with procedures established by the Retirement Committee.
3.4. Matching Pre-Tax Contributions. Each Employer shall make a Matching
Pre-Tax Contribution to the Plan on behalf of each Participant who is employed
by such Employer and who has completed a one-year Period of Service in the
amount of one hundred percent (100%) of the Pre-Tax Contributions made by the
Participant for each payroll period during the Plan Year, but only to the extent
that such Pre-Tax Contributions do not exceed six percent (6%) of the
Participant's Compensation for each such payroll period.
3.5. After-Tax Contributions for Participants Credited with at least a
One-Year Period of Service. A Participant who has completed a Period of Service
of at least one year and who
19 Intersil Retirement Plan (Non-Union)
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Miscellaneous Provisions
has elected not to make Pre-Tax Contributions may elect to contribute to the
Plan as an After-Tax Contribution an amount equal to any whole percentage of his
Compensation for each payroll period which does not exceed 12 percent (12%) of
his Compensation for such payroll period.
3.6. Matching After-Tax Contributions. Each Employer shall make a Matching
After-Tax Contribution to the Plan on behalf of each Participant who is an
Employee of such Employer and who has completed a one year Period of Service in
the amount of 100 percent (100%) of the After-Tax Contributions made by the
Participant for each payroll period during the Plan Year, but only to the extent
that such After-Tax Contributions do not exceed six percent (6%) of the
Participant's Compensation for each such payroll period.
3.7. Elections to Make Pre-Tax and After-Tax Contributions.
(a) Initial Elections. If a Participant elects not to have Pre-Tax
Contributions begin automatically pursuant to Section 3.3(a), then the
Participant may subsequently elect to begin making Pre-Tax Contributions to the
Plan by filing the appropriate form or by following the appropriate telephonic
or electronic procedures in the time and manner established by the Retirement
Committee. A Participant may elect to begin making After-Tax Contributions by
filing the appropriate form or by following the appropriate telephonic or
electronic procedures in the time and manner established by the Retirement
Committee. An election made under this Section 3.7(a) shall become effective as
of the first payroll period commencing immediately after the date of the
election or such later date as may be administratively practicable.
(b) Changing Elections. A Participant may change the percentage (in
increments of one percent (1%)) of future Pre-Tax Contributions or After-Tax
Contributions made on his behalf (or both) by filing the appropriate form or by
following the appropriate
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Miscellaneous Provisions
telephonic or electronic procedures for changing elections in the time and
manner established by the Retirement Committee. A change of election shall
become effective as of the first payroll period commencing immediately after the
date of the election or such later date as may be administratively practicable.
(c) Terminating Elections. A Participant may terminate his election
to have Pre-Tax Contributions or After-Tax Contributions made on his behalf (or
both) by filing the appropriate form or by following the telephonic or
electronic procedures for terminating elections in the time and manner
established by the Retirement Committee. The termination election shall become
effective as of the first payroll period commencing immediately after the date
of the election or such later date as may be administratively practicable.
(d) Retirement Committee's Discretion to Limit Elections.
Notwithstanding a Participant's elections made pursuant to this Article III, the
Retirement Committee may direct that the Participant's Pre-Tax Contributions or
After-Tax Contributions (or both) be limited in any manner the Retirement
Committee, in its discretion, shall determine appropriate to preserve the
qualification of the Plan under section 401(a) of the Code and as a qualified
cash or deferred arrangement under section 401(k) of the Code.
3.8. Rollover Contributions. A Participant, with the consent of the
Retirement Committee or its delegate, may at any time make a rollover
contribution to the Plan. For this purpose, a rollover contribution shall
include only (a) cash funds transferred directly from a tax-qualified plan
(within the meaning of section 401 of the Code) and that constitute on an
"eligible rollover distribution" (as defined in section 402(c)(4) of the Code),
and (b) cash funds distributed from a tax-qualified plan or a conduit individual
retirement account that are transferred to the
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Plan within 60 days of the Participant's receipt thereof and that constitute on
an "eligible rollover distribution" (as defined in section 402(c)(4) of the
Code). A Participant may be required to establish that the transfer of amounts
into a Rollover Account will not require any changes to the terms of the Plan or
will not expose the Plan or Trust to adverse tax consequences.
3.9. Employer's Obligation to Make Contributions.
(a) Contributions. Each Employer agrees to pay to the Trustee the
contributions that are required with respect to Participants who are Employees
of such Employer. Profit-Sharing Contributions with respect to a Plan Year shall
be paid to the Trustee no later than the due date for filing the Employer's
federal income tax return (including extensions thereof) for the fiscal year of
the Employer ending with or within such Plan Year. Pre-Tax Contributions and
After-Tax Contributions shall be withheld and paid by the Employer, and Matching
Contributions shall be paid by the Employers to the Trustee periodically
throughout the Plan Year.
(b) Limitation. Contributions under this Article III shall not be
made to the Plan to the extent they would exceed the deduction limitations of
section 404 of the Code, in which case such contributions shall be reduced to
the extent allowable and necessary in the following order: (1) Profit-Sharing
Contributions; (2) Matching Contributions; and (3) Pre-Tax Contributions.
22 Intersil Retirement Plan (Non-Union)
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Miscellaneous Provisions
3.10. Treatment of Forfeited Amounts.
(a) Reduction of Contributions. Forfeitures shall be allocated to
Employers as provided in paragraph (b) and be used to reduce Profit-Sharing
Contributions and Matching Contributions of such Employer.
(b) Allocation of Forfeitures to Employers. Forfeitures of
Profit-Sharing Contributions and Matching Contributions shall be credited to the
Employer with which the Participant was last employed before the forfeiture
occurred, or as otherwise determined by the Retirement Committee.
3.11. Finality of Allocations. The Retirement Committee shall cause a
written account statement to be given to each Participant (or, in the event of
the Participant's death, his Beneficiary) at least annually setting forth the
amount of the contributions allocated to his Accounts. Any Participant or
Beneficiary claiming that an error has been made in an account statement shall
notify the Retirement Committee in writing within 90 days following the delivery
or mailing of such statement. The Retirement Committee shall review the claim
and advise the Participant or Beneficiary of its decision in writing. If no such
notice of error is filed, the account statement shall be presumed to be correct.
23 Intersil Retirement Plan (Non-Union)
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Miscellaneous Provisions
ARTICLE IV
LIMITATIONS ON CONTRIBUTIONS
4.1. In General. Notwithstanding any provisions of Article III to the
contrary, the contributions provided for in Article III shall be limited to the
extent necessary to meet the requirements of this Article IV.
4.2. Pre-Tax Contributions.
(a) Treatment of Certain Contributions as After-Tax. If the
Retirement Committee determines that a Participant's Pre-Tax Contributions for a
calendar year have reached the dollar limit described in Section 3.3(a), any
additional contributions for that calendar year pursuant to the Participant's
Pre-Tax Contribution election shall be treated in the manner provided under
Section 3.3.
(b) Return of Excess Deferrals. In the event that a Participant's
Pre-Tax Contributions made to the Plan for a calendar year exceed the dollar
limit described in Section 3.3(a), the excess amount, as adjusted for income and
loss, may, in the discretion of the Retirement Committee, be distributed to the
Participant no later than April 15 of the following year in accordance with the
requirements of section 402(g) of the Code and U.S. Treasury Regulation Section
1.402(g)-1 (or transferred to the SERP in accordance with a timely election
filed by the Participant).
4.3. Limitations on Contributions for Highly Compensated Employees.
(a) Limits imposed by section 401(k)(3) of the Code. Notwithstanding
the provisions of Section 3.3, if the Pre-Tax Contributions made for a Plan Year
fail to satisfy both
24 Intersil Retirement Plan (Non-Union)
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Miscellaneous Provisions
of the tests set forth in subparagraphs (1) and (2) of this paragraph, the
adjustments prescribed in Section 4.3(e)(1) shall be made.
(1) The average deferral percentage (as defined in
subparagraph (d)(1)) for the group consisting of all
highly compensated Employees (as defined in subparagraph
(d)(4)) for the Plan Year does not exceed the product of
the average deferral percentage for the group consisting
of all non-highly compensated Employees for the
immediately preceding Plan Year and 1.25.
(2) The average deferral percentage for the group consisting
of all highly compensated Employees for the Plan Year
(i) does not exceed the average deferral percentage of
the group consisting of all non-highly compensated
Employees for the immediately preceding Plan Year by
more than 2 percentage points, and (ii) does not exceed
the product of the average deferral percentage of the
group consisting of all non-highly compensated Employees
for the immediately preceding Plan Year and 2.0.
(b) Limits imposed by section 401(m) of the Code. Notwithstanding
the provisions of Sections 3.1, 3.4 and 3.6, if the aggregate of the Matching
Contributions and After-Tax Contributions made for a Plan Year fail to satisfy
both of the tests set forth in subparagraphs (1) and (2) of this paragraph, the
adjustments prescribed in Section 4.3(e)(2) shall be made.
(1) The average contribution percentage (as defined in
subparagraph (d)(2)) for the group consisting of all
highly compensated
25 Intersil Retirement Plan (Non-Union)
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Miscellaneous Provisions
Employees for the Plan Year does not exceed the product
of the average contribution percentage for the group
consisting of all non-highly compensated Employees for
the immediately preceding Plan Year and 1.25.
(2) The average contribution percentage for the group
consisting of all highly compensated Employees for the
Plan Year (i) does not exceed the average contribution
percentage of the group consisting of all non-highly
compensated Employees for the immediately preceding Plan
Year by more than 2 percentage points, and (ii) does not
exceed the product of the average contribution
percentage of the group consisting of all non-highly
compensated Employees for the immediately preceding Plan
Year and 2.0.
(c) Aggregate Limit on Contributions. Notwithstanding anything
herein to the contrary, if the aggregate of the Pre-Tax Contributions, Matching
Contributions and After-Tax Contributions made for a Plan Year fail to satisfy
all of the tests set forth in subparagraphs (1), (2) and (3) of this paragraph,
the adjustments prescribed in subparagraph (e)(3) shall be made.
(1) The "average deferral percentage" (as defined in
subparagraph (d)(1)) for the group consisting of highly
compensated Employees for the Plan Year does not exceed
the product of the average deferral percentage for the
group consisting of all non-highly compensated Employees
for the immediately preceding Plan Year and 1.25.
26 Intersil Retirement Plan (Non-Union)
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Miscellaneous Provisions
(2) The average contribution percentage (as defined in
subparagraph (d)(2)) for the group consisting of highly
compensated Employees for the Plan Year does not exceed
the product of the average contribution percentage for
the group consisting of all non-highly compensated
Employees for the immediately preceding Plan Year and
1.25.
(3) The sum of the average deferral percentage (as
determined under subparagraph (d)(1) after making the
adjustments required by subparagraph (e)(1) for the Plan
Year) and the average contribution percentage (as
determined under subparagraph (d)(2) after making the
adjustments required by subparagraph (e)(2) for the Plan
Year) for the group consisting of highly compensated
Employees for the Plan Year does not exceed the
"aggregate limit" (as defined in subparagraph (d)(3))
for such Plan Year.
(d) Definitions and Special Rules. For purposes of this Section:
(1) The "average deferral percentage"
(i) for the group of highly compensated Employees for
a Plan Year shall be the average of the ratios,
calculated separately for each Employee in such
group to the nearest one-hundredth of one percent,
of the Pre-Tax Contributions made for the benefit
of such Employee to the total
27 Intersil Retirement Plan (Non-Union)
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Miscellaneous Provisions
compensation for such Plan Year paid to such
Employee, and
(ii) for the group of non-highly compensated Employees
for the immediately preceding Plan Year shall be
the average of the ratios, calculated separately
for each Employee in such group to the nearest
one-hundredth of one percent, of the Pre-Tax
Contributions made for the benefit of such
Employee for the immediately preceding Plan Year
to the total compensation for the immediately
preceding Plan Year paid to such Employee.
(2) The "average contribution percentage"
(i) for the group of highly compensated Employees for
a Plan Year shall be the average of the ratios,
calculated separately for each Employee in such
group to the nearest one-hundredth of one percent,
of the Matching Contributions, the After-Tax
Contributions and, in the Retirement Committee's
sole discretion, to the extent permitted under
rules prescribed by the Secretary of the U.S.
Treasury Department or otherwise under the law,
the Pre-Tax Contributions made during such year
for the benefit of such Employee to such
Employee's compensation for such Plan Year, and
28 Intersil Retirement Plan (Non-Union)
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Miscellaneous Provisions
(ii) for the group of non-highly compensated Employees
for the immediately preceding Plan Year shall be
the average of the ratios, calculated separately
for each Employee in such group to the nearest
one-hundredth of one percent, of the Employer
matching contributions, After-Tax Contributions
and, in the Retirement Committee's sole
discretion, to the extent permitted under rules
prescribed by the Secretary of the U.S. Treasury
Department or otherwise under the law, the Pre-Tax
Contributions made during the immediately
preceding Plan Year for the benefit of such
Employee to such Employee's compensation for the
immediately preceding Plan Year.
(3) The "aggregate limit" shall equal the greater of
(A) the sum of (i) 1.25 times the greater of the
average deferral percentage or the average
contribution percentage for the immediately
preceding Plan Year for the group consisting of
non-highly compensated Employees for such
immediately preceding Plan Year, plus (ii) the
lesser of (a) the sum of two percentage points and
the lesser of the average deferral percentage or
the average contribution percentage for the
immediately preceding Plan Year for the group
consisting of all non-highly compensated Employees
for such immediately preceding Plan Year, and (b)
200% of
29 Intersil Retirement Plan (Non-Union)
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Miscellaneous Provisions
the lesser of the average deferral percentage or
the average contribution percentage for the
immediately preceding Plan Year for the group
consisting of all non-highly compensated Employees
for such immediately preceding Plan Year and
(B) the sum of (i) 1.25 times the lesser of the
average deferral percentage or the average
contribution percentage for the immediately
preceding Plan Year for the group consisting of
all non-highly compensated Employees for such
immediately preceding Plan Year, plus (ii) the
lesser of (a) the sum of two percentage points
plus the greater of the average deferral
percentage or the average contribution percentage
for the immediately preceding Plan Year for the
group consisting of all non-highly compensated
Employees for such immediately preceding Plan
Year, and (b) 200% of the greater of the average
deferral percentage and the average contribution
percentage for the immediately preceding Plan Year
for the group consisting of all non-highly
compensated Employees for such immediately
preceding Plan Year;
(4) "highly compensated Employee" shall mean any Employee
who has become a Participant who performs services in
the determination year and is in one or more of the
following groups:
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Miscellaneous Provisions
(i) Employees who were five percent owners (as
determined in section 416(i)(1)(A)(iii) of the Code) at
any time during the determination year or the look-back
year, or (ii) Employees with compensation greater than
$80,000 (adjusted for increases in the cost of living as
set forth in section 415(d) of the Code) during the
look-back year and who were in the top-paid group during
the look-back year. Any former Employee who had a
separation year prior to the determination year and was
a highly compensated Employee as described in any of
clauses (i) and (ii) above for either (A) his separation
year or (B) any determination year ending on or after
this attainment of age 55 shall be considered a "highly
compensated Employee". For purposes of determining
whether a person is a highly compensated Employee of an
Employer with respect to a Plan Year, the term
"determination year" means the Plan Year for which the
determination is being made; the term "look-back year"
means the twelve-month period immediately preceding the
determination year; the term "top-paid group" means the
top 20% of employees of the Employer ranked on the basis
of compensation received during the year (provided,
however, that when determining the number of employees
in such group, employees described in section 414(9)(8)
of the Code, to the extent required by Q&A 9(b) of U.S.
Treasury Regulation Section 1.414(q)-1T or subsequent
final regulations, are excluded); "compensation"
31 Intersil Retirement Plan (Non-Union)
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Miscellaneous Provisions
means compensation within the meaning of section
415(c)(3) of the Code, including elective or salary
reduction contributions to a cafeteria plan, cash or
deferred arrangement or tax-sheltered annuity; employers
aggregated under section 414(b), (c), (m) or (o) of the
Code are treated as a single employer; and "separation
year" means the determination year the Employee
separates from service with the applicable Employer.
(5) "non-highly compensated Employee" shall mean any
Employee who has become a Participant who performs
services in the determination year (as defined in
subparagraph (4) of this paragraph) and is not a highly
compensated Employee.
(6) "compensation" shall have the meaning set forth in
section 414(s) of the Code or, in the discretion of the
Retirement Committee, any other meaning in accordance
with the Code for these purposes;
(7) if the Plan and one or more other plans of an Employer
or any of its affiliates to which pre-tax contributions,
matching contributions or employee contributions (as
such terms are defined for purposes of section 401(m) of
the Code), or qualified nonelective contributions (as
such term is defined in section 401(m)(4)(C) of the
Code), are made are treated as one plan for purposes of
section 4 10(b) of the Code, such plans shall be treated
as one plan for purposes of this Section. If a highly
compensated Employee
32 Intersil Retirement Plan (Non-Union)
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Miscellaneous Provisions
participates in the Plan and one or more other plans of
his employer or any of its affiliates to which any such
contributions are made, all such contributions shall be
aggregated for purposes of this Section.
(e) Adjustments to comply with limits. (1) Adjustments to comply
with section 401(k)(3) of the Code. The Retirement Committee shall cause to be
made such periodic computations as it shall deem necessary or appropriate to
determine whether either of the tests set forth in subparagraph (a)(1) or (a)(2)
will be satisfied during a Plan Year and, if it appears to the Retirement
Committee that neither of such tests will be satisfied, the Retirement Committee
shall take such steps as it deems necessary or appropriate to adjust the Pre-Tax
Contributions made for all or a portion of the remainder of such Plan Year on
behalf of each Participant who is a highly compensated Employee to the extent it
deems necessary in order for one of such tests to be satisfied. If after the end
of a Plan Year it is determined that regardless of any such steps taken neither
of the tests set forth in subparagraph (a)(1) or (a)(2) will be satisfied with
respect to such Plan Year, the Retirement Committee shall calculate a total
amount by which Pre-Tax Contributions must be reduced in order to satisfy either
such test, in the manner prescribed by section 401(k)(8)(B) of the Code (the
"excess contributions amount"). The amount of Pre-Tax Contributions to be
reduced for each Participant who is a highly compensated Employee shall be
determined by first reducing the Pre-Tax Contributions of each Participant whose
actual dollar amount of Pre-Tax Contributions for such Plan Year is the highest
until such reduced dollar amount equals the next highest actual dollar amount of
Pre-Tax Contributions made for such Plan Year on behalf of any highly
compensated Participant or until the total reduction equals the excess
contributions amount. If further reductions are necessary, then such
contributions on
33 Intersil Retirement Plan (Non-Union)
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Miscellaneous Provisions
behalf of each Participant who is a highly compensated Employee and whose actual
dollar amount of Pre-Tax Contributions made for such Plan Year is the highest
(determined after the reduction described in the previous sentence) shall be
reduced in accordance with the previous sentence. Such reductions shall continue
to be made to the extent necessary so that the total reduction equals the excess
contributions amount. The amount by which Pre-Tax Contributions are to be
reduced in accordance with this paragraph (e) shall be deemed to be After-Tax
Contributions and any Matching Pre-Tax Contributions made with respect to such
Pre-Tax Contributions shall be deemed to be After-Tax Matching Contributions.
The amount by which a Participant's Pre-Tax Contributions are reduced in
accordance with this paragraph (e) shall be reduced by any Pre-Tax Contributions
previously distributed to such Participant pursuant to Section 4.2 for such Plan
Year. The amount of any income allocable to any such reductions shall be
determined pursuant to final regulations promulgated by the U.S. Treasury
Department. The unadjusted amount of any reductions distributed shall be treated
as "annual additions" for purposes of Section 4.4.
(2) Adjustments to comply with section 401(m) of the Code.
The Retirement Committee shall cause to be made such
periodic computations as it shall deem necessary or
appropriate to determine whether either of the tests set
forth in subparagraph (b)(1) or (b)(2) will be satisfied
during a Plan Year with respect to the Plan, and if it
appears to the Retirement Committee that neither of such
tests will be satisfied, the Retirement Committee shall
take such steps as it deems necessary or appropriate to
adjust the Matching Contributions and the After-Tax
Contributions made for
34 Intersil Retirement Plan (Non-Union)
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Miscellaneous Provisions
all or a portion of the remainder of such Plan Year on
behalf of each Participant who is a highly compensated
Employee to the extent necessary in order for one of
such tests to be satisfied. If after the end of a Plan
Year it is determined that regardless of any steps taken
neither of the tests set forth in subparagraph (b)(1) or
(b)(2) will be satisfied with respect to such Plan Year,
the Retirement Committee shall calculate the maximum
contribution percentage permissible for Participants who
are highly compensated Employees under the tests set
forth in subparagraphs (b)(1) and (b)(2) and reduce the
Matching Contributions and After-Tax Contributions made
on behalf of each Participant who is a highly
compensated Employee and whose actual dollar amount of
Matching Contributions and After-Tax Contributions for
such Plan Year is the highest in the same manner
described in subparagraph (1) of this paragraph to the
extent necessary to comply with subparagraph (b)(1) or
(b)(2). The reduction described in the foregoing
sentence shall be made first with respect to a
Participant's After-Tax Contributions in excess of six
percent of Compensation, second with respect to any
remaining After-Tax Contributions and any Matching
After-Tax Contributions attributable thereto, third with
respect to any Matching Pre-Tax Contributions. The
Retirement Committee shall distribute (or transfer to
the SERP in accordance with a timely election filed by
35 Intersil Retirement Plan (Non-Union)
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Miscellaneous Provisions
the Participant) no later than the last day of the
subsequent Plan Year to each such Participant the amount
of such reductions made with respect to vested Matching
Contributions and After-Tax Contributions plus any
income allocable thereto to which such Participant would
be entitled under the Plan if such Participant had
terminated service on the last day of the Plan Year for
which such contributions are made (or earlier if such
Participant actually terminates service at any earlier
date), and any remaining amount of such reductions plus
any income allocable thereto shall be forfeited and used
to reduce contributions in accordance with Section 3.10.
The amount of any such income allocable to any such
reductions to be so distributed or forfeited shall be
determined pursuant to final regulations promulgated by
the U.S. Treasury Department.
(3) Adjustments to comply with the aggregate limit. If after
making the adjustments required by subparagraphs (1) and
(2) of this paragraph for a Plan Year the Retirement
Committee determines that the sum of the average
deferral percentage and the average contribution
percentage for the group consisting of Participants who
are highly compensated Employees exceeds the aggregate
limit for such Plan Year, the Retirement Committee shall
no later than the last day of the subsequent Plan Year
reduce (i) first the After-Tax Contributions made for
such Plan Year on behalf of
36 Intersil Retirement Plan (Non-Union)
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Miscellaneous Provisions
each Participant who is a highly compensated Employee
and any corresponding Matching Contributions and (ii)
second, the Pre-Tax Contributions made for such Plan
Year on behalf of each Participant who is a highly
compensated Employee and any corresponding Matching
Contributions to the extent necessary to eliminate such
excess. Such reduction shall be effected in the same
manner described in subparagraphs (1) and (2), as
applicable, of this paragraph (e).
4.4. Limitations on Annual Additions.
(a) The Defined Contribution Limit. The "annual addition," as
defined herein, for any Plan Year to a Participant's accounts in all defined
contribution plans maintained by the Employers or Affiliates shall not exceed
the lesser of (1) twenty-five percent (25%) of the Participant's Compensation
for the Plan Year, and (2) $30,000 (as adjusted in accordance with section
415(d) of the Code). The term "annual additions" means the sum of all
contributions and forfeitures allocated to a Participant's accounts (other than
a rollover account).
(b) The Combined Limit. If the Participant also has participated in
a defined benefit plan maintained by an Employer or an Affiliate, then the
limitations of section 415(e) of the Code shall apply with respect to Plan Years
beginning prior to January 1, 2000. If such limitations are exceeded in any such
Plan Year, then the benefits under such defined benefit plan maintained by the
Employer or Affiliate shall be reduced before the annual additions to the Plan
are reduced.
37 Intersil Retirement Plan (Non-Union)
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Miscellaneous Provisions
(c) Reduction of Contributions. If the Retirement Committee
determines at any time that the annual addition to any Participant's Accounts
exceeds the limitation described in paragraph (a) or (b) (or both) for any Plan
Year, then the contributions on behalf of the Participant shall be reduced, to
the extent necessary, in the following order:
(1) Pre-Tax Contributions in excess of six percent (6%) of
the Participant's Compensation;
(2) Remaining Pre-Tax Contributions and Matching Pre-Tax
Contributions attributable thereto on a pro rata basis;
(3) Profit-Sharing Contributions;
(4) After-Tax Contributions in excess of six percent (6%) of
the Participant's Compensation;
(5) Remaining After-Tax Contributions and Matching After-Tax
Contributions attributable thereto on a pro rata basis.
After-Tax Contributions, Pre-Tax Contributions and Profit-Sharing
Contributions, each as adjusted for gains, shall be returned to the Participant
(or in the case of an eligible Participant who has filed an election as
described in clause (ii) of Section 3.3(b), such Pre-Tax Contributions and
Profit-Sharing Contributions shall be transferred to the SERP). Matching
Contributions, as adjusted for gains, to the extent allowable shall be held in a
suspense account and allocated to the accounts of such Participant in the next
Plan Year, provided, however, that if the Participant is not covered by the Plan
in the next Plan Year, the amount shall be allocated to the remaining
Participants in the Plan who are employed by such Participant's Employer.
38 Intersil Retirement Plan (Non-Union)
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Miscellaneous Provisions
(d) Limits on Limits. The limits stated on this Article IV shall
apply only to the extent required under the Code. Except as otherwise
specifically provided in this Section 4.4, all of the requirements of section
415 of the Code, and limitations thereon, are incorporated herein by reference.
39 Intersil Retirement Plan (Non-Union)
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Miscellaneous Provisions
ARTICLE V
VESTING AND FORFEITURES
5.1. In General. A Participant shall have a fully vested interest at all
times in his Pre-Tax Account, After-Tax Account, Harris Stock Pre-Tax Account,
Harris Stock After-Tax Account and Savings Account (other than the portion of
such accounts attributable to matching contributions made after October 1, 1984)
and Rollover Account.
5.2. Vesting on Retirement, Death or Disability. A Participant shall have
a fully vested interest in his Profit Sharing Account, Matching Account, Harris
Stock Matching Account, and portion of his Savings Account attributable to
matching contributions made after October 1, 1984, on termination of his
employment with the Employers in the event of the Participant's:
(a) retirement on or after Early Retirement Age;
(b) retirement on or after the effective date of the Participant's
Disability; or
(c) death.
5.3. Vesting on Other Termination of Employment.
(a) Vesting Schedule. A Participant who terminates employment other
than on the occurrence of one of the events described in Section 5.2 shall have
a vested interest in his Profit-Sharing Account, Matching Account, Harris Stock
Matching Account and the portion of his Savings Account attributable to matching
contributions made after October 1, 1984 based upon his Period of Service in
accordance with the following schedule:
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Miscellaneous Provisions
Period of Service Vested Percentage
----------------- -----------------
Less than 3 years 0%
3 years but less than 4 years 30%
4 years but less than 5 years 40%
5 years but less than 6 years 60%
6 years but less than 7 years 80%
7 years or more 100%
(b) Vesting on Sale of Business. In the event of the sale or
disposition of a business or a sale of substantially all of the assets of a
trade or business, the Corporation may, in its discretion, provide for
accelerated vesting with respect to those Participants affected by the sale.
5.4. Effect of In-Service Withdrawals on a Participant's Vested
Percentage. If a Participant receives a withdrawal under Article IX or a
distribution under Article VII from his Profit-Sharing Account at a time when
the Participant has less than a fully vested interest in that account, the
dollar amount of his vested interest in his Profit Sharing Account (X) shall be
determined at any subsequent time by the following formula:
X = P(AB + D) - D
For the purpose of applying the formula, P is the percentage of the
Participant's interest in his Profit-Sharing Account that is vested at the time
the determination is made, AB is the balance credited to the Profit-Sharing
Account at the time the determination is made, and D is the amount of the
withdrawal.
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Miscellaneous Provisions
5.5. Forfeitures. If upon a Participant's termination of employment with
the Employers the Participant is not fully vested in the balance of his or her
Profit Sharing Account, Pre-Tax Matching Account and After-Tax Matching Account,
then the difference between the value of each such Account and the amount
distributable with respect thereto shall be charged to such Account and
forfeited. Such forfeiture shall occur as of the Valuation Date coinciding with
or next following the earlier of (i) the date the Participant takes a
distribution of his or her vested interest in such Account and (ii) the date as
of which the Participant incurs five consecutive one-year Periods of Severance.
For purposes of the preceding sentence, a Participant who does not have a vested
interest in his or her Profit Sharing Account, Pre-Tax Matching Account or
After-Tax Matching Account (or all such Accounts) shall be deemed to have
received a distribution of such Account as of the date of such Participant's
termination of employment with the Employers. If such Participant is reemployed
by an Employer prior to incurring five consecutive one-year Periods of
Severance, such forfeiture shall be reinstated by the Employer with which the
Participant is reemployed.
42 Intersil Retirement Plan (Non-Union)
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Miscellaneous Provisions
ARTICLE VI
ACCOUNTS AND INVESTMENTS
6.1. Establishment of Accounts. The Retirement Committee shall establish
and maintain for each Participant the following Accounts showing the
Participant's interest under the Plan:
(a) Profit-Sharing Account, which shall consist of the following two
subaccounts:
(1) a Basic Account to record the portion of Profit-Sharing
Contributions allocable to the Participant's
Compensation and the earnings and losses thereon; and
(2) a Supplemental Account to record the portion of
Profit-Sharing Contributions allocable to the
Participant's Excess Compensation.
In the case of a Participant who became a Participant on the Effective Date, the
Participant's Profit Sharing Account shall also include any amount transferred
to the Plan from the Predecessor Plan that was credited to the Participant's
profit sharing account thereunder immediately prior to such transfer.
(b) Pre-Tax Account to record (i) Pre-Tax Contributions made on the
Participant's behalf and the earnings and losses Participant who became a
Participant on the Effective (i) Pre-Tax Contributions made thereon. In the case
of a Date, such Account shall also include any amount transferred to the Plan
from the Predecessor Plan that was credited to the Participant's pre-tax account
thereunder immediately prior to such transfer.
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Miscellaneous Provisions
(c) After-Tax Account to record the After-Tax Contributions made on
the Participant's behalf and the earnings or losses thereon. In the case of a
Participant who became a Participant on the Effective Date, such Account shall
also include any amount transferred to the Plan from the Predecessor Plan that
was credited to the Participant's after-tax account thereunder immediately prior
to such transfer.
(d) Matching Account to record the Matching Pre-Tax Contributions
and Matching After-Tax Contributions made on the Participant's behalf and the
earnings and losses thereon. In the case of a Participant who became a
Participant on the Effective Date, such Account shall also include any amount
transferred to the Plan from the Predecessor Plan that was credited to the
Participant's matching pre-tax account and matching after-tax account thereunder
immediately prior to such transfer.
(e) In the case of a Participant who became a Participant on the
Effective Date, a Savings Account to record any amount transferred to the Plan
from the Predecessor Plan that was credited to the Participant's savings account
thereunder immediately prior to such transfer.
(f) In the case of a Participant who became a Participant on the
Effective Date, a Harris Stock Pre-Tax Account to record any amount transferred
to the Plan from the Predecessor Plan that was credited to the Participant's
Harris stock pre-tax account thereunder immediately prior to such transfer.
(g) In the case of a Participant who became a Participant on the
Effective Date, a Harris Stock After-Tax Account to record any amount
transferred to the Plan from the
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Miscellaneous Provisions
Predecessor Plan that was credited to the Participant's Harris stock after-tax
account thereunder immediately prior to such transfer.
(h) In the case of a Participant who became a Participant on the
Effective Date, a Harris Stock Matching Account to record any amount transferred
to the Plan from the Predecessor Plan that was credited to the Participant's
Harris stock matching account thereunder immediately prior to such transfer.
(i) Rollover Account to reflect the Participant's Rollover
contributions and the earnings and losses thereon. In the case of a Participant
who became a Participant on the Effective Date, such Account shall also include
any amount transferred to the Plan from the Predecessor Plan that was credited
to the Participant's rollover account thereunder immediately prior to such
transfer.
6.2. Investment of Accounts. Subject to Section 6.4, each Participant
shall have the right to direct the investment of the current balances of his
Accounts and future contributions to his Accounts among the Investment Funds in
accordance with the following procedures and such additional procedures as may
be established from time to time by the Retirement Committee.
(a) Election Procedures. Each election shall be made by filing the
appropriate form or by following the appropriate telephonic or electronic
procedures in the time and manner established by the Retirement Committee in its
absolute discretion.
(b) Elections in 1% Increments for Current Balances. A Participant's
election with respect to his current Account balances shall be made in
increments of one percent (1%) (or such larger percentage as determined by the
Retirement Committee) of the Account balances;
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Miscellaneous Provisions
(c) Elections in 1% Increments for Future Contributions. A
Participant's election with respect to future contributions shall be made in
increments of one percent (1%) (or such larger percentage as determined by the
Retirement Committee) of such contributions;
(d) Changing Elections. A Participant may change his investment
elections by filing the appropriate form or by following the appropriate
telephonic or electronic procedures established by the Retirement Committee and
subject to the following rules:
(i) An investment election with respect to future
contributions shall be effective as of the first payroll
period commencing immediately after the date of the
election, provided that the election change is made
before the deadline established from time to time by the
Retirement Committee, or such later date as may be
administratively practicable. If more than one election
change is made with respect to a payroll period, the
most recent election change made prior to the applicable
deadline shall be given effect with respect to such
payroll period.
(ii) An investment election with respect to a Participant's
current Account balances which is made on a Valuation
Date shall be effective on the immediately following
Valuation Date (or as soon as practicable thereafter
with respect to transfers out of the Harris Stock Fund),
provided that the election change is made before the
deadline established from time to time by the Retirement
Committee. An investment election change (i) made on a
day that is not a Valuation Date or (ii) made on a
Valuation Date after the applicable deadline shall
become effective on the second Valuation Date occurring
after the date such change is made (or as soon as
practicable thereafter with respect to transfers out of
the Harris Stock Fund). If more than one election change
in respect of a Valuation Date is made before the
applicable deadline, the last such election change shall
be given effect with respect to such Valuation Date.
(e) Elections Apply to All Accounts. Subject to Section 6.4, each of
the Participant's Accounts shall be invested among the Investment Funds in the
same manner, such that each election by a Participant with respect to the
Investment Funds shall apply to all of his Accounts in the same proportion.
46 Intersil Retirement Plan (Non-Union)
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Miscellaneous Provisions
(f) Investment of Accounts Absent Election. In the event a
Participant fails to make a required investment election with respect to his
current Account balances or future contributions, such Account balances or
future contributions shall be invested in an Investment Fund designated by the
Retirement Committee until the Participant makes a valid investment election
pursuant to this Section 6.2.
6.3. Allocation of Earnings and Losses. In determining a Participant's
share of the earnings or losses of each of the Investment Funds as of any
Valuation Date, the total earnings or losses of the particular Investment Fund
since the immediately preceding Valuation Date, net of expenses allocable to
such fund, shall be allocated among the Participants' Accounts invested in the
fund on such Valuation Date based on the ratio of each Participant's Accounts to
the aggregate of the Accounts of all Participants, before taking into account
any contributions that are required to be but are not yet made as of the
Valuation Date and before taking into account any distributions, withdrawals or
loans to Participants made as of the Valuation Date. Contributions to an Account
are not credited with earnings for the Valuation Date on which the contributions
are credited to the Account.
6.4. Special Rules Concerning Harris Stock Fund. Notwithstanding any
provision of Section 6.2 to the contrary, the rules set forth in this Section
shall apply to investments in the Harris Stock Fund.
(a) Availability. Pre-Tax Contributions, After-Tax Contributions,
Matching Contributions, Profit Sharing Contributions and Rollover Contributions
may not be invested in the Harris Stock Fund.
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Miscellaneous Provisions
(b) Restrictions on Transfers. A Participant may not transfer any
portion of his Accounts which are invested in other Investment Funds to the
Harris Stock Fund. A Participant may transfer all or a portion of his Accounts
which are invested in the Harris Stock Fund to any other Investment Fund in one
percent (1%) increments in accordance with procedures established by the
Retirement Committee.
(c) Dividends. A Participant's allocable share of cash dividends
(and other cash earnings) credited to the Harris Stock Fund will be reinvested
as soon as administratively practicable among the Investment Funds other than
the Harris Stock Fund in the same proportion that the investment of the
Participant's future contributions is made pursuant to Section 6.2. Dividends
paid in the form of stock shall be liquidated and reinvested in accordance with
this paragraph, unless otherwise determined by Retirement Committee.
(d) Distributions. Distributions from the Harris Stock Fund shall be
in the form of cash or shares of stock of the Predecessor Company at the
election of the Participant. Fractional shares and distributions of a de minimis
amount as determined by the Retirement Committee shall be paid in cash.
(e) Voting. The Trustee will vote the shares in the Harris Stock
Fund in accordance with instructions from the Retirement Committee.
48 Intersil Retirement Plan (Non-Union)
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Miscellaneous Provisions
ARTICLE VII
DISTRIBUTIONS
7.1. In General. A Participant shall be entitled to receive a distribution
of the vested interest in his Accounts on the earlier of the Participant's (i)
termination of employment and (ii) attainment of age 59 1/2, except that his
Pre-Tax Contributions and Matching Pre-Tax Contributions are distributable only
to the extent that a distribution of such Pre-Tax Contributions is permissible
under section 401(k) of the Code. A termination of employment shall not be
deemed to occur for purposes of this Section 7.1 and Section 7.2 until the
Participant is no longer employed by an Employer. A Participant may elect, in
accordance with procedures established by the Retirement Committee, to receive
the sum of the vested balances of his Accounts, if any, that are invested in the
Harris Stock Fund either in (a) cash, or (b) in shares of common stock of the
Predecessor Company; provided, however, that distributions of fractional shares
and de minimis amounts (as determined by the Retirement Committee) shall be made
in cash.
7.2. Small Benefit Cash-out. Except as provided in Section 7.5, in any
case in which a Participant's vested interest in his Accounts does not exceed
$5,000 (or such larger amount as may be permitted by law), the vested interest
shall be paid to the Participant in a lump sum as of the later of (a) the end of
the calendar quarter in which such vested interest does not exceed $5,000 and
(b) the end of the calendar quarter following his termination of employment with
the Employers, or such other date as may be administratively practicable. For
this purpose, if at the time of commencement of distribution of any
Participant's vested interest in the form of scheduled periodic payments, the
value of the Participant's vested interest exceeded $5,000, then
49 Intersil Retirement Plan (Non-Union)
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Miscellaneous Provisions
at the time of any subsequent scheduled periodic payment such vested interest
will, to the extent required by law, be deemed to exceed $5,000.
7.3. Form of Payment.
(a) Options. In any case in which a Participant's vested interest in
his Accounts exceeds the amount provided in Section 7.2, the Participant (or in
the event of death, his Beneficiary) entitled to receive a distribution may
elect at any time to receive payment of his vested interest in:
(1) an amount not greater than the vested balance of the
Participant's Accounts; provided, however, that only one
such payment may be made in any single month;
(2) substantially equal periodic installment payments,
payable not less frequently than annually and not more
frequently than monthly, over a period of time to be
elected by the Participant;
(3) a combination of (1) and (2); or
(4) a direct rollover pursuant to Section 7.5.
Changes Allowed. A Participant (or, in the event of death, his
Beneficiary) may change his election with respect to the form of payment at any
time before or after distribution of benefits commences, subject to the
provisions of Section 7.9.
Effect of Failure to Specify an Option. If a Participant fails to file an
election under this Section 7.3, then his benefits shall be paid in accordance
with Section 7.4.
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Miscellaneous Provisions
7.4. Time of Payment. Except as provided in Section 7.2, upon a
Participant's termination of employment with the Employers, the Participant may
elect that payment of his vested interest begin as soon as administratively
practicable or at any other time permitted under the Plan. If a Participant
fails to file an election under this Section 7.4 and payment of benefits has not
already commenced, payment of his benefits shall commence in accordance with the
provisions of Section 7.9.
7.5. Direct Rollover.
(a) A Participant or "distributee" may elect at any time to have any
portion of an "eligible rollover distribution" paid in a direct rollover to the
trustee or custodian of an "eligible retirement plan" specified by the
Participant or distributee, whichever is applicable. Payment of a direct
rollover in the form of a check payable to the trustee or custodian of an
eligible retirement plan, for the benefit of the Participant or distributee, may
be mailed to the Participant or distributee, at the discretion of the Retirement
Committee.
(b) For purposes of this Section 7.5, the following terms shall have
the following meanings:
(1) "distributee" means a surviving spouse, or a spouse or
former spouse who is an alternate payee under a
qualified domestic relations order defined in section
4.l4.(p) of the Code.
(2) "eligible retirement plan" means an individual
retirement account described in section 408(a) of the
Code, an individual retirement annuity described in
section 408(b) of the Code, an annuity plan
51 Intersil Retirement Plan (Non-Union)
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Miscellaneous Provisions
described in section 403(a) of the Code, or a qualified
trust described in section 401(a) of the Code that
accepts an eligible rollover distribution.
(3) "eligible rollover distribution" means any distribution
of all or a portion of the Participant's Accounts, other
than the portion of his After-Tax Account and Harris
Stock After-Tax Account attributable to After-Tax
Contributions, but does not include a distribution (i)
in installments over a period of ten years or more or
over a period described in Section 7.9(c), (ii) to the
extent the distribution is required under section
401(a)(9) of the Code or (iii) a withdrawal from a
Participant's Pre-Tax Account pursuant to Section 9.2.
7.6. Payments on Death. If a Participant dies before he has received the
full amount of the vested interest in his Accounts, then the unpaid amount shall
be paid to his Beneficiary. If the unpaid amount does not exceed $5,000 (or such
larger amount as permitted under Section 7.2), it shall be paid to the
Beneficiary as of the end of the calendar quarter following the Participant's
death or such later date as may be administratively practicable. If the unpaid
amount exceeds $5,000 (or such larger amount as may be permitted under Section
7.2), it shall be paid to the Beneficiary as provided in Sections 7.3 and 7.4
and, if the Beneficiary is the spouse, Section 7.5, provided that, if the
Beneficiary fails to file an election, the unpaid amount shall be paid in a lump
sum not later than the fifth anniversary of the Participant's death.
52 Intersil Retirement Plan (Non-Union)
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Miscellaneous Provisions
7.7. Benefit Amount and Withholding.
(a) Vested Amount and Adjustments. For purposes of this Article VII,
a Participant's vested interest in his Accounts shall be determined as of the
Valuation Date coinciding with or immediately preceding the date on which a
Participant's distribution is processed, and shall take into account any
Profit-Sharing Contribution to which the Participant may be entitled under
Section 3.2 that has not yet been credited to the Participant's Profit-Sharing
Account. Any unpaid amount in the Participant's Accounts following a
distribution shall continue to be adjusted for earnings and losses as provided
in Section 6.3 until the Valuation Date coinciding with or immediately preceding
the date on which a distribution with respect to such amount is processed.
(b) Withholding. The Employer shall have the right to require, prior
to any distribution, payment by the Participant of any Federal, state, local or
other taxes which may be required to be withheld or paid in connection with any
distribution hereunder. The Employer shall have the right to withhold from a
distribution, which would otherwise be distributable to a Participant, any
amount necessary to satisfy any such obligation.
7.8. Order of Distributions. Any distribution under this Plan shall be
charged against the Participant's Accounts pursuant to administrative procedures
designed to maximize the tax benefits to the Participant by distributing to him
first his After-Tax Contributions to the extent permitted by law.
7.9. Statutory Requirements. Notwithstanding any other provisions of the
Plan to the contrary, the following rules shall apply to all payments under the
Plan:
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Miscellaneous Provisions
(a) Latest Commencement Date. Unless the Participant files a written
election to defer payment of benefits, benefits payments with respect to any
Participant shall commence no later than the 60th day after the close of the
Plan Year in which the latest of the following occurs:
(1) the date on which the Participant attains Normal
Retirement Age;
(2) the 10th anniversary of the date on which the
Participant commenced participation in the Plan; and
(3) the date on which the Participant terminated employment.
Failure to file an election under Section 7.4 for payment of benefits to
commence shall be deemed to be a written election to defer payment of benefits
under this paragraph (a).
(b) Required Beginning Date. Notwithstanding paragraph (a) above,
payment of benefits to a Participant shall commence no later than April 1 of the
calendar year following the calendar year in which the Participant attains age
70 1/2 or (if the Participant is not a "5-percent owner" under section 4 16(i)
of the Code) the Participant's termination of employment with the Employers, if
later.
(c) Maximum Duration of Distributions. Payment of a Participant's
benefit pursuant to paragraph (b) shall be made over a period not to exceed one
of the following periods:
(1) the life of the Participant;
(2) the life of the Participant and the Participant's
Beneficiary;
54 Intersil Retirement Plan (Non-Union)
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Miscellaneous Provisions
(3) a period certain not extending beyond the life
expectancy of the Participant; or
(4) a period certain not extending beyond the joint and last
survivor expectancy of the Participant and his
Beneficiary.
The amount to be distributed each year must be at least equal to the
quotient obtained by dividing the Participant's benefit by the life expectancy
of the Participant or the joint and last survivor expectancy of the Participant
and his Beneficiary. Life expectancy and joint and last survivor expectancy
shall be computed by the use of the return multiples contained in U.S. Treasury
Regulation Section 1.72-9. For purposes of this computation, a Participant's and
a spouse's life expectancy may be recalculated annually; however, the life
expectancy of a Beneficiary, other than the Participant's spouse, may not be
recalculated. If the Participant's spouse is not the Beneficiary, the method of
distribution selected must ensure that at least 50 percent of the present value
of the amount available for distribution is paid within the life expectancy of
the Participant.
(d) Distribution after the Participant's Death. In the event a
Participant who is receiving benefits dies, the remaining balance of his
benefits shall be distributed at least as rapidly as under the method of
distribution elected by the Participant. If a Participant dies before
distribution of benefits commences, the Participant's entire interest will be
distributed no later than five years after the Participant's death, except to
the extent that an election is made to receive distributions in accordance with
(1) or (2) below:
(1) if any portion of the Participant's benefit is payable
to a Beneficiary, installment distributions may be made
over the life or
55 Intersil Retirement Plan (Non-Union)
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Miscellaneous Provisions
life expectancy of the Beneficiary, provided that the
installments commence no later than one year after the
Participant's death, and
(2) if the Beneficiary is the Participant's spouse, the
commencement of distributions may be delayed until the
date on which the Participant would have attained age 70
1/2. If the spouse dies before payments begin,
subsequent distribution shall be made as if the spouse
had been the Participant.
For purposes of the foregoing, payments may be calculated by use of the
return multiples specified in U.S. Treasury Regulation Section 1.72-9. The life
expectancy of a spouse or other Beneficiary shall be calculated at the time
payment first commences without subsequent recalculation. Any amount paid to a
child of the Participant shall be treated as if it had been paid to the
surviving spouse if the amount becomes payable to the spouse when the child
reaches the age of majority.
(e) Limit on Limits. All distributions under this Section 7.9 shall
be determined and made in accordance with section 401(a)(9) of the Code,
including the minimum distribution incidental benefit requirement of proposed
U.S. Treasury Regulation Section 1.401(a)(9)-2, the provisions of which are
incorporated herein by reference.
7.10. Designating Beneficiaries.
(a) Written Designation. Each Participant may designate, in the
manner prescribed by the Retirement Committee, a Beneficiary or Beneficiaries to
receive any benefits payable as a result of the death of the Participant. This
designation may be changed by the
56 Intersil Retirement Plan (Non-Union)
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Miscellaneous Provisions
Participant at any time by giving notice to the Retirement Committee in
accordance with rules and procedures established by the Retirement Intersil
Retirement Plan (Non-union) Committee. Any designation of a Beneficiary other
than the Participant's spouse must be consented to by the spouse in writing (or
other method permitted by the Internal Revenue Service) and witnessed by a
notary public. A consent obtained pursuant to this paragraph (a) from a spouse
of a Participant who subsequently becomes divorced from such spouse and marries
a different spouse shall not be effective with respect to such second spouse.
Spousal consent shall not be required if the Participant establishes to the
satisfaction of a Plan representative that such consent may not be obtained
because (a) there is no spouse; (b)the spouse cannot be located, or (c) there
exists such other circumstances as the Secretary of the U.S. Treasury Department
may prescribe as excusing the requirement for such consent. A Participant may
revoke any prior election without obtaining the consent of the spouse to such
revocation. In the absence of a new election that meets the requirements of this
Section 7.10, the Participant's surviving spouse shall be the Beneficiary.
(b) Death Prior to Designating Beneficiary or Death after Designated
Beneficiary's Death. In the event the Participant dies with no beneficiary
designation on file or after the death of a designated Beneficiary, the
Participant's Beneficiary with respect to the portion of the benefits for which
no Beneficiary has been designated shall be the Participant's surviving spouse,
if any, and if there is no surviving spouse, the Participant's estate.
(c) Successor Beneficiaries. A Beneficiary who has been designated
in accordance with Section 7.10(a) may name a successor beneficiary or
beneficiaries in accordance with procedures established by the Retirement
Committee. If the designated Beneficiary dies after the Participant and before
the entire amount of the Participant's benefit under the Plan in which the
designated Beneficiary has an interest has been distributed, then any
57 Intersil Retirement Plan (Non-Union)
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Miscellaneous Provisions
remaining amount shall be distributed, as soon as practicable after the death of
such designated Beneficiary, in the form of a single sum payment to the
successor beneficiary or if there is no such successor beneficiary, to the
Beneficiary's estate.
7.11. Inability to Locate Participant. If, at any time after a
Participant's benefit becomes payable, a check or other instrument in payment of
such benefit is returned unclaimed or the Retirement Committee is otherwise
unable to locate the individual to whom a payment is due, then all payments to
such individual shall be discontinued. If, after exercising reasonable
diligence, the Retirement Committee is unable to locate such individual, the
portion of the Participant's benefit payable to such individual shall be
forfeited, provided, however, that if such individual subsequently makes a claim
for benefits, then the forfeited amount shall be reinstated to the extent
required by law by the Employer that last employed the Participant.
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Miscellaneous Provisions
ARTICLE VIII
LOANS
8.1. In General, Loans to Participants.
(a) Making of Loans. Subject to the restrictions set forth in this
Section, the Retirement Committee shall establish a loan program whereby any
Participant who is an Employee may request pursuant to procedures established by
the Retirement Committee, to borrow funds from the Plan. The principal balance
of such loan shall be not less than $500 and shall not exceed the lesser of (1)
50 percent (50%) of the aggregate of the Participant's vested account balances
as of the Valuation Date coinciding with or immediately preceding the day on
which the loan is made, and (2) $50,000, reduced by the excess, if any, of the
highest outstanding loan balance of the Participant under all plans maintained
by the Employer during the period of time beginning one year and one day prior
to the date such loan is to be made and ending on the date such loan is to be
made over the outstanding balance of loans from all such plans on the date on
which such loan was made.
(b) Restrictions. Amounts equal to any such loan shall be debited
proportionately from each of the Participant's accounts and investment
subaccounts (other than subaccounts invested in the Harris Stock Fund), subject
to any other ordering rules adopted by the Retirement Committee. Each loan
approved by the Retirement Committee shall be subject to the loan program and
only upon the following terms and conditions:
(1) The period for repayment of the loan shall not exceed
five years from the date of the loan; provided, however,
that if the purpose of the loan, as determined by the
Retirement Committee, is to acquire
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Miscellaneous Provisions
any dwelling unit that within a reasonable period of
time is to be used as the principal residence of the
Participant, then such period for repayment may exceed
five years to the extent permitted by the Retirement
Committee.
(2) Each loan shall be secured by an assignment of a portion
of the Participant's vested benefit under the Plan at
least equal to the initial principal amount of such loan
and such other collateral as may be required by the
Retirement Committee.
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Miscellaneous Provisions
ARTICLE IX
IN-SERVICE WITHDRAWALS
9.1. Withdrawals from Savings Account and After-Tax Account. Subject to
Sections 9.3 and 9.4, a Participant may elect to withdraw from the Plan at any
time in a single sum an amount not greater than the balances of his Savings
Account and After-Tax Account in the time and manner prescribed by the
Retirement Committee. The amount withdrawn shall be debited first to his Savings
Account and then to his After-Tax Account. A Participant may make a withdrawal
under this Section 9.1 no more than once in any calendar quarter.
9.2. Withdrawals from Rollover, Pre-Tax and Profit Sharing Accounts.
(a) Availability. Subject to Sections 9.3 and 9.4, a Participant who
has taken all available loans under Article VIII hereof and who has exhausted
his right to withdrawals under Section 9.1 may elect, if he has an immediate and
heavy financial need within the meaning of U.S. Treasury Regulation Section
1.401(k)-1(d)(2)(iv), to withdraw, in the time and manner prescribed by the
Retirement Committee, in a single sum an amount not greater than (i) 100 percent
of his Pre-Tax Contributions, (ii) the entire balance of his Rollover Account,
and (iii) the vested balance of his Profit Sharing Account. A Participant shall
be deemed to have an immediate and heavy financial need if the withdrawal is
requested for any of the following reasons:
(1) to pay expenses for medical care previously incurred by
the Participant, his spouse or any of his dependents or
necessary for these persons to obtain medical care;
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Miscellaneous Provisions
(2) to purchase (excluding mortgage payments) a principal
residence for the Participant;
(3) to pay for tuition and related education fees for the
next 12 months of post-secondary education for the
Participant, his spouse, children or dependents;
(4) to prevent the eviction of the Participant from his
principal residence or a foreclosure on the mortgage of
the Participant's principal residence; or
(5) the occurrence of any other event determined by the
Commissioner of Internal Revenue pursuant to U.S.
Treasury Regulation Section 1.401(k)-l(d)(2)(iv).
A withdrawal to satisfy an immediate and heavy financial need of the
Participant may be made only if:
(i) the withdrawal is not in excess of the amount
required to meet the financial need of the
Participant, including taxes and additions to tax
applicable to such withdrawal, and
(ii) the Participant has obtained all other
distributions, withdrawals, and all nontaxable
loans currently available under the Plan and any
other plans maintained by the Employer and
Affiliates.
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Miscellaneous Provisions
The Participant shall be required (i) to certify to the Retirement Committee in
the manner prescribed by the Retirement Committee both the reason for the
financial need and that such need cannot be satisfied from sources other than a
withdrawal from the Participant's Accounts, and (ii) to submit any additional
supporting documentation as may be requested by the Retirement Committee.
(b) Order of Withdrawals. Withdrawals under this Section 9.2 shall
be withdrawn from a Participant's Accounts in the following order: (i) from the
Participant's Rollover Account, if any; (ii) to the extent that the balance of
the Participant's Rollover Account is not sufficient to satisfy the amount of
the requested withdrawal, from the Participant's Pre-Tax Contributions; and
(iii) to the extent that the Participant's Rollover Account and Pre-Tax
Contributions are not sufficient to satisfy the amount of the requested
withdrawal, from the vested balance of the Participant's Profit Sharing Account.
(c) Limitations. A Participant may take a withdrawal under this
Section 9.2 no more than once in any six-month period.
9.3. Conditions Applicable to All Withdrawals. A Participant shall provide
to the Retirement Committee written notice of his election to make any
withdrawal permitted under this Article IX at least 30 days (or such shorter
period as may be designated by the Retirement Committee) prior to the date as of
which such withdrawal is to be effected. The amount available for withdrawal
under this Article IX shall be reduced by the amount of any outstanding loan
balance under Article VIII hereof, and no withdrawal under this Article IX shall
be permitted to the extent that such withdrawal would cause the aggregate amount
of such outstanding loan balance to exceed the limits described in Section 8.1.
The amount available for withdrawal under this Article IX is also subject to
reduction in the sole discretion of the Retirement Committee to
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Miscellaneous Provisions
take into account the investment experience of the Trust Fund between the date
of the election and the date of the withdrawal.
9.4. Reduction of Investment Fund Balances. The Investment Funds in which
a Participant's Accounts are invested, other than the Harris Stock Fund, shall
be reduced proportionately to reflect the amount of the Participant's
withdrawals under this Article IX.
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Miscellaneous Provisions
ARTICLE X
TOP-HEAVY PROVISIONS
10.1. In General. Notwithstanding any other provisions of the Plan to the
contrary, for any Plan Year in which this Plan is "top-heavy," as defined
herein, the provisions of this Article X shall apply. If the Plan is top-heavy
and then ceases to be top-heavy, except as otherwise provided in Section 10.3,
then the provisions of this Article X shall cease to apply.
10.2. Minimum Allocation.
(a) Amount. For any Plan Year for which the Plan is top-heavy, a
minimum allocation shall be made for each "non-key employee" who is employed by
an Employer on the last day of the Plan Year in an amount equal to the lesser of
(1) three percent (3 %) of Compensation and (2) the largest percentage of
Compensation allocated to any "key employee" during the Plan Year. The minimum
allocation shall be determined without regard to any Social Security
contribution, and without regard to any Pre-Tax Contributions made on behalf of
non-key employees. The minimum allocation shall not apply to any non-key
employee who receives a minimum contribution or minimum benefit under any other
plan of an Employer or Affiliate.
(b) Allocation. To satisfy paragraph (a), the Profit-Sharing
Contributions for such Plan Year first shall be allocated to all Participants
employed on the last day of the Plan Year in an amount that meets the minimum
allocation amount, and any remaining Profit-Sharing Contribution then shall be
allocated in accordance with Section 3.2.
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Miscellaneous Provisions
10.3. Minimum Vesting. For any Plan Year for which the Plan is top-heavy,
the vested interest of a Participant who is employed by an Employer during any
part of the Plan Year shall be determined under the following schedule:
Period of Service Vesting Percentage
----------------- ------------------
Less than 2 years 0%
2 years but less than 3 years 20%
3 years but less than 4 years 40%
4 years but less than 5 years 60%
5 years but less than 6 years 80%
6 years or more 100%
If the Plan becomes top-heavy and later ceases to be top-heavy, a
Participant who has a three-year Period of Service as determined under Section
5.3 may elect to have his vested interest continue to be determined under this
Section 10.3, notwithstanding that the Plan is no longer top-heavy.
10.4. Definitions. For purposes of this Article X, the following terms
shall have the following meanings:
(a) "Determination date" means the last day of the preceding Plan
Year.
(b) "Determination period" means the Plan Year containing the
determinate date and the four preceding Plan Years.
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Miscellaneous Provisions
(c) "Key employee" means an Employee or former Employee (and their
Beneficiaries who, at any time during the determination period, is
(1) an officer of the Employer and has annual compensation
greater than 50 percent of the dollar limitation in
effect under section 415(b)(1)(A) of the Code for any
such Plan Year,
(2) one of the ten Employees having annual compensation in
excess of the limitation in effect under section
415(c)(l)(A) of the Code and owning (or considered as
owning with the meaning of section 318 of the Code) the
largest interests in the Employer,
(3) a five-percent owner (within the meaning of section
416(i)(1)(B) of the Code) of the Employer, or
(4) a one-percent owner of the Employer having annual
compensation from the Employer of more than $150,000.
The determination of "key employee" shall be made under section 416(i)(1)
of the Code, the terms of which are incorporated herein by reference.
(d) "Non-key employee" means any Employee who is not a key employee.
(e) "Permissive aggregation group" means the "required aggregation
group" and any other plans of the Employer which, when considered as a group
with the required aggregation group, would continue to satisfy the requirements
of sections 401(a)(4) and 410 of the Code.
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Miscellaneous Provisions
(f) "Required aggregation group" means (1) each qualified plan of
the Employer in which at least one key employee participates or participated at
any time during the determination period (regardless of whether the plan has
terminated), and (2) any other qualified plan of the Employer which enables a
plan described in (1) to meet the requirements of sections 401(a) and 410 of the
Code.
(g) "Top-heavy" means:
(1) the top-heavy ratio for the Plan exceeds 60 percent and
the Plan is not part of any required aggregation group
or permissive aggregation group;
(2) the Plan is part of a required aggregation group but not
a permissive aggregation group and the top-heavy ratio
for the required aggregation group exceeds 60 percent;
(3) the Plan is part of a required aggregation group and a
permissive aggregation group and the top-heavy ratio for
the permissive aggregation group exceeds 60 percent.
(h) "Top-heavy ratio" means:
(1) if the Employer or an Affiliate has not maintained any
defined benefit plan which during the five-year period
ending on the determination date had accrued benefits,
the top-heavy ratio is a fraction, the numerator of
which is the sum of the account balances of all key
employees as of the determination date (including any
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Miscellaneous Provisions
part of any account balance distributed in the five-year
period ending on the determination date), and the
denominator of which is the sum of all account balances
(including any part of any account balance distributed
in the five-year period ending on the determination
date).
(2) If an Employer or an Affiliate maintains or has
maintained a defined benefit plan which during the
five-year period ending on the determination date had
accrued benefits, the top-heavy ratio is a fraction, the
numerator of which is the sum of account balances under
the defined contributions plans for all key employees
(including any part of any account balance distributed
in the five-year period ending on the determination
date), and the present value of accrued benefits under
the defined benefit plans for all key employees as of
the determination date, and the denominator of which is
the sum of the account balances under the defined
contribution plans for all participants (including any
part of any account balance distributed in the five-year
period ending on the determination date), and the
present value of accrued benefits under the defined
benefit plans for all participants as of the
determination date.
(3) For purposes of (1) and (2) above, the value of account
balances and the present value of accrued benefits shall
be determined as of the last day of the Plan Year that
falls within or ends with the 12-
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Miscellaneous Provisions
month period ending on the determination date, except as
provided in section 416 of the Code for the first and
second plan years of a defined benefit plan. In the case
of a defined benefit plan, the "present value of accrued
benefits" shall be determined under the terms of the
applicable defined benefit plan. The account balances
and accrued benefits of a Participant who is not a key
employee but who was a key employee in a prior year, or
who has not been credited with at least an Hour of
Service with any Employer maintaining the plan at any
time during the five-year period ending on the
determination date shall be disregarded. When
aggregating plans, the value of account balances and
accrued benefits shall be calculated with reference to
the determination dates that fall within the same
calendar year.
(4) The calculation of the top-heavy ratio shall be
determined in accordance with section 416 of the Code,
the provisions of which are incorporated herein by
reference.
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Miscellaneous Provisions
ARTICLE XI
ADMINISTRATION
11.1. Named Fiduciaries. The Retirement Committee shall be a "named
fiduciary" within the meaning of such term as used in ERISA.
11.2. Retirement Committee. The Corporation shall establish a Retirement
Committee to administer the Plan. The members of the Retirement Committee shall
be appointed, and removed at any time, by the board of directors of the
Corporation. Any member of the Retirement Committee may, but need not, be an
employee, director, officer or shareholder of an Employer. A member of the
Retirement Committee may resign at any time by giving written notice to the
Corporation at least 15 days prior to the effective date of the resignation.
Notwithstanding anything contained in this Article, an Employee of the
Corporation who serves on the Retirement Committee shall be deemed to resign
upon the termination of such Employee's employment with the Company. Such deemed
resignation shall be effective as of the date of the termination of employment.
11.3. Powers and Duties of Retirement Committee. The Retirement Committee
shall be the "administrator" of the Plan within the meaning of such term as used
in ERISA and, except for duties specifically vested in the Trustee, shall be
responsible for the administration of the provisions of the Plan. The Retirement
Committee may establish such rules and regulations as it deems necessary to
enable it to administer the Plan. The Retirement Committee shall have the duty
and authority to interpret and construe, in its sole discretion, the terms of
the Plan in regard to all questions of eligibility, the status and rights of
Participants, distributees and other persons under the Plan, and the manner,
time, and amount of payment of any distribution under the Plan.
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Miscellaneous Provisions
The Retirement Committee may allocate its responsibilities among its members and
may designate any other person, partnership, corporation or another committee to
carry out any of its responsibilities with respect to administration of the
Plan. Any such allocation or designation shall be reduced to writing and such
writing shall be kept with the records of the Plan. Any reference in the Plan to
the Retirement Committee shall include any person, partnership, corporation or
committee to which the Retirement Committee has delegated any of its
responsibilities to the extent of such delegation.
11.4. Actions of Retirement Committee. No formal meeting and no minutes
shall be required with respect to actions taken by the Retirement Committee.
11.5. Finality of Decisions. All decisions and directions made by the
Retirement Committee, in the discretionary exercise of its powers and duties,
shall be final and binding on all parties concerned, except that the Retirement
Committee may revoke or modify a decision or direction that it determines to
have been in error.
11.6. Immunities of Retirement Committee. Except as otherwise provided by
law, no member of the Retirement Committee shall be liable to an Employer or to
any Participant or Beneficiary by reason of the Retirement Committee's exercise
in good faith of any power or discretion vested by such committee under the
terms of the Plan.
11.7. Advisers and Agents. The Corporation, or the Retirement Committee,
with the consent of the Corporation, may employ one or more persons to render
advice with respect to any responsibility that the Corporation, or the
Retirement Committee, respectively, has under the Plan. The Corporation, or the
Retirement Committee, may appoint unrelated parties to carry out trustee,
investment management and record-keeping responsibilities with respect to the
Plan.
72 Intersil Retirement Plan (Non-Union)
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Miscellaneous Provisions
11.8. Retirement Committee Member who is Participant. A member of the
Retirement Committee who also is a Participant shall have no right to vote with
respect to any action that pertains solely to him as a Participant. In the event
a majority of the remaining members are unable to agree as to the action to be
taken with respect to the Participant, the chief executive officer of the
Corporation shall appoint an impartial person to arbitrate the matter among the
remaining members and to reach a decision.
11.9. Information Provided by Employer. Each Employer shall provide the
Corporation, the Retirement Committee and the Trustee with complete and timely
information regarding employment data for each Employee and Participant needed
by the Corporation, Retirement Committee or Trustee, including, but not limited
to, information concerning Compensation, date of employment, date of termination
of employment, reason for termination and any other information required by the
Corporation, Retirement Committee, or Trustee.
11.10. Expenses. All expenses incurred in administering the Plan and the
Trust, including the expenses of the Retirement Committee, investment advisory
and record-keeping fees, the fees of counsel and any agents for the Corporation,
the fees and expenses of the Trustee, the fees of counsel for the Trustee and
other administrative expenses shall be paid by the Trustee from the Trust Fund
to the extent that such expenses are not paid by the Corporation. The Retirement
Committee, in its sole discretion, having regard for the nature of the
particular expense, shall determine the portion of such expense, if any, which
is to be borne by any Employer. An Employer may seek reimbursement of any
expense paid by such company that the Retirement Committee determines is
properly payable by the Trust Fund.
73 Intersil Retirement Plan (Non-Union)
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Miscellaneous Provisions
11.11. Trust. A trust shall be created by the execution of the Trust
Agreement between the Corporation and the Trustee. All contributions under the
Plan shall be paid to the Trustee. The Trustee shall hold all monies and other
property received by it and invest and reinvest the same, together with the
income therefrom, on behalf of the Participants collectively in accordance with
the provisions of the Trust Agreement. The Trustee shall make distributions from
the Trust Fund at such time or times to such person or persons and in such
amounts as the Retirement Committee directs in accordance with the Plan.
11.12. Trust Fund Available to Pay All Plan Benefits. The Plan is intended
to be a single plan under U.S. Treasury Regulation Section 1 .414(l)-1(b)(1).
The maintenance of Accounts as required by the terms of the Plan shall be for
record-keeping purposes only. All of the Trust Fund shall be available to pay
benefits to all Participants and Beneficiaries.
11.13. Corporation as Agent for Employers. Each entity that becomes a
participating Employer by so doing shall be deemed to have appointed the
Corporation its agent to exercise on its behalf all of the powers and
authorities hereby conferred upon the Corporation by the terms of the Plan,
including, but not by way of limitation, the power to amend and terminate the
Plan. The authority of the Corporation to act as such agent shall continue
unless and until the portion of the Trust Fund held for the benefit of Employees
of the particular Employer and their Beneficiaries is set aside in a separate
Trust Fund.
74 Intersil Retirement Plan (Non-Union)
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Miscellaneous Provisions
ARTICLE XII
AMENDMENT AND TERMINATION
12.1. Amendment. The Corporation reserves the right to amend the Plan by
action of its board of directors or an authorized committee thereof at any time
and from time to time, subject to the following limitations:
(a) no amendment shall be made which vests in any Employer any
interest in any assets of the Plan other than as specifically provided in
Section 12.2;
(b) no amendment shall be made which would have the effect of
decreasing a Participant's "accrued benefit" as proscribed in section 411(d)(6)
of the Code; and
(c) no amendment shall have the effect of reducing a Participant's
vested interest in his Accounts. If the Plan is amended to change the vesting
schedule, each Participant with at least a three-year Period of Service shall
have the right to elect to have his vested interest computed without regard to
the amendment. Each Participant shall be permitted to make this election during
the period ending 60 days after the latest of the date (1) the amendment is
adopted; (2) the amendment is effective, and (3) the Participant is issued a
written notice of the amendment by the Corporation or its delegate.
12.2. Termination of Plan. This Plan is intended to be permanent, and it
is the expectation of the Corporation that it will continue indefinitely.
However, the Corporation reserves the right to terminate the Plan by resolution
of its board of directors or an authorized committee thereof. In the case of a
complete termination of the Plan, previously
75 Intersil Retirement Plan (Non-Union)
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Miscellaneous Provisions
unallocated forfeitures shall be allocated as otherwise provided in the Plan. To
the extent previously unallocated forfeitures cannot be allocated because all
Participants have reached the limitations of section 415 of the Code, the
unallocated amount shall revert back to the appropriate Employer, as provided in
Section 3.10.
12.3. Discontinuance of Contributions. The Corporation reserves the right
to discontinue contributions to the Plan by amendment or by resolution of its
board of directors or an authorized committee thereof.
12.4. Vesting on Termination or Discontinuance of Contributions. As of the
date of the partial or complete termination of the Plan or upon the complete
discontinuance of contributions to the Plan, in each case as determined by the
Retirement Committee in its sole discretion, each affected Participant shall
become fully vested in his Accounts and no further allocations of contributions
or forfeitures shall be made after such date on behalf of an affected
Participant.
12.5. Distribution on Termination. Upon the complete termination of the
Plan, the Trustee shall distribute to each affected Participant the full amount
standing to the credit of his Accounts, provided that if such amount exceeds (or
at the time of any prior distribution exceeded) $5,000 (or such larger amount as
may be permitted by law) and the Participant is not yet age 65, such lump sum
shall not be paid without his consent. If the Participant does not consent, an
annuity contract shall be purchased for and distributed to the Participant.
76 Intersil Retirement Plan (Non-Union)
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Miscellaneous Provisions
ARTICLE XIII
MISCELLANEOUS PROVISIONS
13.1. Restrictions on Alienation: Qualified Domestic Relations Orders.
Except as otherwise may be required (i) to offset an amount that a Participant
is ordered to pay to the Plan as a result of a judgment, settlement, order or
decree entered on or after August 5, 1997 as permitted under section
401(a)(13)(C) of the Code or (ii) for income tax withholding purposes, no
benefit or interest under this Plan shall be subject to assignment or
alienation, either voluntarily or involuntarily. The preceding sentence shall
apply to the creation, assignment or recognition of a right to any benefit
payable with respect to a Participant pursuant to a domestic relations order,
unless such order is determined by the Retirement Committee to be a "qualified
domestic relations order", as defined in section 4.l4.(p) of the Code. In
accordance with uniform and nondiscriminatory procedures established by the
Retirement Committee from time to time, the Retirement Committee upon the
receipt of a domestic relations order which seeks to require the distribution of
a Participant's Account in whole or in part to an "alternate payee" (as that
term is defined in section 4.l4(p)(8) of the Code) shall:
(1) promptly notify the Participant and such "alternate
payee" of the receipt of such order and of the procedure
which the Retirement Committee will follow to determine
whether such order constitutes a "qualified domestic
relations order" within the meaning of section 4.l4(p)
of the Code,
77 Intersil Retirement Plan (Non-Union)
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Miscellaneous Provisions
(2) determine whether such order constitutes a "qualified
domestic relations order" and notify the Participant and
the "alternate payee" of the results of such
determination, and
(3) if the Retirement Committee determines that such order
does constitute a "qualified domestic relations order,"
distribute to such "alternate payee" under the terms of
such order the amount called for under the order in a
single sum within 60 days of the date such order is
determined to constitute a qualified domestic relations
order, without regard to whether a distribution would be
permissible to the Participant at such time under this
Plan.
The determination and the distribution made by, or at the direction of,
the Retirement Committee under this Section 13.1 shall be final and binding on
the Participant and on all other persons interested in such order. An "alternate
payee" under this Section 13.1 shall not be an eligible person for purposes of
obtaining a loan pending the distribution of such alternate payee's entire
interest under this Plan.
13.2. Exclusive Benefit Requirement. Except as provided in Sections 12.2,
13.1 and 13.3, no assets of the Plan shall revert to an Employer or be used for
or diverted to purposes other than providing benefits to Participants and their
Beneficiaries and defraying reasonable costs of administering the Plan.
13.3. Return of Contributions.
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Miscellaneous Provisions
(a) Mistake of fact. Any contribution made by an Employer due to a
mistake of fact shall be returned to the Employer within one year of the date
the contribution was made.
(b) Nondeductible Contributions. In the event the deduction of a
contribution made by an Employer is disallowed under section 404 of the Code,
such contribution (to the extent disallowed) shall be returned to the Employer
within one year of the disallowance of the deduction.
13.4. No Contract of Employment. Neither the establishment and maintenance
of the Plan nor the participation in the Plan by any Employee shall be construed
as a contract between the Employee and any Employer so as to give any Employee
the right to be retained by any Employer, or to interfere with the rights of any
Employer to discharge the Employee at any time.
13.5. Payment of Benefits on Incapacity. In the event the Retirement
Committee determines that any person to whom a distribution is to be made is
unable to care for his affairs by reason of illness or other disability, any
amount distributable to such person (unless prior claim thereto shall have been
made by a duly qualified guardian or other legal representative) may, in the
discretion of the Retirement Committee, be paid to such other person deemed by
the Retirement Committee to be responsible for such person. Any such payment
made under this Section 13.5 shall constitute a complete discharge of any
liability under this Plan.
13.6. Merger. In the event of a merger or consolidation with, or transfer
of assets or liabilities to any other plan, each Participant shall receive a
benefit immediately after such merger, consolidation or transfer (if the Plan
then terminated) which is at least equal to the benefit the Participant was
entitled to receive immediately before such merger, consolidation or transfer
(if the Plan had then terminated).
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Miscellaneous Provisions
13.7. Construction. The headings and subheadings in this Plan have been
inserted for convenience of reference only and are to be ignored in the
construction of its provisions. Wherever appropriate, the masculine shall be
read as the feminine, the plural as the singular, and the singular as the
plural. References in this Plan to a Section shall be to a Section in this Plan
unless otherwise indicated. References in this Plan to a section of the Code,
ERISA or any other federal law shall also refer to the final regulations issued
under such section.
13.8. Governing Law. This Plan shall be construed, to the extent to which
state law is applicable, in accordance with the laws of the State of Florida.
Venue for any action arising under this Plan shall be in Brevard County,
Florida.
13.9. Mistaken Payments. If a mistake is made in favor of a Participant,
Beneficiary or alternate payee in the payment of benefits under this Plan, then
the Corporation or the Trustee (acting at the Corporation direction and on
behalf of the Plan) shall take such action against such Participant, Beneficiary
or alternate payee to remedy such mistake and to make the Plan whole as the
Corporation deems proper and appropriate under the circumstances, and any
mistake in favor of the Plan shall promptly be corrected by, or at the direction
of, the Retirement Committee.
INTERSIL CORPORATION
Date: 9/3/99 By: /s/ Daniel J. Heneghan
----------------------------------
Daniel J. Heneghan
Attest: /s/ Christina Kae Foust Title: Vice President, Secretary
----------------------------- and Treasurer
80 Intersil Retirement Plan (Non-Union)
EXHIBIT 10.37
INTERSIL CORPORATION
RETIREMENT PLAN
(UNION)
<PAGE>
TABLE OF CONTENTS
ARTICLE 1
DEFINITIONS
1.1 Accounts.......................................................... 2
1.2 Affiliate......................................................... 2
1.3 After-Tax Account................................................. 2
1.4 After-Tax Contributions........................................... 2
1.5 Basic Account..................................................... 2
1.6 Beneficiary....................................................... 2
1.7 Break-in-Service.................................................. 2
1.8 Code.............................................................. 2
1.9 Compensation...................................................... 3
1.10 Corporation....................................................... 4
1.11 Disability........................................................ 4
1.12 Early Retirement Age.............................................. 4
1.13 Effective Date.................................................... 4
1.14 Employee.......................................................... 4
1.15 Employer.......................................................... 5
1.16 ERISA............................................................. 5
1.17 Excess Compensation............................................... 5
1.18 Full-Time Employee................................................ 5
1.19 Harris Stock Fund................................................. 5
1.20 Harris Stock After-Tax Account.................................... 5
1.21 Harris Stock Matching Account..................................... 6
1.22 Harris Stock Pre-Tax Account...................................... 6
1.23 Highly Compensated Employee....................................... 6
1.24 Hour of Service................................................... 6
1.25 Investment Funds.................................................. 6
1.26 Layoff ........................................................... 6
1.27 Leave of Absence.................................................. 7
1.28 Matching Account.................................................. 7
1.29 Matching After-Tax Contribution................................... 7
1.30 Matching Contributions............................................ 7
1.31 Matching Pre-Tax Contributions.................................... 7
1.32 Military Service.................................................. 8
1.33 Normal Retirement Age............................................. 8
1.34 Participant....................................................... 8
1.35 Period of Service................................................. 8
1.36 Period of Severance............................................... 8
1.37 Plan.............................................................. 8
- i -
<PAGE>
1.38 Plan Year......................................................... 8
1.39 Predecessor Company............................................... 9
1.40 Pre-Tax Account................................................... 9
1.41 Pre-Tax Contributions............................................. 9
1.42 Profit-Sharing Account............................................ 9
1.43 Profit-Sharing Contributions ..................................... 9
1.44 Retirement Committee.............................................. 9
1.45 Rollover Account.................................................. 9
1.46 Savings Account................................................... 9
1.47 Severance from Service Date....................................... 9
1.48 Supplemental Account.............................................. 10
1.49 Taxable Wage Base................................................. 10
1.50 Trust Agreement................................................... 10
1.51 Trust Fund........................................................ 10
1.52 Trustee........................................................... 10
1.53 Valuation Date.................................................... 10
ARTICLE II
PARTICIPATION
2.1 In General........................................................ 11
2.2 Renewal of Participation on Reemployment.......................... 11
2.3 Periods of Service on Reemployment................................ 12
2.4 Service with an Acquired Company.................................. 13
2.5 Employment by Non-Participating Affiliates........................ 13
2.6 Military Service.................................................. 14
ARTICLE III
CONTRIBUTIONS AND ALLOCATIONS
3.1 Profit-Sharing Contributions...................................... 15
3.2 Allocation of Profit-Sharing Contribution to Participants......... 15
3.3 Pre-Tax Contributions............................................. 17
3.4 Matching Pre-Tax Contributions.................................... 18
3.5 After-Tax Contributions for Participants Credited with at
least a One-Year Period of Service................................ 18
3.6 Matching After-Tax Contributions.................................. 18
3.7 Elections to Make Pre-Tax and After-Tax Contributions............. 19
3.8 Rollover Contributions............................................ 20
3.9 Employer's Obligation to Make Contributions....................... 21
3.10 Treatment of Forfeited Amounts ................................... 21
3.11 Finality of Allocations........................................... 22
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<PAGE>
ARTICLE IV
LIMITATIONS ON CONTRIBUTIONS
4.1 In General........................................................ 23
4.2 Pre-Tax Contributions............................................. 23
4.3 Limitations on Contributions for Highly Compensated Employees..... 24
4.4 Limitation on Annual Additions.................................... 35
ARTICLE V
VESTING AND FORFEITURES
5.1 In General........................................................ 38
5.2 Vesting on Retirement, Death or Disability........................ 38
5.3 Vesting on Other Termination of Employment........................ 38
5.4 Effect of In-Service Withdrawals on a Participant's
Vested Percentage................................................. 39
5.5 Forfeitures....................................................... 40
ARTICLE VI
ACCOUNTS AND INVESTMENTS
6.1 Establishment of Accounts........................................ 41
6.2 Investment of Accounts........................................... 42
6.3 Allocation of Earnings and Losses................................ 44
6.4 Special Rules Concerning Harris Stock Fund....................... 45
ARTICLE VII
DISTRIBUTIONS
7.1 In General....................................................... 47
7.2 Small Benefit Cash-out........................................... 47
7.3 Form of Payment.................................................. 48
7.4 Time of Payment.................................................. 49
7.5 Direct Rollover.................................................. 49
7.6 Payments on Death................................................ 50
7.7 Benefit Amount and Withholding................................... 51
7.8 Order of Distributions........................................... 51
7.9 Statutory Requirements........................................... 51
7.10 Designating Beneficiaries........................................ 55
7.11 Inability to Locate Participant.................................. 56
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<PAGE>
ARTICLE VIII
LOANS
8.1 In General....................................................... 57
ARTICLE IX
IN-SERVICE WITHDRAWALS
9.1 Withdrawals from Savings Account and After-Tax Account........... 59
9.2 Withdrawals from Rollover, Pre-Tax and Profit Sharing Accounts... 59
9.3 Conditions Applicable to All Withdrawals......................... 61
9.4 Reduction of Investment Fund Balances............................ 62
ARTICLE X
ADMINISTRATION
10.1 Named Fiduciaries................................................ 63
10.2 Retirement Committee............................................. 63
10.3 Powers and Duties of Retirement Committee........................ 63
10.4 Actions of Retirement Committee ................................. 64
10.5 Finality of Decisions............................................ 64
10.6 Immunities of Retirement Committee............................... 64
10.7 Advisers and Agents.............................................. 64
10.8 Retirement Committee Member who is Participant................... 65
10.9 Information Provided by Employers................................ 65
10.10 Expenses ........................................................ 65
10.11 Trust ........................................................... 66
10.12 Trust Fund Available to Pay All Plan Benefits.................... 66
10.13 Corporation as Agent for Employers............................... 66
ARTICLE XI
AMENDMENT AND TERMINATION
11.1 Amendment........................................................ 67
11.2 Termination of Plan.............................................. 67
11.3 Discontinuance of Contributions.................................. 68
11.4 Vesting on Termination or Discontinuance of Contributions........ 68
11.5 Distribution on Termination...................................... 68
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<PAGE>
ARTICLE XII
MISCELLANEOUS PROVISIONS
12.1 Restrictions on Alienation: Qualified Domestic Relations Orders.. 69
12.2 Exclusive Benefit Requirement.................................... 70
12.3 Return of Contributions.......................................... 70
12.4 No Contract of Employment........................................ 71
12.5 Payment of Benefits on Incapacity................................ 71
12.6 Merger........................................................... 71
12.7 Construction..................................................... 71
12.8 Governing Law.................................................... 72
12.9 Mistaken Payments................................................ 72
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<PAGE>
INTRODUCTION
The title of the Plan shall be the Intersil Corporation Retirement
Plan (Union). The Plan is an amendment and restatement of the Harris Corporation
Union Retirement Plan, as in effect on August 13, 1999, and shall be effective
as of August 14, 1999 in respect of Participants whose employment terminates on
or after such date, provided, however, that:
(i) any provision that specifies a different effective date shall be
effective as of such date,
(ii) Sections 1.9, 2.3, 4.3 and 7.9, to the extent such Sections
reflect modifications required by the Small Business Job Protection Act of
1996, shall be effective as of the first day of the first Plan Year
beginning after December 31, 1996,
(iii) Sections 1.32 and 2.6, to the extent such Sections reflect
modifications required by the Uniformed Services Employment and
Reemployment Rights Act of 1994, shall be effective as of December 12,
1994, and
(iv) Sections 7.2, 7.6 and 11.2, to the extent such Sections reflect
modifications to the amount of a Participant's vested interest which may
be distributed without his consent, shall be effective as of the first day
of the first Plan Year beginning after August 5, 1997.
The Plan is designated as a "profit sharing plan" within the meaning
of U.S. Treasury Regulation Section 1 .401(a)(2)(ii) that contains a qualified
cash or deferred arrangement under section 401(k) of the Code.
In order to implement the establishment of this Plan and the related
transfer of employment of certain employees of the Predecessor Company to the
Corporation, notwithstanding any provision of the Plan to the contrary, during a
transition period beginning on August 14, 1999 and ending on the date determined
by the Retirement Committee, loans,
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<PAGE>
withdrawals, distributions and investment elections under the Plan will be
subject to such rules and restrictions as may be established by the Retirement
Committee.
ARTICLE I
DEFINITIONS
1.1. Accounts -- means the accounts established under Section 6.1, and any
other account that may be established under the Plan on behalf of a Participant.
1.2. Affiliate -- means (a) any corporation that is a member of the same
controlled group (within the meaning of section 414(b) of the Code) as an
Employer, (b) a trade or business (whether or not incorporated) under common
control (within the meaning of section 414(c) of the Code) with an Employer, (c)
any organization (whether or not incorporated) that is a member of an affiliated
service group (within the meaning of section 414(m) of the Code) that includes
an Employer, a corporation described in clause (a) of this subdivision or a
trade or business described in clause (b) of this subdivision, or (d) any other
entity that is required to be aggregated with an Employer pursuant to final
regulations promulgated by the U.S. Treasury Department under section 414(o) of
the Code.
1.3. After-Tax Account -- means the Account established for a Participant
under Section 6.1(c).
1.4. After-Tax Contributions -- means the contributions described in
Section 3.5.
1.5. Basic Account -- means the Account established for a Participant
under Section 6.1(a)(1).
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<PAGE>
Definitions
1.6. Beneficiary -- means the person or persons entitled to receive any
benefits payable under the Plan on account of a Participant's death.
1.7. Break-in-Service -- means a Period of Severance, as defined in
Section 1.37.
1.8. Code -- means the Internal Revenue Code of 1986, as amended from time
to time.
1.9. Compensation -- means the total earnings paid by an Employer to an
Employee and properly reportable for federal income tax purposes on Form W-2 for
a Plan Year (including overtime and bonuses); provided that:
(a) the Employee's Compensation shall also include amounts that
would have been so paid and reported on Form W-2 but for the Employee's election
to have compensation reduced pursuant to the Plan or any other qualified cash or
deferred arrangement described in section 401(k) of the Code or a cafeteria plan
as described in section 125 of the Code; and
(b) the Employee's Compensation shall not include the following
items (even if properly reportable for federal income tax purposes on Form W-2):
(i) any extraordinary compensation of a non-recurring
nature;
(ii) any award made or amount paid pursuant to an Employer's
equity-based compensation arrangement including, but not
limited to, performance shares, stock options (including
any exercise thereof), restricted stock, stock
appreciation rights (including any exercise thereof),
and dividend equivalents;
(iii) severance pay or special retirement pay;
(iv) imputed compensation, such as Employer-paid group
insurance premiums; and
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<PAGE>
Definitions
(v) reimbursements or other allowances for automobile,
relocation, tax-equalization, travel or educational
expenses.
In no event shall an Employee's Compensation in excess of $160,000 (as adjusted
for increases in the cost of living pursuant to section 401(a)(17) of the Code)
be taken into account for any purpose under the Plan. In addition, in the year
in which an Employee becomes a Participant, only Compensation received after he
becomes a Participant shall be taken into account. For purposes of any test
imposed under any section of the Code, the Plan authorizes the use of any
definition of compensation, provided that such definition satisfies the
requirements of such section.
1.10. Corporation -- means Intersil Corporation, a Delaware corporation.
1.11. Disability -- means a disability that qualifies a Participant for
disability benefits under title II or title XVI of the Federal Social Security
Act; such disability for Plan purposes shall be deemed to occur on the effective
date determined by the Social Security Administration.
1.12. Early Retirement Age -- means an individual's attainment of age 55
while an Employee.
1.13. Effective Date -- means, except as provided elsewhere herein, August
14, 1999 with respect to the Corporation and each other entity that is an
Employer on such date, and with respect to any other Employer, the date
designated by such Employer and agreed to by the Corporation.
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<PAGE>
Definitions
1.14. Employee -- means an individual whose employment relationship with
an Employer is covered by a collective bargaining agreement which provides for
such individual's participation in the Plan. Notwithstanding the foregoing, no
individual who renders services to an Employer shall be considered an Employee
for purposes of the Plan if such individual renders such services pursuant to
(i) a written agreement providing that such services are to be rendered by the
individual as an independent contractor, (ii) a written agreement (other than a
collective bargaining agreement) with an entity, including a leasing
organization within the meaning of section 414(n)(2) of the Code, that is not an
Employer, or (iii) a written agreement that contains a waiver of participation
in the Plan. A leased employee shall be treated as an Employee only for purposes
of applying the requirements described in section 414(n)(3) of the Code and
determining the number and identity of Highly Compensated Employees.
1.15. Employer -- means the Corporation, Choice Microsystems, Inc. or any
other entity that, with the consent of the Corporation, elects to participate in
the Plan and any successor entity that adopts the Plan. If any such entity
withdraws from participation in the Plan or terminates its participation in the
Plan, such entity shall thereupon cease to be an Employer. If an entity that is
an Employer ceases to be an Affiliate, such entity shall cease to be an Employer
unless the Corporation consents to such entity's continued participation in the
Plan.
1.16. ERISA -- means the Employee Retirement Income Security Act of 1974,
as amended from time to time.
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<PAGE>
1.17. Excess Compensation -- means the portion of a Participant's
Compensation that exceeds the Taxable Wage Base for the year in which the
Compensation is received.
1.18. Full-Time Employee -- means an Employee who is regularly scheduled
by an Employer to work 30 or more hours per week and who is not classified by
the Employer as an intern.
1.19. Harris Stock Fund -- means the Investment Fund that is designed to
be invested in qualifying employer securities (within the meaning of section 407
of ERISA) issued by the Predecessor Company.
1.20. Harris Stock After-Tax Account -- means the Account established for
a Participant under Section 6.1(g).
1.21. Harris Stock Matching Account -- means the Account established for a
Participant under Section 6.1(h).
1.22. Harris Stock Pre-Tax Account -- means the Account established for a
Participant under Section 6.1(f).
1.23. Highly Compensated Employee -- means, for a Plan Year, any Employee
who is:
(a) a 5-percent owner (as determined under section 416(i)(1) of
the Code) of an Employer at any time during the Plan Year or
the preceding Plan Year; or
(b) paid Compensation in excess of $80,000 (as adjusted for
increases in the cost of living pursuant to section
414(q)(1)(B)(ii) of the Code) from an Employer for the
preceding Plan Year. The Employees taken into account
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<PAGE>
Definitions
under this paragraph (b) for each Plan Year shall be limited
to those Employees who were members of the top-paid group (as
defined in section 414(q)(3) of the Code) for the preceding
Plan Year, unless otherwise elected by the Corporation for
such Plan Year in accordance with applicable law.
1.24. Hour of Service -- means each hour for which an Employee is paid or
entitled to payment for the performance of duties for an Employer.
1.25. Investment Funds -- means the investment funds designated by the
Retirement Committee from time to time.
1.26. Layoff -- means a temporary suspension of the active employment of
an Employee with the understanding that the Employee will be recalled to active
employment if and when his services are again required. A period of Layoff
terminates, and the Severance from Service Date of a Participant who is not
recalled or otherwise employed by an Employer is deemed to occur, on the
earliest of the following dates:
(a) the expiration date specified in a notice of recall delivered
to the Employee;
(b) the first anniversary of the date the Layoff began in
accordance with clause (b) of the definition of "Severance
from Service Date" contained in Section 1.47; and
(c) the election of an Employee to terminate the Layoff by written
notice delivered to the Employer.
1.27. Leave of Absence -- means a period of interruption of the active
employment of an Employee granted by an Employer with the understanding that the
Employee will return to active employment at the expiration of the period of
time. A Leave of Absence as originally
- 6 - Intersil Retirement Plan (Union)
<PAGE>
Definitions
granted may be extended by the Employer for additional periods. The term "Leave
of Absence" does not include a period of Military Service.
1.28. Matching Account -- means the Account established for a Participant
under Section 6.1(d).
1.29. Matching After-Tax Contributions -- means the contributions made on
behalf of a Participant under Section 3.6.
1.30. Matching Contributions -- means the aggregate of the Matching
After-Tax Contributions and the Matching Pre-Tax Contributions made on behalf of
a Participant.
1.31. Matching Pre-Tax Contributions -- means the contributions made on
behalf of a Participant under Section 3.4.
1.32. Military Service -- means the performance of duty by an individual
on a voluntary or involuntary basis in a uniformed service, within the meaning
of the Uniformed Services Employment and Reemployment Rights Act, for which the
individual is entitled to reemployment rights under such Act.
1.33. Normal Retirement Age -- an individual's attainment of age 65 while
an Employee.
1.34. Participant -- means an Employee who satisfies the requirements of
Section 2.1. An individual shall cease to be a Participant upon the complete
distribution or forfeiture of his Accounts.
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<PAGE>
Definitions
1.35. Period of Service -- means the aggregate of (a) the period of time
that begins on an Employee's employment or reemployment date, whichever is
applicable, and ends on his Severance from Service Date and (b) the Employee's
"period of service" prior to August 14, 1999 with the Predecessor Company as
determined under the Plan as in effect on August 13, 1999. For purposes of
clause (a) of the preceding sentence, an Employee's employment date is the date
on which the Employee first performs an Hour of Service; an Employee's
reemployment date is the date on which the Employee first performs an Hour of
Service after his most recent Severance from Service Date.
1.36. Period of Severance -- means the period of time commencing on the
Severance from Service Date and ending on the date on which the Employee again
performs an Hour of Service.
1.37. Plan -- means the Intersil Corporation Retirement Plan (Union)
herein set forth, as amended from time to time.
1.38. Plan Year -- means the fiscal year of the Corporation.
1.39. Predecessor Company -- means Harris Corporation, a Delaware
corporation.
1.40. Pre-Tax Account -- means the Account established for a Participant
under Section 6.1(b).
1.41. Pre-Tax Contributions -- means the contributions made on behalf of a
Participant under Section 3.3.
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<PAGE>
Definitions
1.42. Profit-Sharing Account -- means the Account established for a
Participant under Section 6.1(a).
1.43. Profit-Sharing Contributions -- means the contributions described in
Section 3.1.
1.44. Retirement Committee -- means the committee established under
Section 10.2.
1.45. Rollover Account -- means the Account established for a Participant
under Section 6.1(i).
1.46. Savings Account -- means the Account established for a Participant
under Section 6.1(e).
1.47. Severance from Service Date -- means, with respect to an Employer,
the earlier of (a) the date on which the Employee quits, retires, is discharged
or dies, and (b) the first anniversary of the first date of a period in which an
Employee remains absent from service (with or without pay) for any reason other
than quitting, retirement, discharge or death; provided, however, that "second
anniversary" shall be substituted for "first anniversary" if the absence is due
to maternity or paternity reasons as defined in section 410(a)(5)(E) of the
Code. The period between the first and the second anniversary shall not be a
Period of Service or a Period of Severance.
1.48. Supplemental Account -- means the Account established for a
Participant under Section 6.1(a)(2).
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<PAGE>
Definitions
1.49. Taxable Wage Base -- means the maximum amount of earnings that may
be considered wages under section 3121(a)(1) of the Code for purposes of section
3 01(a) of the Code, as in effect on the first day of the Plan Year. In the case
of an Employee who was a Participant for only a portion of a particular Plan
Year, the Taxable Wage Base shall be multiplied by the ratio of the number of
calendar months (including a fraction of a month as a full month) in the Plan
Year during which he was a Participant to 12 months.
1.50. Trust Agreement -- means the trust agreement relating to the Plan,
entered into between the Corporation and the Trustee, as it may be amended from
time to time.
1.51. Trust Fund -- means the assets held by the Trustee in accordance
with the Trust Agreement.
1.52. Trustee -- means T. Rowe Price Trust Company, or such successor (or
successors) thereto designated by the Retirement Committee to act as trustee
under the provisions of the Trust Agreement, who shall agree to act as such by
executing the Trust Agreement.
1.53. Valuation Date -- means each day the New York Stock Exchange is
open, and any other day as the Retirement Committee may determine.
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<PAGE>
ARTICLE II
PARTICIPATION
2.1. In General.
(a) Employees who were Employees of the Predecessor Company. Each
individual who was an active participant in the Plan immediately prior to the
Effective Date and who is an Employee on the Effective Date shall continue to be
a Participant in the Plan on the Effective Date.
(b) Other Employees. Each other Employee shall become a Participant
in the Plan on the date he completes a one-year Period of Service.
Notwithstanding the preceding sentence, and solely for purposes of making
Pre-Tax Contributions, After-Tax Contributions and Rollover Contributions, a
Full-Time Employee shall become a Participant in the Plan on the date he first
performs an Hour of Service for an Employer.
2.2. Renewal of Participation on Reemployment. An Employee who terminates
employment with the Employers after he completes a one-year Period of Service
and is reemployed by an Employer shall become a Participant as of the effective
date of such Employee's reemployment. An Employee who terminates employment with
the Employers before he completes a one-year Period of Service and is reemployed
by an Employer shall become a Participant as provided in Section 2.1(b),
provided that his Period of Service prior to such reemployment shall be used to
satisfy the one-year Period of Service requirement imposed by Section 2.1(b) to
the extent provided under Section 2.3.
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<PAGE>
Participation
2.3. Periods of Service on Reemployment. The following rules shall apply
to an Employee who terminates employment with the Employers before he completes
a one-year Period of Service and is reemployed by an Employer:
(a) Credit for Prior Period of Service. If the Employee is
reemployed by an Employer before his Period of Severance equals or exceeds the
greater of (i) his Period of Service before he terminated employment and (ii)
five years, then his Period of Service before he terminated employment with the
Employers shall be taken into account in determining whether the Employee has
completed a one-year Period of Service for purposes of Section 2.1 and for
purposes of determining a Participant's Period of Service under Section 5.3.
(b) Credit for Period of Severance. If the Employee terminates
employment with the Employers due to quitting, discharge, or retirement and is
reemployed by an Employer within 12 months of his termination date, his Period
of Severance shall be taken into account in determining whether the Employee has
completed a one-year Period of Service for purposes of Section 2.1 and for
purposes of determining a Participant's Period of Service under Section 5.3. If
the Employee terminates employment with the Employers for any reason other than
quitting, discharge, or retirement, and subsequently quits, is discharged, or
retires, his Period of Severance shall be taken into account in determining
whether the Employee has completed a one-year Period of Service for purposes of
Section 2.1 and for purposes of determining a Participant's Period of Service
under Section 5.3 only if he is reemployed by an Employer within 12 months of
the date of his termination of employment.
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<PAGE>
Participation
2.4. Service with an Acquired Company. In the case of a corporation (other
than an Employer or an Affiliate) with respect to which substantially all of the
assets of a trade or business of such corporation are acquired by an Employer or
an Affiliate, an Employee's Period of Service shall include employment with such
corporation only to the extent expressly provided in the corporate documents
effecting the acquisition.
2.5. Employment by Non-Participating Affiliates. If an individual is
employed by an Affiliate that is not an Employer, then any period of employment
by the Affiliate shall be taken into account to the same extent it would have
been had such period of employment been as an Employee of an Employer solely for
the purposes of (i) determining whether and when such individual is eligible to
participate in the Plan under this Article II upon becoming an Employee, (ii)
measuring such individual's Period of Service and (iii) determining when such
individual has retired or otherwise terminated employment for purposes of
Article VII. If a Participant is transferred from an Employer to another
Employer or from an Employer to an Affiliate that is not an Employer, such
transfer shall not terminate the Participant's participation in the Plan and
such Participant shall continue to participate in the Plan until an event occurs
that would have terminated his participation had he continued in the service of
a Employer until the occurrence of such event; provided, however, that a
Participant shall not be entitled to make or receive an allocation of any
contributions during any period of employment with an Affiliate that is not an
Employer. Payments received by a Participant from an Affiliate that is not an
Employer shall not be treated as Compensation for any purposes under the Plan.
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<PAGE>
Participation
2.6. Military Service. Notwithstanding any provision of the Plan to the
contrary, (i) a Participant who returns to employment after a period of Military
Service may elect to make Pre-Tax Contributions and After-Tax Contributions to
the Plan in respect of such Military Service and (ii) the Employer that
reemploys such a Participant shall make any Profit-Sharing Contributions and
Matching Contributions on behalf of such Participant to the Plan upon the
Participant's reemployment to the extent required by law and in accordance with
section 414(u) of the Code.
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<PAGE>
ARTICLE III
CONTRIBUTIONS AND ALLOCATIONS
3.1. Profit-Sharing Contributions.
(a) Basic. Subject to the limitations set forth in Sections 3.9, 4.4
and 13.3, the Employers may contribute a Profit Sharing Contribution for each
Plan Year in such amounts as the Corporation shall determine.
(b) Special. Subject to the limitations set forth in Sections 3.9,
4.4 and 13.3, the Corporation, in its discretion, may provide for an additional
Profit-Sharing Contribution in a specified dollar amount or pursuant to a
formula with respect to any Plan Year.
(c) Apportionment Between the Plan and the Non-union Plan. The
amount of Profit-Sharing Contributions to the Plan for a Plan Year shall be
determined by apportioning the aggregate profit sharing contributions designated
by the Corporation for such Plan Year between the Plan and the Intersil
Corporation Retirement Plan (Non-union), based on the ratio of the
"Compensation" plus "Excess Compensation" (as such terms are defined in the
plans) for the Plan Year of the Participants in each such plan to the aggregate
"Compensation" plus "Excess Compensation" of all Participants in such plans for
the Plan Year.
3.2. Allocation of Profit-Sharing Contribution to Participants.
(a) In General. Profit-Sharing Contributions for a Plan Year shall
be allocated among the eligible Participants described in paragraph (c) who are
employed by the Employers based on the ratio of each such Participant's
Compensation plus Excess Compensation for the
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<PAGE>
Contributions and Allocations
Plan Year to the Compensation plus Excess Compensation of all such Participants
for the Plan Year.
(b) Limitation On Amount. Notwithstanding paragraph (a), the amount
allocated to an eligible Participant pursuant to paragraph (a) for any Plan Year
shall not cause such Participant's "excess contribution percentage" to exceed
such Participant's "base contribution percentage" for such Plan Year by more
than the lesser of (i) the base contribution percentage, and (ii) the greater of
(A) 5.7% and (B) the percentage equal to the portion of the rate of tax under
section 3111(a) of the Code as in effect as of the first day of the Plan Year
which is attributable to old-age insurance. For purposes of the immediately
preceding sentence, the term "excess contribution percentage" shall mean the
percentage of the Participant's Compensation which is allocated to the
Participant pursuant to paragraph (a) with respect to such Participant's Excess
Compensation, and the term "base contribution percentage" shall mean the
percentage of the Participant's Compensation which is allocated to the
Participant pursuant to paragraph (a) with respect to that portion of the
Participant's Compensation which is not Excess Compensation. Any remaining
amount shall be allocated based on the ratio of each such eligible Participant's
Compensation for the Plan Year to the Compensation of all eligible Participants
for the Plan Year.
(c) Limitation On Eligibility. A Participant shall be eligible to
receive an allocation of Profit-Sharing Contributions for a Plan Year if he has
completed a one-year Period of Service and either (i) the Participant is an
Employee on the earlier of (A) the last day of the Plan Year and (B) the June 30
nearest to the last day of the Plan Year or (ii) the Participant
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<PAGE>
Contributions and Allocations
terminated employment with the Employers during the Plan Year on or after Early
Retirement Age or Normal Retirement Age, or due to Disability, death, Layoff,
Leave of Absence or Military Service.
3.3. Pre-Tax Contributions.
(a) Contribution Election. A Participant may elect to defer a
portion of his Compensation payable for each payroll period by an amount equal
to any whole percentage which does not exceed twelve percent (12%), and the
amount by which his Compensation is so reduced shall be contributed to the Plan
on his behalf as a Pre-Tax Contribution. Each Participant shall be deemed to
have elected to defer six percent (6%) of his Compensation payable for each
payroll period in the form of Pre-Tax Contributions, to become effective as of
the first payroll period as soon as administratively practicable following his
satisfaction of the participation requirements set forth in Section 2.1, unless
the Participant affirmatively elects otherwise prior to such payroll period in
the time and manner prescribed by the Retirement Committee. A Participant who
elects not to make Pre-Tax Contributions to the Plan in accordance with the
foregoing sentence may subsequently elect to make Pre-Tax Contributions to the
Plan in accordance with Section 3.7, and such Participant's election to make
PreTax Contributions shall become effective as of the first payroll period
commencing immediately after the date of the election or such later date as may
be administratively practicable. An election shall remain in effect until
revised or revoked. The sum of the Pre-Tax Contributions and other elective
deferrals (within the meaning of section 402(g)(3) of the Code) made on behalf
of the Participant to the Plan and any other plan of an Employer for any
calendar year shall not exceed
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<PAGE>
Contributions and Allocations
$10,000 (as adjusted in accordance with section 402(g)(5) of the Code for
increases in the cost of living).
(b) Contributions in Excess of the Maximum. If the Pre-Tax
Contributions on behalf of a Participant for a calendar year reach the limit for
such year described in paragraph (a), then any additional contributions to be
made during the calendar year pursuant to the Participant's election shall be
made as After-Tax Contributions and any Matching Pre-Tax Contributions with
respect to that amount shall be made as Matching After-Tax Contributions.
3.4. Matching Pre-Tax Contribution. Each Employer shall make a Matching
Pre-Tax Contribution to the Plan on behalf of each Participant who is employed
by such Employer and who has completed a one-year Period of Service in the
amount of one hundred percent (100%) of the Pre-Tax Contributions made by the
Participant for each payroll period during the Plan Year, but only to the extent
that such Pre-Tax Contributions do not exceed six percent (6%) of the
Participant's Compensation for each such payroll period.
3.5. After-Tax Contributions for Participants Credited with at least a
One-Year Period of Service. A Participant who has completed a Period of Service
of at least one year and who has elected not to make Pre-Tax Contributions may
elect to contribute to the Plan as an After-Tax Contribution an amount equal to
any whole percentage of his Compensation for each payroll period which does not
exceed 12 percent (12%) of his Compensation for such payroll period.
3.6. Matching After-Tax Contributions. Each Employer shall make a Matching
After-Tax Contribution to the Plan on behalf of each Participant who is an
Employee of such Employer
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<PAGE>
Contributions and Allocations
and who has completed a one year Period of Service in the amount of 100 percent
(100%) of the After-Tax Contributions made by the Participant for each payroll
period during the Plan Year, but only to the extent that such After-Tax
Contributions do not exceed six percent (6%) of the Participant's Compensation
for each such payroll period.
3.7. Elections to Make Pre-Tax and After-Tax Contributions.
(a) Initial Elections. If a Participant elects not to have Pre-Tax
Contributions begin automatically pursuant to Section 3.3(a), then the
Participant may subsequently elect to begin making Pre-Tax Contributions to the
Plan by filing the appropriate form or by following the appropriate telephonic
or electronic procedures in the time and manner established by the Retirement
Committee. A Participant may elect to begin making After-Tax Contributions by
filing the appropriate form or by following the appropriate telephonic or
electronic procedures in the time and manner established by the Retirement
Committee. An election made under this Section 3.7(a) shall become effective as
of the first payroll period commencing immediately after the date of the
election or such later date as may be administratively practicable.
(b) Changing Elections. A Participant may change the percentage (in
increments of one percent (1 %)) of future Pre-Tax Contributions or After-Tax
Contributions made on his behalf (or both) by filing the appropriate form or by
following the appropriate telephonic or electronic procedures for changing
elections in the time and manner established by the Retirement Committee. A
change of election shall become effective as of the first payroll period
commencing immediately after the date of the election or such later date as may
be administratively practicable.
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<PAGE>
Contributions and Allocations
(c) Terminating Elections. A Participant may terminate his election
to have Pre-Tax Contributions or After-Tax Contributions made on his behalf (or
both) by filing the appropriate form or by following the telephonic or
electronic procedures for terminating elections in the time and manner
established by the Retirement Committee. The termination election shall become
effective as of the first payroll period commencing immediately after the date
of the election or such later date as may be administratively practicable.
(d) Retirement Committee's Discretion to Limit Elections.
Notwithstanding a Participant's elections made pursuant to this Article III, the
Retirement Committee may direct that the Participant's Pre-Tax Contributions or
After-Tax Contributions (or both) be limited in any manner the Retirement
Committee, in its discretion, shall determine appropriate to preserve the
qualification of the Plan under section 401(a) of the Code and as a qualified
cash or deferred arrangement under section 401(k) of the Code.
3.8. Rollover Contributions. A Participant, with the consent of the
Retirement Committee or its delegate, may at any time make a rollover
contribution to the Plan. For this purpose, a rollover contribution shall
include only (a) cash funds transferred directly from a tax-qualified plan
(within the meaning of section 401 of the Code) and that constitute an "eligible
rollover distribution" (as defined in section 402(c)(4) of the Code), and (b)
cash funds distributed from a tax-qualified plan or a conduit individual
retirement account that are transferred to the Plan within 60 days of the
Participant's receipt thereof and that constitute an "eligible rollover
distribution" (as defined in section 402(c)(4) of the Code). A Participant may
be required to
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<PAGE>
Contributions and Allocations
establish that the transfer of amounts into a Rollover Account will not require
any changes to the terms of the Plan or will not expose the Plan or Trust to
adverse tax consequences.
3.9. Employer's Obligation to Make Contributions.
(a) Contributions. Each Employer agrees to pay to the Trustee the
contributions that are required with respect to Participants who are Employees
of such Employer. Profit-Sharing Contributions with respect to a Plan Year shall
be paid to the Trustee no later than the due date for filing the Employer's
federal income tax return (including extensions thereof) for the fiscal year of
the Employer ending with or within such Plan Year. Pre-Tax Contributions and
After-Tax Contributions shall be withheld and paid by the Employer, and Matching
Contributions shall be paid by the Employers to the Trustee periodically
throughout the Plan Year.
(b) Limitation. Contributions under this Article III shall not be
made to the Plan to the extent they would exceed the deduction limitations of
section 404 of the Code, in which case such contributions shall be reduced to
the extent allowable and necessary in the following order: (1) Profit-Sharing
Contributions; (2) Matching Contributions; and (3) Pre-Tax Contributions.
3.10. Treatment of Forfeited Amounts.
(a) Reduction of Contributions. Forfeitures shall be allocated to
Employers as provided in paragraph (b) and be used to reduce Profit-Sharing
Contributions and Matching Contributions of such Employer.
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<PAGE>
Contributions and Allocations
(b) Allocation of Forfeitures to Employers. Forfeitures of
Profit-Sharing Contributions and Matching Contributions shall be credited to the
Employer with which the Participant was last employed before the forfeiture
occurred, or as otherwise determined by the Retirement Committee.
3.11. Finality of Allocations. The Retirement Committee shall cause a
written account statement to be given to each Participant (or, in the event of
the Participant's death, his Beneficiary) at least annually setting forth the
amount of the contributions allocated to his Accounts. Any Participant or
Beneficiary claiming that an error has been made in an account statement shall
notify the Retirement Committee in writing within 90 days following the delivery
or mailing of such statement. The Retirement Committee shall review the claim
and advise the Participant or Beneficiary of its decision in writing. If no such
notice of error is filed, the account statement shall be presumed to be correct.
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<PAGE>
ARTICLE IV
LIMITATIONS ON CONTRIBUTIONS
4.1. In General. Notwithstanding any provisions of Article III to the
contrary, the contributions provided for in Article III shall be limited to the
extent necessary to meet the requirements of this Article IV.
4.2. Pre-Tax Contributions.
(a) Treatment of Certain Contributions as After-Tax. If the
Retirement Committee determines that a Participant's Pre-Tax Contributions for a
calendar year have reached the dollar limit described in Section 3.3(a), any
additional contributions for that calendar year pursuant to the Participant's
Pre-Tax Contribution election shall be deemed to be After-Tax Contributions and
the Matching Contributions with respect to that amount, if any, shall be deemed
to be Matching After-Tax Contributions.
(b) Return of Excess Deferrals. In the event that a Participant's
Pre-Tax Contributions made to the Plan for a calendar year exceed the dollar
limit described in Section 3.3(a), the excess amount, as adjusted for income and
loss, may, in the discretion of the Retirement Committee, be distributed to the
Participant no later than April 15 of the following year in accordance with the
requirements of section 402(g) of the Code and U.S. Treasury Regulation Section
1.402(g)-1.
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<PAGE>
4.3. Limitations on Contributions for Highly Compensated Employees.
(a) Limits imposed by section 401(k)(3) of the Code. Notwithstanding
the provisions of Section 3.3, if the Pre-Tax Contributions made for a Plan Year
fail to satisfy both of the tests set forth in subparagraphs (1) and (2) of this
paragraph, the adjustments prescribed in Section 4.3(e)(1) shall be made.
(1) The average deferral percentage (as defined in subparagraph
(d)(1)) for the group consisting of all highly compensated
Employees (as defined in subparagraph (d)(4)) for the Plan
Year does not exceed the product of the average deferral
percentage for the group consisting of all non-highly
compensated Employees for the immediately preceding Plan Year
and 1.25.
(2) The average deferral percentage for the group consisting of
all highly compensated Employees for the Plan Year (i) does
not exceed the average deferral percentage of the group
consisting of all non-highly compensated Employees for the
immediately preceding Plan Year by more than 2 percentage
points, and (ii) does not exceed the product of the average
deferral percentage of the group consisting of all non-highly
compensated Employees for the immediately preceding Plan Year
and 2.0.
(b) Limits imposed by section 40 1(m) of the Code. Notwithstanding
the provisions of Sections 3.1, 3.4 and 3.6, if the aggregate of the Matching
Contributions and After-
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<PAGE>
Tax Contributions made for a Plan Year fail to satisfy both of the tests set
forth in subparagraphs (1) and (2) of this paragraph, the adjustments prescribed
in Section 4.3(e)(2) shall be made.
(1) The average contribution percentage (as defined in
subparagraph (d)(2)) for the group consisting of all highly
compensated Employees for the Plan Year does not exceed the
product of the average contribution percentage for the group
consisting of all non-highly compensated Employees for the
immediately preceding Plan Year and 1.25.
(2) The average contribution percentage for the group consisting
of all highly compensated Employees for the Plan Year (i) does
not exceed the average contribution percentage of the group
consisting of all non-highly compensated Employees for the
immediately preceding Plan Year by more than 2 percentage
points, and (ii) does not exceed the product of the average
contribution percentage of the group consisting of all
non-highly compensated Employees for the immediately preceding
Plan Year and 2.0.
(c) Aggregate Limit on Contributions. Notwithstanding anything
herein to the contrary, if the aggregate of the Pre-Tax Contributions, Matching
Contributions and After-Tax Contributions made for a Plan Year fail to satisfy
all of the tests set forth in subparagraphs (1), (2) and (3) of this paragraph,
the adjustments prescribed in subparagraph (e)(3) shall be made.
(1) The "average deferral percentage" (as defined in subparagraph
(d)(1)) for the group consisting of highly compensated
Employees for the Plan Year
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<PAGE>
does not exceed the product of the average deferral percentage
for the group consisting of all non-highly compensated
Employees for the immediately preceding Plan Year and 1.25.
(2) The average contribution percentage (as defined in
subparagraph (d)(2)) for the group consisting of highly
compensated Employees for the Plan Year does not exceed the
product of the average contribution percentage for the group
consisting of all non-highly compensated Employees for the
immediately preceding Plan Year and 1.25.
(3) The sum of the average deferral percentage (as determined
under subparagraph (d)(1) after making the adjustments
required by subparagraph (e)(1) for the Plan Year) and the
average contribution percentage (as determined under
subparagraph (d)(2) after making the adjustments required by
subparagraph (e)(2) for the Plan Year) for the group
consisting of highly compensated Employees for the Plan Year
does not exceed the "aggregate limit" (as defined in
subparagraph (d)(3)) for such Plan Year.
(d) Definitions and Special Rules. For purposes of this Section:
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<PAGE>
(1) The "average deferral percentage"
(i) for the group of highly compensated Employees for a Plan
Year shall be the average of the ratios, calculated
separately for each Employee in such group to the
nearest one-hundredth of one percent, of the Pre-Tax
Contributions made for the benefit of such Employee to
the total compensation for such Plan Year paid to such
Employee, and
(ii) for the group of non-highly compensated Employees for
the immediately preceding Plan Year shall be the average
of the ratios, calculated separately for each Employee
in such group to the nearest one-hundredth of one
percent, of the Pre-Tax Contributions made for the
benefit of such Employee for the immediately preceding
Plan Year to the total compensation for the immediately
preceding Plan Year paid to such Employee.
(2) The "average contribution percentage"
(i) for the group of highly compensated Employees for a Plan
Year shall be the average of the ratios, calculated
separately for each Employee in such group to the
nearest one-hundredth of one percent, of the Matching
Contributions, the After-Tax Contributions and, in the
Retirement Committee's sole discretion, to the extent
permitted under rules prescribed by the Secretary of
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<PAGE>
the U.S. Treasury Department or otherwise under the law,
the Pre-Tax Contributions made during such year for the
benefit of such Employee to such Employee's compensation
for such Plan Year, and
(ii) for the group of non-highly compensated Employees for
the immediately preceding Plan Year shall be the average
of the ratios, calculated separately for each Employee
in such group to the nearest one-hundredth of one
percent, of the Employer matching contributions,
After-Tax Contributions and, in the Retirement
Committee's sole discretion, to the extent permitted
under rules prescribed by the Secretary of the U.S.
Treasury Department or otherwise under the law, the
Pre-Tax Contributions made during the immediately
preceding Plan Year for the benefit of such Employee to
such Employee's compensation for the immediately
preceding Plan Year.
(3) The aggregate limit" shall equal the greater of
(A) the sum of (i) 1.25 times the greater of the average
deferral percentage or the average contribution
percentage for the immediately preceding Plan Year for
the group consisting of non-highly compensated Employees
for such immediately preceding Plan Year, plus (ii) the
lesser of (a) the sum of two percentage
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<PAGE>
points and the lesser of the average deferral percentage
or the average contribution percentage for the
immediately preceding Plan Year for the group consisting
of all non-highly compensated Employees for such
immediately preceding Plan Year, and (b) 200% of the
lesser of the average deferral percentage or the average
contribution percentage for the immediately preceding
Plan Year for the group consisting of all non-highly
compensated Employees for such immediately preceding
Plan Year and
(B) the sum of (i) 1.25 times the lesser of the average
deferral percentage or the average contribution
percentage for the immediately preceding Plan Year for
the group consisting of all non-highly compensated
Employees for such immediately preceding Plan Year, plus
(ii) the lesser of (a) the sum of two percentage points
plus the greater of the average deferral percentage or
the average contribution percentage for the immediately
preceding Plan Year for the group consisting of all
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<PAGE>
non-highly compensated Employees for such immediately
preceding Plan Year;
(4) "highly compensated Employee" shall mean any Employee who has
become a Participant who performs services in the
determination year and is in one or more of the following
groups: (i) Employees who were five percent owners (as
determined in section 416(i)(1)(A)(iii) of the Code) at any
time during the determination year or the look-back year, or
(ii) Employees with compensation greater than $80,000
(adjusted for increases in the cost of living as set forth in
section 415(d) of the Code) during the look-back year and who
were in the top-paid group during the look-back year. Any
former Employee who had a separation year prior to the
determination year and was a highly compensated Employee as
described in any of clauses (i) and (ii) above for either (A)
his separation year or (B) any determination year ending on or
after this attainment of age 55 shall be considered a "highly
compensated Employee". For purposes of determining whether a
person is a highly compensated Employee of an Employer with
respect to a Plan Year, the term "determination year" means
the Plan Year for which the determination is being made; the
term "look-back year" means the twelve-month period
immediately preceding the determination year; the term
"top-paid group" means the top 20% of employees of the
Employer ranked on the basis of compensation received
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<PAGE>
during the year (provided, however, that when determining the
number of employees in such group, employees described in
section 414(q)(8) of the Code, to the extent required by Q&A
9(b) of U.S. Treasury Regulation Section 1.414(q)-1T or
subsequent final regulations, are excluded); "compensation"
means compensation within the meaning of section 415(c)(3) of
the Code, including elective or salary reduction contributions
to a cafeteria plan, cash or deferred arrangement or
tax-sheltered annuity; employers aggregated under section
414(b), (c), (m) or (o) of the Code are treated as a single
employer; and "separation year" means the determination year
the Employee separates from service with the applicable
Employer.
(5) "non-highly compensated Employee" shall mean any Employee who
has become a Participant who performs services in the
determination year (as defined in subparagraph (4) of this
paragraph) and is not a highly compensated Employee.
(6) "compensation" shall have the meaning set forth in section
414(s) of the Code or, in the discretion of the Retirement
Committee, any other meaning in accordance with the Code for
these purposes;
(7) if the Plan and one or more other plans of an Employer or any
of its affiliates to which pre-tax contributions, matching
contributions or
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<PAGE>
employee contributions (as such terms are defined for purposes
of section 401(m) of the Code), or qualified nonelective
contributions (as such term is defined in section 401(m)(4)(C)
of the Code), are treated as one plan for purposes of section
410(b) of the Code, such plans shall be treated as one plan
for purposes of this Section. If a highly compensated Employee
participates in the Plan and one or more other plans of his
Employer or any of its affiliates to which any such
contributions are made, all such contributions shall be
aggregated for purposes of this Section.
(e) Adjustments to comply with limits. (1) Adjustments to comply
with section 401 (k)(3) of the Code. The Retirement Committee shall cause to be
made such periodic computations as it shall deem necessary or appropriate to
determine whether either of the tests set forth in subparagraph (a)(1) or (a)(2)
will be satisfied during a Plan Year and, if it appears to the Retirement
Committee that neither of such tests will be satisfied, the Retirement Committee
shall take such steps as it deems necessary or appropriate to adjust the Pre-Tax
Contributions made for all or a portion of the remainder of such Plan Year on
behalf of each Participant who is a highly compensated Employee to the extent it
deems necessary in order for one of such tests to be satisfied. If after the end
of a Plan Year it is determined that regardless of any such steps taken neither
of the tests set forth in subparagraph (a)(1) or (a)(2) will be satisfied with
respect to such Plan Year, the Retirement Committee shall calculate a total
amount by which Pre-Tax Contributions must be reduced in order to satisfy either
such test, in the manner prescribed by section 401(k)(8)(B) of the Code (the
"excess contributions amount"). The amount of Pre-Tax
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<PAGE>
Contributions to be reduced for each Participant who is a highly compensated
Employee shall be determined by first reducing the Pre-Tax Contributions of each
Participant whose actual dollar amount of Pre-Tax Contributions for such Plan
Year is the highest until such reduced dollar amount equals the next highest
actual dollar amount of Pre-Tax Contributions made for such Plan Year on behalf
of any highly compensated Participant or until the total reduction equals the
excess contributions amount. If further reductions are necessary, then such
contributions on behalf of each Participant who is a highly compensated Employee
and whose actual dollar amount of Pre-Tax Contributions made for such Plan Year
is the highest (determined after the reduction described in the previous
sentence) shall be reduced in accordance with the previous sentence. Such
reductions shall continue to be made to the extent necessary so that the total
reduction equals the excess contributions amount. The amount by which Pre-Tax
Contributions are to be reduced in accordance with this paragraph (e) shall be
deemed to be After-Tax Contributions and any Matching Pre-Tax Contributions made
with respect to such Pre-Tax Contributions shall be deemed to be After-Tax
Matching Contributions. The amount by which a Participant's Pre-Tax
Contributions are reduced in accordance with this paragraph (e) shall be reduced
by any Pre-Tax Contributions previously distributed to such Participant pursuant
to Section 4.2 for such Plan Year. The amount of any income allocable to any
such reductions shall be determined pursuant to final regulations promulgated by
the U.S. Treasury Department. The unadjusted amount of any reductions
distributed shall be treated as "annual additions" for purposes of Section 4.4.
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<PAGE>
(1) Adjustments to comply with section 401(m) of the Code. The
Retirement Committee shall cause to be made such periodic
computations as it shall deem necessary or appropriate to
determine whether either of the tests set forth in
subparagraph (b)(1) or (b)(2) will be satisfied during a Plan
Year with respect to the Plan, and if it appears to the
Retirement Committee that neither of such tests will be
satisfied, the Retirement Committee shall take such steps as
it deems necessary or appropriate to adjust the Matching
Contributions and the After-Tax Contributions made for all or
a portion of the remainder of such Plan Year on behalf of each
Participant who is a highly compensated Employee to the extent
necessary in order for one of such tests to be satisfied. If
after the end of a Plan Year it is determined that regardless
of any steps taken neither of the tests set forth in
subparagraph (b)(1) or (b)(2) will be satisfied with respect
to such Plan Year, the Retirement Committee shall calculate
the maximum contribution percentage permissible for
Participants who are highly compensated Employees under the
tests set forth in subparagraphs (b)(1) and (b)(2) and reduce
the Matching Contributions and After-Tax Contributions made on
behalf of each Participant who is a highly compensated
Employee and whose actual dollar amount of Matching
Contributions and After-Tax Contributions for such Plan Year
is the highest in the same manner described in subparagraph
(1) of this paragraph to the extent necessary to comply with
subparagraph (b)(1) or (b)(2). The reduction described in the
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<PAGE>
foregoing sentence shall be made first with respect to a
Participant's After-Tax Contributions in excess of six percent
of Compensation, second with respect to any remaining
After-Tax Contributions and any Matching After-Tax
Contributions attributable thereto, third with respect to any
Matching Pre-Tax Contributions. The Retirement Committee shall
distribute no later than the last day of the subsequent Plan
Year to each such Participant the amount of such reductions
made with respect to vested Matching Contributions and
After-Tax Contributions plus any income allocable thereto to
which such Participant would be entitled under the Plan if
such Participant had terminated service on the last day of the
Plan Year for which such contributions are made (or earlier if
such Participant actually terminates service at any earlier
date), and any remaining amount of such reductions plus any
income allocable thereto shall be forfeited and used to reduce
contributions in accordance with Section 3.10. The amount of
any such income allocable to any such reductions to be so
distributed or forfeited shall be determined pursuant to final
regulations promulgated by the U.S. Treasury Department.
(2) Adjustments to comply with the aggregate limit. If after
making the adjustments required by subparagraphs (1) and (2)
of this paragraph for a Plan Year the Retirement Committee
determines that the sum of the average deferral percentage and
the average contribution percentage for
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<PAGE>
the group consisting of Participants who are highly
compensated Employees exceeds the aggregate limit for such
Plan Year, the Retirement Committee shall no later than the
last day of the subsequent Plan Year reduce (i) first the
After-Tax Contributions made for such Plan Year on behalf of
each Participant who is a highly compensated Employee and any
corresponding Matching Contributions and (ii) second, the
Pre-Tax Contributions made for such Plan Year on behalf of
each Participant who is a highly compensated Employee and any
corresponding Matching Contributions to the extent necessary
to eliminate such excess. Such reduction shall be effected in
the same manner described in subparagraphs (1) and (2), as
applicable, of this paragraph (e).
4.4. Limitations on Annual Additions.
(a) The Defined Contribution Limit. The "annual addition," as
defined herein, for any Plan Year to a Participant's accounts in all defined
contribution plans maintained by the Employers or Affiliates shall not exceed
the lesser of (1) twenty-five percent (25%) of the Participant's Compensation
for the Plan Year, and (2) $30,000 (as adjusted in accordance with section
415(d) of the Code). The term "annual additions" means the sum of all
contributions and forfeitures allocated to a Participant's accounts (other than
a rollover account).
(b) The Combined Limit. If the Participant also has participated in
a defined benefit plan maintained by an Employer or an Affiliate, then the
limitations of section 415(e) of the Code shall apply with respect to Plan Years
beginning prior to January 1, 2000. If such
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<PAGE>
limitations are exceeded in any such Plan Year, then the benefits under such
defined benefit plan maintained by the Employer or Affiliate shall be reduced
before the annual additions to the Plan are reduced.
(c) Reduction of Contributions. If the Retirement Committee
determines at any time that the annual addition to any Participant's Accounts
exceeds the limitation described in paragraph (a) or (b) (or both) for any Plan
Year, then the contributions on behalf of the Participant shall be reduced, to
the extent necessary, in the following order:
(1) Pre-Tax Contributions in excess of six percent (6%) of
the Participant's Compensation;
(2) Remaining Pre-Tax Contributions and Matching Pre-Tax
Contributions attributable thereto on a pro rata basis;
(3) Profit-Sharing Contributions;
(4) After-Tax Contributions in excess of six percent (6%) of
the Participant's Compensation;
(5) Remaining After-Tax Contributions and Matching After-Tax
Contributions attributable thereto on a pro rata basis.
After-Tax Contributions, Pre-Tax Contributions and Profit-Sharing
Contributions, each as adjusted for gains, shall be returned to the Participant
Matching Contributions, as adjusted for gains, to the extent allowable shall be
held in a suspense account and allocated to the accounts of
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<PAGE>
such Participant in the next Plan Year, provided, however, that if the
Participant is not covered by the Plan in the next Plan Year, the amount shall
be allocated to the remaining Participants in the Plan who are employed by such
Participant's Employer.
(d) Limits on Limits. The limits stated on this Article IV shall
apply only to the extent required under the Code. Except as otherwise
specifically provided in this Section 4.4, all of the requirements of section
415 of the Code, and limitations thereon, are incorporated herein by reference.
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<PAGE>
ARTICLE V
VESTING AND FORFEITURES
5.1. In General. A Participant shall have a fully vested interest at all
times in his Pre-Tax Account, After-Tax Account, Harris Stock Pre-Tax Account,
Harris Stock After-Tax Account and Savings Account (other than the portion of
such accounts attributable to matching contributions) and Rollover Account.
5.2. Vesting on Retirement, Death or Disability. A Participant shall have
a fully vested interest in his Profit Sharing Account, Matching Account, Harris
Stock Matching Account, and portion of his Savings Account attributable to
matching contributions, on termination of his employment with the Employers in
the event of the Participant's:
(a) retirement on or after Early Retirement Age;
(b) retirement on or after the effective date of the Participant's
Disability; or
(c) death.
5.3. Vesting on Other Termination of Employment.
(a) Vesting Schedule. A Participant who terminates employment other
than on the occurrence of one of the events described in Section 5.2 shall have
a vested interest in his Profit-Sharing Account, Matching Account, Harris Stock
Matching Account and the portion of his Savings Account attributable to matching
contributions based upon his Period of Service in accordance with the following
schedule:
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<PAGE>
Vesting and Forfeitures
Period of Service Vested Percentage
----------------- -----------------
Less than 3 years 0%
3 years but less than 4 years 30%
4 years but less than 5 years 40%
5 years but less than 6 years 60%
6 years but less than 7 years 80%
7 years or more 100%
(b) Vesting on Sale of Business. In the event of the sale or
disposition of a business or a sale of substantially all of the assets of a
trade or business, the Corporation may, in its discretion, provide for
accelerated vesting with respect to those Participants affected by the sale.
5.4. Effect of In-Service Withdrawals on a Participant's Vested
Percentage. If a Participant receives a withdrawal under Article IX or a
distribution under Article VII from his Profit-Sharing Account at a time when
the Participant has less than a fully vested interest in that account, the
dollar amount of his vested interest in his Profit-Sharing Account (X) shall be
determined at any subsequent time by the following formula:
X = P(AB + D) - D
For the purpose of applying the formula, P is the percentage of the
Participant's interest in his Profit-Sharing Account that is vested at the time
the determination is made, AB is the balance
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<PAGE>
Vesting and Forfeitures
credited to the Profit-Sharing Account at the time the determination is made,
and D is the amount of the withdrawal.
5.5. Forfeitures. If upon a Participant's termination of employment with
the Employers the Participant is not fully vested in the balance of his or her
Profit Sharing Account, Pre-Tax Matching Account and After-Tax Matching Account,
then the difference between the value of each such Account and the amount
distributable with respect thereto shall be charged to such Account and
forfeited. Such forfeiture shall occur as of the Valuation Date coinciding with
or next following the earlier of (i) the date the Participant takes a
distribution of his or her vested interest in such Account and (ii) the date as
of which the Participant incurs five consecutive one-year Periods of Severance.
For purposes of the preceding sentence, a Participant who does not have a vested
interest in his or her Profit Sharing Account, Pre-Tax Matching Account or
After-Tax Matching Account (or all such Accounts) shall be deemed to have
received a distribution of such Account as of the date of such Participant's
termination of employment with the Employers. If such Participant is reemployed
by an Employer prior to incurring five consecutive one-year Periods of
Severance, such forfeiture shall be reinstated by the Employer with which the
Participant is reemployed.
ARTICLE VI
ACCOUNTS AND INVESTMENTS
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Accounts and Investments
6.1. Establishment of Accounts. The Retirement Committee shall establish
and maintain for each Participant the following Accounts showing the
Participant's interest under the Plan:
(a) Profit-Sharing Account, which shall consist of the following two
subaccounts:
(1) a Basic Account to record the portion of Profit-Sharing
Contributions allocable to the Participant's
Compensation and the earnings and losses thereon; and
(2) a Supplemental Account to record the portion of
Profit-Sharing Contributions allocable to the
Participant's Excess Compensation.
(b) Pre-Tax Account to record (i) Pre-Tax Contributions made on the
Participant's behalf and the earnings and losses thereon.
(c) After-Tax Account to record the After-Tax Contributions made on
the Participant's behalf and the earnings or losses thereon.
(d) Matching Account to record the Matching Pre-Tax Contributions
and Matching After-Tax Contributions made on the Participant's behalf and the
earnings and losses thereon.
(e) A Savings Account to record any savings contributions under the
Plan as in effect prior to July 1, 1990.
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Accounts and Investments
(f) In the case of a Participant who is a Participant on the
Effective Date, a Harris Stock Pre-Tax Account to record any Pre-Tax
Contributions made prior to the Effective Date on the Participant's behalf which
are invested in the Harris Stock Fund.
(g) In the case of a Participant who is a Participant on the
Effective Date, a Harris Stock After-Tax Account to record any After-Tax
Contributions made prior to the Effective Date on the Participant's behalf which
are invested in the Harris Stock Fund.
(h) In the case of a Participant who is a Participant on the
Effective Date, a Harris Stock Matching Account to record any Matching
Contributions made prior to the Effective Date on the Participant's behalf which
are invested in the Harris Stock Fund.
(i) Rollover Account to reflect the Participant's Rollover
contributions and the earnings and losses thereon.
6.2. Investment of Accounts. Subject to Section 6.4, each Participant
shall have the right to direct the investment of the current balances of his
Accounts and future contributions to his Accounts among the Investment Funds in
accordance with the following procedures and such additional procedures as may
be established from time to time by the Retirement Committee.
(a) Election Procedures. Each election shall be made by filing the
appropriate form or by following the appropriate telephonic or electronic
procedures in the time and manner established by the Retirement Committee in its
absolute discretion.
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Accounts and Investments
(b) Elections in 1 % Increments for Current Balances. A
Participant's election with respect to his current Account balances shall be
made in increments of one percent (1 %) (or such larger percentage as determined
by the Retirement Committee) of the Account balances;
(c) Elections in 1 % Increments for Future Contributions. A
Participant's election with respect to future contributions shall be made in
increments of one percent (1 %) (or such larger percentage as determined by the
Retirement Committee) of such contributions;
(d) Changing Elections. A Participant may change his investment
elections by filing the appropriate form or by following the appropriate
telephonic or electronic procedures established by the Retirement Committee and
subject to the following rules:
(i) An investment election with respect to future
contributions shall be effective as of the first payroll
period commencing immediately after the date of the
election, provided that the election change is made
before the deadline established from time to time by the
Retirement Committee, or such later date as may be
administratively practicable. If more than one election
change is made with respect to a payroll period, the
most recent election change made prior to the applicable
deadline shall be given effect with respect to such
payroll period.
(ii) An investment election with respect to a Participant's
current Account balances which is made on a Valuation
Date shall be effective on the immediately following
Valuation Date (or as soon as practicable thereafter
with respect to transfers out of the Harris Stock Fund),
provided that the election change is made before the
deadline established from time to time by the Retirement
Committee. An investment election change (i) made on a
day that is not a Valuation Date or (ii) made on a
Valuation Date after the applicable deadline shall
become effective on the second Valuation Date occurring
after the date such change is made (or as soon as
practicable thereafter with respect to transfers out of
the Harris Stock Fund). If more than one election change
in respect of a
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Accounts and Investments
Valuation Date is made before the applicable deadline,
the last such election change shall be given effect with
respect to such Valuation Date.
(e) Elections Apply to All Accounts. Subject to Section 6.4, each of
the Participant's Accounts shall be invested among the Investment Funds in the
same manner, such that each election by a Participant with respect to the
Investment Funds shall apply to all of his Accounts in the same proportion.
(f) Investment of Accounts Absent Election. In the event a
Participant fails to make a required investment election with respect to his
current Account balances or future contributions, such Account balances or
future contributions shall be invested in an Investment Fund designated by the
Retirement Committee until the Participant makes a valid investment election
pursuant to this Section 6.2.
6.3. Allocation of Earnings and Losses. In determining a Participant's
share of the earnings or losses of each of the Investment Funds as of any
Valuation Date, the total earnings or losses of the particular Investment Fund
since the immediately preceding Valuation Date, net of expenses allocable to
such fund, shall be allocated among the Participants' Accounts invested in the
fund on such Valuation Date based on the ratio of each Participant's Accounts to
the aggregate of the Accounts of all Participants, before taking into account
any contributions that are required to be but are not yet made as of the
Valuation Date and before taking into account any distributions, withdrawals or
loans to Participants made as of the Valuation Date Contributions to an Account
are not credited with earnings for the Valuation Date on which the contributions
are credited to the Account.
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Accounts and Investments
6.4. Special Rules Concerning Harris Stock Fund. Notwithstanding any
provision of Section 6.2 to the contrary, the rules set forth in this Section
shall apply to investments in the Harris Stock Fund.
(a) Availability. Pre-Tax Contributions, After-Tax Contributions,
Matching Contributions, Profit Sharing Contributions and Rollover Contributions
made on or after the Effective Date may not be invested in the Harris Stock
Fund.
(b) Restrictions on Transfers. A Participant may not transfer any
portion of his Accounts which are invested in other Investment Funds to the
Harris Stock Fund. A Participant may transfer all or a portion of his Accounts
which are invested in the Harris Stock Fund to any other Investment Fund in one
percent (1 %) increments in accordance with procedures established by the
Retirement Committee.
(c) Dividends. A Participant's allocable share of cash dividends
(and other cash earnings) credited to the Harris Stock Fund will be reinvested
as soon as administratively practicable among the Investment Funds other than
the Harris Stock Fund in the same proportion that the investment of the
Participant's future contributions is made pursuant to Section 6.2. Dividends
paid in the form of stock shall be liquidated and reinvested in accordance with
this paragraph, unless otherwise determined by the Retirement Committee.
(d) Distributions. Distributions from the Harris Stock Fund shall be
in the form of cash or shares of stock of the Predecessor Company at the
election of the Participant.
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Accounts and Investments
Fractional shares and distributions of a de minimis amount as determined by the
Retirement Committee shall be paid in cash.
(e) Voting. The Trustee will vote the shares in the Harris Stock
Fund in accordance with instructions from the Retirement Committee.
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ARTICLE VII
DISTRIBUTIONS
7.1. In General. A Participant shall be entitled to receive a distribution
of the vested interest in his Accounts on the earlier of the Participant's (i)
termination of employment and (ii) attainment of age 59 1/2, except that his
Pre-Tax Contributions and Matching Pre-Tax Contributions are distributable only
to the extent that a distribution of such Pre-Tax Contributions is permissible
under section 40 1(k) of the Code. A termination of employment shall not be
deemed to occur for purposes of this Section 7.1 and Section 7.2 until the
Participant is no longer employed by an Employer. A Participant may elect, in
accordance with procedures established by the Retirement Committee, to receive
the sum of the vested balances of his Accounts, if any, that are invested in the
Harris Stock Fund either in (a) cash, or (b) in shares of common stock of the
Predecessor Company; provided, however, that distributions of fractional shares
and de minimis amounts (as determined by the Retirement Committee) shall be made
in cash.
7.2. Small Benefit Cash-out. Except as provided in Section 7.5, in any
case in which a Participant's vested interest in his Accounts does not exceed
$5,000 (or such larger amount as may be permitted by law), the vested interest
shall be paid to the Participant in a lump sum as of the later of (a) the end of
the calendar quarter in which such vested interest does not exceed $5,000 and
(b) the end of the calendar quarter following his termination of employment with
the Employers, or such other date as may be administratively practicable. For
this purpose, if at the
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time of commencement of distribution of any Participant's vested interest in the
form of scheduled periodic payments, the value of the Participant's
vested interest exceeded $5,000, then at the time of any subsequent scheduled
periodic payment such vested interest will, to the extent required by law, be
deemed to exceed $5,000.
7.3. Form of Payment.
(a) Options. In any case in which a Participant's vested interest in
his accounts exceeds the amount provided in Section 7.2, the Participant (or in
the event of death, his Beneficiary) entitled to receive a distribution may
elect at any time to receive payment of his vested interest in:
(1) an amount not greater than the vested balance of the
Participant's Accounts; provided, however, that only one
such payment may be made in any single month;
(2) substantially equal periodic installment payments,
payable not less frequently than annually and not more
frequently than monthly, over a period of time to be
elected by the Participant;
(3) a combination of (1) and (2); or
(4) a direct rollover pursuant to Section 7.5.
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Distributions
(b) Changes Allowed. A Participant (or, in the event of death, his
Beneficiary) may change his election with respect to the form of payment at any
time before or after distribution of benefits commences, subject to the
provisions of Section 7.9.
(c) Effect of Failure to Specify an Option. If a Participant fails
to file an election under this Section 7.3, then his benefits shall be paid in
accordance with Section 7.4.
7.4. Time of Payment. Except as provided in Section 7.2, upon a
Participant's termination of employment with the Employers, the Participant may
elect that payment of his vested interest begin as soon as administratively
practicable or at any other time permitted under the Plan. If a Participant
fails to file an election under this Section 7.4 and payment of benefits has not
already commenced, payment of his benefits shall commence in accordance with the
provisions of Section 7.9.
7.5. Direct Rollover.
(a) A Participant or "distributee" may elect at any time to have any
portion of an "eligible rollover distribution" paid in a direct rollover to the
trustee or custodian of an "eligible retirement plan" specified by the
Participant or distributee, whichever is applicable. Payment of a direct
rollover in the form of a check payable to the trustee or custodian of an
eligible retirement plan, for the benefit of the Participant or distributee, may
be mailed to the Participant or distributee, at the discretion of the Retirement
Committee.
(b) For purposes of this Section 7.5, the following terms shall have
the following meanings:
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Distributions
(1) "distributee" means a surviving spouse, or a spouse or
former spouse who is an alternate payee under a
qualified domestic relations order defined in section
414(p) of the Code.
(2) "eligible retirement plan" means an individual
retirement account described in section 408(a) of the
Code, an individual retirement annuity described in
section 408(b) of the Code, an annuity plan described in
section 403(a) of the Code, or a qualified trust
described in section 401(a) of the Code that accepts an
eligible rollover distribution.
(3) "eligible rollover distribution" means any distribution
of all or a portion of the Participant's Accounts, other
than the portion of his After-Tax Account and Harris
Stock After-Tax Account attributable to After-Tax
Contributions, but does not include a distribution (i)
in installments over a period of ten years or more or
over a period described in Section 7.9(c), (ii) to the
extent the distribution is required under section
401(a)(9) of the Code or (iii) a withdrawal from a
Participant's Pre-Tax Account pursuant to Section 9.2.
7.6. Payments on Death. If a Participant dies before he has received the
full amount of the vested interest in his Accounts, then the unpaid amount shall
be paid to his Beneficiary. If
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Distributions
the unpaid amount does not exceed $5,000 (or such larger amount as permitted
under Section 7.2), it shall be paid to the Beneficiary as of the end of the
calendar quarter following the Participant's death or such later date as may be
administratively practicable. If the unpaid amount exceeds $5,000 (or such
larger amount as may be permitted under Section 7.2), it shall be paid to the
Beneficiary as provided in Sections 7.3 and 7.4 and, if the Beneficiary is the
spouse, Section 7.5, provided that, if the Beneficiary fails to file an
election, the unpaid amount shall be paid in a lump sum not later than the fifth
anniversary of the Participant's death.
7.7. Benefit Amount and Withholding.
(a) Vested Amount and Adjustments. For purposes of this Article VII,
a Participant's vested interest in his Accounts shall be determined as of the
Valuation Date coinciding with or immediately preceding the date on which a
Participant's distribution is processed, and shall take into account any
Profit-Sharing Contribution to which the Participant may be entitled under
Section 3.2 that has not yet been credited to the Participant's Profit-Sharing
Account. Any unpaid amount in the Participant's Accounts following a
distribution shall continue to be adjusted for earnings and losses as provided
in Section 6.3 until the Valuation Date coinciding with or immediately preceding
the date on which a distribution with respect to such amount is processed.
(b) Withholding. The Employer shall have the right to require, prior
to any distribution, payment by the Participant of any Federal, state, local or
other taxes which may be required to be withheld or paid in connection with any
distribution hereunder. The Employer
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Distributions
shall have the right to withhold from a distribution, which would otherwise be
distributable to a Participant, any amount necessary to satisfy any such
obligation.
7.8. Order of Distributions. Any distribution under this Plan shall be
charged against the Participant's Accounts pursuant to administrative procedures
designed to maximize the tax benefits to the Participant by distributing to him
first his After-Tax Contributions to the extent permitted by law.
7.9. Statutory Requirements. Notwithstanding any other provisions of the
Plan to the contrary, the following rules shall apply to all payments under the
Plan:
(a) Latest Commencement Date. Unless the Participant files a written
election to defer payment of benefits, benefits payments with respect to any
Participant shall commence no later than the 60th day after the close of the
Plan Year in which the latest of the following occurs:
(1) the date on which the Participant attains Normal
Retirement Age;
(2) the 10th anniversary of the date on which the
Participant commenced participation in the Plan; and
(3) the date on which the Participant terminated employment.
Failure to file an election under Section 7.4 for
payment of benefits to commence shall be deemed to be a
written election to defer payment of benefits under this
paragraph (a).
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Distributions
(b) Required Beginning Date. Notwithstanding paragraph (a) above,
payment of benefits to a Participant shall commence no later than April 1 of the
calendar year following the calendar year in which the Participant attains age
70 1/2 or (if the Participant is not a "5-percent owner" under section 416(i) of
the Code) the Participant's termination of employment with the Employers, if
later.
(c) Maximum Duration of Distributions. Payment of a Participant's
benefit pursuant to paragraph (b) shall be made over a period not to exceed one
of the following periods:
(1) the life of the Participant;
(2) the life of the Participant and the Participant's
Beneficiary;
(3) a period certain not extending beyond the life
expectancy of the Participant; or
(4) a period certain not extending beyond the joint and last
survivor expectancy of the Participant and his
Beneficiary.
The amount to be distributed each year must be at least equal to the
quotient obtained by dividing the Participant's benefit by the life expectancy
of the Participant or the joint and last survivor expectancy of the Participant
and his Beneficiary. Life expectancy and joint and last survivor expectancy
shall be computed by the use of the return multiples contained in U.S. Treasury
Regulation Section 1.72-9. For purposes of this computation, a Participant's and
a spouse's life expectancy may be recalculated annually; however, the life
expectancy of a Beneficiary,
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Distributions
other than the Participant's spouse, may not be recalculated. If the
Participant's spouse is not the Beneficiary, the method of distribution selected
must ensure that at least 50 percent of the present value of the amount
available for distribution is paid within the life expectancy of the
Participant.
(d) Distribution after the Participant's Death. In the event a
Participant who is receiving benefits dies, the remaining balance of his
benefits shall be distributed at least as rapidly as under the method of
distribution elected by the Participant. If a Participant dies before
distribution of benefits commences, the Participant's entire interest will be
distributed no later than five years after the Participant's death, except to
the extent that an election is made to receive distributions in accordance with
(1) or (2) below:
(1) if any portion of the Participant's benefit is payable
to a Beneficiary, installment distributions may be made
over the life or life expectancy of the Beneficiary,
provided that the installments commence no later than
one year after the Participant's death, and
(2) if the Beneficiary is the Participant's spouse, the
commencement of distributions may be delayed until the
date on which the Participant would have attained age 70
1/2. If the spouse dies before payments begin,
subsequent distribution shall be made as if the spouse
had been the Participant.
For purposes of the foregoing, payments may be calculated by use of the
return multiples specified in U.S. Treasury Regulation Section 1.72-9. The life
expectancy of a spouse or other
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Distributions
Beneficiary shall be calculated at the time payment first commences without
subsequent recalculation. Any amount paid to a child of the Participant shall be
treated as if it had been paid to the surviving spouse if the amount becomes
payable to the spouse when the child reaches the age of majority.
(e) Limit on Limits. All distributions under this Section 7.9 shall
be determined and made in accordance with section 401(a)(9) of the Code,
including the minimum distribution incidental benefit requirement of proposed
U.S. Treasury Regulation Section 1 .401(a)(9)-2, the provisions of which are
incorporated herein by reference.
7.10. Designating Beneficiaries.
(a) Written Designation. Each Participant may designate, in the
manner prescribed by the Retirement Committee, a Beneficiary or Beneficiaries to
receive any benefits payable as a result of the death of the Participant. This
designation may be changed by the Participant at any time by giving notice to
the Retirement Committee in accordance with rules and procedures established by
the Retirement Committee. Any designation of a Beneficiary other than the
Participant's spouse must be consented to by the spouse in writing (or other
method permitted by the Internal Revenue Service) and witnessed by a notary
public. A consent obtained pursuant to this paragraph (a) from a spouse of a
Participant who subsequently becomes divorced from such spouse and marries a
different spouse shall not be effective with respect to such second spouse.
Spousal consent shall not be required if the Participant establishes to the
satisfaction of a Plan representative that such consent may not be obtained
because (a) there is no spouse; (b) the spouse cannot be located, or (c) there
exists such other circumstances as the
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Distributions
Secretary of the U.S. Treasury Department may prescribe as excusing the
requirement for such consent. A Participant may revoke any prior election
without obtaining the consent of the spouse to such revocation. In the absence
of a new election that meets the requirements of this Section 7.10, the
Participant's surviving spouse shall be the Beneficiary.
(b) Death Prior to Designating Beneficiary or Death after Designated
Beneficiary's Death. In the event the Participant dies with no beneficiary
designation on file or after the death of a designated Beneficiary, the
Participant's Beneficiary with respect to the portion of the benefits for which
no Beneficiary has been designated shall be the Participant's surviving spouse,
if any, and if there is no surviving spouse, the Participant's estate.
(c) Successor Beneficiaries. A Beneficiary who has been designated
in accordance with Section 7.10(a) may name a successor beneficiary or
beneficiaries in accordance with procedures established by the Retirement
Committee. If the designated Beneficiary dies after the Participant and before
the entire amount of the Participant's benefit under the Plan in which the
designated Beneficiary has an interest has been distributed, then any remaining
amount shall be distributed, as soon as practicable after the death of such
designated Beneficiary, in the form of a single sum payment to the successor
beneficiary or if there is no such successor beneficiary, to the Beneficiary's
estate.
7.11. Inability to Locate Participant. If, at any time after a
Participant's benefit becomes payable, a check or other instrument in payment of
such benefit is returned unclaimed or the Retirement Committee is otherwise
unable to locate the individual to whom a payment is
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Distributions
due, then all payments to such individual shall be discontinued. If, after
exercising reasonable diligence, the Retirement Committee is unable to locate
such individual, the portion of the Participant's benefit payable to such
individual shall be forfeited, provided, however, that if such individual
subsequently makes a claim for benefits, then the forfeited amount shall be
reinstated to the extent required by law by the Employer that last employed the
Participant.
ARTICLE VIII
LOANS
8.1. In General. Loans to Participants. (a) Making of Loans. Subject to
the restrictions set forth in this Section, the Retirement Committee shall
establish a loan program whereby any Participant who is an Employee may request
pursuant to procedures established by the Retirement Committee, to borrow funds
from the Plan. The principal balance of such loan shall be not less than $500
and shall not exceed the lesser of (1) 50 percent (50%) of the aggregate of the
Participant's vested account balances as of the Valuation Date coinciding with
or immediately preceding the day on which the loan is made, and (2) $50,000,
reduced by the excess, if any, of the highest outstanding loan balance of the
Participant under all plans maintained by the Employer during the period of time
beginning one year and one day prior to the date such loan is to be made and
ending on the date such loan is to be made over the outstanding balance of loans
from all such plans on the date on which such loan was made.
(b) Restrictions. Amounts equal to any such loan shall be debited
proportionately from each of the Participant's accounts and investment
subaccounts (other than subaccounts
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Loans
invested in the Harris Stock Fund), subject to any other ordering rules adopted
by the Retirement Committee. Each loan approved by the Retirement Committee
shall be subject to the loan program and only upon the following terms and
conditions:
(1) The period for repayment of the loan shall not exceed five years
from the date of the loan; provided, however, that if the purpose of the loan,
as determined by the Retirement Committee, is to acquire any dwelling unit that
within a reasonable period of time is to be used as the principal residence of
the Participant, then such period for repayment may exceed five years to the
extent permitted by the Retirement Committee.
(2) Each loan shall be secured by an assignment of a portion of the
Participant's vested benefit under the Plan at least equal to the initial
principal amount of such loan and such other collateral as may be required by
the Retirement Committee.
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ARTICLE IX
IN-SERVICE WITHDRAWALS
9.1. Withdrawals from Savings Account and After-Tax Account. Subject to
Sections 9.3 and 9.4, a Participant may elect to withdraw from the Plan at any
time in a single sum an amount not greater than the balances of his Savings
Account and After-Tax Account in the time and manner prescribed by the
Retirement Committee. The amount withdrawn shall be debited first to his Savings
Account and then to his After-Tax Account. A Participant may make a withdrawal
under this Section 9.1 no more than once in any calendar quarter.
9.2. Withdrawals from Rollover, Pre-Tax and Profit Sharing Accounts.
(a) Availability. Subject to Sections 9.3 and 9.4, a Participant who
has taken all available loans under Article VIII hereof and who has exhausted
his right to withdrawals under Section 9.1 may elect, if he has an immediate and
heavy financial need within the meaning of U.S. Treasury Regulation Section
1.401(k)-1(d)(2)(iv), to withdraw, in the time and manner prescribed by the
Retirement Committee, in a single sum an amount not greater than (i) 100 percent
of his Pre-Tax Contributions, (ii) the entire balance of his Rollover Account,
and (iii) the vested balance of his Profit Sharing Account. A Participant shall
be deemed to have an immediate and heavy financial need if the withdrawal is
requested for any of the following reasons:
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Administration
(1) to pay expenses for medical care previously incurred by
the Participant, his spouse or any of his dependents or
expenses necessary for these persons to obtain medical
care;
(2) to purchase (excluding mortgage payments) a principal
residence for the Participant;
(3) to pay for tuition and related education fees for the
next 12 months of post-secondary education for the
Participant, his spouse, children or dependents;
(4) to prevent the eviction of the Participant from his
principal residence or a foreclosure on the mortgage of
the Participant's principal residence; or
(5) the occurrence of any other event determined by the
Commissioner of Internal Revenue pursuant to U.S.
Treasury Regulation Section 1 .401(k)-1(d)(2)(iv).
A withdrawal to satisfy an immediate and heavy financial need of the Participant
may be made only if:
(i) the withdrawal is not in excess of the amount
required to meet the financial need of the
Participant, including taxes and additions to tax
applicable to such withdrawal, and
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Administration
(ii) the Participant has obtained all other
distributions, withdrawals, and all nontaxable
loans currently available under the Plan and any
other plans maintained by the Employer and
Affiliates.
The Participant shall be required (i) to certify to the Retirement Committee in
the manner prescribed by the Retirement Committee both the reason for the
financial need and that such need cannot be satisfied from sources other than a
withdrawal from the Participant's Accounts, and (ii) to submit any additional
supporting documentation as may be requested by the Retirement Committee.
(b) Order of Withdrawals. Withdrawals under this Section 9.2 shall
be withdrawn from a Participant's Accounts in the following order: (i) from the
Participant's Rollover Account, if any; (ii) to the extent that the balance of
the Participant's Rollover Account is not sufficient to satisfy the amount of
the requested withdrawal, from the Participant's Pre-Tax Contributions; and
(iii) to the extent that the Participant's Rollover Account and Pre-Tax
Contributions are not sufficient to satisfy the amount of the requested
withdrawal, from the vested balance of the Participant's Profit Sharing Account.
(c) Limitations. A Participant may take a withdrawal under this
Section 9.2 no more than once in any six-month period.
9.3. Conditions Applicable to All Withdrawals. A Participant shall provide
to the Retirement Committee written notice of his election to make any
withdrawal permitted under this
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Administration
Article IX at least 30 days (or such shorter period as may be designated by the
Retirement Committee) prior to the date as of which such withdrawal is to be
effected. The amount available for withdrawal under this Article IX shall be
reduced by the amount of any outstanding loan balance under Article VIII hereof,
and no withdrawal under this Article IX shall be permitted to the extent that
such withdrawal would cause the aggregate amount of such outstanding loan
balance to exceed the limits described in Section 8.1. The amount available for
withdrawal under this Article IX is also subject to reduction in the sole
discretion of the Retirement Committee to take into account the investment
experience of the Trust Fund between the date of the election and the date of
the withdrawal.
9.4. Reduction of Investment Fund Balances. The Investment Funds in which
a Participant's Accounts are invested, other than the Harris Stock Fund, shall
be reduced proportionately to reflect the amount of the Participant's
withdrawals under this Article IX.
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Administration
ARTICLE X
ADMINISTRATION
10.1. Named Fiduciaries. The Retirement Committee shall be a "named
fiduciary" within the meaning of such term as used in ERISA.
10.2. Retirement Committee. The Corporation shall establish a Retirement
Committee to administer the Plan. The members of the Retirement Committee shall
be appointed, and removed at any time, by the board of directors of the
Corporation. Any member of the Retirement Committee may, but need not, be an
employee, director, officer or shareholder of an Employer. A member of the
Retirement Committee may resign at any time by giving written notice to the
Corporation at least 15 days prior to the effective date of the resignation.
Notwithstanding anything contained in this Article, an Employee of the
Corporation who serves on the Retirement Committee shall be deemed to resign
upon the termination of such Employee's employment with the Company. Such deemed
resignation shall be effective as of the date of the termination of employment.
10.3. Powers and Duties of Retirement Committee. The Retirement Committee
shall be the "administrator" of the Plan within the meaning of such term as used
in ERISA and, except for duties specifically vested in the Trustee, shall be
responsible for the administration of the provisions of the Plan. The Retirement
Committee may establish such rules and regulations as it deems necessary to
enable it to administer the Plan. The Retirement Committee shall have the duty
and authority to interpret and construe, in its sole discretion, the terms of
the Plan in regard
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Administration
to all questions of eligibility, the status and rights of Participants,
distributees and other persons under the Plan, and the manner, time, and amount
of payment of any distribution under the Plan. The Retirement Committee may
allocate its responsibilities among its members and may designate any other
person, partnership, corporation or another committee to carry out any of its
responsibilities with respect to administration of the Plan. Any such allocation
or designation shall be reduced to writing and such writing shall be kept with
the records of the Plan. Any reference in the Plan to the Retirement Committee
shall include any person, partnership, corporation or committee to which the
Retirement Committee has delegated any of its responsibilities to the extent of
such delegation.
10.4. Actions of Retirement Committee. No formal meeting and no minutes
shall be required with respect to actions taken by the Retirement Committee.
10.5. Finality of Decisions. All decisions and directions made by the
Retirement Committee, in the discretionary exercise of its powers and duties,
shall be final and binding on all parties concerned, except that the Retirement
Committee may revoke or modify a decision or direction that it determines to
have been in error.
10.6. Immunities of Retirement Committee. Except as otherwise provided by
law, no member of the Retirement Committee shall be liable to an Employer or to
any Participant or Beneficiary by reason of the Retirement Committee's exercise
in good faith of any power or discretion vested by such committee under the
terms of the Plan.
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Administration
10.7. Advisers and Agents. The Corporation, or the Retirement Committee,
with the consent of the Corporation, may employ one or more persons to render
advice with respect to any responsibility that the Corporation, or the
Retirement Committee, respectively, has under the Plan. The Corporation, or the
Retirement Committee, may appoint unrelated parties to carry out trustee,
investment management and record-keeping responsibilities with respect to the
Plan.
10.8. Retirement Committee Member who is Participant. A member of the
Retirement Committee who also is a Participant shall have no right to vote with
respect to any action that pertains solely to him as a Participant. In the event
a majority of the remaining members are unable to agree as to the action to be
taken with respect to the Participant, the chief executive officer of the
Corporation shall appoint an impartial person to arbitrate the matter among the
remaining members and to reach a decision.
10.9. Information Provided by Employer. Each Employer shall provide the
Corporation, the Retirement Committee and the Trustee with complete and timely
information regarding employment data for each Employee and Participant needed
by the Corporation, Retirement Committee or Trustee, including, but not limited
to, information concerning Compensation, date of employment, date of termination
of employment, reason for termination and any other information required by the
Corporation, Retirement Committee, or Trustee.
10.10. Expenses. All expenses incurred in administering the Plan and the
Trust, including the expenses of the Retirement Committee, investment advisory
and record-keeping fees, the fees of counsel and any agents for the Corporation,
the fees and expenses of the Trustee,
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<PAGE>
Administration
the fees of counsel for the Trustee and other administrative expenses shall be
paid by the Trustee from the Trust Fund to the extent that such expenses are not
paid by the Corporation. The Retirement Committee, in its sole discretion,
having regard for the nature of the particular expense, shall determine the
portion of such expense, if any, which is to be borne by any Employer. An
Employer may seek reimbursement of any expense paid by such company that the
Retirement Committee determines is properly payable by the Trust Fund.
10.11. Trust. A trust shall be created by the execution of the Trust
Agreement between the Corporation and the Trustee. All contributions under the
Plan shall be paid to the Trustee. The Trustee shall hold all monies and other
property received by it and invest and reinvest the same, together with the
income therefrom, on behalf of the Participants collectively in accordance with
the provisions of the Trust Agreement. The Trustee shall make distributions from
the Trust Fund at such time or times to such person or persons and in such
amounts as the Retirement Committee directs in accordance with the Plan.
10.12. Trust Fund Available to Pay All Plan Benefits. The Plan is intended
to be a single plan under U.S. Treasury Regulation Section 1 .414(l)-1(b)(1).
The maintenance of Accounts as required by the terms of the Plan shall be for
record-keeping purposes only. All of the Trust Fund shall be available to pay
benefits to all Participants and Beneficiaries.
10.13. Corporation as Agent for Employers. Each entity that becomes a
participating Employer by so doing shall be deemed to have appointed the
Corporation its agent to exercise on its behalf all of the powers and
authorities hereby conferred upon the Corporation by the terms of
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<PAGE>
Administration
the Plan, including, but not by way of limitation, the power to amend and
terminate the Plan. The authority of the Corporation to act as such agent shall
continue unless and until the portion of the Trust Fund held for the benefit of
Employees of the particular Employer and their Beneficiaries is set aside in a
separate Trust Fund.
ARTICLE XI
AMENDMENT AND TERMINATION
11.1. Amendment. The Corporation reserves the right to amend the Plan by
action of its board of directors or an authorized committee thereof at any time
and from time to time, subject to the following limitations:
(a) no amendment shall be made which vests in any Employer any
interest in any assets of the Plan other than as specifically provided in
Section 11.2;
(b) no amendment shall be made which would have the effect of
decreasing a Participant's "accrued benefit" as proscribed in section 411(d)(6)
of the Code; and
(c) no amendment shall have the effect of reducing a Participant's
vested interest in his Accounts. If the Plan is amended to change the vesting
schedule, each Participant with at least a three-year Period of Service shall
have the right to elect to have his vested interest computed without regard to
the amendment. Each Participant shall be permitted to make this election during
the period ending 60 days after the latest of the date (1) the amendment is
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Amendment and Termination
adopted; (2) the amendment is effective, and (3) the Participant is issued a
written notice of the amendment by the Corporation or its delegate.
11.2. Termination of Plan. This Plan is intended to be permanent, and it
is the expectation of the Corporation that it will continue indefinitely.
However, the Corporation reserves the right to terminate the Plan by resolution
of its board of directors or an authorized committee thereof. In the case of a
complete termination of the Plan, previously unallocated forfeitures shall be
allocated as otherwise provided in the Plan. To the extent previously
unallocated forfeitures cannot be allocated because all Participants have
reached the limitations of section 415 of the Code, the unallocated amount shall
revert back to the appropriate Employer, as provided in Section 3.10.
11.3. Discontinuance of Contributions. The Corporation reserves the right
to discontinue contributions to the Plan by amendment or by resolution of its
board of directors or an authorized committee thereof.
11.4. Vesting on Termination or Discontinuance of Contributions. As of the
date of the partial or complete termination of the Plan or upon the complete
discontinuance of contributions to the Plan, in each case as determined by the
Retirement Committee in its sole discretion, each affected Participant shall
become fully vested in his Accounts and no further allocations of contributions
or forfeitures shall be made after such date on behalf of an affected
Participant.
11.5. Distribution on Termination. Upon the complete termination of the
Plan, the Trustee shall distribute to each affected Participant the full amount
standing to the credit of his
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<PAGE>
Amendment and Termination
Accounts, provided that if such amount exceeds (or at the time of any prior
distribution exceeded) $5,000 (or such larger amount as may be permitted by law)
and the Participant is not yet age 65, such lump sum shall not be paid without
his consent. If the Participant does not consent, an annuity contract shall be
purchased for and distributed to the Participant.
ARTICLE XII
MISCELLANEOUS PROVISIONS
12.1. Restrictions on Alienation: Qualified Domestic Relations Orders.
Except as otherwise may be required (i) to offset an amount that a Participant
is ordered to pay to the Plan as a result of a judgment, settlement, order or
decree entered on or after August 5, 1997 as permitted under section
401(a)(13)(C) of the Code or (ii) for income tax withholding purposes, no
benefit or interest under this Plan shall be subject to assignment or
alienation, either voluntarily or involuntarily. The preceding sentence shall
apply to the creation, assignment or recognition of a right to any benefit
payable with respect to a Participant pursuant to a domestic relations order,
unless such order is determined by the Retirement Committee to be a "qualified
domestic relations order", as defined in section `414(p) of the Code. In
accordance with uniform and nondiscriminatory procedures established by the
Retirement Committee from time to time, the Retirement Committee upon the
receipt of a domestic relations order which seeks to require the distribution of
a Participant's Account in whole or in part to an "alternate payee" (as that
term is defined in section 414(p)(8) of the Code) shall:
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<PAGE>
Miscellaneous Provisions
(1) promptly notify the Participant and such "alternate payee" of
the receipt of such order and of the procedure which the Retirement Committee
will follow to determine whether such order constitutes a "qualified domestic
relations order" within the meaning of section 414(p) of the Code,
(2) determine whether such order constitutes a "qualified domestic
relations order" and notify the Participant and the "alternate payee" of the
results of such determination, and
(3) if the Retirement Committee determines that such order does
constitute a "qualified domestic relations order," distribute to such "alternate
payee" under the terms of such order the amount called for under the order in a
single sum within 60 days of the date such order is determined to constitute a
qualified domestic relations order, without regard to whether a distribution
would be permissible to the Participant at such time under this Plan.
The determination and the distribution made by, or at the direction of,
the Retirement Committee under this Section 12.1 shall be final and binding on
the Participant and on all other persons interested in such order. An "alternate
payee" under this Section 12.1 shall not be an eligible person for purposes of
obtaining a loan pending the distribution of such alternate payee's entire
interest under this Plan.
12.2. Exclusive Benefit Requirement. Except as provided in Sections 11.2,
12.1 and 12.3, no assets of the Plan shall revert to an Employer or be used for
or diverted to purposes other
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<PAGE>
Miscellaneous Provisions
than providing benefits to Participants and their Beneficiaries and defraying
reasonable costs of administering the Plan.
12.3. Return of Contributions.
(a) Mistake of fact. Any contribution made by an Employer due to a
mistake of fact shall be returned to the Employer within one year of the date
the contribution was made.
(b) Nondeductible Contributions. In the event the deduction of a
contribution made by an Employer is disallowed under section 404 of the Code,
such contribution (to the extent disallowed) shall be returned to the Employer
within one year of the disallowance of the deduction.
12.4. No Contract of Employment. Neither the establishment and maintenance
of the Plan nor the participation in the Plan by any Employee shall be construed
as a contract between the Employee and any Employer so as to give any Employee
the right to be retained by any Employer, or to interfere with the rights of any
Employer to discharge the Employee at any time.
12.5. Payment of Benefits on Incapacity. In the event the Retirement
Committee determines that any person to whom a distribution is to be made is
unable to care for his affairs by reason of illness or other disability, any
amount distributable to such person (unless prior claim thereto shall have been
made by a duly qualified guardian or other legal representative) may, in the
discretion of the Retirement Committee, be paid to such other person deemed by
the Retirement Committee to be responsible for such person. Any such payment
made under this Section 12.5 shall constitute a complete discharge of any
liability under this Plan.
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Miscellaneous Provisions
12.6. Merger. In the event of a merger or consolidation with, or transfer
of assets or liabilities to any other plan, each Participant shall receive a
benefit immediately after such merger, consolidation or transfer (if the Plan
then terminated) which is at least equal to the benefit the Participant was
entitled to receive immediately before such merger, consolidation or transfer
(if the Plan had then terminated).
12.7. Construction. The headings and subheadings in this Plan have been
inserted for convenience of reference only and are to be ignored in the
construction of its provisions. Wherever appropriate, the masculine shall be
read as the feminine, the plural as the singular, and the singular as the
plural. References in this Plan to a Section shall be to a Section in this Plan
unless otherwise indicated. References in this Plan to a section of the Code,
ERISA or any other federal law shall also refer to the final regulations issued
under such section.
12.8. Governing Law. This Plan shall be construed, to the extent to which
state law is applicable, in accordance with the laws of the State of Florida.
Venue for any action arising under this Plan shall be in Brevard County,
Florida.
12.9. Mistaken Payments. If a mistake is made in favor of a Participant,
Beneficiary or alternate payee in the payment of benefits under this Plan, then
the Corporation or the Trustee (acting at the Corporation direction and on
behalf of the Plan) shall take such action against such Participant, Beneficiary
or alternate payee to remedy such mistake and to make the Plan whole as the
Corporation deems proper and appropriate under the circumstances, and any
mistake in favor of the Plan shall promptly be corrected by, or at the direction
of, the Retirement Committee.
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<PAGE>
Miscellaneous Provisions
INTERSIL CORPORATION
Date: 9/3/99 By: /s/ Daniel J. Heneghan
-------- -------------------------------
Daniel J. Heneghan
Attest: /s/ Christina Kae Foust Title: Vice President, Secretary
------------------------- ------------------------------
Christina Kae Foust and Treasurer
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EXHIBIT 10.38
Commercial Supply Agreement
By and Between
Texas Instruments Incorporated
and
Harris Corporation
<PAGE>
Commercial Supply Agreement
This Agreement (hereinafter "Agreement") is made in duplicate original
Counterparts and effective as of December 3, 1998 ("Effective Date") by and
between Harris Corporation, a corporation duly organized and validly existing
under the laws of the State of Delaware, acting by and through its Semiconductor
Sector with a principal place of business at 2401 Palm Bay Road, Northeast, Palm
Bay, Florida 32905 (hereinafter "Harris") and Texas Instruments Incorporated, a
corporation duly organized and validly existing under the laws of the State of
Delaware, acting by and through its Semiconductor Group with a principal place
of business at 8505 Forest Lane, Dallas, Texas 75243 (hereinafter "TI"). Buyer
and/or TI may be referred to herein as a "Party" or the "Parties", as the case
may require.
WHEREAS, Harris and its affiliates and TI have entered into an Asset
Purchase Agreement (the "APA") pursuant to which TI will purchase from Harris
the exclusive right to manufacture, market and sell certain Commercial Logic
Products (capitalized terms used herein and not otherwise defined shall have the
meanings given to them in the APA) along with certain assets, rights and
properties of Harris used or useful with the Commercial Logic Business, all on
the terms and subject to the conditions set forth in the APA.
WHEREAS, in order to provide for a continuing source of supply of
Commercial Logic Products during a transition period beginning on the Effective
Date and ending on June 30, 1999, unless mutually extended by the parties,
Harris agrees to sell and TI agrees to purchase certain semiconductor products,
devices, wafers and/or die pursuant to specifications and in quantities mutually
agreed upon by the parties and subject to the Terms and Conditions set forth in
this Agreement.
NOW THEREFORE, the Parties agree as follows:
1. Definitions. For the purposes of this Agreement, the following underlined
terms will have the meanings set forth below.
1.1. "Estimated Ship Date" shall mean the date Harris approximates that
it will ship the Product to TI.
1.2. "Lead-time" shall mean the approximate length of time Harris
requires from the date a purchase order for the Product is
submitted to Harris by TI until such time Harris can ship the
Product pursuant to such purchase order.
1.3. "Product" shall mean those semiconductor products, devices, wafers
and/or die to be manufactured by Harris pursuant to this
Agreement.
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<PAGE>
1.4. "Product Specification" shall mean the acceptance criteria for the
Product mutually agreed upon between Harris and TI.
1.5. "Requested Delivery Date" shall mean the arrival date for the
Product requested by TI.
2. Scope of Agreement. Subject to the terms and conditions set forth in this
Agreement, Harris agrees to sell to TI semiconductor product, devices,
wafers and/or die manufactured using processes consistent with Harris'
standard internal practices according to specifications and in quantities
mutually agreed upon by the Parties. Harris shall deliver to TI and TI
shall purchase Product ordered by TI pursuant to the terms and conditions
set forth in this Agreement.
3. Statement of Work.
3.1. TI shall consult with and guide Harris as well as provide
reasonable technical assistance in the fulfillment of
manufacturing responsibilities undertaken by Harris pursuant to
this Agreement.
3.2. Harris will be responsible for Process Technology and facilities
necessary and/or appropriate for performing its manufacturing
responsibilities specified herein.
3.3. Harris agrees to provide reasonable technical support to assist in
failure analysis of Product provided under this Agreement and to
respond to TI's needs for such analysis in a timely manner.
4. Product Forecasts, Purchases and Sales.
4.1. Four Month Rolling Forecast. During the term of this Agreement, TI
shall supply to Harris by the first day of each month a
non-binding four month rolling forecast of estimated unit demand
by wafer technology for unassembled semiconductor products and by
package level for finished goods. Upon execution of this
Agreement, TI shall provide Harris with its initial four month
rolling forecast. Requests for quantities greater than those set
forth in TI's four month forecasts will be accommodated by Harris
to the extent capacity is available. Within seven (7) days of
receipt of each of TI's rolling four month forecasts, Harris shall
provide written acceptance or rejection of the demand levels set
forth in TI's forecast and shall communicate the existence and
amount of residual capacity available to provide quantities
greater than those set forth in TI's forecast.
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<PAGE>
4.2. One Month Loading Forecast. In addition to providing the four
month rolling forecast described in Section 4.1., TI will, on the
last work day preceding the first and fifteenth day of each month,
provide Harris with an updated one month loading forecast setting
forth TI's estimated product demand and requested delivery date by
wafer for unassembled semiconductor products and by device for
finished goods. The quantities set forth in weeks (1) one and (2)
two of each loading forecast shall constitute a firm commitment on
TI's behalf, except that, at any time prior to the second work day
of week (2) two, TI reserves the right to change the device
loading of the week (2) two mix by up to twenty-five percent
(25%). The quantities set forth in weeks (3) three and (4) four of
each loading forecast are subject to change but will become firm
commitments unless modified in writing by TI prior to the
beginning of the third week. Each loading forecast shall
constitute a release against the corresponding purchase order
issued by TI pursuant to Section 4.4.1. below.
4.3. Low Demand for Product. In recognition of the fact that Harris
cannot maintain a robust manufacturing capability if the demand
for die or finished products drops to an unacceptably low level,
the parties agree that if the forecasted demand on Harris drops
below the minimum process lot starts per week as set forth on
Exhibit A, Section 3, for any of the four (4) fabrication
technologies (CD4000, HC/HCT, AC/ACT, FC/FCT), , Harris and TI
will agree on an appropriate end of life order and delivery
period.
4.4. Purchases and Sales.
4.4.1. TI's purchase of Product shall be initiated by the issuance
of a written purchase order which will provide a reasonable
Lead-time to ensure timely delivery of the products. A
purchase order will only be accepted by Harris if issued by
TI's authorized representative. Each purchase order issued
by TI shall specify: (i) a purchase order number and date,
(ii) quantity of Product to be delivered using the Minimum
Line Quantities ("MLQ's") listed on Exhibit A, (iii)
Product part number and revision level, (iv) Product
description, (v) Product unit price, (vi) Requested
Delivery Date, (vii) shipping instructions, including
carrier and delivery address, and (viii) signature(s) of
authorized TI representative. No terms or conditions in
either Party's purchase, sales, delivery or shipping, forms
of acknowledgments, or similar documents shall have effect
to the extent such terms and conditions are inconsistent
with terms and conditions set forth in this Agreement.
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<PAGE>
4.4.2. Within five (5) business days after Harris receives TI's
purchase order, Harris shall provide to TI Estimated Ship
Date for the Product requested pursuant to such purchase
order. If Harris cannot commit to an Estimated Ship Date
that satisfies TI's Requested Delivery Date, Harris shall
propose, in good faith, an alternative Estimated Ship Date.
Any purchase order placed by TI prior to the termination of
this Agreement in which the Estimated Ship Date will be
after the termination of this Agreement shall continue to
be governed by the terms and conditions of this Agreement.
4.4.3. All forecasts, purchase orders and shipping documents
between the parties shall be communicated by electronic
means to the maximum extent feasible.
5. Pricing.
5.1. Product Pricing and Minimum Line Quantities. Prices charged shall
be as indicated on Exhibit A attached hereto and incorporated
herein by this reference. Prices cover only semiconductor
products, devices, wafers, and/or die set forth in Exhibit A. Any
semiconductor products, devices, wafers and/or die not set forth
in Exhibit A will be provided only if pricing and other terms are
separately negotiated and mutually agreed upon by the Parties.
5.2. Product Specification Change Process. Upon receipt of a written
request by TI, Harris shall, within fifteen (15) business days,
submit to TI a written summary of estimated adjustments or costs,
if any, reasonably required to implement a modification to the
Product Specification requested by TI. Such summary shall include
the change, if any, to: (i) any applicable Product delivery dates;
and (ii) the mask tooling impacted and unit price. Written
approval from TI must be received by Harris prior to
implementation of such changes, and will be referenced as an
Amendment to this Agreement. If Harris does not receive such
written approval from TI within five (5) calendar days after
Harris submits a summary to TI, TI shall have been deemed to have
withdrawn such request for change to the Product Specifications.
5.3. Freight and Tax Charges. Prices set forth in this Agreement do not
include freight charges or any customs duties, sales, use, value
added, excise, Federal, state, local or other similar taxes. All
such duties or taxes shall be paid by TI, or in lieu thereof, TI
shall provide Harris with an appropriate exemption certificate.
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<PAGE>
6. Delivery, Shipments, Invoices and Payments.
6.1. Title and Transportation. All shipments of Product to TI shall be
F.O.B. point of manufacture. Title and risk of loss or damage
shall pass to TI upon tender of delivery of the Products to a
carrier at manufacturing point.
6.2. Terms and Method of Payment. Terms of payment shall be net thirty
(30) days from date of invoice. TI's payment of any invoice shall
not constitute acceptance of Products. Such invoices may be
subject to adjustments for errors, shortages, or defects in
Products. Each shipment shall constitute an independent
transaction and TI shall pay for the same in accordance with the
specified payment terms. Payments shall be made in US dollars.
7. Term. Subject to the terms and conditions set forth in this Agreement, TI
may issue purchase orders at any time prior to June 30, 1999. Unless
sooner terminated under the provisions of this Agreement, this Agreement
shall terminate on June 30, 1999, unless mutually extended by the
parties. Provisions of this Agreement which by their terms extend past
the termination date shall survive termination.
8. Inspection and Acceptance. TI agrees to perform incoming inspection of
Product within thirty (30) calendar days of TI's receipt of Product. If
Harris delivers Product to TI that does not conform in a material respect
to TI's. purchase order, TI shall notify Harris by written notice within
five (5) calendar days after TI inspects Product. If TI rejects such
product, TI's notice shall specify TI's reason(s) for rejecting the
Product. TI will thereupon return rejected Product F.O.B. shipping point
for repair or replacement at Harris' option.
9. Product Warranty.
9.1. Warranty Period. Harris, except as otherwise provided below,
warrants all goods against faulty workmanship or the use of
defective materials and warrants that goods will conform to
published Harris specifications or other agreed upon written
Product Specifications. Unassembled semiconductor devices in wafer
or die form shall meet the minimum yield levels set forth in
Exhibit A attached hereto and incorporated herein by this
reference. The warranty period for finished goods shall be two (2)
years from the date of shipment. The warranty period for
unassembled semiconductor devices in wafer or die form shall be
six (6) months from the date of shipment. All product returned to
Harris for failure to comply with the applicable specifications
will be
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<PAGE>
repaired or replaced within reasonable lead-time, at the option of
Harris.
9.2. No Additional Warranties. EXCEPT FOR THE EXPRESS WARRANTIES STATED
IN THIS AGREEMENT, HARRIS MAKES NO ADDITIONAL WARRANTIES, EXPRESS,
IMPLIED OR STATUTORY, INCLUDING BUT NOT LIMITED TO, ANY IMPLIED
CONDITIONS OR WARRANTY OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE OR ANY OTHER WARRANTY OBLIGATION ON THE PART OF
HARRIS. TI'S REMEDIES SHALL BE LIMITED TO THE REMEDIES SPECIFIED
HEREIN.
10. Limitation of Damages. IN NO EVENT WILL EITHER PARTY BE LIABLE TO THE
OTHER FOR ANY LOST PROFITS, LOSS OF GOODWILL, OVERHEAD, COST OF COVER OR
OTHER INDIRECT, SPECIAL, INCIDENTAL, OR CONSEQUENTIAL DAMAGES ARISING OUT
OF OR RELATED TO THIS AGREEMENT, HOWEVER CAUSED, AND WHETHER BASED IN
CONTRACT, TORT (INCLUDING NEGLIGENCE), STRICT LIABILITY OR OTHERWISE.
THESE LIMITATIONS SHALL APPLY EVEN IF THE PARTY HAS BEEN ADVISED OF THE
POSSIBILITY OF SUCH DAMAGE, AND NOTWITHSTANDING THE FAILURE OF ESSENTIAL
PURPOSE OF ANY LIMITED REMEDY HEREIN.
11. Miscellaneous.
11.1. Force Majeure. Anything contained in this Agreement to the
contrary notwithstanding, the obligations of the Parties hereto
shall be subject to all laws, both present and future, of any
government having jurisdiction over the Parties hereto, and to
orders, regulations, directions or requests of any such
government, or any department, agency or corporation thereof, and
to war, acts of public enemies, strikes or other labor
disturbances, accidents, transportation embargo, shortage of
supplies, fires, floods, earthquakes, acts of God, or causes of
like or different kind beyond the control of the Parties, and the
Parties hereto shall be excused from any failure to perform any
obligation hereunder to the extent such failure is caused by any
such law, order, regulation, direction, request or contingency,
for the period such cause endures. Production and deliveries may
be allocated in a reasonable manner among its customers by Harris
when these circumstances create a delay or shortfall in production
of the Product or of products of the general type covered by this
Agreement. Notwithstanding the foregoing, in the event any such
cause delays either Party's performance of any of its material
obligations under this Agreement,
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<PAGE>
the other Party may suspend its performance under this Agreement
for the period such delay continues and if any such cause renders
impossible or delays for a period of more than six months either
Party's performance of any of its material obligations under this
Agreement, the other Party may upon written notice terminate this
Agreement and such termination will be deemed to have occurred
with consent of both parties. The Party whose performance is
delayed on account of any such cause shall promptly notify the
other Party and shall exert reasonable efforts to recommence
performance as soon as possible.
11.2. Relationship of Parties.
11.2.1. Neither Party shall have, or shall represent that it has,
any power, right, or authority to bind the other Party, or
to assume or create any obligation or responsibility,
express or implied, on behalf of the other Party or in the
other Party's name.
11.2.2. Each Party is an independent contractor; nothing in this
Agreement shall be construed as constituting Harris and TI
as partners, joint venturers, or as creating the
relationships of employer and employee, franchiser and
franchisee, master and servant, principal and agent, or
any other form of legal association that would impose
liability on one Party for the act or failure to act of
the other Party.
11.2.3. Harris shall grant TI upon reasonable notice, access to
its manufacturing line during normal business hours for
the purpose of inspection and observation. Such access
shall be granted as long as it does not unduly interfere
with Harris operations or other business affairs.
11.2.4. An employee of one Party shall not be considered, for any
purpose, an employee of the other Party. To the extent
this Agreement involves work by one Party on the premises
of the other Party, each Party shall instruct and require
its respective visiting employees to observe and obey all
rules, policies and procedures in effect at the facilities
of the other Party.
11.3. Notices and Administration of the Agreement. All notices shall be
given in writing either by personal delivery to the Party to whom
notice is directed, or by confirmed telex or facsimile, or by a
commercial overnight courier service, or by registered or
certified mail, return receipt requested. The date upon which any
such notice is so
- 7 -
<PAGE>
personally delivered, the date of confirmation of telex,
facsimile, or courier delivery, or if the notice is given by
registered or certified mail, the date three (3) days after it is
deposited in the U.S. mail, shall be deemed to be the date shown
as delivered on the return receipt of such notice, irrespective of
the date appearing therein. For and on the behalf of each Party,
the person designated below shall have cognizance of the work
provided pursuant to this Agreement. General administration of the
Agreement shall be through them. Each Party reserves the right to
independently appoint a different individual and agrees to notify
the other Party in writing of such change. All statements and
notices shall be sent directly to the following individuals.
---------------------------------------------------------------
If to TI If to Harris
---------------------------------------------------------------
Texas Instruments Incorporated Harris Corporation
P.O. Box 84, M.S. 800 Semiconductor Sector
Sherman, Texas 75091 P.O. Box 883, M.S. 53-202
Attention: Rich Moore Melbourne, FL 32902-0883
Attention: Ray Odom
---------------------------------------------------------------
11.4. Language Interpretation. In the interpretation of this Agreement,
unless the context otherwise requires, (a) words importing the
singular shall be deemed to import the plural and vice versa, (b)
words denoting gender shall include all genders, (c) references to
persons shall include corporations other bodies, and vice versa,
(d) references to Parties, sections, schedules, addenda,
paragraphs, articles and exhibits shall mean the Parties,
sections, schedules, addenda, paragraphs, articles and exhibits of
and to this Agreement, and (e) periods of days, weeks or months
shall mean calendar days, weeks or months.
11.5. Headings. Article and Section headings are included solely for
convenience, are not to be considered a part of this Agreement,
and are not intended to be full and accurate descriptions of their
contents.
11.6. Export. Each Party hereby assures the other that it will not
knowingly, without prior authorization, if required of the Office
of Export Administration, U.S. Department of Commerce, export or
re-export (as defined in Section 380.1(b)-(c) of the Export
Administration Regulations and any amendments thereto) the
technical data covered hereby. TI shall be responsible for
determining the ITAR status of devices manufactured under this
Agreement, and for obtaining all applicable licenses.
- 8 -
<PAGE>
11.7. Other Restrictions. In exercising its rights under this Agreement,
each Party agrees to comply strictly and fully with all export
controls imposed on Products by any country or organization or
nations within whose jurisdiction each Party operates or does
business. Each Party agrees not to export or permit export of
Products or any related technical data or any direct Product of
any related technical data, without complying with the export
control laws in the relevant jurisdiction.
11.8. Incorporation by Reference. Except as herein set forth to the
contrary, the terms and conditions of the APA are herein
incorporated by reference as if set forth in full.
11.9. Exhibits. The following is the list of Exhibits which are attached
hereto and are hereby incorporated into this Agreement by
reference.
Exhibit A: Pricing and Minimum Die Per Wafer, Minimum Line
Quantities and Minimum Process Quantities
- 9 -
<PAGE>
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be
signed by duly authorized officers or representative as of the date first above
written.
TEXAS INSTRUMENTS INCORPORATED HARRIS CORPORATION
Semiconductor Group Semiconductor Sector
By: /s/ Glenn Culhane By: /s/ Ray D. Odom
------------------------------------- -------------------------------
Name: Glenn Culhane Name: Ray D. Odom
----------------------------------- -----------------------------
Title: Vice President - Texas Instruments Title: General Manager
---------------------------------- ----------------------------
Date: December 3, 1998 Date: December 3, 1998
----------------------------------- ----------------------------
- 10 -
<PAGE>
EXHIBIT A
COMMERCIAL SUPPLY AGREEMENT
PRICING AND MINIMUM DIE PER WAFER, MINIMUM LINE QUANTITIES,
AND MINIMUM PROCESS QUANTITIES
1. PRICING AND MINIMUM DIE PER WAFER. The commercial products subject to
this Agreement are provided as follows:
The commercial products (finished goods, "fg" and die), their
transfer prices, and the minimum die per wafer ("MDPW") are listed
in Schedule 1(a)[c] attached.
2. MINIMUM LINE QUANTITIES. The minimum line quantities ("MLQ's") to be
ordered are as follows:
a) Finished Goods Requests (available in die bank)
Commercial 1,000 units
b) Die Request
Minimum die request will be equivalent to twelve (12) wafers, MDPW
device as set forth in Schedule 1 (a)[c] for all commercial die
requests.
3. MINIMUM PROCESS. The minimum process technology quantities (wafer lot
starts per week) to be accepted are as follows:
Family Minimum Wafer Lot Starts
------ Per Week
--------
CD4000 5
HC/HCT 5
AC/ACT/FCT 5
- 1 -
<PAGE>
SCHEDULE 1(a)[C]
COMMERCIAL PRODUCTS FOR SUPPLY AGREEMENT
<TABLE>
<CAPTION>
FG Std Die Std NDW Die
Family Device Die ASP Trf Price Die Cost Trf Price ---- MDPW MLQ
- - ------ ------ --- --- --------- -------- --------- ---- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ACT CD54AC00W 13109C 0.201 0.189 0.111 0.111 3,071 2,303 27,637
ACT CD54AC04W 13123B 0.183 0.172 0.110 0.110 2,968 2,226 26,714
ACT CD54AC08W 12125B 0.251 0.236 0.109 0.109 3,071 2,303 27,637
ACT CD54AC240W 13100D 0.568 0.534 0.172 0.172 1,792 1,344 16,128
ACT CD54AC273W 13146B 0.790 0.743 0.146 0.146 2,251 1,689 20,263
ACT CD54AC86W 13127B 0.248 0.233 0.109 0.109 3,071 2,303 27,637
ACT CD54ACT00W 14109C 0.200 0.188 0.118 0.118 3,071 2,303 27,637
ACT CD54ACT04W 14123B 0.200 0.188 0.111 0.111 2,968 2,226 26,714
ACT CD54ACT244W 14102D 0.674 0.634 0.178 0.178 1,792 1,344 16,128
ACT CD54ACT245W 14103C 0.641 0.603 0.212 0.212 1,431 1,073 12,880
ACT CD54ACT74W 14108B 0.239 0.225 0.131 0.131 1,629 1,222 14,664
ACT CD54ACT86W 14127B 0.280 0.263 0.132 0.132 3,071 2,303 27,637
ACT CD74AC00E 13109C 0.114 0.107 0.124 0.075 3,071 2,303 27,637
ACT CD74AC00M 13109DXXXCT 0.113 0.106 0.113 0.075 3,589 2,692 32,303
ACT CD74AC00M96 13109DXXXCT 0.107 0.101 0.112 0.071 3,589 2,692 32,303
ACT CD74AC00M96S2463 13109DXXXCT 0.113 0.106 0.112 0.075 3,589 2,692 32,303
ACT CD74AC02E 13150A 0.114 0.107 0.090 0.075 2,225 1,669 20,028
ACT CD74AC02M 13150AXXXCT 0.122 0.115 0.090 0.081 2,225 1,669 20,028
ACT CD74AC02M96 13150AXXXCT 0.051 0.048 0.089 0.034 2,225 1,669 20,028
ACT CD74AC02M96S2463 13150AXXXCT 0.113 0.106 0.114 0.075 2,225 1,669 20,028
ACT CD74AC04E 13123B 0.118 0.111 0.115 0.078 2,968 2,226 26,714
ACT CD74AC04M 13123CXXXCT 0.127 0.119 0.113 0.084 3,578 2,684 32,203
ACT CD74AC04M96 13123CXXXCT 0.116 0.109 0.113 0.077 3,578 2,684 32,203
ACT CD74AC04M96S2227 13123CXXXCT 0.160 0.150 0.114 0.106 3,578 2,684 32,203
ACT CD74AC04M96S2357 13123BXXXCT 0.160 0.150 0.114 0.106 2,968 2,226 26,714
ACT CD74AC04M96S2463 13123CXXXCT 0.110 0.103 0.114 0.073 3,578 2,684 32,203
ACT CD74AC05E 13124B 0.123 0.116 0.117 0.081 2,968 2,226 26,714
ACT CD74AC05M 13124BXXXCT 0.118 0.111 0.116 0.078 2,968 2,226 26,714
ACT CD74AC05M96 13124BXXXCT 0.110 0.103 0.116 0.073 2,968 2,226 26,714
ACT CD74AC08E 13125B 0.110 0.103 0.122 0.073 3,071 2,303 27,637
ACT CD74AC08M 13125DXXXCT 0.118 0.111 0.112 0.078 3,589 2,692 32,303
</TABLE>
- 1 - COMPANY CONFIDENTIAL
<PAGE>
SCHEDULE 1(a)[C]
COMMERCIAL PRODUCTS FOR SUPPLY AGREEMENT
<TABLE>
<CAPTION>
FG Std Die Std NDW Die
Family Device Die ASP Trf Price Die Cost Trf Price ---- MDPW MLQ
- - ------ ------ --- --- --------- -------- --------- ---- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ACT CD74AC08M96 13125DXXXCT 0.122 0.115 0.111 0.081 3,589 2,692 32,303
ACT CD74AC08M96S2463 13125DXXXCT 0.113 0.106 0.112 0.075 3,589 2,692 32,303
ACT CD74AC109E 13122B 0.146 0.137 0.150 0.096 1,629 1,222 14,664
ACT CD74AC109M96 13122BXXXCT 0.115 0.108 0.150 0.076 1,629 1,222 14,664
ACT CD74AC10M 13147AXXXCT 0.146 0.137 0.092 0.092 2,760 2,070 24,837
ACT CD74AC10M96 13147AXXXCT 0.196 0.184 0.092 0.092 2,760 2,070 24,837
ACT CD74AC10M96S2463 13147AXXXCT 0.110 0.103 0.093 0.073 2,760 2,070 24,837
ACT CD74AC112E 13144A 0.216 0.203 0.140 0.140 1,717 1,288 15,457
ACT CD74AC112M96 13144AXXXCT 0.197 0.185 0.145 0.130 1,717 1,288 15,457
ACT CD74AC138E 13110A 0.162 0.152 0.170 0.107 1,386 1,040 12,475
ACT CD74AC138M 13110BXXXCT 0.151 0.142 0.169 0.100 2,389 1,792 21,499
ACT CD74AC138M96 13110BXXXCT 0.181 0.170 0.169 0.119 2,389 1,792 21,499
ACT CD74AC138M96S2463 13110BXXXCT 0.140 0.132 0.166 0.092 2,389 1,792 21,499
ACT CD74AC139E 13139A 0.177 0.166 0.160 0.117 1,504 1,128 13,537
ACT CD74AC139EX 13139A 0.590 0.555 0.167 0.167 1,504 1,128 13,537
ACT CD74AC139M96 13139AXXXCT 0.162 0.152 0.162 0.107 1,504 1,128 13,537
ACT CD74AC139M96S2463 13139AXXXCT 0.160 0.150 0.165 0.106 1,504 1,128 13,537
ACT CD74AC14E 13163A 0.140 0.132 0.166 0.092 1,750 1,312 15,746
ACT CD74AC14M 13163AXXXCT 0.140 0.132 0.168 0.092 1,750 1,312 15,746
ACT CD74AC14M96 13163AXXXCT 0.136 0.128 0.168 0.090 1,750 1,312 15,746
ACT CD74AC14M96S2497 13163AXXXCT 0.150 0.141 0.168 0.099 1,750 1,312 15,746
ACT CD74AC151E 13132A 0.220 0.207 0.148 0.145 1,643 1,233 14,791
ACT CD74AC153E 13134B 0.219 0.206 0.145 0.145 1,697 1,272 15,269
ACT CD74AC153M96 13134BXXXCT 0.144 0.135 0.147 0.095 1,697 1,272 15,269
ACT CD74AC157E 13115A 0.218 0.205 0.172 0.144 1,406 1,055 12,655
ACT CD74AC157M 13115AXXXCT 0.205 0.193 0.174 0.135 1,406 1,055 12,655
ACT CD74AC157M96 13115AXXXCT 0.135 0.127 0.171 0.089 1,406 1,055 12,655
ACT CD74AC158M 13116AXXXCT 0.260 0.244 0.174 0.172 1,406 1,055 12,655
ACT CD74AC161E 13117B 0.510 0.479 0.156 0.156 1,560 1,170 14,040
ACT CD74AC161M 13117BXXXCT 0.329 0.309 0.156 0.156 1,560 1,170 14,040
ACT CD74AC181M96 13117BXXXCT 0.286 0.269 0.157 0.157 1,560 1,170 14,040
</TABLE>
- 2 - COMPANY CONFIDENTIAL
<PAGE>
SCHEDULE 1(a)[C]
COMMERCIAL PRODUCTS FOR SUPPLY AGREEMENT
<TABLE>
<CAPTION>
FG Std Die Std NDW Die
Family Device Die ASP Trf Price Die Cost Trf Price ---- MDPW MLQ
- - ------ ------ --- --- --------- -------- --------- ---- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ACT CD74AC161M96S2463 13117BXXXCT 0.178 0.167 0.159 0.117 1,560 1,170 14,040
ACT CD74AC163E 131188B 0.422 0.397 0.157 0.157 1,560 1,170 14,040
ACT CD74AC163M 131188BXXXCT 0.325 0.306 0.155 0.155 1,560 1,170 14,040
ACT CD74AC163M96S2497 131188BXXXCT 0.240 0.226 0.159 0.158 1,560 1,170 14,040
ACT CD74AC164E 13145A 0.440 0.414 0.164 0.164 1,504 1,128 13,536
ACT CD74AC164M 13145AXXXCT 0.382 0.359 0.166 0.166 1,504 1,128 13,536
ACT CD74AC164M96 13145AXXXCT 0.262 0.246 0.164 0.164 1,504 1,128 13,536
ACT CD74AC174M96 13148AXXXCT 0.255 0.240 0.162 0.162 1,531 1,148 13,777
ACT CD74AC174M96S2463 13148AXXXCT 0.211 0.198 0.162 0.139 1,531 1,148 13,777
ACT CD74AC175M 13149AXXXCT 0.244 0.229 0.168 0.161 1,450 1,087 13,046
ACT CD74AC175M96 13149AXXXCT 0.352 0.331 0.169 0.169 1,450 1,087 13,046
ACT CD74AC175M96S2463 13149AXXXCT 0.197 0.185 0.171 0.130 1,450 1,087 13,046
ACT CD74AC175M96S2497 13149AXXXCT 0.218 0.205 0.171 0.144 1,450 1,087 13,046
ACT CD74AC191E 13113A 0.465 0.437 0.240 0.240 991 743 8,916
ACT CD74AC20E 13151A 0.152 0.143 0.077 0.077 3,291 2,468 29,620
ACT CD74AC20M 13151AXXXCT 0.165 0.155 0.078 0.078 3,291 2,468 29,620
ACT CD74AC20M96 13151AXXXCT 0.131 0.123 0.079 0.079 3,291 2,468 29,620
ACT CD74AC20M96S2463 13151AXXXCT 0.118 0.109 0.079 0.077 3,291 2,468 29,620
ACT CD74AC238M96 13111AXXXCT 0.276 0.259 0.170 0.170 1,436 1,077 12,926
ACT CD74AC240E 13100D 0.271 0.255 0.191 0.179 1,792 1,344 16,128
ACT CD74AC240M 13100D 0.204 0.192 0.191 0.135 1,792 1,344 16,128
ACT CD74AC240M96 13100D 0.125 0.118 0.191 0.083 1,792 1,344 16,128
ACT CD74AC240M96S2497 13100D 0.200 0.188 0.191 0.132 1,792 1,344 16,128
ACT CD74AC244E 13102D 0.243 0.228 0.188 0.160 1,792 1,344 16,128
ACT CD74AC244ES2497 13102D 0.220 0.207 0.191 0.145 1,792 1,344 16,128
ACT CD74AC244M 13102D 0.201 0.189 0.191 0.133 1,792 1,344 16,128
ACT CD74AC244M96 13102D 0.249 0.234 0.191 0.164 1,792 1,344 16,128
ACT CD74AC244M96S2497 13102D 0.200 0.188 0.191 0.132 1,792 1,344 18,128
ACT CD74AC244SM 13102DXXXCT 0.381 0.358 0.197 0.197 1,792 1,344 16,128
ACT CD74AC244SM96 13102DXXXCT 0.659 0.619 0.197 0.197 1,792 1,344 16,128
ACT CD74AC245E 13103C 0.195 0.183 0.216 0.129 1,625 1,218 14,621
</TABLE>
- 3 - COMPANY CONFIDENTIAL
<PAGE>
SCHEDULE 1(a)[C]
COMMERCIAL PRODUCTS FOR SUPPLY AGREEMENT
<TABLE>
<CAPTION>
FG Std Die Std NDW Die
Family Device Die ASP Trf Price Die Cost Trf Price ---- MDPW MLQ
- - ------ ------ --- --- --------- -------- --------- ---- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ACT CD74AC245M 13103C 0.275 0.259 0.218 0.182 1,625 1,218 14,621
ACT CD74AC245M96 13103C 0.219 0.206 0.218 0.145 1,625 1,218 14,621
ACT CD74AC245M96S2483 13103C 0.220 0.207 0.218 0.145 1,625 1,218 14,621
ACT CD74AC245SM 13103CXXXCT 0.320 0.301 0.219 0.211 1,625 1,218 14,621
ACT CD74AC251M 13133AXXXCT 0.209 0.196 0.151 0.138 1,643 1,233 14,791
ACT CD74AC251M96S2463 13133AXXXCT 0.190 0.179 0.151 0.125 1,643 1,233 14,791
ACT C074AC253M 13135BXXXCT 0.252 0.237 0.149 0.149 1,697 1,272 15,269
ACT CD74AC253M96 13135AXXXCT 0.202 0.190 0.149 0.133 1,717 1,288 15,456
ACT CD74AC253M96S2463 13135AXXXCT 0.188 0.177 0.149 0.124 1,717 1,288 15,456
ACT CD74AC253M96S2497 13135AXXXCT 0.209 0.196 0.149 0.138 1,717 1,288 15,456
ACT CD74AC257E 13120A 0.204 0.192 0.175 0.135 1,264 948 11,376
ACT CD74AC257M 13120AXXXCT 0.213 0.200 0.174 0.141 1,264 948 11,376
ACT CD74AC257M96 13120AXXXCT 0.267 0.251 0.174 0.174 1,264 948 11,376
ACT CD74AC257M96S2463 13120AXXXCT 0.172 0.162 0.197 0.114 1,264 948 11,376
ACT CD74AC257M96S2497 13120AXXXCT 0.130 0.122 0.197 0.086 1,264 948 11,376
ACT CD74AC273E 13146A 0.152 0.143 0.152 0.100 1,258 944 11,324
ACT CD74AC273M 13146A 0.133 0.125 0.151 0.088 1,258 944 11,324
ACT CD74AC273M96 13146A 0.163 0.153 0.150 0.108 1,258 944 11,324
ACT CD74AC280E 13119A 0.263 0.247 0.143 0.143 1,673 1,255 15,055
ACT C074AC280M 13119AXXXCT 0.306 0.288 0.146 0.146 1,673 1,255 15,055
ACT CD74AC280M96 13119AXXXCT 0.347 0.326 0.145 0.145 1,673 1,255 15,055
ACT CD74AC280M96S2483 13119AXXXCT 0.204 0.192 0.146 0.135 1,673 1,255 15,055
ACT CD74AC280MS2074 13119AXXXCT 0.240 0.226 0.145 0.145 1,673 1,255 15,055
ACT CD74AC283E 13112A 0.344 0.323 0.213 0.213 1,132 849 10,184
ACT CD74AC283M 13112AXXXCT 0.339 0.319 0.215 0.215 1,132 849 10,184
ACT CD74AC297MS2075 13164AXXXCT 0.330 0.310 0.201 0.201 1,464 1,098 13,180
ACT CD74AC32E 13126B 0.144 0.135 0.129 0.095 3,071 2,303 27,637
ACT CD74AC32M 13126DXXXCT 0.120 0.113 0.112 0.079 3,589 2,692 32,303
ACT CD74AC32M96 13126DXXXCT 0.117 0.110 0.111 0.077 3,589 2,692 32,303
ACT CD74AC32M96S2463 13126DXXXCT 0.115 0.108 0.111 0.076 3,589 2,692 32,303
ACT CD74AC32M96S2497 13126DXXXCT 0.110 0.103 0.113 0.073 3,589 2,692 32,303
</TABLE>
- 4 - COMPANY CONFIDENTIAL
<PAGE>
SCHEDULE 1(a)[C]
COMMERCIAL PRODUCTS FOR SUPPLY AGREEMENT
<TABLE>
<CAPTION>
FG Std Die Std NDW Die
Family Device Die ASP Trf Price Die Cost Trf Price ---- MDPW MLQ
- - ------ ------ --- --- --------- -------- --------- ---- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ACT CD74AC373E 13137B 0.192 0.180 0.195 0.127 1,129 847 10,165
ACT CD74AC373M 13137B 0.211 0.198 0.194 0.139 1,129 847 10,165
ACT CD74AC373M96 13137B 0.179 0.168 0.194 0.118 1,129 847 10,165
ACT CD74AC373M96S2497 13137B 0.210 0.197 0.218 0.139 1,129 847 10,165
ACT CD74AC374E 13104B 0.206 0.194 0.258 0.136 926 694 8,333
ACT CD74AC374M 13104B 0.218 0.205 0.263 0.144 926 694 8,333
ACT CD74AC374M96 13104B 0.092 0.086 0.263 0.061 926 694 8,333
ACT CD74AC374M96S2463 13104B 0.220 0.207 0.263 0.145 926 694 8,333
ACT CD74AC374M96S2497 13104B 0.200 0.188 0.263 0.132 926 694 8,333
ACT CD74AC374MS2075 13104B 0.256 0.241 0.263 0.169 926 694 8,333
ACT CD74AC534M96 13136B 0.407 0.383 0.261 0.261 913 685 8,215
ACT CD74AC540M 13105B 0.241 0.227 0.212 0.159 1,167 875 10,506
ACT CD74AC541E 13106B 0.298 0.280 0.212 0.197 1,167 875 10,506
ACT CD74AC541M 13106B 0.251 0.236 0.212 0.166 1,167 875 10,506
ACT CD74AC541M96 13106B 0.283 0.266 0.207 0.187 1,167 875 10,506
ACT CD74AC541SM 13106BXXXCT 0.580 0.545 0.218 0.218 1,167 875 10,506
ACT CD74AC563E 13141A 0.416 0.391 0.232 0.232 1,062 797 9,559
ACT CD74AC573E 13140A 0.265 0.249 0.191 0.175 1,062 797 9,559
ACT CD74AC573M 13140A 0.248 0.233 0.191 0.164 1,062 797 9,559
ACT CD74AC573M96 13140A 0.223 0.210 0.193 0.147 1,062 797 9,559
ACT CD74AC574E 13142A 0.200 0.188 0.246 0.132 870 652 7,828
ACT CD74AC574M96 13142A 0.241 0.227 0.243 0.159 870 652 7,828
ACT CD74AC646M 13130B 1.341 1.261 0.603 0.603 548 411 4,928
ACT CD74AC646M96 13130B 0.193 0.181 0.539 0.127 548 411 4,928
ACT CD74AC646M96S2463 13130B 0.800 0.752 0.694 0.528 548 411 4,928
ACT CD74AC74E 13108B 0.141 0.133 0.149 0.093 1,629 1,222 14,664
ACT CD74AC74M 13108CXXXCT 0.138 0.130 0.129 0.091 3,101 2,326 27,912
ACT CD74AC74M96 13108CXXXCT 0.132 0.124 0.128 0.087 3,101 2,326 27,912
ACT CD74AC74M96S2497 13108CXXXCT 0.130 0.122 0.130 0.086 3,101 2,326 27,912
ACT CD74AC86E 13127B 0.146 0.137 0.114 0.096 3,071 2,303 27,637
ACT CD74AC86M 13127BXXXCT 0.158 0.149 0.113 0.104 3,071 2,303 27,637
</TABLE>
- 5 - COMPANY CONFIDENTIAL
<PAGE>
SCHEDULE 1(a)[C]
COMMERCIAL PRODUCTS FOR SUPPLY AGREEMENT
<TABLE>
<CAPTION>
FG Std Die Std NDW Die
Family Device Die ASP Trf Price Die Cost Trf Price ---- MDPW MLQ
- - ------ ------ --- --- --------- -------- --------- ---- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ACT CD74AC86M96 13127BXXXCT 0.106 0.100 0.112 0.070 3,071 2,303 27,637
ACT CD74AC86M96S2463 13127BXXXCT 0.140 0.132 0.130 0.092 3,071 2,303 27,637
ACT CD74AC86M96S2497 13127BXXXCT 0.140 0.132 0.130 0.092 3,071 2,303 27,637
ACT CD74ACT00E 14109C 0.087 0.082 0.131 0.057 3,071 2,303 27,637
ACT CD74ACT00M 14109DXXXCT 0.069 0.065 0.120 0.046 3,549 2,662 31,944
ACT CD74ACT00M96 14109DXXXCT 0.101 0.095 0.121 0.067 3,549 2,662 31,944
ACT CD74ACT00M96S2378 14109DXXXCT 0.130 0.122 0.123 0.086 3,549 2,662 31,944
ACT CD74ACT00M96S2463 14109DXXXCT 0.110 0.103 0.123 0.073 3,549 2,662 31,944
ACT CD74ACT00M96S2497 14109DXXXCT 0.120 0.113 0.123 0.079 3,549 2,662 31,944
ACT CD74ACT02E 14150B 0.123 0.116 0.113 0.081 3,960 2,970 35,638
ACT CD74ACT02M96 14150AXXXCT 0.104 0.098 0.095 0.069 2,401 1,801 21,609
ACT CD74ACT04E 14123B 0.124 0.117 0.114 0.082 2,968 2,226 26,714
ACT CD74ACT04M 14123CXXXCT 0.096 0.090 0.114 0.063 3,700 2,775 33,301
ACT CD74ACT04M96 14123CXXXCT 0.079 0.074 0.114 0.052 3,700 2,775 33,301
ACT CD74ACT04M96S2463 14123CXXXCT 0.110 0.103 0.115 0.073 3,700 2,775 33,301
ACT CD74ACT04M96S2497 14123CXXXCT 0.101 0.095 0.115 0.067 3,700 2,775 33,301
ACT CD74ACT04M96S2546 14123CXXXCT 0.159 0.149 0.115 0.105 3,700 2,775 33,301
ACT CD74ACT05E 14124B 0.088 0.083 0.118 0.058 2,968 2,226 26,714
ACT CD74ACT05M 14124BXXXCT 0.118 0.111 0.117 0.078 2,968 2,226 26,714
ACT CD74ACT05M96 14124BXXXCT 0.124 0.117 0.116 0.082 2,968 2,226 26,714
ACT CD74ACT05M96S2074 14124BXXXCT 0.120 0.113 0.117 0.079 2,968 2,226 26,714
ACT CD74ACT05MS2075 14124BXXXCT 0.130 0.122 0.117 0.086 2,968 2,226 26,714
ACT CD74ACT05MS2298 14124BXXXCT 0.117 0.110 0.117 0.077 2,968 2,226 26,714
ACT CD74ACT08E 14125B 0.100 0.094 0.129 0.066 3,071 2,303 27,637
ACT CD74ACT08M 14125DXXXCT 0.091 0.086 0.120 0.060 3,549 2,662 31,944
ACT CD74ACT08M96 14125DXXXCT 0.088 0.083 0.120 0.058 3,549 2,662 31,944
ACT CD74ACT08M96S2497 14125DXXXCT 0.120 0.113 0.121 0.079 3,549 2,662 31,994
ACT CD74ACT109E 14122B 0.179 0.168 0.158 0.118 1,629 1,222 14,664
ACT CD74ACT109M 14122BXXXCT 0.169 0.159 0.160 0.112 1,629 1,222 14,664
ACT CD74ACT109M96 14122BXXXCT 0.196 0.184 0.133 0.129 1,629 1,222 14,664
ACT CD74ACT10E 14147A 0.086 0.081 0.099 0.057 2,791 2,093 25,119
</TABLE>
- 6 - COMPANY CONFIDENTIAL
<PAGE>
SCHEDULE 1(a)[C]
COMMERCIAL PRODUCTS FOR SUPPLY AGREEMENT
<TABLE>
<CAPTION>
FG Std Die Std NDW Die
Family Device Die ASP Trf Price Die Cost Trf Price ---- MDPW MLQ
- - ------ ------ --- --- --------- -------- --------- ---- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ACT CD74ACT10M 14147AXXXCT 0.116 0.109 0.100 0.077 2,791 2,093 25,119
ACT CD74ACT10M96 14147AXXXCT 0.092 0.086 0.100 0.061 2,791 2,093 25,119
ACT CD74ACT112M 14144AXXXCT 0.262 0.246 0.153 0.153 1,717 1,288 15,457
ACT CD74ACT112M96 14144AXXXCT 0.262 0.246 0.152 0.152 1,717 1,288 15,457
ACT CD74ACT138E 14110A 0.176 0.165 0.170 0.116 1,369 1,027 12,325
ACT CD74ACT138M 14110BXXXCT 0.166 0.156 0.168 0.110 2,469 1,852 22,224
ACT CD74ACT138M96 14110BXXXCT 0.177 0.166 0.168 0.117 2,469 1,852 22,224
ACT CD74ACT139M96 14139AXXXCT 0.160 0.150 0.172 0.106 1,466 1,100 13,195
ACT CD74ACT139M96S2497 14139AXXXCT 0.170 0.160 0.174 0.112 1,466 1,100 13,195
ACT CD74ACT14E 14163A 0.144 0.135 0.180 0.095 1,677 1,258 15,090
ACT CD74ACT14M 14163AXXXCT 0.121 0.114 0.179 0.080 1,677 1,258 15,090
ACT CD74ACT14M96 14163AXXXCT 0.136 0.128 0.179 0.090 1,677 1,258 15,090
ACT CD74ACT14M96S2463 14163AXXXCT 0.130 0.122 0.181 0.086 1,677 1,258 15,090
ACT CD74ACT14M96S2478 14163AXXXCT 0.130 0.122 0.181 0.086 1,677 1,258 15,090
ACT CD74ACT14M96S2497 14163AXXXCT 0.150 0.141 0.181 0.099 1,677 1,258 15,090
ACT CD74ACT151M96 14132AXXXCT 0.264 0.248 0.162 0.162 1,624 1,218 14,612
ACT CD74ACT153E 14134B 0.240 0.226 0.155 0.155 1,697 1,272 15,269
ACT CD74ACT153M 14134BXXXCT 0.287 0.270 0.157 0.157 1,697 1,272 15,269
ACT CD74ACT153M96 14134BXXXCT 0.158 0.149 0.157 0.104 1,697 1,272 15,269
ACT CD74ACT157E 14115A 0.200 0.188 0.170 0.132 1,423 1,067 12,806
ACT CD74ACT157M 14115AXXXCT 0.249 0.234 0.172 0.164 1,423 1,067 12,806
ACT CD74ACT157M96 14115AXXXCT 0.257 0.242 0.170 0.170 1,423 1,067 12,806
ACT CD74ACT157M96S2497 14115AXXXCT 0.210 0.197 0.172 0.139 1,423 1,067 12,806
ACT CD74ACT158M96 14116AXXXCT 0.293 0.275 0.180 0.180 1,423 1,067 12,806
ACT CD74ACT161E 14117B 0.196 0.184 0.161 0.129 1,580 1,185 14,216
ACT CD74ACT161M96 14117BXXXCT 0.254 0.239 0.163 0.163 1,580 1,185 14,216
ACT CD74ACT161M96S2463 14117BXXXCT 0.190 0.179 0.165 0.125 1,580 1,185 14,216
ACT CD74ACT163E 14118A 0.050 0.047 0.163 0.033 1,811 1,358 16,296
ACT CD74ACT163M 14118BXXXCT 0.317 0.298 0,165 0.165 1,580 1,185 14,216
ACT CD74ACT163M96 14118AXXXCT 0.300 0.282 0.165 0.165 1,811 1,358 16,296
ACT CD74ACT164E 14145A 0.447 0.420 0.176 0.176 1,431 1,074 12,883
</TABLE>
- 7 - COMPANY CONFIDENTIAL
<PAGE>
SCHEDULE 1(a)[C]
COMMERCIAL PRODUCTS FOR SUPPLY AGREEMENT
<TABLE>
<CAPTION>
FG Std Die Std NDW Die
Family Device Die ASP Trf Price Die Cost Trf Price ---- MDPW MLQ
- - ------ ------ --- --- --------- -------- --------- ---- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ACT CD74ACT164M 14145AXXXCT 0.392 0.368 0.178 0.178 1,431 1,074 12,883
ACT CD74ACT164M96 14145AXXXCT 0.472 0.444 0.178 0.178 1,431 1,074 12,883
ACT CD74ACT164MS2298 14145AXXXCT 0.350 0.329 0.178 0.178 1,431 1,074 12,883
ACT CD74ACT174E 14148A 0.196 0.184 0.161 0.129 1,571 1,178 14,135
ACT CD74ACT174M 14148AXXXCT 0.140 0.132 0.163 0.092 1,571 1,178 14,135
ACT CD74ACT174M96 14148AXXXCT 0.184 0.173 0.163 0.121 1,571 1,178 14,135
ACT CD74ACT174M96S2497 14148AXXXCT 0.197 0.185 0.164 0.130 1,571 1,178 14,135
ACT CD74ACT175E 14149A 0.204 0.192 0.177 0.135 1,431 1,074 12,883
ACT CD74ACT175M 14149AXXXCT 0.222 0.209 0.178 0.147 1,431 1,074 12,883
ACT CD074ACT175M96 14149AXXXCT 0.183 0.172 0.178 0.121 1,431 1,074 12,883
ACT CD74ACT175M96S2463 14149AXXXCT 0.236 0.222 0.178 0.156 1,431 1,074 12,883
ACT CD74ACT175M96S2497 14149AXXXCT 0.110 0.103 0.178 0.073 1,431 1,074 12,883
ACT CD74ACT191M 14113AXXXCT 0.832 0.782 0.258 0.258 966 724 8,690
ACT CD74ACT20E 14151A 0.145 0.136 0.087 0.087 3,213 2,410 28,915
ACT CD74ACT20M 14151AXXXCT 0.173 0.163 0.088 0.088 3,213 2,410 28,915
ACT CD74ACT20M96 14151AXXXCT 0.143 0.134 0.088 0.088 3,213 2,410 28,915
ACT CD74ACT238E 14111A 0.373 0.351 0.171 0.171 1,369 1,027 12,325
ACT CD74ACT240E 14100D 0.205 0.193 0.205 0.135 1,792 1,344 16,128
ACT CD74ACT240M 14100D 0.195 0.183 0.202 0.129 1,792 1,344 16,128
ACT CD74ACT240M96 14100D 0.207 0.195 0.202 0.137 1,792 1,344 16,128
ACT CD74ACT240M96S2497 14100D 0.230 0.216 0.204 0.152 1,792 1,344 16,128
ACT CD74ACT241E 14101D 0.233 0.219 0.196 0.154 1,792 1,344 16,128
ACT CD74ACT241M96S2497 14101D 0.242 0.227 0.195 0.160 1,792 1,344 16,128
ACT CD74ACT244E 14102D 0.205 0.193 0.213 0.135 1,792 1,344 16,128
ACT CD74ACT244ES2497 14102D 0.200 0.188 0.215 0.132 1,792 1,344 16,128
ACT CD74ACT244M 14102D 0.179 0.168 0.212 0.118 1,792 1,344 16,128
ACT CD74ACT244M96 14102D 0.222 0.209 0.212 0.147 1,792 1,344 16,128
ACT CD74ACT244M96S2497 14102D 0.220 0.207 0.212 0.145 1,792 1,344 16,128
ACT CD74ACT245E 14103C 0.205 0.193 0.258 0.135 1,431 1,073 12,880
ACT CD74ACT245M 14103C 0.233 0.219 0.257 0.154 1,431 1,073 12,880
ACT CD74ACT245M96 14103C 0.242 0.227 0.257 0.160 1,431 1,073 12,880
</TABLE>
- 8 - COMPANY CONFIDENTIAL
<PAGE>
SCHEDULE 1(a)[C]
COMMERCIAL PRODUCTS FOR SUPPLY AGREEMENT
<TABLE>
<CAPTION>
FG Std Die Std NDW Die
Family Device Die ASP Trf Price Die Cost Trf Price ---- MDPW MLQ
- - ------ ------ --- --- --------- -------- --------- ---- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ACT CD74ACT245M96S2463 14103C 0.230 0.216 0.260 0.152 1,431 1,073 12,880
ACT CD74ACT245M96S2497 14103C 0.230 0.216 0.260 0.152 1,431 1,073 12,880
ACT CD74ACT245MS2074 14103C 0.225 0.212 0.260 0.149 1,431 1,073 12,880
ACT CD74ACT245SM 14103BXXXCT 0.492 0.462 0.264 0.264 723 542 6,504
ACT CD74ACT253M 14135BXXXCT 0.169 0.159 0.159 0.112 1,697 1,272 15,269
ACT CD74ACT2S3M96 14135BXXXCT 0.220 0.207 0.159 0.145 1,697 1,272 15,269
ACT CD74ACT253M96S2463 14135BXXXCT 0.187 0.176 0.159 0.123 1,697 1,272 15,269
ACT CD74ACT253M96S2497 14135BXXXCT 0.230 0.216 0.159 0.152 1,697 1,272 15,269
ACT CD74ACT257E 14120A 0.254 0.239 0.179 0.168 1,312 984 11,808
ACT CD74ACT257M 14120BXXXCT 0.218 0.205 0.178 0.144 2,357 1,768 21,213
ACT CD74ACT257M96 14120BXXXCT 0.190 0.179 0.178 0.125 2,357 1,768 21,213
ACT CD74ACT273E 14146A 0.235 0.221 0.173 0.155 1,095 821 9,853
ACT CD74ACT273M 14146A 0.227 0.213 0.171 0.150 1,095 821 9,853
ACT CD74ACT273M96 14146A 0.194 0.182 0.171 0.128 1,095 821 9,853
ACT CD74ACT273M96S2497 14146A 0.270 0.254 0.172 0.172 1,095 821 9,853
ACT CD74ACT273SM 14146AXXXCT 0.263 0.247 0.175 0.174 1,095 821 9,853
ACT CD74ACT280E 14119A 0.282 0.265 0.150 0.150 1,594 1,196 14,347
ACT CD74ACT280M 14119AXXXCT 0.257 0.242 0.153 0.153 1,594 1,196 14,347
ACT CD74ACT280M96 14119AXXXCT 0.246 0.231 0.151 0.151 1,594 1,196 14,347
ACT CD74ACT280MS2074 14119AXXXCT 0.240 0.226 0.153 0.153 1,594 1,196 14,347
ACT CD74ACT283E 14112A 0.353 0.332 0.227 0.227 1,104 828 9,936
ACT CD74ACT283M 14112AXXXCT 0.370 0.348 0.229 0.229 1,104 828 9,936
ACT CD74ACT297M 14164AXXXCT 0.351 0.330 0.174 0.174 1,446 1,085 13,018
ACT CD74ACT299M96 14128A 0.427 0.401 0.381 0.282 660 495 5,937
ACT CD74ACT32E 14126B 0.112 0.105 0.117 0.074 3,071 2,303 27,637
ACT CD74ACT32M 14126DXXXCT 0.056 0.053 0.120 0.037 3,549 2,662 31,944
ACT CD74ACT32M96 14126DXXXCT 0.111 0.104 0.120 0.073 3,549 2,662 31,944
ACT CD74ACT32M96S2497 14126DXXXCT 0.105 0.099 0.121 0.069 3,549 2,662 31,944
ACT CD74ACT373E 14137B 0.197 0.185 0.205 0.130 1,043 782 9,383
ACT CD74ACT373M 14137B 0.113 0.106 0.204 0.075 1,043 782 9,383
ACT CD74ACT373M98 14137B 0.158 0.149 0.204 0.104 1,043 782 9,383
</TABLE>
- 9 - COMPANY CONFIDENTIAL
<PAGE>
SCHEDULE 1(a)[C]
COMMERCIAL PRODUCTS FOR SUPPLY AGREEMENT
<TABLE>
<CAPTION>
FG Std Die Std NDW Die
Family Device Die ASP Trf Price Die Cost Trf Price ---- MDPW MLQ
- - ------ ------ --- --- --------- -------- --------- ---- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ACT CD74ACT373M96S2463 14137B 0.205 0.193 0.241 0.135 1,043 782 9,383
ACT CD74ACT374E 14104B 0.245 0.230 0.259 0.162 965 724 8,685
ACT CD74ACT374M 14104B 0.148 0.139 0.258 0.098 965 724 8,685
ACT CD74ACT374M96 14104B 0.187 0.176 0.258 0.123 965 724 8,685
ACT CD74ACT374M96S2463 14104B 0.217 0.204 0.261 0.143 965 724 8,685
ACT CD74ACT374M96S2497 14104B 0.203 0.191 0.261 0.134 965 724 8,685
ACT CD74ACT540E 14105B 0.221 0.208 0.232 0.146 1,107 830 9,960
ACT CD74ACT540M 14105B 0.241 0.227 0.231 0.159 1,107 830 9,960
ACT CD74ACT540MS2075 14105B 0.220 0.207 0.234 0.145 1,107 830 9,960
ACT CD74ACTS41E 14106B 0.248 0.233 0.229 0.164 1,107 830 9,960
ACT CD74ACT541M 14106B 0.236 0.222 0.231 0.156 1,107 830 9,960
ACT CD74ACT541M96 14106B 0.254 0.239 0.228 0.168 1,107 830 9,960
ACT CD74ACT541M96S2497 14106B 0.350 0.329 0.231 0.231 1,107 830 9,960
ACT CD74ACT541SM 14106BXXXCT 0.260 0.244 0.238 0.172 1,107 830 9,960
ACT CD74ACT573E 14140A 0.227 0.213 0.194 0.150 987 741 8,886
ACT CD74ACT573M 14140A 0.223 0.210 0.193 0.147 987 741 8,886
ACT CD74ACT573M96 14140A 0.287 0.270 0.193 0.189 987 741 8,886
ACT CD74ACT573M96S2497 14140A 0.250 0.235 0.196 0.165 987 741 8,886
ACT CD74ACT574E 14142A 0.247 0.232 0.234 0.163 870 652 7,828
ACT CD74ACT574M 14142A 0.187 0.176 0.233 0.123 870 652 7,828
ACT CD74ACT574M96 14142A 0.276 0.259 0.233 0.182 870 652 7,828
ACT CD74ACT574M96S2497 14142A 0.200 0.188 0.287 0.132 870 652 7,828
ACT CD74ACT623M96 14155C 0.341 0.321 0.262 0.225 1,431 1,073 12,880
ACT CD74ACT646EN 14130B 1.272 1.196 0.726 0.726 548 411 4,928
ACT CD74ACT646M 14130B 0.233 0.219 0.527 0.154 548 411 4,928
ACT CD74ACT646M96 14130B 0.773 0.727 0.521 0.510 548 411 4,928
ACT CD74ACT646M96S2463 14130B 1.010 0.949 0.714 0.667 548 411 4,928
ACT CD74ACT652EN 14157C 1.517 1.426 0.726 0.726 784 588 7,052
ACT CD74ACT652M 14157B 0.913 0.858 0.527 0.527 765 573 6,882
ACT CD74ACT652M96 14157B 1.289 1.212 0.527 0.527 765 573 6,882
ACT CD74ACT652MS2298 14157B 1.331 1.251 0.527 0.527 765 573 6,882
</TABLE>
- 10 - COMPANY CONFIDENTIAL
<PAGE>
SCHEDULE 1(a)[C]
COMMERCIAL PRODUCTS FOR SUPPLY AGREEMENT
<TABLE>
<CAPTION>
FG Std Die Std NDW Die
Family Device Die ASP Trf Price Die Cost Trf Price ---- MDPW MLQ
- - ------ ------ --- --- --------- -------- --------- ---- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ACT CD74ACT74E 14108B 0.130 0.122 0.156 0.086 1,629 1,222 14,664
ACT CD74ACT74M 14108CXXXCT 0.103 0.097 0.134 0.068 3,135 2,352 28,218
ACT CD74ACT74M96 14108CXXXCT 0.124 0.117 0.134 0.082 3,135 2,352 28,218
ACT CD74ACT74M96S2497 14108CXXXCT 0.130 0.122 0.136 0.086 3,135 2,352 28,218
ACT CD74ACT86E 14127B 0.159 0.149 0.122 0.105 3,071 2,303 27,637
ACT CD74ACT86M 14127BXXXCT 0.160 0.150 0.120 0.106 3,071 2,303 27,637
ACT CD74ACT86M96 14127BXXXCT 0.128 0.120 0.120 0.084 3,071 2,303 27,637
CD4000 18892 10900X 0.236 0.222 0.041 0.041 2,522 1,892 22,699
CD4000 18893 06911A 0.307 0.289 0.082 0.082 1,256 942 11,307
CD4000 41053 06947X 0.290 0.273 0.111 0.111 926 694 8,331
CD4000 98634 06586C 0.133 0.125 0.032 0.032 3,211 2,408 28,901
CD4000 99395 10705A 0.177 0.166 0.058 0.058 1,755 1,316 15,792
CD4000 99397 11196X 0.207 0.195 0.075 0.075 1,287 966 11,587
CD4000 99398 06936B 0.125 0.118 0.032 0.032 3,166 2,375 28,496
CD4000 99399 10941X 0.203 0.191 0.079 0.079 1,305 979 11,749
CD4000 CD14538BE 13024B 0.191 0.180 0.091 0.091 1,115 836 10031
CD4000 CD14538BES2515 13024B 0.156 0.147 0.091 0.091 1,115 836 10,031
CD4000 CD14538BF 13024B 1.458 1.371 0.087 0.087 1,115 836 10,031
CD4000 CD4001BE 08939X 0.081 0.076 0.036 0.036 2,781 2,086 25,029
CD4000 CD4001BER3589 06939X 0.141 0.133 0.037 0.037 2,781 2,086 25,029
CD4000 CD4001BES2325 06939X 0.108 0.102 0.036 0.036 2,781 2,086 25,029
CD4000 CD4001BF 06939X 0.455 0.428 0.038 0.038 2,781 2,086 25,029
CD4000 CD4001BFS2065 06939X 0.420 0.395 0.038 0.038 2,781 2,086 25,029
CD4000 CD4001BM 06939XXXXCT 0.088 0.083 0.038 0.038 2,781 2,086 25,029
CD4000 CD4001BM96 06939XXXXCT 0.102 0.096 0.038 0.038 2,781 2,086 25,029
CD4000 CD4001BW 06939X 0.199 0.187 0.036 0.036 2,781 2,086 25,029
CD4000 CD4001UBE 06924X 0.084 0.079 0.037 0.037 2,765 2,074 24,883
CD4000 CD4001UBF 06924X 0.840 0.790 0.038 0.038 2,765 2,074 24,883
CD4000 CD4002BE 10255X 0.096 0.090 0.037 0.037 2,781 2,086 25,029
CD4000 CD4002BF 10255X 0.490 0.461 0.038 0.038 2,781 2,086 25,029
CD4000 CD4007UBE 06938X 0.097 0.091 0.029 0.029 3,476 2,607 31,282
</TABLE>
- 11 - COMPANY CONFIDENTIAL
<PAGE>
SCHEDULE 1(a)[C]
COMMERCIAL PRODUCTS FOR SUPPLY AGREEMENT
<TABLE>
<CAPTION>
FG Std Die Std NDW Die
Family Device Die ASP Trf Price Die Cost Trf Price ---- MDPW MLQ
- - ------ ------ --- --- --------- -------- --------- ---- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CD4000 CD4007UBF 06938X 0.485 0.456 0.030 0.030 3,476 2,607 31,282
CD4000 CD4007UBH 06938X 0.227 0.213 0.031 0.031 3,476 2,607 31,282
CD4000 CD4007UBW 06938X 0.180 0.169 0.029 0.029 3,476 2,607 31,282
CD4000 CD4009UBE 06868X 0.131 0.123 0.037 0.037 2,719 2,039 24,472
CD4000 CD40102BE 06653X 0.283 0.266 0.127 0.127 804 603 7,237
CD4000 CD40103BE 06629X 0.217 0.204 0.130 0.130 785 589 7,067
CD4000 CD40103BF 06629X 1.198 1.126 0.134 0.134 785 589 7,067
CD4000 CD40103BW 06629X 0.283 0.266 0.126 0.126 785 589 7,067
CD4000 CD40105BE 06751X 0.362 0.340 0.155 0.155 658 493 5,918
CD4000 CD40105BF 06751X 0.629 0.591 0.160 0.160 658 493 5,918
CD4000 CD40106BE 10900X 0.112 0.105 0.040 0.040 2,522 1,892 22,699
CD4000 CD40106BER3592 10900X 0.129 0.121 0.040 0.040 2,522 1,892 22,699
CD4000 CD40106BES2300 10900X 0.112 0.105 0.040 0.040 2,522 1,892 22,699
CD4000 CD40108BES2515 10900X 0.100 0.094 0.041 0.041 2,522 1,892 22,699
CD4000 CD40106BES5001 10900X 0.110 0.103 0.041 0.041 2,522 1,892 22,699
CD4000 CD40106BEX 10900X 0.249 0.234 0.041 0.041 2,522 1,892 22,699
CD4000 CD40106BF 10900X 0.828 0.778 0.042 0.042 2,522 1,892 22,699
CD4000 CD40106BM 10900XXXXCT 0.101 0.095 0.042 0.042 2,522 1,892 22,699
CD4000 CD40106BM96 10900XXXXCT 0.142 0.133 0.042 0.042 2,522 1,892 22,699
CD4000 CD40106BW 10900X 0.157 0.148 0.039 0.039 2,522 1,892 22,699
CD4000 CD40107BE 0670X 0.133 0.125 0.029 0.029 3,513 2,634 31,613
CD4000 CD40107BF 06706X 0.840 0.790 0.030 0.030 3,513 2,634 31,613
CD4000 CD40109BE 11377A 0.261 0.245 0.075 0.075 1,346 1,010 12,118
CD4000 CD40109BF 11377A 0.886 0.833 0.078 0.078 1,346 1,010 12,118
CD4000 CD40109BW 11377A 0.349 0.328 0.074 0.074 1,346 1,010 12,118
CD4000 CD4010BE 06869X 0.113 0.106 0.038 0.038 2,689 2,017 24,203
CD4000 CD4010BF 06869X 0.800 0.752 0.039 0.039 2,689 2,017 24,203
CD4000 CD40110BE 06830B 0.271 0.255 0.163 0.163 627 470 5,640
CD4000 CD40117BE 10933X 0.157 0.148 0.035 0.035 2,904 2,178 26,140
CD4000 CD4011BE 10256A 0.087 0.082 0.028 0.028 3,680 2,760 33,120
CD4000 CD4011BES2325 10256A 0.108 0.102 0.028 0.028 3,680 2,760 33,120
</TABLE>
- 12 - COMPANY CONFIDENTIAL
<PAGE>
SCHEDULE 1(a)[C]
COMMERCIAL PRODUCTS FOR SUPPLY AGREEMENT
<TABLE>
<CAPTION>
FG Std Die Std NDW Die
Family Device Die ASP Trf Price Die Cost Trf Price ---- MDPW MLQ
- - ------ ------ --- --- --------- -------- --------- ---- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CD4000 CD4011BF 10256A 0.472 0.444 0.029 0.029 3,680 2,760 33,120
CD4000 CD4011BM 10256AXXXCT 0.091 0.086 0.029 0.029 3,680 2,760 33,120
CD4000 CD4011BM96 10256AXXXCT 0.113 0.106 0.029 0.029 3,680 2,760 33,120
CD4000 CD4011BW 10256A 0.167 0.157 0.027 0.027 3,680 2,780 33,120
CD4000 CD4011UBE 06982X 0.092 0.086 0.044 0.044 2,341 1,755 21,065
CD4000 CD4012BE 10257X 0.095 0.089 0.041 0.041 1,853 1390 16,677
CD4000 CD4012BES2064 10257X 0.085 0.080 0.041 0.041 1,853 1,390 16,677
CD4000 CD4012BM96 10257XXXCT 0.100 0.094 0.042 0.042 2,511 1,883 22,599
CD4000 CD4013BE 06936B 0.084 0.079 0.032 0.032 3,166 2,375 28,496
CD4000 CD4013BES2325 06936B 0.108 0.102 0.032 0.032 3,166 2,375 28,496
CD4000 CD40138ES2497 06936B 0.110 0.103 0.033 0.033 3,166 2,375 28,496
CD4000 CD4013BES2515 06936B 0.067 0.063 0.033 0.033 3,166 2,375 28,496
CD4000 CD4013BES2540 06936B 0.095 0.089 0.033 0.033 3,166 2,375 28,496
CD4000 CD4013BEX 06936B 0.143 0.134 0.032 0.032 3,166 2,375 28,496
CD4000 CD4013BF 06936B 0.490 0.461 0.033 0.033 3,166 2,375 28,496
CD4000 CD40138H 06936B 0.181 0.170 0.034 0.034 3,166 2,315 28,496
CD4000 CD4013BM 06936BXXXCT 0.086 0.081 0.033 0.033 3,166 2,315 28,496
CD4000 CD40138M96 06936BXXXCT 0.120 0.113 0.033 0.033 3,166 2,375 28,496
CD4000 CD4013BW 06936B 0.163 0.153 0.031 0.031 3,166 2,375 28,496
CD4000 CD4014BE 10163X 0.205 0.193 0.085 0.085 1,202 901 10,817
CD4000 CD4015BE 06911A 0.142 0.133 0.081 0.081 1,256 942 11,307
CD4000 CD4015BF 06911A 0.478 0.449 0.084 0.084 1,256 942 11,307
CD4000 CD4015BW 06911A 0.267 0.251 0.079 0.079 1,256 942 11,307
CD4000 CD40161BE 10215X 0.305 0.287 0.097 0.097 1,056 792 9,501
CD4000 CD40161BW 10215X 0.317 0.298 0.094 0.094 1,056 792 9,501
CD4000 CD4016BE 06940B 0.116 0.109 0.028 0.028 3,644 2,733 32,793
CD4000 CD4016BF 06940B 0.463 0.435 0.029 0.029 3,644 2,733 32,793
CD4000 CD4010BM 00940BXXXCT 0.099 0.093 0.029 0.029 3,644 2,733 32,793
CD4000 CD4016BW 08940B 0.173 0.163 0.027 0.027 3,644 2,733 32,793
CD4000 CD40174BE 10276X 0.132 0.124 0.060 0.060 1,690 1,267 15,206
CD4000 CD40174BE116 10276X 0.130 0.122 0.080 0.060 1,690 1,267 15,206
</TABLE>
- 13 - COMPANY CONFIDENTIAL
<PAGE>
SCHEDULE 1(a)[C]
COMMERCIAL PRODUCTS FOR SUPPLY AGREEMENT
<TABLE>
<CAPTION>
FG Std Die Std NDW Die
Family Device Die ASP Trf Price Die Cost Trf Price ---- MDPW MLQ
- - ------ ------ --- --- --------- -------- --------- ---- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CD4000 CD40174BF 10276X 0.797 0.749 0.062 0.062 1,690 1,267 15,206
CD4000 CD40174BW 10276X 0.180 0.169 0.059 0.059 1,690 1,267 15,206
CD4000 CD40175BE 11180X 0.135 0.127 0.052 0.052 1,945 1,459 17,508
CD4000 CD4017BE 10494B 0.134 0.126 0.102 0.088 998 748 8,981
CD4000 CD4017BF 10494B 0.980 0.921 0.105 0.105 998 748 8,981
CD4000 CD4017BW 10494B 0.331 0.311 0.099 0.099 998 748 8,981
CD4000 CD4018BE 10113X 0.161 0.151 0.073 0.073 1,388 1,041 12,492
CD4000 CD4018BES2064 10113X 0.171 0.161 0.073 0.073 1,388 1,041 12,492
CD4000 CD40192BE 06729X 0.184 0.173 0.111 0.111 916 687 8,247
CD4000 CD40193BE 06730X 0.200 0.188 0.113 0.113 906 679 8,150
CD4000 CD40194BE 10485A 0.178 0.167 0.098 0.098 1,037 778 9,333
CD4000 CD4019BE 10939X 0.125 0.118 0.041 0.041 2,467 1,850 22,200
CD4000 CD4019BES2260 10939X 0.160 0.150 0.041 0.041 2,467 1,850 22,200
CD4000 CD40198F 10939X 0.754 0.709 0.043 0.043 2,467 1,850 22,200
CD4000 CD4020BE 06947X 0.171 0.161 0.110 0.110 926 694 8,331
CD4000 CD4020BF 06947X 0.913 0.858 0.114 0.114 926 694 8,331
CD4000 CD4020BW 06947X 0.352 0.331 0.107 0.107 926 694 8,331
CD4000 CD4021BE 10164X 0.135 0.127 0.081 0.081 1,260 945 11,338
CD4000 CD4021BES2515 10164X 0.111 0.104 0.082 0.073 1,260 945 11,338
CD4000 CD4021BF 10164X 0.669 0.629 0.083 0.083 1,260 945 11,338
CD4000 CD4022BE 10495B 0.155 0.146 0.087 0.087 1,176 882 10,584
CD4000 CD4022BF 10495B 0.511 0.480 0.089 0.089 1,176 882 10,584
CD4000 CD4022BW 10495B 0.250 0.235 0.084 0.084 1,176 882 10,584
CD4000 CD4023BE 10258X 0.088 0.083 0.040 0.040 2,539 1,904 22,850
CD4000 CD4023BF 10258X 0.509 0.478 0.041 0.041 2,539 1,904 22,850
CD4000 CD4023BM 10258XXXXCT 0.070 0.066 0.041 0.041 2,539 1,904 22,850
CD4000 CD4023BM96 10258XXXXCT 0.099 0.093 0.041 0.041 2,539 1,904 22,850
CD4000 CD4023BW 10258X 0.133 0.125 0.039 0.039 2,539 1,904 22,850
CD4000 CD4024BE 06903X 0.147 0.138 0.064 0.064 1,596 1,197 14,367
CD4000 CD4024BF 06903X 0.571 0.537 0.068 0.066 1,596 1,197 14,367
CD4000 CD4024BM 06003XXXXCT 0.131 0.123 0.066 0.066 1,596 1,197 14,367
</TABLE>
- 14 - COMPANY CONFIDENTIAL
<PAGE>
SCHEDULE 1(a)[C]
COMMERCIAL PRODUCTS FOR SUPPLY AGREEMENT
<TABLE>
<CAPTION>
FG Std Die Std NDW Die
Family Device Die ASP Trf Price Die Cost Trf Price ---- MDPW MLQ
- - ------ ------ --- --- --------- -------- --------- ---- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CD4000 CD4024BM96 00903XXXXCT 0.137 0.129 0.066 0.066 1,596 1,197 14,367
CD4000 CD4025BE 10259X 0.097 0.091 0.041 0.041 2,511 1,883 22,599
CD4000 CD4025BES2064 10259X 0.095 0.089 0.041 0.041 2,511 1,883 22,599
CD4000 CD4025BF 10259X 0.358 0.337 0.041 0.041 2,511 1,883 22,599
CD4000 CD4025BM 10259XXXXCT 0.050 0.047 0.042 0.033 2,511 1,883 22,599
CD4000 CD4025BM96 10259XXXXCT 0.099 0.093 0.042 0.042 2,511 1,883 22,599
CD4000 CD4025BW 10259X 0.134 0.126 0.039 0.039 2,511 1,883 22,599
CD4000 CD4026BE 06995X 0.146 0.137 0.106 0.096 964 723 8,679
CD4000 CD4027BE 06904A 0.143 0.134 0.052 0.052 1,945 1,459 17,503
CD4000 CD4027BES2065 06904A 0.130 0.122 0.052 0.052 1,945 1,459 17,503
CD4000 CD4027BF 06904A 0.656 0.617 0.054 0.054 1,945 1,459 17,503
CD4000 CD4027BM 06904AXXXCT 0.108 0.102 0.054 0.054 1,945 1,459 17,503
CD4000 CD4027BW 06904A 0.152 0.143 0.051 0.051 1,945 1,459 17,503
CD4000 CD4028BE 06984X 0.147 0.138 0.057 0.057 1,788 1,341 16,093
CD4000 CD4028BF 06984X 0.818 0.769 0.059 0.059 1,788 1,341 16,093
CD4000 CD4029BE 06836X 0.198 0.186 0.104 0.104 994 746 8,949
CD4000 CD4029BF 06836X 0.882 0.829 0.106 0.106 994 746 8,949
CD4000 CD4029BW 06836X 0.316 0.297 0.100 0.100 994 746 8,949
CD4000 CD4030BE 06950X 0.146 0.137 0.051 0.051 1,985 1,489 17,868
CD4000 CD4030BF 06950X 0.818 0.769 0.053 0.053 1,985 1,489 17,868
CD4000 CD4030BW 06950X 0.197 0.185 0.050 0.050 1,985 1,489 17,868
CD4000 CD4033BE 06996X 0.189 0.178 0.100 0.100 1,022 766 9,195
CD4000 CD4035BF 10165X 0.964 0.906 0.082 0.082 1,285 964 11,567
CD4000 CD4040BE 06948X 0.162 0.152 0.109 0.107 937 703 8,430
CD4000 CD4040BF 06948X 0.902 0.848 0.112 0.112 937 703 8,430
CD4000 CD4040BFS2065 06948X 0.690 0.649 0.112 0.112 937 703 8,430
CD4000 CD4040BW 06948X 0.350 0.329 0.106 0.106 937 703 8,430
CD4000 CD4041UBE 06905A 0.357 0.338 0.054 0.054 1,885 1,414 16,965
CD4000 CD4041UBF 06905A 2.331 2.191 0.056 0.056 1,885 1,414 16,965
CD4000 CD4041UBW 06905A 0.296 0.278 0.053 0.053 1,885 1,414 16,965
CD4000 CD4042BE 06917X 0.116 0.109 0.047 0.047 2,156 1,617 19,403
</TABLE>
- 15 - COMPANY CONFIDENTIAL
<PAGE>
SCHEDULE 1(a)[C]
COMMERCIAL PRODUCTS FOR SUPPLY AGREEMENT
<TABLE>
<CAPTION>
FG Std Die Std NDW Die
Family Device Die ASP Trf Price Die Cost Trf Price ---- MDPW MLQ
- - ------ ------ --- --- --------- -------- --------- ---- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CD4000 CD4042BF 06917X 0.446 0.419 0.049 0.049 2,156 1,617 19,403
CD4000 CD4042BW 06917X 0.171 0.161 0.046 0.046 2,156 1,617 19,403
CD4000 CD4043BE 10125X 0.132 0.124 0.050 0.050 2,043 1,533 18,391
CD4000 CD4044BE 10126X 0.122 0.115 0.050 0.050 2,043 1,533 18,391
CD4000 CD4044BF 10126X 0.483 0.454 0.051 0.051 2,043 1,533 18,391
CD4000 CD4045BW 06942X 0.411 0.386 0.091 0.091 1,093 820 9,835
CD4000 CD4046BE 10005A 0.147 0.138 0.091 0.091 1,124 843 10,116
CD4000 CD4046BES2064 10005A 0.180 0.169 0.091 0.091 1,124 843 10,116
CD4000 CD4046BF 10005A 0.409 0.384 0.094 0.094 1,124 843 10,116
CD4000 CD4046BW 10005A 0.365 0.343 0.088 0.088 1,124 843 10,116
CD4000 CD4047BE 06943C 0.190 0.179 0.067 0.067 1,528 1,146 13,749
CD4000 CD4047BES2497 06943C 0.420 0.395 0.067 0.067 1,528 1,146 13,749
CD4000 CD4047BF 06943C 1.124 1.057 0.069 0.069 1,528 1,146 13,749
CD4000 CD4047BW 06943C 0.318 0.299 0.065 0.065 1,528 1,146 13,749
CD4000 CD4048BE 06944A 0.165 0.155 0.054 0.054 1,886 1,415 16,975
CD4000 CD4049UBE 10889X 0.111 0.104 0.041 0.041 2,466 1,850 22,194
CD4000 CD4049UBER3817 10889X 0.110 0.103 0.041 0.041 2,466 1,850 22,194
CD4000 CD4049UBES2064 10889X 0.116 0.109 0.041 0.041 2,466 1,850 22,194
CD4000 CD4049UBES2065 10889X 0.116 0.109 0.041 0.041 2,466 1,850 22,194
CD4000 CD4049UBF 10889X 0.606 0.570 0.043 0.043 2,466 1,850 22,194
CD4000 CD4049UBW 10889X 0.146 0.137 0.040 0.040 2,466 1,850 22,194
CD4000 CD4050BE 10966A 0.117 0.110 0.040 0.040 2,506 1,880 22,555
CD4000 CD4050BF 10966A 0.584 0.549 0.042 0.042 2,506 1,880 22,555
CD4000 CD4050BW 10966A 0.151 0.142 0.040 0.040 2,506 1,880 22,555
CD4000 CD4051BE 10905X 0.117 0.110 0.096 0.077 1,066 800 9,598
CD4000 CD4051BER4248 10905X 0.550 0.517 0.096 0.096 1,066 800 9,598
CD4000 CD4051BES2325 10905X 0.164 0.154 0.096 0.096 1,066 800 9,598
CD4000 CD4051BF 10905X 0.695 0.653 0.099 0.099 1,066 800 9,598
CD4000 CD4051BH 10905X 0.283 0.266 0.101 0.101 1,066 800 9,598
CD4000 CD4051BM 52164AXXXCT 0.102 0.096 0.092 0.067 1,149 862 10,342
CD4000 CD4051BW 10905X 0.322 0.303 0.093 0.093 1,066 800 9,598
</TABLE>
- 16 - COMPANY CONFIDENTIAL
<PAGE>
SCHEDULE 1(a)[C]
COMMERCIAL PRODUCTS FOR SUPPLY AGREEMENT
<TABLE>
<CAPTION>
FG Std Die Std NDW Die
Family Device Die ASP Trf Price Die Cost Trf Price ---- MDPW MLQ
- - ------ ------ --- --- --------- -------- --------- ---- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CD4000 CD4052BE 10940X 0.127 0.119 0.078 0.078 1,231 923 11,081
CD4000 CD4052BES2065 10940X 0.150 0.141 0.078 0.078 1,231 923 11,081
CD4000 CD4052BF 10940X 0.879 0.826 0.080 0.080 1,231 923 11,081
CD4000 CD4053BE 10941X 0.118 0.111 0.081 0.078 1,305 979 11,749
CD0000 CD4053BF 10941X 0.752 0.707 0.080 0.080 1,305 979 11,749
CD4000 CD4053BH 10941X 0.281 0.264 0.083 0.083 1,305 979 11,749
CD4000 CD4053BW 10941X 0.254 0.239 0.076 0.076 1,305 979 11,749
CD4000 CD4054BE 06881X 0.165 0.155 0.049 0.049 2,072 1,554 18,644
CD4000 CD4054BW 06881X 0.363 0.341 0.048 0.048 2,072 1,554 18,644
CD4000 CD4055BE 06715M 0.209 0.196 0.078 0.078 1,311 983 11,796
CD4000 CD4056BE 06716M 0.166 0.156 0.077 0.077 1,326 994 11,933
CD4000 CD4056BF 06716M 1.507 1.417 0.079 0.079 1,326 994 11,933
CD4000 CD4059AE 06006A 1.303 1.225 0.258 0.258 380 285 3,423
CD4000 CD4059AW 06006A 1.899 1.785 0.246 0.246 380 285 3,423
CD4000 CD4060BE 06949A 0.141 0.133 0.110 0.093 926 694 8,331
CD4000 CD4060BF 06949A 0.758 0.713 0.112 0.112 926 694 8,331
CD4000 CD4060BW 06949A 0.350 0.329 0.107 0.107 926 694 8,331
CD4000 CD4063BE 06415X 0.176 0.165 0.052 0.052 1,961 1,471 17,647
CD4000 CD4063BF 06415X 1.491 1.402 0.054 0.054 1,961 1,471 17,647
CD4000 CD4066BE 06941X 0.089 0.084 0.047 0.047 2,156 1,617 19,400
CD4000 CD4066BES2272 06941X 0.143 0.134 0.047 0.047 2,156 1,617 19,400
CD4000 CD4066BES2325 06941X 0.132 0.124 0.047 0.047 2,156 1,617 19,400
CD4000 CD4066BES2497 06941X 0.130 0.122 0.047 0.047 2,156 1,617 19,400
CD4000 CD4066BEX 06941X 0.252 0.237 0.048 0.048 2,156 1,617 19,400
CD4000 CD4066BF 06941X 0.499 0.469 0.049 0.049 2,156 1,617 19,400
CD4000 CD4066BM96 06941XXXXCT 0.110 0.103 0.049 0.049 2,156 1,617 19,400
CD4000 CD4066BW 06941X 0.140 0.132 0.048 0.046 2,156 1,617 19,400
CD4000 CD4067BE 06589A 0.510 0.479 0.109 0.109 958 718 8,620
CD4000 CD4067BF 06589A 1.316 1.237 0.110 0.110 958 718 8,620
CD4000 CD4067BH 06589A 0.630 0.592 0.108 0.108 958 718 8,620
CD4000 CD4067BW 06589A 0.460 0.432 0.103 0.103 958 718 8,620
</TABLE>
- 17 - COMPANY CONFIDENTIAL
<PAGE>
SCHEDULE 1(a)[C]
COMMERCIAL PRODUCTS FOR SUPPLY AGREEMENT
<TABLE>
<CAPTION>
FG Std Die Std NDW Die
Family Device Die ASP Trf Price Die Cost Trf Price ---- MDPW MLQ
- - ------ ------ --- --- --------- -------- --------- ---- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CD4000 CD4068BE 10087X 0.092 0.086 0.036 0.036 2,797 2,098 25,176
CD4000 CD4068BES2325 10087X 0.117 0.110 0.036 0.036 2,797 2,098 25,176
CD4000 CD4068BF 10087X 0.564 0.530 0.038 0.038 2,797 2,098 25,176
CD4000 CD4069UBE 11149X 0.077 0.072 0.022 0.022 4,626 3,470 41,638
CD4000 CD4069UBE35 11149X 0.140 0.132 0.022 0.022 4,626 3,470 41,638
CD4000 CD4069UBES2325 11149X 0.116 0.109 0.022 0.022 4,626 3,470 41,638
CD4000 CD4069UBES2515 11149X 0.067 0.063 0.022 0.022 4,626 3,470 41,638
CD4000 CD4069UBF 11149X 0.473 0.445 0.023 0.023 4,626 3,470 41,638
CD4000 CD4069UBM 11149XXXXCT 0.083 0.078 0.023 0.023 4,626 3,470 41,638
CD4000 CD4069UBM96 11149XXXXCT 0.166 0.156 0.023 0.023 4,626 3,470 41,638
CD4000 CD4069UBW 11149X 0.143 0.134 0.021 0.021 4,626 3,470 41,638
CD4000 CD4070BE 06950X 0.093 0.087 0.051 0.051 1,985 1,489 17,868
CD4000 CD4070BF 06950X 0.523 0.492 0.053 0.053 1,985 1,489 17,868
CD4000 CD4070BM 06950XXXXCT 0.150 0.141 0.053 0.053 1,985 1,489 17,868
CD4000 CD4070BW 06950X 0.174 0.164 0.050 0.050 1,985 1,489 17,868
CD4000 CD4071BE 10088X 0.091 0.086 0.038 0.038 2,693 2,020 24,238
CD4000 CD4071BES2325 10088X 0.107 0.101 0.038 0.038 2,693 2,020 24,238
CD4000 CD4071BES2515 10088X 0.067 0.063 0.038 0.038 2,693 2,020 24,238
CD4000 CD4071BF 10088X 0.496 0.466 0.039 0.039 2,693 2,020 24,238
CD4000 CD4071BM 10088XXXXCT 0.078 0.073 0.039 0.039 2,693 2,020 24,238
CD4000 CD4071BW 10088X 0.132 0.124 0.037 0.037 2,693 2,020 24,238
CD4000 CD4072BE 10027X 0.101 0.095 0.032 0.032 3,182 2,387 28,642
CD4000 CD4072BF 10027X 0.408 0.384 0.033 0.033 3,182 2,387 28,642
CD4000 CD4073BE 10089X 0.088 0.083 0.038 0.038 2,705 2,029 24,349
CD4000 CD4073BES2325 10089X 0.107 0.101 0.038 0.038 2,705 2,029 24,349
CD4000 CD4073BF 10089X 0.429 0.403 0.039 0.039 2,705 2,029 24,349
CD4000 CD4073BM 10089XXXXCT 0.068 0.064 0.039 0.039 2,705 2,029 24,349
CD4000 CD4073BW 10089X 0.134 0.126 0.037 0.037 2,705 2,029 24,349
CD4000 CD4075BE 10090X 0.090 0.085 0.037 0.037 2,713 2,034 24,413
CD4000 CD4075BF 10090X 0.442 0.415 0.039 0.039 2,713 2,034 24,413
CD4000 CD4076BE 06584A 0.181 0.170 0.062 0.062 1,642 1,232 14,779
</TABLE>
- 18 - COMPANY CONFIDENTIAL
<PAGE>
SCHEDULE 1(a)[C]
COMMERCIAL PRODUCTS FOR SUPPLY AGREEMENT
<TABLE>
<CAPTION>
FG Std Die Std NDW Die
Family Device Die ASP Trf Price Die Cost Trf Price ---- MDPW MLQ
- - ------ ------ --- --- --------- -------- --------- ---- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CD4000 CD4076BF 06584A 0.927 0.871 0.064 0.064 1,642 1,232 14,779
CD4000 CD4077BE 06953X 0.090 0.085 0.049 0.049 2,077 1,557 18,690
CD4000 CD4077BES2515 06953X 0.067 0.063 0.050 0.044 2,077 1,557 18,690
CD4000 CD4077BF 06953X 0.525 0.494 0.050 0.050 2,077 1,557 18,690
CD4000 CD4077BM 06953XXXXCT 0.068 0.064 0.051 0.045 2,077 1,557 18,690
CD4000 CD4077BW 06953X 0.180 0.169 0.048 0.048 2,077 1,557 18,690
CD4000 CD4078BE 10091X 0.094 0.088 0.033 0.033 3,130 2,347 28,169
CD4000 CD4078BM 10091XXXXCT 0.150 0.141 0.034 0.034 3,130 2,347 28,169
CD4000 CD4078BW 10091X 0.115 0.108 0.032 0.032 3,130 2,347 28,169
CD4000 CD4081BE 10092X 0.087 0.082 0.037 0.037 2,765 2,074 24,883
CD4000 CD4081BES2325 10092X 0.108 0.102 0.037 0.037 2,765 2,074 24,883
CD4000 CD4081BES2515 10092X 0.067 0.063 0.037 0.037 2,765 2,074 24,883
CD4000 CD4081BEX 10092X 0.206 0.194 0.038 0.038 2,765 2,074 24,883
CD4000 CD4081BF 10092X 0.476 0.447 0.038 0.038 2,765 2,074 24,883
CD4000 CD4081BM 10092XXXXCT 0.074 0.070 0.038 0.038 2,765 2,074 24883
CD4000 CD4081BW 10092X 0.124 0.117 0.036 0.036 2,765 2,074 24,883
CD4000 CD4082BE 10093X 0.094 0.088 0.037 0.037 2,773 2,079 24,954
CD4000 CD4082BES2064 10093X 0.093 0.087 0.037 0.037 2,773 2,079 24,954
CD4000 CD4082BF 10093X 0.425 0.400 0.038 0.038 2,773 2,079 24,954
CD4000 CD4082BW 10093X 0.128 0.120 0.036 0.036 2,773 2,079 24,954
CD4000 CD4085BE 06562A 0.192 0.180 0.030 0.030 3,422 2,567 30,800
CD4000 CD4085BF 06562A 0.632 0.594 0.031 0.031 3,422 2,567 30,800
CD4000 CD4086BE 06561A 0.107 0.101 0.026 0.026 3,938 2,953 35,441
CD4000 CD4089BE 10416X 0.329 0.309 0.106 0.106 960 720 8,638
CD4000 CD4093BE 06586C 0.102 0.096 0.032 0.032 3,211 2,408 28,901
CD4000 CD4093BEXS2064 06586C 0.215 0.202 0.032 0.032 3,211 2,408 28,901
CD4000 CD4093BF 06586C 0.535 0.503 0.033 0.033 3,211 2,408 28,901
CD4000 CD4093BH 06586C 0.161 0.151 0.034 0.034 3,211 2,408 28,901
CD4000 CD4093BM 06586CXXXCT 0.095 0.089 0.033 0.033 3,211 2,408 28,901
CD4000 CD4093BM96 06S86CXXXCT 0.196 0.184 0.033 0.033 3,211 2,408 28,901
CD4000 CD4093BW 06586C 0.161 0.151 0.031 0.031 3,211 2,408 28,901
</TABLE>
- 19 - COMPANY CONFIDENTIAL
<PAGE>
SCHEDULE 1(a)[C]
COMMERCIAL PRODUCTS FOR SUPPLY AGREEMENT
<TABLE>
<CAPTION>
FG Std Die Std NDW Die
Family Device Die ASP Trf Price Die Cost Trf Price ---- MDPW MLQ
- - ------ ------ --- --- --------- -------- --------- ---- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CD4000 CD4094BE 06602X 0.133 0.125 0.093 0.088 1,098 823 9,881
CD4000 CD4094BES2515 06602X 0.111 0.104 0.094 0.073 1,098 823 9,881
CD4000 CD4094BF 06602X 0.946 0.889 0.096 0.096 1,098 823 9,881
CD4000 CD4094BW 06602X 0.336 0.316 0.090 0.090 1,098 823 9,881
CD4000 CD4097BE 06607A 0.453 0.426 0.105 0.105 992 744 8,932
CD4000 CD4098BE 06946X 0.158 0.149 0.079 0.079 1,297 973 11,672
CD4000 CD4098BF 06946X 1.117 1.050 0.081 0.081 1,297 973 11,672
CD4000 CD4098BW 06946X 0.317 0.298 0.076 0.076 1,297 973 11,672
CD4000 CD4099BE 06610X 0.168 0.158 0.086 0.086 1,192 894 10,727
CD4000 CD4099BES2497 06610X 0.210 0.197 0.086 0.086 1,192 894 10,727
CD4000 CD4099BF 06610X 0.839 0.789 0.088 0.088 1,192 894 10,727
CD4000 CD4099BW 06610X 0.349 0.328 0.083 0.083 1,192 894 10,727
CD4000 CD4502BE 06859X 0.231 0.217 0.079 0.079 1,290 968 11,613
CD4000 CD4502BW 06859X 0.250 0.235 0.077 0.077 1,290 968 11,613
CD4000 CD4503BE 10705A 0.146 0.137 0.058 0.058 1,755 1,316 15,792
CD4000 CD4503BES2325 10705A 0.199 0.187 0.058 0.058 1,755 1,316 15,792
CD4000 CD4S03BW 10705A 0.214 0.201 0.056 0.056 1,755 1,316 15,792
CD4000 CD4504BE 11901A 0.196 0.184 0.095 0.095 1,146 860 10,315
CD4000 CD4508BE 06785A 0.539 0.507 0.099 0.099 1,054 791 9,486
CD4000 CD4510BE 06803X 1.132 1.064 0.100 0.100 1,015 761 9,133
CD4000 CD4511BE 10480X 0.157 0.148 0.114 0.104 892 669 8,031
CD4000 CD4511BF 10480X 0.875 0.823 0.118 0.118 892 669 8,031
CD4000 CD4512BE 10213X 0.168 0.158 0.059 0.059 1,727 1,295 15,539
CD4000 CD4514BE 10075X 0.395 0.371 0.091 0.091 1,144 858 10,297
CD4000 CD4514BM 10075X 0.340 0.320 0.090 0.090 1,144 858 10,297
CD4000 CD4514BW 10075X 0.492 0.462 0.087 0.087 1,144 858 10,297
CD4000 CD4515BE 10076X 0.446 0.419 0.088 0.088 1,185 889 10,664
CD4000 CD4516BE 06875X 0.172 0.162 0.080 0.080 1,268 951 11,409
CD4000 CD4516BF 06875X 0.604 0.568 0.083 0.083 1,268 951 11,409
CD4000 CD4510BW 00875X 0.260 0.244 0.078 0.078 1,268 951 11,409
CD4000 CD4517BE 10482X 0.510 0.479 0.180 0.180 567 425 5,105
</TABLE>
- 20 - COMPANY CONFIDENTIAL
<PAGE>
SCHEDULE 1(a)[C]
COMMERCIAL PRODUCTS FOR SUPPLY AGREEMENT
<TABLE>
<CAPTION>
FG Std Die Std NDW Die
Family Device Die ASP Trf Price Die Cost Trf Price ---- MDPW MLQ
- - ------ ------ --- --- --------- -------- --------- ---- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CD4000 CD4517BW 10482X 0.673 0.633 0.175 0.175 567 425 5,105
CD4000 CD4518BE 10914A 0.143 0.134 0.080 0.080 1,278 958 11,502
CD4000 CD4518BF 10914A 0.784 0.737 0.081 0.081 1,278 958 11,502
CD4000 CD451BBW 10914A 0.278 0.261 0.078 0.078 1,278 958 11,502
CD4000 CD4520BE 10915A 0.166 0.156 0.080 0.080 1,278 958 11,502
CD4000 CD4520BES2325 10915A 0.233 0.219 0.080 0.080 1,278 958 11,502
CD4000 CD4520BF 10915A 0.720 0.677 0.082 0.082 1,278 958 11,502
CD4000 CD4520BW 10915A 0.296 0.278 0.078 0.078 1,278 958 11,502
CD4000 CD4521BE 11903B 0.174 0.164 0.077 0.077 1,324 993 11,919
CD4000 CD4522BE 11904A 0.215 0.202 0.066 0.066 1,550 1,163 13,953
CD4000 CD4527BE 10415X 0.242 0.227 0.114 0.114 893 670 8,035
CD4000 CD4532BE 06634X 0.141 0.133 0.053 0.053 1,915 1,436 17,237
CD4000 CD4538BE 10523X 0.257 0.242 0.138 0.138 738 553 6,640
CD4000 CD4536BW 10523X 0.310 0.291 0.134 0.134 738 553 6,640
CD4000 CD4541BE 11196X 0.103 0.097 0.074 0.068 1,287 966 11,587
CD4000 CD4541BES2260 11196X 0.230 0.216 0.074 0.074 1,287 966 11,587
CD4000 CD4541BF 11196X 1.175 1.105 0.075 0.075 1,287 966 11,587
CD4000 CD4541BW 11196X 0.280 0.263 0.072 0.072 1,287 966 11,587
CD4000 CD4543BE 11049A 0.151 0.142 0.061 0.061 1,660 1,245 14,937
CD4000 CD4555BE 06627X 0.127 0.119 0.064 0.064 1,586 1,189 14,274
CD4000 CD4556BE 06628X 0.146 0.137 0.064 0.064 1,586 1,189 14,274
CD4000 CD4556BF 06628X 0.796 0.748 0.066 0.066 1,586 1,189 14,274
CD4000 CD4572UBE 11909A 0.153 0.144 0.030 0.030 3,371 2,528 30,341
CD4000 CD4572UBW 11909A 0.247 0.232 0.029 0.029 3,371 2,528 30,341
CD4000 CD4585BE 10519X 0.144 0.135 0.080 0.080 1,282 961 11,536
CD4000 CD4724BE 10463X 0.361 0.339 0.086 0.086 1,191 893 10,717
FCT CD54FCT244E 13752B 0.893 0.839 0.174 0.174 1,499 1,124 13,488
FCT CD54FCT244MS2298 13752B 1.391 1.308 0.177 0.177 1,499 1,124 13,488
FCT CD54FCT245E 13762B 1.365 1.283 0.435 0.435 587 441 5,287
FCT CD54FCT245MS2298 13762B 1.502 1.412 0.433 0.433 587 441 5,287
FCT CD74FCT240E 13750B 0.915 0.860 0.174 0.174 1,499 1,124 13,488
</TABLE>
- 21 - COMPANY CONFIDENTIAL
<PAGE>
SCHEDULE 1(a)[C]
COMMERCIAL PRODUCTS FOR SUPPLY AGREEMENT
<TABLE>
<CAPTION>
FG Std Die Std NDW Die
Family Device Die ASP Trf Price Die Cost Trf Price ---- MDPW MLQ
- - ------ ------ --- --- --------- -------- --------- ---- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
FCT CD74FCT24CM 13750B 0.870 0.818 0.174 0.174 1,499 1,124 13,488
FCT CD74FCT240M96 13750B 0.834 0.784 0.174 0.174 1,499 1,124 13,488
FCT CD74FCT244ATE 13752B 0.487 0.458 0.174 0.174 1,499 1,124 13,488
FCT CD74FCT244E 13752B 0.905 0.851 0.174 0.174 1,499 1,124 13,488
FCT CD74FCT244M 13752B 0.539 0.507 0.174 0.174 1,499 1,124 13,488
FCT CD74FCT244M96 13752B 0.698 0.656 0.174 0.174 1,499 1,124 13,488
FCT CD74FCT245E 13762B 0.860 0.808 0.435 0.435 587 441 5,287
FCT CD74FCT245M 13762B 0.935 0.879 0.438 0.438 587 441 5,287
FCT CD74FCT245M96 13762B 0.928 0.872 0.433 0.433 587 441 5,287
FCT CD74FCT273E 13761B 0.917 0.862 0.162 0.162 1,591 1,193 14,318
FCT CD74FCT273M96 13761B 0.491 0.462 0.162 0.162 1,591 1,193 14318
FCT CD74FCT2952AM 13769A 1.180 1.109 0.397 0.397 644 483 5,795
FCT CD74FCT373E 13753B 0.695 0.653 0.176 0.176 1,491 1,118 13,416
FCT CD74FCT373M 13753B 0.545 0.512 0.176 0.176 1,491 1,118 13,416
FCT CD74FCT373M9S 13753B 0.820 0.771 0.177 0.177 1,491 1,118 13,416
FCT CD74FCT374E 13754B 0.640 0.602 0.168 0.168 1,568 1,176 14,113
FCT CD74FCT374M 13754B 0.717 0.674 0.167 0.167 1,568 1,176 14,113
FCT CD74FCT374M96 13754B 1.432 1.346 0.174 0.174 1,568 1,176 14,113
FCT CD74FCT540E 13765A 0.472 0.444 0.199 0.199 1,299 974 11,689
FCT CD74FCT540M 13765A 0.915 0.860 0.198 0.198 1,299 974 11,689
FCT CD74FCT540M96 13765A 0.700 0.658 0.198 0.198 1,299 974 11,689
FCT CD74FCT541E 13766A 0.745 0.700 0.275 0.275 921 690 8,286
FCT CD74FCT541M 13766A 0.598 0.562 0.274 0.274 921 690 8,286
FCT CD74FCT543EN 13767A 0.980 0.921 0.397 0.397 657 493 5,912
FCT CD74FCT543M 13767A 1.023 0.962 0.391 0.391 657 493 5,912
FCT CD74FCT543M96 13767A 1.156 1.087 0.391 0.391 657 493 5,912
FCT CD74FCT564E 13760B 0.758 0.713 0.222 0.222 1,151 863 10,357
FCT CD74FCT564M 13760B 0.538 0.506 0.221 0.221 1,151 863 10,357
FCT CD74FCT573E 13757B 0.616 0.579 0.206 0.206 1,266 949 11,393
FCT CD74FCT573M 13757B 0.722 0.679 0.203 0.203 1,266 949 11,393
FCT CD74FCT573M96 13757B 0.716 0.673 0.203 0.203 1,266 949 11,393
</TABLE>
- 22 - COMPANY CONFIDENTIAL
<PAGE>
SCHEDULE 1(a)[C]
COMMERCIAL PRODUCTS FOR SUPPLY AGREEMENT
<TABLE>
<CAPTION>
FG Std Die Std NDW Die
Family Device Die ASP Trf Price Die Cost Trf Price ---- MDPW MLQ
- - ------ ------ --- --- --------- -------- --------- ---- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
FCT CD74FCT573SM96 13757BXXXCT 0.670 0.630 0.210 0.210 1,266 949 11,393
FCT CD74FCT574E 13758B 0.602 0.566 0.195 0.195 1,332 999 11,985
FCT CD74FCT574M 13758B 0.242 0.227 0.194 0.160 1,332 999 11,985
FCT CD74FCT574SM 13758BXXXCT 0.850 0.799 0.215 0.215 1,249 937 11,245
FCT CD74FCT623M 13763B 0.998 0.938 0.350 0.350 737 553 6,632
FCT CD74FCT646EN 13779A 2.755 2.590 0.582 0.582 434 326 3,907
FCT CD74FCT652EN 13784A 0.951 0.894 0.574 0.574 441 330 3,966
FCT CD74FCT652M 13784A 1.722 1.619 0.565 0.565 441 330 3,966
FCT CD74FCT653EN 13798A 1.613 1.516 0.521 0.521 486 365 4,374
FCT CD74FCT6S3M 13798A 1.051 0.988 0.513 0.513 486 365 4,374
FCT CD74FCT654EN 13799A 1.800 1.692 0.632 0.632 402 301 3,616
FCT CD74FCT821AM96S2497 13771A 0.700 0.658 0.256 0.256 989 742 8,898
FCT CD74FCT823AEN 13775A 1.704 1.602 0.362 0.362 976 732 8,783
FCT CD74FCT824AEN 13776A 1.521 1.430 0.282 0.282 976 732 8,783
FCT CD74FCT841AEN 13773A 1.091 1.026 0.308 0.308 886 664 7,974
FCT CD74FCT641AM 13773A 1.048 0.985 0.284 0.284 886 664 7,974
FCT CD74FCT841AM96 13773A 1.280 1.203 0.303 0.303 886 664 7,974
FCT CD74FCT843AM 13777A 1.264 1.188 0.342 0.342 732 549 6,587
FCT CD74FCT843AM96 13777A 1.004 0.944 0.342 0.342 732 549 6,587
FCT CD74FCT844AEN 13778A 1.520 1.429 0.318 0.318 860 645 7,743
HCT 100935 11694A02XCT 0.230 0.216 0.060 0.060 2,447 1,835 22,025
HCT 135991 13702A02XCT 0.328 0.308 0.080 0.080 1,971 1,478 17,739
HCT CD54HC00F 11600H 0.508 0.478 0.053 0.053 2,791 2,093 25,122
HCT CD54HC00W 11600H 0.126 0.118 0.050 0.050 2,791 2,093 25,122
HCT CD54HC02F 11678A01 0.452 0.425 0.045 0.045 3,341 2,506 30,067
HCT CD54HC04F 11681B 0.510 0.479 0.051 0.051 2,885 2,164 25,966
HCT CD54HC04W 11681B 0.133 0.125 0.048 0.048 2,885 2,164 25,966
HCT CD54HC08F 11718B01 0.509 0.478 0.048 0.048 3,058 2,293 27,521
HCT CD54HC109W 11690B01 0.206 0.194 0.044 0.044 3,187 2,390 28,682
HCT CD54HC10F 11683B01 0.534 0.502 0.058 0.058 2,567 1,925 23,101
HCT CD54HC11F 11684B01 0.518 0.487 0.044 0.044 3,387 2,540 30,483
</TABLE>
- 23 - COMPANY CONFIDENTIAL
<PAGE>
SCHEDULE 1(a)[C]
COMMERCIAL PRODUCTS FOR SUPPLY AGREEMENT
<TABLE>
<CAPTION>
FG Std Die Std NDW Die
Family Device Die ASP Trf Price Die Cost Trf Price ---- MDPW MLQ
- - ------ ------ --- --- --------- -------- --------- ---- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
HCT CD54HC125F 11727A01 0.877 0.824 0.053 0.053 2,779 2,084 25,010
HCT CD54HC125W 11727A01 0.198 0.186 0.050 0.050 2,779 2,084 25,010
HCT CD54HC132W 11677B01 0.314 0.295 0.038 0.038 3,658 2,743 32,921
HCT CD54HC138F 11602F 0.707 0.665 0.062 0.062 2,371 1,778 21,335
HCT CD54HC139F 11610C01 0.782 0.735 0.050 0.050 2,930 2,198 26,372
HCT CD54HC139W 11610C01 0.270 0.254 0.048 0.048 2,930 2,198 26,372
HCT CD54HC14F 11685A 0.462 0.434 0.056 0.056 3,237 2,427 29,130
HCT CD54HC14W 11685A 0.276 0.259 0.053 0.053 3,237 2,427 29,130
HCT CD54HC154W 11632C01 0.677 0.636 0.097 0.097 1,430 1,073 12,873
HCT CD54HC157F 116280 0.799 0.751 0.055 0.055 2,868 2,151 25,812
HCT CD54HC157W 116280 0.218 0.205 0.052 0.052 2,868 2,151 25,812
HCT CD54HC161F 11635D01 0.925 0.870 0.080 0.080 1,888 1,416 16,994
HCT CD54HC161W 11635D01 0.328 0.308 0.074 0.074 1,888 1,416 16,994
HCT CD54HC164F 11667B01 0.912 0.857 0.045 0.045 3,253 2,440 29,278
HCT CD54HC174F 11625D01 0.830 0.780 0.068 0.068 2,182 1,637 19,640
HCT CD54HC193W 11666C01 0.368 0.346 0.074 0.074 1,869 1,402 16,821
HCT CD54HC20W 11721B01 0.134 0.126 0.037 0.037 3,724 2,793 33,514
HCT CD54HC221F 11693D01 1.589 1.494 0.092 0.092 1,636 1,227 14,722
HCT CD54HC221W 11693D01 0.435 0.409 0.085 0.085 1,636 1,227 14,722
HCT CD54HC237F 11730B01 1.828 1.718 0.063 0.063 2,354 1,766 21,190
HCT CD54HC244F 11606C 1.144 1.075 0.100 0.100 1,609 1,207 14,483
HCT CD54HC244W 11606C01 0.472 0.444 0.094 0.094 1,609 1,207 14,483
HCT CD54HC245F 11617M 1.000 0.940 0.115 0.115 2,218 1,664 19,966
HCT CD54HC273F 11613G 1.632 1.534 0.088 0.088 1,928 1,446 17,353
HCT CD54HC299F 11615F01 1.000 0.940 0.127 0.127 1,159 869 10,429
HCT CD54HC299W 11615F01 1.170 1.100 0.120 0.120 1,159 869 10,429
HCT CD54HC30F 11724A01 0.751 0.706 0.038 0.038 3,938 2,954 35,446
HCT CD54HC30W 11724A01 0.133 0.125 0.035 0.035 3,938 2,954 35,446
HCT CD54HC32W 11687A01 0.135 0.127 0.035 0.035 3,967 2,975 35,705
HCT CD54HC354W 11672A 0.737 0.693 0.084 0.084 1,667 1,250 15,004
HCT CD54HC373F 11605C01 1.104 1.038 0.109 0.109 1,500 1,125 13,497
</TABLE>
- 24 - COMPANY CONFIDENTIAL
<PAGE>
SCHEDULE 1(a)[C]
COMMERCIAL PRODUCTS FOR SUPPLY AGREEMENT
<TABLE>
<CAPTION>
FG Std Die Std NDW Die
Family Device Die ASP Trf Price Die Cost Trf Price ---- MDPW MLQ
- - ------ ------ --- --- --------- -------- --------- ---- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
HCT CD54HC374W 11609C01 0.448 0.421 0.075 0.075 1,857 1,392 16,709
HCT CD54HC40103F 11709B01 1.981 1.862 0.104 0.104 1,412 1,059 12,711
HCT CD54HC40103W 11709B01 0.440 0.414 0.098 0.098 1,412 1,059 12,711
HCT CD54HC4015H 11697C01 0.400 0.376 0.096 0.096 1,577 1,183 14,192
HCT CD54HC4020F 11651D01 1.041 0.979 0.064 0.064 2,298 1,723 20,682
HCT CD54HC4024F 11699D01 1.307 1.229 0.042 0.042 3,523 2,642 31,703
HCT CD54HC4024W 11699D01 0.290 0.273 0.040 0.040 3,523 2,642 31,703
HCT CD54HC4040F 11652D01 1.169 1.099 0.064 0.064 2,298 1,723 20,682
HCT CD54HC4040W 11652D01 0.305 0.287 0.061 0.061 2,298 1,723 20,682
HCT CD54HC4046AF 11701A 2.248 2.113 0.083 0.083 1,789 1,342 16,099
HCT CD54HC4046AW 11701A 0.858 0.807 0.078 0.078 1,789 1,342 16,099
HCT CD54HC4049W 11674B01 0.171 0.161 0.047 0.047 2,948 2,211 26,532
HCT CD54HC4050W 11675B01 0.163 0.153 0.046 0.046 3,049 2,286 27,437
HCT CD54HC4051F 11702A 1.145 1.076 0.074 0.074 2,133 1,600 19,197
HCT CD54HC4051W 11702A 0.400 0.376 0.070 0.070 2,133 1,600 19,197
HCT CD54HC4052W 11703B 0.325 0.306 0.111 0.111 1,350 1,012 12,147
HCT CD54HC4053F 11704A 1.498 1.408 0.059 0.059 2,679 2,009 24,113
HCT CD54HC4053H 11704A 0.438 0.412 0.061 0.061 2,679 2,009 24,113
HCT CD54HC4053W 11704A 0.383 0.360 0.056 0.056 2,679 2,009 24,113
HCT CD54HC4059W 11740A01 0.890 0.837 0.197 0.197 708 531 6,371
HCT CD54HC4060W 11653B 0.348 0.327 0.063 0.063 2,198 1,648 19,780
HCT CD54HC4066W 11705C01 0.164 0.154 0.048 0.048 3,122 2,342 28,099
HCT CD54HC4520F 11713B01 2.199 2.067 0.088 0.088 1,670 1,252 15,027
HCT CD54HC4520W 11713B01 0.360 0.338 0.083 0.083 1,670 1,252 15,027
HCT CD54HC4538F 11646C 1.118 1.051 0.060 0.060 2,445 1,834 22,008
HCT CD54HC4538W 11646C 0.472 0.444 0.057 0.057 2,445 1,834 22,008
HCT CD54HC540W 11611E 0.468 0.440 0.084 0.084 1,668 1,251 15,016
HCT CD54HC541W 116120 0.445 0.418 0.084 0.084 1,613 1,210 14,520
HCT CD54HC573F 11616M 1.641 1.543 0.076 0.076 3,179 2,384 28,608
HCT CD54HC574F 11604C 1.040 0.978 0.109 0.109 1,372 1,029 12,351
</TABLE>
- 25 - COMPANY CONFIDENTIAL
<PAGE>
SCHEDULE 1(a)[C]
COMMERCIAL PRODUCTS FOR SUPPLY AGREEMENT
<TABLE>
<CAPTION>
FG Std Die Std NDW Die
Family Device Die ASP Trf Price Die Cost Trf Price ---- MDPW MLQ
- - ------ ------ --- --- --------- -------- --------- ---- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
HCT CD54HC574W 11604C 0.719 0.676 0.102 0.102 1,372 1,029 12,351
HCT CD54HC73F 11655A01 0.708 0.668 0.043 0.043 3,470 2,603 31,234
HCT CD54HC74F 11601M 0.508 0.478 0.054 0.054 4,386 3,289 39,473
HCT CD54HC74W 11601F 0.199 0.187 0.051 0.051 2,752 2,064 24,771
HCT CD54HC86H 11657B01 0.080 0.075 0.045 0.045 3,356 2,517 30,205
HCT CD54HC86W 11657B01 0.195 0.183 0.042 0.042 3,356 2,517 30,205
HCT CD54HCT00F 13600C 0.552 0.519 0.054 0.054 2,819 2,114 25,368
HCT CD54HCT00W 13600H 0.134 0.126 0.050 0.050 2,761 2,071 24,848
HCT CD54HCT04F 13681B 0.551 0.518 0.051 0.051 2,885 2,164 25,966
HCT CD54HCT04H 13681B 0.170 0.160 0.053 0.053 2,885 2,164 25,966
HCT CD54HCT04W 13681B 0.135 0.127 0.048 0.048 2,885 2,164 25,966
HCT CD54HCT08F 13682B01 0.554 0.521 0.052 0.052 2,832 2,124 25,486
HCT CD54HCT08W 13682B01 0.160 0.150 0.049 0.049 2,832 2,124 25,486
HCT CD54HCT112W 13691A01 0.220 0.207 0.055 0.055 2,553 1,914 22,973
HCT CD54HCT123W 13645C 0.192 0.180 0.049 0.049 2,816 2,112 25,344
HCT CD54HCT125W 13727A01 0.231 0.217 0.044 0.044 3,147 2,360 28,324
HCT CD54HCT138F 13602F 0.955 0.898 0.063 0.063 2,344 1,758 21,098
HCT CD54HCT138W 13602F 0.206 0.194 0.059 0.059 2,344 1,758 21,098
HCT CD54HCT139F 13610C01 0.597 0.561 0.050 0.050 2,930 2,198 26,372
HCT CD54HCT14F 13685A 1.123 1.056 0.061 0.061 3,273 2,455 29,461
HCT CD54HCT14H 13685A 0.329 0.309 0.062 0.062 3,273 2,455 29,461
HCT CD54HCT163F 13636D01 0.621 0.584 0.079 0.079 1,909 1,432 17,183
HCT CD54HCT163W 13636D01 0.334 0.314 0.073 0.073 1,909 1,432 17,183
HCT CD54HCT164H 13667B01 0.360 0.338 0.046 0.046 3,288 2,466 29,596
HCT CD54HCT174W 13625D01 0.270 0.254 0.062 0.062 2,230 1,673 20,071
HCT CD54HCT175W 13626C01 0.282 0.265 0.068 0.068 2,054 1,541 18,487
HCT CD54HCT240W 13607D01 0.451 0.424 0.085 0.085 1,627 1,220 14,644
HCT CD54HCT244F 13606C01 1.019 0.958 0.101 0.101 1,573 1,180 14,161
HCT CD54HCT245F 13617M 1.273 1.197 0.117 0.117 2,218 1,664 19,966
HCT CD54HCT245W 13617C 0.549 0.516 0.111 0.111 1,259 944 11,331
HCT CD54HCT273F 13613G 1.307 1.229 0.087 0.087 1,928 1,446 17,353
</TABLE>
- 26 - COMPANY CONFIDENTIAL
<PAGE>
SCHEDULE 1(a)[C]
COMMERCIAL PRODUCTS FOR SUPPLY AGREEMENT
<TABLE>
<CAPTION>
FG Std Die Std NDW Die
Family Device Die ASP Trf Price Die Cost Trf Price ---- MDPW MLQ
- - ------ ------ --- --- --------- -------- --------- ---- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
HCT CD54HCT273W 13613G 0.524 0.493 0.082 0.082 1,928 1,446 17,353
HCT CD54HCT30H 13724A01 0.290 0.273 0.037 0.037 3,981 2,986 35,832
HCT CD54HCT32F 13720A01 0.530 0.498 0.040 0.040 3,733 2,800 33,600
HCT CD54HCT367H 13662B01 0.250 0.235 0.080 0.080 1,888 1,416 16,991
HCT CD54HCT373F 13605C01 1.439 1.353 0.121 0.121 1,483 1,112 13,349
HCT CD54HCT373W 13605C01 0.544 0.511 0.114 0.114 1,483 1,112 13,349
HCT CD54HCT393F 13671B01 0.988 0.929 0.048 0.048 3,092 2,319 27,832
HCT CD54HCT4053W 13704A 0.388 0.365 0.053 0.053 2,808 2,106 25,275
HCT CD54HCT4514W 13711B01 0.660 0.620 0.125 0.125 1,086 815 9,776
HCT CD54HCT540W 136110 0.510 0.479 0.085 0.085 1,644 1,233 14,796
HCT CD54HCT541F 136120 1.145 1.076 0.089 0.089 1,635 1,226 14,712
HCT CD54HCT574F 13604C 1.488 1.399 0.107 0.107 1,388 1,041 12,490
HCT CD54HCT74F 13601F 0.605 0.569 0.055 0.055 2,694 2,020 24,244
HCT CD54HCT74W 13601F 0.220 0.207 0.052 0.052 2,694 2,020 24,244
HCT CD54HCT86W 13657B01 0.175 0.165 0.042 0.042 3,356 2,517 30,205
HCT CD54HCU04W 11649B01 0.171 0.161 0.033 0.033 4,217 3,163 37,952
HCT CD74HCD00M 11600HXXXCT 0.077 0.072 0.052 0.051 2,791 2,093 25,122
HCT CD74HCD00M96 11600HXXXCT 0.085 0.080 0.053 0.053 2,791 2,093 25,122
HCT CD74HC02E 11678A01 0.076 0.071 0.043 0.043 3,341 2,506 30,067
HCT CD74HC02M 11678A01XCT 0.082 0.077 0.044 0.044 3,341 2,506 30,067
HCT CD74HC02M96 11678A01XCT 0.083 0.078 0.044 0.044 3,341 2,506 30,067
HCT CD74HC02MR1901 11678A01XCT 0.090 0.085 0.044 0.044 3,341 2,506 30,067
HCT CD74HC03E 11737A01 0.082 0.077 0.035 0.035 4,340 3,255 39,060
HCT CD74HC03M 11737A01XCT 0.092 0.086 0.036 0.036 4,340 3,255 39,060
HCT CD74HC03MN96 11737A01XCT 0.091 0.086 0.036 0.036 4,340 3,255 39,060
HCT CD74HC04E 11681M 0.087 0.082 0.050 0.050 4,792 3,594 43,126
HCT CD74HC04M 11681BXXXCT 0.081 0.076 0.051 0.051 2,885 2,164 25,966
HCT CD74HC04M96 11681BXXXCT 0.092 0.086 0.051 0.051 2,885 2,164 25,966
HCT CD74HC04M96S2497 11681BXXXCT 0.083 0.078 0.051 0.051 2,885 2,164 25,966
HCT CD74HC08E 11718B01 0.075 0.071 0.047 0.047 3,058 2,293 27,521
HCT CD74HC08M 11718B01XCT 0.093 0.087 0.047 0.047 3,058 2,293 27,521
</TABLE>
- 27 - COMPANY CONFIDENTIAL
<PAGE>
SCHEDULE 1(a)[C]
COMMERCIAL PRODUCTS FOR SUPPLY AGREEMENT
<TABLE>
<CAPTION>
FG Std Die Std NDW Die
Family Device Die ASP Trf Price Die Cost Trf Price ---- MDPW MLQ
- - ------ ------ --- --- --------- -------- --------- ---- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
HCT CD74HC08M96 11718B01XCT 0.089 0.084 0.048 0.048 3,058 2,293 27,521
HCT CD74HC08M96S2466 11718B01XCT 0.110 0.103 0.048 0.048 3,058 2,293 27,521
HCT CD74HC08M96S2497 11718B01XCT 0.090 0.085 0.048 0.048 3,058 2,293 27,521
HCT CD74HC08M96S5001 11718B01XCT 0.090 0.085 0.048 0.048 3,058 2,293 27,521
HCT CD74HC08MS2075 11718B01XCT 0.085 0.080 0.048 0.048 3,058 2,293 27,521
HCT CD74HC107E 11642A01 0.191 0.180 0.042 0.042 3,484 2,613 31,353
HCT CD74HC107M 11642A01XCT 0.143 0.134 0.042 0.042 3,484 2,613 31,353
HCT CD74HC107M96 11642A01XCT 0.107 0.101 0.042 0.042 3,484 2,613 31,353
HCT CD74HC109E 11690B01 0.143 0.134 0.045 0.045 3,187 2,390 28,682
HCT CD74HC109M 11690B01XCT 0.141 0.133 0.046 0.046 3,187 2,390 28,682
HCT CD74HC109M96 11690B01XCT 0.141 0.133 0.046 0.046 3,187 2,390 28,682
HCT CD74HC10E 11683B01 0.090 0.085 0.056 0.056 2,567 1,925 23,101
HCT CD74HC10M 11683B01XCT 0.097 0.091 0.058 0.058 2,567 1,925 23,101
HCT CD74HC10M96 11683B01XCT 0.100 0.094 0.058 0.058 2,567 1,925 23,101
HCT CD74HC112E 11691A01 0.184 0.173 0.054 0.054 2,667 2,000 24,005
HCT CD74HC112ES2497 11691A01 0.160 0.150 0.054 0.054 2,667 2,000 24,005
HCT CD74HC112M96 11691A01XCT 0.198 0.186 0.055 0.055 2,667 2,000 24,005
HCT CD74HC11E 11684B01 0.081 0.076 0.043 0.043 3,387 2,540 30,483
HCT CD74HC11M 11684B01XCT 0.100 0.094 0.044 0.044 3,387 2,540 30,483
HCT CD74HC11M96 11684B01XCT 0.095 0.089 0.044 0.044 3,387 2,540 30,483
HCT CD74HC11M96S2497 11684B01XCT 0.100 0.094 0.044 0.044 3,387 2,540 30,483
HCT CD74HC123E 11645C 0.156 0.147 0.053 0.053 2,784 2,088 25,059
HCT CD74HC123M 11645CXXXCT 0.171 0.161 0.053 0.053 2,784 2,088 25,059
HCT CD74HC123M96 11645CXXXCT 0.153 0.144 0.053 0.053 2,784 2,088 25,059
HCT CD74HC125E 11727A01 0.112 0.105 0.052 0.052 2,779 2,084 25,010
HCT CD74HC125M 11727A01XCT 0.116 0.109 0.053 0.053 2,779 2,084 25,010
HCT CD74HC12SM96 11727A01XCT 0.119 0.112 0.053 0.053 2,779 2,084 25,010
HCT CD74HC125M96S2357 11727A01XCT 0.115 0.108 0.053 0.053 2,779 2,084 25,010
HCT CD74HC125MS2074 11727A01XCT 0.080 0.075 0.053 0.053 2,779 2,084 25,010
HCT CD74HC126E 11728A01 0.101 0.095 0.049 0.049 2,980 2,235 26,817
HCT CD74HC126M 11728A01XCT 0.108 0.102 0.049 0.049 2,980 2,235 26,817
</TABLE>
- 28 - COMPANY CONFIDENTIAL
<PAGE>
SCHEDULE 1(a)[C]
COMMERCIAL PRODUCTS FOR SUPPLY AGREEMENT
<TABLE>
<CAPTION>
FG Std Die Std NDW Die
Family Device Die ASP Trf Price Die Cost Trf Price ---- MDPW MLQ
- - ------ ------ --- --- --------- -------- --------- ---- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
HCT CD74HC126M96 11728A01XCT 0.118 0.111 0.050 0.050 2,980 2,235 26,817
HCT CD74HC126MS2074 11728A01XCT 0.130 0.122 0.050 0.050 2,980 2,235 26,817
HCT CD74HC132E 11677B01 0.123 0.116 0.040 0.040 3,658 2,743 32,921
HCT CD74HC132M 11677B01XCT 0.096 0.090 0.040 0.040 3,658 2,743 32,921
HCT CD74HC132M96 11677B01XCT 0.124 0.117 0.040 0.040 3,658 2,743 32,921
HCT CD74HC132M96S2300 11677B01XCT 0.112 0.105 0.040 0.040 3,658 2,743 32,921
HCT CD74HC132M96S2497 11677B01XCT 0.130 0.122 0.040 0.040 3,658 2,743 32,921
HCT CD74HC132M96S5001 11677B01XCT 0.130 0.122 0.040 0.040 3,658 2,743 32,921
HCT CD74HC137E 11729B01 0.162 0.152 0.064 0.064 2,250 1,687 20,248
HCT CD74HC138E 11602M 0.110 0.103 0.061 0.061 3,999 2,999 35,989
HCT CD74HC138M 11602MXXXCT 0.109 0.102 0.062 0.062 3,999 2,999 35,989
HCT CD74HC138M96 11602MXXXCT 0.111 0.104 0.062 0.062 3,999 2,999 35,989
HCT CD74HC139E 11610B 0.115 0.108 0.049 0.049 2,947 2,210 26,520
HCT CD74HC139M 11610C01XCT 0.110 0.103 0.050 0.050 2,930 2,198 26,372
HCT CD74HC139M96 11610C01XCT 0.116 0.109 0.050 0.050 2,930 2,198 26,372
HCT CD74HC139M96S2497 11610C01XCT 0.106 0.100 0.050 0.050 2,930 2,198 26,372
HCT CD74HC147E 11658A01 0.155 0.146 0.075 0.075 1,933 1,450 17,399
HCT CD74HC147M 11658A01XCT 0.195 0.183 0.076 0.076 1,933 1,450 17,399
HCT CD74HC14E 11685M 0.093 0.087 0.055 0.055 5,616 4,212 50,548
HCT CD74HC14M 11685AXXXCT 0.093 0.087 0.056 0.056 3,237 2,427 29,130
HCT CD74HC14M96 11685AXXXCT 0.096 0.090 0.056 0.056 3,237 2,427 29,130
HCT CD74HC14M96S2357 11685A02XCT 0.090 0.085 0.056 0.056 3,237 2,427 29,130
HCT CD74HC14M96S2497 11685AXXXCT 0.118 0.111 0.056 0.056 3,237 2,427 29,130
HCT CD74HC151E 11659B01 0.121 0.114 0.048 0.048 3,028 2,271 27,256
HCT CD74HC151M 11659B01XCT 0.157 0.148 0.049 0.049 3,028 2,271 27,256
HCT CD74HC151M96 11659B01XCT 0.141 0.133 0.049 0.049 3,028 2,271 27,256
HCT CD74HC153E 11660A 0.156 0.147 0.044 0.044 3,298 2,474 29,685
HCT CD74HC153M 11660AXXXCT 0.157 0.148 0.045 0.045 3,298 2,474 29,685
HCT CD74HC153M96 11660AXXXCT 0.142 0.133 0.045 0.045 3,298 2,474 29,685
HCT CD74HC154E 11632C01 0.426 0.400 0.103 0.103 1,430 1,073 12,873
HCT CD74HC154EN 11632C01 0.554 0.521 0.102 0.102 1,430 1,073 12,873
</TABLE>
- 29 - COMPANY CONFIDENTIAL
<PAGE>
SCHEDULE 1(a)[C]
COMMERCIAL PRODUCTS FOR SUPPLY AGREEMENT
<TABLE>
<CAPTION>
FG Std Die Std NDW Die
Family Device Die ASP Trf Price Die Cost Trf Price ---- MDPW MLQ
- - ------ ------ --- --- --------- -------- --------- ---- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
HCT CD74HC154M 11632C01 0.603 0.567 0.101 0.101 1,430 1,073 12,873
HCT CD74HC154M96 11632C01 0.513 0.482 0.101 0.101 1,430 1,073 12,873
HCT CD74HC157E 116280 0.127 0.119 0.054 0.054 2,868 2,151 25,812
HCT CD74HC157M 11628MXXXCT 0.145 0.136 0.055 0.055 5,162 3,872 46,462
HCT CD74HC157M96 11628MXXXCT 0.151 0.142 0.055 0.055 5,162 3,872 46,462
HCT CD74HC157M96S2497 11628MXXXCT 0.200 0.188 0.055 0.055 5,162 3,872 48,462
HCT CD74HC158E 11629B01 0.136 0.128 0.048 0.048 2,988 2,241 26,893
HCT CD74HC158M 11629B01XCT 0.157 0.148 0.049 0.049 2,988 2,241 26,893
HCT CD74HC161E 11635D01 0.146 0.137 0.077 0.077 1,888 1,416 16,994
HCT CD74HC161M 11635D01XCT 0.172 0.162 0.078 0.078 1,888 1,416 16,994
HCT CD74HC161M96 11635D01XCT 0.125 0.118 0.078 0.078 1,888 1,416 16,994
HCT CD74HC163E 11636D01 0.133 0.125 0.076 0.076 1,909 1,432 17,183
HCT CD74HC163M 11636D01XCT 0.132 0.124 0.077 0.077 1,909 1,432 17.183
HCT CD74HC163M96 11636D01XCT 0.146 0.137 0.077 0.077 1,909 1,432 17,183
HCT CD74HC164E 11667M 0.150 0.141 0.044 0.044 5,339 4,004 48,053
HCT CD74HC164ES2065 11667B01 0.157 0.148 0.044 0.044 3,253 2,440 29,278
HCT CD74HC164M 11667B01XCT 0.140 0.132 0.045 0.045 3,253 2,440 29,278
HCT CD74HC164M96 11667B01XCT 0.159 0.149 0.045 0.045 3,253 2,440 29,278
HCT CD74HC164MS2074 11667B01XCT 0.152 0.143 0.045 0.045 3,253 2,440 29,278
HCT CD74HC165E 11630C01 0.145 0.136 0.043 0.043 3,330 2,498 29,974
HCT CD74HC165ES2065 11630C01 0.162 0.152 0.043 0.043 3,330 2,498 29,974
HCT CD74HC165M 11630C01XCT 0.185 0.174 0.044 0.044 3,330 2,498 29,974
HCT CD74HC165M96 11630C01XCT 0.145 0.136 0.044 0.044 3,330 2,498 29,974
HCT CD74HC165M96S2357 11630C01XCT 0.134 0.126 0.044 0.044 3,330 2,498 29,974
HCT CD74HC166E 11654B 0.142 0.133 0.057 0.057 2,521 1,891 22,686
HCT CD74HC166M 11654BXXXCT 0.210 0.197 0.059 0.059 2,521 1,891 22,686
HCT CD74HC166M96 11654BXXXCT 0.201 0.189 0.059 0.059 2,521 1,891 22,686
HCT CD74HC173E 11656C01 0.116 0.109 0.081 0.077 1,780 1,335 16,022
HCT CD74HC173M 11656C01XCT 0.227 0.213 0.083 0.083 1,780 1,335 16,022
HCT CD74HC174E 11625D01 0.113 0.106 0.066 0.066 2,182 1,637 19,640
HCT CD74HC174M 11625D01XCT 0.128 0.120 0.068 0.068 2,182 1,637 19,640
</TABLE>
- 30 - COMPANY CONFIDENTIAL
<PAGE>
SCHEDULE 1(a)[C]
COMMERCIAL PRODUCTS FOR SUPPLY AGREEMENT
<TABLE>
<CAPTION>
FG Std Die Std NDW Die
Family Device Die ASP Trf Price Die Cost Trf Price ---- MDPW MLQ
- - ------ ------ --- --- --------- -------- --------- ---- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
HCT CD74HC174M96 1162SD01XCT 0.162 0.152 0.068 0.068 2,182 1,637 19,640
HCT CD74HC175E 11626C01 0.118 0.111 0.070 0.070 2,054 1,541 18,487
HCT CD74HC175M 11626C01XCT 0.109 0.102 0.072 0.072 2,054 1,541 18,487
HCT CD74HC175M96 11626C01XCT 0.157 0.148 0.072 0.072 2,054 1,541 18,487
HCT CD74HC190E 11692D01 0.203 0.191 0.082 0.082 1,762 1,322 15,860
HCT CD74HC191E 11664D01 0.192 0.180 0.080 0.080 1,802 1,351 16,216
HCT CD74HC191EX 11664D01 0.306 0.288 0.082 0.082 1,802 1,351 16,216
HCT CD74HC191M 11664D01XCT 0.171 0.161 0.082 0.082 1,802 1,351 16,216
HCT CD74HC191M96 11664D01XCT 0.238 0.224 0.082 0.082 1,802 1,351 16,216
HCT CD74HC192E 11665C 0.238 0.224 0.081 0.081 1,785 1,339 16,065
HCT CD74HC193E 11666C01 0.168 0.158 0.077 0.077 1,869 1,402 16,821
HCT CD74HC193M 11666C01XCT 0.247 0.232 0.079 0.079 1,869 1,402 16,821
HCT CD74HC193M96 11666C01XCT 0.187 0.176 0.079 0.079 1,869 1,402 16,821
HCT CD74HC194E 11668B01 0.222 0.209 0.048 0.048 3,025 2,269 27,224
HCT CD74HC194M 11668B01XCT 0.252 0.237 0.049 0.049 3,025 2,269 27,224
HCT CD74HC194M96 11668B01XCT 0.184 0.173 0.049 0.049 3,025 2,269 27,224
HCT CD74HC195E 11627A 0.206 0.194 0.047 0.047 3,191 2,393 28,716
HCT CD74HC195M 11627B01XCT 0.218 0.205 0.048 0.048 3,063 2,297 27,568
HCT CD74HC20E 11721B01 0.077 0.072 0.039 0.039 3,724 2,793 33,514
HCT CD74HC20M 11721B01XCT 0.079 0.074 0.040 0.040 3,523 2,642 31,704
HCT CD74HC20M96 11721B01XCT 0.084 0.079 0.040 0.040 3,523 2,642 31,704
HCT CD74HC20MS2074 11721B01XCT 0.090 0.085 0.040 0.040 3,523 2,642 31,704
HCT CD74HC21E l1736B01 0.088 0.083 0.037 0.037 4,347 3,260 39,120
HCT CD74HC21M 11736B01XCT 0.095 0.089 0.037 0.037 4,347 3,260 39,120
HCT CD74HC21M96 11736B01XCT 0.112 0.105 0.037 0.037 4,347 3,260 39,120
HCT CD74HC221E 11693D01 0.213 0.200 0.090 0.090 1,636 1,227 14,722
HCT CD74HC221M 11693D01XCT 0.185 0.174 0.090 0.090 1,636 1,227 14,722
HCT CD74HC221M96 11693D01XCT 0.239 0.225 0.090 0.090 1,636 1,227 14,722
HCT CD74HC221M96S5001 11693D01XCT 0.130 0.122 0.090 0.086 1,636 1,227 14,722
HCT CD74HC237E 11730B01 0.150 0.141 0.061 0.061 2,354 1,766 21,190
HCT CD74HC237M 11730B01XCT 0.216 0.203 0.063 0.063 2,354 1,766 21,190
</TABLE>
- 31 - COMPANY CONFIDENTIAL
<PAGE>
SCHEDULE 1(a)[C]
COMMERCIAL PRODUCTS FOR SUPPLY AGREEMENT
<TABLE>
<CAPTION>
FG Std Die Std NDW Die
Family Device Die ASP Trf Price Die Cost Trf Price ---- MDPW MLQ
- - ------ ------ --- --- --------- -------- --------- ---- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
HCT CD74HC237M96 11730B01XCT 0.167 0.157 0.063 0.063 2,354 1,766 21,190
HCT CD74HC238E 11603F 0.157 0.148 0.061 0.061 2,371 1,778 21,335
HCT CD74HC238M 11603FXXXCT 0.193 0.181 0.062 0.062 2,371 1,178 21,335
HCT CD74HC238M96 11603FXXXCT 0.196 0.184 0.062 0.062 2,371 1,778 21,335
HCT CD74HC238M96S2497 11603FXXXCT 0.180 0.169 0.062 0.062 2,371 1,778 21,335
HCT CD74HC240E 11607D01 0.121 0.114 0.089 0.080 1,627 1,220 14,644
HCT CD74HC240M 11607D01 0.098 0.092 0.088 0.065 1,627 1,220 14,644
HCT CD74HC240M96 11607D01 0.135 0.127 0.088 0.088 1,627 1,220 14,644
HCT CD74HC241E 11608D01 0.138 0.130 0.089 0.089 1,627 1,220 14,644
HCT CD74HC241M96 11608D01 0.194 0.182 0.088 0.088 1,627 1,220 14,644
HCT CD74HC243E 11622D01 0.152 0.143 0.077 0.077 1,887 1,415 16,981
HCT CD74HC243M 11622D01XCT 0.263 0.247 0.078 0.078 1,887 1,415 16,981
HCT CD74HC243M96 11622D01XCT 0.140 0.132 0.078 0.078 1,887 1,415 16,981
HCT CD74HC244E 11606C01 0.126 0.118 0.098 0.083 1,609 1,207 14,483
HCT CD74HC244M96 11606M 0.130 0.122 0.097 0.086 2,709 2,032 24,382
HCT CD74HC244M96S2463 11606C01 0.125 0.118 0.097 0.083 1,609 1,207 14,483
HCT CD74HC244M96S2497 11606M 0.118 0.111 0.097 0.078 2,709 2,032 24,382
HCT CD74HC245E 11617M 0.156 0.147 0.112 0.103 2,218 1,664 19,966
HCT CD74HC245M 11617M 0.138 0.130 0.112 0.091 2,218 1,664 19,966
HCT CD74HC245M96 11617M 0.125 0.118 0.112 0.083 2,218 1,664 19,966
HCT CD74HC251E 11614C01 0.129 0.121 0.067 0.067 2,155 1,616 19,392
HCT CD74HC251M 11614C01XCT 0.131 0.123 0.069 0.069 2,155 1,616 19,392
HCT CD74HC251M96 11614C01XCT 0.127 0.119 0.069 0.069 2,155 1,616 19,392
HCT CD74HC253E 11639B01 0.140 0.132 0.046 0.046 3,143 2,358 28,291
HCT CD74HC253M 11639B01XCT 0.178 0.167 0.047 0.047 3,143 2,358 28,291
HCT CD74HC257E 11620C01 0.146 0.137 0.046 0.046 3,169 2,377 28,525
HCT CD74HC257M 11620C01XCT 0.167 0.157 0.047 0.047 3,169 2,377 28,525
HCT CD74HC257M96 11620C01XCT 0.156 0.147 0.047 0.047 3,169 2,377 28,525
HCT CD74HC257M96S2463 11620C01XCT 0.150 0.141 0.047 0.047 3,169 2,377 28,525
HCT CD74HC259E 11694A 0.140 0.132 0.059 0.059 2,447 1,835 22,025
HCT CD74HC259M 11694MXXXCT 0.137 0.129 0.060 0.060 4,023 3,017 36,209
</TABLE>
- 32 - COMPANY CONFIDENTIAL
<PAGE>
SCHEDULE 1(a)[C]
COMMERCIAL PRODUCTS FOR SUPPLY AGREEMENT
<TABLE>
<CAPTION>
FG Std Die Std NDW Die
Family Device Die ASP Trf Price Die Cost Trf Price ---- MDPW MLQ
- - ------ ------ --- --- --------- -------- --------- ---- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
HCT CD74HC259M96 11694MXXXCT 0.133 0.125 0.060 0.060 4,023 3,017 36,209
HCT CD74HC259M96S2497 11694MXXXCT 0.130 0.122 0.060 0.060 4,023 3,017 36,209
HCT CD74HC273E 11613G 0.123 0.116 0.086 0.081 1,928 1,446 17,353
HCT CD74HC273M 11613G 0.134 0.126 0.085 0.085 1,928 1,446 17,353
HCT CD74HC273M96 11613G 0.128 0.120 0.085 0.084 1,928 1,446 17,353
HCT CD74HC273M96S5001 11613G 0.167 0.157 0.085 0.085 1,928 1,446 17,353
HCT CD74HC27E 11686A 0.082 0.077 0.042 0.042 3,459 2,594 31,133
HCT CD74HC27M 11686AXXXCT 0.111 0.104 0.043 0.043 3,459 2,594 31,133
HCT CD74HC27M96 11686AXXXCT 0.110 0.103 0.043 0.043 3,459 2,594 31,133
HCT CD74HC280E 11640B01 0.124 0.117 0.044 0.044 3,290 2,468 29,610
HCT CD74HC280ES2065 11640B01 0.135 0.127 0.044 0.044 3,290 2,468 29,610
HCT CD74HC280M96 11840B01XCT 0.125 0.118 0.045 0.045 3,290 2,468 29,610
HCT CD74HC280MS2074 11640B01XCT 0.134 0.126 0.045 0.045 3,290 2,468 29,610
HCT CD74HC283E 11723A01 0.245 0.230 0.064 0.064 2,224 1,668 20,016
HCT CD74HC283M 11723A01XCT 0.266 0.250 0.065 0.065 2,224 1,668 20,016
HCT CD74HC283M96 11723A01XCT 0.237 0.223 0.065 0.065 2,224 1,668 20,016
HCT CD74HC297E 11680A01 0.566 0.532 0.135 0.135 1,072 804 9,647
HCT CD74HC299E 11615F01 0.254 0.239 0.125 0.125 1,159 869 10,429
HCT CD74HC299M 11615F01 0.308 0.290 0.124 0.124 1,159 869 10,429
HCT CD74HC299M96 11615F01 0.299 0.281 0.124 0.124 1,159 869 10,429
HCT CD74HC30E 11724A01 0.081 0.076 0.037 0.037 3,938 2,954 35,446
HCT CD74HC30M 11724A01XCT 0.094 0.088 0.038 0.038 3,938 2,954 35,446
HCT CD74HC30M96 11724A01XCT 0.089 0.084 0.038 0.038 3,938 2,954 35,446
HCT CD74HC30M96S2074 11724A01XCT 0.088 0.083 0.038 0.038 3,938 2,954 35,446
HCT CD74HC30M96S2497 11724A01XCT 0.103 0.097 0.038 0.038 3,938 2,954 35,446
HCT CD74HC32E 11687A01 0.080 0.075 0.037 0.037 3,967 2,975 35,705
HCT CD74HC32M 11687A01XCT 0.094 0.088 0.037 0.037 3,967 2,975 35,705
HCT CD74HC32M96 11687A01XCT 0.080 0.075 0.037 0.037 3,967 2,975 35,705
HCT CD74HC354E 11672A 0.219 0.206 0.087 0.087 1,667 1,250 15,004
HCT CD74HC365E 11695B01 0.161 0.151 0.077 0.077 1,888 1,416 16,991
HCT CD74HC365M 11695B01XCT 0.217 0.204 0.078 0.078 1,888 1,416 16,991
</TABLE>
- 33 - COMPANY CONFIDENTIAL
<PAGE>
SCHEDULE 1(a)[C]
COMMERCIAL PRODUCTS FOR SUPPLY AGREEMENT
<TABLE>
<CAPTION>
FG Std Die Std NDW Die
Family Device Die ASP Trf Price Die Cost Trf Price ---- MDPW MLQ
- - ------ ------ --- --- --------- -------- --------- ---- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
HCT CD74HC365M96 11695B01XCT 0.146 0.137 0.078 0.078 1,888 1,416 16,991
HCT CD74HC366E 11661B01 0.252 0.237 0.079 0.079 1,827 1,370 16,443
HCT CD74HC367E 11662B01 0.166 0.156 0.079 0.079 1,827 1,370 16,443
HCT CD74HC367M 11662B01XCT 0.229 0.215 0.081 0.081 1,827 1,370 16,443
HCT CD74HC367M96 11662B01XCT 0.208 0.196 0.081 0.081 1,827 1,370 16,443
HCT CD74HC367MS2075 11662B01XCT 0.164 0.154 0.081 0.081 1,827 1,370 16,443
HCT CD74HC368E 11663B01 0.202 0.190 0.077 0.077 1,868 1,401 16,808
HCT CD74HC368M 11663B01XCT 0.223 0.210 0.079 0.079 1,868 1,401 16,808
HCT CD74HC368M96 11663B01XCT 0.247 0.232 0.079 0.079 1,868 1,401 16,808
HCT CD74HC373E 11605C01 0.134 0.126 0.107 0.088 1,500 1,125 13,497
HCT CD74HC373ES2497 11605C01 0.160 0.150 0.107 0.106 1,500 1,125 13,497
HCT CD74HC373M 11605C01 0.135 0.127 0.106 0.089 1,500 1,125 13,497
HCT CD74HC373M96 11605C01 0.137 0.129 0.106 0.090 1,500 1,125 13,497
HCT CD74HC373M96S2093 11605C01 0.180 0.169 0.106 0.106 1,500 1,125 13,497
HCT CD74HC374E 11609C01 0.135 0.127 0.078 0.078 1,857 1,392 16,709
HCT CD74HC374M 11609M 0.148 0.139 0.078 0.078 3,478 2,609 31,302
HCT CD74HC374M96 11609M 0.142 0.133 0.078 0.078 3,478 2,609 31,302
HCT CD74HC377E 11648B01 0.136 0.128 0.064 0.064 2,259 1,694 20,329
HCT CD74HC377M 11648B01 0.157 0.148 0.064 0.064 2,259 1,694 20,329
HCT CD74HC377M96 11648B01 0.162 0.152 0.064 0.064 2,259 1,694 20,329
HCT CD74HC390E 11670A 0.105 0.099 0.052 0.052 2,773 2,080 24,959
HCT CD74HC390M 11670A01XCT 0.187 0.176 0.053 0.053 2,773 2,080 24,959
HCT CD74HC390M96 11670A01XCT 0.147 0.138 0.053 0.053 2,773 2,080 24,959
HCT CD74HC393E 11671B01 0.144 0.135 0.045 0.045 3,195 2,397 28,759
HCT CD74HC393ES2065 11671B01 0.165 0.155 0.045 0.045 3,195 2,397 28,759
HCT CD74HC393M 11671B01XCT 0.173 0.163 0.046 0.046 3,195 2,397 28,759
HCT CD74HC393M96 11671B01XCT 0.166 0.156 0.046 0.046 3,195 2,397 28,759
HCT CD74HC4002E 11696A01 0.109 0.102 0.026 0.026 5,480 4,110 49,317
HCT CD74HC4002M 11696A01XCT 0.136 0.128 0.027 0.027 5,480 4,110 49,317
HCT CD74HC4002M96 11696A01XCT 0.130 0.122 0.027 0.027 5,480 4,110 49,317
HCT CD74HC4002M96S2497 11696A01XCT 0.140 0.132 0.027 0.027 5,480 4,110 49,317
</TABLE>
- 34 - COMPANY CONFIDENTIAL
<PAGE>
SCHEDULE 1(a)[C]
COMMERCIAL PRODUCTS FOR SUPPLY AGREEMENT
<TABLE>
<CAPTION>
FG Std Die Std NDW Die
Family Device Die ASP Trf Price Die Cost Trf Price ---- MDPW MLQ
- - ------ ------ --- --- --------- -------- --------- ---- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
HCT CD74HC40103E 11709B01 0.257 0.242 0.102 0.102 1,412 1,059 12,711
HCT CD74HC40103M 11709B01XC1 0.228 0.214 0.105 0.105 1,412 1,059 12,711
HCT CD74HC40103M96 11709B01XCT 0.233 0.219 0.105 0.105 1,412 1,059 12,711
HCT CD74HC40105E 11669M 0.270 0.254 0.076 0.076 3,205 2,404 28,849
HCT CD74HC40105M 11669A01XCT 0.278 0.261 0.077 0.077 1,910 1,432 17,188
HCT CD74HC40105M96 11669A01XCT 0.161 0.151 0.077 0.077 1,910 1,432 17,188
HCT CD74HC4015E 11697C01 0.222 0.209 0.092 0.092 1,577 1,183 14,192
HCT CD74HC4016E 11698B01 0.318 0.299 0.043 0.043 3,596 2,697 32,368
HCT CD74HC4016M96 11698B01XCT 0.208 0.196 0.044 0.044 3,596 2,697 32,368
HCT CD74HC4017E 11650B01 0.198 0.186 0.082 0.082 1,766 1,324 15,892
HCT CD74HC4017M96 11650B01XCT 0.146 0.137 0.084 0.084 1,766 1,324 15,892
HCT CD74HC4020E 11651D01 0.152 0.143 0.063 0.063 2,298 1,723 20,682
HCT CD74HC4020M 11651MXXXCT 0.152 0.143 0.064 0.064 3,909 2,931 35,177
HCT CD74HC4020M96 11651MXXXCT 0.171 0.161 0.064 0.064 3,909 2,931 35,177
HCT CD74HC4024E 11699D01 0.163 0.153 0.041 0.041 3,523 2,642 31,703
HCT CD74HC4024M 11699D01XCT 0.160 0.150 0.042 0.042 3,523 2,642 31,703
HCT CD74HC4024M96 11699D01XCT 0.156 0.147 0.042 0.042 3,523 2,642 31,703
HCT CD74HC4024M96S2497 11699D01XCT 0.150 0.141 0.042 0.042 3,523 2,642 31,703
HCT CD74HC4040E 11652M 0.144 0.135 0.063 0.063 3,909 2,931 35,177
HCT CD74HC4040ES2065 11652D01 0.167 0.157 0.063 0.063 2,298 1,723 20,682
HCT CD74HC4040M 11652MXXXCT 0.159 0.149 0.064 0.064 3,909 2,931 35,177
HCT CD74HC4040M96 11652MXXXCT 0.166 0.156 0.064 0.064 3,909 2,931 35,177
HCT CD74HC4040M96S2357 11652D02XCT 0.325 0.306 0.064 0.064 2,298 1,723 20,682
HCT CD74HC4040M96S2497 11652MXXXCT 0.170 0.160 0.064 0.064 3,909 2,931 35,177
HCT CD74HC4040MS2074 11652DXXXCT 0.280 0.263 0.064 0.064 2,298 1,723 20,682
HCT CD74HC4046AE 11701A 0.254 0.239 0.081 0.081 1,789 1,342 16,099
HCT CD74HC4046AM 11701AXXXCT 0.312 0.293 0.083 0.083 1,789 1,342 16,099
HCT CD74HC4046AM96 11701AXXXCT 0.308 0.290 0.083 0.083 1,789 1,342 16,099
HCT CD74HC4046AM96S2463 11701AXXXCT 0.330 0.310 0.083 0.083 1,789 1,342 16,099
HCT CD74HC4046AM96S2497 11701AXXXCT 0.420 0.395 0.083 0.083 1,789 1,342 16,099
HCT CD74HC4046AMR2854 11701AXXXCT 0.480 0.451 0.083 0.083 1,789 1,342 16,099
</TABLE>
- 35 - COMPANY CONFIDENTIAL
<PAGE>
SCHEDULE 1(a)[C]
COMMERCIAL PRODUCTS FOR SUPPLY AGREEMENT
<TABLE>
<CAPTION>
FG Std Die Std NDW Die
Family Device Die ASP Trf Price Die Cost Trf Price ---- MDPW MLQ
- - ------ ------ --- --- --------- -------- --------- ---- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
HCT CD74HC4046AMR3413 11701AXXXCT 0.507 0.477 0.083 0.083 1,789 1,342 16,099
HCT CD74HC4049E 11674B01 0.181 0.170 0.049 0.049 2,948 2,211 26,532
HCT CD74HC4049M 11674B01XCT 0.194 0.182 0.050 0.050 2,948 2,211 26,532
HCT CD74HC4049M96 11674B01XCT 0.230 0.216 0.050 0.050 2,948 2,211 26,532
HCT CD74HC4050E 11675B01 0.154 0.145 0.047 0.047 3,049 2,286 27,437
HCT CD74HC4050M 11675B01XCT 0.173 0.163 0.048 0.048 3,049 2,286 27,437
HCT CD74HC4050M96 11675B01XCT 0.122 0.115 0.048 0.048 3,049 2,286 27,437
HCT CD74HC4051E 11702A 0.122 0.115 0.073 0.073 2,133 1,600 19,197
HCT CD74HC4051M 11702MXXXCT 0.177 0.166 0.074 0.074 4,093 3,070 36,835
HCT CD74HC4051M96 11702MXXXCT 0.193 0.181 0.074 0.074 4,093 3,070 36,835
HCT CD74HC4051M96S2075 11702MXXXCT 0.160 0.150 0.074 0.074 4,093 3,070 36,835
HCT CD74HC4051M96S2093 11702MXXXCT 0.160 0.150 0.074 0.074 4,093 3,070 36,835
HCT CD74HC4051M96S2497 11702MXXXCT 0.180 0.169 0.074 0.074 4,093 3,070 36,835
HCT CD74HC4051M96S2515 11702MXXXCT 0.136 0.128 0.074 0.074 4,093 3,070 36,835
HCT CD74HC4052E 11703B 0.154 0.145 0.115 0.102 1,350 1,012 12,147
HCT CD74HC4052ES2091 11703B 0.158 0.149 0.115 0.104 1,350 1,012 12,147
HCT CD74HC4052M 11703MXXXCT 0.128 0.120 0.116 0.084 2,957 2,218 26,615
HCT CD74HC4052M96 11703MXXXCT 0.174 0.164 0.117 0.115 2,957 2,218 26,615
HCT CD74HC4052M96S2093 11703MXXXCT 0.160 0.150 0.117 0.106 2,957 2,218 26,615
HCT CD74HC4053E 11704A 0.155 0.146 0.058 0.058 2,679 2,009 24,113
HCT CD74HC4053ES2091 11704A 0.165 0.155 0.058 0.058 2,679 2,009 24,113
HCT CD74HC4053M 11704MXXXCT 0.179 0.168 0.059 0.059 4,884 3,663 43,958
HCT CD74HC4053M96 11704MXXXCT 0.158 0.149 0.059 0.059 4,884 3,663 43,958
HCT CD74HC4053M96S2093 11704MXXXCT 0.170 0.160 0.059 0.059 4,884 3,663 43,958
HCT CD74HC4053M96S2497 11704MXXXCT 0.210 0.197 0.059 0.059 4,884 3,663 43,958
HCT CD74HC4059E 11740A01 0.824 0.775 0.213 0.213 708 531 6,371
HCT CD74HC4059M96 11740A01 0.851 0.800 0.203 0.203 708 531 6,371
HCT CD74HC4060E 11653B 0.148 0.139 0.066 0.066 2,198 1,648 19,780
HCT CD74HC4060M 11653BXXXCT 0.153 0.144 0.067 0.067 2,198 1,648 19,780
HCT CD74HC4060M96 11653BXXXCT 0.207 0.195 0.067 0.067 2,198 1,648 19,780
HCT CD74HC4066E 11705C01 0.141 0.133 0.050 0.050 3,122 2,342 28,099
</TABLE>
- 36 - COMPANY CONFIDENTIAL
<PAGE>
SCHEDULE 1(a)[C]
COMMERCIAL PRODUCTS FOR SUPPLY AGREEMENT
<TABLE>
<CAPTION>
FG Std Die Std NDW Die
Family Device Die ASP Trf Price Die Cost Trf Price ---- MDPW MLQ
- - ------ ------ --- --- --------- -------- --------- ---- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
HCT CD74HC4066ES2064 11705C01 0.160 0.150 0.050 0.050 3,122 2,342 28,099
HCT CD74HC4066M 11705C01XCT 0.114 0.107 0.051 0.051 3,122 2,342 28,099
HCT CD74HC4066M96 11705C01XCT 0.135 0.127 0.051 0.051 3,122 2,342 28,099
HCT CD74HC4066MR1896 11705C02XCT 0.120 0.113 0.051 0.051 3,122 2,342 28,099
HCT CD74HC4067E 11706B01 0.605 0.569 0.163 0.163 905 678 8,142
HCT CD74HC4067M 11706B01 0.551 0.518 0.159 0.159 905 676 8,142
HCT CD74HC4067M96 11706B01 0.594 0.558 0.159 0.159 905 678 8,142
HCT CD74HC4067M96S2497 11706B01 0.840 0.790 0.159 0.159 905 876 8,142
HCT CD74HC4075E 11707A01 0.134 0.126 0.052 0.052 2,764 2,073 24,876
HCT CD74HC4075M 11707A01XCT 0.103 0.097 0.053 0.053 2,764 2,073 24,876
HCT CD74HC4075M96 11707A01XCT 0.114 0.107 0.053 0.053 2,764 2,073 24,876
HCT CD74HC4075M96S2497 11707A01XCT 0.100 0.094 0.053 0.053 2,764 2,073 24,876
HCT CD74HC4094E 11708A01 0.143 0.134 0.001 0.061 2,371 1,778 21,335
HCT CD74HC4094M 11708A01XCT 0.167 0.157 0.062 0.062 2,371 1,778 21,335
HCT CD74HC4094M96 11708MXXCT 0.170 0.160 0.062 0.062 3,976 2,982 35,786
HCT CD74HC4094M96S2093 11708A01XCT 0.190 0.179 0.002 0.062 2,371 1,778 21,335
HCT CD74HC4094M96S2515 11708A01XCT 0.156 0.147 0.002 0.062 2,371 1,778 21,335
HCT CD74HC423E 11716C 0.211 0.198 0.052 0.052 2,784 2,088 25,059
HCT CD74HC423M 11716CXXXCT 0.235 0.221 0.053 0.053 2,784 2,088 25,059
HCT CD74HC42E 11715B 0.169 0.159 0.077 0.077 1,870 1,403 16,832
HCT CD74HC42M 11715BXXXCT 0.166 0.156 0.079 0.079 1,870 1,403 16,832
HCT CD74HC4316E 11732B 0.154 0.145 0.055 0.055 2,800 2,100 25,199
HCT CD74HC4316ES2065 11732A 0.137 0.129 0.055 0.055 2,800 2,100 25,199
HCT CD74HC4316M 11732MXXXCT 0.173 0.163 0.057 0.057 4,984 3,738 44,855
HCT CD74HC4316M96 11732MXXXCT 0.171 0.161 0.055 0.055 4,984 3,738 44,855
HCT CD74HC4316MS2074 11732AXXXCT 0.135 0.127 0.055 0.055 2,800 2,100 25,199
HCT CD74HC4351E 11741A01 0.304 0.286 0.085 0.085 1,814 1,361 16,330
HCT CD74HC4351M 11741A01 0.329 0.309 0.085 0.085 1,814 1,361 16,330
HCT CD74HC4352E 11742A01 0.312 0.293 0.091 0.091 1,017 763 9,156
HCT CD74HC4511E 11710A01 0.200 0.188 0.067 0.067 2,163 1,622 19,467
HCT CD74HC4511M 11710A01XCT 0.190 0.179 0.068 0.068 2,163 1,622 19,467
</TABLE>
- 37 - COMPANY CONFIDENTIAL
<PAGE>
SCHEDULE 1(a)[C]
COMMERCIAL PRODUCTS FOR SUPPLY AGREEMENT
<TABLE>
<CAPTION>
FG Std Die Std NDW Die
Family Device Die ASP Trf Price Die Cost Trf Price ---- MDPW MLQ
- - ------ ------ --- --- --------- -------- --------- ---- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
HCT CD74HC4514E 11711B01 0.601 0.565 0.140 0.140 1,051 788 9,461
HCT CD74HC4514EN 11711B01 0.613 0.576 0.139 0.139 1,051 788 9,461
HCT CD74HC4514M96 11711B01 0.473 0.445 0.137 0.137 1,051 788 9,481
HCT CD74HC4515EN 11719B01 0.614 0.577 0.139 0.139 1,051 788 9,461
HCT CD74HC4515M 11719B01 0.634 0.596 0.137 0.137 1,051 788 9,461
HCT CD74HC4518E 11712B01 0.222 0.209 0.089 0.089 1,632 1,224 14,689
HCT CD74HC4520E 11713B01 0.244 0.229 0.087 0.087 1,670 1,252 15,027
HCT CD74HC4520M 11713B01XCT 0.267 0.251 0.069 0.089 1,670 1,252 15,027
HCT CD74HC4520M96 11713B01XCT 0.177 0.166 0.089 0.089 1,670 1,252 15,027
HCT CD74HC4538E 11646C 0.166 0.156 0.059 0.059 2,445 1,834 22,008
HCT CD74HC4538M 11646MXXXCT 0.219 0.206 0.060 0.060 4,093 3,069 36,833
HCT CD74HC4538M96 11646MXXXCT 0.216 0.203 0.000 0.060 4,093 3,069 36,833
HCT CD74HC4538M96105 11646C02XCT 0.250 0.235 0.060 0.060 2,445 1,834 22,008
HCT CD74HC4543E 11714A01 0.169 0.159 0.050 0.050 2,889 2,167 26,001
HCT CD74HC533E 11638C01 0.330 0.310 0.117 0.117 1,237 928 11,136
HCT CD74HC534E 11643C01 0.340 0.320 0.070 0.070 2,063 1,547 18,565
HCT CD74HC540E 11611E 0.160 0.150 0.087 0.087 1,668 1,251 15,016
HCT CD74HC540M 11611E 0.162 0.152 0.086 0.086 1,668 1,251 15,016
HCT CD74HC540M96 11611E 0.095 0.089 0.086 0.063 1,668 1,251 15,016
HCT CD74HC541E 116120 0.147 0.138 0.088 0.088 1,613 1,210 14,520
HCT CD74HC541M 116120 0.137 0.129 0.087 0.087 1,613 1,210 14,520
HCT CD74HC541M96 116120 0.160 0.150 0.087 0.087 1,613 1,210 14,520
HCT CD74HC563E 11637C01 0.196 0.184 0.074 0.074 1,953 1,465 17,580
HCT CD74HC504E 11644C 0.135 0.127 0.106 0.089 1,372 1,029 12,351
HCT CD74HC564M 11644C 0.368 0.346 0.105 0.105 1,372 1,029 12,351
HCT CD74HC573E 11616M 0.140 0.132 0.075 0.075 3,179 2,384 28,608
HCT CD74HC573M 11616M 0.149 0.140 0.074 0.074 3,179 2,384 28,608
HCT CD74HC573M96 11616M 0.121 0.114 0.074 0.074 3,179 2,384 28,608
HCT CD74HC573M96S2357 11616D02 0.205 0.193 0.074 0.074 1,953 1,465 17,580
HCT CD74HC573M96S2515 11616M 0.105 0.099 0.074 0.069 3,179 2,384 28,608
HCT CD74HC574E 11604C 0.135 0.127 0.107 0.089 1,372 1,029 12,351
</TABLE>
- 38 - COMPANY CONFIDENTIAL
<PAGE>
SCHEDULE 1(a)[C]
COMMERCIAL PRODUCTS FOR SUPPLY AGREEMENT
<TABLE>
<CAPTION>
FG Std Die Std NDW Die
Family Device Die ASP Trf Price Die Cost Trf Price ---- MDPW MLQ
- - ------ ------ --- --- --------- -------- --------- ---- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
HCT CD74HC574M 11604M 0.136 0.128 0.105 0.090 2,335 1,751 21,015
HCT CD74HC574M96 11604M 0.170 0.160 0.105 0.105 2,335 1,751 21,015
HCT CD74HC597E 11749A01 0.171 0.161 0.057 0.057 2,597 1,948 23,376
HCT CD74HC597M 11749A01XCT 0.181 0.170 0.058 0.058 2,597 1,948 23,376
HCT CD74HC597M96 11749A01XCT 0.176 0.165 0.058 0.058 2,597 1,948 23,376
HCT CD74HC640E 11618B 0.303 0.285 0.112 0.112 1,231 923 11,076
HCT CD74HC646M96 11623C01 1.056 0.993 0.262 0.262 556 417 5,005
HCT CD74HC652EN 11788A01 0.849 0.798 0.303 0.303 483 362 4,349
HCT CD74HC670E 11676B01 0.265 0.249 0.112 0.112 1,289 967 11,604
HCT CD74HC670M96 11676B01XCT 0.235 0.221 0.115 0.115 1,289 967 11,604
HCT CD74HC688E 11641B01 0.174 0.164 0.051 0.051 2,876 2,157 25,888
HCT CD74HC688M 11641B01 0.138 0.130 0.050 0.050 2,876 2,157 25,888
HCT CD74HC688M96 11641B01 0.179 0.168 0.050 0.050 2,876 2,157 25,888
HCT CD74HC7046AE 11733A01 0.513 0.482 0.082 0.082 1,817 1,363 16,356
HCT CD74MC7046AM 11733A01XCT 0.419 0.394 0.083 0.083 1,817 1,363 16,356
HCT CD74HC7046AM96 11733A01XCT 0.527 0.495 0.083 0.083 1,817 1,363 16,356
HCT CD74HC7266E 11739A01 0.179 0.168 0.035 0.035 4,107 3,080 36,960
HCT CD74HC7266M 11739A01XCT 0.151 0.142 0.036 0.036 4,107 3,080 36,960
HCT CD74HC7266M96 11739A01XCT 0.177 0.166 0.036 0.036 4,107 3,080 36,960
HCT CD74HC73E 11655A01 0.105 0.099 0.042 0.042 3,470 2,603 31,234
HCT CD74HC73M 11655A01XCT 0.146 0.137 0.043 0.043 3,470 2,603 31,234
HCT CD74HC73M96S2404 11855A01XCT 0.100 0.094 0.043 0.043 3,470 2,603 31,234
HCT CD74HC74E 11601M 0.102 0.096 0.052 0.052 4,386 3,289 39,473
HCT CD74HC74M 11601FXXXCT 0.088 0.083 0.054 0.054 2,752 2,064 24,771
HCT CD74HC741496 11601FXXXCT 0.100 0.094 0.054 0.054 2,752 2,064 24,771
HCT CD74HC74M98S2093 11601FXXXCT 0.083 0.078 0.054 0.054 2,752 2,064 24,771
HCT CD74HC74MR4099 11601F02XCT 0.220 0.207 0.054 0.054 2,752 2,064 24,771
HCT CD74HC75E 11688A01 0.123 0.116 0.052 0.052 2,783 2,087 25,043
HCT CD74HC75M 11688A01XCT 0.126 0.118 0.053 0.053 2,783 2,087 25,043
HCT CD74HC75M96 11688A01XCT 0.109 0.102 0.053 0.053 2,783 2,087 25,043
HCT CD74HC85E 11689A01 0.135 0.127 0.075 0.075 1,915 1,436 17,234
</TABLE>
- 39 - COMPANY CONFIDENTIAL
<PAGE>
SCHEDULE 1(a)[C]
COMMERCIAL PRODUCTS FOR SUPPLY AGREEMENT
<TABLE>
<CAPTION>
FG Std Die Std NDW Die
Family Device Die ASP Trf Price Die Cost Trf Price ---- MDPW MLQ
- - ------ ------ --- --- --------- -------- --------- ---- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
HCT CD74HC85M 11689A01XCT 0.185 0.174 0.077 0.077 1,915 1,436 17,234
HCT CD74HC85M96 11089A01XCT 0.166 0.156 0.077 0.077 1,915 1,436 17,234
HCT CD74HC85M96S2497 11689A01XCT 0.166 0.156 0.077 0.077 1,915 1,436 17,234
HCT CD74HC86E 11657B01 0.102 0.096 0.043 0.043 3,356 2,517 30,205
HCT CD74HC86M 11657B01XCT 0.113 0.106 0.044 0.044 3,356 2,517 30,205
HCT CD74HC86M96 11657B01XCT 0.103 0.097 0.044 0.044 3,356 2,517 30,205
HCT CD74HC86M96S2378 11657B01XCT 0.110 0.103 0.044 0.044 3,356 2,517 30,205
HCT CD74HC93E 11738A01 0.197 0.185 0.031 0.031 4,783 3,587 43,044
HCT CD74HC93M 11738A01XCT 0.201 0.189 0.032 0.032 4,783 3,587 43,044
HCT CD74HC93M96 11738A01XCT 0.146 0.137 0.032 0.032 4,783 3,587 43,044
HCT CD74HC93M96S2300 11738A01XCT 0.133 0.125 0.032 0.032 4,783 3,587 43,044
HCT CD74HCT00E 13600H 0.087 0.082 0.052 0.052 2,761 2,071 24,848
HCT CD74HCT00ES2065 13600C 0.142 0.133 0.052 0.052 2,819 2,114 25,368
HCT CD74HCT00M 13600HXXXCT 0.077 0.072 0.054 0.051 2,761 2,071 24,848
HCT CD74HCT00M96 13600HXXXCT 0.065 0.061 0.053 0.043 2,761 2,071 24,848
HCT CD74HCT00MS2074 13600HXXXCT 0.092 0.086 0.054 0.054 2,761 2,071 24,848
HCT CD74HCT02E 13678A01 0.079 0.074 0.045 0.045 3,234 2,426 29,107
HCT CD74HCT02EX 13678A01 0.181 0.170 0.045 0.045 3,234 2,426 29,107
HCT CD74HCT02M 13678A01XCT 0.082 0.077 0.045 0.045 3,234 2,426 29,107
HCT CD74HCT02M96 13678A01XCT 0.094 0.088 0.046 0.046 3,234 2,426 29,107
HCT CD74HCT03E 13737A01 0.064 0.060 0.033 0.033 4,323 3,242 38,904
HCT CD74HCT03M 13737A01XCT 0.068 0.064 0.034 0.034 4,323 3,242 38,904
HCT CD74HCT03M96 13737A01XCT 0.086 0.081 0.034 0.034 4,323 3,242 38,904
HCT CD74HCT03M96S2497 13737A01XCT 0.094 0.088 0.034 0.034 4,323 3,242 38,904
HCT CD74HCT04E 13681M 0.090 0.085 0.050 0.050 4,741 3,556 42,672
HCT CD74HCT04ES2065 13681B 0.088 0.083 0.050 0.050 2,885 2,164 25,966
HCT CD74HCT04EX 13681B 0.184 0.173 0.050 0.050 2,885 2,164 25,966
HCT CD74HCT04M 13681BXXXCT 0.068 0.064 0.051 0.045 2,885 2,164 25,966
HCT CD74HCT04M96 13681BXXXCT 0.079 0.074 0.051 0.051 2,885 2,164 25,966
HCT CD74HCT04M96S2075 13681BXXXCT 0.092 0.086 0.051 0.051 2,885 2,164 25,966
HCT CD74HCT04M96S2497 13681BXXXCT 0.095 0.089 0.051 0.051 2,885 2,164 25,966
</TABLE>
- 40 - COMPANY CONFIDENTIAL
<PAGE>
SCHEDULE 1(a)[C]
COMMERCIAL PRODUCTS FOR SUPPLY AGREEMENT
<TABLE>
<CAPTION>
FG Std Die Std NDW Die
Family Device Die ASP Trf Price Die Cost Trf Price ---- MDPW MLQ
- - ------ ------ --- --- --------- -------- --------- ---- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
HCT CD74HCT04MS2075 13681BXXXCT 0.087 0.082 0.051 0.051 2,885 2,164 25,966
HCT CD74HCT08E 13682B01 0.082 0.077 0.051 0.051 2,832 2,124 25,486
HCT CD74HCT08EX 13682B01 0.178 0.167 0.051 0.051 2,832 2,124 25,486
HCT CD74HCT08M 13682B01XCT 0.083 0.078 0.052 0.052 2,832 2,124 25,486
HCT CD74HCT08M96 13682B01XCT 0.083 0.078 0.052 0.052 2,832 2,124 25,486
HCT CD74HCT08M96S2497 13682B01XCT 0.080 0.075 0.052 0.052 2,832 2,124 25,486
HCT CD74HCT08MR2499 13682B01XCT 0.115 0.108 0.052 0.052 2,832 2,124 25,486
HCT CD74HCT08MS2074 13682B01XCT 0.088 0.083 0.052 0.052 2,832 2,124 25,486
HCT CD74HCT107E 13642A01 0.163 0.153 0.044 0.044 3,298 2,474 29,685
HCT CD74HCT109E 13690B01 0.165 0.155 0.045 0.045 3,152 2,364 26,370
HCT CD74HCT109M 13690B01XCT 0.150 0.141 0.047 0.047 3,152 2,364 28,370
HCT CD74HCT109M96 13690B01XCT 0.144 0.135 0.047 0.047 3,152 2,364 28,370
HCT CD74HCT10E 13683B01 0.079 0.074 0.058 0.052 2,510 1,882 22,588
HCT CD74HCT10M 13683B01XCT 0.079 0.074 0.059 0.052 2,510 1,882 22,588
HCT CD74HCT10M96 13683B01XCT 0.075 0.071 0.059 0.050 2,510 1,882 22,588
HCT CD74HCT11M 13684B01XCT 0.054 0.051 0.045 0.036 3,275 2,457 29,478
HCT CD74HCT11M96 13684B01XCT 0.089 0.084 0.045 0.045 3,275 2,457 29,478
HCT CD74HCT11M96S2497 13684B01XCT 0.133 0.125 0.045 0.045 3,275 2,457 29,478
HCT CD74HCT123E 13645C 0.157 0.148 0.053 0.053 2,816 2,112 25,344
HCT CD74HCT123M 13645CXXXCT 0.187 0.176 0.052 0.052 2,816 2,112 25,344
HCT CD74HCT123M96 13645CXXXCT 0.137 0.129 0.052 0.052 2,816 2,112 25,344
HCT CD74HCT123M96S5001 13645CXXXCT 0.180 0.169 0.052 0.052 2,816 2,112 25,344
HCT CD74HCT125E 13727A01 0.111 0.104 0.045 0.045 3,147 2,360 28324
HCT CD74HCT125M 13727A01XCT 0.103 0.097 0.046 0.046 3,147 2,360 28,324
HCT CD74HCT125M96 13727A01XCT 0.096 0.090 0.046 0.046 3,147 2,360 28,324
HCT CD74HCT125M96S2497 13727A01XCT 0.110 0.103 0.047 0.047 3,147 2,360 28,324
HCT CD74HCT126E 13728A 0.118 0.111 0.047 0.047 3,080 2,310 27,721
HCT CD74HCT126M 13728A01XCT 0.126 0.118 0.047 0.047 3,080 2,310 27,721
HCT CD74HCT126M96 13728A01XCT 0.126 0.118 0.047 0.047 3,080 2,310 27,721
HCT CD74HCT126M96S2497 13728A01XCT 0.140 0.132 0.048 0.048 3,080 2,310 27,721
HCT CD74HCT132E 13746A01 0.117 0.110 0.040 0.040 3,675 2,756 33,072
</TABLE>
- 41 - COMPANY CONFIDENTIAL
<PAGE>
SCHEDULE 1(a)[C]
COMMERCIAL PRODUCTS FOR SUPPLY AGREEMENT
<TABLE>
<CAPTION>
FG Std Die Std NDW Die
Family Device Die ASP Trf Price Die Cost Trf Price ---- MDPW MLQ
- - ------ ------ --- --- --------- -------- --------- ---- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
HCT CD74HCT132M 13746A01XCT 0.125 0.118 0.040 0.040 3,675 2,756 33,072
HCT CD74HCT132M96 13746A01XCT 0.117 0.110 0.040 0.040 3,675 2,756 33,072
HCT CD74HCT132M96S2478 13746A01XCT 0.142 0.133 0.041 0.041 3,675 2,756 33,072
HCT CD74HCT132M96S2497 13746A01XCT 0.114 0.107 0.041 0.041 3,675 2,756 33,072
HCT CD74HCT132M96S5001 13746A01XCT 0.157 0.148 0.041 0.041 3,675 2,756 33,072
HCT CD74HCT132MR3170 13746A01XCT 0.130 0.122 0.041 0.041 3,675 2,756 33,072
HCT CD74HCT137M96 13729B01XCT 0.191 0.180 0.063 0.063 2,354 1,766 21,190
HCT CD74HCT138E 13602M 0.114 0.107 0.061 0.061 3,999 2,999 35,989
HCT CD74HCT138M 13602MXXXCT 0.118 0.111 0.062 0.062 3,999 2,999 35,989
HCT CD74HCT138M96 13602MXXXCT 0.118 0.109 0.062 0.062 3,999 2,999 35,989
HCT CD74HCT138M96S2497 13602MXXXCT 0.105 0.099 0.063 0.063 3,999 2,999 35,989
HCT CD74HCT139E 13610B 0.118 0.111 0.049 0.049 2,959 2,219 26,628
HCT CD74HCT139M 13610C01XCT 0.068 0.064 0.050 0.045 2,930 2,198 26,372
HCT CD74HCT139M96 13610C01XCT 0.096 0.090 0.050 0.050 2,930 2,198 26,372
HCT CD74HCT139M96S2497 13610C01XCT 0.110 0.103 0.050 0.050 2,930 2,198 26,372
HCT CD74HCT147E 13658A01 0.161 0.151 0.076 0.076 1,912 1,434 17,205
HCT CD74HCT14E 13685M 0.103 0.097 0.059 0.059 5,616 4,212 50,548
HCT CD74HCT14M 13685AXXXCT 0.103 0.097 0.060 0.060 3,273 2,455 29,461
HCT CD74HCT14M96 13685AXXXCT 0.107 0.101 0.060 0.060 3,273 2,455 29,461
HCT CD74HCT14M96S2497 13685AXXXCT 0.097 0.091 0.060 0.060 3,273 2,455 29,461
HCT CD74HCT151E 13659B01 0.136 0.128 0.049 0.049 2,962 2,221 26,657
HCT CD74HCT151M 13659B01XCT 0.137 0.129 0.050 0.050 2,962 2,221 26,657
HCT CD74HCT151M96 13659B01XCT 0.156 0.147 0.050 0.050 2,962 2,221 26,657
HCT CD74HCT151M96S5001 13659B01XCT 0.150 0.141 0.050 0.050 2,962 2,221 26,657
HCT CD74HCT153E 13660A01 0.140 0.132 0.041 0.041 3,484 2,613 31,353
HCT CD74HCT153M 13660A01XCT 0.142 0.133 0.042 0.042 3,484 2,613 31,353
HCT CD74HCT153M96 13660A01XCT 0.124 0.117 0.042 0.042 3,484 2,613 31,353
HCT CD74HCT153M96S2497 13660A01XCT 0.130 0.122 0.042 0.042 3,484 2,613 31,353
HCT CD74HCT153M96S2515 13660A01XCT 0.123 0.116 0.042 0.042 3,484 2,613 31,353
HCT CD74HCT154E 13632C 0.487 0.458 0.104 0.104 1,414 1,060 12,725
HCT CD74HCT154EN 13632C 1.042 0.979 0.104 0.104 1,414 1,060 12,725
</TABLE>
- 42 - COMPANY CONFIDENTIAL
<PAGE>
SCHEDULE 1(a)[C]
COMMERCIAL PRODUCTS FOR SUPPLY AGREEMENT
<TABLE>
<CAPTION>
FG Std Die Std NDW Die
Family Device Die ASP Trf Price Die Cost Trf Price ---- MDPW MLQ
- - ------ ------ --- --- --------- -------- --------- ---- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
HCT CD74HCT154M 13632C01 0.459 0.431 0.102 0.102 1,414 1,060 12,725
HCT CD74HCT157E 136280 0.134 0.126 0.059 0.059 2,824 2,118 25,416
HCT CD74HCT157M 13628MXXXCT 0.149 0.140 0.060 0.060 2,824 2,118 25,416
HCT CD74HCT157M96 13628MXXXCT 0.119 0.112 0.060 0.060 2,824 2,118 25,416
HCT CD74HCT157M96S2497 13628MXXXCT 0.153 0.144 0.060 0.060 2,824 2,118 25,416
HCT CD74HCT158E 13629B01 0.169 0.159 0.051 0.051 2,826 2,119 25,432
HCT CD74HC1161E 13635D01 0.120 0.113 0.075 0.075 1,930 1,448 17,371
HCT CD74HCT161M 13635D01XCT 0.108 0.102 0.077 0.071 1,930 1,448 17,371
HCT CD74HCT161M96 13635D01XCT 0.143 0.134 0.077 0.077 1,930 1,448 17,371
HCT CD74HCT163E 13636D01 0.152 0.143 0.076 0.076 1,909 1,432 17,183
HCT CD74HCT163M 13636D01XCT 0.146 0.137 0.077 0.077 1,909 1,432 17,183
HCT CD74HCT163M96 13636D01XCT 0.168 0.158 0.077 0.077 1,909 1,432 17,183
HCT CD74HCT163M96S2497 13636D01XCT 0.100 0.094 0.077 0.066 1,909 1,432 17,183
HCT CD74HCT164E 13667B01 0.143 0.134 0.044 0.044 3,288 2,466 29,596
HCT CD74HCT164ES2497 13667B01 0.180 0.169 0.044 0.044 3,288 2,466 29,596
HCT CD74HCT164M 13667B01XCT 0.131 0.123 0.044 0.044 3,288 2,466 29,596
HCT CD74HCT164M96 13667B01XCT 0.140 0.132 0.044 0.044 3,288 2,466 29,596
HCT CD74HCT164MS2074 13667B01XCT 0.143 0.134 0.044 0.044 3,288 2,466 29,596
HCT CD74HCT165E 13630C01 0.155 0.146 0.043 0.043 3,330 2,498 29,974
HCT CD74HCT165ER2489 13630C01 0.175 0.165 0.043 0.043 3,330 2,498 29,974
HCT CD74HCT165M 13630C01XCT 0.171 0.161 0.044 0.044 3,330 2,498 29,974
HCT CD74HCT165M96 13630CXXXCT 0.140 0.132 0.044 0.044 3,330 2,498 29,974
HCT CD74HCT165M96S2074 13630C01XCT 0.139 0.131 0.044 0.044 3,330 2,498 29,974
HCT CD74HCT165MS2075 13630C01XCT 0.143 0.134 0.044 0.044 3,330 2,498 29,974
HCT CD74HCT166E 13654B01 0.158 0.149 0.057 0.057 2,548 1,911 22,936
HCT CD74HCT166M 13654B01XCT 0.203 0.191 0.058 0.058 2,548 1,911 22,936
HCT CD74HCT166M96 13654B01XCT 0.173 0.163 0.058 0.058 2,548 1,911 22,936
HCT CD74HCT166M96S2497 13654B01XCT 0.110 0.103 0.058 0.058 2,548 1,911 22,936
HCT CD74HCT173E 13656C01 0.127 0.119 0.079 0.079 1,820 1,365 16,378
HCT CD74HCT173M96 13656C01XCT 0.234 0.220 0.081 0.081 1,820 1,365 16,378
HCT CD74HCT174E 13625D01 0.107 0.101 0.065 0.065 2,230 1,673 20,071
</TABLE>
- 43 - COMPANY CONFIDENTIAL
<PAGE>
SCHEDULE 1(a)[C]
COMMERCIAL PRODUCTS FOR SUPPLY AGREEMENT
<TABLE>
<CAPTION>
FG Std Die Std NDW Die
Family Device Die ASP Trf Price Die Cost Trf Price ---- MDPW MLQ
- - ------ ------ --- --- --------- -------- --------- ---- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
HCT CD74HCT174M 13625D01XCT 0.129 0.121 0.066 0.066 2,230 1,673 20,071
HCT CD74HCT174M96 13625D01XCT 0.123 0.116 0.066 0.066 2,230 1,673 20,071
HCT CD74HCT175E 13626C01 0.129 0.121 0.070 0.070 2,054 1,541 18,487
HCT CD74HCT175ES2497 13626C01 0.180 0.169 0.070 0.070 2,054 1,541 18,487
HCT CD74HCT175M 13626C01XCT 0.150 0.141 0.072 0.072 2,054 1,541 18,487
HCT CD74HCT175M96 13626C01XCT 0.086 0.081 0.072 0.057 2,054 1,541 18,487
HCT CD74HCT175M96S2497 13626C01XCT 0.100 0.094 0.072 0.066 2,054 1,541 18,487
HCT CD74HCT191E 13664D01 0.212 0.199 0.080 0.080 1,802 1,351 16,216
HCT CD74HCT191M 13664BXXXCT 0.237 0.223 0.082 0.082 1,437 1,078 12,936
HCT CD74HCT193E 13666C01 0.254 0.239 0.078 0.078 1,848 1,386 16,632
HCT CD74HCT20E 13679B01 0.080 0.075 0.039 0.039 3,682 2,762 33,139
HCT CD74HCT21E 13736B01 0.099 0.093 0.037 0.037 4,129 3,091 37,164
HCT CD74HCT21M 13736B01XCT 0.080 0.075 0.038 0.038 4,129 3,091 37,164
HCT CD74HCT21M96 13736B01XCT 0.091 0.086 0.038 0.038 4,129 3,097 37,164
HCT CD74HCT221E 13693D01 0.236 0.222 0.089 0.089 1,617 1,213 14,557
HCT CD74HCT221M 13693D01XCT 0.195 0.183 0.091 0.091 1,617 1,213 14,557
HCT CD74HCT221M96 13693D01XC1 0.306 0.288 0.091 0.091 1,617 1,213 14,557
HCT CD74HCT237E 13730B01 0.208 0.196 0.061 0.061 2,381 1,785 21,425
HCT CD74HCT238E 13603F 0.223 0.210 0.062 0.062 2,344 1,758 21,098
HCT CD74HCT238M 13603FXXXCT 0.199 0.187 0.063 0.063 2,344 1,758 21,098
HCT CD74HCT240E 13607D01 0.137 0.129 0.089 0.089 1,627 1,220 14,644
HCT CD74HCT240M 13607D01 0.162 0.152 0.089 0.089 1,627 1,220 14,644
HCT CD74HCT240M96 13607D01 0.143 0.134 0.089 0.089 1,627 1,220 14,644
HCT CD74HCT241E 13608D01 0.169 0.159 0.089 0.089 1,627 1,220 14,644
HCT CD74HCT241M96 13608D01 0.232 0.218 0.088 0.088 1,627 1,220 14,644
HCT CD74HCT244E 13606C01 0.145 0.136 0.099 0.096 1,573 1,180 14,161
HCT CD74HCT244ES2497 13606C01 0.155 0.146 0.099 0.099 1,573 1,180 14,161
HCT CD74HCT244M 13606M 0.122 0.115 0.099 0.081 2,709 2,032 24,382
HCT CD74HCT244M96 13606M 0.120 0.113 0.099 0.079 2,709 2,032 24,382
HCT CD74HCT244MS2075 13606C01 0.157 0.148 0.099 0.099 1,573 1,180 14,161
HCT CD74HCT245E 13617M 0.139 0.131 0.114 0.092 2,218 1,664 19,966
</TABLE>
- 44 - COMPANY CONFIDENTIAL
<PAGE>
SCHEDULE 1(a)[C]
COMMERCIAL PRODUCTS FOR SUPPLY AGREEMENT
<TABLE>
<CAPTION>
FG Std Die Std NDW Die
Family Device Die ASP Trf Price Die Cost Trf Price ---- MDPW MLQ
- - ------ ------ --- --- --------- -------- --------- ---- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
HCT CD74HCT245M 13617M 0.143 0.134 0.113 0.094 2,218 1,664 19,966
HCT CD74HCT245M96 13617M 0.128 0.120 0.113 0.084 2,218 1,664 19,966
HCT CD74HCT245M96S5001 13617M 0.170 0.160 0.113 0.112 2,218 1,664 19,966
HCT CD74HCT245MS2075 13617M 0.143 0.134 0.112 0.094 2,218 1,664 19,966
HCT CD74HCT251E 13614C01 0.153 0.144 0.068 0.068 2,131 1,598 19,181
HCT CD74HCT251M 13614C01XCT 0.119 0.112 0.069 0.069 2,131 1,598 19,181
HCT CD74HCT251M96 13614C01XCT 0.157 0.148 0.069 0.069 2,131 1,598 19,181
HCT CD74HCT251MS2075 13614C01XCT 0.180 0.169 0.069 0.069 2,131 1,598 19,181
HCT CD74HCT253E 13639B01 0.166 0.156 0.047 0.047 3,110 2,332 27,986
HCT CD74HCT253M 13639B01XCT 0.275 0.259 0.048 0.048 3,110 2,332 27,986
HCT CD74HCT253M96 13639B01XCT 0.132 0.124 0.048 0.048 3,110 2,332 27,986
HCT CD74HCT257E 13620C01 0.154 0.145 0.045 0.045 3,169 2,377 28,525
HCT CD74HCT257ES2064 13620C01 0.155 0.146 0.046 0.046 3,169 2,377 28,525
HCT CD74HCT257ES2497 13620C01 0.200 0.188 0.046 0.046 3,169 2,377 28,525
HCT CD74HCT257M 13620MXXXCT 0.147 0.138 0.046 0.046 5,162 3,872 46,462
HCT CD74HCT257M96 13620MXXXCT 0.143 0.134 0.047 0.047 5,162 3,872 46,462
HCT CD74HCT258E 13747A01 0.176 0.165 0.055 0.055 2,119 1,589 19,068
HCT CD74HCT259E 13694A 0.159 0.149 0.063 0.063 2,314 1,736 20,828
HCT CD74HCT259M 13694MXXXCT 0.172 0.162 0.064 0.064 4,023 3,017 36209
HCT CD74HCT259M96 13694MXXXCT 0.162 0.152 0.063 0.063 4,023 3,017 36,209
HCT CD74HCT259M96S2497 13694MXXXCT 0.390 0.367 0.064 0.064 4,023 3,017 36,209
HCT CD74HCT259M96S5001 13694MXXXCT 0.170 0.160 0.084 0.064 4,023 3,017 36,209
HCT CD74HCT259MS2075 13694MXXXCT 0.145 0.136 0.063 0.063 4,023 3,017 36,209
HCT CD74HCT273E 13613G 0.139 0.131 0.065 0.085 1,928 1,446 17,353
HCT CD74HCT273ES2065 13613G 0.148 0.139 0.084 0.084 1,928 1,446 17,353
HCT CD74HCT273M 13613GXXXCT 0.099 0.093 0.084 0.065 1,928 1,446 17,353
HCT CD74HCT273M96 13613GXXXCT 0.123 0.116 0.084 0.081 1,928 1,446 17,353
HCT CD74HCT273M96S2497 13613G 0.100 0.094 0.085 0.066 1,928 1,446 17,353
HCT CD74HCT27E 13686A01 0.070 0.066 0.042 0.042 3,422 2,566 30,794
HCT CD74HCT27M 13686A01XCT 0.069 0.065 0.043 0.043 3,422 2,566 30,794
HCT CD74HCT27M96 13686A01XCT 0.098 0.092 0.043 0.043 3,422 2,566 30,794
</TABLE>
- 45 - COMPANY CONFIDENTIAL
<PAGE>
SCHEDULE 1(a)[C]
COMMERCIAL PRODUCTS FOR SUPPLY AGREEMENT
<TABLE>
<CAPTION>
FG Std Die Std NDW Die
Family Device Die ASP Trf Price Die Cost Trf Price ---- MDPW MLQ
- - ------ ------ --- --- --------- -------- --------- ---- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
HCT CD74HCT27M96S2497 13686A01XCT 0.110 0.103 0.043 0.043 3,422 2,566 30,794
HCT CD74HCT280E 13640B01 0.150 0.141 0.044 0.044 3,290 2,468 29,610
HCT CD74HCT283E 13723A01 0.270 0.254 0.060 0.060 2,411 1,808 21,696
HCT CD74HCT283M 13723A01XCT 0.227 0.213 0.061 0.061 2,411 1,808 21,696
HCT CD74HCT297E 13680A01 0.680 0.639 0.140 0.140 1,035 776 9,314
HCT CD74HCT299E 13615F01 0.322 0.303 0.126 0.126 1,146 859 10,312
HCT CD74HCT299M 13615F01 0.319 0.300 0.126 0.126 1,146 859 10,312
HCT CD74HCT30E 13724A01 0.079 0.074 0.036 0.036 3,981 2,986 35,832
HCT CD74HCT30M 13724A01XCT 0.088 0.083 0.036 0.036 3,981 2,988 35,832
HCT CD74HCT30M96 13724A01XCT 0.105 0.099 0.036 0.036 3,981 2,988 35,832
HCT CD74HCT30M96S2497 13724A01XCT 0.090 0.085 0.036 0.036 3,981 2,986 35,832
HCT CD74HCT32E 13720A01 0.088 0.083 0.038 0.038 3,733 2,800 33,600
HCT CD74HCT32ES2064 13720A01 0.100 0.094 0.039 0.039 3,733 2,800 33,600
HCT CD74HCT32EX 13720A01 0.147 0.138 0.038 0.038 3,733 2,800 33,600
HCT CD74HCT32M 13720A01XCT 0.081 0.076 0.039 0.039 3,733 2,800 33,600
HCT CD74HCT32M96 13720A01XCT 0.082 0.077 0.039 0.039 3,733 2,800 33,600
HCT CD74HCT32M96S2497 13720A01XCT 0.090 0.085 0.040 0.040 3,733 2,800 33,600
HCT CD74HCT32MR2499 13720A01XCT 0.115 0.108 0.039 0.039 3,733 2,800 33,600
HCT CD74HCT354E 13672A 0.292 0.274 0.084 0.084 1,722 1,292 15,499
HCT CD74HCT365E 13695B01 0.203 0.191 0.077 0.077 1,868 1,401 16,808
HCT CD74HCT365M 13095B01XCT 0.204 0.192 0.079 0.079 1,868 1,401 16,808
HCT CD74HCT365M96 13895B01XCT 0.165 0.155 0.079 0.079 1,868 1,401 16,808
HCT CD74HCT367E 13662B01 0.192 0.180 0.077 0.077 1,888 1,416 16,991
HCT CD74HCT367M 13662B01XCT 0.207 0.195 0.078 0.078 1,888 1,416 16,991
HCT CD74HCT367M96 13862B01XCT 0.131 0.123 0.078 0.078 1,888 1,416 16,991
HCT CD74HCT367MS2516 13662B01XCT 0.187 0.176 0.078 0.078 1,888 1,418 16,991
HCT CD74HCT368M 13663B01XCT 0.198 0.186 0.078 0.078 1,888 1,416 16,991
HCT CD74HCT373E 13605C01 0.122 0.115 0.119 0.081 1,483 1,112 13,349
HCT CD74HCT373M 13605C01 0.129 0.121 0.118 0.085 1,483 1,112 13,349
HCT CD74HCT373M96 13605C01 0.151 0.142 0.118 0.100 1,483 1,112 13,349
HCT CD74HCT373M96S2497 13605C01 0.130 0.122 0.118 0.086 1,483 1,112 13,349
</TABLE>
- 46 - COMPANY CONFIDENTIAL
<PAGE>
SCHEDULE 1(a)[C]
COMMERCIAL PRODUCTS FOR SUPPLY AGREEMENT
<TABLE>
<CAPTION>
FG Std Die Std NDW Die
Family Device Die ASP Trf Price Die Cost Trf Price ---- MDPW MLQ
- - ------ ------ --- --- --------- -------- --------- ---- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
HCT CD74HCT374E 13609C01 0.138 0.130 0.068 0.068 2,109 1,581 18,978
HCT CD74HCT374M 13609C01 0.074 0.070 0.068 0.049 2,109 1,581 18,978
HCT CD74HCT374M96 13609C01 0.099 0.093 0.068 0.065 2,109 1,581 18,978
HCT CD74HCT374M96S2497 13609C01 0.121 0.114 0.068 0.068 2,109 1,581 18,978
HCT CD74HCT374MS2075 13609C01 0.147 0.138 0.068 0.068 2,109 1,581 18,978
HCT CD74HCT377E 13648B01 0.126 0.118 0.062 0.062 2,310 1,732 20,786
HCT CD74HCT377M 13848B01 0.144 0.135 0.062 0.062 2,310 1,732 20,786
HCT CD74HCT377M96 13648B01 0.179 0.168 0.062 0.062 2,310 1,732 20,786
HCT CD74HCT390M 13670A01XCT 0.178 0.167 0.053 0.053 2,773 2,080 24,959
HCT CD74HCT390M96 13670A01XCT 0.210 0.197 0.053 0.053 2,773 2,080 24,959
HCT CD74HCT393E 13671B01 0.143 0.134 0.047 0.047 3,092 2,319 27,832
HCT CD74HCT393ES2064 13671B01 0.180 0.169 0.047 0.047 3,092 2,319 27,832
HCT CD74HCT393ES2497 13671B01 0.230 0.216 0.047 0.047 3,092 2,319 27,832
HCT CD74HCT393M 13671B01XCT 0.137 0.129 0.048 0.048 3,092 2,319 27,832
HCT CD74HCT393M96 13671B01XCT 0.171 0.161 0.048 0.048 3,092 2,319 27,832
HCT CD74HCT393M96S2497 13671B01XCT 0.136 0.128 0.048 0.048 3,092 2,319 27,832
HCT CD74HCT393MS2075 13671B01XCT 0.180 0.169 0.048 0.048 3,092 2,319 27,832
HCT CD74HCT40103E 13709B01 0.271 0.255 0.106 0.106 1,366 1,024 12,292
HCT CD74HCT40103M 13709B01XCT 0.247 0.232 0.108 0.108 1,366 1,024 12,292
HCT CD74HCT40103M96 13709B01XCT 0.237 0.223 0.108 0.108 1,366 1,024 12,292
HCT CD74HCT40105E 13669A01 0.204 0.192 0.082 0.082 1,761 1,321 15,851
HCT CD74HCT40105ES2064 13669A01 0.190 0.179 0.082 0.082 1,761 1,321 15,851
HCT CD74HCT40105M 13669A01XCT 0.238 0.224 0.084 0.084 1,761 1,321 15,851
HCT CD74HCT40105M96 13669A01XCT 0.346 0.325 0.084 0.084 1,761 1,321 15,851
HCT CD74HCT4020E 13651D01 0.167 0.157 0.062 0.062 2,298 1,723 20,682
HCT CD74HCT4020ER2489 13651D01 0.250 0.235 0.063 0.063 2,298 1,723 20,682
HCT CD74HCT4020M 13651D01XCT 0.189 0.178 0.064 0.064 2,298 1,723 20,682
HCT CD74HCT4020M96 13651D01XCT 0.173 0.163 0.064 0.064 2,298 1,723 20,682
HCT CD74HCT4024M 13699D01XCT 0.244 0.229 0.042 0.042 3,523 2,642 31,703
HCT CD74HCT4040E 13652D01 0.159 0.149 0.062 0.062 2,324 1,743 20,914
HCT CD74HCT4040ES2497 13652D01 0.200 0.188 0.062 0.062 2,324 1,743 20,914
</TABLE>
- 47 - COMPANY CONFIDENTIAL
<PAGE>
SCHEDULE 1(a)[C]
COMMERCIAL PRODUCTS FOR SUPPLY AGREEMENT
<TABLE>
<CAPTION>
FG Std Die Std NDW Die
Family Device Die ASP Trf Price Die Cost Trf Price ---- MDPW MLQ
- - ------ ------ --- --- --------- -------- --------- ---- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
HCT CD74HCT4040M 13652MXXXCT 0.136 0.128 0.063 0.063 3,909 2,931 35,177
HCT CD74HCT4046AE 13701A 0.364 0.342 0.081 0.081 1,789 1,342 16,099
HCT CD74HCT4046AM 13701AXXXCT 0.360 0.338 0.083 0.083 1,789 1,342 16,099
HCT CD74HCT4046AM96 13701AXXXCT 0.424 0.399 0.083 0.083 1,789 1,342 16,099
HCT CD74HCT4046AM96S2463 13701AXXXCT 0.332 0.312 0.083 0.083 1,789 1,342 16,099
HCT CD74HCT4046AMS2074 13701AXXXCT 0.266 0.250 0.083 0.083 1,789 1,342 16,099
HCT CD74HCT4051E 13702A 0.177 0.166 0.079 0.079 1,971 1,478 17,739
HCT CD74HCT4051M 13702AXXXCT 0.154 0.145 0.080 0.080 1,971 1,478 17,739
HCT CD74HCT4052E 13703B 0.133 0.125 0.101 0.088 1,545 1,159 13,907
HCT CD74HCT4052M 13703BXXXCT 0.110 0.103 0.101 0.073 1,545 1,159 13,907
HCT CD74HCT4053E 13704A 0.168 0.158 0.055 0.055 2,808 2,106 25,275
HCT CD74HCT4053M 13704MXXXCT 0.160 0.150 0.056 0.056 4,884 3,683 43,958
HCT CD74HCT4053M96 13704MXXXCT 0.181 0.170 0.056 0.056 4,884 3,663 43,958
HCT CD74HCT4053M96S2378 13704MXXXCT 0.160 0.150 0.056 0.056 4,884 3,663 43,958
HCT CD74HCT4060E 13653B 0.169 0.159 0.066 0.066 2,198 1,648 19,780
HCT CD74HCT4060ER2489 13653B 0.360 0.338 0.066 0.066 2,198 1,648 19,780
HCT CD74HCT4060M 13653BXXXCT 0.147 0.138 0.067 0.067 2,198 1,648 19,780
HCT CD74HCT4060M96 13653BXXXCT 0.127 0.119 0.067 0.067 2,198 1,648 19,780
HCT CD74HCT4066E 13705C 0.164 0.154 0.049 0.049 3,157 2,368 28,415
HCT CD74HCT4066ER3170 13705C02 0.159 0.149 0.049 0.049 3,157 2,368 28,415
HCT CD74HCT4066M 13705MXXXCT 0.169 0.159 0.050 0.050 5,277 3,958 47,494
HCT CD74HCT4066M96 13705MXXXCT 0.192 0.180 0.050 0.050 5,277 3,958 47,494
HCT CD74HCT4066M96S2378 13705MXXXCT 0.150 0.141 0.050 0.050 5,277 3,958 47,494
HCT CD74HCT4066MR3170 13705C02XCT 0.160 0.150 0.050 0.050 3,157 2,368 28,415
HCT CD74HCT4075E 13707A01 0.137 0.129 0.052 0.052 2,764 2,073 24,876
HCT CD74HCT4094E 13708M 0.163 0.153 0.060 0.060 3,976 2,982 35,786
HCT CD74HCT4094M 13708A01XCT 0.171 0.161 0.062 0.062 2,397 1,798 21,572
HCT CD74HCT4094M96 13708A01XCT 0.213 0.200 0.062 0.062 2,397 1,798 21,572
HCT CD74HCT423E 13716C 0.272 0.256 0.055 0.055 2,626 1,970 23,635
HCT CD74HCT423M96 13716CXXXCT 0.200 0.188 0.056 0.056 2,626 1,970 23,635
HCT CD74HCT42E 13715B01 0.193 0.181 0.077 0.077 1,893 1,420 17,040
</TABLE>
- 48 - COMPANY CONFIDENTIAL
<PAGE>
SCHEDULE 1(a)[C]
COMMERCIAL PRODUCTS FOR SUPPLY AGREEMENT
<TABLE>
<CAPTION>
FG Std Die Std NDW Die
Family Device Die ASP Trf Price Die Cost Trf Price ---- MDPW MLQ
- - ------ ------ --- --- --------- -------- --------- ---- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
HCT CD74HCT4316E 13732A 0.255 0.240 0.056 0.056 2,767 2,075 24,903
HCT CD74HCT4316M 13732AXXXCT 0.191 0.180 0.057 0.057 2,767 2,075 24,903
HCT CD74HCT4316M96 13732AXXXCT 0.242 0.227 0.057 0.057 2,767 2,075 24,903
HCT CD74HCT4351E 13741A 0.286 0.269 0.093 0.093 1,667 1,251 15,006
HCT CD74HCT14520E 13713B01 0.233 0.219 0.086 0.086 1,688 1,266 15,196
HCT CD74HCT4520M 13713B01XCT 0.158 0.149 0.088 0.088 1,688 1,266 15,196
HCT CD74HCT4520M96 13713B01XCT 0.342 0.321 0.088 0.088 1,688 1,266 15,196
HCT CD74HCT4538E 13646M 0.247 0.232 0.059 0.059 4,093 3,069 36,833
HCT CD74HCT4538M 13646MXXXCT 0.232 0.218 0.060 0.060 4,093 3,069 36,833
HCT CD74HCT4538M96 13648MXXXCT 0.247 0.232 0.060 0.060 4,093 3,069 36,833
HCT CD74HCT4543E 13714A01 0.167 0.157 0.049 0.049 2,953 2,215 26,579
HCT CD74HCT533E 13638C01 0.308 0.290 0.123 0.123 1,181 886 10,629
HCT CD74HCT534E 13843C 0.273 0.257 0.073 0.073 1,994 1,496 17,946
HCT CD74HCT540E 136110 0.155 0.146 0.089 0.089 1,644 1,233 14,796
HCT CD74HCT540M 136110 0.149 0.140 0.088 0.088 1,644 1,233 14,796
HCT CD74HCT541E 136120 0.139 0.131 0.088 0.088 1,635 1,226 14,712
HCT CD74HCT541M 136120 0.150 0.141 0.086 0.086 1,635 1,226 14,712
HCT CD74HCT541M96 136120 0.186 0.175 0.086 0.086 1,635 1,226 14,712
HCT CD74HCT541M96S5001 136120 0.179 0.168 0.087 0.087 1,635 1,226 14,712
HCT CD74HCT563E 13637C01 0.235 0.221 0.079 0.079 1,829 1,371 16,458
HCT CD74HCT563M 13637C01 0.268 0.252 0.079 0.079 1,829 1,371 16,458
HCT CD74HCT564E 13644C01 0.288 0.271 0.114 0.114 1,264 948 11,380
HCT CD74HCT564M 13644C01 0.320 0.301 0.114 0.114 1,264 948 11,380
HCT CD74HCT573E 13616D01 0.156 0.147 0.074 0.074 1,933 1,449 17,393
HCT CD74HCT573ER3170 13616D02 0.164 0.154 0.075 0.075 1,933 1,449 17,393
HCT CD74HCT573M 13616D01 0.130 0.122 0.074 0.074 1,933 1,449 17,393
HCT CD74HCT573M96 13616D01 0.145 0.136 0.074 0.074 1,933 1,449 17,393
HCT CD74HCT574E 13604C 0.130 0.122 0.105 0.086 1,388 1,041 12,490
HCT CD74HCT574ES2064 13604C 0.190 0.179 0.104 0.104 1,388 1,041 12,490
HCT CD74HCT574M 13604M 0.142 0.133 0.104 0.094 2,335 1,751 21,015
HCT CD74HCT574M96 13604M 0.167 0.157 0.104 0.104 2,335 1,751 21,015
</TABLE>
- 49 - COMPANY CONFIDENTIAL
<PAGE>
SCHEDULE 1(a)[C]
COMMERCIAL PRODUCTS FOR SUPPLY AGREEMENT
<TABLE>
<CAPTION>
FG Std Die Std NDW Die
Family Device Die ASP Trf Price Die Cost Trf Price ---- MDPW MLQ
- - ------ ------ --- --- --------- -------- --------- ---- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
HCT CD74HCT597E 13749A01 0.162 0.152 0.057 0.057 2,589 1,942 23,304
HCT CD74HCT597M96 13749A01XCT 0.181 0.170 0.058 0.058 2,589 1,942 23,304
HCT CD74HCT640E 13618B 0.306 0.288 0.118 0.118 1,291 968 11,616
HCT CD74HCT640M 13618C01 0.313 0.294 0.117 0.117 1,230 922 11,068
HCT CD74HCT646M96 13623C 0.352 0.331 0.256 0.232 563 422 5,064
HCT CD74HCT652M 13788A01 0.424 0.399 0.253 0.253 569 427 5,124
HCT CD74HCT688E 13641B01 0.203 0.191 0.051 0.051 2,846 2,134 25,612
HCT CD74HCT688M 13641B01 0.188 0.177 0.051 0.051 2,846 2,134 25,612
HCT CD74HCT688M96 13641B01 0.256 0.241 0.051 0.051 2,846 2,134 25,612
HCT CD74HCT688M96S2497 13641B01 0.250 0.235 0.051 0.051 2,846 2,134 25,612
HCT CD74HCT7046AE 13733A01 0.618 0.581 0.096 0.096 1,637 1,228 14,736
HCT CD74HCT7046AM 13733A01XCT 0.756 0.711 0.098 0.098 1,637 1,228 14,736
HCT CD74HCT7046AM96 13733A01XCT 0.499 0.469 0.098 0.098 1,637 1,228 14,736
HCT CD74HCT73E 13655A01 0.388 0.365 0.044 0.044 3,323 2,492 29,905
HCT CD74HCT74E 13601M 0.093 0.087 0.054 0.054 4,386 3,289 39,473
HCT CD74HCT74ES2065 13601F 0.100 0.094 0.053 0.053 2,694 2,020 24,244
HCT CD74HCT74ES2497 13601M 0.100 0.094 0.054 0.054 4,386 3,289 39,473
HCT CD74HCT74M 13601FXXXCT 0.095 0.089 0.055 0.055 2,694 2,020 24,244
HCT CD74HCT174M96 13601FXXXCT 0.095 0.089 0.055 0.055 2,694 2,020 24,244
HCT CD74HCT74MR2499 13601FXXXCT 0.170 0.160 0.055 0.055 2,694 2,020 24,244
HCT CD74HCT75E 13688A 0.154 0.145 0.051 0.051 2,846 2,134 25,612
HCT CD74HCT85E 13689A01 0.270 0.254 0.075 0.075 1,937 1,452 17,430
HCT CD74HCT85M 13689A01XCT 0.219 0.206 0.076 0.076 1,937 1,452 17,430
HCT CD74HCT86E 13657B01 0.108 0.102 0.043 0.043 3,356 2,517 30,205
HCT CD74HCT86M 13657B01XCT 0.114 0.107 0.044 0.044 3,356 2,517 30,205
HCT CD74HCT86M96 13657B01XCT 0.124 0.117 0.044 0.044 3,356 2,517 30,205
HCT CD74HCT86MS2074 13657B01XCT 0.115 0.108 0.044 0.044 3,356 2,517 30,205
HCT CD74HCT93E 13738A01 0.190 0.179 0.030 0.030 4,880 3,660 43,920
HCT CD74HCU04E 11649B01 0.084 0.079 0.034 0.034 4,217 3,163 37,952
HCT CD74HCU04M 11649B01XCT 0.099 0.093 0.035 0.035 4,217 3,163 37,952
HCT CD74HCU04M96 11849B01XCT 0.091 0.086 0.035 0.035 4,217 3,163 37,952
</TABLE>
- 50 - COMPANY CONFIDENTIAL
EXHIBIT 10.39
Military Supply Agreement
By and Between
Texas Instruments Incorporated
and
Harris Corporation
<PAGE>
Military Supply Agreement
This Agreement (hereinafter "Agreement") is made in duplicate original
counterparts and effective as of December 3, 1998 ("Effective Date") by and
between Harris Corporation, a corporation duly organized and validly existing
under the laws of the State of Delaware, acting by and through its Semiconductor
Sector with a principal place of business at 2401 Palm Bay Road, Northeast, Palm
Bay, Florida 32905 (hereinafter "Harris") and Texas Instruments Incorporated, a
corporation duly organized and validly existing under the laws of the State of
Delaware, acting by and through its Semiconductor Group with a principal place
of business at 8505 Forest Lane, Dallas, Texas 75243 (hereinafter "TI"). Buyer
and/or TI may be referred to herein as a "Party" or the "Parties", as the case
may require.
WHEREAS, Harris and its affiliates and TI have entered into an Asset
Purchase Agreement (the "APA") pursuant to which TI will purchase from Harris
the exclusive right to manufacture, market and sell certain Military Logic
Products (capitalized terms used herein and not otherwise defined shall have the
meanings given to them in the APA) along with certain assets, rights and
properties of Harris used or useful with the Military Logic Business, all on the
terms and subject to the conditions set forth in the APA.
WHEREAS, in order to provide for a continuing source of supply of Military
Logic Products during a transition period beginning on the Effective Date and
ending on June 30, 1999, unless mutually extended by the parties, Harris agrees
to sell and TI agrees to purchase certain semiconductor products, devices,
wafers and/or die pursuant to specifications and in quantities mutually agreed
upon by the parties and subject to the Terms and Conditions set forth in this
Agreement.
NOW THEREFORE, the Parties agree as follows:
1. Definitions. For the purposes of this Agreement, the following underlined
terms will have the meanings set forth below.
1.1. "Estimated Ship Date" shall mean the date Harris approximates that
it will ship the Product to TI.
1.2. "Lead-time" shall mean the approximate length of time Harris
requires from the date a purchase order for the Product is submitted
to Harris by TI until such time Harris can ship the Product pursuant
to such purchase order.
1.3. "Product" shall mean those semiconductor products, devices, wafers
and/or die to be manufactured by Harris pursuant to this Agreement.
1.4. "Product Specification" shall mean the acceptance criteria for the
Product mutually agreed upon between Harris and TI.
1.5. "Requested Delivery Date" shall mean the arrival date for the
Product requested by TI.
-1-
<PAGE>
2. Scope of Agreement. Subject to the terms and conditions set forth in this
Agreement, Harris agrees to sell to TI semiconductor product, devices,
wafers and/or die manufactured using processes consistent with Harris'
standard internal practices according to specifications and in quantities
mutually agreed upon by the Parties. Harris shall deliver to TI and TI
shall purchase Product ordered by TI pursuant to the terms and conditions
set forth in this Agreement.
3. Statement of Work.
3.1. TI shall consult with and guide Harris as well as provide reasonable
technical assistance in the fulfillment of manufacturing
responsibilities undertaken by Harris pursuant to this Agreement.
3.2. Harris will be responsible for Process Technology and facilities
necessary and/or appropriate for performing its manufacturing
responsibilities specified herein.
3.3. Harris agrees to provide reasonable technical support to assist in
failure analysis of Product provided under this Agreement and to
respond to TI's needs for such analysis in a timely manner.
4. Product Forecasts, Purchases and Sales.
4.1. Four Month Rolling Forecast. During the term of this Agreement, TI
shall supply to Harris by the first day of each month a non-binding
four month rolling forecast of estimated unit demand by wafer
technology for unassembled semiconductor products and by package
level for finished goods. Upon execution of this Agreement, TI shall
provide Harris with its initial four month rolling forecast.
Requests for quantities greater than those set forth in TI's four
month forecasts will be accommodated by Harris to the extent
capacity is available. Within seven (7) days of receipt of each of
TI's rolling four month forecasts, Harris shall provide written
acceptance or rejection of the demand levels set forth in TI's
forecast and shall communicate the existence and amount of residual
capacity available to provide quantities greater than those set
forth in TI's forecast.
4.2. One Month Loading Forecast. In addition to providing the four month
rolling forecast described in Section 4.1., TI will, on the last
work day preceding the first and fifteenth day of each month,
provide Harris with an updated one month loading forecast setting
forth TI's estimated product demand and requested delivery date by
wafer for unassembled semiconductor products and by device for
finished goods. The quantities set forth in weeks (1) one and (2)
two of each loading forecast shall constitute a firm commitment on
TI's behalf, except that, at any time prior to the second work day
of week (2) two, TI reserves the right to change the device loading
of the week (2) two mix by up to twenty-five percent (25%). The
quantities set forth in weeks (3) three and (4) four of each loading
forecast are subject to change but will become firm commitments
unless modified in writing by TI prior to the beginning of the third
week. Each loading forecast
-2-
<PAGE>
shall constitute a release against the corresponding purchase order
issued by TI pursuant to Section 4.3.1. below.
4.3. Purchases and Sales.
4.3.1. TI's purchase of Product shall be initiated by the issuance
of a written purchase order which will provide a reasonable
Lead-time to ensure timely delivery of the products. A
purchase order will only be accepted by Harris if issued by
TI'S authorized representative. Each purchase order issued
by TI shall specify: (i) a purchase order number and date,
(ii) quantity of Product to be delivered using the Minimum
Line Quantities ("MLQ's") listed on Exhibit A, (iii) Product
part number and revision level, (iv) Product description,
(v) Product unit price, (vi) Requested Delivery Date, (vii)
shipping instructions, including carrier and delivery
address, and (viii) signature(s) of authorized TI
representative. No terms or conditions in either Party's
purchase, sales, delivery or shipping, forms of
acknowledgments, or similar documents shall have effect to
the extent such terms and conditions are inconsistent with
terms and conditions set forth in this Agreement.
4.3.2. Within five (5) business days after Harris receives TI's
purchase order, Harris shall provide to TI Estimated Ship
Date for the Product requested pursuant to such purchase
order. If Harris cannot commit to an Estimated Ship Date
that satisfies TI's Requested Delivery Date, Harris shall
propose, in good faith, an alternative Estimated Ship Date.
Any purchase order placed by TI prior to the termination of
this Agreement in which the Estimated Ship Date will be
after the termination of this Agreement shall continue to be
governed by the terms and conditions of this Agreement.
4.3.3. All forecasts, purchase orders and shipping documents
between the parties shall be communicated by electronic
means to the maximum extent feasible.
5. Pricing.
5.1. Product Pricing and Minimum Line Quantities. Prices charged shall be
as indicated on Exhibit A attached hereto and incorporated herein by
this reference. Prices cover only semiconductor products, devices,
wafers, and/or die set forth in Exhibit A. Any semiconductor
products, devices, wafers and/or die not set forth in Exhibit A will
be provided only if pricing and other terms are separately
negotiated and mutually agreed upon by the Parties.
5.2. Product Specification Process. Upon receipt of a written request by
TI, Harris shall, within fifteen (15) business days, submit to TI a
written summary of estimated adjustments or costs, if any,
reasonably required to implement a modification to the Product
Specification requested by TI. Such summary shall
-3-
<PAGE>
include the change, if any, to: (i) any applicable Product delivery
dates; and: (ii) the mask tooling impacted and unit price. Written
approval from TI must be received by Harris prior to implementation
of such changes, and will be referenced as an Amendment to this
Agreement. If Harris does not receive such written approval from TI
within five (5) calendar days after Harris submits a summary to TI,
TI shall have been deemed to have withdrawn such request for change
to the Product Specifications.
5.3. Freight and Tax Charges. Prices set forth in this Agreement do not
include freight charges or any customs duties, sales, use, value
added, excise, Federal, state, local or other similar taxes. All
such duties or taxes shall be paid by TI, or in lieu thereof, TI
shall provide Harris with an appropriate exemption certificate.
6. Delivery, Shipments, Invoices and Payments.
6.1. Title and Transportation. All shipments of Product to TI shall be
F.O.B. point of manufacture. Title and risk of loss or damage shall
pass to TI upon tender of delivery of the Products to a carrier at
manufacturing point.
6.2. Terms and Method of Payment. Terms of payment shall be net thirty
(30) days from date of invoice. TI's payment of any invoice shall
not constitute acceptance of Products. Such invoices may be subject
to adjustments for errors, shortages, or defects in Products. Each
shipment shall constitute an independent transaction and TI shall
pay for the same in accordance with the specified payment terms.
Payments shall be made in US dollars.
7. Term. Subject to the terms and conditions set forth in this Agreement, TI
may issue purchase orders at any time prior to June 30, 1999. Unless
sooner terminated under the provisions of this Agreement, this Agreement
shall terminate on June 30, 1999, unless mutually extended by the parties.
Provisions of this Agreement which by their terms extend past the
termination date shall survive termination.
8. Inspection and Acceptance. TI agrees to perform incoming inspection of
Product within thirty (30) calendar days of TI's receipt of Product. If
Harris delivers Product to TI that does not conform in a material respect
to TI's purchase order, TI shall notify Harris by written notice within
five (5) calendar days after TI inspects Product. If TI rejects such
product, TI's notice shall specify TI's reason(s) for rejecting the
Product. TI will thereupon return rejected Product F.O.B. shipping point
for repair or replacement at Harris' option.
9. Product Warranty.
9.1. Warranty Period. Harris, except as otherwise provided below,
warrants all goods against faulty workmanship or the use of
defective materials and warrants that goods will conform to
published Harris specifications or other agreed upon written Product
Specifications. Unassembled semiconductor devices in wafer or die
form shall meet the minimum yield levels set forth in Exhibit A
attached
-4-
<PAGE>
hereto and incorporated herein by this reference. The warranty
period for finished goods shall be two (2) years from the date of
shipment. The warranty period for unassembled semiconductor devices
in wafer or die form shall be six (6) months from the date of
shipment. All product returned to Harris for failure to comply with
the applicable specifications will be repaired or replaced within
reasonable lead-time, at the option of Harris.
9.2. No Additional Warranties. EXCEPT FOR THE EXPRESS WARRANTIES STATED
IN THIS AGREEMENT, HARRIS MAKES NO ADDITIONAL WARRANTIES, EXPRESS,
IMPLIED OR STATUTORY, INCLUDING BUT NOT LIMITED TO, ANY IMPLIED
CONDITIONS OR WARRANTY OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE OR ANY OTHER WARRANTY OBLIGATION ON THE PART OF
HARRIS. TI'S REMEDIES SHALL BE LIMITED TO THE REMEDIES SPECIFIED
HEREIN.
10. Limitation of Damages. IN NO EVENT WILL EITHER PARTY BE LIABLE TO THE
OTHER FOR ANY LOST PROFITS, LOSS OF GOODWILL, OVERHEAD, COST OF COVER OR
OTHER INDIRECT, SPECIAL, INCIDENTAL, OR CONSEQUENTIAL DAMAGES ARISING OUT
OF OR RELATED TO THIS AGREEMENT, HOWEVER CAUSED, AND WHETHER BASED IN
CONTRACT, TORT (INCLUDING NEGLIGENCE), STRICT LIABILITY OR OTHERWISE.
THESE LIMITATIONS SHALL APPLY EVEN IF THE PARTY HAS BEEN ADVISED OF THE
POSSIBILITY OF SUCH DAMAGE, AND NOTWITHSTANDING THE FAILURE OF ESSENTIAL
PURPOSE OF ANY LIMITED REMEDY HEREIN.
11. Miscellaneous.
11.1. Force Majeure. Anything contained in this Agreement to the contrary
notwithstanding, the obligations of the Parties hereto shall be
subject to all laws, both present and future, of any government
having jurisdiction over the Parties hereto, and to orders,
regulations, directions or requests of any such government, or any
department, agency or corporation thereof, and to war, acts of
public enemies, strikes or other labor disturbances, accidents,
transportation embargo, shortage of supplies, fires, floods,
earthquakes, acts of God, or causes of like or different kind beyond
the control of the Parties, and the Parties hereto shall be excused
from any failure to perform any obligation hereunder to the extent
such failure is caused by any such law, order, regulation,
direction, request or contingency, for the period such cause
endures. Production and deliveries may be allocated in a reasonable
manner among its customers by Harris when these circumstances create
a delay or shortfall in production of the Product or of products of
the general type covered by this Agreement. Notwithstanding the
foregoing, in the event any such cause delays either Party's
performance of any of its material obligations under this Agreement,
the other Party may suspend its performance under this Agreement for
the period such delay continues and if any such cause renders
impossible or delays for a period of more than six months either
Party's performance of any of its material obligations under this
-5-
<PAGE>
Agreement, the other Party may upon written notice terminate this
Agreement and such termination will be deemed to have occurred with
consent of both parties. The Party whose performance is delayed on
account of any such cause shall promptly notify the other Party and
shall exert reasonable efforts to recommence performance as soon as
possible.
11.2. Relationship of Parties.
11.2.1. Neither Party shall have, or shall represent that it has,
any power, right, or authority to bind the other Party, or
to assume or create any obligation or responsibility,
express or implied, on behalf of the other Party or in the
other Party's name.
11.2.2. Each Party is an independent contractor; nothing in this
Agreement shall be construed as constituting Harris and TI
as partners, joint venturers, or as creating the
relationships of employer and employee, franchiser and
franchisee, master and servant, principal and agent, or any
other form of legal association that would impose liability
on one Party for the act or failure to act of the other
Party.
11.2.3. Harris shall grant TI upon reasonable notice, access to its
manufacturing line during normal business hours for the
purpose of inspection and observation. Such access shall be
granted as long as it does not unduly interfere with Harris
operations or other business affairs.
11.2.4. An employee of one Party shall not be considered, for any
purpose, an employee of the other Party. To the extent this
Agreement involves work by one Party on the premises of the
other Party, each Party shall instruct and require its
respective visiting employees to observe and obey all rules,
policies and procedures in effect at the facilities of the
other Party.
11.3. Notices and Administration of the Agreement. All notices shall be
given in writing either by personal delivery to the Party to whom
notice is directed, or by confirmed telex or facsimile, or by a
commercial overnight courier service, or by registered or certified
mail, return receipt requested. The date upon which any such notice
is so personally delivered, the date of confirmation of telex,
facsimile, or courier delivery, or if the notice is given by
registered or certified mail, the date three (3) days after it is
deposited in the U.S. mail, shall be deemed to be the date shown as
delivered on the return receipt of such notice, irrespective of the
date appearing therein. For and on the behalf of each Party, the
person designated below shall have cognizance of the work provided
pursuant to this Agreement. General administration of the Agreement
shall be through them. Each Party reserves the right to
independently appoint a different individual and agrees to notify
the other Party in writing of such change. All statements and
notices shall be sent directly to the following individuals.
-6-
<PAGE>
If to TI If to Harris
-------- ------------
Texas Instruments Incorporated Harris Corporation
P.O. Box 84, M.S. 853 Semiconductor Sector
Sherman, Texas 75091 P.O. Box 883, M.S. 53-202
Attention: Robert Kroeger Attention: Ray Odom
11.4. Language Interpretation. In the interpretation of this Agreement,
unless the context otherwise requires, (a) words importing the
singular shall be deemed to import the plural and vice versa, (b)
words denoting gender shall include all genders, (c) references to
persons shall include corporations, other bodies and vice versa, (d)
references to Parties, sections, schedules, addenda, paragraphs,
articles and exhibits shall mean the Parties, sections, schedules,
addenda, paragraphs, articles and exhibits of and to this Agreement,
and (e) periods of days, weeks or months shall mean calendar days,
weeks or months.
11.5. Headings. Article and Section headings are included solely for
convenience, are not to be considered a part of this Agreement, and
are not intended to be full and accurate descriptions of their
contents.
11.6. Export. Each Party hereby assures the other that it will not
knowingly, without prior authorization, if required of the Office of
Export Administration, U.S. Department of Commerce, export or
re-export (as defined in Section 380.1 (b)-(c) of the Export
Administration Regulations and any amendments thereto) the technical
data covered hereby. TI shall be responsible for determining the
ITAR status of devices manufactured under this Agreement, and for
obtaining all applicable licenses.
11.7. Other Restrictions. In exercising its rights under this Agreement,
each Party agrees to comply strictly and fully with all export
controls imposed on Products by any country or organization or
nations within whose jurisdiction each Party operates or does
business. Each Party agrees not to export or permit export of
Products or any related technical data or any direct Product of any
related technical data, without complying with the export control
laws in the relevant jurisdiction.
11.8. Incorporation by Reference. Except as herein set forth to the
contrary, the terms and conditions of the APA are herein
incorporated by reference as if set forth in full.
11.9. Exhibits. The following is the list of Exhibits which are attached
hereto and are hereby incorporated into this Agreement by reference.
Exhibit A: Pricing and Minimum Die Per Wafer and Minimum Line
Quantities.
-7-
<PAGE>
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be
signed by duly authorized officers or representative as of the date first above
written.
TEXAS INSTRUMENTS INCORPORATED HARRIS CORPORATION
Semiconductor Group Semiconductor Group
By: /s/ Glenn Culhane By: /s/ Ray D. Odom
---------------------------------- ----------------
Name: Glenn Culhane Name: Ray D. Odom
---------------------------------- ----------------
Title: Vice President - Texas Instruments Title: General Manager
---------------------------------- ----------------
Date: December 3, 1998 Date: December 3, 1998
---------------------------------- ----------------
-8-
<PAGE>
EXHIBIT A
MILITARY SUPPLY AGREEMENT
PRICING AND MINIMUM DIE PER WAFER AND MINIMUM LINE QUANTITIES
-------------------------------------------------------------
1. PRICING AND MINIMUM DIE PER WAFER. The military products subject to this
Agreement are provided as follows:
The military products, their prices, and the minimum die per wafer
("MDPW") are listed in Schedule 1(a)[m] attached.
2. MINIMUM LINE QUANTITIES. The minimum line quantities ("MLQ's") to be
ordered are as follows:
a) Finished Goods Requests (available in die bank)
Military 100 units
b) Die Request
Minimum die request will be equivalent to six (6) wafers, MDPW
by device as set forth in Schedule 1 (a)[m] for all military
die requests.
-1-
<PAGE>
SCHEDULE 1(a)[M]
MILITARY PRODUCTS FOR SUPPLY AGREEMENT
<TABLE>
<CAPTION>
FG Std Die
Device (Harris) SMD Die ASP Trf Price Die Cost Trf Price
- - --------------- --- --- --- --------- -------- ---------
<C> <C> <C> <C> <C> <C> <C>
135957 06415XXXXBN5A 1.482 1.186 0.053 0.053
89262AKB3T 05361BXXXBN5A 12.000 9.600 0.020 0.020
89265AKB3T 05681XXXXBN5A 49.530 39.624 0.027 0.027
89267AKB3T 05675XXXXBN5A 33.600 26.880 0.030 0.030
89270AKB3T 10494BXXXBN5A 38.220 30.576 0.104 0.104
89271AKB3T 04020AXXXBN5A 35.550 28.440 0.188 0.188
89273AKB3T 05867XXXXBN5A 32.310 25.848 0.031 0.031
CD14538BF3A 5962-9055701EA 13024BXXXBN5A 2.180 1.744 0.093 0.093
CD4000AFB JM38510105201BCA 05361BXXXJN5A 15.397 12.318 0.024 0.024
CD4001BF3A 06939XXXXJN5A 1.006 0.805 0.046 0.046
CD4001BF3AS2283 06939XXXXJN5A 0.500 0.400 0.046 0.046
CD4001BFB JM38510/05252BCA 06939XXXXJN5A 7.803 6.242 0.046 0.046
CD4001BFS2484 06939X 0.690 0.552 0.038 0.038
CD4001BK3 06939XXXXBN5A 23.325 18.660 0.045 0.045
CD4001UBF3A 06924XXXXBN5A 1.712 1.370 0.037 0.037
CD4001UBF3AS2451 06924XXXXBN5A 1.367 1.094 0.037 0.037
CD4002BF3A 7704403CA 10255XXXXBN5A 1.387 1.110 0.037 0.037
CD4002BK3 10255XXXXBN5A 6.196 4.957 0.037 0.037
CD4006BF3A 06910XXXXBN5A 2.156 1.725 0.085 0.085
CD4006BF3AS2451 06910XXXXBN5A 2.270 1.816 0.085 0.085
CD4007UBF3A 06938XXXXBN5A 1.613 1.290 0.030 0.030
CD4007UBF3A116 06938XXXXBN5A 1.310 1.048 0.030 0.030
CD4007UBF3AS2451 06938XXXXBN5A 1.829 1.463 0.030 0.030
CD4008BF3A 06724AXXXBW5A 2.073 1.658 0.078 0.078
CD4009UBF3A 06868XXXXBN5A 2.219 1.775 0.040 0.040
CD40101BF3A 06588XXXXBN5A 1.931 1.545 0.049 0.049
CD40103BF3A 06629XXXXBN5A 2.112 1.690 0.132 0.132
CD40105BF3A 06751XXXXBN5A 1.850 1.480 0.157 0.157
CD40106BF3A 10900XXXXBN5A 1.526 1.221 0.041 0.041
CD40107BF3A 06706XXXXBN5A 1.827 1.462 0.029 0.029
CD40108BD3 10363XXXXBN5A 16.378 13.102 0.171 0.171
CD40109BF3A 11377AXXXBN5A 1.892 1.514 0.077 0.077
CD40109BK3 11377AXXXBN5A 31.624 25.299 0.077 0.077
CD4010BF3A 06869XXXXBN5A 2.063 1.650 0.038 0.038
CD4011AD3 05681XXXXBN5A 3.984 3.187 0.027 0.027
CD4011AFB JM38510/05001BCA 05681XXXXJN5A 5.898 4.718 0.032 0.032
CD4011BF3A 10256AXXXJN5A 1.052 0.842 0.038 0.038
CD4011BF3AS2283 10256AXXXJN5A 0.500 0.400 0.038 0.038
CD4011BFB JM38510/05051BCA 10256AXXXJN5A 12.782 10.226 0.038 0.038
<CAPTION>
Std Die
Device (Harris) NDW MDPW MLQ
- - --------------- --- ---- ---
<S> <C> <C> <C>
135957 1,961 1,471 8,824
89262AKB3T 5,113 3,835 23,009
89265AKB3T 3,732 2,799 16,792
89267AKB3T 3,354 2,515 15,091
89270AKB3T 998 748 4,491
89271AKB3T 523 392 2,355
89273AKB3T 3,194 2,396 14,373
CD14538BF3A 300 225 1,350
CD4000AFB 300 225 1,350
CD4001BF3A 2,750 2,063 12,375
CD4001BF3AS2283 2,750 2,063 12,375
CD4001BFB 2,750 2,063 12,375
CD4001BFS2484 2,781 2,086 12,515
CD4001BK3 2,781 2,086 12,515
CD4001UBF3A 2,765 2,074 12,442
CD4001UBF3AS2451 2,765 2,074 12,442
CD4002BF3A 2,781 2,086 12,515
CD4002BK3 2,781 2,086 12,515
CD4006BF3A 1,215 911 5,468
CD4006BF3AS2451 1,215 911 5,468
CD4007UBF3A 3,476 2,607 15,641
CD4007UBF3A116 3,476 2,607 15,641
CD4007UBF3AS2451 3,476 2,607 15,641
CD4008BF3A 1,333 1,000 5,998
CD4009UBF3A 2,719 2,039 12,236
CD40101BF3A 2,115 1,566 9,517
CD40103BF3A 785 589 3,533
CD40105BF3A 658 493 2,959
CD40106BF3A 2,522 1,892 11,349
CD40107BF3A 3,513 2,634 15,807
CD40108BD3 604 453 2,719
CD40109BF3A 1,346 1,010 6,059
CD40109BK3 1,346 1,010 6,059
CD4010BF3A 2,689 2,017 12,101
CD4011AD3 3,732 2,799 16,792
CD4011AFB 3,732 2,799 16,792
CD4011BF3A 3,559 2,669 16,014
CD4011BF3AS2283 3,559 2,669 16,014
CD4011BFB 3,559 2,669 16,014
</TABLE>
-1-
<PAGE>
SCHEDULE 1(a)[M]
MILITARY PRODUCTS FOR SUPPLY AGREEMENT
<TABLE>
<CAPTION>
FG Std Die
Device (Harris) SMD Die ASP Trf Price Die Cost Trf Price
- - --------------- --- --- --- --------- -------- ---------
<C> <C> <C> <C> <C> <C> <C>
CD4011BK3 10256AXXXBN5A 17.684 14.147 0.028 0.028
CD4012BF3A 10257XXXXBN5A 1.463 1.170 0.041 0.041
CD4012BF3AS2451 10257XXXXBN5A 1.710 1.368 0.041 0.041
CD4012BFB JM38510/05052BCA 10257XXXXJN5A 14.025 11.220 0.051 0.051
CD4013BF3A 10953XXXXJN5A 1.347 1.078 0.098 0.098
CD4013BF3AS2451 10953XXXXJN5A 1.259 1.007 0.098 0.098
CD4013BFB JM38510/05151BCA 10953XXXXJN5A 7.487 5.990 0.098 0.098
CD4013BK3 10953XXXXBN5A 22.474 17.979 0.057 0.057
CD4014BF3A 10163XXXXBN5A 1.611 1.289 0.086 0.086
CD4015BF3A 06911AXXXBN5A 1.597 1.278 0.095 0.095
CD4015BF3AS2451 06911AXXXBN5A 1.419 1.135 0.100 0.100
CD40160BF3A 10214XXXXBN5A 2.133 1.706 0.100 0.100
CD40161BF3A 10215XXXXBN5A 1.752 1.402 0.098 0.098
CD40163BF3A 10217XXXXBN5A 2.390 1.912 0.099 0.099
CD401GBF3A 5962-9064001CA 06940BXXXBN5A 1.360 1.088 0.028 0.028
CD40174BF3A 10276XXXXBN5A 1.487 1.190 0.070 0.070
CD401750F3A 11180XXXXBN5A 1.540 1.232 0.053 0.053
CD4017AFB JM38510/05601BEA 10494BXXXJN5A 5.414 4.331 0.121 0.121
CD4017BF3A 10494BXXXBN5A 1.494 1.195 0.104 0.104
CD4017BFB JM38510/05651BEA 10494BXXXJN5A 10.403 8.322 0.121 0.121
CD4018BF3A 10113XXXXJN5A 1.861 1.489 0.091 0.091
CD4018BFB JM38510/05652BEA 10113XXXXJN5A 8.315 6.652 0.091 0.091
CD40192BF3A 06729XXXXBN5A 2.403 1.922 0.113 0.113
CD40193BF3A 06730XXXXBN5A 2.130 1.704 0.114 0.114
CD40193BF3AS2265 06730XXXXBN5A 2.919 2.335 0.114 0.114
CD4019AFB JM38510/05302BEA 05652XXXXJN5A 7.261 5.809 0.040 0.040
CD4019BF3A 14269AXXXBN5A 1.515 1.212 0.040 0.040
CD4019BF3AS2451 14269AXXXBN5A 1.860 1.488 0.040 0.040
CD4019BFB JM38510/05352BEA 14269AXXXJN5A 7.402 5.922 0.064 0.064
CD4020AFB JM38510/05603BEA 06065BXXXJN5A 6.831 5.465 0.075 0.075
CD4020BF3A 06947XXXXJN5A 1.510 1.208 0.160 0.160
CD4021BF3AS2451 06947XXXXJN5A 1.920 1.536 0.171 0.171
CD4020BFB JM38510/05653BEA 06947XXXX.JN5A 11.806 9.445 0.171 0.171
CD4021BF3A 10164XXXXJN5A 1.651 1.321 0.099 0.099
CD4021BFB JM38510/05754BEA 10164XXXXJN5A 11.344 9.075 0.099 0.099
CD4022BF3A 10495BXXXBN5A 2.034 1.627 0.088 0.088
C04023BF3A 10258XXXXJN5A 1.105 0.884 0.041 0.041
CD4023BFB JM38510/05053BCA 10258XXXXJN5A 11.974 9.579 0.051 0.051
CD4023RK3 10258XXXXBN5A 25.425 20.340 0.041 0.041
<CAPTION>
Std Die
Device (Harris) NDW MDPW MLQ
- - --------------- --- ---- ---
<S> <C> <C> <C>
CD4011BK3 3,680 2,760 16,560
CD4012BF3A 2,511 1,883 11,300
CD4012BF3AS2451 2,511 1,883 11,300
CD4012BFB 2,483 1862 11,174
CD4013BF3A 1,479 1,109 6,654
CD4013BF3AS2451 1,479 1,109 6,654
CD4013BFB 1,479 1,109 6,654
CD4013BK3 2,170 1,628 9,767
CD4014BF3A 1,202 901 5,408
CD4015BF3A 1,256 942 5,653
CD4015BF3AS2451 1,256 942 5,653
CD40160BF3A 1,031 773 4,639
CD40161BF3A 1,056 792 4,751
CD40163BF3A 1,043 182 4,695
CD401GBF3A 3,644 2,733 16,396
CD40174BF3A 1,690 1,207 7,603
CD401750F3A 1,945 1,459 8,754
CD4017AFB 1,945 1,459 8,754
CD4017BF3A 998 748 4,491
CD4017BFB 998 748 4,491
CD4018BF3A 1,356 1,017 6,101
CD4018BFB 1,358 1,017 6,101
CD40192BF3A 916 687 4,123
CD40193BF3A 906 679 4,075
CD40193BF3AS2265 906 679 4,075
CD4019AFB 906 679 4,075
CD4019BF3A 2,583 1,937 11,623
CD4019BF3AS2451 2,583 1,937 11,623
CD4019BFB 2,583 1,937 11,623
CD4020AFB 2,583 1,937 11,623
CD4020BF3A 915 686 4,116
CD4021BF3AS2451 915 686 4,116
CD4020BFB 915 688 4,116
CD4021BF3A 1,202 901 5,408
CD4021BFB 1,202 901 5,408
CD4022BF3A 1,176 882 5,292
C04023BF3A 2,539 1,904 11,425
CD4023BFB 2,539 1,904 11,425
CD4023RK3 2,539 1,904 11,425
</TABLE>
-2-
<PAGE>
SCHEDULE 1(a)[M]
MILITARY PRODUCTS FOR SUPPLY AGREEMENT
<TABLE>
<CAPTION>
FG Std Die
Device (Harris) SMD Die ASP Trf Price Die Cost Trf Price
- - --------------- --- --- --- --------- -------- ---------
<C> <C> <C> <C> <C> <C> <C>
CD4024AFB JM38510/05605BCA 05385CXXXJN5A 10.347 8.278 0.070 0.070
CD4024BF3A 06903XXXXBN5A 1.707 1.366 0.065 0.065
CD4024BF3AS2451 06903XXXXBN5A 1.623 1.298 0.051 0.079
CD4024BFB JM38510/05655BCA 06903XXXXJN5A 2.221 1.777 0.095 0.095
CD40257BF3A 06786XXXXBN5A 2.095 1.676 0.054 0.054
CD4025AFB JM38510/05204BCA 05920XXXXJN5A 8.657 6.926 0.035 0.035
C04025BFBA 10259XXXXBN5A 1.224 0.979 0.041 0.041
CD4025BF3AS2451 10259XXXXBN5A 1.364 1.091 0.041 0.041
CD4025AFB JM38510105254BCA 110259XXXXJN5A 3.572 2.858 0.050 0.050
CD4027BF3A 06904AXXXJN5A 1.646 1.317 0.067 0.067
C04027BF3AS2451 06904AXXXJN5A 1.239 0.991 0.067 0.067
CD4027BFB JM38510/05152BEA 06904AXXXJN5A 11.975 9.580 0.067 0.067
CD4028BF3A 14271AXXXBN5A 1.618 1.294 0.058 0.058
C04029BF3A 8101602EA 06838XXXXBN5A 1.804 1.443 0.104 0.104
CD4029BF3AS2451 06836XXXXBN5A 2.148 1.718 0.104 0.104
CD4030BF3A 06950XXXXBN5A 1.786 1.429 0.052 0.052
C04030BF3AS2451 06950XXXXBN5A 1.424 1.139 0.052 0.052
CD4030BFB JM38510/05353BCA 06950XXXXJN5A 11.744 9.395 0.060 0.060
CD4031BF3A 10204XXXXBN5A 2.876 2.301 0.170 0.170
CD4034BF3A 10341XXXXBN5A 4.639 3.711 0.207 0.207
CD4035BF3A 8101701EA 101165XXXXBN5A 1.530 1.224 0.080 0.080
CD4040BF3A 06948XXXXBN5A 1.613 1.290 0.110 0.110
CD4041UBF3A 06905AXXXBN5A 1.955 1.584 0.055 0.055
CD4042BF3A 06917XXXXBN5A 1.649 1.319 0.048 0.048
CD4042BF3AS2451 06917XXXXBN5A 2.385 1.908 0.048 0.048
CD4044BF3A 10125XXXXBN5A 1.727 1.382 0.051 0.051
C04044BF3A 10126XXXXBN5A 1.800 1.440 0.051 0.051
CD4046BF3A 5962-9466401MEA 10005AXXXBN5A 1.960 1.568 0.092 0.092
C040460FS2265 10005AXXXBN5A 2.100 1.680 0.092 0.092
CD4047BD3 8102001CA 06943CXXXBN5A 1.893 1.514 0.082 0.082
CD4047BF3A 06943CXXXBN5A 1.146 0.917 0.082 0.082
CD4048BF3A 06944AXXXBN5A 1.892 1.514 0.058 0.058
CD4048BF3AS2451 06944AXXXBN5A 2.108 1.688 0.062 0.062
CD4049AFB JM3851/055038EA 06246XXXXJN5A 15.859 12.687 0.045 0.045
CD4049UBF3A 14270AXXXSN5A 1.386 1.109 0.046 0.046
CD4049U9F3AS2451 14270AXXXSN5A 1.552 1.242 0.046 0.046
CD4049UBFB JM38510/05553BEA 14270AXXXJN5A 11.267 9.014 0.064 0.064
CD4049UBK3 14270AXXXBN5A 25.556 20.445 0.040 0.040
CD4050AFB JM38510/05504BEA 06265XXXXJN5A 9.105 7.284 0.042 0.042
<CAPTION>
Std Die
Device (Harris) NDW MDPW MLQ
- - --------------- --- ---- ---
<S> <C> <C> <C>
CD4024AFB 1,574 1,180 7,081
CD4024BF3A 1,596 1,197 7,183
CD4024BF3AS2451 1,596 1,197 7,183
CD4024BFB 1,578 1,183 7,099
CD40257BF3A 1,917 1,438 8,627
CD4025AFB 3,326 2,495 14,969
C04025BFBA 2,511 1,883 11,300
CD4025BF3AS2451 2,511 1,883 11,300
CD4025AFB 2,539 1,904 11,425
CD4027BF3A 1,901 1,425 8,553
C04027BF3AS2451 1,901 1,425 8,553
CD4027BFB 1,901 1,425 8,553
CD4028BF3A 1,777 1,332 7,994
C04029BF3A 994 746 4,475
CD4029BF3AS2451 994 746 4,475
CD4030BF3A 1,985 1,489 8,934
C04030BF3AS2451 1,985 1,489 8,934
CD4030BFB 2,031 1,523 9,139
CD4031BF3A 697 523 3.137
CD4034BF3A 498 374 2,243
CD4035BF3A 498 374 2,243
CD4040BF3A 937 703 4,215
CD4041UBF3A 1,885 1,414 8,482
CD4042BF3A 2,156 1,617 9,701
CD4042BF3AS2451 2,156 1,617 9,701
CD4044BF3A 2,043 1,533 9,195
C04044BF3A 2,043 1,533 9,195
CD4046BF3A 1,124 843 5,058
C040460FS2265 1,124 843 5,058
CD4047BD3 1,528 1,146 6,875
CD4047BF3A 1,528 1,146 6,875
CD4048BF3A 1,886 1,415 8,488
CD4048BF3AS2451 1,886 1,415 8,488
CD4049AFB 1,886 1,415 8,488
CD4049UBF3A 2,592 1,944 11,666
CD4049U9F3AS2451 2,592 1,944 11,666
CD4049UBFB 2,592 1,944 11,666
CD4049UBK3 2,592 1,944 11,666
CD4050AFB 2,716 2,037 12,220
</TABLE>
-3-
<PAGE>
SCHEDULE 1(a)[M]
MILITARY PRODUCTS FOR SUPPLY AGREEMENT
<TABLE>
<CAPTION>
FG Std Die
Device (Harris) SMD Die ASP Trf Price Die Cost Trf Price
- - --------------- --- --- --- --------- -------- ---------
<C> <C> <C> <C> <C> <C> <C>
CD4050BF3A 10966AXXXBN5A 1.418 1.134 0.041 0.041
CD4050BF3AS2451 10966AXXXBN5A 1.748 1.398 0.041 0.041
CD4050BFB JM38510/05554BEA 10966AXXXJN5A 8.224 6.579 0.056 0.056
CD4051BF3A 10905XXXXBN5A 1.577 1.262 0.110 0.110
CD4052BF3A 7901502EA 10940XXXXBN5A 1.632 1.306 0.079 0.079
CD4053BF3A 8101801EA 10941XXXXBN5A 1.307 1.046 0.079 0.079
CD40S4BF3A 06B81XXXXBN5A 2.413 1.930 0.050 0.050
CD4056BF3A 06716MXXXBN5A 2.437 1.950 0.078 0.078
CD4059AD3 06006AXXXBN5A 19.940 15.952 0.254 0.254
CD4060BF3A 06949AXXXBN5A 1.627 1.302 0.128 0.128
CD4063BF3A 06415XXXXBN5A 2.183 1.746 0.053 0.053
CD4066BF3A 06941XXXXBN5A 1.442 1.154 0.048 0.048
CD4066BF3AS2451 06941XXXXBN5A 1.438 1.150 0.048 0.048
CD4066BFB JM38510/05852BCA 06941XXXXJN5A 12.191 9.753 0.058 0.058
CD40668K3 06941XXXXBN5A 29.121 23.297 0.048 0.048
CD4067BF3A 06589AXXXBN5A 3.193 2.554 0.049 0.049
CD4068BF3A 10087XXXXBN5A 1.671 1.337 0.035 0.035
CD4069UBF3A 11149XXXXJN5A 1.133 0.906 0.032 0.032
CD4069UBF3AS2442 11149XXXXJN5A 1.441 1.153 0.032 0.032
CD4069UBFB JM38510/17401BCA 11149XXXXJN5A 12.000 9.600 0.032 0.032
CD4070BF3A 06950XXXXBN5A 1.062 0.850 0.052 0.052
CD4070BFB JM38510/17203BCA 06950XXXXJN5A 11.240 8.992 0.060 0.060
CD4071BF3A 10088XXXXJN5A 1.307 1.046 0.048 0.048
CD4071BFB JM385/17101BCA 10088XXXXJN5A 12.308 9.846 0.048 0.048
CD4072BF3A 7706002CA 10027XXXXBN5A 1.505 1.204 0.032 0.032
CD4073BF3A 7705102CA 10089XXXXJN5A 1.568 1.254 0.049 0.049
CD40730BFB JM385101170038CA 10089XXXXJN5A 12.186 9.749 0.049 0.049
10090XXXXJN5A 1.397 1.118 0.047 0.047
CD4077BF3A JM38510/171039CA 10090XXXXJN5A 11.701 9.381 0.047 0.047
06584AQ0SN5A 1.818 1.454 0.063 0.063
06953XXXBN5A 1.713 1.370 0.046 0.046
CD4078BF3A 7704402CA 10091XXXXBN5A 1.607 1.286 0.033 0.033
CD4081BF3A 7702402CA 10092XXXXJN5A 1.419 1.135 0.059 0.059
CD4081BF3AS2283 10092XXXXJN5A 0.590 0.472 0.055 0.055
CD4081BFB JM3851/17001BCA 10092XXXXJN5A 11.560 9.248 0.059 0.059
CD4082BF3A 7705902CA 10093X.XXXJN5A 1.397 1.118 0.044 0.044
CD4082BFB JM38510/17002BCA 10093XXXXJN5A 11.876 9.501 0.044 0.044
CD4085BF3A 06562AXXXBN5A 1.632 1.306 0.030 0.030
CD4086BF3A 06561AXXXBN5A 1.749 1.399 0.024 0.024
<CAPTION>
Std Die
Device (Harris) NDW MDPW MLQ
- - --------------- --- ---- ---
<S> <C> <C> <C>
CD4050BF3A 2,506 1,880 11,278
CD4050BF3AS2451 2,506 1,880 11,278
CD4050BFB 2,506 1,880 11,278
CD4051BF3A 1,066 800 4,799
CD4052BF3A 1,231 923 5,540
CD4053BF3A 1,305 979 5,875
CD40S4BF3A 2,072 1,554 9,322
CD4056BF3A 1,326 994 5,966
CD4059AD3 380 285 1,712
CD4060BF3A 926 694 4,166
CD4063BF3A 1,961 1,471 8,824
CD4066BF3A 2,156 1,617 9,700
CD4066BF3AS2451 2,158 1,617 9,700
CD4066BFB 2,156 1,617 9,700
CD40668K3 2,156 1.617 9,700
CD4067BF3A 958 718 4,310
CD4068BF3A 2,797 2,098 12,588
CD4069UBF3A 4,626 3,470 20,819
CD4069UBF3AS2442 4,626 3,470 20,819
CD4069UBFB 4,626 3,470 20,819
CD4070BF3A 1,985 1,489 8,934
CD4070BFB 1,985 1,489 8,934
CD4071BF3A 2,663 1,997 11,983
CD4071BFB 2,663 1,997 11,983
CD4072BF3A 2,663 1,997 11,983
CD4073BF3A 2,585 1,939 11,633
CD40730BFB 2,585 1,939 11,633
2,713 2,034 12,207
CD4077BF3A 2,713 2,034 12,207
1,642 1,232 7,389
2,077 1,557 9,345
CD4078BF3A 3,130 2,347 14,084
CD4081BF3A 2,703 2,028 12,165
CD4081BF3AS2283 2,703 2,028 12,165
CD4081BFB 2,703 2,028 12,165
CD4082BF3A 2,703 2,028 12,165
CD4082BFB 2,934 2,200 13,202
CD4085BF3A 3,422 2,567 15,400
CD4086BF3A 3,938 2,953 17,721
</TABLE>
-4-
<PAGE>
SCHEDULE 1(a)[M]
MILITARY PRODUCTS FOR SUPPLY AGREEMENT
<TABLE>
<CAPTION>
FG Std Die
Device (Harris) SMD Die ASP Trf Price Die Cost Trf Price
- - --------------- --- --- --- --------- -------- ---------
<C> <C> <C> <C> <C> <C> <C>
CD4089BF3A 10416XXXXBN5A 2.144 1.715 0.108 0.108
CD4093BF3A 7704602CA 06586CXXXBN5A 1.563 1.250 0.032 0.032
CD4094BF3A 7702501EA 06602XXXXBN5A 1.553 1.242 0.094 0.094
CD4098BF3A 06946XXXXJN5A 1.791 1.433 0.100 0.100
CD4098BFB JM38510/17504BEA 06946XXXXJN5A 9.839 7.871 0.100 0.100
CD4099BF3A 06610XXXXJN5A 1.639 1.311 0.119 0.119
CD4099BFB JM38510/17601BEA 06610XXXXJN5A 12.161 9.729 0.127 0.127
CD4502BF3A 7702002EA 06859XXXXBN5A 1.906 1.525 0.080 0.080
CD4502BFB JM38510/17403BEA 06859XXXXJN5A 12.945 10.356 0.097 0.097
CD4503BF3A 10705AXXXBN5A 1.561 1.249 0.059 0.059
CD4504BF3A 11901AXXXBN5A 2.028 1.622 0.090 0.090
CD4504BF3AS2451 11901AXXXBN5A 1.973 1.578 0.090 0.090
CD4508BD3 06785AXXXBN5A 11.419 9.135 0.098 0.098
CD4508BF3A 06785AXXXBN5A 2.833 2.266 0.098 0.098
CD4511BF3A 10480XXXXBN5A 1.818 1.454 0.131 0.131
CD4511BK3 10480XXXXBN5A 31.867 25.494 0.138 0.138
CD4512BF3A 10213XXXXBN5A 1.783 1.426 0.060 0.060
CD4514BF3A 10075XXXXBN5A 3.095 2.476 0.090 0.090
CD4515BF3A 7703201JA 10076XXXXBN5A 3.311 2.649 0.100 0.100
CD4S16BF3A 06875XXXXBN5A 1.888 1.510 0.093 0.093
CD4517BF3A 10482XXXXBN5A 2.377 1.902 0.182 0.182
CD4518BF3A 10914AXXXBN5A 1.901 1.521 0.081 0.081
CD4520BF3A 7702301EA 10915AXXXBN5A 1.615 1.292 0.081 0.081
CD4532BF3A 06634XXXXBN5A 2.030 1.624 0.054 0.054
CD4536BF3A 10523XXXXBN5A 2.129 1.703 0.140 0.140
CD4541BF3A 11196XXXXBN5A 1.983 1.586 0.075 0.075
CD4555BF3A 7704701EA 06627XXXXBN5A 1.865 1.492 0.065 0.065
CD4556BF3A 7704801EA 06628XXXXBN5A 1.637 1.310 0.079 0.079
CD4585BF3A 7703702EA 10519XXXXBN5A 2.016 1.613 0.078 0.078
CD4724BF3A 10463XXXXBN5A 2.264 1.811 0.086 0.086
CD54AC00F3A 13109BXXXBW5A 1.539 1.231 0.118 0.118
CD54AC04F3A 13123AXXXBW5A 1.573 1.258 0.111 0.111
CD54AC05F3A 13124AXXXBW5A 1.402 1.122 0.113 0.113
CD54AC0BF3A 13125AXXXBW5A 1.905 1.524 0.117 0.117
CD54AC112F3A 13144AXXXBW5A 2.212 1.770 0.133 0.133
CD54AC138F3A 13110AXXXBW5A 2.435 1.948 0.170 0.170
CD54AC139F3A 13139AXXXBW5A 2.131 1.705 0.156 0.156
CD54AC153F3A 13134BXXXBW5A 2.350 1.880 0.138 0.138
CD54AC157F3A 13115AXXXBW5A 2.625 2.100 0.164 0.164
<CAPTION>
Std Die
Device (Harris) NDW MDPW MLQ
- - --------------- --- ---- ---
<S> <C> <C> <C>
CD4089BF3A 960 720 4,319
CD4093BF3A 3,211 2,408 14,450
CD4094BF3A 1,098 823 4,941
CD4098BF3A 1,282 961 5,768
CD4098BFB 1,282 961 5,768
CD4099BF3A 1,151 863 5,179
CD4099BFB 1,151 863 5,179
CD4502BF3A 1,290 968 5,806
CD4502BFB 1,290 968 5,806
CD4503BF3A 1,755 1,316 7,896
CD4504BF3A 1,146 860 5,157
CD4504BF3AS2451 1,146 860 5,157
CD4508BD3 1,054 791 4,743
CD4508BF3A 1,054 791 4,743
CD4511BF3A 892 669 4,015
CD4511BK3 892 669 4,015
CD4512BF3A 1,727 1,295 7,770
CD4514BF3A 1,144 858 5,148
CD4515BF3A 1,144 858 5,148
CD4S16BF3A 1,268 951 5,704
CD4517BF3A 567 425 2,552
CD4518BF3A 1,278 958 5,751
CD4520BF3A 1,278 958 5,751
CD4532BF3A 1,915 1,436 8,618
CD4536BF3A 738 553 3,320
CD4541BF3A 1,287 966 5,793
CD4555BF3A 1,586 1,189 7,137
CD4556BF3A 1,586 1,189 7,137
CD4585BF3A 1,586 1,189 7,137
CD4724BF3A 1,191 893 5,359
CD54AC00F3A 2,015 1,511 9,069
CD54AC04F3A 2,140 1,605 9,631
CD54AC05F3A 2,140 1,605 9,631
CD54AC0BF3A 2,015 1,511 9,069
CD54AC112F3A 1,717 1,288 7,729
CD54AC138F3A 1,386 1,040 6,237
CD54AC139F3A 1,504 1,128 6,769
CD54AC153F3A 1,697 1,272 7,634
CD54AC157F3A 1,406 1,055 6,328
</TABLE>
-5-
<PAGE>
SCHEDULE 1(a)[M]
MILITARY PRODUCTS FOR SUPPLY AGREEMENT
<TABLE>
<CAPTION>
FG Std Die
Device (Harris) SMD Die ASP Trf Price Die Cost Trf Price
- - --------------- --- --- --- --------- -------- ---------
<C> <C> <C> <C> <C> <C> <C>
CD54AC161F3A 13117BXXXBW5A 6.734 5.387 0.150 0.150
CD54AC163F3A 13118AXXXTW5A 7.500 6.000 0.150 0.150
CD54AC164F3A 13145AXXXBW5A 2.620 2.096 0.156 0.156
CD54AC191F3A 13113AXXXBW5A 8.308 6.646 0.231 0.231
CD54AC193F3A 13114AXXXBW5A 9.483 7.586 0.231 0.231
CD54AC240F3A 13100BXXXBW5A 7.227 5.782 0.268 0.268
CD54AC244F3A 13102BXXXBW5A 6.085 4.868 0.182 0.182
CD54AC245F3A 13103BXXXBW5A 7.046 5.637 0.352 0.352
CD54AC257F3A 13120AXXXBW5A 3.150 2.520 0.218 0.218
CD54AC273F3A 13146AXXXBW5A 11.542 9.234 0.224 0.224
CD54AC280F3A 13119AXXXBW5A 6.500 5.200 0.138 0.138
CDS4AC283F3A 13112AXXXBW5A 7.402 5.922 0.203 0.203
CD54AC299F3A 13128AXXXBW5A 10.886 8.709 0.347 0.347
CD54AC32F3A 13126AXXXBW5A 1.804 1.443 0.123 0.123
CD54AC373F3A 13137BXXXBW5A 6.695 5.356 0.209 0.209
CD54AC374F3A 13104BXXXBW5A 5.698 4.558 0.303 0.303
CD54AC541F3A 13106BXXXBW5A 9.398 7.518 0.203 0.203
CD54AC573F3A 13140AXXXBW5A 4.842 3.874 0.221 0.221
CD54AC574F3A 13142AXXXBW5A 8.763 7.010 0.257 0.267
CD54AC74F3A 13108BXXXBW5A 2.264 1.811 0.143 0.143
CD54ACT00F3A 14109BXXXBW5A 1.541 1.233 0.126 0.126
CD54ACT02F3A 14150AXXXBW5A 1.891 1.513 0.107 0.107
CD54ACT04F3A 14123AXXXBW5A 1.633 1.306 0.111 0.111
CD54ACT05F3A 14124AXXXBW5A 1.358 1.086 0.113 0.113
CD54ACT05F3AS2360 14124AXXXBW5A 2.400 1.920 0.113 0.113
C054ACT05F3AS2841 14124AXXXBW5A 1.500 1.200 0.113 0.113
CD54ACT08F3A 14125AXXXBW5A 1.753 1.402 0.150 0.150
CD54ACT109F3A 14122BXXXBW5A 2.592 2.074 0.151 0.151
CD54ACT112F3A 14144AXXXBW5A 2.018 1.614 0.145 0.145
CD54ACT138F3A 14110AXXXBW5A 2.405 1.924 0.177 0.177
CD54ACT139F3A 14139AXXXBW5A 2.616 2.093 0.164 0.164
CD54ACT151F3A 14132AXXXBW5A 2.669 2.135 0.152 0.152
CD54ACT153F3A 14134BXXXBW5A 2.272 1.818 0.148 0.148
CD54ACT161F3A 14117BXXXBW5A 6.493 5.194 0.155 0.155
CD54ACT163F3A 14118BXXXBW5A 7.032 5.626 0.155 0.155
CD54ACT164F3A 14145AXXXBW5A 2.529 2.023 0.167 0.167
CD54ACT164F3AS2841 14145AXXXBW5A 2.121 1.697 0.167 0.167
CD54ACT174F3A 14148AXXXBW5A 3.447 2.758 0.155 0.155
<CAPTION>
Std Die
Device (Harris) NDW MDPW MLQ
- - --------------- --- ---- ---
<S> <C> <C> <C>
CD54AC161F3A 1,560 1,170 7,020
CD54AC163F3A 1,560 1,170 7,020
CD54AC164F3A 1,504 1,128 6,768
CD54AC191F3A 991 743 4,458
CD54AC193F3A 991 743 4,458
CD54AC240F3A 1,305 979 5,874
CD54AC244F3A 1,305 979 5,874
CD54AC245F3A 827 620 3,720
CD54AC257F3A 1,264 948 5.688
CD54AC273F3A 1,258 944 5,662
CD54AC280F3A 1,673 1,255 7,528
CDS4AC283F3A 1,132 849 5,092
CD54AC299F3A 669 502 3,011
CD54AC32F3A 1,916 1,437 8,621
CD54AC373F3A 1,129 847 5,082
CD54AC374F3A 926 694 4,166
CD54AC541F3A 1,167 875 5,253
CD54AC573F3A 1,062 797 4,780
CD54AC574F3A 870 652 3,914
CD54AC74F3A 1,629 1,222 7,332
CD54ACT00F3A 1,990 1,493 8,957
CD54ACT02F3A 2,401 1,801 10,804
CD54ACT04F3A 2,241 1,681 10,085
CD54ACT05F3A 2,241 1,681 10,085
CD54ACT05F3AS2360 2,241 1,681 10,085
C054ACT05F3AS2841 2,241 1,681 10,085
CD54ACT08F3A 1,990 1,493 8,957
CD54ACT109F3A 1,629 1,222 7,332
CD54ACT112F3A 1,717 1,288 7,729
CD54ACT138F3A 1,369 1,027 6,162
CD54ACT139F3A 1,466 1,100 6,597
CD54ACT151F3A 1,624 1,218 7,306
CD54ACT153F3A 1,697 1,272 7,634
CD54ACT161F3A 1,580 1,185 7,108
CD54ACT163F3A 1,580 1,185 7,108
CD54ACT164F3A 1,431 1,074 6,442
CD54ACT164F3AS2841 1,431 1,074 6,442
CD54ACT174F3A 1,571 1,178 7,067
</TABLE>
-6-
<PAGE>
SCHEDULE 1(a)[M]
MILITARY PRODUCTS FOR SUPPLY AGREEMENT
<TABLE>
<CAPTION>
FG Std Die
Device (Harris) SMD Die ASP Trf Price Die Cost Trf Price
- - --------------- --- --- --- --------- -------- ---------
<C> <C> <C> <C> <C> <C> <C>
CD54ACT191F3A 14113AXXXBW5A 7.597 6.078 0.243 0.243
CD54ACT193F3A 14114AXXXBW5A 9.879 7.903 0.243 0.243
CD54ACT20F3A 14151AXXXBW5A 1.770 1.416 0.083 0.083
CD54ACT240F3A 14100BXXXBW5A 6.813 5.450 0.195 0.195
CD54ACT241F3A 14101BXXXBW5A 6.135 4.908 0.186 0.186
CD54ACT244F3A 14102BXXXBW5A 5.476 4.381 0.205 0.205
CD54ACT245F3A 14103BXXXBW5A 5.826 4.661 0.303 0.303
CD54ACT253F3A 14135BXXXBW5A 3.400 2.720 0.150 0.150
CD54ACT257F3A 14120AXXXBW5A 2.921 2.337 0.190 0.190
CD54ACT273F3A 14146AXXXBW5A 5.744 4.595 0.220 0.220
CD54ACT273F3A 14146AXXXBW5A 8.800 7.040 0.220 0.220
CD54ACT280F3A 14119AXXXBW5A 6.500 5.200 0.143 0.143
CD54ACT283F3A 14112AXXXBW5A 6.327 5.062 0.216 0.216
CD54ACT299F3A 14128AXXXBW5A 5.023 4.018 0.365 0.365
CD54ACT32F3A 14126AXXXBW5A 1.606 1.285 0.125 0.125
CD54ACT32F3AS2841 14126AXXXBW5A 1.620 1.296 0.125 0.125
CD54ACT373F3A 14137BXXXBW5A 4.838 3.870 0.233 0.233
CD54ACT374F3A 14104BXXXBW5A 5.380 4.304 0.249 0.249
CD54ACT533F3A 14138BXXXBW5A 7.467 5.974 0.234 0.234
CD54ACT534F3A 14136BXXXBW5A 8.161 6.529 0.249 0.249
CD54ACT540F3A 14105BXXXBW5A 9.388 7.510 0.221 0.221
CD54ACT541F3A 14106BXXXBW5A 6.414 5.131 0.221 0.221
CD54ACT573F3A 14140AXXXBW5A 6.888 5.510 0.246 0.246
CD54ACT574F3A 14142AXXXBW5A 7.188 5.750 0.274 0.274
CD54ACT623F3A 14155BXXXBW5A 10.876 8.701 0.301 0.301
CD54ACT74F3A 14108BXXXBW5A 2.118 1.694 0.150 0.150
CD54ACT86F3A 14127AXXXBW5A 2.497 1.998 0.129 0.129
CD54HC00F3A 8403701CA 11600H02XBW5A 0.899 0.719 0.050 0.050
CD54HC00F3AS2283 11600H02XBW5A 0.480 0.384 0.050 0.050
CD54HC02F3A 8404101CA 11678A02XBW5A 0.930 0.744 0.042 0.042
CD54HC03F3A 5962-8764701CA 11737A02XBW5A 1.163 0.930 0.033 0.033
CD54HC04F3A 8409801CA 11681B02XBW5A 0.985 0.788 0.048 0.048
CD54HC08F3A 8404701CA 11718B02XBW5A 0.961 0.769 0.046 0.046
CD54HC107F3A 5962-8515401CA 11642A02XBW5A 1.343 1.074 0.039 0.039
CD54HC109F3A 8415001EA 11690B02XBW5A 1.410 1.128 0.043 0.043
CD54HC10F3A 8403801CA 11683B02XBW5A 1.229 0.983 0.054 0.054
CD54HC112F3A 8408801EA 11691A02XBW5A 1.384 1.107 0.051 0.051
CD54HC11F3A 8404801CA 11684B02XBW5A 0.934 0.747 0.041 0.041
CD54HC123F3A 5962-8684701EA 11645C02XBW5A 1.539 1.231 0.050 0.050
<CAPTION>
Std Die
Device (Harris) NDW MDPW MLQ
- - --------------- --- ---- ---
<S> <C> <C> <C>
CD54ACT191F3A 966 724 4,345
CD54ACT193F3A 966 724 4,345
CD54ACT20F3A 3,213 2,410 14,457
CD54ACT240F3A 1,274 955 5,731
CD54ACT241F3A 1,274 955 5,731
CD54ACT244F3A 1,210 907 5,445
CD54ACT245F3A 827 620 3,720
CD54ACT253F3A 1,697 1,272 7,634
CD54ACT257F3A 1,312 984 5,904
CD54ACT273F3A 1,095 821 4,927
CD54ACT273F3A 1,095 821 4,927
CD54ACT280F3A 1,594 1,196 7,173
CD54ACT283F3A 1,104 828 4,968
CD54ACT299F3A 660 495 2,968
CD54ACT32F3A 1,990 1,493 8,957
CD54ACT32F3AS2841 1,990 1,493 8,957
CD54ACT373F3A 1,043 782 4,692
CD54ACT374F3A 965 724 4,342
CD54ACT533F3A 1,043 782 4,692
CD54ACT534F3A 965 724 4,342
CD54ACT540F3A 1,107 830 4,980
CD54ACT541F3A 1,107 830 4,980
CD54ACT573F3A 987 741 4,443
CD54ACT574F3A 870 652 3,914
CD54ACT623F3A 839 629 3,774
CD54ACT74F3A 1,629 1,222 7,332
CD54ACT86F3A 1,916 1,437 8,621
CD54HC00F3A 2,791 2,093 12,561
CD54HC00F3AS2283 2,791 2,093 12,561
CD54HC02F3A 3,341 2,506 15,033
CD54HC03F3A 3,341 2,506 15,033
CD54HC04F3A 2,885 2,164 12,983
CD54HC08F3A 3,058 2,293 13,760
CD54HC107F3A 3,058 2,293 13,760
CD54HC109F3A 3,058 2,293 13,760
CD54HC10F3A 2,567 1,925 11,551
CD54HC112F3A 2,567 1,925 11,551
CD54HC11F3A 3,387 2,540 15,242
CD54HC123F3A 2,784 2,088 12,529
</TABLE>
-7-
<PAGE>
SCHEDULE 1(a)[M]
MILITARY PRODUCTS FOR SUPPLY AGREEMENT
<TABLE>
<CAPTION>
FG Std Die
Device (Harris) SMD Die ASP Trf Price Die Cost Trf Price
- - --------------- --- --- --- --------- -------- ---------
<C> <C> <C> <C> <C> <C> <C>
CD54HC125F3A 5962-8772101CA 11727A02XBW5A 1.061 0.849 0.050 0.050
CD54HC126F3A 5962-8684801CA 11728A02XBW5A 1.026 0.821 0.047 0.047
CD54HC132F3A 11677B02XBW5A 1.165 0.932 0.038 0.038
CD54HC132F3AS2283 11677B02XBW5A 0.680 0.544 0.038 0.038
CD54HC138F3A 8406201EA 11602F02XBW5A 1.460 1.168 0.059 0.059
CD54HC139F3A 8409201EA 11610C02XBW5A 1.152 0.922 0.047 0.047
CD54HC147F3A 8406401EA 11658A02XBW5A 2.186 1.749 0.071 0.071
CD54HC14F3A 8409101CA 11685A02XBW5A 0.950 0.760 0.053 0.053
CD54HC151F3A 8412801EA 11659B02XBW5A 1.480 1.184 0.045 0.045
CD54HC153F3A 8409301EA 11660A02XBW5A 1.605 1.284 0.046 0.046
CD54HC154F3A 5962-8682201JA 11632C02XBW5A 3.662 2.930 0.098 0.098
CD54HC157F3A 5962-8606101EA 11628E02XBW5A 1.276 1.021 0.056 0.056
CD54HC158F3A 5962-8682301EA 11629B02XBW5A 1.448 1.158 0.046 0.046
CD54HC100F3A 5962-8682401EA 11633D02XBW5A 1.704 1.363 0.072 0.072
CD54HC161F3A 8407501EA 11635D02XBW5A 1.479 1.183 0.074 0.074
CD54HC162F3A 8409401EA 11634D02XBW5A 4.841 3.873 0.070 0.070
CD54HC163F3A 8607601EA 11636D02XBW5A 1.532 1.226 0.073 0.073
CD54HC164F3A 8416201CA 11667B02XBW5A 1.678 1.342 0.042 0.042
CD54HC165F3A 8409501EA 11630C02XBW5A 1.203 0.962 0.041 0.041
CD54HC166F3A 11654B02XBW5A 1.487 1.190 0.055 0.055
CD54HC173F3A 5962-8682501EA 11656C02XBW5A 1.793 1.434 0.077 0.077
CD54HC174F3A 8407301EA 11625002XBW5A 1.163 0.930 0.064 0.064
CD54HC175F3A 8408901EA 11626C02XBW5A 1.230 0.984 0.068 0.068
CD54HC175F3AS2283 11626C02XBW5A 0.998 0.798 0.068 0.068
CD54HC190F3A 5962-8994601EA 11692CXXXTW5A 2.074 1.659 0.078 0.078
CD54HC191F3A 5962-8689101EA 11664D02XBW5A 2.730 2.184 0.078 0.078
CD54HC192F3A 5962-8780801EA 11665C02XBW5A 2.916 2.333 0.120 0.120
CD54HC193F3A 5962-8772401EA 11666C02XBW5A 1.667 1.334 0.075 0.075
CD54HC194F3A 5962-8682601EA 11668B02XBW5A 1.982 1.586 0.055 0.055
CD54HC195F3A 5962-8682701EA 11627B02XBW5A 1.589 1.271 0.045 0.045
CDS4HC20F3A 8403901CA 11721B02XBW5A 1.100 0.880 0.037 0.037
CD54HC21F3A 5962-8857601CA 11736B02XBW5A 1.165 0.932 0.035 0.035
CD54HC221F3A 5962-8780501EA 11693D02XBW5A 4.699 3.759 0.087 0.087
CD54HC237F3A 5962-8860601EA 11730B02XBW5A 2.124 1.699 0.058 0.058
C054HC238F3A 5962-8688401EA 11603F02XBW5A 1.716 1.373 0.059 0.059
CD54HC240F3A 8407401RA 11607D02XBW5A 1.709 1.367 0.086 0.086
CD54HC243F3A 8409001CA 11622D02XBW5A 3.402 2.722 0.074 0.074
CD54HC244F3A 8409601RA 11606C02XBW5A 1.486 1.189 0.094 0.094
<CAPTION>
Std Die
Device (Harris) NDW MDPW MLQ
- - --------------- --- ---- ---
<S> <C> <C> <C>
CD54HC125F3A 2,779 2,084 12,505
CD54HC126F3A 2,980 2,235 13,409
CD54HC132F3A 3,658 2,143 16,461
CD54HC132F3AS2283 3,658 2,743 16,461
CD54HC138F3A 2,371 1,778 10,668
CD54HC139F3A 2,930 2,198 13,186
CD54HC147F3A 2,930 2,198 13,186
CD54HC14F3A 3,237 2,427 14,565
CD54HC151F3A 3,237 2,427 14,565
CD54HC153F3A 3,237 2,427 14,565
CD54HC154F3A 1,430 1,073 6,436
CD54HC157F3A 1,430 1,073 6,436
CD54HC158F3A 1,430 1,073 6,436
CD54HC100F3A 1,430 1,073 6,436
CD54HC161F3A 1,888 1,416 8,497
CD54HC162F3A 1,972 1,479 8,875
CD54HC163F3A 1,909 1,432 8,591
CD54HC164F3A 3,253 2,440 14,639
CD54HC165F3A 3,253 2,440 14,639
CD54HC166F3A 2,521 1,891 11,343
CD54HC173F3A 2,521 1,891 11,343
CD54HC174F3A 2,054 1,541 9,244
CD54HC175F3A 2,054 1,541 9,244
CD54HC175F3AS2283 2,054 1,541 9,244
CD54HC190F3A 2,054 1,541 9,244
CD54HC191F3A 1,802 1,351 8,108
CD54HC192F3A 1,802 1,351 8,108
CD54HC193F3A 1,869 1,402 8,411
CD54HC194F3A 3,025 2,269 13,612
CD54HC195F3A 3,025 2,269 13,612
CDS4HC20F3A 3,025 2,269 13,612
CD54HC21F3A 3,025 2,269 13,612
CD54HC221F3A 1,636 1,227 7,361
CD54HC237F3A 1,636 1,227 7,361
C054HC238F3A 2,371 1,778 10,668
CD54HC240F3A 2,371 1,778 10,668
CD54HC243F3A 2,371 1,778 10,668
CD54HC244F3A 1,609 1,207 7,241
</TABLE>
-8-
<PAGE>
SCHEDULE 1(a)[M]
MILITARY PRODUCTS FOR SUPPLY AGREEMENT
<TABLE>
<CAPTION>
FG Std Die
Device (Harris) SMD Die ASP Trf Price Die Cost Trf Price
- - --------------- --- --- --- --------- -------- ---------
<C> <C> <C> <C> <C> <C> <C>
CD54HC244F3AS2283 11606C02XBW5A 1.123 0.898 0.094 0.094
CD54HC245F3A 8408501RA 11617C02XBW5A 1.870 1.496 0.109 0.109
CD54HC257F3A 8512401EA 11620C02XBW5A 1.216 0.973 0.044 0.044
CD54HC259F3A 8551901EA 11694A02XBW5A 1.150 0.920 0.057 0.057
CD54HC273F3A 8409901RA 11613G02XBW5A 1.470 1.176 0.083 0.083
CD54HC27F3A 8404201CA 11686A02XBW5A 1.359 1.087 0.066 0.066
CD54HC280F3A 8607701CA 11640B02XBW5A 2.545 2.036 0.045 0.045
CD54HC283F3A 5962-8976501EA 11723A02XBW5A 1.566 1.253 0.060 0.060
CD54HC297F3A 5962-8999001EA 11680A02XBW5A 4.073 3.258 0.223 0.223
CD54HC299F3A 5962-8780601RA 11615F02XBW5A 3.838 3.070 0.121 0.121
CD54HC30F3A 8404001CA 11724A02XBW5A 1.148 0.918 0.035 0.035
CD54HC32F3A 8404501CA 11687A02XBW5A 0.958 0.766 0.035 0.035
CD54HC32F3AS2283 11687A02XBW5A 0.480 0.384 0.035 0.035
CD54HC354F3A 11672A02XBW5A 2.496 1.997 0.082 0.082
CD54HC365F3A 8500101EA 11695B02XBW5A 1.366 1.093 0.074 0.074
CD54HC366F3A 5962-8682801EA 11661B02XBW5A 1.438 1.150 0.076 0.075
CD54HC367F3A 8500201EA 11662B02XBW5A 1.355 1.084 0.075 0.075
CD54HC368F3A 5962-8681201EA 11663B02XBW5A 1.448 1.158 0.075 0.075
CD54HC373F3A 8407201RA 11605C02XBW5A 1.951 1.561 0.103 0.103
CD54HC374F3AS2283 11609C02XBW5A 1.123 0.898 0.075 0.075
CD54HC377F3A 5962-8780701RA 11648B02XBW5A 3.429 2.743 0.001 0.061
CD54HC393F3A 8410001CA 11671B02XBW5A 1.340 1.072 0.044 0.044
CD54HC4002F3A 8404401CA 11696A02XBW5A 1.000 0.800 0.037 0.037
CD54HC40103F3A 5962-9055301EA 11709B02XBW5A 2.095 1.676 0.099 0.099
CD54HC40105F3A 660A02XBW5A 2.266 1.813 0.073 0.073
CD54HC4015F3A 5952-6996301EA 11697C02XBW5A 1.772 1.418 0.089 0.089
CD54HC4017F3A 8601101EA 11650B02XBW5A 1.772 1.418 0.089 0.089
CD54HC4020F3A 8500301EA 11651D02XBW5A 1.757 1.406 0.061 0.061
CD54HC4024F3A 8601201CA 11699D02XBW5A 1.605 1.284 0.039 0.039
CD54HC4040F3A 8500401EA 11652D02XBW5A 2.209 1.767 0.061 0.061
CD54HC4046AF3A 5962-8960901EA 11701A02XBW5A 2.293 1.834 0.077 0.077
CD54HC4049F3A 5962-8681901EA 11674B02XBW5A 1.239 0.991 0.047 0.047
CD54HC4050F3A 5962-8682001EA 11675B02XBW5A 1.238 0.990 0.045 0.045
CD54HC4051F3A 11702A02XBW5A 1.850 1.480 0.114 0.114
CD54HC4052F3A 5962-8855601EA 11703B02XBW5A 1.839 1.471 0.111 0.111
CD54HC4053F3A 5962-8775401EA 11704A02XBW5A 2.174 1.739 0.055 0.055
CD54HC4059F3A 5962-8944501JA 11740A02XBW5A 5.650 4.520 0.333 0.333
CD54HC4060F3A 5962-8768001EA 11653B02XBW5A 4.175 3.340 0.064 0.064
<CAPTION>
Std Die
Device (Harris) NDW MDPW MLQ
- - --------------- --- ---- ---
<S> <C> <C> <C>
CD54HC244F3AS2283 1,609 1,207 7,241
CD54HC245F3A 1,288 966 5,797
CD54HC257F3A 2,155 1,616 9,696
CD54HC259F3A 2,155 1,616 9,696
CD54HC273F3A 1,928 1,446 8,677
CD54HC27F3A 1,928 1,446 8,677
CD54HC280F3A 3,290 2,468 14,805
CD54HC283F3A 2,272 1,704 10,225
CD54HC297F3A 2,272 1,704 10,225
CD54HC299F3A 2,272 1,704 10,225
CD54HC30F3A 2,272 1,704 10,225
CD54HC32F3A 3,967 2,975 17,852
CD54HC32F3AS2283 3,987 2,975 17,852
CD54HC354F3A 1,667 1,250 7,502
CD54HC365F3A 1,667 1,250 7,502
CD54HC366F3A 1,667 1,250 7,502
CD54HC367F3A 1,667 1,250 7,502
CD54HC368F3A 1,667 1,250 7,502
CD54HC373F3A 1,500 1,125 6,749
CD54HC374F3AS2283 1,857 1,392 8,354
CD54HC377F3A 1,857 1,392 8,354
CD54HC393F3A 3,195 2,397 14,380
CD54HC4002F3A 3,195 2,397 14,380
CD54HC40103F3A 1,412 1,059 6,355
CD54HC40105F3A 1,910 1,432 8,594
CD54HC4015F3A 1,910 1,432 8,594
CD54HC4017F3A 1,910 1,432 8,594
CD54HC4020F3A 1,766 1,324 7,946
CD54HC4024F3A 3,523 2,624 15,852
CD54HC4040F3A 2,298 1,723 10,341
CD54HC4046AF3A 1,789 1,342 8,050
CD54HC4049F3A 1,789 1,342 8,050
CD54HC4050F3A 1,789 1,342 8,050
CD54HC4051F3A 2,133 1,600 9,599
CD54HC4052F3A 2,133 1,600 9,599
CD54HC4053F3A 2,679 2,009 12,057
CD54HC4059F3A 2,679 2,009 12,057
CD54HC4060F3A 2,679 2,009 12,057
</TABLE>
-9-
<PAGE>
SCHEDULE 1(a)[M]
MILITARY PRODUCTS FOR SUPPLY AGREEMENT
<TABLE>
<CAPTION>
FG Std Die
Device (Harris) SMD Die ASP Trf Price Die Cost Trf Price
- - --------------- --- --- --- --------- -------- ---------
<C> <C> <C> <C> <C> <C> <C>
CD54HC4066F3A 11705C02XBW5A 1.257 1.006 0.048 0.048
CD54HC4075F3A 5962-8772201CA 11707A02XBW5A 1.125 0.900 0.050 0.050
CD54HC4094F3A 11708A02XBW5A 1.768 1.414 0.058 0.058
CD54HC42F3A 5962-8682101EA 11715B02XBW5A 1.450 1.160 0.073 0.073
CD54HC4316F3A 11732A02XBW5A 2.194 1.755 0.054 0.054
CD54HC4351F3A . 11741A02XBW5A 4.728 3.782 0.125 0.125
CD54HC4511F3A 5962-8773301EA 11710A02XBW5A 3.884 3.107 0.064 0.064
CD54HC4514F3A 11711B02XBW5A 3.100 2.480 0.162 0.162
CD54HC4514FR3061 11711B02XBW5A 5.050 4.040 0.162 0.162
CDS4HC4510F3A 11745A02XBW5A 2.132 1.706 0.091 0.091
CD54HC4520F3A 5962-8995401EA 11713B02XBW5A 1.841 1.473 0.082 0.082
C054HC4538F3A 5962-8688601EA 11646C02XBW5A 3.474 2.779 0.057 0.057
CD54HC533F3A 5962-8681301RA 11638C02XBW5A 3.984 3.187 0.121 0.121
CD54HC534F3A 5962-8681401RA 11643C02XBW5A 3.718 2.974 0.067 0.067
CD54HC540F3A 11611E02XSW5A 3.610 2.888 0.084 0.084
CD54HC541F3A 11612E02XBW5A 2.224 1.779 0.085 0.085
CDS4HC503F3A 5962-8606201RA 11637C02XBW5A 3.841 3.073 0.070 0.070
CD54HC564F3A 5962-8681501RA 11644C02XBW5A 3.660 2.928 0.102 0.102
CD54HC573F3A 8512801RA 11616D02XBW5A 2.658 2.126 0.072 0.072
CD54HC574F3A 11749A02XBW5A 3.033 2.426 0.102 0.102
CD54HC597F3A 5962-8681701EA 11749A02XBW5A 5.716 4.573 0.054 0.054
CD54HC840F3A 5962-8780901RA 11618C02XBW5A 1.122 0.898 0.109 0.109
CD54HC646F3A 5962-8688501JA 11623C02XBW5A 5.445 4.356 0.252 0.252
CD54HC688F3A 5962-8681801RA 11641B02XBW5A 1.993 1.594 0.049 0.049
CD54HC7266F3A 8404302CA 11739A02XBW5A 1.279 1.023 0.033 0.033
CD54HC73F3A 5962-8515301CA 11655A02XBW5A 1.361 1.089 0.051 0.040
CD54HC74F3A 8405601CA 11601F02XBW5A 1.035 0.828 0.051 0.051
CD54HC75F3A 8407001EA 11688A02XBW5A 1.322 1.058 0.049 0.049
CD54HC85F3A 8601301EA 11689A02XBW5A 1.362 1.090 0.089 0.089
CD54HC86F3A 8404601CA 11657B02XBW5A 1.043 0.834 0.046 0.046
CD54HCT00F3A 5962-8683101CA 13600H02XBW5A 1.348 1.078 0.051 0.051
CD54HCT02F3A 5962-8975101CA 13678A02XBW5A 1.494 1.195 0.043 0.043
CD54HCT03F3A 5962-9065101MCA 13737A02XBW5A 1.498 1.198 0.032 0.032
CD54HCT04F3A 5962-8974701CA 13681B02XBW5A 1.190 0.952 0.048 0.048
CD54HCT08F3A 5962-8688301CA 13682B02XBW5A 1.355 1.084 0.049 0.049
CD54HCT109F3A 5962-9070101MEA 13690B02XBW5A 1.117 0.894 0.044 0.044
CD54HCT10F3A 5962-8984301CA 13683B02XBW5A 1.460 1.168 0.055 0.055
CD54HCT112F3A 5962-8970201EA 13691A02XBW5A 1.410 1.128 0.054 0.054
<CAPTION>
Std Die
Device (Harris) NDW MDPW MLQ
- - --------------- --- ---- ---
<S> <C> <C> <C>
CD54HC4075F3A 3,122 2.342 14,050
CD54HC4094F3A 2,371 1,178 10,668
CD54HC42F3A 2,371 1,778 10,668
CD54HC4316F3A 2,800 2,100 12,600
CD54HC4351F3A 1,814 1,361 8,165
CD54HC4511F3A 1,814 1,361 8,165
CD54HC4514F3A 1,051 788 4,730
CD54HC4514FR3061 1,051 788 4,730
CDS4HC4510F3A 1,530 1,148 6,885
CD54HC4520F3A 1,530 1,148 6,885
C054HC4538F3A 2,445 1,834 11,004
CD54HC533F3A 2,445 1,834 11,004
CD54HC534F3A 2,445 1,834 11,004
CD54HC540F3A 1,668 1,251 7,508
CD54HC541F3A 1,650 1,238 7,427
CDS4HC503F3A 1,650 1,238 7,427
CD54HC564F3A 1,372 1,029 6,176
CD54HC573F3A 1,933 1,449 8,696
CD54HC574F3A 1,372 1,029 6,176
CD54HC597F3A 1,372 1,029 6,176
CD54HC840F3A 1,372 1,029 6,176
CD54HC646F3A 1,372 1,029 6,176
CD54HC688F3A 2,876 2,157 12,944
CD54HC7266F3A 4,144 3,108 18,646
CD54HC73F3A 3,470 2,603 15,617
CD54HC74F3A 2,752 2,064 12,385
CD54HC75F3A 2,752 2,064 12,385
CD54HC85F3A 1,915 1,436 8,617
CD54HC86F3A 3,356 2,517 15,103
CD54HCT00F3A 3,356 2,517 15,103
CD54HCT02F3A 3,234 2,426 14,554
CD54HCT03F3A 4,317 3,238 19,427
CD54HCT04F3A 2,885 2,164 12,983
CD54HCT08F3A 2,832 2,124 12,743
CD54HCT109F3A 2,832 2,124 12,743
CD54HCT10F3A 2,832 2,124 12,743
CD54HCT112F3A 2,832 2,124 12,743
</TABLE>
-10-
<PAGE>
SCHEDULE 1(a)[M]
MILITARY PRODUCTS FOR SUPPLY AGREEMENT
<TABLE>
<CAPTION>
FG Std Die
Device (Harris) SMD Die ASP Trf Price Die Cost Trf Price
- - --------------- --- --- --- --------- -------- ---------
<C> <C> <C> <C> <C> <C> <C>
CD54HCT11F3A 5962-8970901CA 13684B02XBW5A 1.498 1.198 0.042 0.042
CD54HCT123F3A 5962-8970001EA 13645C02XBW5A 2.048 1.638 0.057 0.057
CD54HCT125F3A 13727A02XBW5A 1.423 1.138 0.044 0.044
CD54HCT132F3A 5962-8984501CA 13746A02XBW5A 1.459 1.167 0.038 0.038
CD54HCT138F3A 8550401EA 13602F02XBW5A 2.050 1.640 0.059 0.059
CD54HCT139F3A 13610C02XBW5A 2.197 1.758 0.061 0.061
CD54HCT14F3A 5962-8689001CA 13685A02XBW5A 1.492 1.194 0.058 0.058
CD54HCT151F3A 5962-9065201MEA 13659B02XBW5A 2.372 1.898 0.046 0.046
CD54HCT153F3A 59629050501MEA 13660A02XBW5A 2.439 1.951 0.039 0.039
CD54HCT154F3A 5962-8670101JA 13632C02XBW5A 5.039 4.031 0.099 0.099
CD54HCT157F3A 5062-0070201MEA 13628E02XBW5A 2.106 1.685 0.056 0.058
CD54HCT158F3A 5902-90T0301MEA 13629B02XBW5A 2.304 1.843 0.073 0.073
CD54HCT160F3A 5962-9070501MEA 13633D02XBW5A 3.937 3.150 0.109 0.109
CD54HCT161F3A 5962-8685401EA 13635D02XBW5A 2.841 2.273 0.011 0.071
CD54HCT104F3A 5962-8970401CA 13667B02XBW5A 3.121 2.497 0.042 0.042
CD54HCT165F3A 5962-8685501EA 13630C02XBW5A 3.196 2.557 0.051 0.051
CD54HCT173F3A 5962-8875901EA 13656C02XBW5A 7.532 6.028 0.075 0.075
CD54HCT174F3A 5962-8974301EA 13625D02XBW5A 2.363 1.890 0.063 0.063
CD54HCT174F3A 5962-8974301EAS2035 13625D02XBW5A 2.676 2.141 0.063 0.063
CD54HCT175F3A 5962-8970101EA 13626C02XBW5A 2.413 1.930 0.067 0.067
CD54HCT191F3A 5962-8867101EA 13664D02XBW5A 3.644 2.915 0.078 0.078
CD54HCT193F3A 5962-9084801MEA 13666C02XBW5A 3.688 2.950 0.074 0.074
CD54HCT193F3A 5962-9084801MEAS2035 13666C02XBW5A 4.183 3.346 0.074 0.074
CD64HCT20F3A 13679B02XBW5A 1.235 0.988 0.037 0.037
CD54HCT240F3A 8550501RA 13607D02XBW5A 2.316 1.853 0.084 0.084
CD54HCT241F3A 13808D02XBW5A 5.783 4.626 0.105 0.105
CDS4HCT243F3A 13622D02XBW5A 5.203 4.162 0.107 0.107
CD54HCT244F3A 8513001RA 13606C02XBW5A 1.443 1.154 0.096 0.096
CD54HCT245F3A 8550601RA 13617C02XBW5A 3.188 2.550 0.118 0.118
CD54HCT251F3A 5962-9052401MEA 13614C02XBW5A 2.367 1.894 0.043 0.043
CD54HCT257F3A 5962-8970501EA 13620C02XBW5A 2.731 2.185 0.043 0.043
CD54HCT258F3A 5962-8970801EA 13747A02XBW5A 3.307 2.646 0.053 0.053
CD54HCT259F3A 5962-8985201EA 13694A02XBW5A 2.517 2.014 0.060 0.060
CD54HCT273F3A 5962-8772501RA 13613G02XBW5A 2.030 1.624 0.082 0.082
CD54HCT27F3A 5962-8970301CA 13686A02XBW5A 1.459 1.167 0.040 0.040
CD54HCT280F3A 13640B02XBW5A 4.593 3.674 0.052 0.052
CD54HCT283F3A 13723A02XBW5A 1.616 1.293 0.058 0.058
CD54HCT299F3A 5962-8943601MRA 13615F02XBW5A 6.533 5.226 0.122 0.122
<CAPTION>
Std Die
Device (Harris) NDW MDPW MLQ
- - --------------- --- ---- ---
<S> <C> <C> <C>
CD54HCT11F3A 3,275 2,457 14,739
CD54HCT123F3A 2,816 2,112 12,672
CD54HCT125F3A 3,147 2,360 14,162
CD54HCT132F3A 3,147 2,360 14,162
CD54HCT138F3A 3,147 2,360 14,162
CD54HCT139F3A 2,930 2,198 13,186
CD54HCT14F3A 3,273 2,455 14,730
CD54HCT151F3A 3,273 2,455 14,730
CD54HCT153F3A 3,273 2,455 14,730
CD54HCT154F3A 3,273 2,455 14,730
CD54HCT157F3A 2,624 1,968 11,809
CD54HCT158F3A 2,624 1,968 11,809
CD54HCT160F3A 2,624 1,968 11,809
CD54HCT161F3A 2,624 1,968 11,809
CD54HCT104F3A 3,288 2,466 14,798
CD54HCT165F3A 3,330 2,498 14,987
CD54HCT173F3A 3,330 2,498 14,987
CD54HCT174F3A 2,230 1,673 10,036
CD54HCT174F3A 2,230 1,673 10,038
CD54HCT175F3A 2,054 1,541 9,244
CD54HCT191F3A 2,054 1,541 9,244
CD54HCT193F3A 1,848 1,386 8,316
CD54HCT193F3A 1,848 1,386 8,316
CD64HCT20F3A 3,682 2,762 16,570
CD54HCT240F3A 1,627 1,220 7,322
CD54HCT241F3A 1,627 1,220 7,322
CDS4HCT243F3A 1,781 1,336 8,014
CD54HCT244F3A 1,573 1,180 7,080
CD54HCT245F3A 1,259 944 5,666
CD54HCT251F3A 2,131 1,598 9,590
CD54HCT257F3A 2,131 1,598 9,590
CD54HCT258F3A 2,131 1,598 9,590
CD54HCT259F3A 2,314 1,736 10,414
CD54HCT273F3A 1,928 1,446 8,677
CD54HCT27F3A 1,928 1,446 8,677
CD54HCT280F3A 3,290 2,468 14,805
CD54HCT283F3A 2,427 1,820 10,922
CD54HCT299F3A 2,427 1,820 10,922
</TABLE>
-11-
<PAGE>
SCHEDULE 1(a)[M]
MILITARY PRODUCTS FOR SUPPLY AGREEMENT
<TABLE>
<CAPTION>
FG Std Die
Device (Harris) SMD Die ASP Trf Price Die Cost Trf Price
- - --------------- --- --- --- --------- -------- ---------
<C> <C> <C> <C> <C> <C> <C>
CD54HCT30F3A 5962-8974601CA 13724A02XBW5A 1.386 1.093 0.041 0.041
CD54HCT32F3A 5962-8685201CA 13720A02XBW5A 1.232 0.986 0.037 0.037
CD54HCT365F3A 13695B02XBW5A 1.658 1.326 0.075 0.075
CD54HCT367F3A 5962-9070601MEA 13662B02XBW5A 1.447 1.158 0.073 0.073
CDS4HCT373F3A 5962-8686701RA 13605C02XBW5A 2.133 1.706 0.132 0.132
CD5411CT374F3A 8550701RA 13609C02XBW5A 2.446 1.957 0.066 0.066
CD54HCT390F3A 5962-9098401MEA 13670A02XBW5A 3.069 2.455 0.054 0.054
CD54HCT393F3A 5962-8989001CAS2035 13671B02XBW5A 4.175 3.340 0.045 0.045
CD54HCT393F3A 5962-8989001CA 13671B02XBW5A 2.046 1.637 0.045 0.045
CD54HCT40105F3A 13669A02XBW5A 4.816 3.853 0.078 0.078
CD54HCT4017F3A 5962-0060701MEA 13650B02XBW5A 7.190 5.752 0.100 0.100
CDS4HCT4020F3A 5002-1945801EA 13851D02XBW5A 3.384 2.707 0.061 0.061
CD54HCT4024F3A 13699D02XBW5A 4.370 3.496 0.072 0.072
CD54HCT4040F3A 5962-8994701MEA 13652D02XBW5A 3.421 2.737 0.071 0.071
CD54HCT4046AF3A 5962-8875701EA 13701A02XBW5A 4.183 3.346 0.092 0.092
CD54HCT4051F3A 5962-9065401MEA 13702A02XBW5A 2.644 2.115 0.076 0.076
CD54HCT4059F3A 5962-8862401JA 13740A02XBW5A 6.595 5.276 0.194 0.194
CD54HCT4060F3A 5962-8977101EA 13653B02XBW5A 5.299 4.239 0.063 0.063
CD54HCT4075F3A 13707A02XBW5A 1.018 0.814 0.050 0.050
CD54HCT4538F3A 13646C02XBW5A 3.574 2.859 0.068 0.068
CD54HCT533F3A 13638C02XBW5A 5.116 4.093 0.198 0.198
CD54HCT534F3A 5962-8984901RA 13643C02XBW5A 5.215 4.172 0.069 0.069
CD54HCT541F3A 13612E02XBW5A 3.491 2.793 0.100 0.100
CD54HCT564F3A 13644C02XBW5A 4.808 3.846 0.131 0.131
CD54HCT573F3A 5962-8685601RA 13616002XBW5A 4.858 3.886 0.071 0.071
CD54HCT574F3A 5962-8974201RA 13604C02XBW5A 5.194 4.155 0.101 0.101
CD54HCT040F3A 5962-8974001RA 13618C02XBW5A 6.217 4.974 0.114 0.114
CD54HCTC88F3A 5962-8685701RA 13641B02XBW5A 3.925 3.140 0.048 0.048
CD54HCT74F3A 5962-8685301CA 13601F02XBW5A 1.524 1.219 0.052 0.052
CDS4HCT75F3A 5962-9075801MEA 13688A02XBW5A 1.915 1.532 0.071 0.071
CD54HCT85F3A 5962-8867201EA 13689A02XBW5A 1.872 1.498 0.071 0.071
CD54HCT86F3A 5962-8984401CA 13657B02XBW5A 1.664 1.331 0.049 0.049
<CAPTION>
Std Die
Device (Harris) NDW MDPW MLQ
- - --------------- --- ---- ---
<S> <C> <C> <C>
CD54HCT30F3A 4,070 3,052 18,314
CD54HCT32F3A 3,733 2,800 18,800
CD54HCT365F3A 1,868 1,401 8,404
CD54HCT367F3A 1,868 1,401 8,404
CDS4HCT373F3A 1,483 1,112 6,674
CD5411CT374F3A 1,483 1,112 6,674
CD54HCT390F3A 1,483 1,112 6,674
CD54HCT393F3A 3,092 2,319 13,916
CD54HCT393F3A 3,092 2,319 13,916
CD54HCT40105F3A 1,761 1,321 7,926
CD54HCT4017F3A 1,761 1,321 7,926
CDS4HCT4020F3A 1,761 1,321 7,926
CD54HCT4024F3A 3,523 2,642 15,852
CD54HCT4040F3A 2,324 1,743 10,457
CD54HCT4046AF3A 1,789 1,342 8,050
CD54HCT4051F3A 1,789 1,342 8,050
CD54HCT4059F3A 1,789 1,342 8,050
CD54HCT4060F3A 1,789 1,342 8,050
CD54HCT4075F3A 2,764 2,073 12,438
CD54HCT4538F3A 2,445 1,834 11,004
CD54HCT533F3A 1,181 886 5,315
CD54HCT534F3A 1,181 888 5,315
CD54HCT541F3A 1,650 1,238 7,427
CD54HCT564F3A 1,264 948 5,690
CD54HCT573F3A 1,933 1,449 8,696
CD54HCT574F3A 1,388 1,041 6,245
CD54HCT040F3A 1,230 922 5,534
CD54HCTC88F3A 2,846 2,134 12,806
CD54HCT74F3A 2,694 2,020 12,122
CDS4HCT75F3A 2,694 2,020 12,122
CD54HCT85F3A 1,937 1,452 8,715
CD54HCT86F3A 1,937 1,452 8,715
</TABLE>
-12-
EXHIBIT 10.40
INTELLECTUAL PROPERTY AGREEMENT
between
TEXAS INSTRUMENTS INCORPORATED,
as Purchaser
and
HARRIS CORPORATION,
HARRIS ADVANCED TECHNOLOGY (MALAYSIA) SDN. BHD
and
HARRIS SOUTHWEST PROPERTIES, INC.,
as Seller
<PAGE>
TABLE OF CONTENTS
Page
----
I. DEFINITIONS............................................................2
II. ASSIGNMENT.............................................................2
2.1. Logic Business Intellectual Property.............................2
2.2. Documentation....................................................2
III. GRANT OF LICENSE.......................................................2
3.1. Patents..........................................................2
3.2. Know-How.........................................................2
3.3. Copyrights.......................................................2
3.4. Mask Works.......................................................3
3.5. Trademarks.......................................................3
3.6. Third Party Intellectual Property................................3
3.7. Sublicense.......................................................3
3.8. Quality Control..................................................4
3.9. Identification of Patents After Closing Date.....................4
3.10. Grant-Back License for Supply Agreements.........................4
IV. TECHNOLOGY TRANSFER....................................................4
4.1. Sufficient Transfer..............................................4
(a) Identified Parts ...........................................5
(b) Identified Processes .......................................5
(c) Component Testing Software and Hardware and
Associated Documentation ...................................5
(d) Logic Product Software .....................................5
(e) Technical Data .............................................5
(f) Books and Records ..........................................5
4.2. Support..........................................................6
V. REPRESENTATIONS AND WARRANTIES.........................................6
5.1. Conflict.........................................................6
5.2. Ownership........................................................6
5.3. No Infringement by Seller........................................6
5.4. No Infringement by Third Party...................................7
5.5. Effective Transfer of Necessary Rights...........................7
VI. MISCELLANEOUS PROVISIONS...............................................7
6.1. Cooperation......................................................7
6.2. No Obligation....................................................7
6.3. Notices..........................................................8
6.4. Expenses.........................................................9
6.5. Successors and Assigns...........................................9
-i-
<PAGE>
6.6. Waiver...........................................................9
6.7. Entire Agreement; Disclosure Schedules...........................9
6.8. Amendments, Supplements, Etc.....................................9
6.9. Rights of the Parties............................................9
6.10. Further Assurances...............................................9
6.11. Applicable Law..................................................10
6.12. Execution in Counterparts.......................................10
6.13. Titles and Headings.............................................10
6.14. Invalid Provisions..............................................10
6.15. Attorneys' Fees.................................................10
EXHIBIT A DEFINITIONS.....................................................13
ii
<PAGE>
INTELLECTUAL PROPERTY AGREEMENT
This INTELLECTUAL PROPERTY AGREEMENT (this "Agreement") is made and
entered into as of December 3, 1998, by and between Texas Instruments
Incorporated, a Delaware corporation ("Purchaser"), and Harris Corporation, a
Delaware corporation, acting through its Semiconductor Sector ("Harris"), Harris
Advanced Technology. (Malaysia) Sdn. Bhd, a Malaysian corporation ("HAT") and
Harris Southwest Properties, Inc., a Delaware corporation ("HSP") (collectively,
"Seller").
RECITALS:
WHEREAS, among other businesses, Seller presently conducts the business
(the "Commercial Logic Business") of manufacturing, marketing and selling
commercial digital logic integrated circuits, listed by part number on Schedule
6.9(a) attached to the Commercial Asset Purchase Agreement defined hereafter
(the "Commercial Logic Products");
WHEREAS, Seller desires to sell and Purchaser desires to purchase Seller's
right to manufacture, market and sell the Commercial Logic Products and certain
assets, rights and properties of Seller used or useful in connection with the
Commercial Logic Business, all on the terms and subject to the conditions set
forth in an Asset Purchase Agreement dated October 23, 1998 (the "Commercial
Asset Purchase Agreement");
WHEREAS, Seller also presently conducts the business (the "Military Logic
Business") of manufacturing, marketing and selling military digital logic
integrated circuits, listed by part number on Schedule 6.9(a) attached to the
Military Asset Purchase Agreement defined hereafter (the "Military Logic
Products");
WHEREAS, Seller also desires to sell and Purchaser also desires to
purchase Seller's right to manufacture, market and sell the Military Logic
Products and certain assets, rights and properties of Seller used or useful in
connection with the Military Logic Business, all on the terms and subject to the
conditions set forth in an Asset Purchase Agreement dated October 23, 1998 (the
"Military Asset Purchase Agreement");
WHEREAS, Seller owns or controls and has or may have various Intellectual
Property rights which relate to or are utilized in the conduct of the Commercial
Logic Business and the Military Logic Business and manufacture, marketing and
sale of the Commercial Logic Products and Military Logic Products, and which
Purchaser desires to acquire by assignment or utilize under license; and
WHEREAS, Seller wishes to grant ownership or licenses to Purchaser under
the various Intellectual Property rights owned or controlled by Seller;
NOW, THEREFORE, in consideration of the mutual covenants, representations,
warranties and agreements herein contained, and other good and valuable
consideration, the parties hereby agree as follows:
-1-
<PAGE>
I. DEFINITIONS
As used in this Agreement, unless the context otherwise requires,
capitalized terms defined in this Agreement shall have the meanings set forth on
Exhibit A hereto. Capitalized terms used but not defined herein have the
meanings given them in the respective applicable Commercial Asset Purchase
Agreement or Military Asset Purchase Agreement.
II. ASSIGNMENT
2.1. Logic Business Intellectual Property. Seller agrees to assign and
transfer on the Closing Date, and hereby assigns and transfers (effective on the
Closing Date) to Purchaser, all right, title and interest of Seller in and to
the Logic Business Intellectual Property included in the items listed on the
Asset Purchase Agreement Schedules 2.1(e), 2.1(f) and 2.1(g) and all other Logic
Business Intellectual Property, together with any and all of the goodwill of the
business in connection with which the Trademarks hereby assigned are used; all
right, title and interest in any and all pending applications for registration
or other protection of the same (including, without limitation, any and all
right to claim priority in connection therewith); and all rights and causes of
action to sue, enforce or recover for past, present or future infringement,
misappropriation, dilution, unfair competition, false designation of origin or
the like of the Intellectual Property assigned hereby.
2.2. Documentation. At and after the Closing Date, each party hereto will
execute and deliver any deeds, bills of sale, assignments or assurances and take
and do any other actions and things reasonably necessary to vest, perfect or
confirm of record or otherwise, in the other party, any and all right, title and
interest in, to and under any of the rights, properties or assets of the party
acquired or to be acquired by the other party as a result of, or in connection
with, this Agreement.
III. GRANT OF LICENSE
3.1. Patents. Seller grants to Purchaser an irrevocable, perpetual,
world-wide, fully paid and royalty-free non-exclusive license under all
Invention Disclosures and Patents included in Seller Intellectual Property at
the Closing Date, to engage in the Logic Business and to make, use, sell, offer
for sale, export and import Logic Products.
3.2. Know-How. Seller grants to Purchaser an irrevocable, perpetual,
world-wide, fully-paid and royalty-free exclusive license under all Know-How
included in Seller Intellectual Property at the Closing Date, and used by Seller
in the Logic Business, to make, use, sell, offer for sale, export and import
Logic Products and other products in the Field of Use.
3.3. Copyrights. Seller grants to Purchaser an irrevocable, perpetual,
world-wide, fully-paid and royalty-free license under all Copyrights included in
Seller Intellectual Property at the Closing Date, to copy and reproduce, create
adaptive and derivative works, publicly distribute copies and reproductions,
publicly display or perform, and otherwise utilize the Copyrights in the use,
sell, offer for sale, export and import of Logic Products. Such license
2
<PAGE>
shall be subject to pre-existing rights granted to third parties, but otherwise
shall be exclusive in the Field of Use, and non-exclusive otherwise.
3.4. Mask Works. Seller grants to Purchaser an irrevocable, perpetual,
world-wide, fully-paid and royalty-free license under all Mask Works included in
Seller Intellectual Property at the Closing Date, to reproduce a Mask Work by
any means, to import or distribute a semiconductor chip product in which a Mask
Work is embodied or to induce or cause others to do any of the foregoing, for
Logic Products. Such license shall be subject to pre-existing rights granted to
third parties, but otherwise shall be exclusive in the Field of Use, and
non-exclusive otherwise.
3.5. Trademarks. Seller grants to Purchaser an irrevocable, world-wide,
fully-paid and royalty-free license to use Trademarks included in Seller
Intellectual Property and previously used by Seller in connection with Logic
Products. Such license shall be for a transitional period of two (2) years from
the Closing Date or, if longer than two (2) years, until all inventory and
work-in-progress displaying Seller's Trademarks, in existence at the Closing
Date, is exhausted. Thereupon such license and such rights will terminate. Such
license shall be subject to preexisting rights granted to third parties, but
otherwise shall be exclusive in the Field of Use, and non-exclusive otherwise.
Notwithstanding the foregoing, the parties agree that Purchaser shall have the
right, perpetually, to use all product specific identification numbers and
configurations used by Seller in connection with the Logic Products.
Purchaser shall not acquire under the terms of this Agreement any title or
interest in the name "Harris" or "Harris Semiconductor" or Seller's monograms,
logos, trademarks, or any variations or combinations thereof that have any
application beyond the Logic Business. Purchaser, however, shall be entitled to
(i) market and sell without alteration all Logic Product Inventory acquired
hereunder and all Logic Products acquired under the terms of the Supply
Agreement (as hereinafter defined), which the parties acknowledge shall bear
Seller's package designation, (ii) continue to use, in connection with the
manufacture, marketing and sale of Logic Products, all materials and supplies
acquired hereunder and shall not be obligated to overstamp or otherwise alter
such materials prior to use and (iii) otherwise use the above referenced Seller
names and marks in accordance with the terms of the licenses granted in this
Article III.
3.6. Third Party Intellectual Property. To the extent not otherwise
assigned or transferred above, Seller grants to Purchaser a sublicense under any
such Third Party Logic Business Intellectual Property at the Closing Date,
subject to Purchaser's right to refuse such license, to make, use, sell, offer
for sale, export and import Logic Products. Such license shall be irrevocable,
perpetual, world-wide, fully-paid and royalty-free, exclusive in the Field of
Use and non-exclusive otherwise, to the full extent permissible, or else be on
the best other terms available under the license between Seller and the third
party, except that any Patents sublicensed hereunder shall be licensed only on a
non-exclusive basis.
3.7. Sublicense. With respect to the assets assigned in Article II herein
and the licenses granted in Sections 3.1 through 3.5, and to the full extent
permissible under Section 3.6, above, the assignment and license to Purchaser
hereunder includes, without limitation:
3
<PAGE>
(a) the right to have Seller or a third party make Logic Products
either in finished or semi-finished form (by way of example, semi-finished form"
includes (1) semiconductor wafers at any stage of their manufacture, (2) foundry
services and (3) assembly) for offer for sale, sale, use, lease, import or other
disposition directly or indirectly by Purchaser or under the trademark, trade
name, or other commercial indicia of Purchaser.
(b) the right to sublicense to any Affiliate of Purchaser.
(c) the right to assign or transfer the license by Purchaser to a
third party in connection with a merger or sale in which a third party acquires
substantially all or a major portion of the Logic Business assets acquired from
Seller hereunder.
3.8. Quality Control. To the extent the Seller Trademarks are used on or
in connection with the manufacture, sale, performance or service of Logic
Products manufactured, used, performed or sold as of the Closing Date
(hereinafter referred to as the "Trademarked Products"), Purchaser shall
manufacture, distribute, and sell the Trademarked Products in accordance with
applicable minimum quality standards used immediately preceding the Closing
Date.
3.9. Identification of Patents After Closing Date. If, subsequent to the
Closing Date, either party identifies any Patents or Mask Works Rights which are
Logic Business Intellectual Property that are not specifically identified in
this Agreement and for which Seller is obligated under Section 2.1 herein to
assign rights therein to Purchaser, then upon notice thereof Seller shall
promptly inform Purchaser of all relevant information in Seller's possession
and, at the request of Purchaser, Seller shall cooperate in execution and
delivery of assignment documentation and take and do any other actions and
things reasonably necessary to vest, perfect or confirm of record or otherwise
in Purchaser any and all right, title and interest in said Patents or Mask Works
Rights. The obligations of Seller under this Section 3.9 shall be Purchaser's
sole remedy for any failure to identity or assign Patents or Mask Works Rights
which are Logic Business Intellectual Property.
3.10. Grant-Back License for Supply Agreements. Purchaser grants to Seller
a fully-paid and royalty-free non-exclusive license under Logic Business
Intellectual Property acquired by Seller under Article II and under Seller
Intellectual Property licensed exclusively under Article III, for the duration
of and to the extent necessary for Seller to fulfill its obligations to
Purchaser under the agreements by and between Seller and Purchaser dated October
23, 1998, for the supply by Seller of Commercial Logic Products and Military
Logic Products to Purchaser (the "Commercial Supply Agreement" and "Military
Supply Agreement").
IV. TECHNOLOGY TRANSFER
4.1. Sufficient Transfer. Seller agrees to promptly, at its expense, but
in no event later than sixty (60) days after Closing Date, transfer to Purchaser
any and all information in written or electronic format and materials, in the
physical possession or control of Seller and reasonably necessary and sufficient
to carry on the business of manufacturing, marketing and selling the Logic
Products by Seller and in no event less than necessary to carry on such business
4
<PAGE>
in a commercially reasonable manner, including without limitation putting
Purchaser in possession of the following:
(a) Identified Parts -- everything needed by Seller to manufacture,
market and sell the parts identified in Schedule 6.9(a) of the Asset Purchase
Agreement.
(b) Identified Processes -- everything needed by Seller to perform
all semiconductor manufacturing processes used by Seller to manufacture Logic
Products on the Closing Date, through back-end assembly, testing and packaging,
including but not limited to the following processes: CD4000; BiCMOS FCT;
HC/HCT; and AC/ACT.
(c) Component Testing Software and Hardware and Associated
Documentation -- all component software test programs used in the Logic
Business, associated probe cards and final test fixtures (including diagrams
thereof, other associated documentation, and testing hardware and software
identified on Asset Purchase Agreement Schedule 2.1(e) herein) used in the
design and manufacture of the Logic Products, except to the extent unavailable
after diligent search and attempt to locate the same;
(d) Logic Product Software -- all design, development, application
and technical support software and associated documentation (including product
software identified on Asset Purchase Agreement Schedule 2.1(f) herein) used in
the design and manufacture of the Logic Products, except to the extent
unavailable after diligent search and attempt to locate the same;
(e) Technical Data -- all technical information used in the Logic
Business (whether in written or electronic format) or relating to the Logic
Products or to the manufacture, marketing and sale thereof, including the
information identified on Asset Purchase Agreement Schedule 2.1(g) herein and
further including, without limitation, except to the extent unavailable after
diligent search and attempt to locate the same: test flows for probe and final
test, yield data by device for wafer fab and final test, Logic Product data
books or data sheets, outstanding specification waivers, outstanding product
change notices, special current customer requirements, specific flow for current
customers, characterization packets and electrical data logs, process and
assembly qualification data, ESD data, all device revisions, all die revisions,
die size, fabrication processes, layout rules for each technology, layout data
by device, process parameter limits for each technology, process history data
for each technology, process recipe modifications by device, mount and bond
diagrams by device, quality reliability data and to the extent available,
verification rules, schematics by device, SPICE models, materials list of
packages, assembly diagrams and masks;
(f) Books and Records -- all books and records of the Logic Business
relating to product engineering, research and development, and manufacture,
marketing and sale of Logic Products, including, without limitation, customer
lists, backlog information, distributor resale data, internal price books,
delivery performance information, and all outstanding Logic Product price
quotes, except to the extent unavailable after diligent search and attempt to
locate the same.
5
<PAGE>
If, subsequent to the Closing Date, either party identifies any
information or materials which have not been delivered to Purchaser as required
under this Agreement, then upon notice thereof Seller shall promptly undertake
all reasonable steps to effect such delivery.
4.2. Support. Seller agrees to provide Purchaser after Closing Date
reasonable support to put Purchaser in a position to carry on the business of
manufacturing, marketing and selling the Logic Products at least to the extent
carried on by Seller and in no event less than in a commercially reasonable
manner, including without limitation training as requested by Purchaser or
Purchaser's employees and further demonstrations or explanations regarding any
of the materials or information referred to in Section 4.1. Such support shall
include the services of four Seller engineers and four Seller marketing
specialists to assist Purchaser during the six month period following the
Closing Date, on a full time basis during the first two months of such period
and thereafter on a part time basis as required by Purchaser. The foregoing
services will be provided to Purchaser without charge. Such services will be
provided at the locations designated by Purchaser. Seller will defray all travel
costs associated with such services, up to $50,000 in the aggregate. Purchaser
will reimburse Seller for all additional travel costs incurred at the request of
Purchaser, based on actual expenditures for coach airfare and standard business
accommodations and meals. Any support services requested by Purchaser in
addition to the foregoing shall be provided by Seller at an hourly rate of
$50.00 per hour per Seller employee, but not to exceed a day rate per employee
of $400.00.
V. REPRESENTATIONS AND WARRANTIES
5.1. Conflict. These representations and warranties are in addition to and
not in lieu of all representations and warranties set forth in the Asset
Purchase Agreement.
5.2. Ownership. Seller owns or has the right to license the Testing
Hardware and Software, the Product Software, the Technical Data and all other
intellectual property rights to be conveyed or licensed to Purchaser pursuant to
this Agreement and the Asset Purchase Agreement (collectively referred to as
"Proprietary Rights") and has the rights to sell, assign, transfer, license and
deliver, as applicable, such Proprietary Rights to Purchaser as contemplated
herein.
5.3. No Infringement by Seller.
(a) Except as noted in Subsection 5.3(b) herein, to the actual
knowledge of Seller, the Proprietary Rights do not conflict with or infringe,
and no one has asserted to Seller that such rights conflict with or infringe,
any proprietary rights owned, possessed or used by any third party. There are no
claims, disputes, actions, proceedings, suits or appeals pending against Seller
with respect to any Proprietary Rights, and to the knowledge of Seller, none has
been threatened against Seller. Except as noted in Subsection 5.3(b) herein, to
the actual knowledge of Seller, there are no facts or alleged facts which would
reasonably serve as a basis for any claim that Seller does not have the right to
use, free of any rights or claims of others, all Proprietary Rights in the
design, development, manufacture, use, sale and other disposition of any or all
of the Products and services presently being used, furnished or sold in the
conduct of the Logic Business as it is now being conducted.
6
<PAGE>
(b) Beginning in 1989 Seller received notices regarding alleged
infringement and future infringement relating to patents and patent applications
for which Jerome Lemelson is a named inventor. Purchaser acknowledges this
matter as described in the letter to Mr. Douglas E. Whitney, Esq., dated January
14, 1998 (a copy of which Purchaser acknowledges having received including an
Exhibit A) and the complaint filed by the Lemelson Medical, Education & Research
Foundation, Limited Partnership in U.S. District Court, District of Arizona on
July 31, 1998, naming multiple defendants including Purchaser. As of the date of
this Agreement this matter remains unresolved.
5.4. No Infringement by Third Party. To the actual knowledge of Seller,
the Proprietary Rights transferred or exclusively licensed to Purchaser herein
are not infringed by any third party, and Seller has not asserted against any
third party that such rights are infringed by any third party. There are no
claims, disputes, actions, proceedings, suits or appeals pending against a third
party by Seller with respect to those rights.
5.5. Effective Transfer of Necessary Rights. Pursuant to the Asset
Purchase Agreement and the documents, instruments and agreements contemplated
thereby, Seller will either (i) license the Proprietary Rights or (ii) transfer
good title to the Proprietary Rights to Purchaser. The Proprietary Rights sold
or licensed to Purchaser pursuant to the Asset Purchase Agreement and the
documents, instruments and agreements contemplated thereby, including but not
limited to this Agreement, will transfer all necessary Intellectual Property
rights which Seller has the right and authority to transfer to Purchaser to
conduct the Logic Business, at least to the extent carried on by Seller
immediately prior to the Closing Date, with the mutual understanding that
conduct of the Logic Business by Purchaser may require that Purchaser utilize in
conjunction therewith the intellectual property rights, business organization
and capabilities presently in Purchaser's possession.
VI. MISCELLANEOUS PROVISIONS
6.1. Cooperation. Seller agrees to make its employees reasonably available
to the Purchaser to reasonably assist and otherwise reasonably cooperate in the
preparation and prosecution of all Logic Business Patents, Logic Business
Trademarks, Logic Business Copyrights, Logic Business Mask Works and Logic
Business Invention Disclosures and to execute any and all applications,
assignments, affidavits, and any other papers in connection therewith to perfect
Purchaser's rights in any country. Such assistance and cooperation includes, but
is not limited to communicating relevant facts and enabling contact with
relevant employees and cooperating in testifying in any legal proceedings,
signing all lawful papers, executing all divisional, continuations, reissues and
substitute applications, making all lawful oaths, and generally doing everything
reasonable to aid Purchaser, its successors, assigns and nominees to pursue and
enforce protection in all countries.
6.2. No Obligation. Nothing in this Agreement shall require Purchaser to
pursue or continue to pursue in any country any patent or invention registration
or the like, or trademark, copyright or mask work registration, or any similar
protection; nor to enforce the same against infringements or the like; nor to
maintain in force any current or subsequently obtained patent or invention
registration, or trademark, copyright or mask work registration, or the like.
7
<PAGE>
6.3. Notices. All notices and other communications required or permitted
hereunder will be in writing and, unless otherwise provided in this Agreement,
will be deemed to have been duly given when delivered in person or when
dispatched by electronic facsimile transfer (confirmed in writing by mail
simultaneously dispatched) or one business day after having been dispatched by a
nationally recognized overnight courier service to the appropriate party at the
address specified below:
(a) If to Seller, to:
Harris Semiconductor
P.O. Box 883, M/S 53-209
Melbourne, Florida 32902-0083
Attention: Stephen K. Cusick, Esquire
Facsimile No.: (407) 729-5392
with a copy to:
Harris Corporation
1025 West NASA Boulevard, M/S 119 CHQ
Melbourne, Florida 32919
Attention: Richard L. Ballantyne, Esquire
Facsimile No.: (407) 727-9222
(b) If to Purchaser, to:
Texas Instruments Incorporated
7839 Churchill Way, M/S 3995
Dallas, Texas 75251
- or -
P.O. Box 650311, M/S 3995
Dallas, Texas 75265
Attention: Charles D. Tobin
Facsimile No.: (214) 917-3804
with a copy to:
Texas Instruments Incorporated
8505 Forest Lane, M/S 8658
Dallas, Texas 75243
- or -
P.O. Box 660199, M/S 8658
Dallas, Texas 75266
Attention: Richard J. Agnich, Esq.
Facsimile No.: (972) 480-5061
or to such other address or addresses as any such party may from time to time
designate as to itself by like notice.
8
<PAGE>
6.4. Expenses. Except as otherwise expressly provided herein, each party
hereto will pay any expenses incurred by it incident to this Agreement and in
preparing to consummate and consummating the transactions provided for herein.
6.5. Successors and Assigns. This Agreement will be binding upon and inure
to the benefit of the parties hereto and their respective successors and
permitted assigns, and shall be assignable or delegable by either party without
the prior written consent of the other party; provided, however, that upon
notice to Seller, Purchaser may assign or delegate any or all of their rights or
obligations under this Agreement to any Affiliate thereof or to any Person that
directly or indirectly acquires, after the Closing, all or substantially all of
the assets or voting stock of Purchaser.
6.6. Waiver. Purchaser may, by written notice to Seller, and Seller may,
by written notice to Purchaser, (a) extend the time for performance of any of
the obligations of the other party under this Agreement, (b) waive any
inaccuracies in the representations or warranties of the other party contained
in this Agreement, (c) waive compliance with any of the conditions or covenants
of the other party contained in this Agreement, or (d) waive or modify
performance of any of the obligations of the other party under this Agreement;
provided, however, that no such party may, without the prior written consent of
the other parties, make or grant such extension of time, waiver of inaccuracies
or compliance or waiver or modification of performance with respect to its
representations, warranties, conditions or covenants hereunder. Except as
provided in the immediately preceding sentence, no action taken pursuant to this
Agreement will be deemed to constitute a waiver of compliance with any
representations, warranties, conditions or covenants contained in this Agreement
and will not operate or be construed as a waiver of any subsequent breach,
whether of a similar or dissimilar nature.
6.7. Entire Agreement; Disclosure Schedules. This Agreement, which
includes the schedules and exhibits hereto, supersedes any other agreement,
whether written or oral, that may have been made or entered into by any party
relating to the matters contemplated hereby and constitutes the entire agreement
by and among the parties hereto, except as otherwise set forth in the Asset
Purchase Agreement which shall control in the event of any conflict herewith.
6.8. Amendments, Supplements, Etc. This Agreement may be amended or
supplemented at any time by additional written agreements as may mutually be
determined by Purchaser and Seller to be necessary, desirable or expedient to
further the purposes of this Agreement or to clarity the intention of the
parties.
6.9. Rights of the Parties. Nothing expressed or implied in this Agreement
is intended or will be construed to confer upon or give any Person other than
the parties hereto or their assigns any rights or remedies under or by reason of
this Agreement or any transaction contemplated hereby.
6.10. Further Assurances. From time to time, as and when requested by any
party hereto, the other party will execute and deliver, or cause to be executed
and delivered, all such documents and instruments, make such other deliveries
and take such other actions as may be reasonably necessary to consummate the
transactions contemplated by this Agreement.
9
<PAGE>
6.11. Applicable Law. This Agreement and the legal relations among the
parties hereto will be governed by and construed in accordance with the rules
and substantive Laws of the State of Florida, United States of America, without
regard to conflicts of law provisions thereof.
6.12. Execution in Counterparts. This Agreement may be executed in two or
more counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same agreement.
6.13. Titles and Headings. Titles and headings to Sections herein are
inserted for convenience of reference only, and are not intended to be a part of
or to affect the meaning or interpretation of this Agreement.
6.14. Invalid Provisions. If any provision of this Agreement is held to be
illegal, invalid, or unenforceable under any present or future Law, and if the
rights or obligations under this Agreement of Seller on the one hand and
Purchaser on the other hand will not be materially and adversely affected
thereby, (a) such provision will be fully severable; (b) this Agreement will be
construed and enforced as if such illegal, invalid, or unenforceable provision
had never comprised a part hereof; (c) the remaining provisions of this
Agreement will remain in full force and effect and will not be affected by the
illegal, invalid, or unenforceable provision or by its severance from this
Agreement; and (d) in lieu of such illegal, invalid, or unenforceable provision,
there will be added automatically as a part of this Agreement a legal, valid,
and enforceable provision as similar in terms to such illegal, invalid, or
unenforceable provision as may be possible, or if such addition is not possible
the parties will negotiate in good faith a reasonable provision.
6.15. Attorneys' Fees. If any action at law or in equity is necessary to
enforce or interpret the terms of this Agreement, the prevailing party shall be
entitled to recover in such action its reasonable attorneys' fees, costs and
necessary disbursements in addition to any other relief to which it may be
entitled.
10
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.
TEXAS INSTRUMENTS INCORPORATED
By: /S/ Glenn Culhane
----------------------------------------
Name: Glenn Culhane
Title: Vice President--Texas Instruments,
Manager
HARRIS CORPORATION
By: /S/ Roy Odom
----------------------------------------
Name: Roy Odom
Title: General Manager
HARRIS ADVANCED TECHNOLOGY (MALAYSIA)
SDN. BHD.
By: /S/ Byran R. Roub
----------------------------------------
Name: Byran R. Roub
Title: Director
HARRIS SOUTHWEST PROPERTIES CORP.
By: /S/ David Wasserman
----------------------------------------
Name: David Wasserman
Title: Vice President
11
<PAGE>
EXHIBIT A
DEFINITIONS
"Affiliate" shall mean with respect to any Person, any other person who,
directly or indirectly, controls, is controlled by, or is under common control
with that Person.
"Agreement" shall mean this Intellectual Property Agreement as defined in
the preamble to this Agreement.
"Asset Purchase Agreement" (1) if the parties close on both the Commercial
Asset Purchase Agreement and the Military Asset Purchase Agreement, means both
the Commercial Asset Purchase Agreement and the Military Asset Purchase
Agreement, or either of them, as in the context is appropriate, or, (2) if the
parties close on only the Commercial Asset Purchase Agreement, means the
Commercial Asset Purchase Agreement.
"Closing Date" means the Closing Date as defined in the respective
applicable Commercial Asset Purchase Agreement or Military Asset Purchase
Agreement.
"Commercial Asset Purchase Agreement" shall mean the Asset Purchase
Agreement dated October 23, 1998, by and between Purchaser and Seller, executed
contemporaneously herewith, relating to the Commercial Logic Business and
Commercial Logic Products, as defined in the recitals to this Agreement.
"Commercial Logic Business" means the business conducted by Seller of
manufacturing, marketing and selling commercial but not military and not
radiation hardened digital logic integrated circuits
"Commercial Logic Products" means the commercial digital logic integrated
circuits products manufactured, marketed or sold directly or indirectly by
Seller in the Commercial Logic Business and listed by part number on Schedule
6.9(a) of the Commercial Asset Purchase Agreement.
"Commercial Supply Agreement" shall mean the Supply Agreement dated
__________, 1998, by and between Purchaser and Seller, executed
contemporaneously herewith, relating to the supply by Seller of Commercial Logic
Products to Purchaser, as defined in Section 3.10.
"Copyrights" means all rights associated with works of authorship,
including moral rights, registered and unregistered copyrights, registrations
and applications therefor, in all media, throughout the world.
"Field of Use" (1) if the parties close on both the Commercial Asset
Purchase Agreement and the Military Asset Purchase Agreement, means (a) any
digital logic integrated circuit manufactured by any of the CD4000, BiCMOS FCT,
HC/HCT and AC/ACT processes; and (b) any of the products identified by part
numbers listed on Schedules 6.9(a) of the Commercial Asset Purchase Agreement or
the Military Asset Purchase Agreement and manufactured by any process; or, (2)
if the parties close on only the Commercial Asset Purchase Agreement, means (a)
12
<PAGE>
any commercial digital logic integrated circuit manufactured by any of the
CD4000, BiCMOS FCT, HC/HCT and AC/ACT processes; and (1)) any of the products
identified by part numbers listed on Schedule 6.9(a) of the Commercial Asset
Purchase Agreement and manufactured by any process.
"Intellectual Property" means Patents, Trademarks, Know-How, Copyrights
and Mask Works.
"Know-How" means know-how, technology, inventions disclosed in Invention
Disclosures, trade secrets, technical information, software and source code and
documentation therefor, notebooks, drawings, and (with respect to semiconductor
devices) mask works and application specific software.
"Logic Business" (1) if the parties close on both the Commercial Asset
Purchase Agreement and the Military Asset Purchase Agreement, means the business
conducted by Seller of manufacturing, marketing and selling commercial and
military but not radiation hardened digital logic integrated circuits; or, (2)
if the parties close on only the Commercial Asset Purchase Agreement, means the
business conducted by Seller of manufacturing, marketing and selling commercial
but not military or radiation hardened digital logic integrated circuits;
"Logic Business Intellectual Property" (1) if the parties close on both
the Commercial Asset Purchase Agreement and the Military Asset Purchase
Agreement, means that portion of Seller Intellectual Property which relates
directly to and is used exclusively in the Logic Business or Logic Products; or,
(2) if the parties close on only the Commercial Asset Purchase Agreement, means
that portion of Seller Intellectual Property which relates directly to and is
used exclusively in the Commercial Logic Business or Commercial Logic Products.
"Logic Products" (1) if the parties close on both the Commercial Asset
Purchase Agreement and the Military Asset Purchase Agreement, means the
commercial and military digital logic integrated circuits products manufactured,
marketed or sold directly or indirectly by Seller in the Logic Business and
listed by part number on Schedules 6.9(a) of the Commercial Asset Purchase
Agreement or the Military Asset Purchase Agreement; or, (2) if the parties close
on only the Commercial Asset Purchase Agreement, means the commercial digital
logic integrated circuits products manufactured, marketed or sold directly or
indirectly by Seller in the Commercial Logic Business and listed by part number
on Schedule 6.9(a) of the Commercial Asset Purchase Agreement.
"Mask Works" means all registered or unregistered mask work rights, mask
work registrations and mask work applications, throughout the world.
"Military Asset Purchase Agreement" shall mean the Asset Purchase
Agreement dated October 23, 1998, by and between Purchaser and Seller, executed
contemporaneously herewith, relating to the Military Logic Business and Military
Logic Products, as defined in the recitals to this Agreement.
13
<PAGE>
"Military Logic Business" means the business conducted by Seller of
manufacturing, marketing and selling Military but not commercial and not
radiation hardened digital logic integrated circuits.
"Military Logic Products" means the Military digital logic integrated
circuits products manufactured, marketed or sold directly or indirectly by
Seller in the Military Logic Business and listed by part number on Schedule
6.9(a) of the Military Asset Purchase Agreement.
"Military Supply Agreement" shall mean the Supply Agreement dated
_________, 1998, by and between Purchaser and Seller executed contemporaneously
herewith, relating to the supply by Seller of Military Logic Products to
Purchaser, as defined in Section 3.10.
"Patents" means patents, utility models and all similar government grants
of rights to inventions, and all applications and related rights therefor
(including any and all divisions, continuations, continuations in-part,
reissues, renewals, reexaminations and extensions thereof), throughout the
world.
"Person" has the same meaning as defined in the Asset Purchase Agreement.
"Proprietary Rights" shall have the meaning ascribed to such term in
Section 5.2 of this Agreement.
"Purchaser" shall have the meaning ascribed to such term in the preamble
to this Agreement.
"Seller" shall have the meaning ascribed to such term in the preamble to
this Agreement.
"Seller Intellectual Property" means (a) all Intellectual Property owned
or controlled by Seller or an Affiliate of which Seller owns a majority or
controlling interest; and (b) all Intellectual Property owned or controlled by a
third party and licensed to Seller or an Affiliate of which Seller owns a
majority or controlling interest and which Intellectual Property includes a
right of assignment transfer or sublicense that gives a right to assign or
transfer to, or sublicense Purchaser.
"Seller Products" means all products and services that are being
manufactured or performed by Seller at any time, other than Logic Business
Products that are being manufactured or performed by Seller as of the Closing
Date.
"Technical Data" shall have the meaning ascribed to such term in Section
4.1(e) of this Agreement.
"Third Party Logic Business Intellectual Property" means Intellectual
Property owned or controlled by a third party and licensed to Seller, or an
Affiliate of which Seller owns a majority or controlling interest, under an
exclusive license which provides Seller a right of assignment or transfer or
sublicense that gives a right to assign or transfer or sublicense Purchaser and
which relates exclusively to the Logic Business or Logic Products, or is used or
held for use exclusively in the Logic Business.
14
<PAGE>
"Trademarks" means all registered and unregistered trademarks, service
marks, trade names, symbols, labels, packages, configuration of goods, words,
slogans, phrases, numerals, or devices or combinations thereof, capable of
distinguishing goods or services from goods or services of others, and all
registrations and applications therefore, now existing or hereafter filed,
throughout the world.
15
EXHIBIT 10.41
ASSET TRANSFER AGREEMENT
between
TEXAS INSTRUMENTS INCORPORATED,
as Purchaser,
and
HARRIS ADVANCED TECHNOLOGY (MALAYSIA) SDN. BHD,
as Seller.
<PAGE>
ASSET TRANSFER AGREEMENT
This asset transfer agreement (this "Agreement") is made and entered into
as of December 3, 1998, by and between Texas Instruments Incorporated, a
Delaware corporation ("Purchaser"), on the one hand, and Harris Advanced
Technology (Malaysia) Sdn. Bhd, a Malaysian corporation, ("Seller"), on the
other hand.
RECITALS:
WHEREAS, Seller presently conducts the business (the "Commercial Logic
business") of assembling and testing commercial digital logic integrated
circuits (the "Commercial Logic Products"); and
WHEREAS, Seller desires to sell and Purchaser desires to purchase the
exclusive right to manufacture, market and sell the Commercial Logic products,
and the goodwill and technical know-how of Seller used or useful in connection
with the Commercial Logic Business, all on the terms and subject to the
conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants, representations,
warranties and agreement herein contained, the parties hereto agree as follows:
I. DEFINITIONS
1.1 Definitions. As used in this Agreement, unless the context otherwise
requires, capitalized terms used in this Agreement shall have the meanings set
forth on Exhibit A hereto.
II. PURCHASE OF ASSETS
2.1 Purchase and Sale of Transferred Assets. Seller hereby sells,
transfers, conveys, assigns and delivers, and Purchaser hereby purchases and
accepts, all of Sellers' right, title and interest in the goodwill, technical
know-how and processes associated with the commercial logic business; and to the
rights, properties and assets described in this Section 2.1 (collectively, the
"Transferred Assets"), free and clear of all Liens except Permitted Liens:
(a) Products. All rights, title and interest of Seller in and to the
Commercial Logic Products and the manufacture, marketing and sale thereof.
(b) Component Testing Software and Hardware and Associated
Documentation. The component software programs, associated probe cards and final
test fixtures (including diagrams thereof), and associated documentation.
(c) Product Software. The design, development, application and
technical support software and associated documentation.
(d) Technical Data. All technical information related to the
Commercial Logic Products and the manufacture, marketing and sale thereof.
-2-
<PAGE>
(e) Books and Records. All the books and records of the Commercial
Logic Business.
2.2 Excluded Assets. No rights, properties or assets of Sellers shall be
included in the Transferred Assets except to the extent expressly referenced in
Section 2.1. As an example, no cash, work-in-process, receivables, fixtures,
realty, capital assets, or management information systems are included as
Transferred Assets. Purchaser shall not acquire under the terms of this
Agreement any title or interest in the name "Harris" or "Harris Semiconductor"
or Sellers' monograms, logos, trademarks, or any variations or combinations
thereof.
III. [INTENTIONALLY OMITTED]
IV. PURCHASE PRICE
4.1 Purchase Price. In consideration of the conveyance of Purchaser of the
Transferred Assets and the other rights granted to Purchaser pursuant hereto,
Purchaser shall pay the Closing Date Payment to the Seller in accordance with
Section 4.2.
4.2 Payments of Purchase Price. At the Closing, Purchaser will pay U.S.
$7,800,000 (the "Closing Date Payment") to the Seller by wire transfer.
V. CLOSING
5.1 Closing. The consummation of the transactions contemplated hereby (the
"Closing") shall take place at the offices of Weil, Gotshal & Manges LLP, 100
Crescent Court, Suite 1300, Dallas, Texas (or at such other place as the parties
may designate), at 9:00 a.m. on December 3, 1998 or the third Business Day after
such later date as the conditions specified in Sections 5.4 and 5.5 are
fulfilled. The date on which the Closing is effected is referred to in this
Agreement as the "Closing Date."
5.2 Deliveries at Closing. At the Closing:
(a) Sellers shall deliver to Purchaser the items described in
clauses (i) through (iii) below:
(i) evidence that the party signing this Agreement on behalf
of Seller is authorized to do so;
(ii) the officers' certificates referenced in Section 5.4(c);
and
(iii) all other documents, certificates, instruments or
writings reasonably requested by Purchaser in connection herewith.
(b) Purchaser shall deliver to Seller the items described in clauses
(i) through (iv) below:
-3-
<PAGE>
(i) the Closing Date Payment by wire transfer of immediately
available funds to the account or accounts designated by Seller no later than
two Business Days prior to Closing;
(ii) evidence that the party signing this Agreement on behalf
of Purchaser is authorized to do so;
(iii) the officer's certificate referenced in Section 5.5(c);
and
(iv) all other documents, certificates, instruments or
writings reasonably requested by Sellers in connection herewith.
5.3 Delivery of Purchased Assets. Title to the Transferred Assets passes
to Purchaser as of the Closing at the applicable places of business of Seller.
Promptly following the Closing, Sellers will place Purchaser in full possession
and control of the Transferred Assets. All information capable of electronic
transmission will be transmitted to Purchaser in such manner. All other assets
and information will be delivered by Seller to such locations as Purchaser shall
designate by means of delivery reasonably designated by Purchaser, but at
Seller's cost and risk of loss.
VI. REPRESENTATIONS AND WARRANTIES OF SELLERS
Seller makes the following representations and warranties to Purchaser,
each of which shall be true and correct as of the date hereof and as of the
Closing Date and shall be unaffected by any investigation heretofore or
hereafter made.
6.1 Organization and Good Standing. HAT is a corporation validly existing
and in good standing under the laws of Malaysia and has the requisite corporate
power and authority to own, lease or otherwise hold its properties and assets
and to carry on its business as presently conducted.
6.2 Authorization and Effect of Agreement. Seller has the requisite
corporate power and authority to execute and to deliver this Agreement and to
perform the transactions contemplated hereby. The execution and delivery by
Seller of this Agreement and the performance by them of the transactions
contemplated hereby have been duly authorized by all necessary corporate action
on the part of Seller. This Agreement has been duly executed and delivered by
Seller and constitutes a valid and binding agreement of Seller, enforceable
against moratorium, and similar laws affecting creditors' rights and remedies
generally and subject, as to enforceability, to general principles of equity.
6.3 No Conflicts. The execution and delivery of this Agreement by Seller
does not, and the performance by Sellers of the transactions contemplated by
this Agreement will not, conflict with, or result in any violation of, or
constitute a default under, or, as applicable, give rise to the creation of a
Lien upon any of the Transferred Assets or to a right of termination,
cancellation or acceleration of any obligation or to a loss of a benefit under,
(a) any provision of the Certificate of Incorporation or Bylaws or other
applicable constituent documents of Seller, or (b) any Law or Order applicable
to or binding on either Seller or its assets. Except for expiration of the
waiting period under the Hart-Scott-Rodino Antitrust Improvements Act (the "HSR
Act"),
-4-
<PAGE>
no Consent is required to be obtained, made or given (whether pursuant to
applicable Law, Contract or otherwise) in connection with the execution and
delivery of this Agreement by Seller or the performance by Seller of the
transactions contemplated hereby.
6.4 Financial Data. All historical financial data related to the
Commercial Logic Business provided to Purchaser in connection with the
negotiation of the transactions contemplated hereby (i) was accurately extracted
from the books and records of Seller, (ii) except as identified on Schedule 6.5
hereto, was prepared in accordance with generally accepted accounting principles
consistently applied, and (iii) fairly presents in all material respects the
assets, liabilities and results of operations of the Commercial Logic Business.
6.5 Litigation. There are no judicial or administrative actions,
proceedings or investigations pending or, to Seller's knowledge, threatened that
question the validity of this Agreement or any action taken or to be taken by
Seller in connection with this Agreement. There are no lawsuits, claims,
administrative or other proceedings or investigations relating to the conduct of
the Commercial Logic Business or otherwise affecting the Transferred Assets
pending, or, to Seller's knowledge, threatened against Seller. There are no
judgments, orders or decrees of any Governmental Authority binding on Seller
that relate to the Commercial Logic business or otherwise affect the Transferred
Assets.
6.6 Title to and Condition of Assets. Seller has, and at Closing, Seller
will convey to Purchaser, good, valid and indefeasible title to the Transferred
Assets, free and clear of all Liens other than Permitted Liens. The Transferred
Assets, taken as a whole, are usable in the regular and ordinary course of
business and conform to all applicable Laws.
6.7 Disclosure. No representation or warranty of Seller contained herein,
and no statement contained in any document or other instrument to be furnished
by Seller to Purchaser in connection with the transactions contemplated hereby,
contains or will contain any untrue statements of a material fact or omits or
will omit to state a material fact necessary to make the representation,
warranty or statement so made not misleading.
VII. REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby makes the following representations and warranties to
Seller, each of which shall be true and correct as of the date hereof and as of
the Closing Date and shall be unaffected by any investigation heretofore or
hereafter made.
7.1 Corporate Organization. Purchaser is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has the requisite corporate power and authority to own, lease or otherwise
hold its properties and assets and to carry on its business as presently
conducted.
7.2 Authorization and Effect of Agreement. Purchaser has the requisite
corporate power and authority to execute and deliver this Agreement and to
perform the transactions contemplated hereby. The execution and delivery by
Purchaser of this Agreement and the performance by it of the transactions
contemplated hereby have been duly authorized by all necessary corporate action
on the part of Purchaser. This Agreement has been duly executed and delivered by
Purchaser and constitutes a valid and binding agreement of Purchaser,
enforceable
-5-
<PAGE>
against Purchaser in accordance with its terms, subject to applicable
bankruptcy, reorganization, moratorium and similar laws affecting creditors'
rights and remedies generally and subject, as to enforceability, to general
principles of equity.
7.3 No Conflicts. The execution and delivery of this Agreement by
Purchaser does not, and the performance by Purchaser of the transactions
contemplated by this Agreement will not, conflict with, or result in any
violation of, or constitute a default under (a) any provision of the Certificate
of Incorporation or Bylaws of Purchaser, (b) any of the terms, conditions, or
provisions of any agreement or other document by which Purchaser is bound, or
(c) any Law or Order applicable to or binding on Purchaser. Except for
expiration of the waiting period under the HSR Act, no Consent is required to be
obtained, made or given (whether pursuant to applicable law, Contract or
otherwise) in connection with the execution and delivery of this Agreement by
Purchaser or the performance by Purchaser of the transactions contemplated
hereby.
7.4 Litigation. There are no judicial or administrative actions,
proceedings or investigations pending or, to Purchaser's knowledge, threatened
that question the validity of this Agreement or any action taken or to be taken
by Purchaser in connection with this Agreement.
7.5 Disclaimer. Other than as specifically provided in this Agreement or
in any exhibit, schedule or document delivered pursuant hereto, the Purchaser
acknowledges and agrees that the Transferred Assets are transferred on an "as
is, where is," basis "with all faults" and that the Seller is not making any
further representations or warranties of any kind, express or implied,
respecting the Transferred Assets. The Purchaser acknowledges that any
projections provided by Seller are for illustrative purposes only and do not
form the basis for any liability.
VIII. [INTENTIONALLY OMITTED]
IX. POST-CLOSING COVENANTS
9.1 Covenant Not to Compete. Seller agrees that prior to the fifth
anniversary of the Closing Date, Seller will not, directly or indirectly, own,
manage, operate, control or participate in the ownership, management, operation
or control of any business, whether in corporate, proprietorship or partnership
form or otherwise, engaged in assembly and test of Commercial Logic Products or
other products in these families having similar integration levels and
performance characteristics; provided, however, that nothing herein shall
preclude Seller from (i) owning an equity interest of five percent or less (a)
of any publicly traded company listed on a national stock exchange or on the
NASDAQ national market system or (b) in ventures, partnerships or other entities
that do not constitute affiliates (as such term is defined in the Securities
Exchange Act of 1934, as amended) of Seller, (ii) acquiring the capital stock or
assets of any business that derives less than 10% of its consolidated revenues
from an activity prohibited by the foregoing provisions, so long as the Seller
makes their best efforts to divest that portion of the acquired business that is
engaged in such prohibited activity within 12 months following such acquisition,
(iii) engaging in the manufacturing, marketing and sale of Military Logic
Products, radiation hardened products or other military products having similar
integration levels and performance characteristics, (iv) manufacturing,
marketing, designing or selling products or systems that integrate or utilize
Commercial Logic Products manufactured by third
-6-
<PAGE>
parties, or (v) manufacturing, marketing, designing or selling products or
systems of any other digital logic product having substantially greater
integration and performance characteristics.
9.2 Confidentiality. Seller agrees that from and after the Closing, Seller
will not, directly or indirectly, disclose, reveal, divulge or communicate to
any person or entity other than authorized officers, directors and employees of
Purchaser, or use or otherwise exploit for its own benefit or for the benefit of
anyone other than Purchaser, any Confidential Information (as defined below).
Seller shall not have any obligation to keep confidential any Confidential
Information if and to the extent disclosure thereof is specifically required by
Law or in the enforcement of its rights hereunder; provided, however, that in
the event disclosure is required by applicable Law, Seller shall, to the extent
reasonably possible, provide Purchaser with prompt notice of such requirement
prior to making any disclosure so that Purchaser may seek an appropriate
protective order. For purposes of this Section 9.2, "Confidential Information"
shall mean any confidential information with respect to the conduct or details
of the Commercial Logic Business, including, without limitation, methods of
operation, customers, and customer lists, products, proposed products, former
products, prices, fees, costs, plans, designs, technology, inventions, trade
secrets, know-how, software, marketing methods, policies, plans, or other
specialized information or proprietary matters. The term Confidential
Information does not include, and there shall be no obligation hereunder with
respect to, information that (a) is generally available to the public on the
date of this Agreement, (b) becomes generally available to the public other than
as a result of a disclosure by Seller not otherwise permissible thereunder, (c)
is independently developed by Seller as established by documentary evidence or
(d) Seller learns from other sources where such sources have not, to Seller's
knowledge, violated their confidentiality obligation to Purchaser.
9.3 Specific Performance: Reformation. The parties hereto specifically
acknowledge and agree that the remedy at law for any breach of Section 9.1 or
9.2 will be inadequate and that Purchaser, in addition to any other relief
available to it, shall be entitled to temporary and permanent injunctive relief
without the necessity of proving actual damage or posting any bond whatsoever.
In the event that the provisions of Section 9.1 or 9.2 should ever be deemed to
exceed the limitations provided by applicable Law, then the parties hereto agree
that such provisions shall be reformed to set forth the maximum limitations
permitted.
9.4 Maintenance of Books and Records. Seller and Purchaser shall preserve
until the seventh anniversary of the Closing Date all records possessed by such
party relating to the assets, liabilities or operations of the Commercial Logic
Business prior to the Closing Date. After the Closing Date, where there is a
legitimate purpose, such party shall provide the other party with access, upon
prior reasonable written request specifying the need therefor, during regular
business hours, to (i) the relevant officers and employees of such party and
(ii) the books of account and records of such party, but, in each case, only to
the extent relating to the assets, liabilities and operations of the Commercial
Logic Business prior to the Closing Date, and the other party and its
representatives shall have the right to make copies of such books and records;
provided, however, that the foregoing right of access shall not be exercisable
in such a manner as to interfere unreasonably with the normal operations and
business of such party; and further provided that, as to so much of such
information as constitutes trade berets or confidential business information of
such party, the requesting party and its representatives will use due care to
not disclose such information except (i) as required by Law, (ii) with the prior
written consent
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<PAGE>
of such party, which consent shall not be unreasonably withheld, or (iii) where
such information becomes available to the public generally, or becomes generally
known to competitors of such party, through sources other than the requesting
party and its representatives. Such records may nevertheless be destroyed by a
party if such party sends the other party written notice of its intent to
destroy records, specifying with particularity the contents of the records to be
destroyed. Such records may then be destroyed after the 30th day following
delivery of such notice unless the other party objects to the destruction, in
which case the party seeking to destroy the records shall either agree to retain
such records or to deliver such records to the objecting party.
X. [INTENTIONALLY OMITTED]
XI. [INTENTIONALLY OMITTED]
XII. MISCELLANEOUS PROVISIONS
12.1 Notices. All notices and other communications required or permitted
hereunder will be in writing and, unless otherwise provided in this Agreement,
will be deemed to have been duly given when delivered in person or when
dispatched by electronic facsimile transfer (confirmed in writing by mail
simultaneously dispatched) or one business day after having been dispatched by a
nationally recognized overnight courier service to the appropriate party at the
address specified below:
(a) If to Seller, to:
Harris Advanced Technology (Malaysia) Sdn Bhd
73 Lorong Enggang
Ulu Kelang, Free Trade Zone
54200 Kuala Lumpur, Malaysia
Attention to: C. V. Kwong
Facsimile No.: (603) 4562414
with a copy to:
Harris Semiconductor
P.O. Box 883, M'S 53-209
Melbourne, Florida 32902-0083
Attention: Stephen K. Cusick, Esq.
Facsimile No.: (407) 729-5392
and to:
Harris Corporation
1025 West NASA Boulevard, M'S 119 CHQ
Melbourne, Florida 32919
Attention: Corporate Secretary
Facsimile No.: (407) 727-9222
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<PAGE>
(b) If to Purchaser, to:
Texas Instruments Incorporated
7839 Churchill Way, M'S 3995
Dallas, Texas 75251
- or -
P.O. Box 650311, M'S 3995
Dallas, Texas 75265
Attention: Charles D. Tobin
Facsimile No.: (214) 917-3804
with a copy to:
Texas Instruments Incorporated
8505 Forest lane, M'S 8658
Dallas, Texas 75243
- or -
P.O. Box 660199, M'S 8658
Dallas, Texas 75266
Attention: Richard 3. Agnich, Esq.
Facsimile No.: (972) 480-506l
or to such other address or addresses as any such party may from time to time
designate as to itself by like notice.
12.2 Expenses. Except as otherwise expressly provided herein, each party
hereto will pay any expenses incurred by it incident to this Agreement and in
preparing to consummate and consummating the transactions provided for herein.
12.3 Successors and Assigns. This Agreement will be binding upon and inure
to the benefit of the parties hereto and their respective successors and
permitted assigns, but will not be assignable or delegable by any party without
the prior written consent of the other party; provided, however, that upon
notice to Seller delivered in accordance with Section 12.1, Purchaser may assign
or delegate any or all of their rights or obligations under this Agreement to
any Affiliate thereof or to any Person that directly or indirectly acquires,
after the Closing, all or substantially all of the assets or voting stock of
Purchaser, but such assignment or delegation shall not relieve Purchaser of any
obligation hereunder.
12.4 Waiver. Purchaser may, by written notice to Seller, and Seller may,
by written notice to Purchaser, (a) extend the time for performance of any of
the obligations of the other party under this Agreement, (b) waive any
inaccuracies in the representations or warranties of the other party contained
in this Agreement, (c) waive compliance with any of the conditions or covenants
of the other party contained in this Agreement, or (d) waive or modify
performance of any of the obligations of the other party under this Agreement;
provided however, that no such party may, without the prior written consent of
the other parties, make or grant such extension of time, waiver of inaccuracies
or compliance or waiver or modification of performance with respect to its
representations, warranties, conditions or covenants hereunder. Except as
provided
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<PAGE>
in the immediately preceding sentence, no action taken pursuant to this
Agreement will be deemed to constitute a waiver of compliance with any
representations, warranties, conditions or covenants contained in this Agreement
and will not operate or be construed as a waiver of any subsequent breach,
whether of a similar or dissimilar nature.
12.5 [INTENTIONALLY OMITTED.]
12.6 Amendments, Supplements, Etc. This Agreement may be amended or
supplemented at any time by additional written agreements as may mutually he
determined by Purchaser and Seller to be necessary, desirable or expedient to
further the purposes of this Agreement or to clarify the intention of the
parties.
12.7 Rights of the Parties. Nothing expressed or implied in this Agreement
is intended or will be construed to confer upon or give any Person other than
the parties hereto any rights or remedies under or by reason of this Agreement
or any transaction contemplated hereby.
12.8 Further Assurances. From time to time, as and when requested by any
party hereto, the other party will execute and deliver, or cause to be executed
and delivered, all such documents and instruments, make such other deliveries
and take such other actions as may be reasonably necessary to consummate the
transactions contemplated by this Agreement.
12.9 Applicable Law. This Agreement and the legal relations among the
parties hereto will be governed by and construed in accordance with the rules
and substantive laws of the State of Florida, United States of America, without
regard to conflicts of law provisions thereof
12.10 Execution in Counterparts. This Agreement may be executed in two or
more counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same agreement.
12.11 Tides and Headings. Tides and headings to Sections herein are
inserted for convenience of reference only, and are not intended to be a part of
or to affect the meaning or interpretation of this Agreement.
12.12 Invalid Provisions. If any provision of this Agreement is held to he
illegal, invalid, or unenforceable under any present or future Law, and if the
rights or obligations under this Agreement of Seller on the one hand and
Purchaser on the other hand will not be materially and adversely affected
thereby, (a) such provision will be fully severable; (b) this Agreement will be
construed and enforced as if such illegal, invalid, or unenforceable provision
had never comprised a part hereof; (c) the remaining provisions of this
Agreement will remain in full force and effect and will not be affected by the
illegal, invalid, or unenforceable provision or by its severance from this
Agreement; and (d) in lieu of such illegal, invalid, or unenforceable provision,
there will be added automatically as a part of this Agreement a legal, valid,
and enforceable provision as similar in terms to such illegal, invalid, or
unenforceable provision as may be possible.
12.13 Bulk Sales. Purchaser waives compliance by Seller with the
provisions of the so-called bulk sales Law of any applicable jurisdiction;
provided, however, that Seller will indemnify, defend and hold harmless
Purchaser in respect of any Indemnifiable loss relating to,
-10-
<PAGE>
resulting from or arising out of Seller' failure to comply with such Laws in
connection with the transactions contemplated by this agreement.
12.14 Transfers. Purchaser and Seller will cooperate and take such action
(as may be reasonably requested by the other in order to effect an orderly
transfer of the Transferred Assets with a minimum of disruption to the
operations and employees of the businesses of Purchaser and Seller.
12.15 Transfer Taxes. All sales, use, transfer, stamp, conveyance, value
added or other similar taxes, duties, excises or governmental charges imposed by
any taxing jurisdiction, domestic or foreign, and all recording or filing fees,
notarial fees or other similar costs of Closing with respect to the transfer of
the Transferred Assets or otherwise on account of this Agreement or the
transactions contemplated hereby will be borne one-half by Seller and one-half
by Purchaser.
12.16 Brokers. Purchaser hereby agrees to indemnify and hold harmless
Seller, and Seller hereby agrees to indemnify and hold harmless Purchaser,
against any liability, claim, loss, damage or expense incurred by Seller or
Purchaser, respectively, relating to any fees or commissions owed to any broker,
finder or financial advisor as a result of actions taken by Purchaser or Seller,
respectively.
12.17 Attorneys' Fees. If any action at law or in equity is necessary to
enforce or interpret the terms of this Agreement, the prevailing party shall be
entitled to recover in such action its reasonable attorneys' fees, costs and
necessary disbursements in addition to any other relief to which it may be
entitled.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
TEXAS INSTRUMENTS INCORPORATED
By: /s/ Glenn Culhane
-------------------------------------
Name: Glenn Culhane
Title: Vice president - Texas Instruments,
Manager World Wide Standard Linear and
Logic Products
HARRIS ADVANCED TECHNOLOGY
(MALAYSIA) SDN. BHD
By: /s/ Bryan R. Roub
-------------------------------------
Name: Bryan R. Roub
Title: Director
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<PAGE>
EXHIBIT A
DEFINITIONS
"Affiliate" shall mean with respect to any Person, any other person who,
directly or indirectly, controls, is controlled by, or is under common control
with that Person.
"Agreement" shall have the meaning ascribed to such term in the preamble
to this Agreement.
"Business Day" shall mean a day other than a Saturday, Sunday or other day
on which commercial banks in New York City are authorized or required by law to
Close.
"Closing Date Payment" shall have the meaning ascribed to such term in
Section 4.2 of this Agreement.
"Closing Date" shall have the meaning ascribed to such term in Section 5.1
of this Agreement.
"Closing" shall have the meaning ascribed to such term in Section 5.1 of
this Agreement.
"Commercial Logic Business" shall have the meaning ascribed to such term
in the recitals to this Agreement.
"Commercial Logic Products" shall have the meaning ascribed to such term
in the recitals to this Agreement.
"Consent" shall mean any consent, approval or authorization of, notice to,
or designation, registration, declaration or filing with, any Person.
"Contract" shall mean any agreement, contract, lease, commitment, license,
undertaking or other legally binding contractual right or obligation to which a
Person is a party or by which a Person or its assets or properties are bound.
"Governmental Authority" shall mean any federal, state, local or foreign
government or any subdivision, agency, instrumentality, authority, department,
commission, board or bureau thereof or any federal, state, local or foreign
court, tribunal or arbitrator.
"HSR Act" shall have the meaning ascribed to such term in Section 6.3 of
this Agreement.
"HAT" shall have the meaning ascribed to such term in the preamble to this
Agreement.
"Laws" shall mean all federal, state, local or foreign laws, ordinances,
rules and regulations.
"Liens" shall mean all tide defects or objections, mortgages, liens,
claims, charges, pledges, or other encumbrances of any nature whatsoever,
including without limitation licenses, leases, chattel or other mortgages,
collateral security arrangements, pledges, tide imperfections,
-13-
<PAGE>
defect or objection liens, security interests, conditional and installment sales
agreements, easements, encroachments or restrictions, of any kind and other tide
or interest retention arrangements, reservations or limitations of any nature.
"Order" shall mean any judgment, award, order, writ, injunction or decree
issued by any Governmental Authority.
"Permits" shall mean all permits, licenses, approvals, franchises, notices
and authorizations issued by any Governmental Authority.
"Permitted Liens" shall mean Liens for taxes, assessments and other
governmental charges which are not due and payable or which may thereafter be
paid without penalty.
"Person" shall mean any individual, partnership, joint venture,
corporation, trust, unincorporated organization, Governmental Authority or other
entity.
"Purchase Price" shall have the meaning ascribed to such term in Section
4.1 of this Agreement.
"Purchaser" shall have the meaning ascribed to such term in the recitals
to this Agreement.
"Seller" shall have the meaning ascribed to such term in the preamble to
this Agreement.
"Transferred Assets" shall have the meaning ascribed to such term in
Section 2.1 of this Agreement.
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<PAGE>
Schedule 6.5
Financial Data "GAAP" Exceptions
Historical financial data used in this transaction was prepared in accordance
with generally accepted accounting principles (GAAP) except for the data
regarding the following matters:
(i) A constant exchange rate for Malaysia was used in all periods.
(ii) Corporate Headquarters or Sector charges pertaining to
Management Information Systems and other similar charges for systems used
throughout the business were not reflected in the historical financial data.
(iii) Normal year-end adjustments to financial results, which were
immaterial when viewed in the aggregate, were not reflected in the historical
financial data.
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EXHIBIT 10.42
ASSET PURCHASE AGREEMENT
between
TEXAS INSTRUMENTS INCORPORATED,
as Purchaser,
and
HARRIS CORPORATION,
HARRIS ADVANCED TECHNOLOGY (MALAYSIA) SDN. BHD
and
HARRIS SOUTHWEST PROPERTIES, INC.,
as Sellers
October 23, 1998
<PAGE>
TABLE OF CONTENTS
Page
----
I. DEFINITIONS............................................................1
1.1 DEFINITIONS......................................................1
II. PURCHASE OF ASSETS.....................................................1
2.1 PURCHASE AND SALE OF TRANSFERRED ASSETS..........................1
(a) Products...................................................1
(b) Inventories................................................2
(c) Expensed Assets............................................2
(d) [Intentionally omitted.]...................................2
(e) Component Testing Software and Hardware and Associated
Documentation..............................................2
(f) Product Software...........................................2
(g) Technical Data.............................................2
(h) Other Intellectual Property................................2
(i) Contracts..................................................2
(j) Books and Records..........................................3
2.2 EXCLUDED ASSETS..................................................3
2.3 NONASSIGNABLE CONTRACTS..........................................3
(a) Nonassignability...........................................3
(b) Sellers to Use Commercially Reasonable Efforts.............3
(c) If Waivers or Concents Cannot Be Obtained..................3
III. ASSUMPTION OF LIABILITIES..............................................4
3.1 ASSUMED LIABILITIES..............................................4
3.2 RETAINED LIABILITIES.............................................4
IV. PURCHASE PRICE.........................................................4
4.1 PURCHASE PRICE...................................................4
4.2 PAYMENTS OF PURCHASE PRICE.......................................4
4.3 PHYSICAL INVENTORY AND INVENTORY TRANSFER PRICE..................5
4.4 INVENTORY PAYMENT................................................5
4.5 ALLOCATION OF PURCHASE PRICE.....................................5
V. CLOSING................................................................6
5.1 CLOSING..........................................................6
5.2 DELIVERIES AT CLOSING............................................6
5.3 DELIVERY OF PURCHASED ASSETS.....................................7
5.4 CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER.................7
5.5 CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLERS...................8
VI. REPRESENTATIONS AND WARRANTIES OF SELLERS..............................9
6.1 ORGANIZATION AND GOOD STANDING...................................9
6.2 AUTHORIZATION AND EFFECT OF AGREEMENT............................9
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<PAGE>
6.3 NO CONFLICTS.....................................................9
6.4 NO THIRD PARTY OPTIONS..........................................10
6.5 FINANCIAL DATA..................................................10
6.6 [INTENTIONALLY OMITTED.]........................................10
6.7 LITIGATION......................................................10
6.8 TITLE TO AND CONDITION OF ASSETS................................10
6.9 PRODUCTS........................................................10
6.10 CONTRACTS.......................................................11
6.11 DISTRIBUTORS AND CUSTOMERS......................................11
6.12 YEAR 2000 COMPLIANCE............................................11
6.13 DISCLOSURE......................................................11
VII. REPRESENTATIONS AND WARRANTIES OF PURCHASER...........................12
7.1 CORPORATE ORGANIZATION..........................................12
7.2 AUTHORIZATION AND EFFECT OF AGREEMENT...........................12
7.3 NO CONFLICTS....................................................12
7.4 LITIGATION......................................................12
7.5 DISCLAIMER......................................................12
VIII. PRE-CLOSING COVENANTS.................................................13
8.1 ACCESS OF INFORMATION...........................................13
8.2 CONDUCT OF BUSINESS.............................................13
8.3 NOTIFICATION....................................................13
8.4 NO INCONSISTENT ACTION..........................................13
8.5 SATISFACTION OF CONDITIONS......................................14
8.6 FILINGS.........................................................14
8.7 PUBLICITY.......................................................14
8.8 CUSTOMER RETENTION..............................................13
IX. POST-CLOSING COVENANTS................................................14
9.1 COVENANT NOT TO COMPETE.........................................15
9.2 CONFIDENTIALITY.................................................15
9.3 SPECIFIC PERFORMANCE: REFORMATION...............................15
9.4 PRODUCT WARRANTY MATTERS........................................16
9.5 MAINTENANCE OF BOOKS AND RECORDS................................16
X. TERMINATION...........................................................17
10.1 TERMINATION.....................................................17
XI. SURVIVAL AND INDEMNIFICATION..........................................17
11.1 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS...........17
11.2 LIMITATIONS ON LIABILITY, WARRANTIES AND COVENANTS..............18
11.3 INDEMNIFICATION.................................................18
11.4 DEFENSE OF CLAIMS...............................................19
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<PAGE>
XII. MISCELLANEOUS PROVISIONS..............................................21
12.1 NOTICES.........................................................21
12.2 EXPENSES........................................................22
12.3 SUCCESSORS AND ASSIGNS..........................................22
12.4 WAIVER..........................................................22
12.5 ENTIRE AGREEMENT: DISCLOSURE SCHEDULES..........................22
12.6 AMENDMENTS, SUPPLEMENTS,ETC.....................................22
12.7 RIGHTS OF THE PARTIES...........................................23
12.8 FURTHER ASSURANCES..............................................23
12.9 APPLICABLE LAW..................................................23
12.10 EXECUTION IN COUNTERPARTS.......................................23
12.11 TITLES AND HEADINGS.............................................23
12.12 INVALID PROVISIONS..............................................23
12.13 BULK SALES......................................................23
12.14 TRANSFERS.......................................................23
12.15 TRANSFER TAXES..................................................24
12.16 BROKERS.........................................................24
12.17 ATTORNEYS' FEES.................................................24
Exhibits
Exhibit A - Definitions
Exhibit B - Intellectual Property Agreement
Exhibit C - Supply Agreement
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<PAGE>
Military
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (this "Agreement") is made and entered into
as of October 23, 1998, by and between Texas Instruments Incorporated, a
Delaware corporation ("Purchaser"), on the one hand, and Harris Corporation, a
Delaware corporation acting through its Semiconductor Sector ("Harris"), Harris
Advanced Technology (Malaysia) Sdn. Bhd, a Malaysian corporation ("HAT"), and
Harris Southwest Properties, Inc., a Delaware corporation ("HSP," with HSP,
Harris and HAT sometimes referred to collectively as the "Sellers" and
individually as a "Seller"), on the other hand.
RECITALS:
WHEREAS, Sellers presently conduct the business (the "Military Logic
Business") of manufacturing, marketing and selling digital logic integrated
circuits manufactured to military specifications, but excluding therefrom
radiation hardened products (the "Military Logic Products"), all of which are
listed by part number on Schedule 6.9(a) hereto; and
WHEREAS, Sellers desire to sell and Purchaser desires to purchase the
exclusive right to manufacture, market and sell the Military Logic Products and
certain assets, rights and properties of Sellers used or useful in connection
with the Military Logic Business, all on the terms and subject to the conditions
set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants, representations,
warranties and agreements herein contained, the parties hereto agree as follows:
I. DEFINITIONS
1.1 Definitions. As used in this Agreement, unless the context otherwise
requires, capitalized terms used in this Agreement shall have the meanings set
forth on Exhibit A hereto.
II. PURCHASE OF ASSETS
2.1 Purchase and Sale of Transferred Assets. On the terms and subject to
the conditions hereof, at the Closing (as defined in Section 5.1), Sellers will
sell, transfer, convey, assign and deliver, and Purchaser will purchase and
accept, all of Sellers' right, title and interest in and to the rights,
properties and assets described in this Section 2.1 (collectively, the
"Transferred Assets"), free and clear of all Liens except Permitted Liens:
(a) Products. All right, title and interest of Sellers in and to the
Military Logic Products and the manufacture, marketing and sale thereof,
including without limitation the part numbers and package designations
associated therewith and samples of each Military Logic Product;
<PAGE>
(b) Inventories. All inventory of finished Military Logic Products
and all inventory of probed Military Logic Product die, wherever located (the
"Military Logic Product Inventory");
(c) Expensed Assets. Certain expensed assets of Sellers used or held
for use in connection with the Military Logic Business, as identified on
Schedule 2.1(c) hereto;
(d) [Intentionally omitted.]
(e) Component Testing Software and Hardware and Associated
Documentation. All component software test programs used in the Military Logic
Business, associated probe cards and final test fixtures (including diagrams
thereof and associated documentation) used or useful in the design and
manufacture of the Military Logic Products, including such as are identified on
Schedule 2.1(e) hereto (the "Testing Hardware and Software");
(f) Product Software. All design, development, application and
technical support software and associated documentation used or useful in the
design and manufacture of the Military Logic Products, including such as are
identified on Schedule 2.1(f) hereto (the "Product Software");
(g) Technical Data. All technical information used or useful in the
Military Logic Business (whether in written or electronic format) or relating to
the Military Logic Products or to the manufacture, marketing and sale thereof,
including such information identified on Schedule 2.1(g) hereto, and further
including, without limitation, all test flows for probe and final test, yield
data by device for wafer fab and final test, Military Logic Product data books
or data sheets, outstanding specification waivers, outstanding product change
notices, special current customer requirements, specific flow for current
customers, characterization packets and electrical data logs, process and
assembly qualification data, ESD data, all device revisions, all die revisions,
die size, fabrication processes, layout rules for each technology, layout data
by device, process parameter limits for each technology, process history data
for each technology, process recipe modifications by device, mount and bond
diagrams by device, quality reliability data and to the extent available,
verification rules, schematics by device, SPICE models, materials list of
packages, assembly diagrams and masks;
(h) Other Intellectual Property.All other Intellectual Property (as
defined in the IP Agreement) to be conveyed pursuant to Article II of the IP
Agreement;
(i) Contracts. Subject to Section 2.3, all rights and incidents of
interest in and to all purchase orders for the purchase of Military Logic
Products outstanding at the time of Closing and entered into in the ordinary
course of business consistent with past practice (collectively, the "Military
Logic Contracts"); and
(j) Books and Records. All the books and records of the Military
Logic Business to be transferred pursuant to Section 4.1(f) of the IP Agreement.
2.2 Excluded Assets. No rights, properties or assets of Sellers shall be
included in the Transferred Assets except to the extent expressly referenced in
Section 2.1. As an example, no
2
<PAGE>
cash, work-in-process, receivables, fixtures, realty, capital assets, or
management information systems are included as Transferred Assets. Purchaser
shall not acquire under the terms of this Agreement any title or interest in the
name "Harris" or "Harris Semiconductor" or Sellers' monograms, logos,
trademarks, or any variations or combinations thereof. Purchaser, however, shall
be entitled to (i) market and sell without alteration all Military Logic Product
Inventory acquired hereunder and all Military Logic Products acquired under the
terms of the Supply Agreement (as hereinafter defined), which the parties
acknowledge shall bear Sellers' name and/or mark, (ii) continue to use, in
connection with the manufacture, marketing and sale of Military Logic Products,
all materials and supplies acquired hereunder and shall not be obligated to
overstamp or otherwise alter such materials prior to use and (iii) otherwise use
the above referenced Sellers' names and marks in accordance with the terms of
the license contained in the IP Agreement.
2.3 Nonassignable Contracts.
(a) Nonassignability. To the extent that any Military Logic Contract
to be assigned pursuant hereto is not capable of being assigned without the
consent, approval or waiver of a third person or entity, nothing in this
Agreement will constitute an assignment or require the assignment thereof except
to the extent provided in this Section 2.3.
(b) Sellers to Use Commercially Reasonable Efforts. Notwithstanding
anything contained in this Agreement to the contrary, Sellers will not be
obligated to assign to Purchaser any of their rights and obligations in and to
any of the Military Logic Contracts referred to in Section 2.3(a) without first
having obtained all consents, approvals and waivers necessary for such
assignment; provided, however, that Sellers shall use commercially reasonable
efforts to obtain all such consents, approvals and waivers prior to and, if the
Closing occurs, after the Closing Date (as defined in Section 5.1).
(c) If Waivers or Consents Cannot Be Obtained. To the extent that
the consents, approvals and waivers referred to in Section 2.3(a) are not
obtained by Sellers, Sellers shall use commercially reasonable efforts to (a)
provide to Purchaser the financial and business benefits of any Military Logic
Contract referred to in Section 2.3(a) and (b) and enforce, at the request and
expense of Purchaser, for the account of Purchaser, any rights of Sellers
arising from any such Military Logic Contract (including without limitation the
right to elect to terminate such Military Logic Contract in accordance with the
terms thereof upon the advice of Purchaser).
III. ASSUMPTION OF LIABILITIES
3.1 Assumed Liabilities. As of the Closing, Purchaser will assume and
thereafter, in due course, pay and fully satisfy the following liabilities and
obligations of Sellers (the "Assumed Liabilities") and no other liabilities or
obligations:
(a) all liabilities and obligations for product warranty claims
consistent with the terms and conditions set forth in Schedule 6.9(c) hereto
arising from Military Logic Products produced or sold by Sellers prior to
Closing, but not to exceed $10,000 in the aggregate;
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(b) all liabilities and obligations for distributor stock rotation
returns and ship and debit claims for Military Logic Product sold by Sellers to
the those distributors identified in Schedule 3.1(b) hereto (the "Specified
Distributors") prior to Closing in accordance with Sellers' existing distributor
arrangements as disclosed to Purchaser; and
(c) all liabilities and obligations of Sellers under the Military
Logic Contracts to the extent assigned to Purchaser, or if not so assigned, to
the extent Purchaser has received the financial and business benefits thereof
pursuant to Section 2.3(c), but in any event excluding any obligations arising
from a breach of any Military Logic Contract prior to Closing.
3.2 Retained Liabilities. Notwithstanding anything contained in this
Agreement to the contrary, Purchaser does not assume or agree to pay, satisfy,
discharge or perform and will not be deemed by virtue of the execution and
delivery of this Agreement or any document delivered at the Closing pursuant to
this Agreement, or as a result of the consummation of the transactions
contemplated by this Agreement, to have assumed, or to have agreed to pay,
satisfy, discharge or perform, any liability, obligation or indebtedness of
Sellers (whether primary or secondary, direct or indirect, known or unknown,
absolute or contingent, or otherwise/other than the Assumed Liabilities (such
liabilities and obligations retained by Sellers being referred to herein as the
"Retained Liabilities"). It is specifically agreed that Sellers shall remain
liable for all the Retained Liabilities.
IV. PURCHASE PRICE
4.1 Purchase Price. In consideration of the conveyance to Purchaser of the
Transferred Assets and the other rights granted to Purchaser pursuant hereto and
subject to the conditions and in accordance with terms hereof, Purchaser shall
(a) pay the Closing Date Payment and the Inventory Transfer Price to the
designated Seller in accordance with Sections 4.2 and 4.4 (collectively, the
"Purchase Price") and (b) assume the Assumed Liabilities.
4.2 Payments of Purchase Price. (a) At the Closing, Purchaser will pay
U.S. $6,000,000 (the "Closing Date Payment") to HSP by wire transfer.
(b) At the Closing, Purchaser will pay U.S. $1,000,000 (the
"Estimated Inventory Transfer Price") to Harris by wire transfer.
4.3 Physical Inventory and Inventory Transfer Price. At the close of
business on the Closing Date representatives of Sellers and Purchaser shall
conduct a physical inventory of the Military Logic Product Inventory. Within 15
days following the Closing, Purchaser will deliver to Sellers a schedule
reflecting all Military Logic Product Inventory of a merchantable quality that
is confirmed by such physical inventory, priced in accordance with the pricing
methodology set forth on Schedule 4.3 hereto (the "Product Inventory Schedule").
If Sellers do not deliver a written objection to the Product Inventory Schedule
(specifying the basis therefor) within 10 days following delivery of such
schedule to Sellers, then at the expiration of such 10-day period (or on such
earlier date as Sellers advise Purchaser in writing of their acceptance of such
schedule) the Product Inventory Schedule shall be final. In the event the
Sellers deliver their written objection to the Product Inventory Schedule within
such 10-day period, the parties shall seek to resolve the disputed items by
mutual agreement during the 15-day period following the
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delivery of such objection, and in the event the parties reach agreement
regarding the disputed items, the Product Inventory Schedule with all agreed
revisions, shall be final. In the event the parties fail to reach agreement
regarding one or more of the disputed items during such 15-day period, the
unresolved disputed items will be submitted to Price Waterhouse Coopers LLP or
such other accounting firm as the party mutually agree upon (the "Accountants")
for resolution and the determination with respect to such disputed items shall
be final and binding on the parties. In such event, the Product Inventory
Schedule, as revised pursuant to the agreement of the parties and the
determinations of the Accountants, shall be final. The aggregate variation of
the Military Logic Product Inventory reflected on the final Product Inventory
Schedule, as established pursuant to the preceding provisions, is herein
referred to as the "Inventory Transfer Price." Notwithstanding the foregoing, if
the value established for the Military Logic Product Inventory at Closing in
accordance with the foregoing provisions exceeds $1,000,000, the Inventory
Transfer Price shall be $1,000,000.
4.4 Inventory Payment.
(a) If the Inventory Transfer Price is greater than the Estimated
Inventory Transfer Price, Purchaser shall pay such difference to Harris by wire
transfer of immediately available funds to the account designated by Harris
within five days following the determination of the Inventory Transfer Price in
accordance with Section 4.3.
(b) If the Estimated Inventory Transfer Price is greater than the
Inventory Transfer Price, Harris shall pay such difference to Purchaser by wire
transfer of immediately available funds to the account designated by Purchaser
within five days following the determination of the Inventory Transfer Price in
accordance with Section 4.3.
4.5 Allocation of Purchase Price. Purchaser and Sellers agree to consult
with each other with respect to the allocation of the Purchase Price and Assumed
Liabilities to the Transferred Assets and IP Agreement for tax purposes;
provided, however, that nothing contained herein shall be deemed to obligate
either Purchaser or Sellers to reach agreement with respect to such allocation.
V. CLOSING
5.1 Closing. The consummation of the transactions contemplated hereby (the
"Closing") shall take place at the offices of Weil, Gotshal & Manges LLP, 100
Crescent Court, Suite 1300, Dallas, Texas (or at such other place as the parties
may designate), at 9:00 a.m. on December 3, 1998 or the third Business Day after
such later date as the conditions specified in Sections 5.4 and 5.5 are
fulfilled. The date on which the Closing is effected is referred to in this
Agreement as the "Closing Date."
5.2 Deliveries at Closing. At the Closing:
(a) Sellers shall deliver to Purchaser the items described in
clauses (i) through (vii) below:
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(i) a Bill of Sale, in form and substance reasonably
satisfactory to Purchaser and Sellers (the "Bill of Sale"), executed by Sellers;
(ii) an Assignment of Contracts, in form and substance
reasonably satisfactory to Purchaser and Sellers (the "Assignment of
Contracts"), executed by Sellers;
(iii) the Intellectual Property Agreement, substantially in
the form attached hereto as Exhibit B (the "IP Agreement"), executed by Sellers;
(iv) the Supply Agreement, substantially in the form attached
hereto as Exhibit C (the "Supply Agreement"), executed by Sellers;
(v) evidence that the parties signing this Agreement and the
Collateral Agreements on behalf of Sellers are authorized to do so;
(vi) the officers' certificates referenced in Section 5.4(c);
and
(vii) all other documents, certificates, instruments or
writings reasonably requested by Purchaser in connection herewith.
(b) Purchaser shall deliver to Sellers the items described in
clauses (i) through (vii) below:
(i) the Closing Date Payment and Estimated Inventory Transfer
Price by wire transfer of immediately available funds to the account or accounts
designated by Harris no later than two Business Days prior to Closing;
(ii) an Assumption of Liabilities Agreement pursuant to which
Purchaser assumes at Closing the Assumed Liabilities, in form and substance
reasonably satisfactory to Purchaser and Sellers (the "Assumption Agreement"),
executed by Purchaser;
(iii) the IP Agreement, executed by Purchaser;
(iv) the Supply Agreement, executed by Purchaser;
(v) evidence that the party signing this Agreement and the
Collateral Agreements on behalf of Purchaser is authorized to do so;
(vi) the officer's certificate referenced in Section 5.5(c);
and
(vii) all other documents, certificates, instruments or
writings reasonably requested by Sellers in connection herewith.
(c) The Bill of Sale, Assignment of Contracts, IP Agreement, Supply
Agreement, and Assumption Agreement shall constitute, collectively, the
"Collateral Agreements."
5.3 Delivery of Purchased Assets. Title to the Transferred Assets passes
to Purchaser as of the Closing at the applicable places of business of Sellers,
provided that in the case of
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Transferred Assets located at the Malaysian facilities of HAT, title to such
Transferred Assets shall pass to Purchaser upon physical delivery thereof to
Purchaser at such location outside of Malaysia as is designated by Purchaser.
Promptly following the Closing, Sellers will place Purchaser in full possession
and control of the Transferred Assets and all other information to be provided
in accordance with the terms of the IP Agreement. All information capable of
electronic transmission will be transmitted to Purchaser in such manner. All
other assets and information will be delivered by Sellers to such locations as
Purchaser shall designate by means of delivery reasonably designated by
Purchaser, but at Sellers' cost and risk of loss.
5.4 Conditions Precedent to Obligations of Purchaser. The obligations of
Purchaser under this Agreement to consummate the transactions contemplated
hereby will be subject to the satisfaction, at or prior to Closing, of all of
the following conditions, any one or more of which may be waived at the option
of Purchaser:
(a) All representations and warranties of Sellers made in this
Agreement or in any exhibit, schedule or document delivered pursuant hereto
shall be true and complete in all material respects on and as of the Closing
Date as if made on and as of that date.
(b) All of the terms, covenants and conditions to be complied with
and performed by the Sellers on or prior to the Closing Date shall have been
complied with or performed.
(c) Purchaser shall have received a certificate or certificates,
dated as of the Closing Date, executed on behalf of each Seller by an authorized
officer thereof, certifying in such detail as Purchaser may reasonably request
that the conditions specified in Sections 5.4(a) and (b) hereof have been
fulfilled.
(d) The waiting period under the HSR Act shall have expired or
terminated.
(e) No suit, action, claim or governmental proceeding shall be
pending against, and no order, decree or judgment of any court, agency or
Governmental Authority shall have been rendered against, any party hereto which
would render it unlawful, as of the Closing Date, to effect the transactions
contemplated by this Agreement in accordance with its terms.
(f) Consistent with Section 8.8, Purchaser shall have entered into
such arrangements with the Specified Distributors regarding their continued
distribution of the Military Logic Products as are reasonably satisfactory to
Purchaser (it being acknowledged and agreed to that this condition shall not be
satisfied if the Specified Distributors which account for 10% or more of sales
of Military Logic Products by Sellers shall not have agreed to continue to
distribute Military Logic Products). Such arrangements for continued
distribution will be deemed reasonably satisfactory if Specified Distributors
acknowledge that they will continue to distribute Military Logic Products on
substantially the same terms as are currently in effect with Sellers.
(g) The transactions contemplated by that certain Asset Purchase
Agreement of even date herewith between the parties relating to the purchase and
sale of certain assets of the commercial digital logic integrated circuits
business of Sellers shall have been consummated.
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5.5 Conditions Precedent to Obligations of Sellers. The obligations of
Sellers under this Agreement to consummate the transactions contemplated hereby
will be subject to the satisfaction, at or prior to the Closing, of all the
following conditions, any one or more of which may be waived at the option of
Sellers:
(a) All representations and warranties of Purchaser made in this
Agreement or in any exhibit, schedule or document delivered pursuant hereto
shall be true and complete in all material respects as of the Closing Date as if
made on and as of that date.
(b) All of the terms, covenants and conditions to be complied with
and performed by Purchaser on or prior to the Closing Date shall have been
complied with or performed.
(c) Sellers shall have received a certificate, dated as of the
Closing Date, executed on behalf of Purchaser by an authorized officer thereof,
certifying in such detail as Seller may reasonably request that the conditions
specified in Sections 5.5(a) and (b) have been fulfilled.
(d) The waiting period under the HSR Act shall have expired or
terminated.
(e) No suit, action, claim or governmental proceeding shall be
pending against, and no order, decree or judgment of any court, agency or other
Governmental Authority shall have been rendered against, any party hereto which
would render it unlawful, as of the Closing Date, to effect the transactions
contemplated by this Agreement in accordance with its terms.
(f) The transactions contemplated by that certain Asset Purchase
Agreement of even date herewith between the parties relating to the purchase and
sale of certain assets of commercial digital logic integrated circuits business
of Sellers shall have been consummated.
VI. REPRESENTATIONS AND WARRANTIES OF SELLERS
Sellers jointly and severally make the following representations and
warranties so Purchaser, each of which shall be true and correct as of the date
hereof and as of the Closing Date and shall be unaffected by any investigation
heretofore or hereafter made.
6.1 Organization and Good Standing. Each of Harris and HSP is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has the requisite corporate power and authority to
own, lease or otherwise hold its properties and assets and to carry on its
business as presently conducted. HAT is a corporation validly existing and in
good standing under the laws of Malaysia and has the requisite corporate power
and authority to own, lease or otherwise hold its properties and assets and to
carry on in business as presently conducted.
6.2 Authorization and Effect of Agreement. Sellers have the requisite
corporate power and authority to execute and to deliver this Agreement and to
perform the transactions contemplated hereby. The execution and delivery by
Sellers of this Agreement and the
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performance by them of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of each Seller. This
Agreement has been duly executed and delivered by Sellers and constitutes a
valid and binding agreement of Sellers, enforceable against each Seller in
accordance with its terms, subject to applicable bankruptcy, reorganization,
moratorium, and similar laws affecting creditors' rights and remedies generally
and subject, as to enforceability, to general principles of equity. Each of the
Collateral Agreements, when executed and delivered by Sellers at Closing, will
constitute a valid and binding agreement of Sellers, enforceable against each
Seller in accordance with its terms, subject to applicable bankruptcy,
reorganization, moratorium, and similar laws affecting creditors' rights and
remedies generally and subject, at to enforceability, to general principles of
equity.
6.3 No Conflicts. The execution and delivery of this Agreement and the
Collateral Agreements by Sellers does not, and the performance by Sellers of the
transactions contemplated by this Agreement and the Collateral Agreements will
not, conflict with, or result in any violation of, or constitute a default
under, or, as applicable, give rise to the creation of a Lien upon any of the
Transferred Assets or to a right of termination, cancellation or acceleration of
any obligation or to a loss of a benefit under, (a) any provision of the
Certificate of Incorporation or Bylaws or other applicable constituent documents
of any Seller, (b) except for required consents to assign Military Logic
Contracts, any of the terms, conditions or provisions of any Contract by which
either Seller is bound, or (c) any Law or Order applicable to or binding on
either Seller or its assets. Except for expiration of the waiting period under
the Hart-Scott-Rodino Antitrust Improvements Act (the "HSR Act") and required
consents to assign Military Logic Contracts, no Consent is required to be
obtained, made or given (whether pursuant to applicable Law, Contract or
otherwise) in connection with the execution and delivery of this Agreement by
Sellers or the performance by Sellers of the transactions contemplated hereby.
6.4 No Third Party Options. There are no existing agreements, options or
commitments granting to any Person the right to acquire any of the Transferred
Assets or any interest therein except for sales of Military Logic Product
Inventory in the ordinary course of business.
6.5 Financial Data. All historical financial data related to the Military
Logic Business provided to Purchaser in connection with the negotiation of the
transactions contemplated hereby (i) was accurately extracted from the books and
records of Sellers, (ii) except as identified on Schedule 6.5 hereto, was
prepared in accordance with generally accepted accounting principles
consistently applied, and (iii) fairly presents in all material respects the
assets, liabilities and results of operations of the Military Logic Business.
6.6 [Intentionally omitted.]
6.7 Litigation. There are no judicial or administrative actions,
proceedings or investigations pending or, to Sellers' knowledge, threatened that
question the validity of this Agreement or any action taken or to be taken by
Sellers in connection with this Agreement. There are no lawsuits, claims,
administrative or other proceedings or investigations relating to the conduct of
the Military Logic Business or otherwise affecting the Transferred Assets
pending, or, to Sellers' knowledge, threatened against Sellers, except as
disclosed in the IP
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Agreement. There are no judgments, orders or decrees of any Governmental
Authority binding on Sellers that relate to the Military Logic Business or
otherwise affect the Transferred Assets.
6.8 Title to and Condition of Assets. Sellers have, and at Closing,
Sellers will convey to Purchaser, good, valid and indefeasible title to the
Transferred Assets, free and clear of all Liens other than Permitted Liens. The
Transferred Assets, taken as a whole, are in good operating condition and
repair, subject to normal wear, are usable in the regular and ordinary course of
business and conform to all applicable Laws.
6.9 Products. (a) Attached hereto as Schedule 6.9(a) is a complete list of
the Military Logic Products by part number.
(b) The Military Logic Product Inventory is of good and merchantable
quality, free of defects, and conforms to applicable military specifications,
except in the case of such inventory that is designated as defective on the
Product Inventory Schedule and as to which no value has been assigned.
(c) Schedule 6.9(c) sets forth the standard form terms and
conditions of all product warranties generally extended by the Sellers to
purchasers of the Military Logic Products during the preceding three years.
(d) Schedule 6.9(d) sets forth Sellers' product warranty,
distributor stock rotation, ship and debit claims and product liability
experience for the Military Logic Products during the preceding three years.
6.10 Contracts. The Military Logic Contracts are valid and enforceable in
accordance with their terms, subject to applicable bankruptcy, reorganization,
moratorium, and similar laws affecting creditors' rights and remedies generally
and subject, as to enforceability, to general principles of equity. Sellers are
not, and to Sellers' knowledge, no other party thereto is, in material default
in the performance, observance or fulfillment of any obligation under the
Military Logic Contracts, and, to Sellers' knowledge, no event has occurred
which with or without the giving of notice or lapse of time, or both, would
constitute a default thereunder.
6.11 Distributors and Customers. Schedule 6.11 hereto set forth a list of
each distributor through which Sellers currently distribute the Military Logic
Products and each purchaser of Military Logic Products outside of distribution
during the twelve months ending October 2, 1998, showing the approximate total
sales (expressed in dollars), by device and by quarter, of Military Logic
Products to each such distributor and customer during the twelve months ending
October 2, 1998. Sellers have provided to Purchaser (i) the pricing arrangements
and other material terms related to Military Logic Products under existing
volume purchase agreements to which Harris is a party and (ii) the current
distributor policies of Harris covering the Military Logic Products with each
current distributor of such products.
6.12 Year 2000 Compliance. The Military Logic Products, the Testing
Hardware and Software, the Product Software and all Date-Sensitive Systems to be
conveyed or licensed to Purchaser pursuant to the terms of this Agreement are
Year 2000 Compliant. For purposes of this Agreement, (i) "Date-Sensitive System"
means any software, microcode, or hardware system or component, including any
electronic or electronically controlled system or component, that
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processes any Date Data, (ii) "Date Data" means any data of any type that
includes date information or which is otherwise derived from, dependent on or
related to date information, and (iii) "Year 2000 Compliant" means that the
applicable device, software, microcode, or hardware system or component
accurately processes Date Data, including for the twentieth and twenty-first
centuries, without loss of any functionality or performance, including but not
limited to calculating, comparing, sequencing, storing and displaying such Date
Data (including all leap year considerations), when used on a stand-alone basis
or in combination with other software or hardware.
6.13 Disclosure. No representation or warranty of Sellers contained
herein, and no statement contained in any document or other instrument to be
furnished by Sellers to Purchaser in connection with the transactions
contemplated hereby, contains or will contain any untrue statement of a material
fact or omits or will omit to state a material fact necessary to make the
representation, warranty or statement so made not misleading.
VII. REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby makes the following representations and warranties to
Sellers, each of which shall be true and correct as of the date hereof and as of
the Closing Date and shall be unaffected by any investigation heretofore or
hereafter made.
7.1 Corporate Organization. Purchaser is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has the requisite corporate power and authority to own, lease or otherwise
hold its properties and assets and to carry on its business as presently
conducted.
7.2 Authorization and Effect of Agreement. Purchaser has the requisite
corporate power and authority to execute and deliver this Agreement and to
perform the transactions contemplated hereby. The execution and delivery by
Purchaser of this Agreement and the performance by it of the transactions
contemplated hereby have been duly authorized by all necessary corporate action
on the part of Purchaser. This Agreement has been duly executed and delivered by
Purchaser and constitutes a valid and binding agreement of Purchaser,
enforceable against Purchaser in accordance with its terms, subject to
applicable bankruptcy, reorganization, moratorium and similar laws affecting
creditors' rights and remedies generally and subject, as to enforceability, to
general principles of equity. Each of the Collateral Agreements, when executed
and delivered by Purchaser at Closing, will constitute a valid and binding
agreement of Purchaser, enforceable against Purchaser in accordance with its
terms, subject to applicable bankruptcy, reorganization, moratorium, and similar
laws affecting creditors' rights and remedies generally and subject, as to
enforceability, to general principles of equity.
7.3 No Conflicts. The execution and delivery of this Agreement and the
Collateral Agreements by Purchaser does not, and the performance by Purchaser of
the transactions contemplated by this Agreement and the Collateral Agreements
will not, conflict with, or result in any violation of, or constitute a default
under (a) any provision of the Certificate of Incorporation or Bylaws of
Purchaser, (b) any of the terms, conditions, or provisions of any agreement or
other document by which Purchaser is bound, or (c) any Law or Order applicable
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to or binding on Purchaser. Except for expiration of the waiting period under
the HSR Act, no Consent is required to be obtained, made or given (whether
pursuant to applicable Law, Contract or otherwise) in connection with the
execution and delivery of this Agreement by Purchaser or the performance by
Purchaser of the transactions contemplated hereby.
7.4 Litigation. There are no judicial or administrative actions,
proceedings or investigations pending or, to Purchaser's knowledge, threatened
that question the validity of this Agreement or any action taken or to be taken
by Purchaser in connection with this Agreement.
7.5 Disclaimer. Other than as specifically provided in this Agreement or
in any exhibit, schedule or document delivered pursuant hereto, the Purchaser
acknowledges and agrees that the Transferred Assets are transferred on an "as
is, where is" basis "with all faults" and that the Sellers are not making any
further representations or warranties of any kind, express or implied,
respecting the Transferred Assets. The Purchaser acknowledges that any
projections provided by Sellers are for illustrative purposes only and do not
form the basis for any liability.
VIII. PRE-CLOSING COVENANTS
8.1 Access of Information. Prior to the Closing, upon reasonable notice
from Purchaser to Sellers, Sellers will afford to the officers, attorneys,
accountants or other authorized representatives of Purchaser reasonable access
during normal business hours to the employees, Transferred Assets, facilities
and books and records of Sellers so as to afford Purchaser full opportunity to
make such review, evaluation and in investigation of the Military Logic Business
as Purchaser determines are reasonably necessary in connection with the
consummation of the transactions contemplated hereby, provided that the
foregoing right of access shall not be exercisable in such a manner as to
interfere unreasonably with the normal operations and business of Sellers.
Purchaser will be permitted to make extracts from or to make copies of such
books and records as may be reasonably necessary in connection therewith. Prior
to the Closing, Sellers will promptly furnish or cause to be furnished to
Purchaser such financial and operating data and other information relating to
the Military Logic Business as Purchaser may reasonably request.
8.2 Conduct of Business. Except as contemplated herein or as otherwise
consented to by Purchaser in writing, during the period from the date of this
Agreement and continuing until the Closing Date, Sellers will, in respect of its
conduct of the Military Logic Business:
(a) use commercially reasonable efforts to (i) carry on the Military
Logic Business in the usual, regular and ordinary course as presently conducted
and consistent with past practice (except to the extent required by this
Agreement), (ii) keep the Military Logic Business intact, and (iii) maintain the
goodwill associated with the Military Logic Business, including but not limited
to preserving the relationships of distributors, customers and others having
business dealings with the Military Logic Business; and
(b) not take or omit to take any action as a result of which any
representation or warranty of Sellers made in Article VI would be rendered
untrue or incorrect if such representation or warranty were made immediately
following the taking or failure to take such action.
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8.3 Notification. (a) Sellers shall notify Purchaser, and Purchaser shall
notify Sellers, of any litigation, arbitration or administrative proceeding
pending or, to their knowledge, threatened against Sellers or Purchaser, as the
case may be, which challenges the transactions contemplated hereby.
(a) Sellers will provide prompt written notice to Purchaser of any
change in any of the information contained in its representations and warranties
made in Article VI hereof or any exhibits or schedules referred to herein or
attached hereto and shall promptly furnish any information which Purchaser may
reasonably request in relation to such change; provided, however, that such
notice shall not operate to cure any breach of the representations and
warranties made in Article VI hereof or any exhibits or schedules referred to
herein or attached hereto.
8.4 No Inconsistent Action. Neither Purchaser nor Sellers shall take any
action which is materially Inconsistent with its obligations under this
Agreement.
8.5 Satisfaction of Conditions. Prior to the Closing, each of the parties
will use reasonable commercial efforts with due diligence and in good faith to
satisfy promptly all conditions required hereby to be satisfied by such party In
order to expedite the consummation of the transactions contemplated hereby.
8.6 Filings. As promptly as practicable after the execution of this
Agreement, each party shall use its commercially reasonable efforts to obtain,
and to cooperate with the other party in obtaining, all authorizations,
consents, orders and approvals of any Governmental Authority that may be or
become necessary in connection with the consummation of the transactions
contemplated by this Agreement, and to take all reasonable actions to avoid the
entry of any order or decree by any Governmental Authority prohibiting the
consummation of the transactions contemplated hereby, including without
limitation, the notifications required to be filed by it under the HSR Act, and
shall furnish to the other all such information in its possession as may be
necessary for the completion of the notifications to be filed by the other.
Purchaser and Sellers agree that the filing fee required to be paid in
connection with the filing under the HSR Act shall be paid one-half by Purchaser
and one-half by Sellers.
8.7 Publicity. Prior to the Closing, neither party will issue or cause the
publication of any press release or other public announcement with respect to
this Agreement or the transactions contemplated hereby without the prior consent
of the other party, which consent will not be unreasonably withheld; provided,
however, that nothing herein will prohibit either party from issuing or causing
publication of any such press release or public announcement to the extent that
such party determines such action to be required by Law or the rules of any
national stock exchange applicable to it, in which event the party making such
determination will, if practicable in the circumstances, use reasonable efforts
to allow the other party reasonable time to comment on such release or
announcement, and will make all revisions thereto reasonably requested by such
other party, in advance of its issuance.
8.8 Customer Retention. Promptly following the execution of this
Agreement, Purchaser and Sellers shall jointly notify all distributors and
customers of the Military Logic Business of the general nature of the
transactions contemplated hereby. Harris senior
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management will contact each of the Specified Distributors and all key customers
of the Military Logic Business, in person or by teleconference, to encourage
such distributors and customers to continue to purchase the Military Logic
Products from Purchaser following Closing and will otherwise use commercially
reasonable efforts to cause the business relationships maintained by Sellers
with such distributors and customers to be transferred to Purchaser without
interruption at Closing. Marketing and sales personnel of Sellers and Purchaser
will participate in joint visits to the Specified Distributors and key customers
for the same purpose. Sellers are aware that Purchaser does not intend to
continue to distribute the Military Logic Products through any of Sellers'
current distributors other than the Specified Distributors or through Seller's
existing sales representatives and acknowledges and confirms that Purchaser will
not, as a consequence of the transactions contemplated hereby, assume or
undertake any obligation to Sellers' distributors and sales representatives with
respect to Military Logic Product sales (other than, in the case of the
Specified Distributors, the Assumed Liabilities). Sellers acknowledge and agree
that any liabilities associated with the termination of Military Logic Product
sales and distribution arrangements with Sellers' sales representatives and
distributors constitute Retained Liabilities.
IX. POST-CLOSING COVENANTS
9.1 Covenant Not to Compete. Sellers agree that prior to the fifth
anniversary of the Closing Date, Sellers will not, directly or indirectly, own,
manage, operate, control or participate in the ownership,management, operation
or control of any business, whether in corporate, proprietorship or partnership
form or otherwise, engaged in the design, manufacturing, marketing or sale of
Military Logic Products or other products in these families having similar
integration levels and performance characteristics; provided, however, that
nothing herein shall preclude Sellers from (i) owning an equity interest of five
percent or less (a) of any publicly traded company listed on a national stock
exchange or on the NASDAQ national market system or (b) in ventures,
partnerships or other entities that do not constitute affiliates (as such term
is defined in the Securities Exchange Act of 1934, as amended) of Sellers, (ii)
acquiring the capital stock or assets of any business that derives less than 10%
of its consolidated revenues from an activity prohibited by the forgoing
provisions, so long as the Sellers make their best efforts to divest that
portion of the acquired business that is engaged in such prohibited activity
within 12 months following such acquisition, (iii) engaging in the
manufacturing, marketing and sale of radiation hardened products or other
products having similar integration levels and performance characteristics, (iv)
manufacturing, marketing, designing or selling products or systems that
integrate or utilize Military Logic Products manufactured by third parties, or
(v) manufacturing, marketing, designing or selling products or systems of any
other digital logic product having substantially greater integration and
performance characteristics.
9.2 Confidentiality. Sellers agree that from and after the Closing,
Sellers will not, directly or indirectly, disclose, reveal, divulge or
communicate to any person or entity other than authorized officers, directors
and employees of Purchaser, or use or otherwise exploit for its own benefit or
for the benefit of anyone other than Purchaser, any Confidential Information (as
defined below). Sellers shall not have any obligation to keep confidential any
Confidential Information if and to the extent disclosure thereof is specifically
required by Law or in the enforcement of its rights hereunder; provided,
however, that in the event disclosure is required
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<PAGE>
by applicable Law, Sellers shall, to the extent reasonably possible, provide
Purchaser with prompt notice of such requirement prior to making any disclosure
so that Purchaser may seek an appropriate protective order. For purposes of this
Section 9.2, "Confidential Information" shall mean any confidential information
with respect to the conduct or details of the Military Logic Business,
including, without limitation, methods of operation, customers, and customer
lists, products, proposed products, former products, prices, fees, costs, plans,
designs, technology, inventions, trade secrets, know-how, software, marketing
methods, policies, plans, or other specialized information or proprietary
matters. The term Confidential Information does not include, and there shall be
no obligation hereunder with respect to, information that (a) is generally
available to the public on the date of this Agreement, (b) becomes generally
available to the public other than as a result of a disclosure by Sellers not
otherwise permissible thereunder, (c) is independently developed by Sellers as
established by documentary evidence or (d) Sellers learns from other sources
where such sources have not, to Sellers' knowledge, violated their
confidentiality obligation to Purchaser.
9.3 Specific Performance: Reformation. The parties hereto specifically
acknowledge and agree that the remedy at law for any breach of Section 9.1 or
9.2 will be inadequate and that Purchaser, in addition to any other relief
available to it, shall be entitled to temporary and permanent injunctive relief
without the necessity of proving actual damage or posting any bond whatsoever.
In the event that the provisions of Section 9.1 or 9.2 should ever be deemed to
exceed the limitations provided by applicable Law, then the parties hereto agree
that such provisions shall be reformed to set forth the maximum limitations
permitted.
9.4 Product Warranty Matters. Sellers acknowledge that they have retained
liability for certain Military Logic Product warranty claims pursuant to Section
3.2. Purchaser will address and remedy all product warranty claims asserted
following the Closing Date with respect to Military Logic Products produced or
sold by Sellers prior to Closing (including the Military Logic Product
Inventory). Sellers will promptly reimburse Purchaser upon invoice for all costs
and expenses in excess of $10,000 in the aggregate reasonably incurred by
Purchaser in remedying such product warranty claims.
9.5 Maintenance of Books and Records. Each of Sellers and Purchaser shall
preserve until the seventh anniversary of the Closing Date all records possessed
by such party relating to the assets, liabilities or operations of the Military
Logic Business prior to the Closing Date. After the Closing Date, where there is
a legitimate purpose, such party shall provide the other party with access, upon
prior reasonable written request specifying the need therefor, during regular
business hours, to (i) the relevant officers and employees of such party and
(ii) the books of account and records of such party, but, in each case, only to
the extent relating to the assets, liabilities and operations of the Military
Logic Business prior to the Closing Date, and the other party and its
representatives shall have the right to make copies of such books and records;
provided, however, that the foregoing right of access shall not be exercisable
in such a manner as to interfere unreasonably with the normal operations and
business of such party; and further provided that, as to so much of such
information as constitutes trade secrets or confidential business information of
such party, the requesting party and its representatives will use due care to
not disclose such information except (i) as required by Law, (ii) with the prior
written consent of such party, which consent shall not be unreasonably withheld,
or (iii) where such information becomes available to the public generally, or
becomes generally known to competitors of such
15
<PAGE>
party, through sources other than the requesting party and its representatives.
Such records may nevertheless be destroyed by a party if such party sends the
other party written notice of its intent to destroy records, specifying with
particularity the contents of the records to be destroyed. Such records may then
be destroyed after the 30th day following delivery of such notice unless the
other party objects to the destruction, in which case the party seeking to
destroy the records shall either agree to retain such records or to deliver such
records to the objecting party.
X. TERMINATION
10.1 Termination. Notwithstanding anything contained in this Agreement to
the contrary, this Agreement may be terminated at any time prior to the Closing:
(a) By the mutual written consent of Purchaser and Sellers;
(b) By either Purchaser or Sellers if the Closing shall not have
occurred on or before December 31, 1998, provided that no party that is in
material breach of this Agreement may terminate this Agreement pursuant to this
Section 10.1(b);
(c) By either Purchaser or Sellers if there shall have been entered
a final, nonappealable order or injunction of any Governmental Authority
restraining or prohibiting the consummation of the transactions contemplated
hereby or any material part thereof; or
(d) By either Purchaser or Sellers if, prior to the Closing Date,
the other party is in material breach of any representation, warranty, covenant
or agreement herein contained and such breach shall not be cured within fifteen
(15) days of the date of notice of default served by the party claiming such
material default, provided that such terminating party shall not also be in
material breach of this Agreement at the time notice of termination is
delivered.
In no event shall termination of this Agreement relieve any party of any
liability for breaches of this Agreement prior to the date of termination.
XI. SURVIVAL AND INDEMNIFICATION
11.1 Survival of Representations, Warranties and Covenants. (a) Except for
the representations and warranties of Sellers contained in Section 6.8, which
shall survive the closing and remain in effect for six years from the Closing
Date, the representations and warranties of Sellers and Purchaser contained in
this Agreement shall survive the Closing until the expiration of two years from
the Closing Date. The representations and warranties contained in Article V of
the IP Agreement shall survive the Closing and remain in effect until the
expiration of all statutes of limitation applicable to any potential third party
claim asserting infringement of intellectual property rights in connection with
Purchaser's operation of the Military Logic Business consistent in all material
respects with past practice. Any claim for an Indemnifiable Loss (as defined in
Section 11.2) asserted within such period of survival as herein provided will be
timely made for purposes hereof. No claims for an Indemnifiable Loss may be
asserted following the expiration of such period.
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(b) Unless a specified period is set forth in this Agreement (in
which event such specified period will control), the covenants in this Agreement
will survive the Closing and remain in effect indefinitely.
11.2 Limitations on Liability. (a) For purposes of this Agreement, (i)
"Indemnity Payment" means any amount of Indemnifiable Losses required to be paid
pursuant to this Agreement, (ii) "Indemnitee" means any person or entity
entitled to indemnification under this Agreement (iii) "Indemnifying Party"
means any person or entity required to provide indemnification under this
Agreement, (iv) "Indemnifiable Losses" means any and all damages, losses,
liabilities, obligations, costs and expenses, and any and all claims, demands or
suits (by any person or entity, including, without limitation, any Governmental
Authority), including, without limitation, the costs and expenses of any and all
actions, suits, proceedings, demands, assessments, judgments, settlements and
compromises relating thereto and including reasonable attorneys' fees and
expenses in connection therewith, and (v) "Third Party Claim" means any claim,
action or proceeding made or brought by any Person other than a party to this
Agreement (or an Affiliate thereof).
(b) Notwithstanding any other provision hereof or of any applicable
Law, (i) no Indemnitee will be entitled to make a claim against an Indemnifying
Party in respect of any breach of a representation or warranty (other than the
representations and warranties contained in Section 6.8 and 6.9(a) or in Article
V of the IP Agreement) under Sections 11.3(a)(i) or 11.3(b)(i) unless and until
the aggregate amount of claims in respect of breaches of representations and
warranties asserted for Indemnifiable Losses under Sections 11.3(a)(i), with
respect to claims by Purchaser, or 11.3(b)(i), with respect to claims by
Sellers, exceeds $50,000, in which event the Indemnitee will be entitled to make
a claim against the Indemnifying Party in respect of Indemnifiable Losses only
to the extent of the excess and (ii) no Indemnitee shall be liable for Indemnity
Payments in respect of breaches of representations or warranties asserted for
Indemnifiable Losses under Sections 11 .3(a)(i) or 11. 3(b)(i), as applicable,
to the extent such aggregate Indemnity Payments by such Indemnifying Party
exceeds the Purchase Price.
11.3 Indemnification. (a) Subject to Sections 11.1 and 11.2, Sellers agree
to jointly and severally indemnify, defend and hold harmless Purchaser from and
against any and all Indemnifiable Losses relating to, resulting from or arising
out of:
(i) any misrepresentation or breach of warranty on the part of
Sellers under the terms of this Agreement or any exhibit, schedule or document
delivered pursuant hereto;
(ii) any nonfulfillment of any agreement or covenant on the
part of Sellers under the terms of this Agreement;
(iii) any Retained Liabilities;
(iv) any failure to comply with any "bulk sales" laws
applicable to the transactions contemplated hereby; and
(v) the conduct of the Military Logic Business or any portion
thereof or the use or ownership of any of the Transferred Assets prior to or on
the Closing Date (other than the Assumed Liabilities).
17
<PAGE>
(b) Purchaser agrees to indemnify, defend and hold harmless Sellers
from and against any and all Indemnifiable Losses relating to, resulting from or
arising out of:
(i) any misrepresentation or breach of warranty on the part of
Purchaser under the terms of this Agreement or any exhibit, schedule or document
delivered pursuant hereto;
(ii) any nonfulfillment of any agreement or covenant on the
part of Purchaser under the terms of this Agreement;
(iii) any Assumed Liabilities; and
(iv) the conduct of the Military Logic Business or any portion
thereof or use or ownership of any of the Transferred Assets after the Closing
Date.
11.4 Defense of Claims. (a) If any Indemnitee receives notice of assertion
or commencement of any Third Party Claim against such Indemnitee with respect to
which an Indemnifying Party is obligated to provide indemnification under this
Agreement, the Indemnitee will give such Indemnifying Party reasonably prompt
written notice thereof, but in any event not later than 15 calendar days after
receipt of such notice of such Third Party Claim. Such notice will describe the
Third Party Claim in reasonable detail, will include copies of all material
written evidence thereof and will indicate the estimated amount, if reasonably
practicable, of the Indemnifiable Loss that has been or may be sustained by the
Indemnitee. The Indemnifying Party will have the right to participate in, or, by
giving written notice to the Indemnitee, to assume, the defense of any Third
Party Claim at such Indemnifying Party's own expense and by such Indemnifying
Party's own counsel (reasonably satisfactory to the Indemnitee), and the
Indemnitee will cooperate in good faith in such defense.
(b) If, within 30 calendar days after giving notice of a Third Party
Claim to an Indemnifying Party pursuant to Section 11.4(a), an Indemnitee
receives written notice from the Indemnifying Party that the Indemnifying Party
has elected to assume the defense of such Third Party Claim as provided in the
last sentence of Section 11.4(a), the Indemnifying Party will not be liable for
any legal expenses subsequently incurred by the Indemnitee in connection with
the defense thereof; provided, however, that if the Indemnifying Party fails to
take reasonable steps necessary to defend diligently such Third Party Claim
within 30 calendar days after receiving written notice from the Indemnitee that
the Indemnitee reasonably believes the Indemnifying Party has failed to take
such steps or if the Indemnifying Party has not undertaken fully to indemnify
the Indemnitee in respect of all Indemnifiable Losses relating to the matter,
the Indemnitee may assume its own defense, and the Indemnifying Party will be
liable for all reasonable costs or expenses paid or incurred in connection
therewith. Without the prior written consent of the Indemnitee, the Indemnifying
Party will not enter into any settlement of any Third Party Claim which would
lead to liability or create any financial or other obligation on the part of the
Indemnitee for which the Indemnitee is not entitled to indemnification
hereunder. If a firm offer is made to settle a Third Party Claim without leading
to liability or the creation of a financial or other obligation on the part of
the Indemnitee for which the Indemnitee is not entitled to indemnification
hereunder and the Indemnifying Party desires to accept and agree to such offer,
the Indemnifying Party will give written notice to the Indemnitee to that
effect. If the
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Indemnitee fails to consent to such firm offer within 10 calendar days after its
receipt of such notice, the Indemnitee may continue to contest or defend such
Third Party Claim and, in such event, the maximum liability of the Indemnifying
Party as to such Third Party Claim will not exceed the amount of such settlement
offer, plus costs and expenses paid or incurred by the Indemnitee through the
end of such 10 calendar day period.
(c) A failure to give timely notice or to include any specified
information in any notice as provided in Sections 11.4(a) or 11.4(b) will not
affect the rights or obligations of any party hereunder except and only to the
extent that, as a result of such failure, any party which was entitled to
receive such notice was deprived of its right to recover any payment under its
applicable insurance coverage or was otherwise damaged as a result of such
failure.
(d) The Indemnifying Party will have a period of 30 calendar days
within which to respond in writing to any claim by an Indemnitee on account of
an Indemnifiable Loss pursuant to Section 11.3 that does not result from a Third
Party Claim (a "Direct Claim"). If the Indemnifying Party does not so respond
within such 30 calendar day period, the Indemnifying Party will be deemed to
have rejected such claim. In the event the Indemnifying Party rejects, or is
deemed to have rejected, a Direct Claim, the Indemnitee will be free to pursue
such remedies as are available at law or in equity in respect of such Direct
Claim.
(e) Sellers' liability for any breach of the representation
contained in Section 6.9(b) shall be subject to the same limitations on
liability applicable to product warranty claims arising under the Supply
Agreement.
(f) To the extent permitted by Law, the indemnity provisions of this
Article XI shall be the sole and exclusive remedy of the parties with respect to
any breach of the representations and warranties contained in this Agreement and
in Article V of the IP Agreement that is asserted subsequent to Closing,
provided that the foregoing shall not prohibit any party from seeking an
injunction or any other equitable remedy in respect thereof.
XII. MISCELLANEOUS PROVISIONS
12.1 Notices. All notices and other communications required or permitted
hereunder will be in writing and, unless otherwise provided in this Agreement,
will be deemed to have been duly given when delivered in person or when
dispatched by electronic facsimile transfer (confirmed in writing by mail
simultaneously dispatched) or one business day after having been dispatched by a
nationally recognized overnight courier service to the appropriate party at the
address specified below:
(a) If to Sellers, to:
Harris Semiconductor
P.O. Box 883, M/S 53-209
Melbourne, Florida 32902-0083
Attention: Stephen K. Cusick, Esq.
Facsimile No.: (407) 729-5392
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<PAGE>
with a copy to:
Harris Corporation
1025 West NASA Boulevard, M/S 119 CHQ
Melbourne, Florida 32919
Attention: Corporate Secretary
Facsimile No.: (407) 727-9222
(b) If to Purchaser, to:
Texas Instruments Incorporated
7839 Churchill Way, M/S 3995
Dallas, Texas 75251
- or -
P.O. Box 650311, M/S 3995
Dallas, Texas 75265
Attention: Charles D. Tobin
Facsimile No.: (214) 917-3804
with a copy to:
Texas Instruments Incorporated
8505 Forest Lane, M/S 8658
Dallas, Texas 75243
-or
P.O. Box 660199, M/S 8658
Dallas, Texas 75266
Attention: Richard J. Agnich, Esq.
Facsimile No.: (972) 480-5061
or to such other address or addresses as any such party may from time to time
designate as to itself by like notice.
12.2 Expenses. Except as otherwise expressly provided herein, each party
hereto will pay any expenses incurred by it incident to this Agreement and in
preparing to consummate and consummating the transactions provided for herein.
12.3 Successors and Assigns. This Agreement will be binding upon and inure
to the benefit of the parties hereto and their respective successors and
permitted assigns, but will not be assignable or delegable by any party without
the prior written consent of the other party; provided, however, that upon
notice to Sellers delivered in accordance with Section 12.1, Purchaser may
assign or delegate any or all of their rights or obligations under this
Agreement to any Affiliate thereof or to any Person that directly or indirectly
acquires, after the Closing, all or substantially all of the assets or voting
stock of Purchaser, but such assignment or delegation shall not relieve
Purchaser of any obligation hereunder.
12.4 Waiver. Purchaser may, by written notice to Sellers, and Sellers may,
by written notice to Purchaser, (a) extend the time for performance of any of
the obligations of the other
20
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party under this Agreement, (b) waive any inaccuracies in the representations or
warranties of the other party contained in this Agreement, (C) waive compliance
with any of the conditions or covenants of the other party contained in this
Agreement, or (d) waive or modify performance of any of the obligations of the
other party under this Agreement; provided, however, that no such party may,
without the prior written consent of the other parties, make or grant such
extension of time, waiver of inaccuracies or compliance or waiver or
modification of performance with respect to its representations, warranties,
conditions or covenants hereunder. Except as provided in the immediately
preceding sentence, no action taken pursuant to this Agreement will be deemed to
constitute a waiver of compliance with any representations, warranties,
conditions or covenants contained in this Agreement and will not operate or be
construed as a waiver of any subsequent breach, whether of a similar or
dissimilar nature.
12.5 Entire Agreement: Disclosure Schedules. This Agreement, which
includes the schedules and exhibits hereto, supersedes any other agreement,
whether written or oral, that may have been made or entered into by any party
relating to the matters contemplated hereby and constitutes the entire agreement
by and among the parties hereto. Notwithstanding the foregoing, that certain
confidentiality agreement dated June 25,1998 entered into between the parties
shall continue in full force and effect until such time as the transactions
contemplated hereby have been consummated, whereupon such agreement shall
automatically terminate.
12.6 Amendments, Supplements, Etc. This Agreement may be amended or
supplemented at any time by additional written agreements as may mutually be
determined by Purchaser and Sellers to be necessary, desirable or expedient to
further the purposes of this Agreement or to clarify the Intention of the
parties.
12.7 Rights of the Parties. Nothing expressed or implied in this Agreement
is intended or will be construed to confer upon or give any Person other than
the parties hereto any rights or remedies under or by reason of this Agreement
or any transaction contemplated hereby.
12.8 Further Assurances. From time to time, as and when requested by any
party hereto, the other party will execute and deliver, or cause to be executed
and delivered, all such documents and instruments, make such other deliveries
and take such other actions as may be reasonably necessary to consummate the
transactions contemplated by this Agreement.
12.9 Applicable Law. This Agreement and the legal relations among the
parties hereto will be governed by and construed in accordance with the rules
and substantive Laws of the State of Florida, United States of America, without
regard to conflicts of law provisions thereof.
12.10 Execution in Counterparts. This Agreement may be executed in two or
more counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same agreement.
12.11 Titles and Headings. Titles and headings to Sections herein are
inserted for convenience of reference only, and are not intended to be a part of
or to affect the meaning or interpretation of this Agreement.
12.12 Invalid Provisions. If any provision of this Agreement is held to be
illegal, invalid, or unenforceable under any present or future Law, and if the
rights or obligations under
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this Agreement of Sellers on the one hand and Purchaser on the other hand will
not be materially and adversely affected thereby, (a) such provision will be
fully severable; (b) this Agreement will be construed and enforced as if such
illegal, invalid, or unenforceable provision had never comprised a part hereof;
(c) the remaining provisions of this Agreement will remain in full force and
effect and will not be affected by the illegal, invalid, or unenforceable
provision or by its severance from this Agreement; and (d) in lieu of such
illegal, invalid, or unenforceable provision, there will be added automatically
as a part of this Agreement a legal, valid, and enforceable provision as similar
in terms to such illegal, invalid, or unenforceable provision as may be
possible.
12.13 Bulk Sales. Purchaser waives compliance by Sellers with the
provisions of the so-called bulk sales Law of any applicable jurisdiction;
provided, however, that Sellers will indemnify, defend and hold harmless
Purchaser in respect of any Indemnifiable Loss relating to, resulting from or
arising out of Sellers' failure so to comply with such Laws in connection with
the transactions contemplated by this Agreement.
12.14 Transfers. Purchaser and Sellers will cooperate and take such action
as may be reasonably requested by the other in order to effect an orderly
transfer of the Transferred Assets with a minimum of disruption to the
operations and employees of the businesses of Purchaser and Sellers.
12.15 Transfer Taxes. All sales, use, transfer, stamp, conveyance, value
added or other similar taxes, duties, excises or governmental charges imposed by
any taxing jurisdiction, domestic or foreign, and all recording or filing fees,
notarial fees or other similar costs of Closing with respect to the transfer of
the Transferred Assets or otherwise on account of this Agreement or the
transactions contemplated hereby will be borne by one-half by Sellers and
one-half by Purchaser.
12.16 Brokers. Purchaser hereby agrees to Indemnify and hold harmless
Sellers, and Sellers hereby agree to indemnify and bold harmless Purchaser,
against any liability, claim, loss, damage or expense incurred by Sellers or
Purchaser, respectively, relating to any fees or commissions owed to any broker,
finder or financial advisor as a result of actions taken by Purchaser or
Sellers, respectively.
12.17 Attorneys' Fees. If any action at law or in equity is necessary to
enforce or interpret the terms of this Agreement, the prevailing party shall be
entitled to recover in such action its reasonable attorneys' fees, costs and
necessary disbursements in addition to any other relief to which it may be
entitled.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
TEXAS INSTRUMENTS INCORPORATED
By: /s/ Glenn Culhane
-----------------------------------------
Name: Glenn Culhane
Title: Vice President--Texas Instruments, Manager--
World Wide Standard Linear and Logic Products
HARRIS CORPORATION
By: /s/ R. D. Odom
-----------------------------------------
Name: R. D. Odom
---------------------------------------
Title: Vice President - General Manager
--------------------------------------
HARRIS ADVANCED TECHNOLOGY (MALAYSIA) SDN. BHD
By: /s/ W. Russell Morcom
-----------------------------------------
Name: W. Russell Morcom
---------------------------------------
Title: Vice President - General Manager
Operations
--------------------------------------
HARRIS SOUTHWEST PROPERTIES, INC.
By: /s/ D. S. Wasserman
-----------------------------------------
Name: D. S. Wasserman
---------------------------------------
Title: Vice President
--------------------------------------
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EXHIBIT A
DEFINITIONS
"Accountants" shall have the meaning ascribed to such term in Section 4.3
of this Agreement.
"Affiliates" shall mean with respect to any Person, any other person who,
directly or indirectly, controls, is controlled by, or is under common control
with that Person.
"Agreement" shall have the meaning ascribed to such term in the preamble
to this Agreement.
"Assignment of Contracts" shall have the meaning ascribed to such term in
Section 5.2(a)(ii) of this Agreement.
"Assumed Liabilities" shall have the meaning ascribed to such term in
Section 3.1 of this Agreement.
"Assumption Agreement" shall have the meaning ascribed to such term in
Section 5.2(b)(ii) of this Agreement.
"Bill of Sale" shall have the meaning ascribed to such term in Section
5.2(a)(i) of this Agreement.
"Business Day" shall mean a day other than a Saturday, Sunday or other day
on which commercial banks in New York City are authorized or required by law to
close.
"Closing Date Payment" shall have the meaning ascribed to such term in
Section 4.2(a) of this Agreement.
"Closing Date" shall have the meaning ascribed to such term in Section 5.1
of this Agreement.
"Closing" shall have the meaning ascribed to such term in Section 5.1 of
this Agreement.
"Collateral Agreements" shall have the meaning ascribed to such term in
Section 5.2(c) of this Agreement.
"Confidential Information" shall have the meaning ascribed to such term in
Section 9.2 of this Agreement. "Consent" shall mean any consent, approval or
authorization of, notice to, or designation, registration, declaration or filing
with, any Person.
"Contract" shall mean any agreement, contract, lease, commitment, license,
undertaking or other legally binding contractual right or obligation to which a
Person is a party or by which a Person or its assets or properties are bound.
<PAGE>
"Date Data" shall have the meaning ascribed to such term in Section 6.12
of this Agreement.
"Date-Sensitive System" shall have the meaning ascribed to such term in
Section 6.12 of this Agreement.
"Direct Claim" shall have the meaning ascribed to such term in Section
11.4(d) of this Agreement.
"Estimated Inventory Transfer Price" shall have the meaning ascribed to
such term in Section 4.2(b) of this Agreement.
"Governmental Authority" shall mean any federal, state, local or foreign
government or any subdivision, agency, instrumentality, authority, department,
commission, board or bureau thereof or any federal, state, local or foreign
court, tribunal or arbitrator.
"HSR Act" shall have the meaning ascribed to such term in Section 6.3 of
this Agreement.
"HAT" shall have the meaning ascribed to such term in the preamble to this
Agreement.
"Harris" shall have the meaning ascribed to such term in the preamble to
this Agreement.
"HSP" shall have the meaning ascribed to such term in the preamble to this
Agreement.
"Indemnifiable Losses" shall have the meaning ascribed to such term in
Section 11.2(a) of this Agreement.
"Indemnifying Party" shall have the meaning ascribed to such term in
Section 11.2(a) of this Agreement.
"Indemnitee" shall have the meaning ascribed to such term in Section
11.2(a) of this Agreement.
"Indemnity Payment" shall have the meaning ascribed to such term in
Section 11.2(a) of this Agreement.
"Purchase Price" shall have the meaning ascribed to such term in Section
4.1 of this Agreement.
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[Page 3 missing]
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<PAGE>
"Purchase Price" shall have the meaning ascribed to such term in Section
4.1 of this Agreement.
"Purchaser" shall have the meaning ascribed to such term in the recitals
to this Agreement.
"Retained Liabilities" shall have the meaning ascribed to such term in
Section 3.2 of this Agreement.
"Seller" shall have the meaning ascribed to such term in the preamble to
this Agreement.
"Sellers" shall have the meaning ascribed to such term in the preamble to
this Agreement.
"Specified Distributors" shall have the meaning ascribed to such term in
Section 3.1(b) of this Agreement.
"Supply Agreement" shall have the meaning ascribed to such term in Section
5.2(a)(iv) of this Agreement.
"Testing Hardware and Software" shall have the meaning ascribed to such
term in Section 2.1(e) of this Agreement.
"Third Party Claim" shall have the meaning ascribed to such term in
Section 11.2(a) of this Agreement.
"Transferred Assets" shall have the meaning ascribed to such term in
Section 2.1 of this Agreement.
"Year 2000 Compliant" shall have the meaning ascribed to such term in
Section 6.12 of this Agreement.
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<PAGE>
EXHIBIT B
INTELLECTUAL PROPERTY AGREEMENT
between
TEXAS INSTRUMENTS INCORPORATED,
as Purchaser
and
HARRIS CORPORATION,
HARRIS ADVANCED TECHNOLOGY (MALAYSIA) SDN. BHD
and
HARRIS SOUTHWEST PROPERTIES, INC.,
as Seller
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TABLE OF CONTENTS
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I. DEFINITIONS............................................................2
II. ASSIGNMENT.............................................................2
2.1 LOGIC BUSINESS INTELLECTUAL PROPERTY.............................2
2.2 DOCUMENTATION....................................................2
III. GRANT OF LICENSE.......................................................2
3.1 PATENTS..........................................................2
3.2 KNOW-HOW.........................................................2
3.3 COPYRIGHTS.......................................................2
3.4 MASK WORKS.......................................................3
3.5 TRADEMARKS.......................................................3
3.6 THIRD PARTY INTELLECTUAL PROPERTY................................3
3.7 SUBLICENSE.......................................................3
3.8 QUALITY CONTROL..................................................4
3.9 IDENTIFICATION OF PATENTS AFTER CLOSING DATE.....................4
3.10 GRANT-BACK LICENSE FOR SUPPLY AGREEMENTS.........................4
IV. TECHNOLOGY TRANSFER....................................................4
4.1 SUFFICIENT TRANSFER..............................................4
(a) Identified Parts...........................................5
(b) Identified Processes.......................................5
(c) Component Testing Software and Hardware and................5
Associated Documentation...................................5
(d) Logic Product Software.....................................5
(e) Technical Data.............................................5
(f) Books and Records..........................................5
4.2 SUPPORT..........................................................6
V. REPRESENTATIONS AND WARRANTIES.........................................6
5.1 CONFLICT.........................................................6
5.2 OWNERSHIP........................................................6
5.3 NO INFRINGEMENT..................................................6
5.4 NO INFRINGEMENT BY THIRD PARTY...................................7
5.5 EFFECTIVE TRANSFER OF NECESSARY RIGHTS...........................7
VI. MISCELLANEOUS PROVISIONS...............................................7
6.1 COOPERATION......................................................7
6.2 NO OBLIGATION....................................................7
6.3 NOTICES..........................................................7
6.4 EXPENSES.........................................................8
6.5 SUCCESSORS AND ASSIGNS...........................................8
6.6 WAIVER...........................................................9
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6.7 ENTIRE AGREEMENT; DISCLOSURE SCHEDULES...........................9
6.8 AMENDMENTS, SUPPLEMENTS, ETC.....................................9
6.9 RIGHTS OF THE PARTIES............................................9
6.10 FURTHER ASSURANCES...............................................9
6.11 APPLICABLE LAW...................................................9
6.12 EXECUTION IN COUNTERPARTS.......................................10
6.13 TITLES AND HEADINGS.............................................10
6.14 INVALID PROVISIONS..............................................10
6.15 ATTORNEYS' FEES.................................................10
Exhibit A - Definitions
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INTELLECTUAL PROPERTY AGREEMENT
This INTELLECTUAL PROPERTY AGREEMENT (this "Agreement") is made and
entered into as of ______________________, 1998, by and between Texas
Instruments Incorporated, a Delaware corporation ("Purchaser"), and Harris
Corporation, a Delaware corporation, acting through its Semiconductor Sector
("Harris"), Harris Advanced Technology (Malaysia) Sdn. Bhd, a Malaysian
corporation ("HAT") and Harris Southwest Properties, Inc., a Delaware
corporation ("HSP") (collectively, "Seller").
RECITALS:
WHEREAS, among other businesses, Seller presently conducts the business
(the "Commercial Logic Business") of manufacturing, marketing and selling
commercial digital logic integrated circuits, listed by part number on Schedule
6.9(a) attached to the Commercial Asset Purchase Agreement defined hereafter
(the "Commercial Logic Products");
WHEREAS, Seller desires to sell and Purchaser desires to purchase Seller's
right to manufacture, market and sell the Commercial Logic Products and certain
assets, rights and properties of Seller used or useful in connection with the
Commercial Logic Business, all on the terms and subject to the conditions set
forth in an Asset Purchase Agreement dated October 23, 1998 (the "Commercial
Asset Purchase Agreement");
WHEREAS, Seller also presently conducts the business (the "Military Logic
Business") of manufacturing, marketing and selling military digital logic
integrated circuits, listed by part number on Schedule 6.9(a) attached to the
Military Asset Purchase Agreement defined hereafter (the "Military Logic
Products");
WHEREAS, Seller also desires to sell and Purchaser also desires to
purchase Seller's right to manufacture, market and sell the Military Logic
Products and certain assets, rights and properties of Seller used or useful in
connection with the Military Logic Business, all on the terms and subject to the
conditions set forth in an Asset Purchase Agreement dated October 23, 1998 (the
"Military Asset Purchase Agreement");
WHEREAS, Seller owns or controls and has or may have various Intellectual
Property rights which relate to or are utilized in the conduct of the Commercial
Logic Business and the Military Logic Business and manufacture, marketing and
sale of the Commercial Logic Products and Military Logic Products, and which
Purchaser desires to acquire by assignment or utilize under license; and
WHEREAS, Seller wishes to grant ownership or licenses to Purchaser under
the various Intellectual Property rights owned or controlled by Seller;
NOW, THEREFORE, in consideration of the mutual covenants, representations,
warranties and agreements herein contained, and other good and valuable
consideration, the parties hereby agree as follows:
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I. DEFINITIONS
As used in this Agreement, unless the context otherwise requires,
capitalized terms defined in this Agreement shall have the meanings set forth on
Exhibit A hereto. Capitalized terms used but not defined herein have the
meanings given them in the respective applicable Commercial Asset Purchase
Agreement or Military Asset Purchase Agreement.
II. ASSIGNMENT
2.1 Logic Business Intellectual Property. Seller agrees to assign and
transfer on the Closing Date, and hereby assigns and transfers (effective on the
Closing Date) to Purchaser, all right, title and interest of Seller in and to
the Logic Business Intellectual Property included in the items listed on the
Asset Purchase Agreement Schedules 2.1(e), 2.1(f) and 2.1(g) and all other Logic
Business Intellectual Property, together with any and all of the goodwill of the
business in connection with which the Trademarks hereby assigned are used; all
right, title and interest in any and all pending applications for registration
or other protection of the same (including, without limitation, any and all
right to claim priority in connection therewith); and all rights and causes of
action to sue, enforce or recover for past, present or future infringement,
misappropriation, dilution, unfair competition, false designation of origin or
the like of the Intellectual Property assigned hereby.
2.2 Documentation. At and after the Closing Date, each party hereto will
execute and deliver any deeds, bills of sale, assignments or assurances and take
and do any other actions and things reasonably necessary to vest, perfect or
confirm of record or otherwise, in the other party, any and all right, title and
interest in, to and under any of the rights, properties or assets of the party
acquired or to be acquired by the other party as a result of, or in connection
with, this Agreement.
III. GRANT OF LICENSE
3.1 Patents. Seller grants to Purchaser an irrevocable, perpetual,
world-wide, fully-paid and royalty-free non-exclusive license under all
Invention Disclosures and Patents included in Seller Intellectual Property at
the Closing Date, to engage in the Logic Business and to make, use, sell, offer
for sale, export and import Logic Products.
3.2 Know-How. Seller grants to Purchaser an irrevocable, perpetual,
world-wide, fully-paid and royalty-free exclusive license under all Know-How
included in Seller Intellectual Property at the Closing Date, and used by Seller
in the Logic Business, to make, use, sell, offer for sale, export and import
Logic Products and other products in the Field of' Use.
3.3 Copyrights. Seller grants to Purchaser an irrevocable, perpetual,
world-wide, fully-paid and royalty-free license under all Copyrights included in
Seller Intellectual Property at the Closing Date, to copy and reproduce, create
adaptive and derivative works, publicly distribute copies and reproductions,
publicly display or perform, and otherwise utilize the Copyrights in the use,
sell, offer for sale, export and import of Logic Products. Such license shall
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be subject to pre-existing rights granted to third parties, but otherwise shall
be exclusive in the Field of Use, and non-exclusive otherwise.
3.4 Mask Works. Seller grants to Purchaser an irrevocable, perpetual,
world-wide, fully-paid and royalty-free license under all Mask Works included in
Seller Intellectual Property at the Closing Date, to reproduce a Mask Work by
any means, to import or distribute a semiconductor chip product in which a Mask
Work is embodied or to induce or cause others to do any of the foregoing, for
Logic Products. Such license shall be subject to pre-existing rights granted to
third parties, but otherwise shall be exclusive in the Field of Use, and
non-exclusive otherwise.
3.5 Trademarks. Seller grants to Purchaser an irrevocable, worldwide,
fully-paid and royalty-free license to use Trademarks included in Seller
Intellectual Property and previously used by Seller in connection with Logic
Products. Such license shall be for a transitional period of two (2) years from
the Closing Date or, if longer than two (2) years, until all inventory and
work-in-progress displaying Seller's Trademarks, in existence at the Closing
Date, is exhausted. Thereupon such license and such rights will terminate. Such
license shall be subject to pre-existing rights granted to third parties, but
otherwise shall be exclusive in the Field of Use, and non-exclusive otherwise.
Notwithstanding the foregoing, the parties agree that Purchaser shall have the
right, perpetually, to use all product specific identification numbers and
configurations used by Seller in connection with the Logic Products.
Purchaser shall not acquire under the terms of this Agreement any title or
interest in the name "Harris' or "Harris Semiconductor" or Seller's monograms,
logos, trademarks, or any variations or combinations thereof that have any
application beyond the Logic Business. Purchaser, however, shall be entitled to
(i) market and sell without alteration all Logic Product Inventory acquired
hereunder and all Logic Products acquired under the terms of the Supply
Agreement (as hereinafter defined), which the parties acknowledge shall bear
Seller's package designation, (ii) continue to use, in connection with the
manufacture, marketing and sale of Logic Products, all materials and supplies
acquired hereunder and shall not be obligated to overstamp or otherwise alter
such materials prior to use and (iii) otherwise use the above referenced Seller
names and marks in accordance with the terms of the licenses granted in this
Article III.
3.6 Third Party Intellectual Property. To the extent not otherwise
assigned or transferred above, Seller grants to Purchaser a sublicense under any
such Third Party Logic Business Intellectual Property at the Closing Date,
subject to Purchaser's right to refuse such license, to make, use, sell, offer
for sale, export and import Logic Products. Such license shall be irrevocable,
perpetual, world-wide, fully-paid and royalty-free, exclusive in the Field of
Use and non-exclusive otherwise, to the full extent permissible, or else be on
the best other terms available under the license between Seller and the third
party, except that any Patents sublicensed hereunder shall be licensed only on a
non-exclusive basis.
3.7 Sublicense. With respect to the assets assigned in Article II herein
and the licenses granted in Sections 3.1 through 3.5, and to the full extent
permissible under Section 3.6, above, the assignment and license to Purchaser
hereunder includes, without limitation:
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(a) the right to have Seller or a third party make Logic Products either
in finished or semi-finished form (by way of example, "semi-finished form"
includes (1) semiconductor wafers at any stage of their manufacture, (2) foundry
services and (3) assembly) for offer for sale, sale, use, lease, import or other
disposition directly or indirectly by Purchaser or under the trademark, trade
name, or other commercial indicia of Purchaser.
(b) the right to sublicense to any Affiliate of Purchaser.
(c) the right to assign or transfer the license by Purchaser to a third
party in connection with a merger or sale in which a third party acquires
substantially all or a major portion of the Logic Business assets acquired from
Seller hereunder.
3.8 Quality Control. To the extent the Seller Trademarks are used on or in
connection with the manufacture, sale, performance or service of Logic Products
manufactured, used, performed or sold as of the Closing Date (hereinafter
referred to as the "Trademarked Products"), Purchaser shall manufacture,
distribute, and sell the Trademarked Products in accordance with applicable
minimum quality standards used immediately preceding the Closing Date.
3.9 Identification of Patents After Closing Date. If, subsequent to the
Closing Date, either party identifies any Patents or Mask Works Rights which are
Logic Business Intellectual Property that are not specifically identified in
this Agreement and for which Seller is obligated under Section 2.1 herein to
assign rights therein to Purchaser, then upon notice thereof Seller shall
promptly inform Purchaser of all relevant information in Seller's possession
and, at the request of Purchaser, Seller shall cooperate in execution and
delivery of assignment documentation and take and do any other actions and
things reasonably necessary to vest, perfect or confirm of record or otherwise
in Purchaser any and all right, title and interest in said Patents or Mask Works
Rights. The obligations of Seller under this Section 3.9 shall be Purchaser's
sole remedy for any failure to identify or assign Patents or Mask Works Rights
which are Logic Business Intellectual Property.
3.10 Grant-Back License for Supply Agreements. Purchaser grants to Seller
a fully-paid and royalty-free non-exclusive license under Logic Business
Intellectual Property acquired by Seller under Article II and under Seller
Intellectual Property licensed exclusively under Article III, for the duration
of and to the extent necessary for Seller to fulfill its obligations to
Purchaser under the agreements by and between Seller and Purchaser dated October
23, 1998, for the supply by Seller of Commercial Logic Products and Military
Logic Products to Purchaser (the "Commercial Supply Agreement' and "Military
Supply Agreement').
IV. TECHNOLOGY TRANSFER
4.1 Sufficient Transfer. Seller agrees to promptly, at its expense, but in
no event later than sixty (60) days after Closing Date, transfer to Purchaser
any and all information in written or electronic format and materials, in the
physical possession or control of Seller and reasonably necessary and sufficient
to carry on the business of manufacturing, marketing and selling the Logic
Products by Seller and in no event less than necessary to carry on such business
in a
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commercially reasonable manner, including without limitation putting Purchaser
in possession of the following:
(a) Identified Parts -- everything needed by Seller to manufacture, market
and sell the parts identified in Schedule 6.9(a) of the Asset Purchase
Agreement.
(b) Identified Processes -- everything needed by Seller to perform all
semiconductor manufacturing processes used by Seller to manufacture Logic
Products on the Closing Date, through back-end assembly, testing and packaging,
including but not limited to the following processes: CD4000; BiCMOS FCT;
HC/HCT; and AC/ACT.
(c) Component Testing Software and Hardware and Associated Documentation
- - -- all component software test programs used in the Logic Business, associated
probe cards and final test fixtures (including diagrams thereof, other
associated documentation, and testing hardware and software identified on Asset
Purchase Agreement Schedule 2.1(e) herein) used in the design and manufacture of
the Logic Products, except to the extent unavailable after diligent search and
attempt to locate the same;
(d) Logic Product Software -- all design, development, application and
technical support software and associated documentation (including product
software identified on Asset Purchase Agreement Schedule 2.1(f) herein) used in
the design and manufacture of the Logic Products, except to the extent
unavailable after diligent search and attempt to locate the same;
(e) Technical Data -- all technical information used in the Logic Business
(whether in written or electronic format) or relating to the Logic Products or
to the manufacture, marketing and sale thereof, including the information
identified on Asset Purchase Agreement Schedule 2.1(g) herein and further
including, without limitation, except to the extent unavailable after diligent
search and attempt to locate the same: test flows for probe and final test,
yield data by device for wafer fab and final test, Logic Product data books or
data sheets, outstanding specification waivers, outstanding product change
notices, special current customer requirements, specific flow for current
customers, characterization packets and electrical data logs, process and
assembly qualification data, ESD data, all device revisions, all die revisions,
die size, fabrication processes, layout rules for each technology, layout data
by device, process parameter limits for each technology, process history data
for each technology, process recipe modifications by device, mount and bond
diagrams by device, quality reliability data and to the extent available,
verification rules, schematics by device, SPICE models, materials list of
packages, assembly diagrams and masks;
(f) Books and Records -- all books and records of the Logic Business
relating to product engineering, research and development, and manufacture,
marketing and sale of Logic Products, including, without limitation, customer
lists, backlog information, distributor resale data, internal price books,
delivery performance information, and all outstanding Logic Product price
quotes, except to the extent unavailable after diligent search and attempt to
locate the same.
If, subsequent to the Closing Date, either party identifies any
information or materials which have not been delivered to Purchaser as required
under this Agreement, then upon notice thereof Seller shall promptly undertake
all reasonable steps to effect such delivery.
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4.2 Support. Seller agrees to provide Purchaser after Closing Date
reasonable support to put Purchaser in a position to carry on the business of
manufacturing, marketing and selling the Logic Products at least to the extent
carried on by Seller and in no event less than in a commercially reasonable
manner, including without limitation training as requested by Purchaser or
Purchaser's employees and further demonstrations or explanations regarding any
of the materials or information referred to in Section 4.1. Such support shall
include the services of four Seller engineers and four Seller marketing
specialists to assist Purchaser during the six month period following the
Closing Date, on a full time basis during the first two months of such period
and thereafter on a part-time basis as required by Purchaser. The foregoing
services will be provided to Purchaser without charge. Such services will be
provided at the locations designated by Purchaser. Seller will defray all travel
costs associated with such services, up to $50,000 in the aggregate. Purchaser
will reimburse Seller for all additional travel costs incurred at the request of
Purchaser, based on actual expenditures for coach airfare and standard business
accommodations and meals. Any support services requested by Purchaser in
addition to the foregoing shall be provided by Seller at an hourly rate of
$50.00 per hour per Seller employee, but not to exceed a day rate per employee
of $400.00.
V. REPRESENTATIONS AND WARRANTIES
5.1 Conflict. These representations and warranties are in addition to and
not in lieu of all representations and warranties set forth in the Asset
Purchase Agreement.
5.2 Ownership. Seller owns or has the right to license the Testing
Hardware and Software, the Product Software, the Technical Data and all other
intellectual property rights to be conveyed or licensed to Purchaser pursuant to
this Agreement and the Asset Purchase Agreement (collectively referred to as
"Proprietary Rights") and has the rights to sell, assign, transfer, license and
deliver, as applicable, such Proprietary Rights to Purchaser as contemplated
herein.
5.3 No Infringement by Seller.
(a) Except as noted in Subsection 5.3(b) herein, to the actual knowledge
of Seller, the Proprietary Rights do not conflict with or infringe, and no one
has asserted to Seller that such rights conflict with or infringe, any
proprietary rights owned, possessed or used by any third party. There are no
claims, disputes, actions, proceedings, suits or appeals pending against Seller
with respect to any Proprietary Rights, and to the knowledge of Seller, none has
been threatened against Seller. Except as noted in Subsection 5.3(b) herein, to
the actual knowledge of Seller, there are no facts or alleged facts which would
reasonably serve as a basis for any claim that Seller does not have the right to
use, free of any rights or claims of others, all Proprietary Rights in the
design, development, manufacture, use, sale and other disposition of any or all
of the Products and services presently being used, furnished or sold in the
conduct of the Logic Business as it is now being conducted.
(b) Beginning in 1989 Seller received notices regarding alleged
infringement and future infringement relating to patents and patent applications
for which Jerome Lemelson is a named inventor. Purchaser acknowledges this
matter as described in the letter to Mr. Douglas E. Whitney, Esq., dated January
14, 1998 (a copy of which Purchaser acknowledges having
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received including an Exhibit A) and the complaint filed by the Lemelson
Medical, Education & Research Foundation, Limited Partnership in U.S. District
Court, District of Arizona on July 31, 1998, naming multiple defendants
including Purchaser. As of the date of this Agreement this matter remains
unresolved.
5.4 No Infringement by Third Party. To the actual knowledge of Seller, the
Proprietary Rights transferred or exclusively licensed to Purchaser herein are
not infringed by any third party, and Seller has not asserted against any third
party that such rights are infringed by any third party. There are no claims,
disputes, actions, proceedings, suits or appeals pending against a third party
by Seller with respect to those rights.
5.5 Effective Transfer of Necessary Rights. Pursuant to the Asset Purchase
Agreement and the documents, instruments and agreements contemplated thereby,
Seller will either (i) license the Proprietary Rights or (ii) transfer good
title to the Proprietary Rights to Purchaser. The Proprietary Rights sold or
licensed to Purchaser pursuant to the Asset Purchase Agreement and the
documents, instruments and agreements contemplated thereby, including but not
limited to this Agreement, will transfer all necessary Intellectual Property
rights which Seller has the right and authority to transfer to Purchaser to
conduct the Logic Business, at least to the extent carried on by Seller
immediately prior to the Closing Date, with the mutual understanding that
conduct of the Logic Business by Purchaser may require that Purchaser utilize in
conjunction therewith the intellectual property rights, business organization
and capabilities presently in Purchaser's possession.
VI. MISCELLANEOUS PROVISIONS
6.1 Cooperation. Seller agrees to make its employees reasonably available
to the Purchaser to reasonably assist and otherwise reasonably cooperate in the
preparation and prosecution of all Logic Business Patents, Logic Business
Trademarks, Logic Business Copyrights, Logic Business Mask Works and Logic
Business Invention Disclosures and to execute any and all applications,
assignments, affidavits, and any other papers in connection therewith to perfect
Purchaser's rights in any country. Such assistance and cooperation includes, but
is not limited to communicating relevant facts and enabling contact with
relevant employees and cooperating in testifying in any legal proceedings,
signing all lawful papers, executing all divisionals, continuations, reissues
and substitute applications, making all lawful oaths, and generally doing
everything reasonable to aid Purchaser, its successors, assigns and nominees to
pursue and enforce protection in all countries.
6.2 No Obligation. Nothing in this Agreement shall require Purchaser to
pursue or continue to pursue in any country any patent or invention registration
or the like, or trademark, copyright or mask work registration, or any similar
protection; nor to enforce the same against infringements or the like; nor to
maintain in force any current or subsequently obtained patent or invention
registration, or trademark, copyright or mask work registration, or the like.
6.3 Notices. All notices and other communications required or permitted
hereunder will be in writing and, unless otherwise provided in this Agreement,
will be deemed to have been duly given when delivered in person or when
dispatched by electronic facsimile transfer
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(confirmed in writing by mail simultaneously dispatched) or one business day
after having been dispatched by a nationally recognized overnight courier
service to the appropriate party at the address specified below:
(a) If to Seller, to:
Harris Semiconductor
P.O. Box 883, M/S 53-209
Melbourne, Florida 32902-0083
Attention: Stephen K. Cusick, Esquire
Facsimile No.: (407) 729-5392
with a copy to:
Harris Corporation
1025 West NASA Boulevard, M/S 119 CHQ
Melbourne, Florida 32919
Attention: Richard L. Ballantyne, Esquire
Facsimile No.: (407) 727-9222
(b) If to Purchaser, to:
Texas Instruments Incorporated
7839 Churchill Way, M/S 3995
Dallas, Texas 75251
- or -
P.O. Box 650311, M/S 3995
Dallas, Texas 75265
Attention: Charles D. Tobin
Facsimile No.: (214) 917-3804
with a copy to:
Texas Instruments Incorporated
8505 Forest Lane, M/S 8658
Dallas, Texas 75243
- or -
P.O. Box 660199, M/S 8658
Dallas, Texas 75266
Attention: Richard J. Agnich, Esq.
Facsimile No.: (972) 480-5061
or to such other address or addresses as any such party may from time to time
designate as to itself by like notice.
6.4 Expenses. Except as otherwise expressly provided herein, each party
hereto will pay any expenses incurred by it incident to this Agreement and in
preparing to consummate and consummating the transactions provided for herein.
6.5 Successors and Assigns. This Agreement will be binding upon and inure
to the benefit of the parties hereto and their respective successors and
permitted assigns, and shall be
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assignable or delegable by either party without the prior written consent of the
other party; provided, however, that upon notice to Seller, Purchaser may assign
or delegate any or all of their rights or obligations under this Agreement to
any Affiliate thereof or to any Person that directly or indirectly acquires,
after the Closing, all or substantially all of the assets or voting stock of
Purchaser.
6.6 Waiver. Purchaser may, by written notice to Seller, and Seller may, by
written notice to Purchaser, (a) extend the time for performance of any of the
obligations of the other party under this Agreement, (b) waive any inaccuracies
in the representations or warranties of the other party contained in this
Agreement, (c) waive compliance with any of the conditions or covenants of the
other party contained in this Agreement, or (d) waive or modify performance of
any of the obligations of the other party under this Agreement; provided,
however, that no such party may, without the prior written consent of the other
parties, make or grant such extension of time, waiver of inaccuracies or
compliance or waiver or modification of performance with respect to its
representations, warranties, conditions or covenants hereunder. Except as
provided in the immediately preceding sentence, no action taken pursuant to this
Agreement will be deemed to constitute a waiver of compliance with any
representations, warranties, conditions or covenants contained in this Agreement
and will not operate or be construed as a waiver of any subsequent breach,
whether of a similar or dissimilar nature.
6.7 Entire Agreement; Disclosure Schedules. This Agreement, which includes
the schedules and exhibits hereto, supersedes any other agreement, whether
written or oral, that may have been made or entered into by any party relating
to the matters contemplated hereby and constitutes the entire agreement by and
among the parties hereto, except as otherwise set forth in the Asset Purchase
Agreement which shall control in the event of any conflict herewith.
6.8 Amendments, Supplements, Etc. This Agreement may be amended or
supplemented at any time by additional written agreements as may mutually be
determined by Purchaser and Seller to be necessary, desirable or expedient to
further the purposes of this Agreement or to clarify the intention of the
parties.
6.9 Rights of the Parties. Nothing expressed or implied in this Agreement
is intended or will be construed to confer upon or give any Person other than
the parties hereto or their assigns any rights or remedies under or by reason of
this Agreement or any transaction contemplated hereby.
6.10 Further Assurances. From time to time, as and when requested by any
party hereto, the other party will execute and deliver, or cause to be executed
and delivered, all such documents and instruments, make such other deliveries
and take such other actions as may be reasonably necessary to consummate the
transactions contemplated by this Agreement.
6.11 Applicable Law. This Agreement and the legal relations among the
parties hereto will be governed by and construed in accordance with the rules
and substantive Laws of the State of Florida, United States of America, without
regard to conflicts of law provisions thereof.
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6.12 Execution in Counterparts. This Agreement may be executed in two or
more counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same agreement.
6.13 Titles and Headings. Titles and headings to Sections herein are
inserted for convenience of reference only, and are not intended to be a part of
or to affect the meaning or interpretation of this Agreement.
6.14 Invalid Provisions. If any provision of this Agreement is held to be
illegal, invalid, or unenforceable under any present or future Law, and if the
rights or obligations under this Agreement of Seller on the one hand and
Purchaser on the other hand will not be materially and adversely affected
thereby, (a) such provision will be fully severable; (b) this Agreement will be
construed and enforced as if such illegal, invalid, or unenforceable provision
had never comprised a part hereof; (c) the remaining provisions of this
Agreement will remain in full force and effect and will not be affected by the
illegal, invalid, or unenforceable provision or by its severance from this
Agreement; and (d) in lieu of such illegal, invalid, or unenforceable provision,
there will be added automatically as a part of this Agreement a legal, valid,
and enforceable provision as similar in terms to such illegal, invalid, or
unenforceable provision as may be possible, or if such addition is not possible
the parties will negotiate in good faith a reasonable provision.
6.15 Attorneys' Fees. If any action at law or in equity is necessary to
enforce or interpret the terms of this Agreement, the prevailing party shall be
entitled to recover in such action its reasonable attorneys' fees, costs and
necessary disbursements in addition to any other relief to which it may be
entitled.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
TEXAS INSTRUMENTS INCORPORATED
By: _______________________________
Name: _____________________________
Title: ____________________________
HARRIS CORPORATION
By: _______________________________
Name: _____________________________
Title: ____________________________
HARRIS ADVANCED TECHNOLOGY
(MALAYSIA) SDN. BHD
By: _______________________________
Name: _____________________________
Title: ____________________________
HARRIS SOUTHWEST PROPERTIES CORP.
By: _______________________________
Name: _____________________________
Title: ____________________________
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EXHIBIT A
DEFINITIONS
"Affiliate" shall mean with respect to any Person, any other person who,
directly or indirectly, controls, is controlled by, or is under common control
with that Person.
"Agreement" shall mean this Intellectual Property Agreement as defined in
the preamble to this Agreement.
"Asset Purchase Agreement" (1) if the parties close on both the Commercial
Asset Purchase Agreement and the Military Asset Purchase Agreement, means both
the Commercial Asset Purchase Agreement and the Military Asset Purchase
Agreement, or either of them, as in the context is appropriate, or, (2) if the
parties close on only the Commercial Asset Purchase Agreement, means the
Commercial Asset Purchase Agreement.
"Closing Date" means the Closing Date as defined in the respective
applicable Commercial Asset Purchase Agreement or Military Asset Purchase
Agreement.
"Commercial Asset Purchase Agreement" shall mean the Asset Purchase
Agreement dated October 23, 1998, by and between Purchaser and Seller, executed
contemporaneously herewith, relating to the Commercial Logic Business and
Commercial Logic Products, as defined in the recitals to this Agreement.
"Commercial Logic Business" means the business conducted by Seller of
manufacturing, marketing and selling commercial but not military and not
radiation hardened digital logic integrated circuits.
"Commercial Logic Products" means the commercial digital logic integrated
circuits products manufactured, marketed or sold directly or indirectly by
Seller in the Commercial Logic Business and listed by part number on Schedule
6.9(a) of the Commercial Asset Purchase Agreement.
"Commercial Supply Agreement" shall mean the Supply Agreement dated
__________, 1998, by and between Purchaser and Seller, executed
contemporaneously herewith, relating to the supply by Seller of Commercial Logic
Products to Purchaser, as defined in Section 3.10.
"Copyrights" means all rights associated with works of authorship,
including moral rights, registered and unregistered copyrights, registrations
and applications therefor, in all media, throughout the world.
"Field of Use" (1) if the parties close on both the Commercial Asset
Purchase Agreement and the Military Asset Purchase Agreement, means (a) any
digital logic integrated circuit manufactured by any of the CD4000, BiCMOS FCT,
HC/HCT and AC/ACT processes; and (b) any of the products identified by part
numbers listed on Schedules 6.9(a) of the Commercial Asset Purchase Agreement or
the Military Asset Purchase Agreement and manufactured by any process; or, (2)
if the parties close on only the Commercial Asset Purchase Agreement, means (a)
any commercial digital logic integrated circuit manufactured by any of the
CD4000, BiCMOS
<PAGE>
FCT, HC/HCT and AC/ACT processes; and (b) any of the products identified by part
numbers listed on Schedule 6.9(a) of the Commercial Asset Purchase Agreement and
manufactured by any process.
"Intellectual Property" means Patents, Trademarks, Know-How, Copyrights
and Mask Works.
"Know-How" means know-how, technology, inventions disclosed in Invention
Disclosures, trade secrets, technical information, software and source code and
documentation therefor, notebooks, drawings, and (with respect to semiconductor
devices) mask works and application specific software.
"Logic Business" (1) if the parties close on both the Commercial Asset
Purchase Agreement and the Military Asset Purchase Agreement, means the business
conducted by Seller of manufacturing, marketing and selling commercial and
military but not radiation hardened digital logic integrated circuits; or, (2)
if the parties close on only the Commercial Asset Purchase Agreement, means the
business conducted by Seller of manufacturing, marketing and selling commercial
but not military or radiation hardened digital logic integrated circuits;
"Logic Business Intellectual Property" (1) if the parties close on both
the Commercial Asset Purchase Agreement and the Military Asset Purchase
Agreement, means that portion of Seller Intellectual Property which relates
directly to and is used exclusively in the Logic Business or Logic Products; or,
(2) if the parties close on only the Commercial Asset Purchase Agreement, means
that portion of Seller Intellectual Property which relates directly to and is
used exclusively in the Commercial Logic Business or Commercial Logic Products.
"Logic Products" (1) if the parties close on both the Commercial Asset
Purchase Agreement and the Military Asset Purchase Agreement, means the
commercial and military digital logic integrated circuits products manufactured,
marketed or sold directly or indirectly by Seller in the Logic Business and
listed by part number on Schedules 6.9(a) of the Commercial Asset Purchase
Agreement or the Military Asset Purchase Agreement; or, (2) if the parties close
on only the Commercial Asset Purchase Agreement, means the commercial digital
logic integrated circuits products manufactured, marketed or sold directly or
indirectly by Seller in the Commercial Logic Business and listed by part number
on Schedule 6.9(a) of the Commercial Asset Purchase Agreement.
"Mask Works" means all registered or unregistered mask work rights, mask
work registrations and mask work applications, throughout the world.
"Military Asset Purchase Agreement" shall mean the Asset Purchase
Agreement dated October 23, 1998, by and between Purchaser and Seller, executed
contemporaneously herewith, relating to the Military Logic Business and Military
Logic Products, as defined in the recitals to this Agreement.
"Military Logic Business" means the business conducted by Seller of
manufacturing, marketing and selling Military but not commercial and not
radiation hardened digital logic integrated circuits.
2
<PAGE>
"Military Logic Products" means the Military digital logic integrated
circuits products manufactured, marketed or sold directly or indirectly by
Seller in the Military Logic Business and listed by part number on Schedule
6.9(a) of the Military Asset Purchase Agreement.
"Military Supply Agreement" shall mean the Supply Agreement dated
__________, 1998, by and between Purchaser and Seller, executed
contemporaneously herewith, relating to the supply by Seller of Military Logic
Products to Purchaser, as defined in Section 3.10.
"Patents" means patents, utility models and all similar government grants
of rights to inventions, and all applications and related rights therefor
(including any and all divisions, continuations, continuations-in-part,
reissues, renewals, reexaminations and extensions thereof), throughout the
world.
"Person" has the same meaning as defined in the Asset Purchase Agreement.
"Proprietary Rights" shall have the meaning ascribed to such term in
Section 5.2 of this Agreement.
"Purchaser" shall have the meaning ascribed to such term in the preamble
to this Agreement.
"Seller" shall have the meaning ascribed to such term in the preamble to
this Agreement.
"Seller Intellectual Property" means (a) all Intellectual Property owned
or controlled by Seller or an Affiliate of which Seller owns a majority or
controlling interest; and (b) all Intellectual Property owned or controlled by a
third party and licensed to Seller or an Affiliate of which Seller owns a
majority or controlling interest and which Intellectual Property includes a
right of assignment, transfer or sublicense that gives a right to assign or
transfer to, or sublicense Purchaser.
"Seller Products" means all products and services that are being
manufactured or performed by Seller at any time, other than Logic Business
Products that are being manufactured or performed by Seller as of the Closing
Date.
"Technical Data" shall have the meaning ascribed to such term in Section
4.1(e) of this Agreement.
"Third Party Logic Business Intellectual Property" means Intellectual
Property owned or controlled by a third party and licensed to Seller, or an
Affiliate of which Seller owns a majority or controlling interest, under an
exclusive license which provides Seller a right of assignment or transfer or
sublicense that gives a right to assign or transfer or sublicense Purchaser and
which relates exclusively to the Logic Business or Logic Products, or is used or
held for use exclusively in the Logic Business.
"Trademarks" means all registered and unregistered trademarks, service
marks, trade names, symbols, labels, packages, configuration of goods, words,
slogans, phrases, numerals, or devices or combinations thereof, capable of
distinguishing goods or
3
<PAGE>
services from goods or services of others, and all registrations and
applications therefore, now existing or hereafter filed, throughout the world.
4
<PAGE>
EXHIBIT C
Military Supply Agreement
By and Between
Texas Instruments Incorporated
and
Harris Corporation
<PAGE>
Military Supply Agreement
This Agreement (hereinafter "Agreement") is made in duplicate original
counterparts and effective as of its execution date ("Effective Date") by and
between Harris Corporation, a corporation duly organized and validly existing
under the laws of the State of Delaware, acting by and through its Semiconductor
Sector with a principal place of business at 2401 Palm Bay Road, Northeast, Palm
Bay, Florida 32905 (hereinafter "Harris") and Texas Instruments Incorporated, a
corporation duly organized and validly existing under the laws of the State of
Delaware, acting by and through its Semiconductor Group with a principal place
of business at 8505 Forest Lane, Dallas, Texas 75243 (hereinafter "TI"). Buyer
and/or TI may be referred to herein as a "Party" or the "Parties", as the case
may require.
WHEREAS, Harris and its affiliates and TI have entered into an Asset
Purchase Agreement (the "APA") pursuant to which TI will purchase from Harris
the exclusive right to manufacture, market and sell certain Military Logic
Products (capitalized terms used herein and not otherwise defined shall have the
meanings given to them in the APA) along with certain assets, rights and
properties of Harris, used or useful with the Military Logic Business, all on
the terms and subject to the conditions set forth in the APA.
WHEREAS, in order to provide for a continuing source of supply of Military
Logic Products during a transition period beginning on the Effective Date and
ending on June 30, 1999, unless mutually extended by the parties, Harris agrees
to sell and TI agrees to purchase certain semiconductor products, devices,
wafers and/or die pursuant to specifications and in quantities mutually agreed
upon by the parties and subject to the Terms and Conditions set forth in this
Agreement.
NOW THEREFORE, the Parties agree as follows:
1. Definitions. For the purposes of this Agreement, the following underlined
terms will have the meanings set forth below.
1.1. "Estimated Ship Date" shall mean the date Harris approximates that
it will ship the Product to TI.
1.2. "Lead-time" shall mean the approximate length of time Harris
requires from the date a purchase order for the Product is submitted
to Harris by TI until such time Harris can ship the Product pursuant
to such purchase order.
1.3. "Product" shall mean those semiconductor products, devices, wafers
and/or die to be manufactured by Harris pursuant to this Agreement.
1.4. "Product Specification" shall mean the acceptance criteria for the
Product mutually agreed upon between Harris and TI.
<PAGE>
1.5. "Requested Delivery Date" shall mean the arrival date for the
Product requested by TI.
2. Scope of Agreement. Subject to the terms and conditions set forth in this
Agreement, Harris agrees to sell to TI semiconductor product, devices,
wafers and/or die manufactured using processes consistent with Harris'
standard internal practices according to specifications and in quantities
mutually agreed upon by the Parties. Harris shall deliver to TI and TI
shall purchase Product ordered by TI pursuant to the terms and conditions
set forth in this Agreement.
3. Statement of Work.
3.1. TI shall consult with and guide Harris as well as provide reasonable
technical assistance in the fulfillment of manufacturing
responsibilities undertaken by Harris pursuant to this Agreement.
3.2. Harris will be responsible for Process Technology and facilities
necessary and/or appropriate for performing its manufacturing
responsibilities specified herein.
3.3. Harris agrees to provide reasonable technical support to assist in
failure analysis of Product provided under this Agreement and to
respond to TI's needs for such analysis in a timely manner.
4. Product Forecasts, Purchases and Sales.
4.1. Four Month Rolling Forecast. During the term of this Agreement, TI
shall supply to Harris by the first day of each month a non-binding
four month rolling forecast of estimated unit demand by wafer
technology for unassembled semiconductor products and by package
level for finished goods. Upon execution of this Agreement, TI shall
provide Harris with its initial four month rolling forecast.
Requests for quantities greater than those set forth in TI's four
month forecasts will be accommodated by Harris to the extent
capacity is available. Within seven (7) days of receipt of each of
TI's rolling four month forecasts, Harris shall provide written
acceptance or rejection of the demand levels set forth in TI's
forecast and shall communicate the existence and amount of residual
capacity available to provide quantities greater than those set
forth in TI's forecast.
4.2. One Month Loading Forecast. In addition to providing the four month
rolling forecast described in Section 4.1., TI will, on the last
work day preceding the first and fifteenth day of each month,
provide Harris with an updated one month loading forecast setting
forth TI's estimated product demand and requested delivery date by
wafer for unassembled semiconductor products and by device for
finished goods. The quantities set forth in weeks (1) one and (2)
two of each loading forecast shall constitute a firm commitment on
TI's behalf, except that, at any time prior to the second work day
of week (2) two, TI reserves the right to change the device loading
of the week (2) two mix by up to twenty-five percent (25%). The
quantities set forth in weeks (3) three and (4) four of each loading
-2-
<PAGE>
forecast are subject to change but will become firm commitments
unless modified in writing by TI prior to the beginning of the third
week. Each loading forecast shall constitute a release against the
corresponding purchase order issued by TI pursuant to Section 4.3.1.
below.
4.3. Purchases and Sales.
4.3.1. TI's purchase of Product shall be initiated by the issuance
of a written purchase order which will provide a reasonable
Lead-time to ensure timely delivery of the products. A
purchase order will only be accepted by Harris if issued by
TI's authorized representative. Each purchase order issued by
TI shall specify: (i) a purchase order number and date, (ii)
quantity of Product to be delivered using the Minimum Line
Quantities ("MLQ's') listed on Exhibit A, (iii) Product part
number and revision level, (iv) Product description, (v)
Product unit price, (vi) Requested Delivery Date, (vii)
shipping instructions, including carrier and delivery
address, and (viii) signature(s) of authorized TI
representative. No terms or conditions in either Party's
purchase, sales, delivery or shipping, forms of
acknowledgments, or similar documents shall have effect to
the extent such terms and conditions are inconsistent with
terms and conditions set forth in this Agreement.
4.3.2. Within five (5) business days after Harris receives TI's
purchase order, Harris shall provide to TI Estimated Ship
Date for the Product requested pursuant to such purchase
order. If Harris cannot commit to an Estimated Ship Date that
satisfies TI's Requested Delivery Date, Harris shall propose,
in good faith, an alternative Estimated Ship Date. Any
purchase order placed by TI prior to the termination of this
Agreement in which the Estimated Ship Date will be after the
termination of this Agreement shall continue to be governed
by the terms and conditions of this Agreement.
4.3.3. All forecasts, purchase orders and shipping documents between
the parties shall be communicated by electronic means to the
maximum extent feasible.
5. Pricing.
5.1. Product Pricing and Minimum Line Quantities. Prices charged shall be
as indicated on Exhibit A attached hereto and incorporated herein by
this reference. Prices cover only semiconductor products, devices,
wafers, and/or die set forth in Exhibit A. Any semiconductor
products, devices, wafers and/or die not set forth in Exhibit A will
be provided only if pricing and other terms are separately
negotiated and mutually agreed upon by the Parties.
5.2. Product Specification Change Process. Upon receipt of a written
request by TI, Harris shall, within fifteen (15) business days,
submit to TI a written summary of estimated adjustments or costs, if
any, reasonably required to implement a
-3-
<PAGE>
modification to the Product Specification requested by TI. Such
summary shall include the change, if any, to: (i) any applicable
Product delivery dates; and (ii) the mask tooling impacted and unit
price. Written approval from TI must be received by Harris prior to
implementation of such changes, and will be referenced as an
Amendment to this Agreement. If Harris does not receive such written
approval from TI within five (5) calendar days after Harris submits
a summary to TI, TI shall have been deemed to have withdrawn such
request for change to the Product Specifications.
5.3. Freight and Tax Charges. Prices set forth in this Agreement do not
include freight charges or any customs duties, sales, use, value
added, excise, Federal, state, local or other similar taxes. All
such duties or taxes shall be paid by TI, or in lieu thereof, TI
shall provide Harris with an appropriate exemption certificate.
6. Delivery, Shipments, Invoices and Payments.
6.1. Title and Transportation. All shipments of Product to TI shall be
F.O.B. point of manufacture. Title and risk of loss or damage shall
pass to TI upon tender of delivery of the Products to a carrier at
manufacturing point.
6.2. Terms and Method of Payment. Terms of payment shall be net thirty
(30) days from date of invoice. TI's payment of any invoice shall
not constitute acceptance of Products. Such invoices may be subject
to adjustments for errors, shortages, or defects in Products. Each
shipment shall constitute an independent transaction and TI shall
pay for the same in accordance with the specified payment terms.
Payments shall be made in US dollars.
7. Term. Subject to the terms and conditions set forth in this Agreement, TI
may issue purchase orders at any time prior to June 30, 1999. Unless
sooner terminated under the provisions of this Agreement, this Agreement
shall terminate on June 30, 1999, unless mutually extended by the parties.
Provisions of this Agreement which by their terms extend past the
termination date shall survive termination.
8. Inspection and Acceptance. TI agrees to perform incoming inspection of
Product within thirty (30) calendar days of TI's receipt of Product. If
Harris delivers Product to TI that does not conform in a material respect
to TI's purchase order, TI shall notify Harris by written notice within
five (5) calendar days after TI inspects Product. If TI rejects such
product, TI's notice shall specify TI's reason(s) for rejecting the
Product. TI will thereupon return rejected Product F.O.B. shipping point
for repair or replacement at Harris' option.
9. Product Warranty.
9.1. Warranty Period. Harris, except as otherwise provided below,
warrants all goods against faulty workmanship or the use of
defective materials and warrants that goods will conform to
published Harris specifications or other agreed upon written Product
Specifications. Unassembled semiconductor devices in wafer or die
form shall meet the minimum yield levels set forth in Exhibit A
attached
-4-
<PAGE>
hereto and incorporated herein by this reference. The warranty
period for finished goods shall be two (2) years from the date of
shipment. The warranty period for unassembled semiconductor devices
in wafer or die form shall be six (6) months from the date of
shipment. All product returned to Harris for failure to comply with
the applicable specifications will be repaired or replaced within
reasonable lead-time, at the option of Harris.
9.2. No Additional Warranties. EXCEPT FOR THE EXPRESS WARRANTIES STATED
IN THIS AGREEMENT, HARRIS MAKES NO ADDITIONAL WARRANTIES, EXPRESS,
IMPLIED OR STATUTORY, INCLUDING BUT NOT LIMITED TO, ANY IMPLIED
CONDITIONS OR WARRANTY OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE OR ANY OTHER WARRANTY OBLIGATION ON THE PART OF
HARRIS. TI'S REMEDIES SHALL BE LIMITED TO THE REMEDIES SPECIFIED
HEREIN.
10. Limitation of Damages. IN NO EVENT WILL EITHER PARTY BE LIABLE TO THE
OTHER FOR ANY LOST PROFITS, LOSS OF GOODWILL, OVERHEAD, COST OF COVER OR
OTHER INDIRECT, SPECIAL, INCIDENTAL, OR CONSEQUENTIAL DAMAGES ARISING OUT
OF OR RELATED TO THIS AGREEMENT, HOWEVER CAUSED, AND WHETHER BASED IN
CONTRACT, TORT (INCLUDING NEGLIGENCE), STRICT LIABILITY OR OTHERWISE.
THESE LIMITATIONS SHALL APPLY EVEN IF THE PARTY HAS BEEN ADVISED OF THE
POSSIBILITY OF SUCH DAMAGE, AND NOTWITHSTANDING THE FAILURE OF ESSENTIAL
PURPOSE OF ANY LIMITED REMEDY HEREIN.
11. Miscellaneous.
11.1. Force Majeure. Anything contained in this Agreement to the contrary
notwithstanding, the obligations of the Parties hereto shall be
subject to all laws, both present and future, of any government
having jurisdiction over the Parties hereto, and to orders,
regulations, directions or requests of any such government, or any
department, agency or corporation thereof, and to war, acts of
public enemies, strikes or other labor disturbances, accidents,
transportation embargo, shortage of supplies, fires, floods,
earthquakes, acts of God, or causes of like or different kind beyond
the control of the Parties, and the Parties hereto shall be excused
from any failure to perform any obligation hereunder to the extent
such failure is caused by any such law, order, regulation,
direction, request or contingency, for the period such cause
endures. Production and deliveries may be allocated in a reasonable
manner among its customers by Harris when these circumstances create
a delay or shortfall in production of the Product or of products of
the general type covered by this Agreement. Notwithstanding the
foregoing, in the event any such cause delays either Party's
performance of any of its material obligations under this Agreement,
the other Party may suspend its performance under this Agreement for
the period such delay continues and if any such cause renders
impossible or delays for a period of more than six months either
Party's performance of any of its material obligations under this
Agreement, the other Party may upon written notice terminate this
Agreement and
-5-
<PAGE>
such termination will be deemed to have occurred with consent of
both parties. The Party whose performance is delayed on account of
any such cause shall promptly notify the other Party and shall exert
reasonable efforts to recommence performance as soon as possible.
11.2. Relationship of Parties.
11.2.1. Neither Party shall have, or shall represent that it has,
any power, right, or authority to bind the other Party, or
to assume or create any obligation or responsibility,
express or implied, on behalf of the other Party or in the
other Party's name.
11.2.2. Each Party is an independent contractor; nothing in this
Agreement shall be construed as constituting Harris and TI
as partners, joint venturers, or as creating the
relationships of employer and employee, franchiser and
franchisee, master and servant, principal and agent, or any
other form of legal association that would impose liability
on one Party for the act or failure to act of the other
Party.
11.2.3. Harris shall grant TI upon reasonable notice, access to its
manufacturing line during normal business hours for the
purpose of inspection and observation. Such access shall be
granted as long as it does not unduly interfere with Harris
operations or other business affairs.
11.2.4. An employee of one Party shall not be considered, for any
purpose, an employee of the other Party. To the extent this
Agreement involves work by one Party on the premises of the
other Party, each Party shall instruct and require its
respective visiting employees to observe and obey all rules,
policies and procedures in effect at the facilities of the
other Party.
11.3. Notices and Administration of the Agreement. All notices shall be
given in writing either by personal delivery to the Party to whom
notice is directed, or by confirmed telex or facsimile, or by a
commercial overnight courier service, or by registered or certified
mail, return receipt requested. The date upon which any such notice
is so personally delivered, the date of confirmation of telex,
facsimile, or courier delivery, or if the notice is given by
registered or certified mail, the date three (3) days after it is
deposited in the U.S. mail, shall be deemed to be the date shown as
delivered on the return receipt of such notice, irrespective of the
date appearing therein. For and on the behalf of each Party, the
person designated below shall have cognizance of the work provided
pursuant to this Agreement. General administration of the Agreement
shall be through them. Each Party reserves the right to
independently appoint a different individual and agrees to notify
the other Party in writing of such change. All statements and
notices shall be sent directly to the following individuals.
-6-
<PAGE>
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If to TI If to Harris
-------- ------------
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Texas Instruments Incorporated Harris Corporation
P.O. Box 84, M.S. 853 Semiconductor Sector
Sherman, Texas 75091 P.O. Box 883, M.S. 53-202
Attention: Robert Kroger Melbourne, FL 32902-0883
Attention: Ray Odom
-------------------------------------------------------------------
11.4. Language Interpretation. In the interpretation of this Agreement,
unless the context otherwise requires, (a) words importing the
singular shall be deemed to import the plural and vice versa, (b)
words denoting gender shall include all genders, (c) references to
persons shall include corporations other bodies, and vice versa, (d)
references to Parties, sections, schedules, addenda, paragraphs,
articles and exhibits shall mean the Parties, sections, schedules,
addenda, paragraphs, articles and exhibits of and to this Agreement,
and (e) periods of days, weeks or months shall mean calendar days,
weeks or months.
11.5. Headings. Article and Section headings are included solely for
convenience, are not to be considered a part of this Agreement, and
are not intended to be full and accurate descriptions of their
contents.
11.6. Export. Each Party hereby assures the other that it will not
knowingly, without prior authorization, if required of the Office of
Export Administration, U.S. Department of Commerce, export or
reexport (as defined in Section 380.1(b)-(c) of the Export
Administration Regulations and any amendments thereto) the technical
data covered hereby. TI shall be responsible for determining the
ITAR status of devices manufactured under this Agreement, and for
obtaining all applicable licenses.
11.7. Other Restrictions. In exercising its rights under this Agreement,
each Party agrees to comply strictly and fully with all export
controls imposed on Products by any country or organization or
nations within whose jurisdiction each Party operates or does
business. Each Party agrees not to export or permit export of
Products or any related technical data or any direct Product of any
related technical data, without complying with the export control
laws in the relevant jurisdiction.
11.8. Incorporation by Reference. Except as herein set forth to the
contrary, the terms and conditions of the APA are herein
incorporated by reference as if set forth in full.
11.9. Exhibits. The following is the list of Exhibits which are attached
hereto and are hereby incorporated into this Agreement by reference.
Exhibit A: Pricing and Minimum Die Per Wafer and Minimum Line
Quantities.
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<PAGE>
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be
signed by duly authorized officers or representative as of the date first above
written.
TEXAS INSTRUMENTS INCORPORATED HARRIS CORPORATION
Semiconductor Group Semiconductor Sector
By: __________________________ By: ____________________________
Name: ________________________ Name: __________________________
Title: _______________________ Title: _________________________
Date: ________________________ Date: __________________________
-8-
<PAGE>
EXHIBIT A
MILITARY SUPPLY AGREEMENT
PRICING AND MINIMUM DIE PER WAFER AND MINIMUM LINE QUANTITIES
1. PRICING AND MINIMUM DIE PER WAFER. The military products subject to this
Agreement are provided as follows:
The military products, their prices, and the minimum die per wafer
("MDPW") are listed in Schedule 1(a)[m] attached.
2. MINIMUM LINE QUANTITIES. The minimum line quantities ("MLQ's") to be
ordered are as follows:
a) Finished Goods Requests (available in die bank)
Military 100 units
b) Die Request
100 units Minimum die request will be equivalent to six (6) wafers,
MDPW by device as set forth in Schedule 1 (a)[m] for all military
die requests.
<PAGE>
SCHEDULE 1(a)[M]
MILITARY PRODUCTS FOR SUPPLY AGREEMENT
<TABLE>
<CAPTION>
FG Std Die Std Die
Device (Harris) SMD Die ASP Trf Price Die Cost Trf Price NDW MDPW MLQ
--------------- --- --- --- --------- -------- --------- --- ---- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
135957 06415XXXXBN5A 1.482 1.186 0.053 0.053 1,961 1,471 8,824
89262AKB3T 05361BXXXBN5A 12.000 9.600 0.020 0.020 5,113 3,835 23,009
89265AKB3T 05681XXXXBN5A 49.530 39.624 0.027 0.027 3,732 2,799 16,792
89267AKB3T 05675XXXXBN5A 33.600 26.880 0.030 0.030 3,354 2,515 15,091
89270AKB3T 10494BXXXBN5A 38.220 30.576 0.104 0.104 998 748 4,491
89271AKB3T 04020AXXXBN5A 35.550 28.440 0.188 0.188 523 392 2,355
89273AKB3T 05867XXXXBN5A 32.310 25.848 0.031 0.031 3,194 2,396 14,373
CD14538BF3A 5962-9055701EA 13024BXXXBN5A 2.180 1.744 0.093 0.093 300 225 1,350
CD4000AFB JM38510/05201BCA 05361BXXXJN5A 15.397 12.318 0.024 0.024 300 225 1,350
CD4001BF3A 06939XXXXJN5A 1.006 0.805 0.046 0.046 2,750 2,063 12,375
CD4001BF3AS2283 06939XXXXJN5A 0.500 0.400 0.046 0.046 2,750 2,063 12,375
CD4001BFB JM38510/05252BCA 06939XXXXJN5A 7.803 6.242 0.046 0.046 2,750 2,063 12,375
CD4001BFS2484 06939X 0.690 0.552 0.038 0.038 2,781 2,086 12,515
CD4001BK3 06939XXXXBN5A 23.325 18.660 0.045 0.045 2,781 2,086 12,515
CD4001UBF3A 06924XXXXBN5A 1.712 1.370 0.037 0.037 2,765 2,074 12,442
CD4001UBF3AS2451 06924XXXXBN5A 1.367 1.094 0.037 0.037 2,765 2,074 12,442
CD4002BF3A 7704403CA 10255XXXXBN5A 1.387 1.110 0.037 0.037 2,781 2,086 12,515
CD4002BK3 10255XXXXBN5A 6.196 4.957 0.037 0.037 2,781 2,086 12,515
CD4006BF3A 06910XXXXBN5A 2.156 1.725 0.085 0.085 1,215 911 5,468
CD4006BF3AS2451 06910XXXXBN5A 2.270 1.816 0.085 0.085 1,215 911 5,468
CD4007UBF3A 06938XXXXBN5A 1.613 1.290 0.030 0.030 3,476 2,607 15,641
CD4007UBF3A116 06938XXXXBN5A 1.310 1.048 0.030 0.030 3,476 2,607 15,641
CD4007UBF3AS2451 06938XXXXBN5A 1.829 1.463 0.030 0.030 3,476 2,607 15,641
CD4008BF3A 06724AXXXBW5A 2.073 1.658 0.078 0.078 1,333 1,000 5,998
CD4009UBF3A 06868XXXXBN5A 2.219 1.775 0.040 0.040 2,719 2,039 12,236
CD40101BF3A 06588XXXXBN5A 1.931 1.545 0.049 0.049 2,115 1,586 9,517
CD40103BF3A 06629XXXXBN5A 2.112 1.690 0.132 0.132 785 589 3,533
CD40105BF3A 06751XXXXBN5A 1.850 1.480 0.167 0.157 658 493 2,959
CD40106BF3A 10900XXXXBN5A 1.526 1.221 0.041 0.041 2,522 1,892 11,349
CD40107BF3A 06706XXXXBN5A 1.827 1.462 0.029 0.029 3,513 2,634 15,807
CD40108BD3 10363XXXXBN5A 16.378 13.102 0.171 0.171 604 453 2,719
</TABLE>
1 COMPANY CONFIDENTIAL
<PAGE>
SCHEDULE 1(a)[M]
MILITARY PRODUCTS FOR SUPPLY AGREEMENT
<TABLE>
<CAPTION>
FG Std Die Std Die
Device (Harris) SMD Die ASP Trf Price Die Cost Trf Price NDW MDPW MLQ
--------------- --- --- --- --------- -------- --------- --- ---- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CD40109BF3A 11377AXXXBN5A 1.892 1.514 0.077 0.077 1,346 1,010 6,059
CD40109BK3 11377AXXXBN5A 31.624 25.299 0.077 0.077 1,346 1,010 6,059
CD4010BF3A 06869XXXXBN5A 2.063 1.650 0.038 0.038 2,689 2,017 12,101
CD4011AD3 05681XXXXBN5A 3.984 3.187 0.027 0.027 3,732 2,799 16,792
CD4011AFB JM38510/05001BCA 05681XXXXJN5A 5.898 4.718 0.032 0.032 3,732 2,799 16,792
CD4011BF3A 10256AXXXJN5A 1.052 0.842 0.038 0.038 3,559 2,669 16,014
CD4011BF3AS2283 10256AXXXJN5A 0.500 0.400 0.038 0.038 3,559 2,669 16,014
CD4011BFB JM38510/05051BCA 10256AXXXJN5A 12.782 10.226 0.038 0.038 3,559 2,669 16,014
CD4011BK3 10256AXXXBN5A 17.684 14.147 0.028 0.028 3,680 2,760 16,560
CD4012BF3A 10257XXXXBN5A 1.463 1.170 0.041 0.041 2,511 1,883 11,300
CD4012BF3AS2451 10257XXXXBN5A 1.710 1.368 0.041 0.041 2,511 1,883 11,300
CD4012BFB JM38510/05052BCA 10257XXXXJN5A 14.025 11.220 0.051 0.051 2,483 1,862 11,174
CD4013BF3A 10953XXXXJN5A 1.347 1.078 0.098 0.098 1,479 1,109 6,654
CD4013BF3AS2451 10953XXXXJN5A 1.259 1.007 0.098 0.098 1,479 1,109 6,654
CD4013BFB JM38510/05151BCA 10953XXXXJN5A 7.487 5.990 0.098 0.098 1,479 1,109 6,654
CD4013BK3 10953XXXXBN5A 22.474 17.979 0.057 0.057 2,170 1,628 9,767
CD4014BF3A 10163XXXXBN5A 1.611 1.289 0.086 0.086 1,202 901 5,408
C04015BF3A 06911AXXXBN5A 1.597 1.278 0.095 0.095 1,256 942 5,653
CD4015BF3AS2451 06911AXXXBN5A 1.419 1.135 0.100 0.100 1,256 942 5,653
CD40160BF3A 10214XXXXBN5A 2.133 1.706 0.100 0.100 1,031 773 4,639
CD40161BF3A 10215XXXXBN5A 1.752 1.402 0.098 0.098 1,056 792 4,751
CD40163BF3A 10217XXXXBN5A 2.390 1.912 0.099 0.099 1,043 782 4,695
CD4016BF3A 5962-9064001CA 06940BXXXBN5A 1.360 1.088 0.028 0.028 3,644 2,733 16,396
CD40174BF3A 10276XXXXBN5A 1.487 1.190 0.070 0.070 1,690 1,267 7.603
CD40175BF3A 11180XXXXBN5A 1.540 1.232 0.053 0.053 1,945 1,459 8,754
CD4017AFB JM38510/05601BEA 10494BXXXJN5A 5.414 4.331 0.121 0.121 1,945 1,459 8,754
CD4017BF3A 10494BXXXBN5A 1.494 1.195 0.104 0.104 998 748 4,491
CD4017BFB JM38510/05651BEA 10494BXXXJN5A 10.403 8.322 0.121 0.121 998 748 4,491
CD4018BF3A 10113XXXXJN5A 1.861 1.489 0.091 0.091 1,356 1,017 6,101
CD4018BFB JM38510/05652BEA 10113XXXXJN5A 8.315 6.652 0.091 0.091 1,356 1,017 6,101
CD40192BF3A 06729XXXXBN5A 2.403 1.922 0.113 0.113 916 687 4,123
</TABLE>
2 COMPANY CONFIDENTIAL
<PAGE>
SCHEDULE 1(a)[M]
MILITARY PRODUCTS FOR SUPPLY AGREEMENT
<TABLE>
<CAPTION>
FG Std Die Std Die
Device (Harris) SMD Die ASP Trf Price Die Cost Trf Price NDW MDPW MLQ
--------------- --- --- --- --------- -------- --------- --- ---- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CD40193BF3A 06730XXXXBN5A 2.130 1.704 0.114 0.114 906 679 4,075
CD40193BF3AS2265 06730XXXXBN5A 2.919 2.335 0.114 0.114 906 679 4,075
CD4019AFB JM38510/05302BEA 05652XXXXJN5A 7.261 5.809 0.040 0.040 906 679 4075
CD4019BF3A 14269AXXXBN5A 1.515 1.212 0.040 0.040 2,583 1,937 11,623
CD4019BF3AS2451 14269AXXXBN5A 1.860 1.488 0.040 0.040 2,583 1,937 11,623
CD4019BFB JM38510/05352BEA 14269AXXXJN5A 7.402 5.922 0.064 0.064 2,583 1,937 11,623
CD4020AFB JM38510/05603BEA 06065BXXXJN5A 6.831 5.465 0.075 0.075 2,583 1,937 11,623
CD4020BF3A 06947XXXXJN5A 1.510 1.208 0.160 0.160 915 686 4,116
CD4020BF3AS2451 06947XXXXJN5A 1.920 1.536 0.171 0.171 915 686 4,116
CD4020BFB JM38510/05653BEA 06947XXXXJN5A 11.806 9.445 0.171 0.171 915 686 4,116
CD4021BF3A 10164XXXXJN5A 1.651 1.321 0.099 0.099 1,202 901 5,408
CD4021BFB JM38510/05754BEA 10164XXXXJN5A 11.344 9.075 0.099 0.099 1,202 901 5,408
CD4022BF3A 10495BXXXBN5A 2.034 1.627 0.088 0.088 1,176 882 5,292
CD4023BF3A 10258XXXXJN5A 1.105 0.884 0.041 0.041 2,539 1,904 11.425
CD4023BFB JM38510/05053BCA 10258XXXXJN5A 11.974 9.579 0.051 0.051 2,539 1,904 11,425
CD4023BK3 10258XXXXBN5A 25.425 20.340 0.041 0.041 2,539 1,904 11,425
CD4024AFB JM38510/05605BCA 05385CXXXJN5A 10.347 8.278 0.070 0.070 1,574 1,180 7,081
CD4024BF3A 06903XXXXBN5A 1.707 1.366 0.065 0.065 1,596 1,197 7,183
CD4024BF3AS2451 06903XXXXBN5A 1.623 1.298 0.079 0.079 1,596 1,197 7,183
CD4024BFB JM38510/05655BCA 06903XXXXJN5A 2.221 1.777 0.095 0.095 1,578 1,183 7,099
CD40257BF3A 06786XXXXBN5A 2.095 1.676 0.054 0.054 1,917 1,438 8,627
CD4025AFB JM38510/05204BCA 05920XXXXJN5A 8.657 6.926 0.035 0.035 3,326 2,495 14,969
CD4025BF3A 10259XXXXBN5A 1.224 0.979 0.041 0.041 2,511 1,883 11,300
CD4025BF3AS2451 10259XXXXBN5A 1.364 1.091 0.041 0.041 2,511 1,883 11,300
CD4025BFB JM38510/05254BCA 10259XXXXJN5A 3.572 2.858 0.050 0.050 2,539 1,904 11,425
CD4027BF3A 06904AXXXJN5A 1.646 1.317 0.067 0.067 1,901 1,425 8,553
CD4027BF3AS2451 06904AXXXJN5A 1.239 0.991 0.067 0.067 1,901 1,425 8,553
CD4027BFB JM38510/05152BEA 06904AXXXJN5A 11.975 9.580 0.067 0.067 1,901 1,425 8,553
CD4028BF3A 14271AXXXBN5A 1.618 1.294 0.058 0.058 1,777 1,332 7,994
CD4029BF3A 8101602EA 06836XXXXBN5A 1.804 1.443 0.104 0.104 994 746 4,475
CD4029BF3AS2451 06836XXXXBN5A 2.148 1.718 0.104 0.104 994 746 4,475
</TABLE>
3 COMPANY CONFIDENTIAL
<PAGE>
SCHEDULE 1(a)[M]
MILITARY PRODUCTS FOR SUPPLY AGREEMENT
<TABLE>
<CAPTION>
FG Std Die Std Die
Device (Harris) SMD Die ASP Trf Price Die Cost Trf Price NDW MDPW MLQ
--------------- --- --- --- --------- -------- --------- --- ---- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CD4030BF3A 06950XXXXBN5A 1.786 1.429 0.052 0.052 1,985 1,489 8,934
CD4030BF3AS2451 06950XXXXBN5A 1.424 1.139 0.052 0.052 1,985 1,489 8,934
CD4030BFB JM38510/05353BCA 06950XXXXJN5A 11.744 9.395 0.060 0.060 2,031 1,523 9,139
CD4031BF3A 10204XXXXBN5A 2.876 2.301 0.170 0.170 697 523 3,137
CD4034BF3A 10341XXXXBN5A 4.639 3.711 0.207 0.207 498 374 2,243
CD4035BF3A 8101701EA 10165XXXXBN5A 1.530 1.224 0.080 0.080 498 374 2,243
CD4040BF3A 06948XXXXBN5A 1.613 1.290 0.110 0.110 937 103 4,215
CD4041UBF3A 06905AXXXBN5A 1.955 1.564 0.055 0.055 1,885 1,414 8,482
CD4042BF3A 06917XXXXBN5A 1.649 1.319 0.048 0.048 2,156 1,617 9701
CD4042BF3AS2451 06917XXXXBN5A 2.385 1.908 0.048 0.048 2,156 1,617 9,701
CD4043BF3A 10125XXXXBN5A 1.727 1.382 0.051 0.051 2,043 1,533 9,195
CD4044BF3A 10126XXXXBN5A 1.800 1.440 0.051 0.051 2,043 1,533 9,195
CD4046BF3A 5962-9466401MEA 10005AXXXBN5A 1.960 1.568 0.092 0.092 1,124 843 5,058
CD4046BFS2265 10005AXXXBN5A 2.100 1.680 0.092 0.092 1,124 843 5,058
CD4047BD3 8102001CA 06943CXXXBN5A 1.893 1.514 0.082 0.082 1,528 1,146 6,875
CD4047BF3A 06943CXXXBN5A 1.146 0.917 0.082 0.082 1,528 1,146 6,875
CD4048BF3A 06944AXXXBN5A 1.892 1.514 0.058 0.058 1,886 1,415 8,488
CD4048BF3AS2451 06944AXXXBN5A 2.108 1.686 0.062 0.062 1,886 1,415 8,488
CD4049AFB JM38510/05503BEA 06246XXXXJN5A 15.859 12.687 0.045 0.045 1,886 1,415 8,488
CD4049UBF3A 14270AXXX5N5A 1.386 1.109 0.046 0.046 2,592 1,944 11,666
CD4049UBF3AS2451 14270AXXX5N5A 1.552 1.242 0.046 0.046 2,592 1,944 11,666
CD4049UBFB JM38510/05553BEA 14270AXXXJN5A 11.267 9.014 0.064 0.064 2,592 1,944 11,666
CD4049UBK3 14270AXXXBN5A 25.556 20.445 0.040 0.040 2,592 1,944 11,666
CD4050AFB JM38510/05504BEA 06265XXXXJN5A 9.105 7.284 0.042 0.042 2,716 2,037 12,220
CD4050BF3A 10966AXXXBN5A 1.418 1.134 0.041 0.041 2,506 1,880 11,278
CD4050BF3AS2451 10966AXXXBN5A 1.748 1.398 0.041 0.041 2,506 1,880 11,278
CD4050BFB JM38510/05554BEA 10966AXXXJN5A 8.224 6.579 0.056 0.056 2,506 1,880 11,278
CD4051BF3A 10905XXXXBN5A 1.577 1.262 0.110 0.110 1,066 800 4,799
CD4052BF3A 7901502EA 10940XXXXBN5A 1.632 1.306 0.079 0.079 1,231 923 5,540
CD4053BF3A 8101801EA 10941XXXXBN5A 1.307 1.046 0.079 0.079 1,305 979 5,875
CD4054BF3A 06881XXXXBN5A 2.413 1.930 0.050 0.050 2,072 1,554 9,322
</TABLE>
4 COMPANY CONFIDENTIAL
<PAGE>
SCHEDULE 1(a)[M]
MILITARY PRODUCTS FOR SUPPLY AGREEMENT
<TABLE>
<CAPTION>
FG Std Die Std Die
Device (Harris) SMD Die ASP Trf Price Die Cost Trf Price NDW MDPW MLQ
--------------- --- --- --- --------- -------- --------- --- ---- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CD4056BF3A 06716MXXXBN5A 2.437 1.950 0.078 0.078 1,326 994 5,966
CD4059AD3 06006AXXXBN5A 19.940 15.952 0.254 0.254 380 285 1,712
CD4060BF3A 06949AXXXBN5A 1.627 1.302 0.128 0.128 926 694 4,166
CD4063BF3A 06415XXXXBN5A 2.183 1.746 0.053 0.053 1,961 1,471 8,824
CD4066BF3A 06941XXXXBN5A 1.442 1.154 0.048 0.048 2,156 1,617 9,700
CD4066BF3AS2451 06941XXXXBN5A 1.438 1.150 0.048 0.048 2,156 1,617 9,700
CD4066BFB JM38510/05852BCA 06941XXXXJN5A 12.191 9.753 0.058 0.058 2,156 1,617 9,700
CD4066BK3 06941XXXXBN5A 29.121 23.297 0.048 0.048 2,156 1,617 9,700
CD4067BF3A 06589AXXXBN5A 3.193 2.554 0.049 0.049 958 718 4,310
CD4068BF3A 10087XXXXBN5A 1.671 1.337 0.035 0.035 2,797 2,098 12,588
CD4069UBF3A 11149XXXXJN5A 1.133 0.906 0.032 0.032 4,626 3,470 20,819
CD4069UBF3AS2442 11149XXXXJN5A 1.441 1.153 0.032 0.032 4,626 3,470 20,819
CD4069UBFB JM38510/17401BCA 11149XXXXJN5A 12.000 9.600 0.032 0.032 4,626 3,470 20,819
CD4070BF3A 06950XXXXBN5A 1.062 0.850 0.052 0.052 1,985 1,489 8,934
CD4070BFB JM38510/17203BCA 06950XXXXJN5A 11.240 8.992 0.060 0.060 1,985 1,489 8,934
CD4071BF3A 10088XXXXJN5A 1.307 1.046 0.048 0.048 2,663 1,997 11,983
CD4071BFB JM38510/17101BCA 10088XXXXJN5A 12.308 9.846 0.048 0.048 2,663 1,997 11,983
CD4072BF3A 7706002CA 10027XXXXBN5A 1.505 1.204 0.032 0.032 2,663 1,997 11,983
CD4073BF3A 7705102CA 10089XXXXJN5A 1.568 1.254 0.049 0.049 2,585 1,939 11,633
CD4073BFB JM38510/17003BCA 10089XXXXJN5A 12.186 9.749 0.049 0.049 2,585 1,939 11,633
CD4075BF3A 10090XXXXJN5A 1.397 1.118 0.047 0.047 2,713 2,034 12,207
CD4075BF8 JM38510/17103BCA 10090XXXXJN5A 11.701 9.361 0.047 0.047 2,713 2,034 12,207
CD4076BF3A 06584AXXXBN5A 1.818 1.454 0.063 0.063 1,642 1,232 7,389
CD4077BF3A 06953XXXXBN5A 1.713 1.370 0.046 0.046 2,077 1,557 9,345
CD4078BF3A 7704402CA 10091XXXXBN5A 1.607 1.286 0.033 0.033 3,130 2,347 14,084
CD4081BF3A 7702402CA 10092XXXXJN5A 1.419 1.135 0.059 0.059 2,703 2,028 12,165
CD4081BF3AS2283 10092XXXXJN5A 0.590 0.472 0.055 0.055 2,703 2,028 12,165
CD4081BFB JM38510/17001BCA 10092XXXXJN5A 11.560 9.248 0.059 0.059 2,703 2,028 12,165
CD4082BF3A 7705902CA 10093XXXXJN5A 1.397 1.118 0.044 0.044 2,703 2,028 12,165
CD4082BFB JM38510/17002BCA 10093XXXXJN5A 11.876 9.501 0.044 0.044 2,934 2,200 13,202
CD4085BF3A 06562AXXXXBN5A 1.632 1.306 0.030 0.030 3,422 2,567 15,400
</TABLE>
5 COMPANY CONFIDENTIAL
<PAGE>
SCHEDULE 1(a)[M]
MILITARY PRODUCTS FOR SUPPLY AGREEMENT
<TABLE>
<CAPTION>
FG Std Die Std Die
Device (Harris) SMD Die ASP Trf Price Die Cost Trf Price NDW MDPW MLQ
--------------- --- --- --- --------- -------- --------- --- ---- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CD4086BF3A 06561AXXXBN5A 1.749 1.399 0.024 0.024 3,938 2,953 17,721
CD4089BF3A 10416XXXXBN5A 2.144 1.715 0.108 0.108 960 720 4,319
CD4093BF3A 7704602CA 06586CXXXBN5A 1.563 1.250 0.032 0.032 3,211 2,408 14,450
CD4094BF3A 7702501EA 06602XXXXBN5A 1.553 1.242 0.094 0.094 1,098 823 4,941
CD4098BF3A 06946XXXXJN5A 1.791 1.433 0.100 0.100 1,282 961 5,768
CD4098BFB JM38510/17504BEA 06946XXXXJN5A 9.839 7.871 0.100 0.100 1,282 961 5,768
CD4099BF3A 06610XXXXJN5A 1.639 1.311 0.119 0.119 1,151 863 5,179
CD4099BFB JM38510/17601BEA 06610XXXXJN5A 12.161 9.729 0.127 0.127 1,151 883 5,179
CD4502BF3A 7702002EA 06859XXXXBN5A 1.906 1.525 0.080 0.080 1,290 968 5,806
CD4502BFB JM38510/17403BEA 06859XXXXBN5A 12.945 10.356 0.097 0.097 1,290 968 5,806
CD4503BF3A 10705AXXXBN5A 1.561 1.249 0.059 0.059 1,755 1,316 7,896
CD4504BF3A 11901AXXXBN5A 2.028 1.622 0.090 0.090 1,146 860 5,157
CD45040B3AS2451 11901AXXXBN5A 1.973 1.578 0.090 0.090 1,146 860 5,157
CD4508BD3 06785AXXXBN5A 11.419 9.135 0.098 0.098 1,054 791 4,743
CD4508BF3A 06785AXXXBN5A 2.833 2.266 0.098 0.098 1,054 791 4,743
CD4511BF3A 10480XXXXBN5A 1.818 1.454 0.131 0.131 892 669 4,015
CD4511BK3 10480XXXXBN5A 31.867 25.494 0.138 0.138 892 669 4,015
CD4512BF3A 10213XXXXBN5A 1.783 1.426 0.060 0.060 1,727 1,295 7,770
CD4514BF3A 10075XXXXBN5A 3.095 2.476 0.090 0.090 1,144 858 5,148
CD4515BF3A 7703201JA 10076XXXXBN5A 3.311 2.649 0.100 0.100 1,144 858 5,148
CD4516BF3A 06875XXXXBN5A 1.888 1.510 0.093 0.093 1,268 951 5,704
CD4517BF3A 10482XXXXBN5A 2.377 1.902 0.182 0.182 567 425 2,552
CD4518BF3A 10914AXXXBN5A 1.901 1.521 0.081 0.081 1,278 958 5,751
CD4520BF3A 7702301EA 10915AXXXBN5A 1.615 1.292 0.081 0.081 1,278 958 5,751
CD4532BF3A 06634XXXXBN5A 2.030 1.624 0.054 0.054 1,915 1,436 8,618
CD4536BF3A 10523XXXXBN5A 2.129 1.703 0.140 0.140 738 553 3,320
CD4541BF3A 11196XXXXBN5A 1.983 1.586 0.075 0.075 1,287 986 5,793
CD4555BF3A 7704701EA 06627XXXXBN5A 1.865 1.492 0.065 0.065 1,586 1,189 7,137
CD4556BF3A 7704801EA 06628XXXXBN5A 1.637 1.310 0.079 0.079 1,586 1,189 7,137
CD4585BF3A 7703702EA 10519XXXXBN5A 2.016 1.613 0.078 0.078 1,586 1,189 7,137
CD4724BF3A 10463XXXXBN5A 2.264 1.811 0.086 0.086 1,191 893 5,359
</TABLE>
6 COMPANY CONFIDENTIAL
<PAGE>
SCHEDULE 1(a)[M]
MILITARY PRODUCTS FOR SUPPLY AGREEMENT
<TABLE>
<CAPTION>
FG Std Die Std Die
Device (Harris) SMD Die ASP Trf Price Die Cost Trf Price NDW MDPW MLQ
--------------- --- --- --- --------- -------- --------- --- ---- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CD54AC00F3A 13109BXXXBW5A 1.539 1.231 0.118 0.118 2,015 1,511 9,069
CD54AC04F3A 13123AXXXBW5A 1.573 1.258 0.111 0.111 2,140 1,605 9,631
CD54AC05F3A 13124AXXXBW5A 1.402 1.122 0.113 0.113 2,140 1,605 9,631
CD54AC08F3A 13125AXXXBW5A 1.905 1.524 0.117 0.117 2,015 1,511 9,069
CD54AC112F3A 13144AXXXBW5A 2.212 1.770 0.133 0.133 1,717 1,288 7,729
CD54AC138F3A 13110AXXXBW5A 2.435 1.948 0.170 0.170 1,386 1,040 6,237
CD54AC139F3A 13139AXXXBW5A 2.131 1.705 0.156 0.156 1,504 1,128 6,769
CD54AC153F3A 13134BXXXBW5A 2.350 1.880 0.138 0.138 1,697 1,272 7,634
C054AC157F3A 13115AXXXBW5A 2.625 2.100 0.164 0.164 1,406 1,055 6,328
CD54AC161F3A 13117BXXXBW5A 6.734 5.387 0.150 0.150 1,560 1,170 7,020
CD54AC163F3A 13118AXXXTW5A 7.500 6.000 0.150 0.150 1,560 1,170 7,020
CD54AC164F3A 13145AXXXBW5A 2.620 2.096 0.156 0.156 1,504 1,128 6,768
CD54AC191F3A 13113AXXXBW5A 8.308 6.646 0.231 0.231 991 743 4,458
CD54AC193F3A 13114AXXXBW5A 9.483 7.586 0.231 0.231 991 743 4,458
CD54AC240F3A 13100BXXXBW5A 7.227 5.782 0.268 0.268 1,305 979 5,874
CD54AC244F3A 13102BXXXBW5A 6.085 4.868 0.182 0.182 1,305 979 5.874
CD54AC245F3A 13103BXXXBW5A 7.046 5.637 0.352 0.352 827 620 3,720
CD54AC257F3A 13120AXXXBW5A 3.150 2.520 0.218 0.218 1,264 948 5,688
CD54AC273F3A 13146AXXXBW5A 11.542 9.234 0.224 0.224 1,258 944 5,662
CD54AC280F3A 13119AXX.XBW5A 6.500 5.200 0.138 0.138 1,673 1,255 7,528
CD54AC283F3A 13112AXXXBW5A 7.402 5.922 0.203 0.203 1,132 849 5,092
CD54AC299F3A 13128AXXXBW5A 10.886 8.709 0347 0.347 669 502 3,011
CD54AC32F3A 13126AXXXBW5A 1.804 1.443 0.123 0.123 1,916 1,437 8,621
CD54AC373F3A 13137BXXXBW5A 6.695 5.356 0.209 0.209 1,129 847 5,082
CD54AC374F3A 13104BXXXBW5A 5.698 4.558 0.303 0.303 926 694 4,166
CD54AC541F3A 13106BXXXBW5A 9.398 7.518 0.203 0.203 1,167 875 5,253
CD54AC573F3A 13140AXXXBW5A 4.842 3.874 0.221 0.221 1,062 797 4,780
CD54AC574F3A . 13142AXXXBW5A 8.763 7.010 0.267 0.267 870 652 3,914
CD54AC74F3A 13108BXXXBW5A 2.264 1.811 0.143 0.143 1,629 1,222 7,332
CD54ACT00F3A 14109BXXXBW5A 1.541 1.233 0.126 0.126 1,990 1,493 8,957
CD54ACT02F3A 14150AXXXBW5A 1.891 1.513 0.107 0.107 2,401 1,801 10,804
</TABLE>
7 COMPANY CONFIDENTIAL
<PAGE>
SCHEDULE 1(a)[M]
MILITARY PRODUCTS FOR SUPPLY AGREEMENT
<TABLE>
<CAPTION>
FG Std Die Std Die
Device (Harris) SMD Die ASP Trf Price Die Cost Trf Price NDW MDPW MLQ
--------------- --- --- --- --------- -------- --------- --- ---- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CD54ACT04F3A 14123AXXXBW5A 1.633 1.306 0.111 0.111 2.241 1,681 10,085
CD54ACT05F3A 14124AXXXBW5A 1.358 1.086 0.113 0.113 2,241 1,681 10,085
CD54ACT05F3AS2360 14124AXXXBW5A 2.400 1.920 0.113 0.113 2,241 1,681 10,085
CD54ACT05F3AS2841 14124AXXXBW5A 1.500 1.200 0.113 0.113 2,241 1,681 10,085
CD54ACT08F3A 14125AXXXBW5A 1.753 1.402 0.150 0.150 1,990 1,493 8,957
CD54ACTl09F3A 14122BXXXBW5A 2.592 2.074 0.151 0.151 1,629 1,222 7,332
CD54ACT112F3A 14144AXXXBW5A 2.018 1.614 0.145 0.145 1,717 1,288 7,729
CD54ACT138F3A 14110AXXXBW5A 2.405 1.924 0.177 0.177 1,369 1,027 6,162
CD54ACT139F3A 14139AXXXBW5A 2.616 2.093 0.164 0.164 1,466 1,100 6,597
CD54ACT151F3A 14132AXXXBW5A 2.669 2.135 0.152 0.152 1,624 1,218 7,306
CD54ACT153F3A 14134BXXXBW5A 2.272 1.818 0.148 0.148 1,697 1,272 7,634
CD54ACT161F3A 14117BXXXBW5A 6.493 5.194 0.155 0.155 1,580 1,185 7,108
C054ACT163F3A 14118BXXXBW5A 7.032 5.626 0.155 0.155 1580 1,185 7,108
CD54ACT164F3A 14145AXXXBW5A 2.529 2.023 0.167 0.167 1,431 1,074 6,442
CD54AC1164F3AS2841 14145AXXXBW5A 2.121 1.697 0.167 0.167 1,431 1,074 6,442
CD54ACT174F3A 14148AXXXBW5A 3.447 2.758 0.155 0.155 1,571 1,178 7,067
CD54ACT191F3A 14113AXXXBW5A 7.597 6.078 0.243 0.243 966 724 4,345
CD54ACT193F3A 14114AXXXBW5A 9.879 7.903 0.243 0.243 966 724 4,345
CD54ACT20F3A 14151AXXXBW5A 1.770 1.416 0.083 0.083 3,213 2,410 14,457
CD54ACT240F3A 141008XXXBW5A 6.813 5.450 0.195 0.195 1,274 955 5,731
CD54ACT241F3A 14101BXXXBW5A 6.135 4.908 0.186 0.186 1,274 955 5,731
CD54ACT244F3A 14102BXXXBW5A 5.476 4.381 0.205 0.205 1,210 907 5,445
CD54ACT245F3A 14103BXXXBW5A 5.826 4.661 0.303 0.303 827 620 3,720
CD54ACT253F3A 14135BXXXBW5A 3.400 2.720 0.150 0.150 1,697 1,272 7,634
CD54ACT257F3A 14120AXXXBW5A 2.921 2.337 0.190 0.190 1,312 984 5,904
CD54ACT273F3A 14146AX.XXBW5A 5.744 4.595 0.220 0.220 1,095 821 4,927
CD54ACT273F3AS2841 14146AXXXBW5A 8.800 7.040 0.220 0.220 1,095 821 4,927
CD54ACT280F3A 14119AXXXBW5A 6.500 5.200 0.143 0.143 1,594 1,196 7,173
CD54ACT283F3A 14112AXXXBW5A 6.327 5.062 0.216 0.216 1,104 828 4,968
CD54ACT299F3A 14128AXXXBW5A 5.023 4.018 0.365 0.365 660 495 2,968
CD54ACT32F3A 14126AXXXBW5A 1.606 1.285 0.125 0.125 1,990 1,493 8,957
</TABLE>
8 COMPANY CONFIDENTIAL
<PAGE>
SCHEDULE 1(a)[M]
MILITARY PRODUCTS FOR SUPPLY AGREEMENT
<TABLE>
<CAPTION>
FG Std Die Std Die
Device (Harris) SMD Die ASP Trf Price Die Cost Trf Price NDW MDPW MLQ
--------------- --- --- --- --------- -------- --------- --- ---- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CD54ACT32F3AS2841 14126AXXXBW5A 1.620 1.296 0.125 0.125 1,990 1,493 8,957
CD54ACT373F3A 14137BXXXBW5A 4.838 3.870 0.233 0.233 1,043 782 4,692
CD54ACT374F3A 14104BXXXBW5A 5.380 4.304 0.249 0.249 965 724 4,342
CD54ACT533F3A 14138BXXXBW5A 7.467 5.974 0.234 0.234 1,043 782 4,692
CD54ACT534F3A 14136BXXXBW5A 8.161 6.529 0.249 0.249 965 724 4,342
CD54ACT540F3A 14105BXXXBW5A 9.388 7.510 0.221 0.221 1,107 830 4,980
CD54ACT541F3A 14106BXXXBW5A 6.414 5.131 0.221 0.221 1,107 830 4,980
CD54ACT573F3A 14140AXXXBW5A 6.888 5.510 0.246 0.246 987 741 4,443
CD54ACT574F3A 14142AXXXBW5A 7.188 5.750 0.274 0.274 870 652 3,914
CD54ACT623F3A 14155BXXXBW5A 10.876 8.701 0.301 0.301 839 629 3,774
CD54ACT74F3A 14108BXXXBW5A 2.118 1.694 0.150 0.150 1,629 1,222 7,332
CD54ACT86F3A 14127AXXXBW5A 2.497 1.998 0.129 0.129 1,916 1,437 8,621
CD54HC00F3A 8403701CA 11600H02XBW5A 0.899 0.719 0.050 0.050 2,791 2,093 12,561
CD54HC00F3AS2283 11600H02XBW5A 0.480 0.384 0.050 0.050 2,791 2,093 12,561
CD54HC02F3A 8404101CA 11678A02XBW5A 0.930 0.744 0.042 0.042 3,341 2,506 15,033
CD54HC03F3A 5962-8764701CA 11737A02XBW5A 1.163 0.930 0.033 0.033 3,341 2,506 15,033
CD54HC04F3A 8409801CA 11681B02XBW5A 0.985 0.788 0.048 0.048 2,885 2,164 12,983
CD54HC08F3A 8404701CA 11718B02XBW5A 0.961 0.769 0.046 0.046 3,058 2,293 13,760
CD54HC107F3A 5962-8515401CA 11642A02XBW5A 1.343 1.074 0.039 0.039 3,058 2,293 13,760
CD54HC109F3A 8415001EA 11690B02XBW5A 1.410 1.128 0.043 0.043 3,058 2,293 13,760
CD54HC10F3A 8403801CA 11683B02XBW5A 1.229 0.983 0.054 0.054 2,567 1,925 11,551
CD54HC112F3A 8408801EA 11691A02XBW5A 1.384 1.107 0.051 0.051 2,567 1,925 11,551
CD54HC11F3A 8404801CA 11684B02XBW5A 0.934 0.747 0.041 0.041 3,387 2,540 15,242
CD54HC123F3A 5962-8684701EA 11645C02XBW5A 1.539 1.231 0.050 0.050 2,784 2,088 12,529
CD54HC125F3A 5962-8772101CA 11727A02XBW5A 1.061 0.849 0.050 0.050 2,779 2,084 12,505
CD54HC126F3A 5962-8684801CA 11728A02XBW5A 1.026 0.821 0.047 0.047 2,980 2,235 13.409
CD54HC132F3A 11677B02XBW5A 1.165 0.932 0.038 0.038 3,658 2,743 16,461
CD54HC132F3AS2283 11677B02XBW5A 0.680 0.544 0.038 0.038 3,658 2,743 16,461
CD54HC138F3A 8406201EA 11602F02XBW5A 1.460 1.168 0.059 0.059 2,371 1,778 10,668
CD54HC139F3A 8409201EA 11610C02XBW5A 1.152 0.922 0.047 0.047 2,930 2,198 13,186
CD54HC147F3A 8406401EA 11658A02XBW5A 2.186 1.749 0.071 0.071 2,930 2,198 13,186
</TABLE>
9 COMPANY CONFIDENTIAL
<PAGE>
SCHEDULE 1(a)[M]
MILITARY PRODUCTS FOR SUPPLY AGREEMENT
<TABLE>
<CAPTION>
FG Std Die Std Die
Device (Harris) SMD Die ASP Trf Price Die Cost Trf Price NDW MDPW MLQ
--------------- --- --- --- --------- -------- --------- --- ---- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CD54HC14F3A 8409101CA 11685A02XBW5A 0.950 0.760 0.053 0.053 3,237 2,427 14,565
CD54HC151F3A 8412801EA 11659802XBW5A 1.480 1.184 0.045 0.045 3,237 2,427 14,565
CD54HC153F3A 8409301EA 11660A02XBW5A 1.605 1.284 0.046 0.046 3,237 2,427 14,565
CD54HC154F3A 5962-8682201JA 11632C02XBW5A 3.662 2.930 0.098 0.098 1,430 1,073 6,436
CD54HC157F3A 5962-8606101EA 11628E02XBW5A 1.276 1.021 0.056 0.056 1,430 1,073 6,436
CD54HC158F3A 5962-8682301EA 11629802XBW5A 1.448 1.158 0.046 0.046 1,430 1,073 6,436
CD54HC160F3A 5962-8682401EA 11633002XBW5A 1.704 1.363 0.072 0.072 1,430 1,073 6,436
CD54HC161F3A 8407501EA 11635D02XBW5A 1.479 1.183 0.074 0.074 1,888 1,416 8,497
CD54HC162F3A 8409401EA 11634D02XBW5A 4.841 3.873 0.070 0.070 1,972 1,479 8,875
CD54HC163F3A 8607601EA 11636C02XBW5A 1.532 1.226 0.073 0.073 1,909 1,432 8,591
CD54HC164F3A 8416201CA 11667B02XBW5A 1.678 1.342 0.042 0.042 3,253 2,440 14,639
CD54HC165F3A 8409501EA 11630C02XBW5A 1.203 0.962 0.041 0.041 3,253 2,440 14,639
CD54HC166F3A 11654B02XBW5A 1.487 1.190 0.055 0.055 2,521 1,891 11,343
CD54HC173F3A 5962-8682501EA 11656C02XBW5A 1.793 1.434 0.077 0.077 2,521 1,891 11,343
CD54HC174F3A 8407301EA 11625D02XBW5A 1.163 0.930 0.064 0.064 2,521 1,891 11,343
CD54HC175F3A 8408901EA 11626C02XBW5A 1.230 0.984 0.068 0.068 2,054 1,541 9,244
CD54HC175F3AS2283 11626C02XBW5A 0.998 0.798 0.068 0.068 2,054 1,541 9,244
CD54HC190F3A 5962-8994601EA 11692CXXXTW5A 2.074 1.659 0.078 0.078 2,054 1,541 9,244
CD54HC191F3A 5962-8689101EA 11664D02XBW5A 2.730 2.184 0.078 0.078 1,802 1,351 8,108
CD54HC192F3A 5962-8780801EA 11665C02XBW5A 2.916 2.333 0.120 0.120 1,802 1,351 8,108
CD54HC193F3A 5962-8772401EA 11666C02XBW5A 1.667 1.334 0.075 0.075 1,869 1,402 8,411
CD54HC194F3A 5962-8682601EA 11668B02XBW5A 1.982 1.586 0.055 0.055 3,025 2,269 13,612
CD54HC195F3A 6962-8682701EA 11627B02XBW5A 1.589 1.271 0.045 0.045 3,025 2,269 13,612
CD54HC20F3A 8403901CA 11721B02XBW5A 1.100 0.880 0.037 0.037 3,025 2,269 13,612
CD54HC21F3A 5962-8857601CA 11736B02XBW5A 1.165 0.932 0.035 0.035 3,025 2,269 13,612
CD54HC221F3A 5962-8780501EA 11693D02XBW5A 4.699 3.759 0.087 0.087 1,636 1,227 1,361
CD54HC237F3A 5962-8860601EA 11730802XBW5A 2.124 1.699 0.058 0.058 1,636 1,227 7,361
CD54HC238F3A 5962-8688401EA 11603F02XBW5A 1.716 1.373 0.059 0.059 2,371 1,778 10,668
CD54HC240F3A 8407401RA 11607D02XBW5A 1.709 1.367 0.086 0.086 2,371 1,778 10,668
CD54HC243F3A 8409001CA 11622D02XBW5A 3.402 2.722 0.074 0.074 2,371 1,778 10,668
CD54HC244F3A 8409601RA 11606C02XBW5A 1.486 1.189 0.094 0.094 1,609 1,207 1,241
</TABLE>
10 COMPANY CONFIDENTIAL
<PAGE>
SCHEDULE 1(a)[M]
MILITARY PRODUCTS FOR SUPPLY AGREEMENT
<TABLE>
<CAPTION>
FG Std Die Std Die
Device (Harris) SMD Die ASP Trf Price Die Cost Trf Price NDW MDPW MLQ
--------------- --- --- --- --------- -------- --------- --- ---- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CD54HC244F3AS2283 11606C02XBW5A 1.123 0.898 0.094 0.094 1,609 1,207 7,241
CD54HC245F3A 8408501RA 11617C02XBW5A 1.870 1.496 0.109 0.109 1,288 966 5,797
CD54HC257F3A 8512401EA 11620C02XBW5A 1.216 0.973 0.044 0.044 2,155 1,616 9,696
CD54HC259F3A 8551901EA 11694A02XBW5A 1.150 0.920 0.057 0.057 2,155 1,616 9,696
CD54HC273F3A 8409901RA 11G13G02XBW5A 1.470 1.176 0.083 0.083 1,928 1,446 8,677
C054HC27F3A 8404201CA 11686A02XBW5A 1.359 1.087 0.068 0.066 1,928 1,446 8,677
CD54HC280F3A 8607701CA 11640802XBW5A 2.545 2.036 0.045 0.045 3,290 2,468 14,805
CD54HC283F3A 5962-8976501EA 11723A02XBW5A 1.566 1.253 0.060 0.060 2,272 1,704 10,225
CD54HC297F3A 5962-8999001EA 1 1680A02XBW5A 4.073 3.258 0.223 0,223 2,272 1,704 10,225
CD54HC299F3A 5962-8780601RA 11615F02XBW5A 3.838 3.070 0.121 0121 2,272 1,704 10,225
CD54HC30F3A 8404001CA 11724A02XBW5A 1.148 0.918 0.036 0.035 2,272 1,704 10,225
CD54HC32F3A 8404501CA 11687A02XBW5A 0.958 0.766 0.035 0.035 3,967 2,975 17,852
CD54HC32F3AS2283 11687A02XBW5A 0.480 0.384 0.035 0.035 3,967 2,975 17,852
CD54HC354F3A 11672A02XBW5A 2.496 1.997 0.082 0.082 1,667 1,250 7,502
CD54HC365F3A 8500101EA 11695B02XBW5A 1.366 1.093 0.074 0.074 1,667 1,250 7,502
CD54HC366F3A 5962-8682801EA 11661B02XBW5A 1.438 1.150 0.075 0.075 1,667 1,250 7,502
CD54HC367F3A 8500201EA 11662B02XBW5A 1.355 1.084 0.075 0.075 1,667 1,250 7,502
CD54HC368F3A 5962-8681201EA 11663B02XBW5A 1.448 1.158 0.075 0.075 1,667 1,250 7,502
CD54HC373F3A 8407201RA 11605C02XBW5A 1.951 1.561 0.103 0.103 1,500 1,125 6,749
CD54HC374F3A 8407101RA 11609C02XBW5A 1.346 1.077 0.078 0.075 1,857 1,392 8,354
CD54HC374F3AS2283 11609C02XBW5A 1.123 0.898 0.075 0.075 1,857 1,392 8,354
CD54HC377F3A 5962-8780701RA 11648802XBW5A 3.429 2.743 0.061 0.061 1,857 1,392 8,354
CD54HC393F3A 8410001CA 11671B02XBW5A 1.340 1.072 0.044 0.044 3,195 2,397 14,380
CD54HC4002F3A 8404401CA 11696A02XBW5A 1.000 0.800 0.037 0.037 3,195 2,397 14,380
CD54HC40103F3A 5962-9055301EA 11709802XBW5A 2.095 1.676 0.099 0.099 1,412 1,059 6,355
CD54HC40105F3A 11669A02XBW5A 2.266 1.813 0.073 0.073 1,910 1,432 8,594
CD54HC4015F3A 5962-8995301EA 11697C02XBW5A 1.772 1.418 0.089 0.089 1,910 1,432 8,594
CD54HC4017F3A 5601101EA 11650B02XBW5A 2.350 1.880 0.078 0.078 1,766 1,324 7.946
CD54HC4020F3A 8500301EA 11651D02XBW5A 1.757 1.406 0.061 0.061 1,766 1,324 7,946
C054HC4024F3A 8601201CA 11699D02XBW5A 1.605 1.284 0.039 0.039 3,523 2,642 15,852
C054HC4040F3A 8500401EA 11652D02XBW5A 2.209 1.767 0.061 0.061 2,298 1,723 10,341
</TABLE>
11 COMPANY CONFIDENTIAL
<PAGE>
SCHEDULE 1(a)[M]
MILITARY PRODUCTS FOR SUPPLY AGREEMENT
<TABLE>
<CAPTION>
FG Std Die Std Die
Device (Harris) SMD Die ASP Trf Price Die Cost Trf Price NDW MDPW MLQ
--------------- --- --- --- --------- -------- --------- --- ---- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CD54HC4046AF3A 5962-8960901EA 11701A02XBW5A 2.293 1.834 0.077 0.077 1,789 1,342 8,050
CD54HC4049F3A 5962-8681901EA 11674B02XBW5A 1.239 0.991 0.047 0.047 1,789 1,342 8,050
CD54HC4050F3A 5962-8682001EA 11675B02XBW5A 1.238 0.990 0.045 0.045 1,789 1,342 8,050
CD54HC4051F3A 11702A02XBW5A 1.850 1.480 0.114 0.114 2,133 1,600 9,599
CD54HC4052F3A 5962-8855601EA 11703B02XBW5A 1.839 1.471 0.111 0.111 2,133 1,600 9,599
CD54HC4053F3A 5962-8775401EA 11704A02XBW5A 2.174 1.739 0.055 0.055 2,679 2,009 12,057
CD54HC4059F3A 5962-8944501JA 11740A02XBW5A 5.650 4.520 0.333 0.333 2,679 2,009 12,057
CD54HC4060F3A 5962-4768001EA 11653B02XBW5A 4.175 3.340 0.064 0.064 2,679 2,009 12,057
CD54HC4066F3A 11705C02XBW5A 1.257 1.006 0.048 0.048 3,122 2,342 14,050
CD54HC4075F3A 5962-8772201CA 11707A02XBW5A 1.125 0.900 0.050 0.050 3,122 2,342 14,050
CD54HC4094F3A 11708A02XBW5A 1.768 1.414 0.058 0.058 2,371 1,778 10,668
CD54HC42F3A 5962-8682101EA 11715802XBW5A 1.450 1.160 0.073 0.073 2,371 1,778 10,668
CD54HC4316F3A 11732A02XBW5A 2.194 1.755 0.054 0.054 2,800 2,100 12,600
CD54HC4351F3A 11741A02XBW5A 4.728 3.782 0.125 0.125 1,814 1,361 8,165
CD54HC4511F3A 5962-8773301EA 11710A02XBW5A 3.884 3.107 0.064 0.064 1,814 1,361 8,165
CD54HC4514F3A 11711B02XBW5A 3.100 2.480 0.162 0.162 1,051 788 4,730
CD54HC4514FR3061 11711B02XBW5A 5.050 4.040 0.162 0.162 1,051 788 4,730
CD54HC4516F3A 11745A02XBW5A 2.132 1.706 0.091 0.091 1,530 1,148 6,885
CD54HC4520F3A 5962-8995401EA 11713802XBW5A 1.841 1.473 0.082 0.082 1,530 1,148 6,885
C054HC4538F3A 5962-8688601EA 11646C02XBW5A 3.474 2.779 0.057 0.057 2,445 1,834 11,004
CD54HC533F3A 5962-8681301RA 11638C02XBW5A 3.984 3.187 0.121 0.121 2,445 1,834 11,004
CD54HC534F3A 5962-8681401RA 11643C02XBW5A 3.718 2.974 0.067 0.067 2,445 1,834 11,004
CD54HC540F3A 11611E02XBW5A 3.610 2.888 0.084 0.084 1,668 1.251 7,508
CD54HC541F3A 11612E02XBW5A 2.224 1 779 0,085 0.085 1,650 1,238 7,427
CD54HC563F3A 5962-8606201RA 11637C02XBW5A 3.841 3.073 0.070 0.070 1,650 1,238 7,427
CD54HC564F3A 5962-8681501RA 11644C02XBW5A 3.660 2.928 0.102 0.102 1,372 1,029 6,176
CD54HC573F3A 8512801RA 11616D02XBW5A 2.658 2.126 0.072 0.072 1,933 1,449 8,696
CD54HC574F3A 11604C02XBW5A 3.033 2.426 0.102 0.102 1,372 1,029 6,176
CD54HC597F3A 5962-8681701EA 11749A02XBW5A 5.716 4.573 0.064 0.054 1,372 1,029 6,176
CD54HC640F3A 5962-8780901RA 11618C02XBW5A 1.122 0.898 0,109 0.109 1,372 1,029 6,176
CD54HC646F3A 5962-8688501JA 11623C02XBW5A 5.445 4.356 0.252 0.252 1,372 1,029 6,176
</TABLE>
12 COMPANY CONFIDENTIAL
<PAGE>
SCHEDULE 1(a)[M]
MILITARY PRODUCTS FOR SUPPLY AGREEMENT
<TABLE>
<CAPTION>
FG Std Die Std Die
Device (Harris) SMD Die ASP Trf Price Die Cost Trf Price NDW MDPW MLQ
--------------- --- --- --- --------- -------- --------- --- ---- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CD54HC688F3A 5962-8681801RA 11641802XBW5A 1.993 1.594 0.049 0.049 2,876 2,157 12,944
CD54HC7266F3A 8404302CA 11739A02XBW5A 1.279 1.023 0.033 0.033 4,144 3,108 18,646
CD54HC73F3A 5962-8515301CA 11655A02XBW5A 1.361 1.089 0.040 0.040 3,470 2,603 15,617
CD54HC74F3A 8405601CA 11601F02XBW5A 1.035 0.828 0.051 0.051 2,752 2,064 12,385
CD54HC75F3A 8407001EA 11688A02XBW5A 1.322 1.058 0.049 0.049 2,752 2,064 12,385
CD54HC85FA 8601301EA 11689A02XBW5A 1.362 1.090 0.089 0.089 1,915 1,436 8,617
CD54HC86F3A 8404601CA 11057B02XBW5A 1.043 0.834 0.046 0.046 3,356 2,517 15,103
CD54HCT00F3A 5962-8683101CA 13600H02XBW5A 1.348 1.078 0.051 0.051 3,356 2,517 15,103
CD54HCT02F3A 5962-8975101CA 13678A02XBW5A 1.494 1.195 0.043 0.043 3,234 2,426 14,554
CD54HCT03F3A 5962-9065101MCA 13737A02XBW5A 1.498 1.198 0.032 0.032 4,317 3,238 19,427
CD54HCT04F3A 5962-8974701CA 13681B02XBW5A 1.190 0.952 0.048 0.048 2,885 2,164 12,983
CD54HCT08F3A 5962-8688301CA 13682B02XBW5A 1.355 1.084 0.049 0.049 2,832 2,124 12,743
CD54HCT109F3A 5962-9070101MEA 13690B02XBW5A 1.117 0.894 0.044 0.044 2,832 2,124 12,743
CD54HCT10F3A 5962-8984301CA 13683B02XBW5A 1.460 1.168 0.055 0.055 2,832 2,124 12.743
CD54HCT112F3A 5962-8970201EA 13891A02XBW5A 1.410 1.128 0.054 0.054 2,832 2,124 12,743
CD54HCT11F3A 5962-8970901CA 13684802XBW5A 1.498 1.198 0.042 0.042 3,275 2,457 14,739
CD54HCT123F3A 5962-8970001EA 13645C02XBW5A 2.048 1.638 0.057 0.057 2,816 2,112 12,672
CD54HCT125F3A 13727A02XBW5A 1.423 1.138 0.044 0.044 3,147 2,360 14,162
CD54HCT132F3A 5962-8984501CA 13746A02XBW5A 1.459 1.167 0.038 0.038 3,147 2,360 14,162
CD54HCT138F3A 8550401EA 13602F02XBW5A 2.050 1.640 0.059 0.059 3,147 2,360 14,162
CD54HCT139F3A 13610C02XBW5A 2.197 1.758 0.061 0.061 2.930 2,198 13,186
CD54HCT14F3A 5962-8689001CA 13685A02XBW5A 1.492 1.194 0.058 0.058 3,273 2,455 14,730
CD54HCT151F3A 5962-9065201MEA 13659B02XBW5A 2.372 1.898 0.046 0.048 3,273 2,455 14,730
CD54HCT153F3A 5962-9050501MEA 13660A02XBW5A 2.439 1.951 0.039 0.039 3,273 2,455 14,730
CD54HCT154F3A 5962-8670101JA 13632C02XBW5A 5.039 4.031 0.099 0.099 3,273 2,455 14,730
CD54HCT157F3A 5962-9070201MEA 13628E02XBW5A 0.106 1.685 0.056 0.056 2,624 1,968 11,809
CD54HCT158F3A 5902-9070301MEA 13629802XBW5A 2.304 1.843 0.073 0.073 2,624 1,968 11.809
CD54HCT160F3A 5962-9070501MEA 13633002XBW5A 3.937 3.150 0.109 0.109 2,624 1,968 11,809
CD54HCT161F3A 5962-8685401EA 13635002XBW5A 2.841 2.273 0.071 0.071 2,624 1,968 11,809
CD54HCT164F3A 5962-8970401CA 13667802XBW5A 3.121 2.497 0.042 0.042 3,288 2,466 14,798
CD54HCT165F3A 5962-8685501EA 13630C02XBW5A 3.196 2.557 0.051 0.051 3,330 2,498 14,987
</TABLE>
13 COMPANY CONFIDENTIAL
<PAGE>
SCHEDULE 1(a)[M]
MILITARY PRODUCTS FOR SUPPLY AGREEMENT
<TABLE>
<CAPTION>
FG Std Die Std Die
Device (Harris) SMD Die ASP Trf Price Die Cost Trf Price NDW MDPW MLQ
--------------- --- --- --- --------- -------- --------- --- ---- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CD54HCT173F3A 5962-8875901EA 13658C02XBW5A 7.532 6.026 0.075 0.075 3,330 2,498 14,967
CD54HCT174F3A 5962-8974301EA 13625002XBW5A 2.363 1.890 0.063 0.063 2,230 1,673 10,036
CD54HCT174F3A 5962-8974301EAS2035 13625002XBW5A 2.676 2.141 0.063 0.063 2,230 1,673 10,036
CD54HCT175F3A 5962-8970101EA 13626C02XBW5A 2.413 1.930 0.067 0.067 2,054 1,541 9,244
CD54HCT191F3A 5962-8867101EA 13664002XBW5A 3.644 2.915 0.078 0.078 2,054 1,541 9,244
CD54HCT193F3A 5962-0054801MEA 13666C02XBW5A 3.688 2.950 0.074 0.074 1,848 1,386 8,316
CD54HCT193F3A 5962-9084801MEAS2035 13666C02XBW5A 4.183 3.346 0.074 0.074 1,848 1,386 8,316
CD54HCT20F3A 13679802XBW5A 1.235 0.988 0.037 0.037 3,682 2,762 16,570
CD54HCT240F3A 8550501RA 13607002XBW5A 2.316 1.853 0.084 0.084 1,627 1,220 7,322
CD54HCT241F3A 13606002XBW5A 5.783 4.626 0.105 0.105 1,627 1,220 7,322
CD54HCT243F3A 13022002XBW5A 5.203 4.162 0.107 0.107 1,781 1,336 8,014
CD54HCT244F3A 8513001RA 13600C02XBW5A 1.443 1.154 0.096 0.096 1,573 1,180 7,080
CD54HCT245F3A 8550601RA 13817C02XBW5A 3.188 2.550 0.118 0.118 1,259 944 5,666
CD54HCT251F3A 5962-9052401MEA 13614C02XBW5A 2.367 1.894 0.064 0.064 2,131 1,598 9,590
CD54HCT257F3A 5962-8970501EA 13620C02XBW5A 2.731 2.185 0.043 0.043 2,131 1,598 9,590
CD54HCT258F3A 5962-8970801EA 13747A02XBW5A 3.307 2.646 0.053 0.053 2,131 1,598 9,590
CD54HCT259F3A 5962-8985201EA 13694A02XBW5A 2.517 2.014 0.060 0.060 2,314 1,736 10,414
CD54HCT273F3A 5962-8772501RA 13613G02XBW5A 2.030 1.624 0.082 0.082 1,928 1,446 8,677
CD54HCT27F3A 5962-8970301CA 13686A02XBW5A 1.459 1.167 0.040 0.040 1,928 1,446 8,677
CD54HCT280F3A 13640B02XBW5A 4.593 3.674 0.052 0.052 3,290 2,468 14,805
CD54HCT283F3A 13723A02XBW5A 1.616 1.293 0.058 0.058 2,427 1,820 10,922
CD54HCT299F3A 5962-8943601MRA 13615F02XBW5A 6.533 5.226 0.122 0.122 2,427 1,820 10,922
CD54HCT30F3A 5962-8974601CA 13724A02XBW5A 1.366 1.093 0.041 0.041 4,070 3,052 18,314
CD54HCT32F3A 5962-8685201CA 13720A02XBW5A 1.232 0.986 0.037 0.037 3,733 2,800 16,800
CD54HCT365F3A 13695B02XBW5A 1.658 1.326 0.076 0.075 1,868 1,401 8,404
CD54HCT367F3A 5962-9070601MEA 13662B02XBW5A 1.447 1.158 0.073 0.073 1,868 1,401 8,404
CD54HCT373F3A 5962-8686701RA 13605C02XBW5A 2.133 1.706 0.132 0.132 1,483 1,112 6,674
CD54HCT374F3A 8550701RA 13609C02XBW5A 2.446 1.957 0.068 0.066 1,483 1,112 6,674
CD54HCT390F3A 5962-9098401MEA 13670A02XBW5A 3.069 2.455 0.064 0.054 1,483 1,112 6,674
CD54HCT393F3A 5962-8989001CAS2035 13671B02XBW5A 4.175 3.340 0.045 0.045 3,092 2,319 13,916
</TABLE>
14 COMPANY CONFIDENTIAL
<PAGE>
SCHEDULE 1(a)[M]
MILITARY PRODUCTS FOR SUPPLY AGREEMENT
<TABLE>
<CAPTION>
FG Std Die Std Die
Device (Harris) SMD Die ASP Trf Price Die Cost Trf Price NDW MDPW MLQ
--------------- --- --- --- --------- -------- --------- --- ---- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CD54HCT393F3A 5962-8989001CA 13671B02XBW5A 2.046 1.637 0.045 0.045 3,092 2,319 13,916
CD54HCT40105F3A 13669A02XBW5A 4.816 3.853 0.078 0.078 1,761 1,321 7,926
CD54HCT4017F3A 5962-9059701MEA 13650802XBW5A 7.190 5.752 0.100 0.100 1,761 1,321 7,926
CD54HCT4020F3A 5962-8945801EA 13651002XBW5A 3.384 2.707 0.001 0.061 1.761 1321 7,926
CD54HCT4024F3A 13699D02XBW5A 4.370 3.496 0.072 0.072 3,523 2,642 15,852
CD54HCT4040F3A 5962-8994701MEA 13652002XBW5A 3.421 2.737 0.071 0.071 2,324 1,743 10,457
CD54HCT4046AF3A 5962-8875701EA 13701A02XBW5A 4.183 3.346 0.092 0.092 1,789 1,342 8,050
CD54HCT4051F3A 5962-9065401MEA 13702A02XBW5A 2644 2.115 0.076 0.076 1,789 1,342 8,050
CD54HCT4059F3A 5962-8862401JA 13740A02XBW5A 6.595 5.276 0.194 0.194 1,789 1,342 8,050
CD54HCT4060F3A 5962-8977101EA 13653802XBW5A 5.299 4.239 0.083 0.063 1,789 1,342 8,050
CD54HCT4075F3A 13707A02XBW5A 1.018 0.814 0.050 0.050 2,764 2,073 12,438
CD54HCT4538F3A 13646C02XBW5A 3.574 2.859 0.068 0.068 2,445 1,834 11,004
CD54HCT533F3A 13638C02XBW5A 5.116 4.093 0.198 0.198 1,181 886 5,315
CD54HCT534F3A 5962-8984901RA 13643C02XBW5A 5.215 4.172 0.069 0.069 1,181 886 5,315
CD54HCT541F3A 13612E02XBW5A 3.491 2.793 0.100 0.100 1,650 1,238 7.427
CD54HCT564F3A 13644C02XBW5A 4.808 3.846 0.131 0.131 1,264 948 5,690
CD54HCT573F3A 5962-8685601RA 13616002XBW5A 4.858 3.886 0.071 0.071 1,933 1,449 8,696
CD54HC1574F3A 5962-8974201RA 13604C02XBW5A 5.194 4.155 0.101 0.101 1,388 1,041 6,245
CD54HCT640F3A 5962-8974001RA 13618C02XBW5A 6.217 4.974 0.114 0.114 1,230 922 5,534
CD54HCT688F3A 5962-8685701RA 13641B02XBW5A 3.925 3.140 0.048 0.048 2,846 2,134 12,806
CD54HCT74F3A 5962-8685301CA 13601F02XBW5A 1.524 1.219 0.052 0.052 2,694 2,020 12,122
CD54HCT75F3A 5962-9075801MEA 13688A02XBW5A 1.915 1.532 0.071 0.071 2,694 2,020 12,122
CD54HCT85F3A 5962-8867201EA 13689A02XBW5A 1.872 1.498 0.071 0.071 1,937 1,452 8,715
CD54HCT86F3A 5962-8984401CA 13657B02XBW5A 1.664 1.331 0.049 0.049 1,937 1,452 8,715
</TABLE>
15 COMPANY CONFIDENTIAL
<PAGE>
SCHEDULE 2.1(c)
EXPENSED ASSETS (MILITARY PRODUCTS)
<TABLE>
<CAPTION>
- - ------------------------------------------------------------------------------------------------------------------------------------
Item Family Approx Description Location Contact
x Qty
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1X Master Masks * CD4000 125 Complete sets of 5" masks, for use on Canon proximity Palm Bay Don Koch
aligner and 4" wafers.
500X Mylar Plots * CD4000 30 Physical Layout Plots on a portion of the CD4000 Family Palm Bay Don Koch
Full set of masks * CD4000 1100 Proximity masks for producing 4" wafers Findlay Dick Hachey
HC/HCT 1200 Proximity masks for producing 4" wafers Findlay Dick Hachey
394 Proximity masks for producing 5" wafers Findlay Dick Hachey
AC/ACT 454 Proximity masks for producing 4" wafers Findlay Dick Hachey
115 Proximity masks for producing 5"wafers Findlay Dick Hachey
178 Stepper reticles Findlay Dick Hachey
FCT 0 Projection masks for producing 4" wafers Findlay Dick Hachey
Burn-in Boards CD4000 5730 Static Burn-in Board that are dedicated to Logic. CD4000, KL Dick Hachey
HC/HCT HC/HCT and AC/ACT all share the same boards.
AC/ACT
</TABLE>
* All masks are used for both Commercial and Military applications
<PAGE>
SCHEDULE 2.1(e)
TESTING HARDWARE AND SOFTWARE
<TABLE>
<CAPTION>
- - ------------------------------------------------------------------------------------------------------------------------------------
Item Family Approx Description Location Contact
x Qty
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Device software test programs CD4000 350 2 test programs for each mask commercial type (Teradyne KL Dick Hachey
J325 and Teradyne J283) and I hi-rel program for each type
(electronic copy) (Teradyne 1283)
HC/HCT 250 2 test programs for each type covers commercial and hi-tel KL Dick Hachey
on the Teradyne J325, Sentry and Trillium testers
AC/ACT 100 3 test programs for each type covers commercial and hi-tel KL Dick Hachey
on the Trillium, Teradyne 1325 and Tektronix testers
FCT 50 2 test programs for each type covers commercial and hi-tel KL Dick Hachey
on the Teradyne 1325 and Trillium testers
Device probe cards and CD4000 200 Probe cards used at the probe operation, minimum of 1 per KL Dick Hachey
associateddocumentation type, most have 2 cards.
HC/HCT 125 Probe cards used at the probe operation, minimum of 1 per Findlay Dick Hachey
type, most have 2 cards
AC/ACT 100 Probe cards used at the probe operation, minimum of 1 per Findlay Dick Hachey
type, most have 2 cards
FCT 30 probe cards used at the probe operation, minimum of 1 per Findlay Dick Hachey
type, most have 2 cards.
Device test fixtures and CD4000 150 Test hardware used at probe and final test operations, KL Dick Hachey
associated documentation unique to each test platform with documentation
HC/HCT 270 Test hardware used at probe and final test operations, KL Dick Hachey
unique to each test platform with documentation
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
AC/ACT 100 Test hardware used at probe and final test operations, KL Dick Hachey
unique to each test platform with documentation
FCT 50 Test hardware used at probe and final test operations, KL Dick Hachey
unique to each test platform with documentation
Sample probe software test CD4000 1 Sample probe program on Keithly tester to monitor fab Findlay Dick Hachey
programs parameters
HC/HCT 1 Sample probe program on Keithly tester to monitor fab Findlay Dick Hachey
parameters
AC/ACT 1 Sample probe program on Keithly tester to monitor fab Findlay Dick Hachey
parameters
FCT 1 Sample probe program on Keithly tester to monitor fab Findlay Dick Hachey
parameters
Sample probe cards and CD4000 3 Hardware used in conjunction with the sample probe program Findlay Dick Hachey
associated documentation on Keithly tester to monitor fab parameters
HC/HCT 3 Hardware used in conjunction with the sample probe program Findlay Dich Hachey
on Keithly tester to monitor fab parameters
AC/ACT 3 Hardware used in conjunction with the sample probe program Findlay Dich Hachey
on Keithly tester to monitor fab parameters
FCT 3 Hardware used in conjunction with the sample probe program Findlay Dich Hachey
on Keithly tester to monitor fab parameters
</TABLE>
2
<PAGE>
SCHEDULE 2.1(f)
Product Software
<TABLE>
<CAPTION>
- - ---------------------------------------------------------------------------------------------------------------------------------
Item Family Approx Description Location Contact
x Qty
- - ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Mask generation databases CD4000 15 Files in either MEBES stream format or GDSII
format.(incomplete set). Palm Bay Don Koch
HC/HCT 120 GDSII Databases (all levels) and associated mask
fab documents Palm Bay Don Koch
AC/ACT 65 GDSII Databases (all levels) and associated mask
fab documents Palm Bay Don Koch
FCT 35 GDSU Databases (all levels) and associated mask
fab documents Palm Bay Don Koch
</TABLE>
3
<PAGE>
SCHEDULE 2.1(g)
Technical Data
<TABLE>
<CAPTION>
- - ------------------------------------------------------------------------------------------------------------------------------------
Item Family Approx Description Location Contact
x Qty
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Design CD4000 120 Published datasheets that provides a circuit description, Findlay Dick Hachey
Product Datasheets screening and performance specifications for each device
family.
HC/HCT 105 Published datasheets that provides a circuit description, Findlay Dick Hachey
screening and performance specifications for each device
family.
AC/ACT 40 Published datasheets that provides a circuit description, Findlay Dick Hachey
screening and performance specifications for each device
family.
FCT 16 Published datasheets that provides a circuit description, Findlay Dick Hachey
screening and performance specifications for each device
family.
Die Size A list by mask of the physical die size. Findlay Dick Hachey
Circuit documentation Any and all available documentation in support of the Findlay Dick Hachey
design of the circuits and circuit families.
Characterization data All available data from the characterization of the Findlay Dick Hachey
products.
ESD data 4 Representative ESD data for MM, CDM, HRM models for each Findlay Dick Hachey
Technology
Fab 4 Fab yield data for calendar years 1997 and 1998 by Findlay Dick Hachey
Yield Data for FAB by technology technology.
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
Process qualification data 4 Package reliability data performed on a scheduled basis Findlay Dick Hachey
(Matrix Monitor Data) for each technology
Fabrication processes 5 Fab processes for CD4000 Commercial and Hi-Rel, HC/HCT, Findlay Dick Hachey
AC/ACT and FCT processes.
Process flow data 5 Workstream factory control system flow for the above 5 Findlay Dick Hachey
processes
Diffusions recipe CD4000 11 The furnace recipes for all diffusion operations for each Findlay Dick Hachey
process
HC/HCT 14 The furnace recipes for all diffusion operations for each Findlay Dick Hachey
process
AC/ACT 14 The furnace recipes for all diffusion operations for each Findlay Dick Hachey
process
FCT 14 The furnace recipes for all diffusion operations for each Findlay Dick Hachey
process
Inplant schedules CD4000 2 The implant schedule for all implants used on each process Findlay Dick Hachey
HC/HCT 5 The implant schedule for all implants used on each process Findlay Dick Hachey
AC/ACT 8 The implant schedule for all implants used on each process Findlay Dick Hachey
FCT 8 The implant schedule for all implants used on each process Findlay Dick Hachey
Substrate specifications CD4000 2 The substrate specification used on CD4000; one for Findlay Dick Hachey
Commercial and one for Hi-tel process
HC/HCT 2 The substrate specification used on HC/HCT ; one Findlay Dick Hachey
bulk and one epi substrate based on part types
</TABLE>
2
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
AC/ACT 1 The substrate specification for AC/ACT; same for all types Findlay Dick Hachey
FCT 1 The substrate specification for FCT; same for all types Findlay Dick Hachey
Sample Probe Test Specifications 4 Internal document for each process that describes the KL Dick Hachey
(internal document) conditions and specifications performed during sample
Fabrication equipment models For each process provide a detailed list of equipment used Findlay Dick Hachey
including vendor and model number
Process parameter limits by Performance nodes is the data taken at each mask level to Findlay Dick Hachey
Technology (Fab in-line data) monitor the fab process
Process history data by Historical data on the Performance notes Findlay Dick Hachey
Technology
Process recipe modifications by 0 All devices run under the standard flow Findlay Dick Hachey
device
Sample probe criticized 3 The sample probe data for the criticized parameters for Findlay Dick Hachey
parameter data each technology. Each parameter will have the Mean, Std
Deviation, Median number of datapoints, Min, Max, Sanity
limits and Specification limits.
Test
Test Flows for Probe and Final CD4000 130 Each test flow shows the route the product follows during Findlay Dick Hachey
Test a given test operation. Test flow by tester for circuit and KL
probe; Test flow by type at final test.
HC/HCT 125 Each test flow shows the route the product follows during Findlay Dick Hachey
a given test operation. Test flow by tester for circuit
probe; Test flow by type at final test.
</TABLE>
3
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
AC/ACT 50 Each test flow shows the route the product follows during Findlay Dick Hachey
a given test operation. Test flow by tester for circuit
probe; Test flow by type at final test.
FCT 25 Each test flow shows the route the product follows during Findlay Dick Hachey
a given test operation. Test flow by tester for circuit
probe; Test flow by type at final test.
Test Specifications (internal Each test flow shows the route the product follows during KL Dick Hachey
document) a given test operation. Test flow by tester for circuit
probe; Test flow by type at final test
CD4000 125 Test documents that provide limits and conditions for the KL Dick Hachey
test programs.
HC/HCT 125 Test documents that provide limits and conditions for the KL Dick Hachey
test programs.
AC/ACT 100 Test documents that provide limits and conditions for the KL Dick Hachey
test programs.
FCT 25 Test documents that provide limits and conditions for the KL Dick Hachey
test programs.
Yield Data for Probe and Final Yield data for CY1998 by type for probe and final test. KL Dick Hachey
test by type
Electrical test validation units CD4000 75 Units that are known good devices to be used for test KL Dick Hachey
(Sample) correlation and debug.
HC/HCT 200 Units that are known good devices to be used for test Findlay Dick Hachey
correlation and debug.
AC/ACT 60 Units that are known good devices to be used for test Findlay Dick Hachey
correlation and debug.
FCT 10 Units that are known good devices to be used for test Findlay Dick Hachey
correlation and debug.
</TABLE>
4
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
Electrical test validation CD4000 100 Wafers that have known good and bad die to be used for Findlay Dick Hachey
wafers (Sample) test correlation and debug.
HC/HCT 100 Wafers that have known good and bad die to be used for Findlay Dick Hachey
test correlation and debug.
AC/ACT 100 Wafers that have known good and bad die to be used for Findlay Dick Hachey
test correlation and debug.
FCT 15 Wafers that have known good and bad die to be used for Findlay Dick Hachey
test correlation and debug.
Assembly
Assembly flow by package type Assembly flow per package, including Cerdip, Flatpak, KL Dick Hachey
Pdip, Sidebrazed, SOIC and SSOP packages
Assembly Diagrams by device CD4000 360 The assembly diagram provides a visual guide to mounting KL Dick Hachey
orientation and bond wire routing per device type per
package type.
HC/HCT 750 The assembly diagram provides a visual guide to mounting KL Dick Hachey
orientation and bond wire routing per device type per
package type.
AC/ACT 300 The assembly diagram provides a visual guide to mounting KL Dick Hachey
orientation and bond wire routing per device type per
package type.
FCT 50 The assembly diagram provides a visual guide to mounting KL Dick Hachey
orientation and bond wire routing per device type per
package type.
Materials list of packages 22 A piece parts list of all the material needed for all KL Dick Hachey
packages
Assembly qualification data All All available data used for the qualification of the KL Dick Hachey
assembly process for CY' 98 to date.
</TABLE>
5
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
QCI flows and qualification data All All available QCI data used for the qualification of KL Dick Hachey
production manufacturing for CY' 98 to date.
Customer Issues Dick Hachey
Outstanding specification waivers All Listing by customer and part of all specification waivers Findlay Dick Hachey
Outstanding product change All Listing by product of all change notices Findlay Dick Hachey
notices
Special customer requirements All Listing by part of deviations required by customer Findlay Dick Hachey
</TABLE>
6
<PAGE>
SCHEDULE 3.1(b)
SPECIFIED DISTRIBUTIORS (MILITARY PRODUCTS)
6-Oct-98
North American Authorized Distributors
<TABLE>
<CAPTION>
- - ----------------------------------------------------------------------------------------------------------------------------------
Company Name and Corporate Address Telephone FAX
- - ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Arrow Electronics, 25 Hub Drive, Melville, NY 11747 516-391-1300
- - ----------------------------------------------------------------------------------------------------------------------------------
Future Electronics, 237 Hymus Blvd., Pointe Claire, Quebec, Canada, H9R 5C7 514-694-7710 514-695-3707
- - ----------------------------------------------------------------------------------------------------------------------------------
Hamilton Hallmark, Avnet OMG, 9800 La Clenega Blvd., Inglewood, CA 90301-4417 310-665-2600 (C) 602-736-7979 (C)
- - ----------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTOR OF OBSOLETE PRODUCTS
- - ----------------------------------------------------------------------------------------------------------------------------------
Rochester Electronics, 10 Malcolm Hoyt Dr., Newburyport, MA 01950 978-462-9332 978-462-9512
- - ----------------------------------------------------------------------------------------------------------------------------------
DIE DISTRIBUTORS
- - ----------------------------------------------------------------------------------------------------------------------------------
Minco, 1805 Rutherford Lane, Austin, TX 78754 512-834-2022 512-837-6285
- - ----------------------------------------------------------------------------------------------------------------------------------
Chip Supply, 7725 N. Orange Blossom Trail, Orlando, FL 32810-2696 407-296-5603 407-290-00164
- - ----------------------------------------------------------------------------------------------------------------------------------
Elmo Semiconductor, 7590 North Glenoaks Blvd., Burbank, CA 91504-1052 818-768-7400
- - ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
European Authorized Distributors
<TABLE>
<CAPTION>
- - ----------------------------------------------------------------------------------------------------------------------------------
Company Name and Corporate Address Telephone FAX
- - ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
AUSTRIA
- - ----------------------------------------------------------------------------------------------------------------------------------
Avnet EMG, Waidhausenstrasse 19, A - 1140 Vienna 43 1 911 28 47 43 1 911 38 53
- - ----------------------------------------------------------------------------------------------------------------------------------
EBV Elektronik, Diefenbachgasse 35/1, A-1150 Vienna 43 1 891 52 43 1 89 1 52 30
- - ----------------------------------------------------------------------------------------------------------------------------------
Spoerle Electronic, Heiligenstadterasse 50-52, A - 1190 Vienna 43 1 891 52 43 1 369 22 73
- - ----------------------------------------------------------------------------------------------------------------------------------
BELGIUM
- - ----------------------------------------------------------------------------------------------------------------------------------
EBV Electronik, Excelsoriaan 35B, B - 1930 Zaventem 32 2 725 46 60 32 2 720 81 52
- - ----------------------------------------------------------------------------------------------------------------------------------
Spoerle Electronic, Keilbert II, Minervastraal, 14/B2, B - 1930 Zaventem 32 2 725 46 60 32 2 725 45 11
- - ----------------------------------------------------------------------------------------------------------------------------------
- - ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Page 1
<PAGE>
<TABLE>
<S> <C> <C>
- - ----------------------------------------------------------------------------------------------------------------------------------
DENMARK
- - ----------------------------------------------------------------------------------------------------------------------------------
Arrow Denmark, Smedeholm, 13A, DK - 2730 Herlev 45 4450 8200 45 4450 8210
- - ----------------------------------------------------------------------------------------------------------------------------------
Avnet Nortec, Transformervej, 17, DK - 2730 Herlev 45 4488 0800 45 4488 0888
- - ----------------------------------------------------------------------------------------------------------------------------------
EBV Electronik, Gladsaxevej 370, DK - 2860 Soborg 45 39 69 05 11 45 39 69 05 04
- - ----------------------------------------------------------------------------------------------------------------------------------
- - ----------------------------------------------------------------------------------------------------------------------------------
EASTERN COUNTRIES
- - ----------------------------------------------------------------------------------------------------------------------------------
EBV Electronik, V Holesovickach 29, CZ - 180 00 Praha 8 Czechoslovakia 42 2 900 22 101 42 2 688 59 16
- - ----------------------------------------------------------------------------------------------------------------------------------
Avnet EMG, Ul. Fort Wola 22, pok 15 p. IX, PL - 00961 Warszawa, Poland 48 22 63 44 736 48 22 63 44 738
- - ----------------------------------------------------------------------------------------------------------------------------------
Avnet EMG, E2000 Sertron S.R.O. Slevacska 744/1 Hloubetin, CZ-19400 Praha 9 Czech 42 2 86 11 42 42 2 81 861 442
- - ----------------------------------------------------------------------------------------------------------------------------------
EBV Elektronik, Ul. Odrzanska 24-29/11, PL-50114 Woclaw, Poland 48 71 34 229 44 48 71 34 299 10
- - ----------------------------------------------------------------------------------------------------------------------------------
EBV Elektronik, Dunajska c.22, Sl - 1511 Ljubljana, Slovenia 386 61 133 02 16 386 61 133 04 57
- - ----------------------------------------------------------------------------------------------------------------------------------
EBV Elektronik, Dmitrowskoje Chaussee 9b, RUS-127434 Moscow, Russia 7 95 9763510 7 95 9764808
- - ----------------------------------------------------------------------------------------------------------------------------------
EBV Elektronik, Ryensvingen 3B, P.O. Box 101, Manglerud, N-0680 Oslo 47 22 67 17 80 47 22 67 17 89
- - ----------------------------------------------------------------------------------------------------------------------------------
- - ----------------------------------------------------------------------------------------------------------------------------------
FINLAND
- - ----------------------------------------------------------------------------------------------------------------------------------
Arrow Finland, Tyopajankatu 5, Box 25, SF-00521 Helsinki 358 9 476 660 358 9 476 663 29
- - ----------------------------------------------------------------------------------------------------------------------------------
Avnet Nortec, Italahdenkatu, 18A, FIN-00210 Helsinki 358 9 61 31 81 358 9 69 22 32 6
- - ----------------------------------------------------------------------------------------------------------------------------------
EBV Elektronik, Pihatorma 1A, FIN-02240, Espoo 358 9 855 7730 359 9 855 0450
- - ----------------------------------------------------------------------------------------------------------------------------------
- - ----------------------------------------------------------------------------------------------------------------------------------
FRANCE
- - ----------------------------------------------------------------------------------------------------------------------------------
Arrow Electronique, 73-79 Rue des Solets, Silic 585, F-94663 Rungis Cedex 33 1 49 78 49 78 33 1 49 78 06 99
- - ----------------------------------------------------------------------------------------------------------------------------------
Avnet EMG, 79, Rue Pierre Semard, P.B.90, F-92322 Chatillon Sous Bagneux 33 1 49 65 27 00 33 1 49 65 25 39
- - ----------------------------------------------------------------------------------------------------------------------------------
EBV Elektronik, 3, rue de la Renaissance, 92184 Antony cedex 33 1 49 96 30 00 33 1 40 96 30 30
- - ----------------------------------------------------------------------------------------------------------------------------------
- - ----------------------------------------------------------------------------------------------------------------------------------
GERMANY
- - ----------------------------------------------------------------------------------------------------------------------------------
Avnet EMG, Stahlgruberring, 12, D-81829 Munchen 49 89 4511001 49 89 45110129
- - ----------------------------------------------------------------------------------------------------------------------------------
EBV Elektronic, Ammerthalstrasse 28, D-85551 Kirchheim-Heimstetten 49 89 99 11 40 49 89 99 11 44 22
- - ----------------------------------------------------------------------------------------------------------------------------------
Spoerle Electronic, Max-Planck Strasse 1-3, D-63303 Dreieich-bei-Frankfurt 49 6103 304-8 49 6103 3044 55
- - ----------------------------------------------------------------------------------------------------------------------------------
- - ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Page 2
<PAGE>
<TABLE>
<S> <C> <C>
- - ----------------------------------------------------------------------------------------------------------------------------------
GREECE
- - ----------------------------------------------------------------------------------------------------------------------------------
EBV Elektronik, Anaxagora Street 1, GR-17778 Travros (Athens) 30 1 34 14 300 30 1 34 14 304
- - ----------------------------------------------------------------------------------------------------------------------------------
- - ----------------------------------------------------------------------------------------------------------------------------------
ITALY
- - ----------------------------------------------------------------------------------------------------------------------------------
Avnet EMG, Centro Direzionale, Via Novara, 570, I-20153 Milano 39 2 38 19 02 39 2 38 00 29 88
- - ----------------------------------------------------------------------------------------------------------------------------------
EBV Elektronik, VIA C. Frova, 34, I-20091 Cinisello Balsamo 39 2 660 96 290 39 2 660 170 20
- - ----------------------------------------------------------------------------------------------------------------------------------
Silverstar CELDIS, Viale Fulvio Testi 280, I-20126 Milano 39 2 661 251 39 2 661 013 59
- - ----------------------------------------------------------------------------------------------------------------------------------
- - ----------------------------------------------------------------------------------------------------------------------------------
NETHERLANDS
- - ----------------------------------------------------------------------------------------------------------------------------------
EBV Elektronik, Planetenbaan, 116, NL - 3606 AK, Maarssenbroek 31 346 58 30 10 31 346 58 30 25
- - ----------------------------------------------------------------------------------------------------------------------------------
Spoerle Electronic, Coitbaan 17, NL-3439 NG, Nieuwegein (Utrecht) 31 30 609 1234 31 30 603 5924
- - ----------------------------------------------------------------------------------------------------------------------------------
Spoerle Electronic, Postbus 7139, De Run 1120, NL - 5605 JC Eindhoven 31 40 230 99 99 31 40 253 5540
- - ----------------------------------------------------------------------------------------------------------------------------------
- - ----------------------------------------------------------------------------------------------------------------------------------
PORTUGAL
- - ----------------------------------------------------------------------------------------------------------------------------------
Amitron-Arrow, Quinta Grande, Lote 20, Alfragide, P-2700 Amadora 351 1 471 48 06 351 1 471 08 02
- - ----------------------------------------------------------------------------------------------------------------------------------
- - ----------------------------------------------------------------------------------------------------------------------------------
SOUTH AFRICA
- - ----------------------------------------------------------------------------------------------------------------------------------
Arrow Altech, 10, Skietlood Street, Isando, Ext. 3, 1600, PO Box 69, Isando,
1600, Transvaal 27 11 391 3804/...19 27 11 974 9683
- - ----------------------------------------------------------------------------------------------------------------------------------
Avnet Kopp, 31 Commerce Crescent, Kramerville, SA-2148 Sandton, SA-2128 Rivonia 27 11 444 23 33 27 11 444 17 06
- - ----------------------------------------------------------------------------------------------------------------------------------
- - ----------------------------------------------------------------------------------------------------------------------------------
SPAIN
- - ----------------------------------------------------------------------------------------------------------------------------------
Amitron-Arrow, Albasanz, 75, SP-28037 Madrid 34 91 304 30 40 34 91 327 24 72
- - ----------------------------------------------------------------------------------------------------------------------------------
EBV Elektronik, Centro Empresarial Euronova, Ronda de Poniente, 4 Ala Derecha,
1A Planta, Officina A, SP-28760 Tres Cantos, Madrid 34 91 8 04 32 56 34 91 8 04 41 03
- - ----------------------------------------------------------------------------------------------------------------------------------
- - ----------------------------------------------------------------------------------------------------------------------------------
SWEDEN
- - ----------------------------------------------------------------------------------------------------------------------------------
Arrow, Isafjordsgatan 7, Box 67, S-164 94 Kista 46 8 562 655 00 46 8 562 655 50
- - ----------------------------------------------------------------------------------------------------------------------------------
Avnet Nortec, Englundavagen 7, PO Box 1830, S-17 127 Solna 46 8 629 1400 46 8 627 0280
- - ----------------------------------------------------------------------------------------------------------------------------------
EBV Elektronik, Derbyvagen 20, S-21235 Malmo 46 40 59 21 00 46 40 59 21 01
- - ----------------------------------------------------------------------------------------------------------------------------------
- - ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Page 3
<PAGE>
<TABLE>
<S> <C> <C>
- - ----------------------------------------------------------------------------------------------------------------------------------
TURKEY
- - ----------------------------------------------------------------------------------------------------------------------------------
EBV Elektronik, Bayar Cad.Gulbahar Sok No.17, Perdemsac Plaza, D:91-93 Kozyatagi,
TK - 81090 Istanbul 90 216 463 1352/3 90 216 463 1355
- - ----------------------------------------------------------------------------------------------------------------------------------
- - ----------------------------------------------------------------------------------------------------------------------------------
UNITED KINGDOM
- - ----------------------------------------------------------------------------------------------------------------------------------
EBV Electronik, Ballymount Trading Estates, Balymount Rd. Walkinstown, Dublin 12 353 1 456 4 034 353 1 456 4 035
- - ----------------------------------------------------------------------------------------------------------------------------------
Arrow Jermyn, St. Martins Business Centre, Cambridge Rd., Bedford MK41 OLF 44 1234 270027 44 1234 214674
- - ----------------------------------------------------------------------------------------------------------------------------------
Avnet-Access, Avnet House, Rutherford Close, Meadway< Stevenage, Herts SG1 2EF 44 1438 788 300 44 1438 788 230
- - ----------------------------------------------------------------------------------------------------------------------------------
EBV Elektronik, 7 Frascati Way, Maidenhead, Berkshire SL6 4UY 44 1628 783 688 44 1628 783 811
- - ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Asian Pacific Authorized Distributors
<TABLE>
<CAPTION>
- - ----------------------------------------------------------------------------------------------------------------------------------
Company Name and Corporate Address Telephone FAX
- - ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
None
</TABLE>
Page 4
<PAGE>
Schedule 4.3
Product Inventory Pricing
Finished Goods Inventory
Finished goods inventory for each Military Logic Product will be valued in the
following manner:
Quantity Months TI/Non-TI Military Transfer Price
- - -------- ------ --------- -----------------------
> 1000 <=12 mos. Non-TI 80% times ASP
> 1000 <=12 mos. TI 40% times ASP
< 1000 <=12 mos. Non-TI and
TI 40% times ASP
-- > 12 mos. Non-TI and
TI 10% times ASP
Sellers will transfer at no charge to Purchaser all military inventory in stock
at the time of closing for which there were no sales by Sellers during FY98.
The aggregate value assigned to the finished goods inventory pursuant to the
foregoing provisions shall be reduced by the sum of (i) an amount equal to three
percent (3%) of all Products held in inventory by the Specified Distributors at
the time of Closing plus (ii) $253,000.
As used above, (a) "Months" means average months of Sellers' FY98 unit sales;
(b) "Quantities" means quantity of Sellers' FY98 Unit Sales; (c) "TI" means that
Purchaser offers an equivalent part number; (d) "Non-TI" means that Purchaser
offers no equivalent part number; (e) "ASP" means Sellers' FY98 Average Selling
Price; and (f) "FY98" means the fiscal year ending July 3, 1998.
Die Inventory
Each category of die inventory will be valued at the lower of the Standard Cost
Calculation or the ASP Calculation, as set forth below.
Standard Cost
Months Calculation ASP Calculation
------ ----------- ---------------
0-6 100% times Standard Cost 66% times ASP
7-12 70% times Standard Cost 50% times ASP
12-30 30% times Standard Cost 25% times ASP
>30 No Charge No Charge
As used above, (a) "Months" means average months of Sellers' FY98 unit sales for
the packaged Product using such die inventory; (b) "ASP" means Sellers' FY98
Average Selling Price for the packaged Products using such die inventory; (c)
"Standard Cost" means Sellers' FY99 standard cost for such die inventory; (d)
"FY98" means the fiscal year ending July 3, 1998; and (e) "FY99" means the
fiscal year beginning July 4, 1998.
<PAGE>
Schedule 6.5
Financial Data "GAAP' Exceptions
Historical financial data used in this transaction was prepared in accordance
with generally accepted accounting principles (GAAP) except for the data
regarding the following matters:
(i) A constant exchange rate for Malaysia was used in all periods.
(ii) Corporate Headquarters or Sector charges pertaining to Management
Information Systems and other similar charges for systems used
throughout the business were not reflected in the historical
financial data.
(iii) Normal year-end adjustments to financial results, which were
immaterial when viewed in the aggregate, were not reflected in the historical
financial data.
<PAGE>
SCHEDULE 6.9(a)(M]
PRODUCT LISTING BY PART NUMBER BY PRODUCT FAMILY [MILITARY]
<TABLE>
<CAPTION>
Family Device Status Family Device Status
- - ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
MIL LOGIC 135957 11 MIL LOGIC 5962-8780801EA 11
MIL LOGIC 5962-8515301CA 11 MIL LOGIC 5962-8780901RA 11
MIL LOGIC 5962-8515401CA 11 MIL LOGIC 5962-8855601EA 11
MIL LOGIC 5962-8606101EA 11 MIL LOGIC 5962-8857601CA 11
MIL LOGIC 5962-8606101EAS2035 11 MIL LOGIC 5962-8860601EA 11
MIL LOGIC 5962-8606201RA 11 MIL LOGIC 5962-8862401JA 11
MIL LOGIC 5962-8670101JA 11 MIL LOGIC 5962-8867101EA 11
MIL LOGIC 5962-8681201EA 11 MIL LOGIC 5962-8867201EA 11
MIL LOGIC 5962-8681301RA 11 MIL LOGIC 5962-8875701EA 11
MIL LOGIC 5962-8681401RA 11 MIL LOGIC 5962-8875901EA 11
MIL LOGIC 5962-8681501RA 11 MIL LOGIC 5962-8943601MRA 11
MIL LOGIC 5962-8681701EA 11 MIL LOGIC 5962-8944501JA 11
MIL LOGIC 5962-8681801RA 11 MIL LOGIC 5962-8945801EA 11
MIL LOGIC 5962-8681901EA 11 MIL LOGIC 5962-8960901EA 11
MIL LOGIC 5962-8682001EA 11 MIL LOGIC 5962-8970001EA 11
MIL LOGIC 5962-8682101EA 11 MIL LOGIC 5962-8970101EA 11
MIL LOGIC 5962-8682201JA 11 MIL LOGIC 5962-8970201EA 11
MIL LOGIC 5962-8682301EA 11 MIL LOGIC 5962-8970301CA 11
MIL LOGIC 5962-8682401EA 11 MIL LOGIC 5962-8970401CA 11
MIL LOGIC 5962-8682501EA 11 MIL LOGIC 5962-8970501EA 11
MIL LOGIC 5962-8682601EA 11 MIL LOGIC 5962-8970701EA 11
MIL LOGIC 5962-8682701EA 11 MIL LOGIC 5962-8970801EA 11
MIL LOGIC 5962-8682801EA 11 MIL LOGIC 5962-8970901CA 11
MIL LOGIC 5962-8683101CA 11 MIL LOGIC 5962-8974001RA 11
MIL LOGIC 5962-8683101CAR2380 11 MIL LOGIC 5962-8974201RA 11
MIL LOGIC 5962-8684701EA 11 MIL LOGIC 5962-8974301EA 11
MIL LOGIC 5962-8684801CA 11 MIL LOGIC 5962-8974301EAS2035 11
MIL LOGIC 5962-8685201CA 11 MIL LOGIC 5962-8974501EA 11
MIL LOGIC 5962-8685301CA 11 MIL LOGIC 5962-8974601CA 11
MIL LOGIC 5962-8685401EA 11 MIL LOGIC 5962-8974701CA 11
MIL LOGIC 5962-8685501EA 11 MIL LOGIC 5962-8975101CA 11
MIL LOGIC 5962-8685601RA 11 MIL LOGIC 5962-8976501EA 11
MIL LOGIC 5962-8685701RA 11 MIL LOGIC 5962-8976901RA 11
MIL LOGIC 5962-8686701RA 11 MIL LOGiC 5962-8977101EA 11
MIL LOGIC 5962-8688301CA 11 MIL LOGIC 5962-8984301CA 11
MIL LOGIC 5962-8688401EA 11 MIL LOGIC 5962-8984401CA 11
MIL. LOGIC 5962-8688501JA 11 MIL LOGIC 5962-8984501CA 11
MIL LOGIC 5962-8688601EA 11 MIL LOGiC 5962-8984901RA 11
MIL LOGIC 5962-8689001CA 11 MIL LOGIC 5962-8985201EA 11
MIL LOGIC 5962-8689101EA 11 MIL LOGIC 5962-8989001CA 11
MIL LOGIC 5962-8764701CA 11 MIL LOGIC 5962-8989001CAS2035 11
MIL LOGIC 5962-8768001EA 11 MIL LOGIC 5962-8994601EA 11
MIL LOGIC 5962-8772101CA 11 MIL LOGIC 5962-8994701MEA 11
MIL LOGIC 5962-8772201CA 11 MIL LOGIC 5962-8995301EA 11
MIL LOGIC 5962-8772401EA 11 MIL LOGIC 5962-8995401EA 11
MIL LOGIC 5962-8772501RA 11 MIL LOGIC 5962-8999001EA 11
MIL LOGIC 5962-8773301EA 11 MIL LOGIC 5962-9050501MEA 11
MIL LOGIC 5962-8775401EA 11 MIL LOGIC 5962-9052401MEA 11
</TABLE>
1
<PAGE>
SCHEDULE 6.9(a)(M]
PRODUCT LISTING BY PART NUMBER BY PRODUCT FAMILY [MILITARY]
<TABLE>
<CAPTION>
Family Device Status Family Device Status
- - ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
MIL LOGIC 5962-8780501EA 11 MIL LOGIC 5962-9055301EA 11
MIL LOGIC 5962-8780601RA 11 MIL LOGIC 5962-9055701EA 11
MIL LOGIC 5962-8780701RA 11 MIL LOGIC 5962-9059701MEA 11
MIL LOGIC 5962-9064001CA 11 MIL LOGIC 8406401EA 11
MIL LOGIC 5962-9065101MCA 11 MIL LOGIC 8407001EA 11
MIL LOGIC 5962-9065201MEA 11 MIL LOGIC 8407101RA 11
MIL LOGIC 5962-9065401MEA 11 MIL LOGIC 8407201RA 11
MIL LOGIC 5962-9070101MEA 11 MIL LOGIC 8407201RAS2035 11
MIL LOGIC 5962-9070201MEA 11 MIL LOGIC 8407301EA 11
MIL LOGIC 5962-9070301MEA 11 MIL LOGIC 8407401RA 11
MIL LOGIC 5962-9070501MEA 11 MIL LOGIC 8407401RAS2035 11
MIL LOGIC 5962-9070601MEA 11 MIL LOGIC 8407501EA 11
MIL LOGIC 5962-9070601MEAS2035 11 MIL LOGIC 8408501RA 11
MIL LOGIC 5962-9075801MEA 11 MIL LOGIC 8408501RAS2035 11
MIL LOGIC 5962-9084801MEA 11 MIL LOGIC 8408801EA 11
MIL LOGIC 5962-9084801MEAS2035 11 MIL LOGIC 8408801EAS2035 11
MIL LOGIC 5962-9084901MCA 11 MIL LOGIC 8408901EA 11
MIL LOGIC 5962-9098401MEA 11 MIL LOGIC 8409001CA 11
MIL LOGIC 5962-9466401MEA 11 MIL LOGIC 8409101CA 11
MIL LOGIC 7702002EA 11 MIL LOGIC 8409201EA 11
MIL LOGIC 7702301EA 11 MIL LOGIC 8409301EA 11
MIL LOGIC 7702402CA 11 MIL LOGIC 8409401EA 11
MIL LOGIC 7702501EA 11 MIL LOGIC 8409501EA 11
MIL LOGIC 7703201JA 11 MIL LOGIC 8409601RA 11
MIL LOGIC 7703702EA 11 MIL LOGIC 8409801CA 11
MIL LOGIC 7704402CA 11 MIL LOGIC 8409801CAS2035 11
MIL LOGIC 7704403CA 11 MIL LOGIC 8409901RA 11
MIL LOGIC 7704602CA 11 MIL LOGIC 8410001CA 11
MIL LOGIC 7704701EA 11 MIL LOGIC 8412801EA 11
MIL LOGIC 7704801EA 11 MIL LOGIC 8415001EA 11
MIL LOGIC 7705102CA 11 MIL LOGIC 8416201CA 11
MIL LOGIC 7705902CA 11 MIL LOGIC 8416201CAS2035 11
MIL LOGIC 7706002CA 11 MIL LOGIC 8500101EA 11
MIL LOGIC 7901502EA 11 MIL LOGIC 8500201EA 11
MIL LOGIC 8101602EA 11 MIL LOGIC 8500301EA 11
MIL LOGIC 8101701EA 11 MIL LOGIC 8500401EA 11
MIL LOGIC 8101801EA 11 MIL LOGIC 8512401EA 11
MIL LOGIC 8102001CA 11 MIL LOGIC 8512501EA 11
MIL LOGIC 8403701CA 11 MIL LOGIC 8512801RA 11
MIL LOGIC 8403801CA 11 MIL LOGIC 8513001RA 11
MIL LOGIC 8403901CA 11 MIL LOGIC 8550401EA 11
MIL LOGIC 8403901CAS2035 11 MIL LOGIC 8550501RA 11
MIL LOGIC 8404001CA 11 MIL LOGIC 8550601RA 11
MIL LOGIC 8404101CA 11 MIL LOGIC 8550701RA 11
MIL LOGIC 8404201CA 11 MIL LOGIC 8551901EA 11
MIL LOGIC 8404201CAS2035 11 MIL LOGIC 8601101EA 11
MIL LOGIC 8404302CA 11 MIL LOGIC 8601201CA 11
MIL LOGIC 8404401CA 11 MIL LOGIC 8601301EA 11
MIL LOGIC 8404501CA 11 MIL LOGIC 8607601EA 11
MIL LOGIC 8404601CA 11 MIL LOGIC 8607701CA 11
MIL LOGIC 8404701CA 11 MIL LOGIC 89262AKB3T 11
</TABLE>
2
<PAGE>
SCHEDULE 6.9(a)(M]
PRODUCT LISTING BY PART NUMBER BY PRODUCT FAMILY [MILITARY]
<TABLE>
<CAPTION>
Family Device Status Family Device Status
- - ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
MIL LOGIC 8404801CA 11 MIL LOGIC 8263AKB3T 11
MIL LOGIC 8405601CA 11 MIL LOGIC 8264UKB3T 11
MIL LOGIC 8406201EA 11 MIL LOGIC 89265AKB3T 11
MIL LOGIC 89266AKB3T 11 MIL LOGIC CD4013AFB 11
MIL LOGIC 89267AKB3T 11 MIL LOGIC CD4013BF3A 11
MIL LOGIC 89270AKB3T 11 MIL LOGIC CD4013BF3AS2451 11
MIL LOGIC 89271AKB3T 11 MIL LOGIC CD4013BF3AS2534 11
MIL LOGIC 89273AKB3T 11 MIL LOGIC CD4013BFB 11
MIL LOGIC 89274AKB3T 11 MIL LOGIC CD4013BK3 11
MIL LOGIC CD14538BF3A 11 MIL LOGIC CD4014BF3A 11
MIL LOGIC CD4001AFB 11 MIL LOGIC CD4015BF3A 11
MIL LOGIC CD4001BF3A 11 MIL LOGIC CD4015BF3AS2451 11
MIL LOGIC CD4001BF3AS2283 11 MIL LOGIC CD40160BF3A 11
MIL LOGIC CD4001BF3AS2534 11 MIL LOGIC CD40160BFS2203 11
MIL LOGIC CD4001BFB 11 MIL LOGIC CD40161BF3A 11
MIL LOGIC CD4001BFS2484 11 MIL LOGIC CD40163BF3A 11
MIL LOGIC CD4001BK3 11 MIL LOGIC CD4016BF3A 11
MIL LOGIC CD4001UBF3A 11 MIL LOGIC CD40174BF3A 11
MIL LOGIC CD4001UBF3AS2451 11 MIL LOGIC CD40175BF3A 11
MIL LOGIC CD4002BF3A 11 MIL LOGIC CD4017AFB 11
MIL LOGIC CD4002BK3 11 MIL LOGIC CD4017BF3A 11
MIL LOGIC CD4006BF3A 11 MIL LOGIC CD4017BF3AS2534 11
MIL LOGIC CD4006BF3AS2283 11 MIL LOGIC CD4017BFB 11
MIL LOGIC CD4006BF3AS2451 11 MIL LOGIC CD4018BF3A 11
MIL LOGIC CD4007UBF3A 11 MIL LOGIC CD4018BFB 11
MIL LOGIC CD4007UBF3A116 11 MIL LOGIC CD4018BK3 11
MIL LOGIC CD4007UBF3AS2451 11 MIL LOGIC CD40192BF3A 11
MIL LOGIC CD408BF3A 11 MIL LOGIC CD40193BF3A 11
MIL LOGIC CD4009UBF3A 11 MIL LOGIC CD40193BF3AS2265 11
MIL LOGIC CD4009UBKS2273 11 MIL LOGIC CD4019AFB 11
MIL LOGIC CD40101BF3A 11 MIL LOGIC CD4019BF3A 11
MIL LOGIC CD40103BF3A 11 MIL LOGIC CD4019BF3AS2451 11
MIL LOGIC CD40105BF3A 11 MIL LOGIC CD4019BFB 11
MIL LOGIC CD40105BF3AS2283 11 MIL LOGIC CD4020AFB 11
MIL LOGIC CD40106BK 11 MIL LOGIC CD4020BF3AS2451 11
MIL LOGIC CD40106BF3A 11 MIL LOGIC CD4020BF3A 11
MIL LOGIC CD40107BF3A 11 MIL LOGIC CD4020BFB 11
MIL LOGIC CD40108BD3 11 MIL LOGIC CD4021BF3A 11
MIL LOGIC CD40109BF3A 11 MIL LOGIC CD4021BF3AS2283 11
MIL LOGIC CD40109BK3 11 MIL LOGIC CD4021BFB 11
MIL LOGIC CD4010BF3A 11 MIL LOGIC CD4022BF3A 11
MIL LOGIC CD4011AD3 11 MIL LOGIC CD4023AFB 11
MIL LOGIC CD4011AFB 11 MIL LOGIC CD4023BF3A 11
MIL LOGIC CD4011BF3A 11 MIL LOGIC CD4023BF3AS2451 11
MIL LOGIC CD4011BF3AS2283 11 MIL LOGIC CD4023BF3AS2534 11
MIL LOGIC CD4011BF3AS2451 11 MIL LOGIC CD4023BFB 11
MIL LOGIC CD4011BF3AS2534 11 MIL LOGIC CD4023BK3 11
MIL LOGIC CD4011BFB 11 MIL LOGIC CD4024AFB 11
MIL LOGIC CD4011BK3 11 MIL LOGIC CD4024BF3A 11
MIL LOGIC CD4011BK3S2344 11 MIL LOGIC CD4024BF3AS2451 11
MIL LOGIC CD4012BF3A 11 MIL LOGIC CD4024BF3AS2534 11
</TABLE>
3
<PAGE>
SCHEDULE 6.9(a)(M]
PRODUCT LISTING BY PART NUMBER BY PRODUCT FAMILY [MILITARY]
<TABLE>
<CAPTION>
Family Device Status Family Device Status
- - ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
MIL LOGIC CD4012BF3AS2451 11 MIL LOGIC CD4024BFB 11
MIL LOGIC C04012BF3AS2534 11 MIL LOGIC CD4025BF3A 11
MIL LOGIC CD4012BFB 11 MIL LOGIC CD4025AFB 11
MIL LOGIC C04025BF3A 11 MIL LOGIC CD4051BF3AS2283 11
MIL LOGIC CD4025BF3AS2451 11 MIL LOGIC CD4052BF3A 11
MIL LOGIC CD4025BFB 11 MIL LOGIC CD4053BF3A 11
MIL LOGIC CD4027AFB 11 MIL LOGIC CD4053BF3AS2283 11
MIL LOGIC CD4027BF3A 11 MIL LOGIC CD4054BF3A 11
MIL LOGIC CD4027BF3AS2451 11 MIL LOGIC CD4056BF3A 11
MIL LOGIC CD4027BF3AS2534 11 MIL LOGIC CD4059AD3 11
MIL LOGIC CD4027BFB 11 MIL LOGIC CD4060BF3A 11
MIL LOGIC CD4027BK3 11 MIL LOGIC CD4060BF3AS2534 11
MIL LOGIC CD4028BF3A 11 MIL LOGIC CD4063BF3A 11
MIL LOGIC CD4029BF3A 11 MIL LOGIC CD4066BF3A 11
MIL LOGIC CD4029BF3AS2451 11 MIL LOGIC CD4066BF3AS2283 11
MIL LOGIC CD4030BF3A 11 MIL LOGIC CD4066BF3AS2451 11
MIL LOGIC CD4030BF3AS2451 11 MIL LOGIC CD4066BF3AS2534 11
MIL LOGIC CD4030BFB 11 MIL LOGIC CD4066BFB 11
MIL LOGIC CD4030BK3S2348 11 MIL LOGIC CD4066BK3 11
MIL LOGIC CD4031BF3A 11 MIL LOGIC CD4067BF3A 11
MIL LOGIC CD4034BF3A 11 MIL LOGIC CD4068BF3A 11
MIL LOGIC CD4035BF3A 11 MIL LOGIC CD4069UBF3A 11
MIL LOGIC CD4040BF3A 11 MIL LOGIC CD4069UBF3AS2442 11
MIL LOGIC CD4041UBF3A 11 MIL LOGIC CD4069UBFB 11
MIL LOGIC CD4042BF3A 11 MIL LOGIC CD4070BF3A 11
MIL LOGIC CD4042BF3AS2329 11 MIL LOGIC CD4070BF3AS2534 11
MIL LOGIC CD4042BF3AS2451 11 MIL LOGIC CD4070BFB 11
MIL LOGIC CD4042BF3AS2534 11 MIL LOGIC CD4071BF3A 11
MIL LOGIC CD4042BK3 11 MIL LOGIC CD4071BF3AS2283 11
MIL LOGIC CD4043BF3A 11 MIL LOGIC CD4071BF3AS2534 11
MIL LOGIC CD4043BF3AS2534 11 MIL LOGIC CD4071BFB 11
MIL LOGIC CD4044BF3A 11 MIL LOGIC CD4072BF3A 11
MIL LOGIC CD4044BF3AS2534 11 MIL LOGIC CD4073BF3A 11
MIL LOGIC CD4046BF3A 11 MIL LOGIC CD4073BFB 11
MIL LOGIC CD4046BFS2265 11 MIL LOGIC CD4075BF3A 11
MIL LOGIC CD4047BD3 11 MIL LOGIC CD4075BFB 11
MIL LOGIC CD4047BF3A 11 MIL LOGIC CD4076BF3A 11
MIL LOGIC CD4048BF3A 11 MIL LOGIC CD4077BF3A 11
MIL LOGIC CD4048BF3AS2451 11 MIL LOGIC CD4078BF3A 11
MIL LOGIC CD4049AFB 11 MIL LOGIC CD4081BF3A 11
MIL LOGIC CD4049UBF3A 11 MIL LOGIC CD4081BF3AS2283 11
MIL LOGIC CD4049UBF3AS2283 11 MIL LOGIC CD4081BF3AS2534 11
MIL LOGIC CD4049UBF3AS2451 11 MIL LOGIC CD4081BFB 11
MIL LOGIC CD4049UBF3AS2534 11 MIL LOGIC CD4081BFB3A 11
MIL LOGIC CD4049UBFB 11 MIL LOGIC CD4082BF3A 11
MIL LOGIC CD4049UBK3 11 MIL LOGIC CD4082BFB 11
MIL LOGIC CD4050AFB 11 MIL LOGIC CD4085BF3A 11
MIL LOGIC CD4050AKR2603 11 MIL LOGIC CD4086BF3A 11
MIL LOGIC CD4050BF3A 11 MIL LOGIC CD4089BF3A 11
MIL LOGIC CD4050BF3AS2283 11 MIL LOGIC CD4093BF3A 11
MIL LOGIC CD4050BF3AS2451 11 MIL LOGIC CD4094F3A 11
</TABLE>
4
<PAGE>
SCHEDULE 6.9(a)(M]
PRODUCT LISTING BY PART NUMBER BY PRODUCT FAMILY [MILITARY]
<TABLE>
<CAPTION>
Family Device Status Family Device Status
- - ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
MIL LOGIC CD4050BF3A2534 11 MIL LOGIC CD4098BF3A 11
MIL LOGIC CD4050BFB 11 MIL LOGIC CD4098BFB 11
MIL LOGIC CD4051BF3A 11 MIL LOGIC CD4099BF3A 11
MIL LOGIC CD4051BF3A 11 MIL LOGIC CD4099BF3A 11
MIL LOGIC CD4099BFB 11 MIL LOGIC CD54AC280F3A 11
MIL LOGIC CD4502BF3A 11 MIL LOGIC CD54AC283F3A 11
MIL LOGIC CD4502BFB 11 MIL LOGIC CD54AC299F3A 11
MIL LOGIC CD4503BF3A 11 MIL LOGIC CD54AC32FA 11
MIL LOGIC CD4504BF3A 11 MIL LOGIC CD54AC32F3AS2283 11
MIL LOGIC CD4504BF3AS2451 11 MIL LOGIC CD54AC373F3A 11
MIL LOGIC CD4508BD3 11 MIL LOGIC CD54AC374F3A 11
MIL LOGIC CD4508BF3A 11 MIL LOGIC CD54AC541F3A 11
MIL LOGIC CD4511BF3A 11 MIL LOGIC CD54AC573F3A 11
MIL LOGIC CD4511BK3 11 MIL LOGIC CD54AC574F3A 11
MIL LOGIC CD4512BF3A 11 MIL LOGIC CD54AC74F3A 11
MIL LOGIC CD4514BF3A 11 MIL LOGIC CD54ACT00F3A 11
MIL LOGIC CD4515BF3A 11 MIL LOGIC CD54ACT02F3A 11
MIL LOGIC CD4516BF3A 11 MIL LOGIC CD54ACT04F3A 11
MIL LOGIC CD4517BF3A 11 MIL LOGIC CD54ACT05F3A 11
MIL LOGIC CD4518BF3A 11 MIL LOGIC CD54ACT05F3AS2360 11
MIL LOGIC CD4520BF3A 11 MIL LOGIC CD54ACT05F3AS2841 11
MIL LOGIC CD4532BF3A 11 MIL LOGIC CD54ACT08F3A 11
MIL LOGIC CD4536BF3A 11 MIL LOGIC CD54ACT109F3A 11
MIL LOGIC CD4541BF3A 11 MIL LOGIC CD54ACT112F3A 11
MIL LOGIC CD4555BF3A 11 MIL LOGIC CD54ACT138F3A 11
MIL LOGIC CD4556BF3A 11 MIL LOGIC CD54ACT139F3A 11
MIL LOGIC CD4556BF3AS2283 11 MIL LOGIC CD54ACT151F3A 11
MIL LOGIC CD4585BF3A 11 MIL LOGIC CD54AT153F3A 11
MIL LOGIC CD4724BF3A 11 MIL LOGIC CD54ACT161F3A 11
MIL LOGIC CD54AC00F3A 11 MIL LOGIC CD54ACT163F3A 11
MIL LOGIC CD54AC00F3AS2283 11 MIL LOGIC CD54ACT164F3A 11
MIL LOGIC CD54AC02F3A 11 MIL LOGIC CD54ACT164F3AS2841 11
MIL LOGIC CD54AC04F3A 11 MIL LOGIC CD54ACT174F3A 11
MIL LOGIC CD54AC04F3AS2283 11 ML LOGIC CD54ACT191F3A 11
MIL LOGIC CD54AC05F3A 11 ML LOGIC CD54ACT193F3A 11
MIL LOGIC CD54AC08F3A 11 MIL LOGIC CD54ACT20F3A 11
MIL LOGIC CD54AC08F3AS2283 11 ML LOGIC CD54ACT240F3A 11
MIL LOGIC CD54AC109F3A 11 ML LOGIC CD54ACT241F3A 11
MIL LOGIC CD54AC112F3A 11 ML LOGIC CD54ACT244F3A 11
MIL LOGIC CD54AC138F3A 11 ML LOGIC CD54ACT245F3A 11
MIL LOGIC CD54AC139F3A 11 ML LOGIC CD54ACT245F3AS2283 11
MIL LOGIC CD54AC153F3A 11 ML LOGIC CD54ACT253F3A 11
MIL LOGIC CD54AC157F3A 11 ML LOGIC CD54ACT257F3A 11
MIL LOGIC CD54AC161F3A 11 ML LOGIC CD54ACT273F3A 11
MIL LOGIC CD54AC163F3A 11 ML LOGIC CD54ACT273F3AS2841 11
MIL LOGIC CD54AC164F3A 11 ML LOGIC CD54ACT280F3A 11
MIL LOGIC CD54AC191F3A 11 ML LOGIC CD54ACT283F3A 11
MIL LOGIC CD54AC193F3A 11 ML LOGIC CD54ACT299F3A 11
</TABLE>
5
<PAGE>
SCHEDULE 6.9(a)(M]
PRODUCT LISTING BY PART NUMBER BY PRODUCT FAMILY [MILITARY]
<TABLE>
<CAPTION>
Family Device Status Family Device Status
- - ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
MIL LOGIC CD54AC240F3A 11 ML LOGIC CD54ACT323F3A 11
MIL LOGIC CD54AC244F3A 11 ML LOGIC CD54ACT32F3A 11
ML LOGIC CD54AC244F3AS2283 11 ML LOGIC CD54ACT32FAS2841 11
MIL LOGIC CD54AC245F3A 11 MIL LOGIC CD54ACT373F3A 11
ML LOGIC CD54AC257F3A 11 MIL LOGIC CD54ACT374F3A 11
MIL LOGIC CD54AC257F3AS2283 11 Mil LOGIC CD54ACT533F3A 11
MIL LOGIC CD54AC273F3A 11 MIL LOGIC CD54ACT534F3A 11
MIL LOGIC CD54ACT540F3A 11 MIL LOGIC CD54HC238F3A 11
MIL LOGIC CD54ACT541F3A 11 MIL LOGIC CD54HC240F3A 11
MIL LOGIC CD54ACT573F3A 11 MIL LOGIC CD54HC243F3A 11
MIL LOGIC CD54ACT574F3A 11 MIL LOGIC CD54HC244F3A 11
MIL LOGIC CD54ACT623F3A 11 MIL LOGIC CD54HC244F3AS2283 11
MIL LOGIC CD54ACT74F3A 11 MIL LOGIC CD54HC244F3AS2534 11
MIL LOGIC CD54ACT86F3A 11 MIL LOGIC CD54HC245F3A 11
MIL LOGIC CD54HC00F3A 11 MIL LOGIC CD54HC245F3AS2283 11
MIL LOGIC CD54HC00F3AS2283 11 MIL LOGIC CD54HC245F3AS2534 11
MIL LOGIC CD54HC00F3AS2534 11 ML LOGIC CD54HC251F3A 11
MIL LOGIC CD54HC02F3A 11 MIL LOGIC CD54HC257F3A 11
MIL LOGIC CD54HC04F3A 11 MIL LOGIC CD54HC259F3A 11
MIL LOGIC CD54HC08F3A 11 MIL LOGIC CD54HC273F3A 11
MIL LOGIC CD54HC08F3AS2534 11 MIL LOGIC CD54HC273F3AS2283 11
MIL LOGIC CD54HC109F3A 11 MIL LOGIC CD54HC280F3A 11
MIL LOGIC CD54HC10F3A 11 MIL LOGIC CD54HC283F3A 11
MIL LOGIC CD54HC11F3A 11 MIL LOGIC CD54HC299F3A 11
MIL LOGIC CD54HC11F3AS2283 11 MIL LOGIC CD54HC32F3A 11
MIL LOGIC CD54HC123F3A 11 MIL LOGIC CD54HC32F3AS2283 11
MIL LOGIC CD54HC123F3AS2283 11 MIL LOGIC CD54HC32F3AS2534 11
MIL LOGIC CD54HC125F3A 11 MIL LOGIC CD54HC354F3A 11
MIL LOGIC CD54HC126F3A 11 MIL LOGIC CD54HC365F3A 11
MIL LOGIC CD54HC132F3A 11 MIL LOGIC CD54HC366F3A 11
MIL LOGIC CD54HC132F3AS2283 11 MIL LOGIC CD54HC367F3A 11
MIL LOGIC CD54HC138F3A 11 MIL LOGIC CD54HC373F3A 11
MIL LOGIC CD54HC138FS2283 11 MIL LOGIC CD54HC373F3AS2283 11
MIL LOGIC CD54HC139F3A 11 MIL LOGIC CD54HC374F3A 11
MIL LOGIC CD54HC147F3A 11 MIL LOGIC CD54HC374F3AS2283 11
MIL LOGIC CD54HC14F3A 11 MIL LOGIC CD54HC377F3A 11
MIL LOGIC CD54HC14F3AS2283 11 ML LOGIC CD54HC393F3A 11
MIL LOGIC CD54HC154F3A 11 MIL LOGIC CD54HC40103F3A 11
ML LOGIC CD54HC157F3A 11 ML LOGIC CD54HC40103F3AS2283 11
MIL LOGIC CD54HC158F3A 11 MIL LOGIC CD54HC40105F3A 11
MIL LOGIC CD54HC160F3A 11 MIL LOGIC CD54HC4015F3A 11
MIL LOGIC CD54HC161F3A 11 MIL LOGIC CD54HC4015F3AS2283 11
MIL LOGIC CD54HC162F3A 11 MIL LOGIC CD54HC4017F3A 11
MIL LOGIC CD54HC163F3A 11 ML LOGIC CD54HC4020F3A 11
MIL LOGIC CD54HC163F3AS2035 11 MIL LOGIC CD54HC4024F3A 11
MIL LOGIC CD54HC164F3A 11 MIL LOGIC CD54HC4024F3AS2283 11
MIL LOGIC CD54HC165F3A 11 MIL LOGIC CD54HC4040F3A 11
MIL LOGIC CD54HC165F3AS2534 11 ML LOGIC CD54HC4040F3AS2283 11
</TABLE>
6
<PAGE>
SCHEDULE 6.9(a)(M]
PRODUCT LISTING BY PART NUMBER BY PRODUCT FAMILY [MILITARY]
<TABLE>
<CAPTION>
Family Device Status Family Device Status
- - ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
ML LOGIC CD54HC166F3A 11 MIL LOGIC CD54HC4046AF3A 11
ML LOGIC CD54HC173F3A 11 MIL LOGIC CD54HC4049F3A 11
MIL LOGIC CD54HC175F3A 11 MIL LOGIC CD54HC4050F3A 11
MIL LOGIC CD54HC175F3AS2035 11 ML LOGIC CD54HC4050F3AS2283 11
MIL LOGIC CD54HC175F3AS2283 11 MIL LOGIC CD54HC4051F3A 11
MIL LOGIC CD54HC190F3A 11 MIL LOGIC CD54HC4052F3A 11
MIL LOGIC CD54HC191F3A 11 ML LOGIC CD54HC4053F3A 11
MIL LOGIC CD54HC193F3A 11 MIL LOGIC CD54HC4053F3AS2283 11
MIL LOGIC CD54HC194F3A 11 MIL LOGIC CD54HC4060F3A 11
MIL LOGIC CD54HC221F3A 11 MIL LOGIC CD54HC4066F3A 11
MIL LOGIC CD54HC4094F3A 11 ML LOGIC CD54HCT138F3AS2534 11
MIL LOGIC CD54HC4316F3A 11 ML LOGIC CD54HCT139F3A 11
ML LOGIC CD54HC4351F3A 11 MIL LOGIC CD54HCT14F3A 11
MIL LOGIC CD54HC4511F3A 11 MIL LOGIC CD54HCT151F3A 11
MIL LOGIC CD54HC4514F3A 11 MIL LOGIC CD54HCT154F3A 11
MIL LOGIC CD54HC4514FR3061 11 MIL LOGIC CD54HCT157F3A 11
MIL LOGIC CD54HC4516F3A 11 MIL LOGIC CD54HCT157F3AS2534 11
MIL LOGIC CD54HC4520F3A 11 MIL LOGIC CD54HCT161F3A 11
MIL LOGIC CD54HC4520F3AS2283 11 MIL LOGIC CD54HCT163F3A 11
MIL LOGIC CD54HC4538F3A 11 MIL LOGIC CD54HCT163F3AS2534 11
MIL LOGIC CD54HC4538F3AS2283 11 MIL LOGIC CD54HCT164F3A 11
MIL LOGIC CD54HC533F3A 11 MIL LOGIC CD54HCT164F3AS2534 11
MIL LOGIC CD54HC534F3A 11 MIL LOGIC CD54HCT165F3A 11
MIL LOGIC CD54HC540F3A 11 MIL LOGIC CD54HCT165F3AS2534 11
MIL LOGIC CD54HC541F3A 11 MIL LOGIC CD54HCT166F3A 11
MIL LOGIC CD54HC564F3A 11 ML LOGIC CD54HCT173F3A 11
MIL LOGIC CD54HC573F3A 11 MIL LOGIC CD54HCT173F3AS2534 11
MIL LOGIC CD54HC574F3A 11 MIL LOGIC CD54HCT174F3A 11
MIL LOGIC CD54HC597F3A 11 MIL LOGIC CD54HCT174F3AS2534 11
MIL LOGIC CD54HC640F3A 11 MIL LOGIC CD54HCT175F3A 11
MIL LOGIC CD54HC646F3A 11 MIL LOGIC CD54HCT175F3AS2534 11
MIL LOGIC CD54HC670F3A 11 MIL LOGIC CD54HCT191F3A 11
MIL LOGIC CD54HC688F3A 11 MIL LOGIC CD54HCT193F3A 11
MIL LOGIC CD54HC688F3AS2283 11 MIL LOGIC CD54HCT193AS2534 11
MIL LOGIC CD54HC7266F3A 11 MIL LOGIC CD54HCT20F3A 11
MIL LOGIC CD54HC73F3A 11 MIL LOGIC CD54HCT238F3A 11
MIL LOGIC CD54HC74F3A 11 MIL LOGIC CD54HCT240F3A 11
MIL LOGIC CD54HC74F3AS2283 11 MIL LOGIC CD54HCT240F3AS2534 11
MIL LOGIC CD54HC75F3A 11 MIL LOGIC CD54HCT241F3A 11
MIL LOGIC CD54HC85F3A 11 ML LOGIC CD54HCT243F3A 11
MIL LOGIC CD54HC86F3A 11 MIL LOGIC CD54HCT244F3A 11
MIL LOGIC CD54HCT00F3A 11 MIL LOGIC CD54HCT244F3AS2534 11
MIL LOGIC CD54HCT02F3A 11 ML LOGIC CD54HCT245F3A 11
MIL LOGIC CD54HCT02F3AS2534 11 MIL LOGIC CD54HCT251F3A 11
ML LOGIC CD54HCT03F3A 11 MIL LOGIC CD54HCT257F3A 11
MIL LOGIC CD54HCT03F3AS2534 11 MIL LOGIC CD54HCT258F3A 11
MIL LOGIC CD54HCT04F3A 11 MIL LOGIC CD54HCT259F3A 11
MIL LOGIC CD54HCT04F3AS2534 11 MIL LOGIC CD54HCT273F3A 11
</TABLE>
7
<PAGE>
SCHEDULE 6.9(a)(M]
PRODUCT LISTING BY PART NUMBER BY PRODUCT FAMILY [MILITARY]
<TABLE>
<CAPTION>
Family Device Status Family Device Status
- - ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
MIL LOGIC CD54HCT08F3A 11 MIL LOGIC CD54HCT273F3AS2534 11
MIL LOGIC CD54HCT08F3AS2534 11 MIL LOGIC CD54HCT280F3A 11
MIL LOGIC CD54HCT109F3A 11 MIL LOGIC CD54HCT283F3A 11
MIL LOGIC CD54HCT10F3A 11 MIL LOGIC CD54HCT299F3A 11
MIL LOGIC CD54HCT10F3AS2534 11 MIL LOGIC CD54HCT299F3AS2534 11
MIL LOGIC CD54HCT112F3A 11 MIL LOGIC CD54HCT30F3A 11
MIL LOGIC CD54HCT11F3A 11 MIL LOGIC CD54HCT32F3A 11
MIL LOGIC CD54HCT11F3AS2534 11 MIL LOGIC CD54HCT32F3AS2534 11
MIL LOGIC CD54HCT123F3A 11 MIL LOGIC CD54HCT365F3A 11
MIL LOGIC CD54HCT125F3A 11 MIL LOGIC CD54HCT365F3AS2534 11
MIL LOGIC CD54HCT132F3A 11 MIL LOGIC CD54HCT367F3A 11
MIL LOGIC CD54HCT1373AS2534 11 MIL LOGIC CD54HCT373F3A 11
MIL LOGIC CD54HCT138F3A 11 MIL LOGIC CD54HCT373F3AS2534 11
MIL LOGIC CD54HCT374F3A 11 MIL LOGIC JM38510/05605BCA 11
MIL LOGIC CD54HCT374F3AS2534 11 MIL LOGIC JM38510/05651BEA 11
MIL LOGIC CD54HCT377F3A 11 MIL LOGIC JM38510/05652BEA 11
MIL LOGIC CD54HCT390F3A 11 MIL LOGIC JM38510/05653BEA 11
MIL LOGIC CD54HCT393F3A 11 MIL LOGIC JM38510/05655BCA 11
MIL LOGIC CD54HCT40105F3A 11 MIL LOGIC JM38510/05754BEA 11
MIL LOGIC CD54HCT4020F3A 11 MIL LOGIC JM38510/05852BCA 11
MIL LOGIC CD54HCT4024F3A 11 MIL LOGIC JM38510/17001BCA 11
MIL LOGIC CD54HCT4040F3A 11 MIL LOGIC JM38510/17002BCA 11
ML LOGIC CDS4HCT4046F3A 11 MIL LOGIC JM38510/17003BCA 11
MIL LOGIC CD54HCT4051F3A 11 MIL LOGIC JM38510/17101BCA 11
MIL LOGIC CD54HCT4059F3A 11 MIL LOGIC JM38510/17103BCA 11
MIL LOGIC CD54HCT4060F3A 11 MIL LOGIC JM38510/17203BCA 11
MIL LOGIC CD54HCT4075F3A 11 MIL LOGIC JM38510/17401BCA 11
MIL LOGIC CD54HCT4538F3A 11 MIL LOGIC JM38510/17403BEA 11
ML LOGIC CD54HCT533F3A 11 MIL LOGIC JM38510/17504BEA 11
MIL LOGIC CD54HCT534F3A 11 MIL LOGIC JM38510/17601BEA 11
MIL LOGIC CD54HCT541F3A 11
MIL LOGIC CD54HCT564F3A 11
MIL LOGIC CD54HCT573F3A 11
MIL LOGIC CD54HCT574F3A 11
MIL LOGIC CD54HCT640F3A 11
MIL LOGIC CD54HCT688F3A 11
MIL LOGIC CD54HCT74F3A 11
MIL LOGIC CD54HCT74F3AS2534 11
MIL LOGIC CD54HCT85F3A 11
MIL LOGIC CD54HCT86F3A 11
MIL LOGIC CD54HCU04F3AS2283 11
MIL LOGIC JM38510/05001BCA 11
MIL LOGIC JM38510/05003BCA 11
MIL LOGIC JM38510/05051BCA 11
MIL LOGIC JM38510/05052BCA 11
MIL LOGIC JM38510/05053BCA 11
MIL LOGIC JM38510/05101BCA 11
MIL LOGIC JM38510/05102BEA 11
MIL LOGIC JM38510/05151BCA 11
MIL LOGIC JM38510/05152BEA 11
</TABLE>
8
<PAGE>
SCHEDULE 6.9(a)(M]
PRODUCT LISTING BY PART NUMBER BY PRODUCT FAMILY [MILITARY]
<TABLE>
<CAPTION>
Family Device Status Family Device Status
- - ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
MIL LOGIC JM38510/05201BCA 11
MIL LOGIC JM38510/05202BCA 11
MIL LOGIC JM38510/05204BCA 11
MIL LOGIC JM38510/05252BCA 11
MIL LOGIC JM38510/05254BCA 11
MIL LOGIC JM38510/05302BEA 11
MIL LOGIC JM38510/05352BEA 11
MIL LOGIC JM38510/05353BCA 11
MIL LOGIC JM38510/05503BEA 11
MIL LOGIC JM38510/05504BEA 11
MIL LOGIC JM38510/05553BEA 11
MIL LOGIC JM38510/05554BEA 11
MIL LOGIC JM38510/05601BEA 11
MIL LOGIC JM38510/05603BEA 11
</TABLE>
9
<PAGE>
SCHEDULE 6.9(c)
TERMS AND CONDITIONS OF SALE
Effective 7/1/93 (Form TC-1)
HARRIS CORPORATION
SEMICONDUCTOR SECTOR
Article 1. General
Harris Corporation, Semiconductor Sector ("Seller"), In the interest of
processing orders in a prompt, and efficient manner has established this set of
Terms and Conditions of Sale to conform to current business and legal
requirements. These Terms and Conditions of Sale shall apply to all quotations
for Products (as defined in Section 3 below).
Article 2. Scope
Seller's offer to sell as stated herein whether or not in response to Buyer's
order is expressly conditioned upon Buyer's acceptance of Seller's Terms and
Conditions of Sale. Buyer's taking delivery of all or any part of product is
evidence of such assent. Any of Buyer's terms and conditions which are different
from or in addition to those contained herein are hereby objected to and of no
effect.
Article 3. Definitions
The following terms as used herein are defined as follows: Article 5. Minimum
Order Release.
(A) Products include integrated circuits, discrete devices, solid state chips,
hybrid circuits, electronic modules containing semiconductors, microprocessors,
memory circuits, varistors and optoelectronic devices.
(B) Standard Products are those Products which are manufactured to Seller's
specifications for sale to all customers.
(C) Custom or Semicustom Products are those Products manufactured in whole or in
part to a specific customer's specifications and identified by a distinctive
custom type number.
(D) Developmental Products are those products which have not been manufactured
in production quantities or commercially introduced and do not bear a
distinctive type number.
Article 4. Prices
(A) Purchase Order - Buyer is required to provide a written Purchase Order to
include as a minimum, product, quantity, price and delivery. An EDI equivalent
is acceptable. The Seller's order acknowledgement completes the written
agreement between the parties.
2
<PAGE>
(B) Billing-Subject to the provisions of sub-paragraph C below:
1. All billings for Standard Products will be at Seller's established prices for
the quantities ordered which are in effect on the order receipt date.
2. All billings for Custom or Semicustom Products will be at prices set by
competitive award or negotiated with the Buyer.
3. Transportation shall be at Buyer's expense.
(C) Order Scheduling - Orders may be placed for shipment over a period of up to
12 months from the date of order receipt Seller reserves the right to cancel any
order for which no release has issued three (3) months from the order receipt
date. Seller reserves the right to reject any revision to an existing open
purchase order when, in its opinion, any such revision substantially alters the
scope of the original order
(D) Price Adjustment - Seller reserves the right to change or withdraw prices at
any time for its Products without notice. If Seller's established price for any
Standard Product is i) increased, the price in effect prior to the increase will
apply to all shipments against orders received prior to the effective date of
the increase for a period of 30 days after the effective date of the increase;
or ii) decreased, Buyer will be billed at the lower price for all shipments made
on or after the effective date of the decrease.
If Buyer fails within 12 months of the order receipt date to release and accept
delivery of the quantity of Product upon which the billing price was based, the
purchase price will be determined by the quantity actually released and shipped
and the Buyer will be billed for any price difference.
(E) Taxes - Unless otherwise specified or required by law, all prices will be
quoted and billed exclusive of federal, state and local excise, sales and
similar taxes. Such taxes, when applicable, will be billed as separate,
additional items on Sellers invoices, unless the Buyer provides Seller with a
properly executed tax exemption certificate.
Article 5. Minimum Order Release.
Minimum order and shipping release quantities are defined by product specific
minimum line quantities (MLQ's) as listed in the current Harris Cost and Resale
or OEM Price List. The MLQ's are multiples of the standard pack. Exceptions to
the MLQ requirement must be specifically negotiated between Buyer and Seller.
Orders for less than MLQ will be automatically increased to meet minimum
requirements. If not in standard pack increment, orders will be changed to
standard pack quantities in accordance with previous Seller/Buyer agreements.
3
<PAGE>
Article 6. Delivery, Title and Risks
(A) All sales are F.O.B., freight collect Seller's named shipping point.
(B) Seller reserves the right to make deliveries in installments. Partial
shipments will be billed as made and payments therefor are subject to the terms
of payment noted below. All delivery indications are estimated and are dependent
in part upon prompt receipt of all necessary information to service an order.
Seller reserves the right to allocate inventories and production when such
allocation becomes necessary. IN NO EVENT WILL SELLER BE LIABLE FOR ANY PREMIUM
TRANSPORTATION, REPROCUREMENT, OR OTHER COSTS OR LOSSES INCURRED BY BUYER AS A
RESULT OF SELLER'S FAILURE TO DELIVER PRODUCT IN ACCORDANCE WITH INDICATED
DELIVERY SCHEDULES.
(C) Seller will endeavor to meet scheduled delivery dates but shall be excused
from performance and not be liable for delay in delivery or non-delivery
attributable in whole or in part to (i) any cause beyond Seller's reasonable
control including but not limited to, act of government, whether in sovereign or
contractual capacity, judicial action, war, civil disturbances, insurrection,
sabotage, act of a public enemy, labor difficulties or disputes, failure of or
delay in delivery by Seller's suppliers or carriers, commercial impracticability
(irrespective of conjectural foreseeability at time of contracting), shortages
of energy, raw materials, labor, or equipment, inadequate yield of product
despite Seller's reasonable efforts, accident, fire, flood, storm or other act
of God, or (ii) Buyer's fault or negligence,
(D) Seller may overship or undership quantities by up to three percent (3%)
(five percent (5%) in the case of Custom Semicustom or Developmental Products),
which shall constitute compliance with Buyer's order, but Buyer shall pay for
only the quantity actually delivered, at the applicable extended unit price.
(E) Title and risk of loss or damage to the Products shall pass to Buyer at the
time Seller delivers possession thereof to the carrier. Any Products (whether
finished or partially completed) held by Seller at Buyer's request beyond
scheduled delivery date shall be at Buyer's risk.
(F)Notwithstanding passage of title, Seller reserves and Buyer grams a security
interest in and right of repossession of Products until fully paid by Buyer.
Article 7. Modification and Substitution of Goods
Seller may modify the specifications of Products of its own design at any time
without notice and may substitute delivery of such Products provided such
modification does not in Seller's sole judgment materially affect form, fit or
function.
4
<PAGE>
Article 8. Payment
(A) Subject to prior approval and extension of credit by Seller, Buyer shall pay
the net invoiced amount in United States currency within thirty (30) days from
date of Seller's invoice. Seller reserves the right at any time to withdraw
previously approved credit and in such event Buyer shall comply with the new
payment terms as a condition for delivery.
(B) Buyer shall make payment without regard to prior inspection of the Products,
but Buyer's right of inspection pursuant to this contract shall not be impaired
thereby.
Article 9. Warrants
(A) Seller warrants that its Products at the time of shipment by Seller are free
from defects in material and workmanship and possess the electrical
characteristics as set forth in, and will perform in accordance with the
applicable data sheet or agreed upon written specifications when operated within
the temperature and all other operating condition limitations set forth therein.
(B) The foregoing shall apply only to failures to meet said warranties which
appear and are reported to Seller within one (1) year from the date of shipment,
or with respect to unassembled Product in wafer or die form thirty (30) days
from the date of shipment.
(C) Seller's warranty does not apply if; and Seller shall have no liability for
Products returned by Buyer as to which Seller's examination discovers that: i)
the Product has been exposed to unusual or excessive environmental, mechanical,
electrical or thermal stress during the course of installation or use; or ii)
the absolute maximum ratings are exceeded for any reason including, but not
limited to, equipment variations, environment variations, the effects of changes
in operating conditions due to variations in device characteristics, improper
equipment design, improper device installation or application; or iii) Product
malfunction is the result of misuse, abuse, improper Installation or
application, alteration, accident, or negligence in use, storage, transportation
or handling or if the original identification markings on the Product have been
removed, defaced or altered; or iv) Product is "burned in" and/or tested for
Buyer by anyone other than Seller unless such procedures have Seller's prior
written approval; or v) the Product is classified as other than a commercial
production unit, e.g. a design verification unit, sample, preproduction unit,
developmental unit, prototype unit, Incomplete (with notice) or "fallout" (i.e.
out of specification with notice) unit. All warranty claims are subject to
verification by Seller.
(D) The liability of Seller hereunder is solely and exclusively limited to
replacement, repair or credit at the purchase price at Seller's option for any
Product which is returned by Buyer during the applicable warranty period and
which is found by Seller to be subject to adjustment under this warranty.
(E) The foregoing warranties extend to Buyer only, and not to Buyer's customers
or to users of Buyer's products. These warranties are the only warranties made
by Seller and shall not be enlarged by representations, descriptions, course of
dealing, trade usage, rendering of technical advice, service, samples, models,
or otherwise.
5
<PAGE>
(F) EXCEPT FOR THE WARRANTY OF TITLE, SELLER MAKES NO OTHER WARRANTIES EXPRESS,
IMPLIED, OR STATUTORY, INCLUDING BUT NOT LIMITED TO ANY IMPLIED WARRANTY OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
Article 10. Returns and Other Disposition
(A) In order to avoid administrative difficulties that result from unauthorized
returns, Buyer shall request a formal Manufacturer's Return Authorization (MRA)
from Seller through Seller's Sales Representative office or Customer Return
Services before returning Product for any reason. Seller shall not be
responsible for packing, inspection or labor costs in connection with the return
of Products. Nor shall Seller be responsible for return of any Product without
authorization.
(B) Buyer may return the affected Products F.O.B. Seller's plant upon receipt of
the MRA from Seller. Buyer must return product with original paperwork. The MRA
numbers must be prominently displayed on the outside packing. Returned items
should be packaged to prevent damage in transit in original containers, if
possible. Buyer shall give Seller a detailed statement of alleged deficiencies
and shall otherwise comply with Seller's Instructions contained in the MRA.
(C) Seller shall have no liability for Products returned or otherwise disposed
of by Buyer, where Seller is unable to verify the alleged deficiency as provided
in Article 9. Such returned Product will be returned to Buyer at Buyer's
expense.
Article 11. Patent Indemnity
(A) Subject to the following provisions Seller shall defend any suit or
proceeding brought against Buyer insofar as such suit or proceeding is based on
a claim that Products manufactured and supplied by Seller to Buyer constitutes
direct infringement of any duly issued United States patent and Seller shall pay
all damages and costs finally awarded therein against Buyer, provided that
Seller (1) is promptly informed and furnished a copy of each communication or
notice in connection with such suit or proceeding and the alleged infringement,
and (2) is given authority, information and assistance (at Seller's expense)
necessary to defend or settle such suit or proceeding. Seller shall not be
obligated to defend or be liable for costs and damages for any infringement
arising out of i) compliance with Buyer's specifications; ii) any additions to
or modifications of the Products by the Buyers; (iii) use of the Products in
combination with other goods or with each other after delivery by Seller; or
(iv) use of the Products in a patented process. Seller shall not be obligated to
defend or be liable for costs and damages for any suit claiming that the
Products infringe a patent in which the Buyer, or any subsidiary or affiliate
thereof, has a direct or indirect ownership Interest in such patent.
(B) If any Products manufactured and supplied by Seller to Buyer are held to
infringe a United States patent and Buyer is enjoined from using such Products,
Seller at its option and expense will either (i) procure for Buyer the fight to
continue using such Products free of any liability for patent infringement, or
replace such Products with non-infringing but otherwise conforming products, or
(iii) refund the purchase price for any such Products returned by Buyer to
Seller.
6
<PAGE>
(C) If a claim of alleged infringement is made prior to completion of delivery
by Seller under this contract, Seller may decline to make further shipments
without being in breach of this contract, and provided Seller has not been
enjoined from selling such Products to Buyer, Seller agrees to supply same to
Buyer at Buyer's option whereupon Buyer shall defend and indemnify Seller (on
the same basis as would otherwise have been required of Seller to Buyer
hereunder) for any continuing infringement arising therefrom subsequent to
Buyer's exercise of such option.
(D) If any suit or proceeding is brought against Seller based on a claim that
Products manufactured and/or supplied hereunder by Seller constitute direct
infringement of any duly Issued United States patent, and such claim arises from
any of the reasons in Paragraph A(i) through A(iv) above then Buyer shall defend
and indemnify Seller on the same basis as would otherwise have been repaired of
Seller to Buyer hereunder.
(E) THE FOREGOING INDEMNITY EXTENDS TO BUYER ONLY AND STATES THE SOLE AND
EXCLUSIVE LIABILITY AND REMEDY OF THE PARTIES HERETO FOR PATENT INFRINGEMENT,
AND IS IN LIEU OF ALL WARRANTIES, EXPRESS, IMPLIED, OR STATUTORY, IN REGARD
THERETO.
Article 12. Termination and Cancellation
DAMAGES INCLUDING BUT NOT LIMITED TO, LOSS OF PROFITS OR REVENUE, LOSS OF USE OF
THE PRODUCT, DAMAGE TO ASSOCIATED EQUIPMENT, DOWNTIME OF PLANT OR EQUIPMENT,
COST OF SUBSTITUTE EQUIPMENT OR PRODUCTS OR CLAIMS OF BUYER'S CUSTOMERS FOR SUCH
DAMAGES.
(A) Buyer shall not terminate, suspend performance under, or issue a `hold'
order on this contract in whole or in part without Seller's written consent
thereto. Buyer's liability for termination, suspension. or `hold' shall include
Seller's charges therefor beyond the price of finished goods delivered and/or
held for Buyer's disposition, such charges including but not limited to costs
for work in process and other adjustment of the billing price to Seller's
established price applicable to the quantity actually delivered plus an amount
equal to twenty percent (20%) of the purchase price for the undelivered product.
(B) Buyer may reschedule its order upon written notice to Seller at least 90
days prior to scheduled delivery for Semicustom and Custom Products or 30 days
prior to scheduled delivery for Standard Products. Scheduled delivery is defined
as the delivery date specified in the Harris Order Acknowledgement column
heading "Harris Date". Orders rescheduled with less than the above specified
notice may, at Seller's option, be treated as terminated and subject to the
termination charges set forth above. Buyer may reschedule an initial order only
once.
(C) Neither party shall cancel this contract for breach of any of its provisions
by the other party without giving such other party advance written notice
thereof and a reasonable time in which to cure the alleged breach, except in the
event of (i) insolvency of such other party, or (ii) failure of Buyer to make
timely payment. Upon cancellation the parties shall be entitled to rights and
remedies available at law or under this contract. except to the extent excluded
or limited by this contract.
7
<PAGE>
(D) Seller, without canceling this contract, may decline to make further
deliveries hereunder in the event of a breach by Buyer, but should Seller elect
to continue delivering despite the breach such action shall not constitute a
waiver of Buyer's breach or in any way affect Seller's remedies therefor.
Article 13. Limitation of Buyer's Remedies and Damages
(A) IN NO EVENT SHALL SELLER BE LIABLE TO BUYER OR TO ANY PARTY CLAIMING UNDER
BUYER WHETHER AS A RESULT OF BREACH OF CONTRACT, WARRANTY, TORT (INCLUDING
NEGLIGENCE OR OTHERWISE), FAILURE OF A REMEDY TO ACCOMPLISH ITS PURPOSE OR
OTHERWISE, FOR SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES.
(B) The liability of Seller on any claim of any kind, whether based upon breach
of contract, warranty, tort (including negligence or otherwise), for any loss or
damage arising out of, or resulting from this agreement or from its performance
or breach, or from any product furnished hereunder, shall in no event exceed the
price of the product which gives rise to the claim. Except as to title, all such
liability shall terminate upon the expiration of the applicable warranty period
set forth in Article 9 above.
Article 14. Source Inspection; Indemnification; Authorization
(A) Source inspection by Buyer or Buyer's customer shall be subject to Seller's
prior authorization and reasonable charges based on Impact thereof on Seller's
resources.
(B) Buyer shall indemnify and hold Seller harmless from any and all suits,
damages, and expenses for the personal injury (including death) or loss or
damage to property of Buyer's employees or agents during or in connection with
any visit to Seller's plant regarding this contract.
Article 15. US. Export Laws
Seller's obligations are subject to the export administration and control laws
and regulations of the U.S. Government. The Buyer shall comply fully with such
laws and regulations in the export, resale or disposition of products.
Article 16. Life Support Indemnity
EXCEPT UPON THE PRIOR EXPRESS WRITTEN APPROVAL OF SELLER'S VICE PRESIDENT AND
GENERAL MANAGER, SELLER'S PRODUCTS ARE NOT INTENDED OR AUTHORIZED FOR USE AS
COMPONENTS IN ANY (i) LIFE SUPPORT DEVICE OR SYSTEM OR (ii) ANY DEVICE INTENDED
FOR SURGICAL IMPLANT INTO THE HUMAN BODY.
Buyer shall indemnify and hold Seller harmless from all liability and costs
(Including court costs and attorney's fees) resulting from claims, demands, or
actions brought against Seller by anyone on account of any injuries (including
death) or property damage caused directly or indirectly
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<PAGE>
from the use of Seller's Products as components in (i) any life support device
or system or (ii) any device intended for surgical implant into the human body.
Article 17. Miscellaneous Terms
(A) Buyer shall not assign this contract or any right or interest therein
without the prior written consent of Seller
(B) This contract supersedes all previous communications, transactions, and
understandings, whether oral, or written, and constitutes the sole and entire
agreement between the parties pertaining to the subject matter hereof. No
modification or deletion of, or addition to these terms shall be binding on
Seller unless made in writing and signed by a duly authorized contracts
representative of Seller at Seller's home office.
(C) This contract shall be in all respects governed by the laws of the State of
Florida.
(D) The invalidity, In whole or in part of any provision shall not affect the
validity or enforceability of any other provision herein.
(E) All orders are subject to acceptance on these Terms and Conditions of Sale
at Seller's home office
APPENDIX I - SUPPLEMENTAL FOR U.S. GOVERNMENT END-USE
In addition to the above Terms and Conditions of Sale the following terms and
conditions apply to Seller's Products when sold for United States Government
end-use. In such cases for custom and semicustom products only, Paragraphs 4B,
4C and 12A shall not apply.
A. CHANGES
The Buyer may at any time, by a written notice, make changes within the general
scope of the order, in any one or more of the following (i) drawings, designs or
specifications, where the supplies to be furnished are to be specially
manufactured for the Government in accordance therewith; (ii) method of shipment
or packing; (iii) place of inspection, delivery or acceptance; or (iv) Increase
or decrease the quantity ordered. If any such change causes an increase or
decrease in the cost of, or the time required for, the performance of any part
of the work under the order, whether changed or not changed by any such order,
an equitable adjustment shall be made in the price or delivery schedule, or
both, and the order shall be modified in writing accordingly.
B. INSPECTION DURING PERFORMANCE
Subject to the limitations set forth in Article 14, all goods shall be subject
to Inspection and test at the request of representatives of the Government at
all reasonable times and places. For this purpose Seller shall allow authorized
Government personnel access to Seller's plant at all reasonable times, and shall
furnish such facilities, supplies and services as may reasonably be required for
this work.
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<PAGE>
C. TITLE AND RISK OP LOSS
Except as otherwise provided in the order, (i) Seller shall be responsible for
the supplies covered by the order until they are delivered to the F.O.B. point,
regardless of the point of inspection; (ii) after delivery to Buyer at his
designated delivery point and prior to acceptance by Buyer, the Buyer shall be
responsible for the loss or destruction of or damage to the supplies only if
such loss, destruction or damage results from the negligence of officers,
agents, or employees of the Buyer and (iii) Seller shall bear all risks as to
rejected supplies after notice of rejection, except that the Buyer shall be
responsible for the loss or destruction of or damage to the supplies if such
loss, destruction or damage results from the negligence of officers, agents or
employees of Buyer.
D. TERMINATION FOR CONVENIENCE
FAR 52.249-2 is made a part hereof to the extent that such termination is made
necessary in whole or in part, by a termination action on the part of the U.S.
Government.
E. TERMINATION FOR DEFAULT
In the event of a termination for default pursuant to FAR 52.2498 or 52.249-9.
Seller shall have thirty (30) days in which to cure any failure to deliver, make
progress or perform. Further, Seller shall have no liability for excess costs.
F. STOP WORK ORDER
(A) The Buyer may at any time, by written notice require Seller to stop all, or
any part, of the work called for by the order for a period of 90 days, and for
any further period to which Seller, may agree in writing. Within such period the
Buyer shall either: (i) cancel the stop work notice, or (ii) terminate the work
as provided in the `Termination' clause `E' above.
(B) If a stop work notice Issued under this clause is cancelled or the period of
the stop work notice expires, Seller shall resume work. An equitable adjustment
shall be made in the price or delivery schedule or both, and the order shall be
modified In writing accordingly, if: (i) the stop work notice results in an
Increase in the time required for, or in Seller's cost property allocable to,
the performance of any part of the order, and (ii) Seller asserts a claim for
such adjustment within 60 days after the end of the period of work stoppage;
provided that the Buyer may receive and act upon any such claim asserted at any
time prior to final payment.
(C) If a stop work notice is not canceled and the work covered by such order is
terminated for the convenience of the Government, the reasonable costs resulting
from the stop work notice shall be allowed In arriving at the termination
settlement.
G. BUYER DELAY OF WORK
If the performance of all or any part of the work is delayed or interrupted by
Buyer by failure to act within the time specified or within a reasonable time if
no time is specified - and such act is not expressly or through implication
authorized by the contract, an adjustment shall be made in the cost of
performance of the contract caused by such delay or interruption and the
contract
10
<PAGE>
modified in writing accordingly. Adjustment will also be made in the delivery or
performance dates and any other contractual provisions affected by such delay or
interruption.
H. DEFECTIVE PRICING
In the event the price negotiated in connection with any prime contract was
increased by any significant amount because Seller's cost or pricing data was
not current, accurate and complete on the date certified in the Seller's
Certificate of Current Cost or Pricing Data, and Seller is obligated to refund
money on the prime contract, the price or cost of the relevant subcontract shall
be adjusted to reflect the reduction of Seller's costs, but in no event shall
any reduction Include cost, fees or any markups of Buyer.
I. SPECIAL TOOLING
Bum-in boards, masks, and other fabrication and test tooling are considered
expendable proprietary items. These items are not deliverable under any
subcontract or purchase orders.
J. RIGHTS IN TECHNICAL DATA
Unless otherwise agreed in a written document signed by the parties, no rights
in technical data, information, software, or other proprietary data of Seller,
Seller's licensors or subcontractors shall be transferred by Seller to Buyer or
Buyer's customer.
K. INCORPORATIONS BY REFERENCE
(A) The following clauses set forth in the Federal Acquisition Regulation are
incorporated herein by reference:
AUTHORIZATION AND CONSENT
(April 1984) 52.227-1
NOTICE AND ASSISTANCE REGARDING PATENT
AND COPYRIGHT INFRINGEMENT
(April 1984) 52.227-2
EXAMINATION OF RECORDS BY COMPTROLLER
GENERAL
(Feb. 1993) 52.215-1
EQUAL OPPORTUNITY (April 1984) 52.222-26
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<PAGE>
(B) In the following clauses, which are incorporated herein by reference, where
necessary to make the context applicable hereto, the term Government or
Contracting Officer shall mean Buyer's customer; Contract shall mean Buyer's
Order: and Contractor shall mean Seller
UTILIZATION OF SMALL BUSINESS CONCERNS AND SMALL DISADVANTAGED
BUSINESS CONCERNS
(Feb. 1990) 52.219-8
Orders over $10,000
SUBCONTRACTING PLAN FOR SMALL BUSINESS AND SMALL DISADVANTAGED
BUSINESS CONCERNS
(Jan. 1991) 52.219-9
Orders over $500,000
UTILIZATION OF LABOR SURPLUS AREA CONCERNS
(April 1984) 52.220-3
Orders over $25,000
LABOR SURPLUS AREA SUBCONTRACTING PROGRAM
(April 1984) 52.220-4
Orders over $500,000
RESTRICTIONS ON CERTAIN FOREIGN PURCHASES (May 1992) 225-11
DEFENSE PRIORITY AND ALLOCATION
REQUIREMENTS (Sep. 1990) 52.212-8
CONTRACT WORK HOURS AND SAFETY STANDARDS
ACT-OVERTIME COMPENSATION (March 1986) 52.222-4
WALSH-HEALEY PUBLIC CONTRACTS ACT (April 1984) 52.222-20
AFFIRMATIVE ACTION FOR DISABLED VETERANS AND
VETERANS OF THE VIETNAM ERA (April 1984) 52.222-35
AFFIRMATIVE ACTION FOR HANDICAPPED WORKERS (April 1984) 222-36
CLEAN AIR AND WATER (April 1984) 52.223-2
LIMITATION OF LIABILITY (April 1984) 246-23
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<PAGE>
Schedule 6.9(d)
Warranty, Stock Rotation, Ship and Debit, and Product Liability
<TABLE>
<CAPTION>
ITEM QTR 1 QTR 2 QTR 3 QTR 4 TOT YR
- - ---- ----- ----- ----- ----- ------
<S> <C> <C> <C> <C> <C>
FY'
96
WARRANTY (C&M) 70 49 260 110 489
STOCK ROTATION 986 642 632 725 2,985
(C&M)
SHIP & DEBIT (C) 1,050 1,140 1,298 1,805 5,293
SHIP & DEBIT (M) 222 297 352 285 1,157
TOTAL 2,328 2,128 2,542 2,925 9,924
FY'
97
WARRANTY (C&M) 162 114 43 63 382
STOCK ROTATION 614 477 507 490 2,088
(C&M)
SHIP & DEBIT (C) 2,607 2,641 2,922 3,405 11,575
SHIP & DEBIT (M) 275 344 227 295 1,140
TOTAL 3,658 3,576 3,698 4,252 15,185
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
FY'
98
WARRANTY (C&M) 14 49 46 227 336
STOCK ROTATION 638 329 464 342 1,773
(C&M)
SHIP & DEBIT (C) 2,975 1,618 1,671 843 7,107
SHIP & DEBIT (M) 337 311 318 317 1,283
TOTAL 3,964 2,307 2,499 1,729 10,499
TOTAL FY `96 THROUGH
FY `98
WARRANTY (C&M) 246 212 349 400 1,207
STOCK ROTATION 2,238 1,448 1,603 1,557 6,846
(C&M)
SHIP & DEBIT (C) 6,568 4,901 5,225 4,973 21,667
SHIP & DEBIT (M) 1,662 1,795 1,842 2,417 7,716
TOTAL 10,714 8,356 9,019 9,346 37,436
PRODUCT LIABILITY - No Claims
FY `96 to Date
</TABLE>
<PAGE>
Schedule 6.11
INTENTIONALLY OMITTED FROM BINDER
-1-
EXHIBIT 10.43
Commercial
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (this "Agreement") is made and entered into
as of October 23, 1998, by and between Texas instruments Incorporated, a
Delaware corporation ("Purchaser"), on the one hand, and Harris Corporation, a
Delaware corporation acting through its Semiconductor Sector ("Harris"), Harris
Advanced Technology (Malaysia) Sdn. Bhd, a Malaysian corporation ("HAT"), and
Harris Southwest Properties, Inc., a Delaware corporation ("HSP," with HSP,
Harris and HAT sometimes referred to collectively as the "Sellers" and
individually as a "Seller"), on the other hand.
RECITALS:
WHEREAS, Sellers presently conduct the business (the "Commercial Logic
Business") of manufacturing, marketing and selling commercial digital logic
integrated circuits (the "Commercial Logic Products"), all of which are listed
by part number on Schedule 6.9(g) hereto; and
WHEREAS, Sellers desire to sell and Purchaser desires to purchase the
exclusive right to manufacture, market and sell the Commercial Logic Products
and certain assets, rights and properties of Sellers used or useful in
connection with the Commercial Logic Business, all on the terms and subject to
the conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants, representations,
warranties and agreements herein contained, the parties hereto agree as follows:
I. DEFINITIONS
1.1 Definitions. As used in this Agreement, unless the context otherwise
requires, capitalized terms used in this Agreement shall have the meanings set
forth on Exhibit A hereto.
II. PURCHASE OF ASSETS
2.1 Purchase and Sale of Transferred Assets. On the terms and subject to
the conditions hereof, at the Closing (as defined in Section 5.1), Sellers will
sell, transfer, convey, assign and deliver, and Purchaser will purchase and
accept, all of Sellers' right, title and interest in and to the rights,
properties and assets described in this Section 2.1, except for the intellectual
Property (as defined in the IP Agreement) which shall only be transferred in
accordance with the IP Agreement (collectively, the "Transferred Assets"), free
and clear of all Liens except Permitted Liens:
(a) Products. All right, title and interest of Sellers in and to the
Commercial Logic Products and the manufacture, marketing and sale thereof,
including without limitation the part numbers and package designations
associated therewith and samples of each Commercial Logic Product;
<PAGE>
(b) Inventories. All inventory of finished Commercial Logic Products and
all inventory of probed Commercial Logic Product die, wherever located (the
"Commercial Logic Product Inventory");
(c) Expensed Assets. Certain expensed assets of Sellers used or held for
use in connection with the Commercial Logic Business, as identified on Schedule
2.1(c) hereto except to the extent that such is exclusively used in the Military
Logic Business (as defined in the IP Agreement and used hereinafter);
(d) [Intentionally omitted.]
(e) Component Testing Software and Hardware and Associated Documentation.
All component software test programs used in the Commercial Logic Business,
associated probe cards and final test fixtures (including diagrams thereof and
associated documentation) used or useful in the design and manufacture of the
Commercial Logic Products, including such as are identified on Schedule 2.1(e)
hereto except to the extent that such is exclusively used in the Military Logic
Business (the "Testing Hardware and Software");
(f) Product Software. All design, development, application and technical
support software and associated documentation used or useful in the design and
manufacture of the Commercial Logic Products, including such as are identified
on Schedule 2.1(f) hereto except to the extent that such is exclusively used in
the Military Logic Business (the "Product Software");
(g) Technical Data. All technical information used or useful in the
Commercial Logic Business (whether in written or electronic format) or relating
to the Commercial Logic Products or to the manufacture, marketing and sale
thereof, including such information identified on Schedule 2.1(g) hereto except
to the extent that such is exclusively used in the Military Logic Business, and
further including, without limitation, all test flows for probe and final test,
yield data by device for wafer fab and final test, Commercial Logic Product data
books or data sheets, outstanding specification waivers, outstanding product
change notices, special current customer requirements, specific flow for current
customers, characterization packets and electrical data logs, process and
assembly qualification data, ESD data, all device revisions, all die revisions,
die size, fabrication processes, layout rules for each technology, layout data
by device, process parameter limits for each technology, process history data
for each technology, process recipe modifications by device, mount and bond
diagrams by device, quality reliability data and to the extent available,
verification rules, schematics by device, SPICE models, materials list of
packages, assembly diagrams and masks;
(h) [Intentionally omitted.]
(i) Contracts. Subject to Section 2.3, all rights and incidents of interest
in and to all purchase orders and quotes for the purchase of Commercial Logic
Products outstanding at the time of Closing and entered into in the ordinary
course of business consistent with past practice (collectively, the "Commercial
Logic Contracts"); and
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<PAGE>
(j) Books and Records. All the books and records of the Commercial Logic
Business to be transferred pursuant to Section 4.1(f) of the IP Agreement.
2.2 Excluded Assets. No rights, properties or assets of Sellers shall be
included in the Transferred Assets except to the extent expressly referenced in
Section 2.1. As an example, no cash, work-in-process, receivables, fixtures,
realty, capital assets, or management information systems are included as
Transferred Assets. Purchaser shall not acquire under the terms of this
Agreement any title or interest in the name "Harris" or "Harris Semiconductor"
or Sellers' monograms, logos, trademarks, or any variations or combinations
thereof. Purchaser, however, shall be entitled to (i) market and sell without
alteration all Commercial Logic Product Inventory acquired hereunder and all
Commercial Logic Products acquired under the terms of the Supply Agreement (as
hereinafter defined), which the parties acknowledge shall bear Sellers' name
and/or mark, (ii) continue to use, in connection with the manufacture, marketing
and sale of Commercial Logic Products, all materials and supplies acquired
hereunder and shall not be obligated to overstamp or otherwise alter such
materials prior to use and (iii) otherwise use the above referenced Sellers'
names and marks in accordance with the terms of the license contained in the IP
Agreement.
2.3 Nonassignable Contracts.
(a) Nonassignability. To the extent that any Commercial Logic Contract to
be assigned pursuant hereto is not capable of being assigned without the
consent, approval or waiver of a third person or entity, nothing in this
Agreement will constitute an assignment or require the assignment thereof except
to the extent provided in this Section 2.3.
(b) Sellers to Use Commercially Reasonable Efforts. Notwithstanding
anything contained in this Agreement to the contrary, Sellers will not be
obligated to assign to Purchaser any of their rights and obligations in and to
any of the Commercial Logic Contracts referred to in Section 2.3(a) without
first having obtained all consents, approvals and waivers necessary for such
assignment; provided, however, that Sellers shall use commercially reasonable
efforts to obtain all such consents, approvals and waivers prior to and, if the
Closing occurs, after the Closing Date (as defined in Section 5.1).
(c) If Waivers or Consents Cannot Be Obtained. To the extent that the
consents, approvals and waivers referred to in Section 2.3(a) are not obtained
by Sellers, Sellers shall use commercially reasonable efforts to (a) provide to
Purchaser the financial and business benefits of any Commercial Logic Contract
referred to in Section 2.3(a) and (b) and enforce, at the request and expense of
Purchaser, for the account of Purchaser any rights of Sellers arising from any
such Commercial Logic Contract (including without limitation the right to elect
to terminate such Commercial Logic Contract in accordance with the terms thereof
upon the advice of Purchaser).
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<PAGE>
III. ASSUMPTION OF LIABILITIES
3.1 Assumed Liabilities. As of the Closing, Purchaser will assume and
thereafter, in due course, pay and fully satisfy the following liabilities and
obligations of Sellers (the "Assumed Liabilities") and no other liabilities or
obligations:
(a) all liabilities and obligations for product warranty claims consistent
with the terms and conditions set forth in Schedule 6.9(c) hereto arising from
Commercial Logic Products produced or sold by Sellers prior to Closing, but not
to exceed $100,000 in the aggregate;
(b) all liabilities and obligations for distributor stock rotation returns
and ship and debit claims for Commercial Logic Product sold by Sellers to the
those distributors identified in Schedule 3.1(b) hereto (the "Specified
Distributors") prior to Closing in accordance with Sellers' existing distributor
arrangements as disclosed to Purchaser; and
(c) all liabilities and obligations of Sellers under the Commercial Logic
Contracts to the extent assigned to Purchaser, or if not so assigned, to the
extent Purchaser has received the financial and business benefits thereof
pursuant to Section 2.3(c), but in any event excluding any obligations arising
from a breach of any Commercial Logic Contract prior to Closing.
3.2 Retained Liabilities. Notwithstanding anything contained in this
Agreement to the contrary, Purchaser does not assume or agree to pay, satisfy,
discharge or perform, and will not be deemed by virtue of the execution and
delivery of this Agreement or any document delivered at the Closing pursuant to
this Agreement, or as a result of the consummation of the transactions
contemplated by this Agreement, to have assumed, or to have agreed to pay,
satisfy, discharge or perform, any liability, obligation or indebtedness of
Sellers (whether primary or secondary, direct or indirect, known or unknown,
absolute or contingent, or otherwise) other than the Assumed Liabilities (such
liabilities and obligations retained by Sellers being referred to herein as the
"Retained Liabilities"). it is specifically agreed that Sellers shall remain
liable for all the Retained Liabilities.
IV. PURCHASE PRICE
4.1 Purchase Price. In consideration of the conveyance to Purchaser of the
Transferred Assets and the other rights granted to Purchaser pursuant hereto and
subject to the conditions and in accordance with terms hereof, Purchaser shall
(a) pay the Closing Date Payment and the Inventory Transfer Price to the
designated Seller in accordance with Sections 4.2 and 4.4 (collectively, the
"Purchase Price") and (b) assume the Assumed Liabilities.
4.2 Payments of Purchase Price. (a) At the Closing, Purchaser will pay U.S.
$13,000,000 (the "Closing Date Payment") to the Sellers by wire transfer of the
following sums:
4
<PAGE>
(i) U.S. $7,800,000 payable to HAT; and
(ii) U.S. $5,200,000 payable to HSP.
(b) At the Closing, Purchaser will pay U.S. $8,500,000 (the "Estimated
Inventory Transfer Price") to Harris by wire transfer.
4.3 Physical Inventory and Inventory Transfer Price. At the close of
business on the Closing Date representatives of Sellers and Purchaser shall
conduct a physical inventory of the Commercial Logic Product Inventory. Within
15 days following the Closing, Purchaser will deliver to Sellers a schedule
reflecting all Commercial Logic Product Inventory of a merchantable quality that
is confirmed by such physical inventory, priced in accordance with the pricing
methodology set forth on Schedule 4.3 hereto (the "Product Inventory Schedule").
If Sellers do not deliver a written objection to the Product Inventory Schedule
(specifying the basis therefor) within 10 days following delivery of such
schedule to Sellers, then at the expiration of such 10-day period (or on such
earlier date as Sellers advise Purchaser in writing of their acceptance of such
schedule) the Product Inventory Schedule shall be final. In the event the
Sellers deliver their written objection to the Product Inventory Schedule within
such 10-day period, the parties shall seek to resolve the disputed items by
mutual agreement during the 15-day period following the delivery of such
objection, and in the event the parties reach agreement regarding the disputed
items, the Product Inventory Schedule with all agreed revisions, shall be final.
In the event the parties fail to reach agreement regarding one or more of the
disputed items during such 15-day period, the unresolved disputed items will be
submitted to PriceWaterhouseCoopers LLP or such other accounting firm as the
parties mutually agree upon (the "Accountants") for resolution and the
determination with respect to such disputed items shall be final and binding on
the parties. In such event, the Product Inventory Schedule, as revised pursuant
to the agreement of the parties and the determinations of the Accountants, shall
be final. The aggregate valuation of the Commercial Logic Product Inventory
reflected on the final Product Inventory Schedule, as established pursuant to
the preceding provisions, is herein referred to as the "Inventory Transfer
Price." Notwithstanding the foregoing, if the value established for the
Commercial Logic Product Inventory at Closing in accordance with the foregoing
provisions exceeds $9,000,000, the Inventory Transfer Price shall be $9,000,000.
4.4 Inventory Payment.
(a) If the Inventory Transfer Price is greater than the Estimated Inventory
Transfer Price, Purchaser shall pay such difference to Harris by wire transfer
of immediately available funds to the account designated by Harris within five
days following the determination of the Inventory Transfer Price in accordance
with Section 4.3.
(b) If the Estimated Inventory Transfer Price is greater than the Inventory
Transfer Price, Harris shall pay such difference to Purchaser by wire transfer
of immediately available funds to the account designated by Purchaser within
five days following the determination of the Inventory Transfer Price in
accordance with Section 4.3.
5
<PAGE>
4.5 Allocation of Purchase Price. Purchaser and Sellers agree to consult
with each other with respect to the allocation of the Purchase Price and Assumed
Liabilities to the Transferred Assets and IP Agreement for tax purposes;
provided, however, that nothing contained herein shall be deemed to obligate
either Purchaser or Sellers to reach agreement with respect to such allocation.
V. CLOSING
5.1 Closing. The consummation of the transactions contemplated hereby (the
"Closing") shall take place at the offices of Weil, Gotshal & Manges LLP, 100
Crescent Court, Suite 1300, Dallas, Texas (or at such other place as the parties
may designate), at 9:00 a.m. on December 3, 1998 or the third Business Day after
such later date as the conditions specified in Sections 5.4 and 5.5 are
fulfilled. The date on which the Closing is effected is referred to in this
Agreement as the "Closing Date."
5.2 Deliveries at Closing. At the Closing:
(a) Sellers shall deliver to Purchaser the items described in clauses (i)
through (vii) below:
(i) a Bill of Sale, in form and substance reasonably satisfactory to
Purchaser and Sellers (the "Bill of Sale"), executed by Sellers;
(ii) an Assignment of Contracts, in form and substance reasonably
satisfactory to Purchaser and Sellers (the "Assignment of Contracts"),
executed by Sellers;
(iii) the Intellectual Property Agreement, substantially in
_____________ attached hereto as Exhibit B (the "IP Agreement"), executed
by Sellers;
(iv) the Supply Agreement, substantially in the form attached hereto
as Exhibit C (the "Supply Agreement"), executed by Sellers;
(v) evidence that the parties signing this Agreement and the
Collateral Agreements on behalf of Sellers are authorized to do so;
(vi) the officers' certificates referenced in Section 5.4(c); and
(vii) all other documents, certificates, instruments or writings
reasonably requested by Purchaser in connection herewith.
(b) Purchaser shall deliver to Sellers the items described in clauses (i)
through (vii) below:
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(i) the Closing Date Payment and Estimated Inventory Transfer Price by
wire transfer of immediately available funds to the account or accounts
designated by Harris no later than two Business Days prior to Closing;
(ii) an Assumption of Liabilities Agreement pursuant to which
Purchaser assumes at Closing the Assumed Liabilities, in form and substance
reasonably satisfactory to Purchaser and Sellers (the "Assumption
Agreement"), executed by Purchaser;
(iii) the IP Agreement, executed by Purchaser;
(iv) the Supply Agreement, executed by Purchaser,
(v) evidence that the party signing this Agreement and the Collateral
Agreements on behalf of Purchaser is authorized to do so;
(vi) the officer's certificate referenced in Section 5.5(c); and
(vii) all other documents, certificates, instruments or writings
reasonably requested by Sellers in connection herewith.
(c) The Bill of Sale, Assignment of Contracts, IP Agreement, Supply
Agreement, and Assumption Agreement shall constitute, collectively, the
"Collateral Agreements."
5.3 Delivery of Purchased Assets. Title to the Transferred Assets passes to
Purchaser as of the Closing at the applicable places of business of Sellers,
provided that in the case of Transferred Assets located at the Malaysian
facilities of HAT, title to such Transferred Assets shall pass to Purchaser upon
physical delivery thereof to Purchaser at such location outside of Malaysia as
is designated by Purchaser. Promptly following the Closing, Sellers will place
Purchaser in full possession and control of the Transferred Assets and all other
information to be provided in accordance with the terms of the IP Agreement. All
information capable of electronic transmission will be transmitted to Purchaser
in such manner. All other assets and information will be delivered by Sellers to
such locations as Purchaser shall designate by means of delivery reasonably
designated by Purchaser, but at Sellers' cost and risk of loss.
5.4 Conditions Precedent to Obligations of Purchaser. The obligations of
Purchaser under this Agreement to consummate the transactions contemplated
hereby will be subject to the satisfaction, at or prior to Closing, of all of
the following conditions, any one or more of which may be waived at the option
of Purchaser:
(a) All representations and warranties of Sellers made in this Agreement or
in any exhibit, schedule or document delivered pursuant hereto shall be true and
complete in all material respects on and as of the Closing Date as if made on
and as of that date.
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(b) All of the terms, covenants and conditions to be complied with and
performed by the Sellers on or prior to the Closing Date shall have been
complied with or performed.
(c) Purchaser shall have received a certificate or certificates, dated as
of the Closing Date, executed on behalf of each Seller by an authorized officer
thereof, certifying in such detail as Purchaser may reasonably request that the
conditions specified in Sections 5.4(a) and (b) hereof have been fulfilled.
(d) The waiting period under the HSR Act shall have expired or terminated.
(e) No suit, action, claim or governmental proceeding shall be pending
against, and no order, decree or judgment of any court, agency or Governmental
Authority shall have been rendered against, any party hereto which would render
it unlawful, as of the Closing Date, to effect the transactions contemplated by
this Agreement in accordance with its terms.
(f) Consistent with Section 8.8, Purchaser shall have entered into such
arrangements with the Specified Distributors regarding their continued
distribution of the Commercial Logic Products as are reasonably satisfactory to
Purchaser (it being acknowledged and agreed to that this condition shall not be
satisfied if the Specified Distributors which account for 10% or more of sales
of Commercial Logic Products by Sellers shall not have agreed to continue to
distribute Commercial Logic Products). Such arrangements for continued
distribution will be deemed reasonably satisfactory if Specified Distributors
acknowledge that they will continue to distribute Commercial Logic Products on
substantially the same terms as are currently in effect with Sellers.
5.5 Conditions Precedent to Obligations of Sellers. The obligations of
Sellers under this Agreement to consummate the transactions contemplated hereby
will be subject to the satisfaction, at or prior to the Closing, of all the
following conditions, any one or more of which may be waived at the option of
Sellers:
(a) All representations and warranties of Purchaser made in this Agreement
or in any exhibit, schedule or document delivered pursuant hereto shall be true
and complete in all material respects as of the Closing Date as if made on and
as of that date.
(b) All of the terms, covenants and conditions to be complied with and
performed by Purchaser on or prior to the Closing Date shall have been complied
with or performed.
(c) Sellers shall have received a certificate, dated as of the Closing
Date, executed on behalf of Purchaser by an authorized officer thereof,
certifying in such detail as Seller may reasonably request that the conditions
specified in Sections 5.5(a) and (b) have been fulfilled.
(d) The waiting period under the HSR Act shall have expired or terminated.
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(e) No suit, action, claim or governmental proceeding shall be pending
against, and no order, decree or judgment of any court, agency or other
Governmental Authority shall have been rendered against, any party hereto which
would render it unlawful, as of the Closing Date, to effect the transactions
contemplated by this Agreement in accordance with its terms.
VI. REPRESENTATIONS AND WARRANTIES OF SELLERS
Sellers jointly and severally make the following representations and
warranties to Purchaser, each of which shall be true and correct as of the date
hereof and as of the Closing Date and shall be unaffected by any investigation
heretofore or hereafter made.
6.1 Organization and Good Standing. Each of Harris and HSP is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware and has the requisite corporate power and authority to own,
lease or otherwise hold its properties and assets and to carry on its business
as presently conducted. HAT is a corporation validly existing and in good
standing under the laws of Malaysia and has the requisite corporate power and
authority to own, lease or otherwise hold its properties and assets and to carry
on its business as presently conducted.
6.2 Authorization and Effect of Agreement. Sellers have the requisite
corporate power and authority to execute and to deliver this Agreement and to
perform the transactions contemplated hereby. The execution and delivery by
Sellers of this Agreement and the performance by them of the transactions
contemplated hereby have been duly authorized by all necessary corporate action
on the part of each Seller. This Agreement has been duly executed and delivered
by Sellers and constitutes a valid and binding agreement of Sellers, enforceable
against each Seller in accordance with its terms, subject to applicable
bankruptcy, reorganization, moratorium, and similar laws affecting creditors'
rights and remedies generally and subject, as to enforceability, to general
principles of equity. Each of the Collateral Agreements, when executed and
delivered by Sellers at Closing, will constitute a valid and binding agreement
of Sellers, enforceable against each Seller in accordance with its terms,
subject to applicable bankruptcy, reorganization, moratorium, and similar laws
affecting creditors' rights and remedies generally and subject, at to
enforceability, to general principles of equity.
6.3 No Conflicts. The execution and delivery of this Agreement and the
Collateral Agreements by Sellers does not, and the performance by Sellers of the
transactions contemplated by this Agreement and the Collateral Agreements will
not, conflict with, or result in any violation of, or constitute a default
under, or, as applicable, give rise to the creation of a Lien upon any of the
Transferred Assets or to a right of termination, cancellation or acceleration of
any obligation or to a loss of a benefit under, (a) any provision of the
Certificate of Incorporation or Bylaws or other applicable constituent documents
of any Seller, (b) except for required consents to assign Commercial Logic
Contracts, any of the terms, conditions or provisions of any Contract by which
either Seller is bound, or (c) any Law or Order applicable to or binding on
either Seller or its assets. Except for expiration of the waiting period under
the Hart-Scott-Rodino Antitrust Improvements Act (the "HSR Act") and required
consents to assign Commercial Logic
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Contracts, no Consent is required to be obtained, made or given (whether
pursuant to applicable Law, Contract or otherwise) in connection with the
execution and delivery of this Agreement by Sellers or the performance by
Sellers of the transactions contemplated hereby.
6.4 No Third Party Options. There are no existing agreements, options or
commitments granting to any Person the right to acquire any of the Transferred
Assets or any interest therein except for sales of Commercial Logic Product
Inventory in the ordinary course of business.
6.5 Financial Data. All historical financial data related to the Commercial
Logic Business provided to Purchaser in connection with the negotiation of the
transactions contemplated hereby (i) was accurately extracted from the books and
records of Sellers, (ii) except as identified on Schedule 6.5 hereto, was
prepared in accordance with generally accepted accounting principles
consistently applied, and (iii) fairly presents in all material respects the
assets, liabilities and results of operations of the Commercial Logic Business.
6.6 [Intentionally omitted.]
6.7 Litigation. There are no judicial or administrative actions,
proceedings or investigations pending or, to Sellers' knowledge, threatened,
that question the validity of this Agreement or any action taken or to be taken
by Sellers in connection with this Agreement. There are no lawsuits, claims,
administrative or other proceedings or investigations relating to the conduct of
the Commercial Logic Business or otherwise affecting the Transferred Assets
pending, or, to Sellers' knowledge, threatened against Sellers, except as
disclosed in the IP Agreement. There are no judgments, orders or decrees of any
Governmental Authority binding on Sellers that relate to the Commercial Logic
Business or otherwise affect the Transferred Assets.
6.8 Title to and Condition of Assets. Sellers have, and at Closing, Sellers
will convey to Purchaser, good, valid and indefeasible title to the Transferred
Assets, free and clear of all Liens other than Permitted Liens. The Transferred
Assets, taken as a whole, are in good operating condition and repair, subject to
normal wear, are usable in the regular and ordinary course of business and
conform to all applicable Laws.
6.9 Products. (a) Attached hereto as Schedule 6.9(a) is a complete list of
the Commercial Logic Products by part number.
(b) The Commercial Logic Product Inventory is of good and merchantable
quality, free of defects, except in the case of such inventory that is
designated as defective on the Product Inventory Schedule and as to which no
value has been assigned.
(c) Schedule 6.9(c) sets forth the standard form terms and conditions of
all product warranties generally extended by the Sellers to purchasers of the
Commercial Logic Products during the preceding three years.
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(d) Schedule 6.9(d) sets forth Sellers' product warranty, distributor stock
rotation, ships and debit claims and product liability experience for the
Commercial Logic Products during the preceding three years.
6.10 Contracts. The Commercial Logic Contracts are valid and enforceable in
accordance with their terms, subject to applicable bankruptcy, reorganization,
moratorium, and similar laws affecting creditors' rights and remedies generally
and subject, as to enforceability, to general principles of equity. Sellers are
not, and to Sellers' knowledge, no other party thereto is, in material default
in the performance, observance or fulfillment of any obligation under the
Commercial Logic Contracts, and, to Sellers' knowledge, no event has occurred
which with or without the giving of notice or lapse of time, or both, would
constitute a default thereunder.
6.11 Distributors and Customers. Schedule 6.11 hereto set forth a list of
each distributor through which Sellers currently distribute the Commercial Logic
Products and each purchaser of Commercial Logic Products outside of distribution
during the twelve months ending October 2, 1998, showing the approximate total
sales (expressed in dollars), by device and by quarter, of Commercial Logic
Products to each such distributor and customer during the twelve months ending
October 2, 1998. Sellers have provided to Purchaser (i) the pricing arrangements
and other material terms related to Commercial Logic Products under existing
volume purchase agreements to which Harris is a party and (ii) the current
distributor policies of Harris covering the Commercial Logic Products with each
current distributor of such products.
6.12 Year 2000 Compliance. The Commercial Logic Products, the Testing
Hardware and Software, the Product Software and all Date-Sensitive Systems to be
conveyed or licensed to Purchaser pursuant to the terms of this Agreement are
Year 2000 Compliant. For purposes of this Agreement, (i) "Date-Sensitive System"
means any software, microcode, or hardware system or component, including any
electronic or electronically controlled system or component, that processes any
Date Data, (ii) "Date Data" means any data of any type that includes date
information or which is otherwise derived from, dependent on or related to date
information, and (iii) "Year 2000 Compliant" means that the applicable device,
software, microcode, or hardware system or component accurately processes Date
Data, including for the twentieth and twenty-first centuries, without loss of
any functionality or performance, including but not limited to calculating,
comparing, sequencing, storing and displaying such Date Data (including all leap
year considerations), when used on a stand-alone basis or in combination with
other software or hardware.
6.13 Disclosure. No representation or warranty of Sellers contained herein,
and no statement contained in any document or other instrument to be furnished
by Sellers to Purchaser in connection with the transactions contemplated hereby,
contains or will contain any untrue statement of a material fact or omits or
will omit to state a material fact necessary to make the representation,
warranty or statement so made not misleading.
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VII. REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby makes the following representations and warranties to
Sellers, each of which shall be true and correct as of the date hereof and as of
the Closing Date and shall be unaffected by any investigation heretofore or
hereafter made.
7.1 Corporate Organization. Purchaser is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has the requisite corporate power and authority to own, lease or otherwise
hold its properties and assets and to carry on its business as presently
conducted.
7.2 Authorization and Effect of Agreement. Purchaser has the requisite
corporate power and authority to execute and deliver this Agreement and to
perform the transactions contemplated hereby. The execution and delivery by
Purchaser of this Agreement and the performance by it of the transactions
contemplated hereby have been duly authorized by all necessary corporate action
on the part of Purchaser. This Agreement has been duly executed and delivered by
Purchaser and constitutes a valid and binding agreement of Purchaser,
enforceable against Purchaser in accordance with its terms, subject to
applicable bankruptcy, reorganization, moratorium and similar laws affecting
creditors' rights and remedies generally and subject, as to enforceability, to
general principles of equity. Each of the Collateral Agreements, when executed
and delivered by Purchaser at Closing, will constitute a valid and binding
agreement of Purchaser, enforceable against Purchaser in accordance with its
terms, subject to applicable bankruptcy, reorganization, moratorium, and similar
laws affecting creditors' rights and remedies generally and subject, as to
enforceability, to general principles of equity.
7.3 No Conflicts. The execution and delivery of this Agreement and the
Collateral Agreements by Purchaser does not, and the performance by Purchaser of
the transactions contemplated by this Agreement and the Collateral Agreements
will not, conflict with, or result in any violation of, or constitute a default
under (a) any provision of the Certificate of Incorporation or Bylaws of
Purchaser, (b) any of the terms, conditions, or provisions of any agreement or
other document by which Purchaser is bound, or (c) any Law or Order applicable
to or binding on Purchaser. Except for expiration of the waiting period under
the HSR Act, no Consent is required to be obtained, made or given (whether
pursuant to applicable Law, Contract or otherwise) in connection with the
execution and delivery of this Agreement by Purchaser or the performance by
Purchaser of the transactions contemplated hereby.
7.4 Litigation. There are no judicial or administrative actions,
proceedings or investigations pending or, to Purchaser's knowledge, threatened
that question the validity of this Agreement or any action taken or to be taken
by Purchaser in connection with this Agreement.
7.5 Disclaimer. Other than as specifically provided in this Agreement or in
any exhibit, schedule or document delivered pursuant hereto, the Purchaser
acknowledges and agrees that the Transferred Assets are transferred on an "as
is, where is" basis "with all faults" and that the Sellers are not making any
further representations or warranties of any kind, express or
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implied, respecting the Transferred Assets. The Purchaser acknowledges that any
projections provided by Sellers are for illustrative purposes only and do not
form the basis for any liability.
VIII. PRE-CLOSING COVENANTS
8.1 Access to Information. Prior to the Closing, upon reasonable notice
from Purchaser to Sellers, Sellers will afford to the officers, attorneys,
accountants or other authorized representatives of Purchaser reasonable access
during normal business hours to the employees, Transferred Assets, facilities
and books and records of Sellers so as to afford Purchaser full opportunity to
make such review, examination and investigation of the Commercial Logic Business
as Purchaser determines are reasonably necessary in connection with the
consummation of the transactions contemplated hereby, provided that the
foregoing right of access shall not be exercisable in such a manner as to
interfere unreasonably with the normal operations and business of Sellers.
Purchaser will be permitted to make extracts from or to make copies of such
books and records as may be reasonably necessary in connection therewith. Prior
to the Closing, Sellers will promptly furnish or cause to be furnished to
Purchaser such financial and operating data and other information relating to
the Commercial Logic Business as Purchaser may reasonably request.
8.2 Conduct of Business. Except as contemplated herein or as otherwise
consented to by Purchaser in writing, during the period from the date of this
Agreement and continuing until the Closing Date, Sellers will, in respect of its
conduct of the Commercial Logic Business:
(a) use commercially reasonable efforts to (1) carry m the Commercial Logic
Business in the usual, regular and ordinary course as presently conducted and
consistent with past practice (except to the extent required by this Agreement),
(ii) keep the Commercial Logic Business intact, and (iii) maintain the goodwill
associated with the Commercial Logic Business, including but not limited to
preserving the relationships of distributors, customers and others having
business dealings with the Commercial Logic Business; and
(b) not take or omit to take any action as a result of which any
representation or warranty of Sellers made in Article VI would be rendered
untrue or incorrect if such representation or warranty were made immediately
following the taking or failure to take such action.
8.3 Notification. (a) Sellers shall notify Purchaser, and Purchaser shall
notify Sellers, of any litigation, arbitration or administrative proceeding
pending or, to their knowledge, threatened against Sellers or Purchaser, as the
case may be, which challenges the transactions contemplated hereby.
(b) Sellers will provide prompt written notice to Purchaser of any change
in any of the information contained in its representations and warranties made
in Article VI hereof or any exhibits or schedules referred to herein or attached
hereto and shall promptly furnish any information which Purchaser may reasonably
request in relation to such change; provided, however, that such notice shall
not operate to cure any breach of the representations and
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warranties made in Article VI hereof or any exhibits or schedules referred to
herein or attached hereto.
8.4 No Inconsistent Action. Neither Purchaser nor Sellers shall take any
action which is materially inconsistent with its obligations under this
Agreement.
8.5 Satisfaction of Conditions. Prior to the Closing, each of the parties
will use reasonable commercial efforts with due diligence and in good faith to
satisfy promptly all conditions required hereby to be satisfied by such party in
order to expedite the consummation of the transactions contemplated hereby.
8.6 Filings. As promptly as practicable after the execution of this
Agreement, each party shall use its commercially reasonable efforts to obtain,
and to cooperate with the other party in obtaining, all authorizations,
consents, orders and approvals of any Governmental Authority that may be or
become necessary in connection with the consummation of the transactions
contemplated by this Agreement, and to take all reasonable actions to avoid the
entry of any order or decree by any Governmental Authority prohibiting the
consummation of the transactions contemplated hereby, including without
limitation, the notifications required to be filed by it under the HSR Act, and
shall furnish to the other all such information in its possession as may be
necessary for the completion of the notifications to be filed by the other.
Purchaser and Sellers agree that the filing fee required to be paid in
connection with the filing under the HSR Act shall be paid one-half by Purchaser
and one-half by Sellers.
8.7 Publicity. Prior to the Closing, neither party will issue or cause the
publication of any press release or other public announcement with respect to
this Agreement or the transactions contemplated hereby without the prior consent
of the other party, which consent will not be unreasonably withheld; provided,
however, that nothing herein will prohibit either party from issuing or causing
publication of any such press release or public announcement to the extent that
such party determines such action to be required by Law or the rules of any
national stock exchange applicable to it, in which event the party making such
determination will, if practicable in the circumstances, use reasonable efforts
to allow the other party reasonable time to comment on such release or
announcement, and will make all revisions thereto reasonably requested by such
other party, in advance of its issuance.
8.8 Customer Retention. Promptly following the execution of this Agreement,
Purchaser and Sellers shall jointly notify all distributors and customers of the
Commercial Logic Business of the general nature of the transactions contemplated
hereby. Harris senior management will contact each of the Specified Distributors
and all key customers of the Commercial Logic Business, in person or by
teleconference, to encourage such distributors and customers to continue to
purchase the Commercial Logic Products from Purchaser following Closing and will
otherwise use commercially reasonable efforts to cause the business
relationships maintained by Sellers with such distributors and customers to be
transferred to Purchaser without interruption at Closing. Marketing and sales
personnel of Sellers and Purchaser will participate in joint visits to the
Specified Distributors and key customers for the same purpose. Sellers are aware
that Purchaser does not intend to continue to distribute the
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Commercial Logic Products through any of Sellers' current distributors other
than the Specified Distributors or through Seller's existing sales
representatives and acknowledges and confirms that Purchaser will not, as a
consequence of the transactions contemplated hereby, assume or undertake any
obligation to Sellers' distributors and sales representatives with respect to
Commercial Logic Product sales (other than, in the case of the Specified
Distributors, the Assumed Liabilities). Sellers acknowledge and agree that any
liabilities associated with the termination of Commercial Logic Product sales
and distribution arrangements with Sellers' sales representatives and
distributors constitute Retained Liabilities.
8.9 Pricing Revisions. Sellers agree to effect the pricing reductions in
the Commercial Logic Products families identified in Schedule 8.9 hereto by no
later than October 31, 1998, and to maintain such reductions in effect through
the Closing Date.
IX. POST-CLOSING COVENANTS
9.1 Covenant Not to Compete. Sellers agree that prior to the fifth
anniversary of the Closing Date, Sellers will not, directly or indirectly, own,
manage, operate, control or participate in the ownership, management, operation
or control of any business, whether in corporate, proprietorship or partnership
form or otherwise, engaged in the design, manufacturing, marketing or sale of
Commercial Logic Products or other products in these families having similar
integration levels and performance characteristics; provided, however, that
nothing herein shall preclude Sellers from (i) owning an equity interest of five
percent or less (a) of any publicly traded company listed on a national stock
exchange or on the NASDAQ national market system or (b) in ventures,
partnerships or other entities that do not constitute affiliates (as such term
is defined in the Securities Exchange Act of 1934, as amended) of Sellers, (ii)
acquiring the capital stock or assets of any business that derives less than 10%
of its consolidated revenues from an activity prohibited by the forgoing
provisions, so long as the Sellers make their best efforts to divest that
portion of the acquired business that is engaged in such prohibited activity
within 12 months following such acquisition, (iii) engaging in the
manufacturing, marketing and sale of Military Logic Products, radiation hardened
products or other military products having similar integration levels and
performance characteristics, (iv) manufacturing, marketing, designing or selling
products or systems that integrate or utilize Commercial Logic Products
manufactured by third parties, or (v) manufacturing, marketing, designing or
selling products or systems of any other digital logic product having
substantially greater integration and performance characteristics.
9.2 Confidentiality. Sellers agree that from and after the Closing, Sellers
will not, directly or indirectly, disclose, reveal, divulge or communicate to
any person or entity other than authorized officers, directors and employees of
Purchaser, or use or otherwise exploit for its own benefit or for the benefit of
anyone other than Purchaser, any Confidential Information (as defined below).
Sellers shall not have any obligation to keep confidential any Confidential
Information if and to the extent disclosure thereof is specifically required by
Law or in the enforcement of its rights hereunder; provided, however, that in
the event disclosure is required by applicable Law, Sellers shall, to the extent
reasonably possible, provide Purchaser with prompt notice of such requirement
prior to making any disclosure so that Purchaser may seek an
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appropriate protective order. For purposes of this Section 9.2, "Confidential
Information" shall mean any confidential information with respect to the conduct
or details of the Commercial Logic Business, including, without limitation,
methods of operation, customers, and customer lists, products, proposed
products, former products, prices, fees, costs, plans, designs, technology,
inventions, trade secrets, know-how, software, marketing methods, policies,
plans, or other specialized information or proprietary matters. The term
Confidential Information does not include, and there shall be no obligation
hereunder with respect to, information that (a) is generally available to the
public on the date of this Agreement, (b) becomes generally available to the
public other than as a result of a disclosure by Sellers not otherwise
permissible thereunder, (c) is independently developed by Sellers as established
by documentary evidence or (d) Sellers learns from other sources where such
sources have not, to Sellers' knowledge, violated their confidentiality
obligation to Purchaser.
9.3 Specific Performance: Reformation. The parties hereto specifically
acknowledge and agree that the remedy at law for any breach of Section 9.1 or
9.2 will be inadequate and that Purchaser, in addition to any other relief
available to it, shall be entitled to temporary and permanent injunctive relief
without the necessity of proving actual damage or posting any bond whatsoever.
In the event that the provisions of Section 9.1 or 9.2 should ever be deemed to
exceed the limitations provided by applicable Law, then the parties hereto agree
that such provisions shall be reformed to set forth the maximum limitations
permitted.
9.4 Product Warranty Matters. Sellers acknowledge that they have retained
liability for certain Commercial Logic Product warranty claims pursuant to
Section 3.2. Purchaser will address and remedy all product warranty claims
asserted following the Closing Date with respect to Commercial Logic Products
produced or sold by Sellers prior to Closing (including the Commercial Logic
Product Inventory). Sellers will promptly reimburse Purchaser upon invoice for
all costs and expenses in excess of $100,000 in the aggregate reasonably
incurred by Purchaser in remedying such product warranty claims.
9.5 Maintenance of Books and Records. Each of Sellers and Purchaser shall
preserve until the seventh anniversary of the Closing Date all records possessed
by such party relating to the assets, liabilities or operations of the
Commercial Logic Business prior to the Closing Date. After the Closing Date,
where there is a legitimate purpose, such party shall provide the other party
with access, upon prior reasonable written request specifying the need therefor,
during regular business hours, to (i) the relevant officers and employees of
such party and (ii) the books of account and records of such party, but, in each
case, only to the extent relating to the assets, liabilities and operations of
the Commercial Logic Business prior to the Closing Date, and the other party and
its representatives shall have the right to make copies of such books and
records; provided, however, that the foregoing right of access shall not be
exercisable in such a manner as to interfere unreasonably with the normal
operations and business of such party; and further provided that, as to so much
of such information as constitutes trade secrets or confidential business
information of such party, the requesting party and its representatives will use
due care to not disclose such information except (i) as required by Law, (ii)
with the prior written consent of such party, which consent shall not be
unreasonably withheld, or (iii) where such information
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becomes available to the public generally, or becomes generally known to
competitors of such party, through sources other than the requesting party and
its representatives. Such records may nevertheless be destroyed by a party if
such party sends the other party written notice of its intent to destroy
records, specifying with particularity the contents of the records to be
destroyed. Such records may then be destroyed after the 30th day following
delivery of such notice unless the other party objects to the destruction, in
which case the party seeking to destroy the records shall either agree to retain
such records or to deliver such records to the objecting party.
X. TERMINATION
10.1 Termination. Notwithstanding anything contained in this Agreement to
the contrary, this Agreement may be terminated at any time prior to the Closing:
(a) By the mutual written consent of Purchaser and Sellers;
(b) By either Purchaser or Sellers if the Closing shall not have occurred
on or before December 31, 1998, provided that no party that is in material
breach of this Agreement may terminate this Agreement pursuant to this Section
10.1(b);
(c) By either Purchaser or Sellers if there shall have been entered a
final, nonappealable order or injunction of any Governmental Authority
restraining or prohibiting the consummation of the transactions contemplated
hereby or any material part thereof; or
(d) By either Purchaser or Sellers if, prior to the Closing Date, the other
party is in material breach of any representation, warranty, covenant or
agreement herein contained and such breach shall not be cured within fifteen
(15) days of the date of notice of default served by the party claiming such
material default, provided that such terminating party shall not also be in
material breach of this Agreement at the time notice of termination is
delivered.
In no event shall termination of this Agreement relieve any party of any
liability for breaches of this Agreement prior to the date of termination.
XI. SURVIVAL AND INDEMNIFICATION
11.1 Survival of Representations, Warranties and Covenants. (a) Except for
the representations and warranties of Sellers contained in Section 6.8, which
shall survive the closing and remain in effect for six years from the Closing
Date, the representations and warranties of Sellers and Purchaser contained in
this Agreement shall survive the Closing until the expiration of two years from
the Closing Date. The representations and warranties contained in Article V of
the IP Agreement shall survive the Closing and remain in effect until the
expiration of all statutes of limitation applicable to any potential third party
claim asserting infringement of intellectual property rights in connection with
Purchaser's operation of the Commercial Logic Business consistent in all
material respects with past practice. Any claim for an Indemnifiable Loss (as
defined in Section 11.2) asserted within such period of survival as herein
provided will be timely
17
<PAGE>
made for purposes hereof. No claims for an Indemnifiable Loss may be asserted
following the expiration of such period.
(b) Unless a specified period is set forth in this Agreement (in which
event such specified period will control), the covenants in this Agreement will
survive the Closing and remain in effect indefinitely.
11.2 Limitations on Liability. (a) For purposes of this Agreement, (i)
"Indemnity Payment" means any amount of Indemnifiable Losses required to be paid
pursuant to this Agreement, (ii) "Indemnitee" means any person or entity
entitled to indemnification under this Agreement, (iii) "Indemnifying Party"
means any person or entity required to provide indemnification under this
Agreement, (iv) "Indemnifiable Losses" means any and all damages, losses,
liabilities, obligations, costs and expenses, and any and all claims, demands or
suits (by any person or entity, including, without limitation, any Governmental
Authority), including, without limitation, the costs and expenses of any and all
actions, suits, proceedings, demands, assessments, judgments, settlements and
compromises relating thereto and including reasonable attorneys' fees and
expenses in connection therewith, and (v) "Third Party Claim" means any claim,
action or proceeding made or brought by any Person other than a party to this
Agreement (or an Affiliate thereof).
(b) Notwithstanding any other provision hereof or of any applicable Law,
(i) no Indemnitee will be entitled to make a claim against an Indemnifying Party
in respect of any breach of a representation or warranty (other than the
representations and warranties contained in Section 6.8 and 6.9(a) or in Article
V of the IP Agreement) under Sections 11.3(a)(i) or 11.3(b)(i) unless and until
the aggregate amount of claims in respect of breaches of representations and
warranties asserted for Indemnifiable Losses under Sections 11.3(a)(i), with
respect to claims by Purchaser, or 11.3(b)(i), with respect to claims by
Sellers, exceeds $100,000, in which event the Indemnitee will be entitled to
make a claim against the Indemnifying Party in respect of Indemnifiable Losses
only to the extent of such excess and (ii) no Indemnitee shall be liable for
Indemnity Payments in respect of breaches of representations or warranties
asserted for Indemnifiable Losses under Sections 11.3(a)(i) or 11.3(b)(i), as
applicable, to the extent such aggregate Indemnity [illegible] include
Indemnifying Party exceeds the Purchase Price.
11.3 Indemnification. (a) Subject to Sections 11.1 and [illegible] written
and severally and indemnify, defend and hold harmless Purchaser from [illegible]
Indemnifiable Losses relating to, resulting from or arising out of:
(i) any misrepresentation or breach of warranty [illegible] under the
terms of this Agreement or any exhibit, [illegible] delivered pursuant
hereto;
(ii) any nonfulfillment of any agreement or covenant on the part of
Sellers under the terms of this Agreement;
(iii) any Retained Liabilities;
18
<PAGE>
(iv) any failure to comply with any "bulk sales" laws applicable to
the transactions contemplated hereby; and
(v) the conduct of the Commercial Logic Business or any portion
thereof or the use or ownership of any of the Transferred Assets prior to
or on the Closing Date (other than the Assumed Liabilities).
(a) Purchaser agrees to indemnify, defend and hold harmless Sellers from
and against any and all Indemnifiable Losses relating to, resulting from or
arising out of:
(i) any misrepresentation or breach of warranty on the part of
Purchaser under the terms of this Agreement or any exhibit, schedule or
document delivered pursuant hereto;
(ii) any nonfulfillment of any agreement or covenant on the part of
Purchaser under the terms of this Agreement;
(iii) any Assumed Liabilities; and
(iv) the conduct of the Commercial Logic Business or any portion
thereof or use or ownership of any of the Transferred Assets after the
Closing Date.
11.4 Defense of Claims. (a) If any Indemnitee receives notice of assertion
or commencement of any Third Party Claim against such Indemnitee with respect to
which an Indemnifying Party is obligated to provide indemnification under this
Agreement, the Indemnitee will give such Indemnifying Party reasonably prompt
written notice thereof, but in any event not later than 15 calendar days after
receipt of such notice of such Third Party Claim. Such notice will describe the
Third Party Claim in reasonable detail, will include copies of all material
written evidence thereof and will indicate the estimated amount, if reasonably
practicable, of the Indemnifiable Loss that has been or may be sustained by the
Indemnitee. The Indemnifying Party will have the right to participate in, or, by
giving written notice to the Indemnitee, to assume, the defense of any Third
Party Claim at such Indemnifying Party's own expense and by such Indemnifying
Party's own counsel (reasonably satisfactory to the Indemnitee), and the
Indemnitee will cooperate in good faith in such defense.
(b) If, within 30 calendar days after giving notice of a Third Party Claim
to an Indemnifying Party pursuant to Section 11.4(a), an Indemnitee receives
written notice from the Indemnifying Party that the Indemnifying Party has
elected to assume the defense of such Third Party Claim as provided in the last
sentence of Section 11.4(a), the Indemnifying Party will not be liable for any
legal expenses subsequently incurred by the Indemnitee in connection with the
defense thereof; provided, however, that if the Indemnifying Party fails to take
reasonable steps necessary to defend diligently such Third Party Claim within 30
calendar days after receiving written notice from the Indemnitee that the
Indemnitee reasonably believes the Indemnifying Party has failed to take such
steps or if the Indemnifying Party has not undertaken fully to indemnify the
Indemnitee in respect of all Indemnifiable Losses relating to the matter, the
19
<PAGE>
Indemnitee may assume its own defense, and the Indemnifying Party will be liable
for all reasonable costs or expenses paid or incurred in connection therewith.
Without the prior written consent of the Indemnitee, the Indemnifying Party will
not enter into any settlement of any Third Party Claim which would lead to
liability or create any financial or other obligation on the part of the
Indemnitee for which the Indemnitee is not entitled to indemnification
hereunder. If a firm offer is made to settle a Third Party Claim without leading
to liability or the creation of a financial or other obligation on the part of
the Indemnitee for which the Indemnitee is not entitled to indemnification
hereunder and the Indemnifying Party desires to accept and agree to such offer,
the Indemnifying Party will give written notice to the Indemnitee to that
effect. If the Indemnitee fails to consent to such firm offer within 10 calendar
days after its receipt of such notice, the Indemnitee may continue to contest or
defend such Third Party Claim and, in such event, the maximum liability of the
Indemnifying Party as to such Third Party Claim will not exceed the amount of
such settlement offer, plus costs and expenses paid or incurred by the
Indemnitee through the end of such 10 calendar day period.
(c) A failure to give timely notice or to include any specified information
in any notice as provided in Sections 11.4(a) or 11.4(b) will not affect the
rights or obligations of any party hereunder except and only to the extent that,
as a result of such failure, any party which was entitled to receive such notice
was deprived of its right to recover any payment under its applicable insurance
coverage or was otherwise damaged as a result of such failure.
(d) The Indemnifying Party will have a period of 30 calendar days within
which to respond in writing to any claim by an Indemnitee on account of an
Indemnifiable Loss pursuant to Section 11.3 that does not result from a Third
Party Claim (a "Direct Claim"). If the Indemnifying Party does not so respond
within such 30 calendar day period, the Indemnifying Party will be deemed to
have rejected such claim. In the event the Indemnifying Party rejects, or is
deemed to have rejected, a Direct Claim, the Indemnitee will be free to pursue
such remedies as are available at law or in equity in respect of such Direct
Claim.
(e) Sellers' liability for any breach of the representation contained in
Section 6.9(b) shall be subject to the same limitations on liability applicable
to product warranty claims arising under the Supply Agreement.
(f) To the extent permitted by Law, the indemnity provisions of this
Article XI shall be the sole and exclusive remedy of the parties with respect to
any breach of the representations and warranties contained in this Agreement and
in Article V of the IP Agreement that is asserted subsequent to Closing,
provided that the foregoing shall not prohibit any party from seeking an
injunction or any other equitable remedy in respect thereof.
XII. MISCELLANEOUS PROVISIONS
12.1 Notices. All notices and other communications required or permitted
hereunder will be in writing and, unless otherwise provided in this Agreement,
will be deemed to have been duly given when delivered in person or when
dispatched by electronic facsimile transfer (confirmed in writing by mail
simultaneously dispatched) or one business day after having been
20
<PAGE>
dispatched by a nationally recognized overnight courier service to the
appropriate party at the address specified below:
(a) If to Sellers, to:
Harris Semiconductor
P.O. Box 883, M/s 53-209
Melbourne, Florida 32902-0083
Attention: Stephen K. Cusick, Esq.
Facsimile No.: (407) 729-5392
with a copy to:
Harris Corporation
1025 West NASA Boulevard, M/S 119 CHQ
Melbourne, Florida 32919
Attention: Corporate Secretary
Facsimile No.: (407) 727-9222
(b) If to Purchaser, to:
Texas Instruments Incorporated
7839 Churchill Way, M/S 3995
Dallas, Texas 75251
- or -
P.O. Box 650311, M/S 3995
Dallas, Texas 75265
Attention: Charles D. Tobin
Facsimile No.: (214) 917-3804
with a copy to:
Texas Instruments Incorporated
8505 Forest Lane, M/S 8658
Dallas, Texas 75243
- or -
P.O. Box 660199, M/S 8658
Dallas, Texas 75266
Attention: Richard J. Agnich, Esq.
Facsimile No.: (972) 480-5061
or to such other address or addresses as any such party may from time to time
designate as to itself by like notice.
21
<PAGE>
12.2 Expenses. Except as otherwise expressly provided herein, each party
hereto will pay any expenses incurred by it incident to this Agreement and in
preparing to consummate and consummating the transactions provided for herein.
12.3 Successors and Assigns. This Agreement will be binding upon and inure
to the benefit of the parties hereto and their respective successors and
permitted assigns, but will not be assignable or delegable by any party without
the prior written consent of the other party; provided, however, that upon
notice to Sellers delivered in accordance with Section 12.1, Purchaser may
assign or delegate any or all of their rights or obligations under this
Agreement to any Affiliate thereof or to any Person that directly or indirectly
acquires, after the Closing, all or substantially all of the assets or voting
stock of Purchaser, but such assignment or delegation shall not relieve
Purchaser of any obligation hereunder.
12.4 Waiver. Purchaser may, by written notice to Sellers, and Sellers may,
by written notice to Purchaser, (a) extend the time for performance of any of
the obligations of the other party under this Agreement, (b)waive any
inaccuracies in the representations or warranties of the other party contained
in this Agreement, (c) waive compliance with any of the conditions or covenants
of the other party contained in this Agreement, or (d) waive or modify
performance of any of the obligations of the other party under this Agreement;
provided, however, that no such party may, without the prior written consent of
the other parties, make or grant such extension of time, waiver of inaccuracies
or compliance or waiver or modification of performance with respect to its
representations, warranties, conditions or covenants hereunder. Except as
provided in the immediately preceding sentence, no action taken pursuant to this
Agreement will be deemed to constitute a waiver of compliance with any
representations, warranties, conditions or covenants contained in this Agreement
and will not operate or be construed as a waiver of any subsequent breach,
whether of a similar or dissimilar nature.
12.5 Entire Agreement: Disclosure Schedules. This Agreement, which includes
the schedules and exhibits hereto, supersedes any other agreement, whether
written or oral, that may have been made or entered into by any party relating
to the matters contemplated hereby and constitutes the entire agreement by and
among the parties hereto. Notwithstanding the foregoing, that certain
confidentiality agreement dated June 25, 1998 entered into between the parties
shall continue in full force and effect until such time as the transactions
contemplated hereby have been consummated, whereupon such agreement shall
automatically terminate.
12.6 Amendments, Supplements, Etc. This Agreement may be amended or
supplemented at any time by additional written agreements as may mutually be
determined by Purchaser and Sellers to be necessary, desirable or expedient to
further the purposes of this Agreement or to clarify the intention of the
parties.
12.7 Rights of the Parties. Nothing expressed or implied in this Agreement
is intended or will be construed to confer upon or give any Person other than
the parties hereto any rights or remedies under or by reason of this Agreement
or any transaction contemplated hereby.
22
<PAGE>
12.8 Further Assurances. From time to time, as and when requested by any
party hereto, the other party will execute and deliver, or cause to be executed
and delivered, all such documents and instruments, make such other deliveries
and take such other actions as may be reasonably necessary to consummate the
transactions contemplated by this Agreement.
12.9 Applicable Law. This Agreement and the legal relations among the
parties hereto will be governed by and construed in accordance with the rules
and substantive Laws of the State of Florida, United States of America, without
regard to conflicts of law provisions thereof.
12.10 Execution in Counterparts. This Agreement may be executed in two or
more counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same agreement.
12.11 Titles and Headings. Titles and headings to Sections herein are
inserted for convenience of reference only, and are not intended to be a part of
or to affect the meaning or interpretation of this Agreement.
12.12 Invalid Provisions. If any provision of this Agreement is held to be
illegal, invalid, or unenforceable under any present or future Law, and if the
rights or obligations under this Agreement of Sellers on the one hand and
Purchaser on the other hand will not be materially and adversely affected
thereby, (a) such provision will be fully severable; (b) this Agreement will be
construed and enforced as if such illegal, invalid, or unenforceable provision
had never comprised a part hereof; (c) the remaining provisions of this
Agreement will remain in full force and effect and will not be affected by the
illegal, invalid, or unenforceable provision or by its severance from this
Agreement; and (d) in lieu of such illegal, invalid, or unenforceable provision,
there will be added automatically as a part of this Agreement a legal, valid,
and enforceable provision as similar in terms to such illegal, invalid, or
unenforceable provision as may be possible.
12.13 Bulk Sales. Purchaser waives compliance by Sellers with the
provisions of the so-called bulk sales Law of any applicable jurisdiction;
provided, however, that Sellers will indemnify, defend and hold harmless
Purchaser in respect of any Indemnifiable Loss relating to, resulting from or
arising out of Sellers' failure so to comply with such Laws in connection with
the transactions contemplated by this Agreement.
12.14 Transfers. Purchaser and Sellers will cooperate and take such action
as may be reasonably requested by the other in order to effect an orderly
transfer of the Transferred Assets with a minimum of disruption to the
operations and employees of the businesses of Purchaser and Sellers.
12.15 Transfer Taxes. All sales, use, transfer, stamp, conveyance, value
added or other similar taxes, duties, excises or governmental charges imposed by
any taxing jurisdiction, domestic or foreign, and all recording or filing fees,
notarial fees or other similar costs of Closing with respect to the transfer of
the Transferred Assets or otherwise on account of this Agreement
23
<PAGE>
or the transactions contemplated hereby will be borne by one-half by Sellers and
one-half by Purchaser.
12.16 Brokers. Purchaser hereby agrees to indemnify and hold harmless
Sellers, and Sellers hereby agree to indemnify and hold harmless Purchaser,
against any liability, claim, loss, damage or expense incurred by Sellers or
Purchaser, respectively, relating to any fees or commissions owed to any broker,
finder or financial advisor as a result of actions taken by Purchaser or
Sellers, respectively.
12.17 Attorneys' Fees. if any action at law or in equity is necessary to
enforce or interpret the terms of this Agreement, the prevailing party shall be
entitled to recover in such action its reasonable attorneys' fees, costs and
necessary disbursements in addition to any other relief to which it may be
entitled.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
TEXAS INSTRUMENTS INCORPORATED
By: /s/ Glenn Culhane
-------------------------------
Name: Glenn Culhane
Title: Vice President--Texas Instruments, Manager--
World Wide Standard Linear and Logic Products
HARRIS CORPORATION
By: /s/ R. D. Odom
-------------------------------
Name: R. D. Odom
-------------------------------
Title: Vice President - General Manager
-------------------------------
HARRIS ADVANCED TECHNOLOGY (MALAYSIA)
SDN. BHD
By: /s/ W. Russell Morcom
-------------------------------
Name: W. Russell Morcom
-------------------------------
Title: Vice President - General Manager Operations
-------------------------------------------
HARRIS SOUTHWEST PROPERTIES, INC.
By: /s/ D. S. Wasserman
-------------------------------
Name: D. S. Wasserman
-------------------------------
Title: Vice President
-------------------------------
24
<PAGE>
EXHIBIT A
DEFINITIONS
"Accountants" shall have the meaning ascribed to such term in Section 4.3
of this Agreement.
"Affiliate" shall mean with respect to any Person, any other person who,
directly or indirectly, controls, is controlled by, or is under common control
with that Person.
"Agreement" shall have the meaning ascribed to such term in the preamble to
this Agreement.
"Assignment of Contracts" shall have the meaning ascribed to such term in
Section 5.2(a)(ii) of this Agreement.
"Assumed Liabilities" shall have the meaning ascribed to such term in
Section 3.1 of this Agreement.
"Assumption Agreement" shall have the meaning ascribed to such term in
Section 5.2(b)(ii) of this Agreement.
"Bill of Sale" shall have the meaning ascribed to such term in Section
5.2(a)(i) of this Agreement.
"Business Day" shall mean a day other than a Saturday, Sunday or other day
on which commercial banks in New York City are authorized or required by law to
close.
"Closing Date Payment" shall have the meaning ascribed to such term in
Section 4.2(a) of this Agreement.
"Closing Date" shall have the meaning ascribed to such term in Section 5.1
of this Agreement.
"Closing" shall have the meaning ascribed to such term in Section 5.1 of
this Agreement.
"Collateral Agreements" shall have the meaning ascribed to such term in
Section 5.2(c) of this Agreement.
"Commercial Logic Business" shall have the meaning ascribed to such term in
the recitals to this Agreement.
"Commercial Logic Contracts" shall have the meaning ascribed to such term
in Section 2.1(i) of this Agreement.
"Commercial Logic Products" shall have the meaning ascribed to such term in
the recitals to this Agreement.
1
<PAGE>
"Commercial Logic Product Inventory" shall have the meaning ascribed to
such term in Section 2.1(b) of this Agreement.
"Confidential Information" shall have the meaning ascribed to such term in
Section 9.2 of this Agreement.
"Consent" shall mean any consent, approval or authorization of, notice to,
or designation, registration, declaration or filing with, any Person.
"Contract" shall mean any agreement, contract, lease, commitment, license,
undertaking or other legally binding contractual right or obligation to which a
Person is a party or by which a Person or its assets or properties are bound.
"Date Data" shall have the meaning ascribed to such term in Section 6.12 of
this Agreement.
"Date-Sensitive System" shall have the meaning ascribed to such term in
Section 6.12 of this Agreement.
"Direct Claim" shall have the meaning ascribed to such term in Section
11.4(d) of this Agreement.
"Estimated Inventory Transfer Price" shall have the meaning ascribed to
such term in Section 4.2(b) of this Agreement.
"Governmental Authority" shall mean any federal, state, local or foreign
government or any subdivision, agency, instrumentality, authority, department,
commission, board or bureau thereof or any federal, state, local or foreign
court, tribunal or arbitrator.
"HSR Act" shall have the meaning ascribed to such term in Section 6.3 of
this Agreement.
"HAT" shall have the meaning ascribed to such term in the preamble to this
Agreement.
"Harris" shall have the meaning ascribed to such term in the preamble to
this Agreement.
"HSP" shall have the meaning ascribed to such term in the preamble to this
Agreement.
"Indemnifiable Losses" shall have the meaning ascribed to such term in
Section 11.2(a)of this Agreement.
"Indemnifying Party" shall have the meaning ascribed to such term in
Section 11.2(a) of this Agreement.
"Indemnitee" shall have the meaning ascribed to such term in Section
11.2(a) of this Agreement.
"Indemnity Payment" shall have the meaning ascribed to such term in Section
11.2(a) of this Agreement.
2
<PAGE>
"IP Agreement" shall have the meaning ascribed to such term in Section
5.2(a)(iii) of this Agreement.
"Laws" shall mean all federal, state, local or foreign laws, ordinances,
rules and regulations.
"Liens" shall mean all title defects or objections, mortgages, liens,
claims, charges, pledges, or other encumbrances of any nature whatsoever,
including without limitation licenses, leases, chattel or other mortgages,
collateral security arrangements, pledges, title imperfections, defect or
objection liens, security interests, conditional and installment sales
agreements, easements, encroachments or restrictions, of any kind and other
title or interest retention arrangements, reservations or limitations of any
nature.
"Order" shall mean any judgment, award, order, writ, injunction or decree
issued by any Governmental Authority.
"Permits" shall mean all permits, licenses, approvals, franchises, notices
and authorizations issued by any Governmental Authority.
"Permitted Liens" shall mean Liens for taxes, assessments and other
governmental charges which are not due and payable or which may thereafter be
paid without penalty.
"Person" shall mean any individual, partnership, joint venture,
corporation, trust, unincorporated organization, Governmental Authority or other
entity.
"Product Inventory Schedule" shall have the meaning ascribed to such term
in Section 4.3 of this Agreement.
"Product Software" shall have the meaning ascribed to such term in Section
2.1(f) of this Agreement.
"Purchase Price" shall have the meaning ascribed to such term in Section
4.1 of this Agreement.
"Purchaser" shall have the meaning ascribed to such term in the recitals to
this Agreement.
"Retained Liabilities" shall have the meaning ascribed to such term in
Section 3.2 of this Agreement.
3
<PAGE>
"Seller" shall have the meaning ascribed to such term in the preamble to
this Agreement.
"Sellers" shall have the meaning ascribed to such term in the preamble to
this Agreement.
"Specified Distributors" shall have the meaning ascribed to such term in
Section 3.1(b) of this Agreement.
"Supply Agreement" shall have the meaning ascribed to such term in Section
5.2(a)(iv)of this Agreement.
"Testing Hardware and Software" shall have the meaning ascribed to such
term in Section 2.1(e) of this Agreement.
"Third Party Claim" shall have the meaning ascribed to such term in Section
11.2(a) of this Agreement.
"Transferred Assets" shall have the meaning ascribed to such term in
Section 2.1 of this Agreement.
"Year 2000 Compliant" shall have the meaning ascribed to such term in
Section 6.12 of this Agreement.
4
<PAGE>
Exhibit B
INTELLECTUAL PROPERTY AGREEMENT
BETWEEN
TEXAS INSTRUMENTS INCORPORATED,
AS PURCHASER
AND
HARRIS CORPORATION,
HARRIS ADVANCED TECHNOLOGY (MALAYSIA) SDN. BHD
AND
HARRIS SOUTHWEST PROPERTIES, INC.,
AS SELLER
<PAGE>
TABLE OF CONTENTS
Page
I. DEFINITIONS..........................................................2
II. ASSIGNMENT...........................................................2
2.1. LOGIC BUSINESS INTELLECTUAL PROPERTY........................2
2.2. DOCUMENTATION...............................................2
III. GRANT OF LICENSE.....................................................2
3.1. PATENTS.....................................................2
3.2. KNOW-HOW....................................................2
3.3. COPYRIGHTS..................................................2
3.4. MASK WORKS..................................................3
3.5. TRADEMARKS..................................................3
3.6. THIRD PARTY INTELLECTUAL PROPERTY...........................3
3.7. SUBLICENSE..................................................3
3.8. QUALITY CONTROL.............................................4
3.9. IDENTIFICATION OF PATENTS AFTER CLOSING DATE................4
3.10. GRANT-BACK LICENSE FOR SUPPLY AGREEMENTS....................4
IV. TECHNOLOGY TRANSFER..................................................4
4.1. SUFFICIENT TRANSFER.........................................4
(a) Identified Parts........................................5
(b) Identified Processes....................................5
(c) Component Testing Software and Hardware and Associated
Documentation...........................................5
(d) Logic Product Software..................................5
(e) Technical Data..........................................5
(f) Books and Records.......................................5
4.2. SUPPORT.....................................................6
V. REPRESENTATIONS AND WARRANTIES.......................................6
5.1. CONFLICT ...................................................6
5.2 OWNERSHIP...................................................6
5.3 NO INFRINGEMENT.............................................6
<PAGE>
Page
----
5.4 NO INFRINGEMENT BY THIRD PARTY..............................7
5.5 EFFECTIVE TRANSFER OF NECESSARY RIGHTS......................7
VI. MISCELLANEOUS PROVISIONS.............................................7
6.1 COOPERATION.................................................7
6.2 NO OBLIGATION...............................................7
6.3 NOTICES ...................................................8
6.4 EXPENSES ...................................................9
6.5 SUCCESSORS AND ASSIGNS......................................9
6.6 WAIVER ...................................................9
6.7 ENTIRE AGREEMENT; DISCLOSURE SCHEDULES......................9
6.8 AMENDMENTS, SUPPLEMENTS. ETC................................9
6.9 RIGHTS OF THE PARTIES......................................10
6.10 FURTHER ASSURANCES.........................................10
6.11 APPLICABLE LAW.............................................10
6.12 EXECUTION IN COUNTERPARTS..................................10
6.13 TITLES AND HEADINGS........................................10
6.14 INVALID PROVISIONS.........................................10
6.15 ATTORNEYS' FEES............................................10
EXHIBIT A - DEFINITIONS
ii
<PAGE>
INTELLECTUAL PROPERTY AGREEMENT
This INTELLECTUAL PROPERTY AGREEMENT (this "Agreement") is made and entered
into as of _________ , 1998, by and between Texas Instruments Incorporated, a
Delaware corporation ("Purchaser"), and Harris Corporation, a Delaware
corporation, acting through its Semiconductor Sector ("Harris"), Harris Advanced
Technology. (Malaysia) Sdn. Bhd, a Malaysian corporation ("HAT") and Harris
Southwest Properties, Inc., a Delaware corporation ("HSP") (collectively,
"Seller").
RECITALS:
WHEREAS, among other businesses, Seller presently conducts the business
(the "Commercial Logic Business") of manufacturing, marketing and selling
commercial digital logic integrated circuits, listed by part number on Schedule
6.9(a) attached to the Commercial Asset Purchase Agreement defined hereafter
(the "Commercial Logic Products");
WHEREAS, Seller desires to sell and Purchaser desires to purchase Seller's
right to manufacture, market and sell the Commercial Logic Products and certain
assets, rights and properties of Seller used or useful in connection with the
Commercial Logic Business, all on the terms and subject to the conditions set
forth in an Asset Purchase Agreement dated October 23, 1998 (the "Commercial
Asset Purchase Agreement");
WHEREAS, Seller also presently conducts the business (the "Military Logic
Business") of manufacturing, marketing and selling military digital logic
integrated circuits, listed by part number on Schedule 6.9(a) attached to the
Military Asset Purchase Agreement defined hereafter (the "Military Logic
Products");
WHEREAS, Seller also desires to sell and Purchaser also desires to purchase
Seller's right to manufacture, market and sell the Military Logic Products and
certain assets, rights and properties of Seller used or useful in connection
with the Military Logic Business, all on the terms and subject to the conditions
set forth in an Asset Purchase Agreement dated October 23, 1998 (the "Military
Asset Purchase Agreement");
WHEREAS, Seller owns or controls and has or may have various Intellectual
Property rights which relate to or are utilized in the conduct of the Commercial
Logic Business and the Military Logic Business and manufacture, marketing and
sale of the Commercial Logic Products and Military Logic Products, and which
Purchaser desires to acquire by assignment or utilize under license; and
WHEREAS, Seller wishes to grant ownership or licenses to Purchaser under
the various Intellectual Property rights owned or controlled by Seller;
NOW, THEREFORE, in consideration of the mutual covenants, representations,
warranties and agreements herein contained, and other good and valuable
consideration, the parties hereby agree as follows:
<PAGE>
I. DEFINITIONS
As used in this Agreement, unless the context otherwise requires,
capitalized terms defined in this Agreement shall have the meanings set forth on
Exhibit A hereto. Capitalized terms used but not defined herein have the
meanings given them in the respective applicable Commercial Asset Purchase
Agreement or Military Asset Purchase Agreement.
II. ASSIGNMENT
2.1 Logic Business Intellectual Property. Seller agrees to assign and
transfer on the Closing Date, and hereby assigns and transfers (effective on the
Closing Date) to Purchaser, all right, title and interest of Seller in and to
the Logic Business Intellectual Property included in the items listed on the
Asset Purchase Agreement Schedules 2.1(e), 2.1(f) and 2.1(g) and all other Logic
Business Intellectual Property, together with any and all of the goodwill of the
business in connection with which the Trademarks hereby assigned are used; all
right, title and interest in any and all pending applications for registration
or other protection of the same (including, without limitation, any and all
right to claim priority in connection therewith); and all rights and causes of
action to sue, enforce or recover for past, present or future infringement,
misappropriation, dilution, unfair competition, false designation of origin or
the like of the Intellectual Property assigned hereby.
2.2 Documentation. At and after the Closing Date, each party hereto will
execute and deliver any deeds, bills of sale, assignments or assurances and take
and do any other actions and things reasonably necessary to vest, perfect or
confirm of record or otherwise, in the other party, any and all right, title and
interest in, to and under any of the rights, properties or assets of the party
acquired or to be acquired by the other party as a result of, or in connection
with, this Agreement.
III. GRANT OF LICENSE
3.1 Patents. Seller grants to Purchaser an irrevocable, perpetual,
world-wide, fully-paid and royalty-free non-exclusive license under all
Invention Disclosures and Patents included in Seller Intellectual Property at
the Closing Date, to engage in the Logic Business and to make, use, sell, offer
for sale, export and import Logic Products.
3.2 Know-How. Seller grants to Purchaser an irrevocable, perpetual,
world-wide, fully-paid and royalty-free exclusive license under all Know-How
included in Seller Intellectual Property at the Closing Date, and used by Seller
in the Logic Business, to make, use, sell, offer for sale, export and import
Logic Products and other products in the Field of Use.
3.3 Copyrights. Seller grants to Purchaser an irrevocable, perpetual,
world-wide, fully-paid and royalty-free license under all Copyrights included in
Seller Intellectual Property at the Closing Date, to copy and reproduce, create
adaptive and derivative works, publicly distribute copies and reproductions,
publicly display or perform, and otherwise utilize the Copyrights in the use,
sell, offer for sale, export and import of Logic Products. Such license shall be
subject to pre-
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existing rights granted to third parties, but otherwise shall be exclusive in
the Field of Use, and non-exclusive otherwise.
3.4 Mask Works. Seller grants to Purchaser an irrevocable, perpetual,
world-wide, fully-paid and royalty-free license under all Mask Works included in
Seller Intellectual Property at the Closing Date, to reproduce a Mask Work by
any means, to import or distribute a semiconductor chip product in which a Mask
Work is embodied or to induce or cause others to do any of the foregoing, for
Logic Products. Such license shall be subject to pre-existing rights granted to
third parties, but otherwise shall be exclusive in the Field of Use, and
non-exclusive otherwise.
3.5 Trademarks. Seller grants to Purchaser an irrevocable, world-wide,
fully-paid and royalty-free license to use Trademarks included in Seller
Intellectual Property and previously used by Seller in connection with Logic
Products. Such license shall be for a transitional period of two (2) years from
the Closing Date or, if longer than two (2) years, until all inventory and
work-in-progress displaying Seller's Trademarks, in existence at the Closing
Date, is exhausted. Thereupon such license and such rights will terminate. Such
license shall be subject to pre-existing rights granted to third parties, but
otherwise shall be exclusive in the Field of Use, and non-exclusive otherwise.
Notwithstanding the foregoing, the parties agree that Purchaser shall have the
right, perpetually, to use all product specific identification numbers and
configurations used by Seller in connection with the Logic Products.
Purchaser shall not acquire under the terms of this Agreement any title or
interest in the name "Harris" or "Harris Semiconductor" or Seller's monograms,
logos, trademarks, or any variations or combinations thereof that have any
application beyond the Logic Business. Purchaser, however, shall be entitled to
(i) market and sell without alteration all Logic Product Inventory acquired
hereunder and all Logic Products acquired under the terms of the Supply
Agreement (as hereinafter defined), which the parties acknowledge shall bear
Seller's package designation, (ii) continue to use, in connection with the
manufacture, marketing and sale of Logic Products, all materials and supplies
acquired hereunder and shall not be obligated to overstamp or otherwise alter
such materials prior to use and (iii) otherwise use the above referenced Seller
names and marks in accordance with the terms of the licenses granted in this
Article III.
3.6 Third Party Intellectual Property. To the extent not otherwise assigned
or transferred above, Seller grants to Purchaser a sublicense under any such
Third Party Logic Business Intellectual Property at the Closing Date, subject to
Purchaser's right to refuse such license, to make, use, sell, offer for sale,
export and import Logic Products. Such license shall be irrevocable, perpetual,
world-wide, fully-paid and royalty-free, exclusive in the Field of Use and
non-exclusive otherwise, to the full extent permissible, or else be on the best
other terms available under the license between Seller and the third party,
except that any Patents sublicensed hereunder shall be licensed only on a
non-exclusive basis.
3.7 Sublicense. With respect to the assets assigned in Article II herein
and the licenses granted in Sections 3.1 through 3.5, and to the full extent
permissible under Section 3.6, above, the assignment and license to Purchaser
hereunder includes, without limitation:
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(a) the right to have Seller or a third party make Logic Products either in
finished or semi-finished form (by way of example, "semi-finished form" includes
(1) semiconductor wafers at any stage of their manufacture, (2) foundry services
and (3) assembly) for offer for sale, sale, use, lease, import or other
disposition directly or indirectly by Purchaser or under the trademark, trade
name, or other commercial indicia of Purchaser.
(b) the right to sublicense to any Affiliate of Purchaser.
(c) the right to assign or transfer the license by Purchaser to a third
party in connection with a merger or sale in which a third party acquires
substantially all or a major portion of the Logic Business assets acquired from
Seller hereunder.
3.8 Quality Control. To the extent the Seller Trademarks are used on or in
connection with the manufacture, sale, performance or service of Logic Products
manufactured, used, performed or sold as of the Closing Date (hereinafter
referred to as the "Trademarked Products"), Purchaser shall manufacture,
distribute, and sell the Trademarked Products in accordance with applicable
minimum quality standards used immediately preceding the Closing Date.
3.9 Identification of Patents After Closing Date. If, subsequent to the
Closing Date, either party identifies any Patents or Mask Works Rights which are
Logic Business Intellectual Property that are not specifically identified in
this Agreement and for which Seller is obligated under Section 2.1 herein to
assign rights therein to Purchaser, then upon notice thereof Seller shall
promptly inform Purchaser of all relevant information in Seller's possession
and, at the request of Purchaser, Seller shall cooperate in execution and
delivery of assignment documentation and take and do any other actions and
things reasonably necessary to vest, perfect or confirm of record or otherwise
in Purchaser any and all right, title and interest in said Patents or Mask Works
Rights. The obligations of Seller under this Section 3.9 shall be Purchaser's
sole remedy for any failure to identify or assign Patents or Mask Works Rights
which are Logic Business Intellectual Property.
3.10 Grant-Back License for Supply Agreements. Purchaser grants to Seller a
fully-paid and royalty-free non-exclusive license under Logic Business
Intellectual Property acquired by Seller under Article II and under Seller
Intellectual Property licensed exclusively under Article III, for the duration
of and to the extent necessary for Seller to fulfill its obligations to
Purchaser under the agreements by and between Seller and Purchaser dated October
23, 1998, for the supply by Seller of Commercial Logic Products and Military
Logic Products to Purchaser (the "Commercial Supply Agreement" and "Military
Supply Agreement").
IV. TECHNOLOGY TRANSFER
4.1 Sufficient Transfer. Seller agrees to promptly, at its expense, but in
no event later than sixty (60) days after Closing Date, transfer to Purchaser
any and all information in written or electronic format and materials, in the
physical possession or control of Seller and reasonably necessary and sufficient
to carry on the business of manufacturing, marketing and selling the Logic
Products by Seller and in no event less than necessary to carry on such business
in a
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<PAGE>
commercially reasonable manner, including without limitation putting Purchaser
in possession of the following:
(a) Identified Parts -- everything needed by Seller to manufacture, market
and sell the parts identified in Schedule 6.9(a) of the Asset Purchase
Agreement.
(b) Identified Processes -- everything needed by Seller to perform all
semiconductor manufacturing processes used by Seller to manufacture Logic
Products on the Closing Date, through back-end assembly, testing and packaging,
including but not limited to the following processes: CD4000; BiCMOS FCT;
HC/HCT; and AC/ACT.
(c) Component Testing Software and Hardware and Associated Documentation --
all component software test programs used in the Logic Business, associated
probe cards and final test fixtures (including diagrams thereof, other
associated documentation, and testing hardware and software identified on Asset
Purchase Agreement Schedule 2.1(e) herein) used in the design and manufacture of
the Logic Products, except to the extent unavailable after diligent search and
attempt to locate the same;
(d) Logic Product Software -- all design, development, application and
technical support software and associated documentation (including product
software identified on Asset Purchase Agreement Schedule 2.1(f) herein) used in
the design and manufacture of the Logic Products, except to the extent
unavailable after diligent search and attempt to locate the same;
(e) Technical Data -- all technical information used in the Logic Business
(whether in written or electronic format) or relating to the Logic Products or
to the manufacture, marketing and sale thereof, including the information
identified on Asset Purchase Agreement Schedule 2.1(g) herein and further
including, without limitation, except to the extent unavailable after diligent
search and attempt to locate the same: test flows for probe and final test,
yield data by device for wafer fab and final test, Logic Product data books or
data sheets, outstanding specification waivers, outstanding product change
notices, special current customer requirements, specific flow for current
customers, characterization packets and electrical data logs, process and
assembly qualification data, ESD data, all device revisions, all die revisions,
die size, fabrication processes, layout rules for each technology, layout data
by device, process parameter limits for each technology, process history data
for each technology, process recipe modifications by device, mount and bond
diagrams by device, quality reliability data and to the extent available,
verification rules, schematics by device, SPICE models, materials list of
packages, assembly diagrams and masks;
(f) Books and Records -- all books and records of the Logic Business
relating to product engineering, research and development, and manufacture,
marketing and sale of Logic Products, including, without limitation, customer
lists, backlog information, distributor resale data, internal price books,
delivery performance information, and all outstanding Logic Product price
quotes, except to the extent unavailable after diligent search and attempt to
locate the same.
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If, subsequent to the Closing Date, either party identifies any information
or materials which have not been delivered to Purchaser as required under this
Agreement, then upon notice thereof Seller shall promptly undertake all
reasonable steps to effect such delivery.
4.2 Support. Seller agrees to provide Purchaser after Closing Date
reasonable support to put Purchaser in a position to carry on the business of
manufacturing, marketing and selling the Logic Products at least to the extent
carried on by Seller and in no event less than in a commercially reasonable
manner, including without limitation training as requested by Purchaser or
Purchaser's employees and further demonstrations or explanations regarding any
of the materials or information referred to in Section 4.1. Such support shall
include the services of four Seller engineers and four Seller marketing
specialists to assist Purchaser during the six month period following the
Closing Date, on a full time basis during the first two months of such period
and thereafter on a part-time basis as required by Purchaser. The foregoing
services will be provided to Purchaser without charge. Such services will be
provided at the locations designated by Purchaser. Seller will defray all travel
costs associated with such services, up to $50,000 in the aggregate. Purchaser
will reimburse Seller for all additional travel costs incurred at the request of
Purchaser, based on actual expenditures for coach airfare and standard business
accommodations and meals. Any support services requested by Purchaser in
addition to the foregoing shall be provided by Seller at an hourly rate of
$50.00 per hour per Seller employee, but not to exceed a day rate per employee
of $400.00.
V. REPRESENTATIONS AND WARRANTIES
5.1 Conflict. These representations and warranties are in addition to and
not in lieu of all representations and warranties set forth in the Asset
Purchase Agreement.
5.2 Ownership. Seller owns or has the right to license the Testing Hardware
and Software, the Product Software, the Technical Data and all other
intellectual property rights to be conveyed or licensed to Purchaser pursuant to
this Agreement and the Asset Purchase Agreement (collectively referred to as
"Proprietary Rights") and has the rights to sell, assign, transfer, license and
deliver, as applicable, such Proprietary Rights to Purchaser as contemplated
herein.
5.3 No Infringement by Seller.
(a) Except as noted in Subsection 5.3(b) herein, to the actual knowledge of
Seller, the Proprietary Rights do not conflict with or infringe, and no one has
asserted to Seller that such rights conflict with or infringe, any proprietary
rights owned, possessed or used by any third party. There are no claims,
disputes, actions, proceedings, suits or appeals pending against Seller with
respect to any Proprietary Rights, and to the knowledge of Seller, none has been
threatened against Seller. Except as noted in Subsection 5.3(b) herein, to the
actual knowledge of Seller, there are no facts or alleged facts which would
reasonably serve as a basis for any claim that Seller does not have the right to
use, free of any rights or claims of others, all Proprietary Rights in the
design, development, manufacture, use, sale and other disposition of any or all
of the Products and services presently being used, furnished or sold in the
conduct of the Logic Business as it is now being conducted.
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(b) Beginning in 1989 Seller received notices regarding alleged
infringement and future infringement relating to patents and patent applications
for which Jerome Lemelson is a named inventor. Purchaser acknowledges this
matter as described in the letter to Mr. Douglas E. Whitney, Esq., dated January
14, 1998 (a copy of which Purchaser acknowledges having received including an
Exhibit A) and the complaint filed by the Lemelson Medical, Education & Research
Foundation, Limited Partnership in U.S. District Court, District of Arizona on
July 31, 1998, naming multiple defendants including Purchaser. As of the date of
this Agreement this matter remains unresolved.
5.4 No Infringement by Third Party. To the actual knowledge of Seller, the
Proprietary Rights transferred or exclusively licensed to Purchaser herein are
not infringed by any third party, and Seller has not asserted against any third
party that such rights are infringed by any third party. There are no claims,
disputes, actions, proceedings, suits or appeals pending against a third party
by Seller with respect to those rights.
5.5 Effective Transfer of Necessary Rights. Pursuant to the Asset Purchase
Agreement and the documents, instruments and agreements contemplated thereby,
Seller will either (i) license the Proprietary Rights or (ii) transfer good
title to the Proprietary Rights to Purchaser. The Proprietary Rights sold or
licensed to Purchaser pursuant to the Asset Purchase [ILLEGIBLE] and the
documents, instruments and agreements [ILLEGIBLE] including but not limited to
this Agreement, will transfer all [ILLEGIBLE] Intellectual Property rights which
Seller has the right and authority to [ILLEGIBLE] to Purchaser to conduct the
Logic Business, at least to the extent carried on by Seller immediately prior to
the Closing Date, with the mutual understanding that conduct of the Logic
Business by Purchaser may require that Purchaser utilize in conjunction
therewith the intellectual property rights, business organization and
capabilities presently in Purchaser's possession.
VI. MISCELLANEOUS PROVISIONS
6.1 Cooperation. Seller agrees to make its employees reasonably available
to the Purchaser to reasonably assist and otherwise reasonably cooperate in the
preparation and prosecution of all Logic Business Patents, Logic Business
Trademarks, Logic Business Copyrights, Logic Business Mask Works and Logic
Business Invention Disclosures and to execute any and all applications,
assignments, affidavits, and any other papers in connection: therewith to
perfect Purchaser's rights in any country. Such assistance and cooperation
includes, but is not limited to communicating relevant facts and enabling
contact with relevant employees and cooperating in testifying in any legal
proceedings, signing all lawful papers, executing all divisionals,
continuations, reissues and substitute applications, making all lawful oaths,
and generally doing everything reasonable to aid Purchaser, its successors,
assigns and nominees to pursue and enforce protection in all countries.
6.2 No Obligation. Nothing in this Agreement shall require Purchaser to
pursue or continue to pursue in any country any patent or invention registration
or the like, or trademark, copyright or mask work registration, or any similar
protection; nor to enforce the same against
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infringements or the like; nor to maintain in force any current or subsequently
obtained patent or invention registration, or trademark, copyright or mask work
registration, or the like.
6.3 Notices. All notices and other communications required or permitted
hereunder will be in writing and, unless otherwise provided in this Agreement,
will be deemed to have been duly given when delivered in person or when
dispatched by electronic facsimile transfer (confirmed in writing by mail
simultaneously dispatched) or one business day after having been dispatched by a
nationally recognized overnight courier service to the appropriate party at the
address specified below:
(a) If to Seller, to:
Harris Semiconductor
P.O. Box 883, M/S 53-209
Melbourne, Florida 32902-0083
Attention: Stephen K. Cusick, Esquire
Facsimile No.: (407) 729-5392
with a copy to:
Harris Corporation
1025 West NASA Boulevard, M/S 119 CHQ
Melbourne, Florida 32919
Attention: Richard L. Ballantyne, Esquire
Facsimile No.: (407) 727-9222
(b) If to Purchaser, to:
Texas Instruments Incorporated
7839 Churchill Way, M/S 3995
Dallas, Texas 75251
- or -
P.O. Box 650311, M/S 3995
Dallas, Texas 75265
Attention: Charles D. Tobin
Facsimile No.: (214) 917-3804
with a copy to:
Texas Instruments Incorporated
8505 Forest Lane, M/S 8658
Dallas, Texas 75243
- or -
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P.O. Box 660199, M/S 8658
Dallas, Texas 75266
Attention: Richard J. Agnich, Esq.
Facsimile No.: (972) 480-5061
or to such other address or addresses as any such party may from time to time
designate as to itself by like notice.
6.4 Expenses. Except as otherwise expressly provided herein, each party
hereto will pay any expenses incurred by it incident to this Agreement and in
preparing to consummate and consummating the transactions provided for herein.
6.5 Successors and Assigns. This Agreement will be binding upon and inure
to the benefit of the parties hereto and their respective successors and
permitted assigns, and shall be assignable or delegable by either party without
the prior written consent of the other party; provided, however, that upon
notice to Seller, Purchaser may assign or delegate any or all of their rights or
obligations under this Agreement to any Affiliate thereof or to any Person that
directly or indirectly acquires, after the Closing, all or substantially all of
the assets or voting stock of Purchaser.
6.6 Waiver. Purchaser may, by written notice to Seller, and Seller may, by
written notice to Purchaser, (a) extend the time for performance of any of the
obligations of the other party under this Agreement, (b) waive any inaccuracies
in the representations or warranties of the other party contained in this
Agreement, (c) waive compliance with any of the conditions or covenants of the
other party contained in this Agreement, or (d) waive or modify performance of
any of the obligations of the other party under this Agreement; provided,
however, that no such party may, without the prior written consent of the other
parties, make or grant such extension of time, waiver of inaccuracies or
compliance or waiver or modification of performance with respect to its
representations, warranties, conditions or covenants hereunder. Except as
provided in the immediately preceding sentence, no action taken pursuant to this
Agreement will be deemed to constitute a waiver of compliance with any
representations, warranties, conditions or covenants contained in this Agreement
and will not operate or be construed as a waiver of any subsequent breach,
whether of a similar or dissimilar nature.
6.7 Entire Agreement; Disclosure Schedules. This Agreement, which includes
the schedules and exhibits hereto, supersedes any other agreement, whether
written or oral, that may have been made or entered into by any party relating
to the matters contemplated hereby and constitutes the entire agreement by and
among the parties hereto, except as otherwise set forth in the Asset Purchase
Agreement which shall control in the event of any conflict herewith.
6.8 Amendments, Supplements, Etc. This Agreement may be amended or
supplemented at any time by additional written agreements as may mutually be
determined by Purchaser and Seller to be necessary, desirable or expedient to
further the purposes of this Agreement or to clarify the intention of the
parties.
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6.9 Rights of the Parties. Nothing expressed or implied in this Agreement
is intended or will be construed to confer upon or give any Person other than
the parties hereto or their assigns any rights or remedies under or by reason of
this Agreement or any transaction contemplated hereby.
6.10 Further Assurances. From time to time, as and when requested by any
party hereto, the other party will execute and deliver, or cause to be executed
and delivered, all such documents and instruments, make such other deliveries
and take such other actions as may be reasonably necessary to consummate the
transactions contemplated by this Agreement.
6.11 Applicable Law. This Agreement and the legal relations among the
parties hereto will be governed by and construed in accordance with the rules
and substantive Laws of the State of Florida, United States of America, without
regard to conflicts of law provisions thereof.
6.12 Execution in Counterparts. This Agreement may be executed in two or
more counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same agreement.
6.13 Titles and Headings. Titles and headings to Sections herein are
inserted for convenience of reference only, and are not intended to be a part of
or to affect the meaning or interpretation of this Agreement.
6.14 Invalid Provisions. If any provision of this Agreement is held to be
illegal, invalid, or unenforceable under any present or future Law, and the
rights or obligations under this Agreement of Seller on the one hand and
Purchaser on the other hand will not be materially and adversely affected
thereby, (a) such provision will be fully severable; (b) this Agreement will be
construed and enforced as if such illegal, invalid, or unenforceable provision
had never comprised a part hereof; (c) the remaining provisions of this
Agreement will remain in full force and effect and will not be affected by the
illegal, invalid, or unenforceable provision or by its severance from this
Agreement; and (d) in lieu of such illegal, invalid, or unenforceable provision,
there will be added automatically as a part of this Agreement a legal, valid,
and enforceable provision as similar in terms to such illegal, invalid, or
unenforceable provision as may be possible, or if such addition is not possible
the parties will negotiate in good faith a reasonable provision.
6.15 Attorneys' Fees. If any action at law or in equity is necessary to
enforce or interpret the terms of this Agreement, the prevailing party shall be
entitled to recover in such action its reasonable attorneys' fees, costs and
necessary disbursements in addition to any other relief to which it may be
entitled.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
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TEXAS INSTRUMENTS INCORPORATED
By:
-------------------------------------
Name:
-----------------------------------
HARRIS CORPORATION
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
HARRIS ADVANCED TECHNOLOGY (MALAYSIA)
SDN.BHD
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
HARRIS SOUTHWEST PROPERTIES, INC.
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
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EXHIBIT A
DEFINITIONS
"Affiliate" shall mean with respect to any Person, any other person who,
directly or indirectly, controls, is controlled by, or is under common control
with that Person.
"Agreement" shall mean this Intellectual Property Agreement as defined in
the preamble to this Agreement.
"Asset Purchase Agreement" (1) if the parties close on both the Commercial
Asset Purchase Agreement and the Military Asset Purchase Agreement, means both
the Commercial Asset Purchase Agreement and the Military Asset Purchase
Agreement, or either of them, as in the context is appropriate, or, (2) if the
parties close on only the Commercial Asset Purchase Agreement, means the
Commercial Asset Purchase Agreement.
"Closing Date" means the Closing Date as defined in the respective
applicable Commercial Asset Purchase Agreement or Military Asset Purchase
Agreement.
"Commercial Asset Purchase Agreement" shall mean the Asset Purchase
Agreement dated October 23, 1998, by and between Purchaser and Seller, executed
contemporaneously herewith, relating to the Commercial Logic Business and
Commercial Logic Products, as defined in the recitals to this Agreement.
"Commercial Logic Business" means the business conducted by Seller of
manufacturing, marketing and selling commercial but not military and not
radiation hardened digital logic integrated circuits.
"Commercial Logic Products" means the commercial digital logic integrated
circuits products manufactured, marketed or sold directly or indirectly by
Seller in the Commercial Logic Business and listed by part number on Schedule
6.9(a) of the Commercial Asset Purchase Agreement.
"Commercial Supply Agreement" shall mean the Supply Agreement dated
___________ 1998, by and between Purchaser and Seller, executed
contemporaneously herewith, relating to the supply by Seller of Commercial Logic
Products to Purchaser, as defined in Section 3.10.
"Copyrights" means all rights associated with works of authorship,
including moral rights, registered and unregistered copyrights, registrations
and applications therefor, in all media, throughout the world.
"Field of Use" (1) if the parties close on both the Commercial Asset
Purchase Agreement and the Military Asset Purchase Agreement, means (a) any
digital logic integrated circuit manufactured by any of the CD4000, BiCMOS FCT,
HC/HCT and AC/ACT processes; and (b) any of the products identified by part
numbers listed on Schedules 6.9(a) of the Commercial
<PAGE>
Asset Purchase Agreement or the Military Asset Purchase Agreement and
manufactured by any process; or, (2) if the parties close on only the Commercial
Asset Purchase Agreement, means (a) any commercial digital logic integrated
circuit manufactured by any of the CD4000, BICMOS FCF, HC/HCT and AC/ACT
processes; and (b) any of the products identified by part numbers listed on
Schedule 6.9(a) of the Commercial Asset Purchase Agreement and manufactured by
any process.
"Intellectual Property" means Patents, Trademarks, Know-How, Copyrights and
Mask Works.
"Know-How" means know-how, technology, inventions disclosed in Invention
Disclosures, trade secrets, technical information, software and source code and
documentation therefor, notebooks, drawings, and (with respect to semiconductor
devices) mask works and application specific software.
"Logic Business" (1) if the parties close on both the Commercial Asset
Purchase Agreement and the Military Asset Purchase Agreement, means the business
conducted by Seller of manufacturing, marketing and selling commercial and
military but not radiation hardened digital logic integrated circuits; or, (2)
if the parties close on only the Commercial Asset Purchase Agreement, means the
business conducted by Seller of manufacturing, marketing and selling commercial
but not military or radiation hardened digital logic integrated circuits.
"Logic Business Intellectual Property" (1) if the parties close on both the
Commercial Asset Purchase Agreement and the Military Asset Purchase Agreement,
means that portion of Seller Intellectual Property which relates directly to and
is used exclusively in the Logic Business or Logic Products; or, (2) if the
parties close on only the Commercial Asset Purchase Agreement, means that
portion of Seller Intellectual Property which relates directly to and is used
exclusively in the Commercial Logic Business or Commercial Logic Products.
"Logic Products" (1) if the parties close on both the Commercial Asset
Purchase Agreement and the Military Asset Purchase Agreement, means the
commercial and military digital logic integrated circuits products manufactured,
marketed or sold directly or indirectly by Seller in the Logic Business and
listed by part number on Schedules 6.9(a) of the Commercial Asset Purchase
Agreement or the Military Asset Purchase Agreement; or, (2) if the parties close
on only the Commercial Asset Purchase Agreement, means the commercial digital
logic integrated circuits products manufactured, marketed or sold directly or
indirectly by Seller in the Commercial Logic Business and listed by part number
on Schedule 6.9(a) of the Commercial Asset Purchase Agreement.
"Mask Works" means all registered or unregistered mask work rights, mask
work registrations and mask work applications, throughout the world.
"Military Asset Purchase Agreement" shall mean the Asset Purchase Agreement
dated October 23, 1998, by and between Purchaser and Seller, executed
contemporaneously herewith,
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relating to the Military Logic Business and Military Logic Products, as defined
in the recitals to this Agreement.
"Military Logic Business" means the business conducted by Seller of
manufacturing, marketing and selling Military but not commercial and not
radiation hardened digital logic integrated circuits.
"Military Logic Products" means the Military digital logic integrated
circuits products manufactured, marketed or sold directly or indirectly by
Seller in the Military Logic Business and listed by part number on Schedule
6.9(a) of the Military Asset Purchase Agreement.
"Military Supply Agreement" shall mean the Supply Agreement dated
___________ 1998, by and between Purchaser and Seller, executed
contemporaneously herewith, relating to the supply by Seller of Military Logic
Products to Purchaser, as defined in Section 3.10.
"Patents" means patents, utility models and all similar government grants
of rights to inventions, and all applications and related rights therefor
(including any and all divisions, continuations, continuations-in-part,
reissues, renewals, reexaminations and extensions thereof), throughout the
world.
"Person" has the same meaning as defined in the Asset Purchase Agreement.
"Proprietary Rights" shall have the meaning ascribed to such term in
Section 5.2 of this Agreement.
"Purchaser" shall - have the meaning ascribed to such term in the preamble
to this Agreement.
"Seller" shall have the meaning ascribed to such term in the preamble to
this Agreement.
"Seller Intellectual Property" means (a) all Intellectual Property owned or
controlled by Seller or an Affiliate of which Seller owns a majority or
controlling interest; and (b) all Intellectual Property owned or controlled by a
third party and licensed to Seller or an Affiliate of which Seller owns a
majority or controlling interest and which Intellectual Property includes a
right of assignment, transfer or sublicense that gives a right to assign or
transfer to, or sublicense Purchaser.
"Seller Products" means all products and services that are being
manufactured or performed by Seller at any time, other than Logic Business
Products that are being manufactured or performed by Seller as of the Closing
Date.
"Technical Data" shall have the meaning ascribed to such term in Section
4.1(e) of this Agreement.
"Third Party Logic Business Intellectual Property" means Intellectual
Property owned or controlled by a third party and licensed to Seller, or an
Affiliate of which Seller owns a majority
3
<PAGE>
or controlling interest, under an exclusive license which provides Seller a
right of assignment or transfer or sublicense that gives a right to assign or
transfer or sublicense Purchaser and which relates exclusively to the Logic
Business or Logic Products, or is used or held for use exclusively in the Logic
Business.
"Trademarks" means all registered and unregistered trademarks, service
marks, trade names, symbols, labels, packages, configuration of goods, words,
slogans, phrases, numerals, or devices or combinations thereof, capable of
distinguishing goods or services from goods or services of others, and all
registrations and applications therefore, now existing or hereafter filed,
throughout the world.
4
<PAGE>
Exhibit C
COMMERCIAL SUPPLY AGREEMENT BY AND BETWEEN
TEXAS INSTRUMENTS INCORPORATED
AND
HARRIS CORPORATION
<PAGE>
COMMERCIAL SUPPLY AGREEMENT
This Agreement (hereinafter "AGREEMENT") is made in duplicate original
counterparts and effective as of its execution date ("EFFECTIVE DATE") by and
between HARRIS CORPORATION, a corporation duly organized and validly existing
under the laws of the State of Delaware, acting by and through its Semiconductor
Sector with a principal place of business at 2401 Palm Bay Road, Northeast, Palm
Bay, Florida 32905 (hereinafter "HARRIS") and TEXAS INSTRUMENTS INCORPORATED, a
corporation duly organized and validly existing under the laws of the State of
Delaware, acting by and through its Semiconductor Group with a principal place
of business at 8505 Forest Lane, Dallas, Texas 75243 (hereinafter "TI"). Buyer
and/or TI may be referred to herein as a "Party" or the "Parties", as the case
may require.
WHEREAS, Harris and its affiliates and TI have entered into an Asset
Purchase Agreement (the "APA") pursuant to which TI will purchase from Harris
the exclusive right to manufacture, market and sell certain Commercial Logic
Products (capitalized terms used herein and not otherwise defined shall have the
meanings given to them in the APA) along with certain assets, rights and
properties of Harris used or useful with the Commercial Logic Business, all on
the terms and subject to the conditions set forth in the APA.
WHEREAS, in order to provide for a continuing source of supply of
Commercial Logic Products during a transition period beginning on the Effective
Date and ending on June 30, 1999, unless mutually extended by the parties,
Harris agrees to sell and TI agrees to purchase certain semiconductor products,
devices, wafers and/or die pursuant to specifications and in quantities mutually
agreed upon by the parties and subject to the Terms and Conditions set forth in
this Agreement.
NOW THEREFORE, THE PARTIES AGREE AS FOLLOWS:
1. DEFINITIONS. For the purposes of this Agreement, the following underlined
terms will have the meanings set forth below.
1.1. "ESTIMATED SHIP DATE" shall mean the date Harris approximates that it
will ship the Product to TI.
1.2. "LEAD-TIME" shall mean the approximate length of time Harris requires
from the date a purchase order for the Product is submitted to Harris
by TI until such time Harris can ship the Product pursuant to such
purchase order.
1.3. "PRODUCT" shall mean those semiconductor products, devices, wafers
and/or die to be manufactured by Harris pursuant to this Agreement.
1.4. "PRODUCT SPECIFICATION" shall mean the acceptance criteria for the
Product mutually agreed upon between Harris and TI.
1
<PAGE>
1.5. "REQUESTED DELIVERY DATE" shall mean the arrival date for the Product
requested by TI.
2. SCOPE OF AGREEMENT. Subject to the terms and conditions set forth in this
Agreement, Harris agrees to sell to TI semiconductor product, devices,
wafers and/or die manufactured using processes consistent with Harris'
standard internal practices according to specifications and in quantities
mutually agreed upon by the Parties. Harris shall deliver to TI and TI
shall purchase Product ordered by TI pursuant to the terms and conditions
set forth in this Agreement.
3. STATEMENT OF WORK.
3.1. TI shall consult with and guide Harris as well as provide reasonable
technical assistance in the fulfillment of manufacturing
responsibilities undertaken by Harris pursuant to this Agreement.
3.2. Harris will be responsible for Process Technology and facilities
necessary and/or appropriate for performing its manufacturing
responsibilities specified herein.
3.3. Harris agrees to provide reasonable technical support to assist in
failure analysis of Product provided under this Agreement and to
respond to TI's needs for such analysis in a timely manner.
4. PRODUCT FORECASTS, PURCHASES AND SALES.
4.1. FOUR MONTH ROLLING FORECAST. During the term of this Agreement, TI
shall supply to Harris by the first day of each month a non-binding
four month rolling forecast of estimated unit demand by wafer
technology for unassembled semiconductor products and by package level
for finished goods. Upon execution of this Agreement, TI shall provide
Harris with its initial four month rolling forecast. Requests for
quantities greater than those set forth in TI's four month forecasts
will be accommodated by Harris to the extent capacity is available.
Within seven (7) days of receipt of each of TI's rolling four month
forecasts, Harris shall provide written acceptance or rejection of the
demand levels set forth in TI's forecast and shall communicate the
existence and amount of residual capacity available to provide
quantities greater than those set forth in TI's forecast.
4.2. ONE MONTH LOADING FORECAST. In addition to providing the four month
rolling forecast described in Section 4.1., TI will, on the last work
day preceding the first and fifteenth day of each month, provide
Harris with an updated one month loading forecast setting forth TI's
estimated product demand and requested delivery date by wafer for
unassembled semiconductor products and by device for finished goods.
The quantities set forth in weeks (1) one and (2) two of each loading
forecast shall constitute a firm commitment on TI's behalf, except
that, at
2
<PAGE>
any time prior to the second work day of week (2) two, TI reserves the
right to change the device loading of the week (2) two mix by up to
twenty-five percent (25%). The quantities set forth in weeks (3) three
and (4) four of each loading forecast are subject to change but will
become firm commitments unless modified in writing by TI prior to the
beginning of the third week. Each loading forecast shall constitute a
release against the corresponding purchase order issued by TI pursuant
to Section 4.4.1. below.
4.3 LOW DEMAND FOR PRODUCT. In recognition of the fact that Harris cannot
maintain a robust manufacturing capability if the demand for die or
finished products drops to an unacceptably low level, the parties
agree that if the forecasted demand on Harris drops below the minimum
process lot starts per week as set forth on Exhibit A, Section 3, for
any of the four (4) fabrication technologies (CD4000, HC/HCT, AC/ACT,
FC/FCT), Harris and TI will agree on an appropriate end of life
order and delivery period.
4.4 PURCHASES AND SALES.
4.4.1. TI's purchase of Product shall be initiated by the
issuance of a written purchase order which will provide
a reasonable Lead-time to ensure timely delivery of the
products. A purchase order will only be accepted by
Harris if issued by TI's authorized representative. Each
purchase order issued by TI shall specify: (i) a
purchase order number and date, (ii) quantity of Product
to be delivered using the Minimum Line Quantities
("MLQs") listed on Exhibit A, (iii) Product part number
and revision level, (iv) Product description, (v)
Product unit price, (vi) Requested Delivery Date, (vii)
shipping instructions, including carrier and delivery
address, and (viii) signature(s) of authorized TI
representative. No terms or conditions in either Party's
purchase, sales, delivery or shipping, forms of
acknowledgments, or similar documents shall have effect
to the extent such terms and conditions are inconsistent
with terms and conditions set forth in this Agreement.
4.4.2. Within five (5) business days after Harris receives TI's
purchase order, Harris shall provide to TI Estimated
Ship Date for the Product requested pursuant to such
purchase order. If Harris cannot commit to an Estimated
Ship Date that satisfies TI's Requested Delivery Date,
Harris shall propose, in good faith, an alternative
Estimated Ship Date. Any purchase order placed by TI
prior to the termination of this Agreement in which the
Estimated Ship Date will be after the termination of
this Agreement shall continue to be governed by the
terms and conditions of this Agreement.
4.4.3. All forecasts, purchase orders and shipping documents
between the parties shall be communicated by electronic
means to the maximum extent feasible.
3
<PAGE>
5. PRICING.
5.1. PRODUCT PRICING AND MINIMUM LINE QUANTITIES. Prices charged shall be
as indicated on Exhibit A attached hereto and incorporated herein by
this reference. Prices cover only semiconductor products, devices,
wafers, and/or die set forth in Exhibit A. Any semiconductor products,
devices, wafers and/or die not set forth in Exhibit A will be provided
only if pricing and other terms are separately negotiated and mutually
agreed upon by the Parties.
5.2. PRODUCT SPECIFICATION CHANGE PROCESS. Upon receipt of a written
request by TI, Harris shall, within fifteen (15) business days, submit
to TI a written summary of estimated adjustments or costs, if any,
reasonably required to implement a modification to the Product
Specification requested by TI. Such summary shall include the change,
if any, to: (i) any applicable Product delivery dates; and (ii) the
mask tooling impacted and unit price. Written approval from TI must be
received by Harris prior to implementation of such changes, and will
be referenced as an Amendment to this Agreement. If Harris does not
receive such written approval from TI within five (5) calendar days
after Harris submits a summary to TI, TI shall have been deemed to
have withdrawn such request for change to the Product Specifications.
5.3. FREIGHT AND TAX CHARGES. Prices set forth in this Agreement do not
include freight charges or any customs duties, sales, use, value
added, excise, Federal, state, local or other similar taxes. All such
duties or taxes shall be paid by TI, or in lieu thereof, TI shall
provide Harris with an appropriate exemption certificate.
6. DELIVERY, SHIPMENTS, INVOICES AND PAYMENTS.
6.1. TITLE AND TRANSPORTATION. All shipments of Product to TI shall be
F.O.B. point of manufacture. Title and risk of loss or damage shall
pass to TI upon tender of delivery of the Products to a carrier at
manufacturing point.
6.2. TERMS AND METHOD OF PAYMENT. Terms [ILLEGIBLE] thirty (30) days from
date of invoice. [ILLEGIBLE] shall not constitute acceptance of
Produce [ILLEGIBLE] subject to adjustments for errors, shortages,
[ILLEGIBLE]. Each shipment shall constitute an independent [ILLEGIBLE]
shall pay for the same in accordance with the [ILLEGIBLE] terms.
Payments shall be made in US dollars.
7. TERM. Subject to the terms and conditions set forth in this Agreement
[ILLEGIBLE] may issue purchase orders at any time prior to June 30, 1999.
Unless sooner terminated under the provisions of this Agreement, this
Agreement shall terminate on June 30, 1999, unless mutually extended by the
parties. Provisions of this Agreement which by their terms extend past the
termination date shall survive termination.
4
<PAGE>
8. INSPECTION AND ACCEPTANCE. TI agrees to perform incoming inspection of
Product within thirty (30) calendar days of TI's receipt of Product. If
Harris delivers Product to TI that does not conform in a material respect
to TI's purchase order, TI shall notify Harris by written notice within
five (5) calendar days after TI inspects Product. If TI rejects such
product, TI's notice shall specify TI's reason(s) for rejecting the
Product. TI will thereupon return rejected Product F.O.B. shipping point
for repair or replacement at Harris' option.
9. PRODUCT WARRANTY.
9.1. WARRANTY PERIOD. Harris, except as otherwise provided below, warrants
all goods against faulty workmanship or the use of defective materials
and warrants that goods will conform to published Harris
specifications or other agreed upon written Product Specifications.
Unassembled semiconductor devices in wafer or die form shall meet the
minimum yield levels set forth in Exhibit A attached hereto and
incorporated herein by this reference. The warranty period for
finished goods shall be two (2) years from the date of shipment. The
warranty period for unassembled semiconductor devices in wafer or die
form shall be six (6) months from the date of shipment. All product
returned to Harris for failure to comply with the applicable
specifications will be repaired or replaced within reasonable
lead-time, at the option of Harris.
9.2. NO ADDITIONAL WARRANTIES. EXCEPT FOR THE EXPRESS WARRANTIES STATED IN
THIS AGREEMENT, HARRIS MAKES NO ADDITIONAL WARRANTIES, EXPRESS,
IMPLIED OR STATUTORY, INCLUDING BUT NOT LIMITED TO, ANY IMPLIED
CONDITIONS OR WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE OR ANY OTHER WARRANTY OBLIGATION ON THE PART OF HARRIS. TI'S
REMEDIES SHALL BE LIMITED TO THE REMEDIES SPECIFIED HEREIN.
10. LIMITATION OF DAMAGES. IN NO EVENT WILL EITHER PARTY BE LIABLE TO THE OTHER
FOR ANY LOST PROFITS, LOSS OF GOODWILL, OVERHEAD, COST OF COVER OR OTHER
INDIRECT, SPECIAL, INCIDENTAL, OR CONSEQUENTIAL DAMAGES ARISING OUT OF OR
RELATED TO THIS AGREEMENT, HOWEVER CAUSED, AND WHETHER BASED IN CONTRACT,
TORT (INCLUDING NEGLIGENCE), STRICT LIABILITY OR OTHERWISE. THESE
LIMITATIONS SHALL APPLY EVEN IF THE PARTY HAS BEEN ADVISED OF THE
POSSIBILITY OF SUCH DAMAGE, AND NOTWITHSTANDING THE FAILURE OF ESSENTIAL
PURPOSE OF ANY LIMITED REMEDY HEREIN.
11. MISCELLANEOUS.
11.1. FORCE MAJEURE. Anything contained in this Agreement to the contrary
notwithstanding, the obligations of the Parties hereto shall be
subject to all laws, both present and future, of any government
having jurisdiction over the Parties
5
<PAGE>
hereto, and to orders, regulations, directions or requests of any
such government, or any department, agency or corporation
thereof, and to war, acts of public enemies, strikes or other
labor disturbances, accidents, transportation embargo, shortage
of supplies, fires, floods, earthquakes, acts of God, or causes
of like or different kind beyond the control of the Parties, and
the Parties hereto shall be excused from any failure to perform
any obligation hereunder to the extent such failure is caused by
any such law, order, regulation, direction, request or
contingency, for the period such cause endures. Production and
deliveries may be allocated in a reasonable manner among its
customers by Harris when these circumstances create a delay or
shortfall in production of the Product or of products of the
general type covered by this Agreement. Notwithstanding the
foregoing, in the event any such cause delays either Party's
performance of any of its material obligations under this
Agreement, the other Party may suspend its performance under this
Agreement for the period such delay continues and if any such
cause renders impossible or delays for a period of more than six
months either Party's performance of any of its material
obligations under this Agreement, the other Party may upon
written notice terminate this Agreement and such termination will
be deemed to have occurred with consent of both parties. The
Party whose performance is delayed on account of any such cause
shall promptly notify the other Party and shall exert reasonable
efforts to recommence performance as soon as possible.
11.2. RELATIONSHIP OF PARTIES.
11.2.1. Neither Party shall have, or shall represent that it has,
any power, right, or authority to bind the other Party, or
to assume or create any obligation or responsibility,
express or implied, on behalf of the other Party or in the
other Party's name.
11.2.2. Each Party is an independent contractor; nothing in this
Agreement shall be construed as constituting Harris and TI
as partners, joint venturers, or as creating the
relationships of employer and employee, franchiser and
franchisee, master and servant, principal and agent, or any
other form of legal association that would impose liability
on one Party for the act or failure to act of the other
Party.
11.2.3. Harris shall grant TI upon reasonable notice, access to
its manufacturing line during normal business hours for the
purpose of inspection and observation. Such access shall be
granted as long as it does not unduly interfere with Harris
operations or other business affairs.
11.2.4. An employee of one Party shall not be considered, for any
purpose, an employee of the other Party. To the extent this
Agreement involves work by one Party on the premises of the
other Party, each
6
<PAGE>
Party shall instruct and require its respective visiting
employees to observe and obey all rules, policies and
procedures in effect at the facilities of the other Party.
11.3. NOTICES AND ADMINISTRATION OF THE AGREEMENT. All notices shall be
given in writing either by personal delivery to the Party to whom
notice is directed, or by confirmed telex or facsimile, or by a
commercial overnight courier service, or by registered or
certified mail, return receipt requested. The date upon which any
such notice is so personally delivered, the date of confirmation
of telex, facsimile, or courier delivery, or if the notice is
given by registered or certified mail, the date three (3) days
after it is deposited in the U.S. mail, shall be deemed to be the
date shown as delivered on the return receipt of such notice,
irrespective of the date appearing therein. For and on the behalf
of each Party, the person designated below shall have cognizance
of the work provided pursuant to this Agreement. General
administration of the Agreement shall be through them. Each Party
reserves the right to independently appoint a different
individual and agrees to notify the other Party in writing of
such change. All statements and notices shall be sent directly to
the following individuals.
If to TI If to Harris
-------- ------------
Texas Instruments Incorporated Harris Corporation
P.O. Box 84, M.S. 800 Semiconductor Sector
Sherman, Texas 75091 P.O. Box 883, M.S. 53-202
Attention: Rich Moore Melbourne, FL 32902-0883
Attention: Ray Odom
11.4. LANGUAGE INTERPRETATION. In the interpretation of this Agreement,
unless the context otherwise requires, (a) words importing the
singular shall be deemed to import the plural and vice versa, (b)
words denoting gender shall include all genders, (c) references to
persons shall include corporations other bodies, and vice versa, (d)
references to Parties, sections, schedules, addenda, paragraphs,
articles and exhibits shall mean the Parties, sections, schedules,
addenda, paragraphs, articles and exhibits of and to this Agreement,
and (e) periods of days, weeks or months shall mean calendar days,
weeks or months.
11.5. HEADINGS. Article and Section headings are included solely for
convenience, are not to be considered a part of this Agreement, and
are not intended to be full and accurate descriptions of their
contents.
11.6. EXPORT. Each Party hereby assures the other that it will not
knowingly, without prior authorization, if required of the Office of
Export Administration, U.S. Department of Commerce, export or import
(as defined in Section 380. 1(b)-(c) of the Export Administration
Regulations and any amendments thereto) the technical data covered
hereby. TI shall be responsible for determining the ITAR
7
<PAGE>
status of devices manufactured under this Agreement, and for
obtaining all applicable licenses.
11.7. OTHER RESTRICTIONS. In exercising its rights under this Agreement,
each Party agrees to comply strictly and fully with all export
controls imposed on Products by any country or organization or
nations within whose jurisdiction each Party operates or does
business. Each Party agrees not to export or permit export of
Products or any related technical data or any direct Product of
any related technical data, without complying with the export
control laws in the relevant jurisdiction.
11.8. INCORPORATION BY REFERENCE. Except as herein set forth to the
contrary, the terms and conditions of the APA are herein incorporated
by reference as if set forth in full.
11.9. EXHIBITS. The following is the list of Exhibits which are attached
hereto and are hereby incorporated into this Agreement by reference.
Exhibit A: Pricing and Minimum Die Per Wafer, Minimum Line Quantities
and Minimum Process Quantities
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be
signed by duly authorized officers or representative as of the date first above
written.
TEXAS INSTRUMENTS INCORPORATED HARRIS CORPORATION
Semiconductor Group Semiconductor Sector
By: By:
------------------------- ------------------------------
Name: Name:
----------------------- ----------------------------
Title: Title:
----------------------- ---------------------------
Date: Date:
------------------------ ---------------------------
8
<PAGE>
EXHIBIT A
COMMERCIAL SUPPLY AGREEMENT
PRICING AND MINIMUM DIE PER WAFER, MINIMUM LINE QUANTITIES,
AND MINIMUM PROCESS QUANTITIES
1. PRICING AND MINIMUM DIE PER WAFER. The commercial products subject to this
Agreement are as provided as follows:
The commercial products (finished goods, "fg" and die), their transfer
prices, and the minimum die per wafer ("MDPW") are listed in Schedule
1(a)[c] attached.
2. MINIMUM LINE QUANTITIES. The minimum line quantities ("MLQ's") to be
ordered are as follows:
a) Finished Goods Requests (available in die bank)
Commercial 1,000 units
b) Die Request
Minimum die request will be equivalent to twelve (12) wafers,
MDPW by device as set forth in Schedule 1(a)[c] for all
commercial die requests.
3. MINIMUM PROCESS. The minimum process technology quantities (wafer lot
starts per week) to be accepted are as follows:
Minimum Wafer Lot Starts
Family Per Week
------ ------------------------
CD4000 5
HC/HCT 5
AC/ACT/FCT 5
<PAGE>
COMPANY CONFIDENTIAL
SCHEDULE 1(a)[C]
COMMERCIAL PRODUCTS FOR SUPPLY AGREEMENT
<TABLE>
<CAPTION>
FG STD DIE STD DIE
FAMILY DEVICE DIE ASP TRF PRICE DIE COST TRF PRICE NDW MDPW MLQ
- - ------ ------ --- --- --------- -------- --------- --- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ACT CD54AC00W 13109C 0.201 0.189 0.111 0.111 3,071 2,303 27,637
ACT CD54AC04W 13123B 0.183 0.172 0.110 0.110 2,968 2,226 26,714
ACT CD54AC08W 12125B 0.251 0.236 0.109 0.109 3,071 2,303 27,637
ACT CD54AC240W 13100D 0.568 0.534 0.172 0.172 1,792 1,344 16,128
ACT CD54AC273W 13146B 0.790 0.743 0.146 0.146 2,251 1,689 20,263
ACT CD54AC86W 13127B 0.248 0.233 0.109 0.109 3,071 2,303 27,637
ACT CD54ACT00W 14109C 0.200 0.188 0.118 0.118 3,071 2,303 27,637
ACT CD54ACT04W 14123B 0.200 0.188 0.111 0.111 2,968 2,226 26,714
ACT CD54ACT244W 14102D 0.674 0.634 0.178 0.178 1,792 1,344 16,128
ACT CD54ACT245W 14103C 0.641 0.603 0.212 0.212 1,431 1,073 12,880
ACT CD54ACT74W 14108B 0.239 0.225 0.131 0.131 1,629 1,222 14,664
ACT CD54ACT86W 14127B 0.280 0.263 0.132 0.132 3,071 2,303 27,637
ACT CD74AC00E 13109C 0.114 0.107 0.124 0.075 3,071 2,303 27,637
ACT CD74AC00M 13109DXXXCT 0.113 0.106 0.113 0.075 3,589 2,692 32,303
ACT CD74AC00M96 13109DXXXCT 0.107 0.101 0.112 0.071 3,589 2,692 32,303
ACT CD74AC00M96S2463 13109DXXXCT 0.113 0.106 0.112 0.075 3,589 2,692 32,303
ACT CD74AC02E 13150A 0.114 0.107 0.090 0.075 2,225 1,669 20,028
ACT CD74AC02M 13150AXXXCT 0.122 0.115 0.090 0.081 2,225 1,669 20,028
ACT CD74AC02M96 13150AXXXCT 0.051 0.048 0.089 0.034 2,225 1,669 20,028
ACT CD74AC02M96S2463 13150AXXXCT 0.113 0.106 0.114 0.075 2,225 1,669 20,028
ACT CD74AC04E 13123B 0.118 0.111 0.115 0.078 2,968 2,226 26,714
ACT CD74AC04M 13123CXXXCT 0.127 0.119 0.113 0.084 3,578 2,684 32,203
ACT CD74AC04M96 13123CXXXCT 0.116 0.109 0.113 0.077 3,578 2,684 32,203
ACT CD74AC04M96S2227 13123CXXXCT 0.160 0.150 0.114 0.106 3,578 2,684 32,203
ACT CD74AC04M96S2357 13123BXXXCT 0.160 0.150 0.114 0.106 2,968 2,226 26,714
ACT CD74AC04M96S2463 13123CXXXCT 0.110 0.103 0.114 0.073 3,578 2,684 32,203
ACT CD74AC05E 13124B 0.123 0.116 0.117 0.081 2,968 2,226 26,714
ACT CD74AC05M 13124BXXXCT 0.118 0.111 0.116 0.078 2,968 2,226 26,714
ACT CD74AC05M96 13124BXXXCT 0.110 0.103 0.116 0.073 2,968 2,226 26,714
</TABLE>
1
<PAGE>
SCHEDULE 1(a)[C]
COMMERCIAL PRODUCTS FOR SUPPLY AGREEMENT
<TABLE>
<CAPTION>
FG STD DIE STD DIE
FAMILY DEVICE DIE ASP TRF PRICE DIE COST TRF PRICE NDW MDPW MLQ
- - ------ ------ --- --- --------- -------- --------- --- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ACT CD74AC08E 13125B 0.110 0.103 0.122 0.073 3,071 2,303 27,637
ACT CD74AC08M 13125DXXXCT 0.118 0.111 0.112 0.078 3,589 2,692 32,303
ACT CD74AC08M96 13125DXXXCT 0.122 0.115 0.111 0.081 3,589 2,692 32,303
ACT CD74AC08M96S2463 13125DXXXCT 0.113 0.106 0.112 0.075 3,589 2,692 32,303
ACT CD74AC1O9E 13122B 0.146 0.137 0.150 0.096 1,629 1,222 14,664
ACT CD74AC109M96 13122BXXXCT 0.115 0.108 0.150 0.076 1,629 1,222 14,664
ACT CD74AC1OM 13147AXXXCT 0.146 0.137 0.092 0.092 2,760 2,070 24,837
ACT CD74AC1OM96 13147AXXXCT 0.196 0.184 0.092 0.092 2,760 2,070 24,837
ACT CD74AC10M96S2463 13147AXXXCT 0.110 0.103 0.093 0.073 2,760 2,070 24,837
ACT CD74AC112E 13144A 0.216 0.203 0.140 0.140 1,717 1,288 15,457
ACT CD74AC112MO6 13144AXXXCT 0.197 0.185 0.145 0.130 1,717 1,288 15,457
ACT CD74AC138E 13110A 0.162 0.152 0.170 0.107 1,386 1,040 12,475
ACT CD74AC138M 13110BXXXCT 0.151 0.142 0.169 0.100 2,389 1,792 21,499
ACT CD74AC138M96 13110BXXXCT 0.181 0.170 0.169 0.119 2,389 1,792 21,499
ACT CD74AC138M96S2463 13110BXXXCT 0.140 0.132 0.166 0.092 2,389 1,792 21,499
ACT CD74AC139E 13139A 0.177 0.166 0.160 0.117 1,504 1,126 13,537
ACT CD74AC139EX 13139A 0.590 0.555 0.167 0.167 1,504 1,126 13,537
ACT CD74AC139M96 13139AXXXCT 0.162 0.152 0.162 0.107 1,504 1,128 13,537
ACT CD74AC139M96S2463 13139AXXXCT 0.160 0.150 0.185 0.106 1,504 1,128 13,537
ACT CD74AC14E 13163A 0.140 0.132 0.166 0.092 1,750 1,312 15,748
ACT CD74AC14M 13163AXXXCT 0.140 0.132 0.168 0.092 1,750 1,312 15,746
ACT CD74AC14M96 13163AXXXCT 0.136 0.128 0.168 0.090 1,750 1,312 15,746
ACT CD74AC14M96S2497 13163AXXXCT 0.150 0.141 0.168 0.099 1,750 1,312 15,746
ACT CD74AC151E 13132A 0.220 0.207 0.148 0.145 1,643 1,233 14,791
ACT CD74AC153E 13134B 0.219 0.206 0.145 0.145 1,697 1,272 15,269
ACT CD74AC153M96 13134BXXXCT 0.144 0.135 0.147 0.095 1,697 1,272 15,269
ACT CD74AC157E 13115A 0.218 0.205 0.172 0.144 1,406 1,055 12,655
ACT CD74AC1S7M 13115AXXXCT 0.205 0.193 0.174 0.135 1,406 1,055 12,655
ACT CD74AC157M96 13115AXXXCT 0.135 0.127 0.171 0.089 1,406 1,055 12,655
ACT CD74AC158M 13116AXXXCT 0.260 0.244 0.174 0.172 1,406 1,055 12,655
</TABLE>
2
<PAGE>
SCHEDULE 1(a)[C]
COMMERCIAL PRODUCTS FOR SUPPLY AGREEMENT
<TABLE>
<CAPTION>
FG STD DIE STD DIE
FAMILY DEVICE DIE ASP TRF PRICE DIE COST TRF PRICE NDW MDPW MLQ
- - ------ ------ --- --- --------- -------- --------- --- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ACT CD74AC161E 13117B 0.510 0.479 0.156 0.156 1,560 1,170 14,040
ACT CD74AC161M 13117BXXXCT 0.329 0.309 0.156 0.156 1,560 1,170 14,040
ACT CD74AC181M96 13117BXXXT 0.286 0.269 0.157 0.157 1,560 1,170 14,040
ACT CD74AC161U96S2463 13117BXXXCT 0.178 0.167 0.159 0.117 1,560 1,170 14,040
ACT CD74AC163E 131188B 0.422 0.397 0.157 0.157 1,560 1,170 14,040
ACT CD74AC163M 131188BXXXCT 0.325 0.306 0.155 0.155 1,560 1,170 14,040
ACT CD74AC163M9882497 131188BXXXCT 0.240 0.226 0.159 0.158 1,560 1,170 14,040
ACT CD74AC164E 13145A 0.440 0.414 0.164 0.164 1,504 1,128 13,536
ACT CD74AC164M 13145AXXXCT 0.382 0.359 0.166 0.166 1,504 1,128 13,536
ACT CD74AC164M96 13145AXXXCT 0.262 0.246 0.164 0.164 1,504 1,128 13,536
ACT CD74AC174M96 13148AXXXCT 0.255 0.240 0.162 0.162 1,531 1,148 13,777
ACT CD74AC174M96S2463 13148AXXXCT 0.211 0.198 0.162 0.139 1,531 1,148 13,777
ACT CD74AC175M 13149AXXXCT 0.244 0.229 0.168 0.161 1,450 1,087 13,046
ACT CD74AC175M96 13149AXXXCT 0.352 0.331 0.169 0.169 1,450 1,087 13,046
ACT CD74AC175M96S2463 13149AXXXCT 0.197 0.185 0.171 0.130 1,450 1,087 13,046
ACT CD74AC175M96S2497 13149AXXXCT 0.218 0.205 0.171 0.144 1,450 1,087 13,046
ACT CD74AC191E 13113A 0.465 0.437 0.240 0.240 991 743 8,916
ACT CD74AC20E 13151A 0.152 0.143 0.077 0.077 3,291 2,468 29,620
ACT CD74AC20M 13151AXXXCT 0.165 0.155 0.078 0.078 3,291 2,468 29,620
ACT CD74AC20M96 13151AXXXCT 0.131 0.123 0.079 0.079 3,291 2,468 29,620
ACT CD74AC20M96S2463 13151AXXXCT 0.118 0.109 0.079 0.077 3,291 2,468 29,620
ACT CD74AC238M96 13111AXXXCT 0.276 0.259 0.170 0.170 1,436 1,077 12,926
ACT CD74AC240E 13100D 0.271 0.255 0.191 0.179 1,792 1,344 16,128
ACT CD74AC240M 13100D 0.204 0.192 0.191 0.135 1,792 1,344 16,128
ACT CD74AC240M96 13100D 0.125 0.118 0.191 0.083 1,792 1,344 16,128
ACT CD74AC240M96S2497 13100D 0.200 0.188 0.191 0.132 1,792 1,344 16,128
ACT CD74AC244E 13102D 0.243 0.228 0.188 0.160 1,792 1,344 16,128
ACT CD74AC244ES2497 13102D 0.220 0.207 0.191 0.145 1,792 1,344 16,128
</TABLE>
3
<PAGE>
SCHEDULE 1(a)[C]
COMMERCIAL PRODUCTS FOR SUPPLY AGREEMENT
<TABLE>
<CAPTION>
FG STD DIE STD DIE
FAMILY DEVICE DIE ASP TRF PRICE DIE COST TRF PRICE NDW MDPW MLQ
- - ------ ------ --- --- --------- -------- --------- --- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ACT CD74AC244M 13102D 0.201 0.189 0.191 0.133 1,792 1,344 16,128
ACT CD74AC244M96 13102D 0.249 0.234 0.191 0.164 1,792 1,344 16,128
ACT CD74AC244M96S2497 13102D 0.200 0.188 0.191 0.132 1,792 1,344 18,128
ACT CD74AC244SM 13102DXXXCT 0.381 0.358 0.197 0.197 1,792 1,344 16,128
ACT CD74AC244SM96 13102DXXXCT 0.659 0.619 0.197 0.197 1,792 1,344 16,128
ACT CD74AC245E 13103C 0.195 0.183 0.216 0.129 1,625 1,218 14,621
ACT CD74AC245M 13103C 0.275 0.259 0.215 0.182 1,625 1,218 14,621
ACT CD74AC245M96 13103C 0.219 0.206 0.218 0.145 1,625 1,218 14,621
ACT CD74AC245M96S2483 13103C 0.220 0.207 0.218 0.145 1,625 1,218 14,621
ACT CD74AC245SM 13103CXXXCT 0.320 0.301 0.219 0.211 1,625 1,218 14,621
ACT CD74AC251M 13133AXXXCT 0.209 0.196 0.151 0.138 1,643 1,233 14,791
ACT CD74AC251M96S2483 13133AXXXCT 0.190 0.179 0.151 0.125 1,643 1,233 14,791
ACT C074AC253M 13135BXXXCT 0.252 0.237 0.149 0.149 1,697 1,272 15,269
ACT CD74AC253M96 13135AXXXCT 0.202 0.190 0.149 0.133 1,717 1,288 15,456
ACT CD74AC253M96S2463 13135AXXXCT 0.188 0.177 0.149 0.124 1,717 1,288 15,456
ACT CD74AC253M96S2497 13135AXXXCT 0.209 0.196 0.149 0.138 1,717 1,288 15,456
ACT CD74AC257E 13120A 0.204 0.192 0.175 0.135 1,264 948 11,376
ACT CD74AC257M 13120AXXXCT 0.213 0.200 0.174 0.141 1,264 948 11,376
ACT CD74AC257M96 13120AXXXCT 0.267 0.251 0.174 0.174 1,264 948 11,376
ACT CD74AC257M96S2463 13120AXXXCT 0.172 0.162 0.197 0.114 1,264 948 11,376
ACT CD74AC257M96S2497 13120AXXXCT 0.130 0.122 0.197 0.086 1,264 948 11,376
ACT CD74AC273E 13146A 0.152 0.143 0.152 0.100 1,258 944 11,324
ACT CD74AC273M 13146A 0.133 0.125 0.151 0.088 1,258 944 11,324
ACT CD74AC273M96 13146A 0.163 0.153 0.150 0.108 1,258 944 11,324
ACT CD74AC280E 13119A 0.263 0.247 0.143 0.143 1,673 1,255 15,055
ACT C074AC280M 13119AXXXCT 0.306 0.288 0.146 0.146 1,673 1,255 15,055
ACT CD74AC280M96 13119AXXXCT 0.347 0.326 0.145 0.145 1,673 1,255 15,055
ACT CD74AC280M96S2483 13119AXXXCT 0.204 0.192 0.146 0.135 1,673 1,255 15,055
ACT CD74AC280MS2074 13119AXXXCT 0.240 0.226 0.145 0.145 1,673 1,255 15,055
ACT CD74AC283E 13112A 0.344 0.323 0.213 0.213 1,132 849 10,184
</TABLE>
4
<PAGE>
SCHEDULE 1(a)[C]
COMMERCIAL PRODUCTS FOR SUPPLY AGREEMENT
<TABLE>
<CAPTION>
FG STD DIE STD DIE
FAMILY DEVICE DIE ASP TRF PRICE DIE COST TRF PRICE NDW MDPW MLQ
- - ------ ------ --- --- --------- -------- --------- --- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ACT CD74AC283M 13112AXXXCT 0.339 0.319 0.215 0.215 1,132 849 10,184
ACT CD74AC297MS2075 13164AXXXCT 0.330 0.310 0.201 0.201 1,464 1,098 13,180
ACT CD74AC32E 13126B 0.144 0.135 0.129 0.095 3,071 2,303 27,637
ACT CD74AC32M 13126DXXXCT 0.120 0.113 0.112 0.079 3,589 2,692 32,303
ACT CD74AC32M96 13126DXXXCT 0.117 0.110 0.111 0.077 3,589 2,692 32,303
ACT CD74AC32M96S2463 13126DXXXCT 0.115 0.108 0.111 0.076 3,589 2,692 32,303
ACT CD74AC32M96S2497 13126DXXXCT 0.110 0.103 0.113 0.073 3,589 2,692 32,303
ACT CD74AC373E 13137B 0.192 0.180 0.195 0.127 1,129 847 10,165
ACT CD74AC373M 13137B 0.211 0.198 0.194 0.139 1,129 847 10,165
ACT CD74AC373M96 13137B 0.179 0.168 0.194 0.118 1,129 847 10,165
ACT CD74AC373M96S2497 13137B 0.210 0.197 0.218 0.139 1,129 847 10,165
ACT CD74AC374E 13104B 0.206 0.194 0.258 0.136 926 694 8,333
ACT CD74AC374M 13104B 0.218 0.205 0.263 0.144 926 694 8,333
ACT CD74AC374M96 13104B 0.092 0.086 0.263 0.061 926 694 8,333
ACT CD74AC374M96S2463 13104B 0.220 0.207 0.263 0.145 926 694 8,333
ACT CD74AC374M96S2497 13104B 0.200 0.188 0.263 0.132 926 694 8,333
ACT CD74AC374MS2075 13104B 0.256 0.241 0.263 0.169 926 694 8,333
ACT CD74AC534M96 13136B 0.407 0.383 0.261 0.261 913 685 8,215
ACT CD74AC540M 13105B 0.241 0.227 0.212 0.159 1,167 875 10,506
ACT CD74AC541E 13106B 0.298 0.280 0.212 0.197 1,167 875 10,506
ACT CD74AC541M 13106B 0.251 0.236 0.212 0.166 1,167 875 10,506
ACT CD74AC541M96 13106B 0.283 0.266 0.207 0.187 1,167 875 10,506
ACT CD74AC541SM 13106BXXXCT 0.580 0.545 0.218 0.218 1,167 875 10,506
ACT CD74AC563E 13141A 0.416 0.391 0.232 0.232 1,062 797 9,559
ACT CD74AC573E 13140A 0.265 0.249 0.191 0.175 1,062 797 9,559
ACT CD74AC573M 13140A 0.248 0.233 0.191 0.164 1,062 797 9,559
ACT CD74AC573M96 13140A 0.223 0.210 0.193 0.147 1,062 797 9,559
ACT CD74AC574E 13142A 0.200 0.188 0.246 0.132 870 652 7,828
ACT CD74AC574M96 13142A 0.241 0.227 0.243 0.159 870 652 7,828
ACT CD74AC646M 13130B 1.341 1.261 0.603 0.603 548 411 4,928
</TABLE>
5
<PAGE>
SCHEDULE 1(a)[C]
COMMERCIAL PRODUCTS FOR SUPPLY AGREEMENT
<TABLE>
<CAPTION>
FG STD DIE STD DIE
FAMILY DEVICE DIE ASP TRF PRICE DIE COST TRF PRICE NDW MDPW MLQ
- - ------ ------ --- --- --------- -------- --------- --- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ACT CD74AC646M96 13130B 0.193 0.181 0.539 0.127 548 411 4,928
ACT CD74AC646M9082463 13130B 0.800 0.752 0.694 0.528 548 411 4,928
ACT CD74AC74E 13108B 0.141 0.133 0.149 0.093 1,629 1,222 14,664
ACT CD74AC74M 13108CXXXCT 0.138 0.130 0.129 0.091 3,101 2,326 27,912
ACT CD74AC74M96 13108CXXXCT 0.132 0.124 0.128 0.087 3,101 2,326 27,912
ACT CD74AC74M96S2497 13108CXXXCT 0.130 0.122 0.130 0.086 3,101 2,328 27,912
ACT CD74AC86E 13127B 0.146 0.137 0.114 0.096 3,071 2,303 27,637
ACT CD74AC86M 13127BXXXCT 0.158 0.149 0.113 0.104 3,071 2,303 27,637
ACT CD74AC86M96 13127BXXXCT 0.106 0.100 0.112 0.070 3,071 2,303 27,637
ACT CD74AC86M96S2463 13127BXXXCT 0.140 0.132 0.130 0.092 3,071 2,303 27,637
ACT CD74AC86M96S2497 13127BXXXCT 0.140 0.132 0.130 0.092 3,071 2,303 27,637
ACT CD74ACT00E 14109C 0.087 0.082 0.131 0.057 3,071 2,303 27,637
ACT CD74ACT00M 14109DXXXCT 0.069 0.065 0.120 0.046 3,549 2,662 31,944
ACT CD74ACT00M90 14109DXXXCT 0.101 0.095 0.121 0.067 3,549 2,662 31,944
ACT CD74ACT00M96S2378 14109DXXXCT 0.130 0.122 0.123 0.086 3,549 2,662 31,944
ACT CD74ACT00M96S2463 14109DXXXCT 0.110 0.103 0.123 0.073 3,549 2,662 31,944
ACT CD74ACT00M96S2497 14109DXXXCT 0.120 0.113 0.123 0.079 3,549 2,662 31,944
ACT CD74ACT02E 14150B 0.123 0.116 0.113 0.081 3,960 2,970 35,638
ACT CD74ACT02M96 14150AXXXCT 0.104 0.098 0.095 0.069 2,401 1,801 21,609
ACT CD74ACT04E 14123B 0.124 0.117 0.114 0.082 2,968 2,226 26,714
ACT CD74ACT04M 14123CXXXCT 0.096 0.090 0.114 0.063 3,700 2,775 33,301
ACT CD74ACT04M96 14123CXXXCT 0.079 0.074 0.114 0.052 3,700 2,775 33,301
ACT CD74ACT04M96S2463 14123CXXXCT 0.110 0.103 0.115 0.073 3,700 2,775 33,301
ACT CD74ACT04M96S2497 14123CXXXCT 0.101 0.095 0.115 0.067 3,700 2,775 33,301
ACT CD74ACT04M96S2546 14123CXXXCT 0.159 0.149 0.115 0.105 3,700 2,775 33,301
ACT CD74ACT05E 14124B 0.088 0.083 0.118 0.058 2,968 2,226 26,714
ACT CD74ACT05M 14124BXXXCT 0.118 0.111 0.117 0.078 2,968 2,226 26,714
ACT CD74ACT05M96 14124BXXXCT 0.124 0.117 0.116 0.082 2,968 2,226 26,714
ACT CD74ACT05M96S2074 14124BXXXCT 0.120 0.113 0.117 0.079 2,968 2,226 26,714
ACT CD74ACT05MS2075 14124BXXXCT 0.130 0.122 0.117 0.086 2,968 2,226 26,714
</TABLE>
6
<PAGE>
SCHEDULE 1(a)[C]
COMMERCIAL PRODUCTS FOR SUPPLY AGREEMENT
<TABLE>
<CAPTION>
FG STD DIE STD DIE
FAMILY DEVICE DIE ASP TRF PRICE DIE COST TRF PRICE NDW MDPW MLQ
- - ------ ------ --- --- --------- -------- --------- --- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ACT CD74ACT05MS2298 14124BXXXCT 0.117 0.110 0.117 0.077 2,968 2,226 26,714
ACT CD74ACT08E 14125B 0.100 0.094 0.129 0.066 3,071 2,303 27,637
ACT CD74ACT08M 14125DXXXCT 0.091 0.086 0.120 0.060 3,549 2,662 31,944
ACT CD74ACT08M96 14125DXXXCT 0.088 0.083 0.120 0.058 3,549 2,662 31,944
ACT CD74ACT08M96S2497 14125DXXXCT 0.120 0.113 0.121 0.079 3,549 2,662 31,994
ACT CD74ACT109E 14122B 0.179 0.168 0.158 0.118 1,629 1,222 14,664
ACT CD74ACT109M 14122BXXXCT 0.169 0.159 0.160 0.112 1,629 1,222 14,664
ACT CD74ACT109M96 14122BXXXCT 0.196 0.184 0.133 0.129 1,629 1,222 14,664
ACT CD74ACT10E 14147A 0.086 0.081 0.099 0.057 2,791 2,093 25,119
ACT CD74ACT10M 14147AXXXCT 0.116 0.109 0.100 0.077 2,791 2,093 25,119
ACT CD74ACT10M96 14147AXXXCT 0.092 0.086 0.100 0.061 2,791 2,093 25,119
ACT CD74ACT112M 14144AXXXCT 0.262 0.246 0.153 0.153 1,717 1,288 15,457
ACT CD74ACT112M96 14144AXXXCT 0.262 0.246 0.152 0.152 1,717 1,288 15,457
ACT CD74ACT138E 14110A 0.176 0.165 0.170 0.116 1,369 1,027 12,325
ACT CD74ACT138M 14110BXXXCT 0.166 0.156 0.168 0.110 2,469 1,852 22,224
ACT CD74ACT138M96 14110BXXXCT 0.177 0.166 0.168 0.117 2,469 1,852 22,224
ACT CD74ACT139M96 14139AXXXCT 0.160 0.150 0.172 0.106 1,466 1,100 13,195
ACT CD74ACT139M96S2497 14139AXXXCT 0.170 0.160 0.174 0.112 1,466 1,100 13,195
ACT CD74ACT14E 14163A 0.144 0.135 0.180 0.095 1,677 1,258 15,090
ACT CD74ACT14M 14163AXXXCT 0.121 0.114 0.179 0.080 1,677 1,258 15,090
ACT CD74ACT14M96 14163AXXXCT 0.136 0.128 0.179 0.090 1,677 1,258 15,090
ACT CD74ACT14M96S2463 14163AXXXCT 0.130 0.122 0.181 0.086 1,677 1,258 15,090
ACT CD74ACT14M96S2478 14163AXXXCT 0.130 0.122 0.181 0.086 1,677 1,258 15,090
ACT CD74ACT14M96S2497 14163AXXXCT 0.150 0.141 0.181 0.099 1,677 1,258 15,090
ACT CD74ACT151M96 14132AXXXCT 0.264 0.248 0.162 0.162 1,624 1,218 14,612
ACT CD74ACT153E 141MB 0.240 0.226 0.155 0.155 1,697 1,272 15,269
ACT CD74ACT1S3M 14134BXXXCT 0.287 0.270 0.157 0.157 1,697 1,272 15,269
ACT CD74ACT153M96 14134BXXXCT 0.158 0.149 0.157 0.104 1,697 1,272 15,269
ACT CD74ACT157E 14115A 0.200 0.188 0.170 0.132 1,423 1,067 12,806
ACT CD74ACT157M 14115AXXXCT 0.249 0.234 0.172 0.164 1,423 1,067 12,806
</TABLE>
7
<PAGE>
SCHEDULE 1(a)[C]
COMMERCIAL PRODUCTS FOR SUPPLY AGREEMENT
<TABLE>
<CAPTION>
FG STD DIE STD DIE
FAMILY DEVICE DIE ASP TRF PRICE DIE COST TRF PRICE NDW MDPW MLQ
- - ------ ------ --- --- --------- -------- --------- --- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ACT CD74ACT157M96 14115AXXXCT 0.257 0.242 0.170 0.170 1,423 1,067 12,806
ACT CD74ACT157M96S2497 14115AXXXCT 0.210 0.197 0.172 0.139 1,423 1,067 12,806
ACT CD74ACT158M96 14116AXXXCT 0.293 0.275 0.180 0.180 1,423 1,067 12,806
ACT CD74ACT1B1E 14117B 0.196 0.184 0.161 0.129 1,580 1,185 14,216
ACT CD74ACT161M96 14117BXXXCT 0.254 0.239 0.163 0.163 1,580 1,185 14,216
ACT CD74ACT161M96S2463 14117BXXXCT 0.190 0.179 0.165 0.125 1,580 1,185 14,216
ACT CD74ACT163E 14118A 0.050 0.047 0.163 0.033 1,811 1,358 16,296
ACT CD74ACT103M 14118BXXXCT 0.317 0.298 0,165 0.165 1,580 1,185 14,216
ACT CD74ACT163M96 14118AXXXCT 0.300 0.282 0.165 0.165 1,811 1,358 16,296
ACT CD74ACT164E 14145A 0.447 0.420 0.176 0.176 1,431 1,074 12,883
ACT CD74ACT164M 14145AXXXCT 0.392 0.368 0.178 0.178 1,431 1,074 12,883
ACT CD74ACT164M96 14145AXXXCT 0.472 0.444 0.178 0.178 1,431 1,074 12,883
ACT CD74ACT164MS2298 14145AXXXCT 0.350 0.329 0.178 0.178 1,431 1,074 12,883
ACT CD74ACT174E 14148A 0.196 0.184 0.161 0.129 1,571 1,178 14,135
ACT CD74ACT174M 14148AXXXCT 0.140 0.132 0.183 0.092 1,571 1,178 14,135
ACT CD74ACT174M96 14148AXXXCT 0.184 0.173 0.183 0.121 1,571 1,178 14,135
ACT CD74ACT174M96S2497 14148AXXXCT 0.197 0.185 0.164 0.130 1,571 1,178 14,135
ACT CD74ACT175E 14149A 0.204 0.192 0.177 0.135 1,431 1,074 12,883
ACT CD74ACT175M 14149AXXXCT 0.222 0.209 0.178 0.147 1,431 1,074 12,883
ACT CD074ACT175M96 14149AXXXCT 0.183 0.172 0.178 0.121 1,431 1,074 12,883
ACT CD74ACT175M96S2483 14149AXXXCT 0.236 0.222 0.178 0.156 1,431 1,074 12,883
ACT CD74ACT175M96S2497 14149AXXXCT 0.110 0.103 0.178 0.073 1,431 1,074 12,883
ACT CD74ACT101M 14113AXXXCT 0.832 0.782 0.258 0.258 966 724 8,690
ACT CD74ACT20E 14151A 0.145 0.136 0.087 0.087 3,213 2,410 28,915
ACT CD74ACT20M 14151AXXXCT 0.173 0.163 0.088 0.088 3,213 2,410 28,915
ACT CD74ACT20M96 14151AXXXCT 0.143 0.134 0.088 0.088 3,213 2,410 28,915
ACT CD74ACT238E 14111A 0.373 0.351 0.171 0.171 1,369 1,027 12,325
ACT CD74ACT240E 14100D 0.205 0.193 0.205 0.135 1,792 1,344 16,128
ACT CD74ACT240M 14100D 0.195 0.183 0.202 0.129 1,792 1,344 16,128
ACT CD74ACT240M96 141000 0.207 0.195 0.202 0.137 1,792 1,344 16,128
</TABLE>
8
<PAGE>
SCHEDULE 1(a)[C]
COMMERCIAL PRODUCTS FOR SUPPLY AGREEMENT
<TABLE>
<CAPTION>
FG STD DIE STD DIE
FAMILY DEVICE DIE ASP TRF PRICE DIE COST TRF PRICE NDW MDPW MLQ
- - ------ ------ --- --- --------- -------- --------- --- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ACT CD74ACT240M96S2497 14100D 0.230 0.216 0.204 0.152 1,792 1,344 16,128
ACT CD74ACT241E 14101D 0.233 0.219 0.196 0.154 1,792 1,344 16,128
ACT CD74ACT241M96S2497 14101D 0.242 0.227 0.195 0.160 1,792 1,344 16,128
ACT CD74ACT244E 141020 0.205 0.193 0.213 0.135 1,792 1,344 16,128
ACT CD74ACT244ES2497 14102D 0.200 0.188 0.215 0.132 1,792 1,344 16,128
ACT CD74ACT244M 14102D 0.179 0.168 0.212 0.118 1,792 1,344 16,128
ACT CD74ACT244M96 141020 0.222 0.209 0.212 0.147 1,792 1,344 16,128
ACT CD74ACT244M96S2497 14102D 0.220 0.207 0.212 0.145 1,792 1,344 16,128
ACT CD74ACT245E 14103C 0.205 0.193 0.258 0.135 1,431 1,073 12,880
ACT CD74ACT245M 14103C 0.233 0.219 0.257 0.154 1,431 1,073 12,880
ACT CD74ACT245M00 14103C 0.242 0.227 0.257 0.160 1,431 1,073 12,880
ACT CD74ACT245M96S2463 14103C 0.230 0.216 0.260 0.152 1,431 1,073 12,880
ACT CD74ACT245M96S2497 14103C 0.230 0.216 0.260 0.152 1,431 1,073 12,880
ACT CD74ACT245MS2074 14103C 0.225 0.212 0.260 0.149 1,431 1,073 12,880
ACT CD74ACT24SSM 14103BXXXCT 0.492 0.462 0.264 0.264 723 542 6,504
ACT CD74ACT253M 14135BXXXCT 0.169 0.159 0.159 0.112 1,697 1,272 15,269
ACT CD74ACT2S3M90 14135BXXXCT 0.220 0.207 0,159 0.145 1,697 1,272 15,269
ACT CD74ACT253M96S2463 14135BXXXCT 0.187 0.176 0.159 0.123 1,697 1,272 15,269
ACT CD74ACT253M96S2497 14135BXXXCT 0.230 0.216 0.159 0.152 1,697 1,272 15,269
ACT CD74ACT257E 14120A 0.254 0.239 0.179 0.168 1,312 984 11,808
ACT CD74ACT257M 141208XXXCT 0.218 0.205 0.178 0.144 2,357 1,768 21,213
ACT CD74ACT257M96 141208XXXCT 0.190 0.179 0.178 0.125 2,357 1,788 21,213
ACT CD74ACT273E 141W 0.235 0.221 0.173 0.155 1,095 821 9,853
ACT CD74ACT273M 14148A 0.227 0.213 0.171 0.150 1,095 821 9,853
ACT CD74ACT273M96 14146A 0.194 0.182 0.171 0.128 1,095 821 9,853
ACT CD74ACT273M9682497 14146A 0.270 0.254 0.172 0.172 1,095 821 9,853
ACT CD74ACT273SM 14146AXXXCT 0.263 0.247 0.175 0.174 1,095 821 9,853
ACT CD74ACT280E 14119A 0.282 0.265 0.150 0.150 1,594 1,196 14,347
ACT CD74ACT280M 14119AXXXCT 0.257 0.242 0.153 0.153 1,594 1,196 14,347
ACT CD74ACT280M90 14119AXXXCT 0.246 0.231 0.151 0.151 1,594 1,196 14,347
</TABLE>
9
<PAGE>
SCHEDULE 1(a)[C]
COMMERCIAL PRODUCTS FOR SUPPLY AGREEMENT
<TABLE>
<CAPTION>
FG STD DIE STD DIE
FAMILY DEVICE DIE ASP TRF PRICE DIE COST TRF PRICE NDW MDPW MLQ
- - ------ ------ --- --- --------- -------- --------- --- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ACT CD74ACT280MS2074 14119AXXXCT 0.240 0.226 0.153 0.153 1,594 1,196 14,347
ACT CD74ACT283E 14112A 0.353 0.332 0.227 0.227 1,104 828 9,936
ACT CD74ACT283M 14112AXXXCT 0.370 0.348 0.229 0.229 1,104 828 9,936
ACT CD74ACT297M 14164AXXXCT 0.351 0.330 0.174 0.174 1,446 1,085 13,018
ACT CD74ACT299M96 14128A 0.427 0.401 0.381 0.282 660 495 5,937
ACT CD74ACT32E 14126B 0.112 0.105 0.117 0.074 3,071 2,303 27,637
ACT CD74ACT32M 14126DXXXCT 0.056 0.053 0.120 0.037 3,549 2,682 31,944
ACT CD74ACT32M96 14126DXXXCT 0.111 0.104 0.120 0.073 3,549 2,662 31,944
ACT CD74ACT32M96S2497 14126DXXXCT 0.105 0.099 0.121 0.069 3,549 2,662 31,944
ACT CD74ACT373E 14137B 0.197 0.185 0.205 0.130 1,043 782 9,383
ACT CD74ACT373M 14137B 0.113 0.106 0.204 0.075 1,043 782 9,383
ACT CD74ACT373M98 14137B 0.158 0.149 0.204 0.104 1,043 782 9,383
ACT CD74ACT373M96S2463 141378 0.205 0.193 0.241 0.135 1,043 782 9,383
ACT CD74ACT374E 141048 0.245 0.230 0.259 0.162 965 724 8,685
ACT CD74ACT374M 14104B 0.148 0.139 0.258 0.098 965 724 8,685
ACT CD74ACT374M00 14104B 0.187 0.176 0.258 0.123 965 724 8,685
ACT CD74ACT374M96S2463 14104B 0.217 0.204 0.261 0.143 965 724 8,685
ACT CD74ACT374M96S2497 14104B 0.203 0.191 0.261 0.134 965 724 8,685
ACT CD74ACT540E 141058 0.221 0.208 0.232 0.146 1,107 830 9,960
ACT CD74ACT540M 14105B 0.241 0.227 0.231 0.159 1,107 830 9,960
ACT CD74ACT540MS2075 141058 0.220 0.207 0.234 0.145 1,107 830 9,960
ACT CD74ACTS41E 141068 0.248 0.233 0.229 0.164 1,107 830 9,960
ACT CD74ACT541M 141068 0.236 0.222 0.231 0.156 1,107 830 9,960
ACT CD74ACT541M96 14106B 0.254 0.239 0.228 0.168 1,107 830 9,960
ACT CD74ACT541M96S2497 141068 0.350 0.329 0.231 0.231 1,107 830 9,960
ACT CD74ACT541SM 14106BXXXCT 0.260 0.244 0.238 0.172 1,107 830 9,960
ACT CD74ACT573E 14140A 0.227 0.213 0.194 0.150 987 741 8,886
ACT CD74ACT573M 14140A 0.223 0.210 0.193 0.147 987 741 8,886
ACT CD74ACT573M96 14140A 0.287 0.270 0.193 0.189 987 741 8,886
ACT CD74ACT573M96S2497 14140A 0.250 0.235 0.196 0.165 987 741 8,886
</TABLE>
10
<PAGE>
SCHEDULE 1(a)[C]
COMMERCIAL PRODUCTS FOR SUPPLY AGREEMENT
<TABLE>
<CAPTION>
FG STD DIE STD DIE
FAMILY DEVICE DIE ASP TRF PRICE DIE COST TRF PRICE NDW MDPW MLQ
- - ------ ------ --- --- --------- -------- --------- --- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ACT CD74ACT574E 14142A 0.247 0.232 0.234 0.163 870 652 7,828
ACT CD74ACT574M 14142A 0.187 0.176 0.233 0.123 870 652 7,828
ACT CD74ACT574M96 14142A 0.276 0.259 0.233 0.182 870 652 7,828
ACT CD74ACT574M96S2497 14142A 0.200 0.188 0.287 0.132 870 652 7,828
ACT CD74ACT623M96 14155C 0.341 0.321 0.262 0.225 1,431 1,073 12,880
ACT CD74ACT646EN 141308 1.272 1.196 0.726 0.726 548 411 4,928
ACT CD74ACT646M 141308 0.233 0.219 0.527 0.154 548 411 4,928
ACT CD74ACT646M96 14130B 0.773 0.727 0.521 0.510 548 411 4,928
ACT CD74ACT646M96S2463 14130B 1.010 0.949 0.714 0.667 548 411 4,928
ACT CD74ACT652EN 14157C 1.517 1.426 0.726 0.726 784 588 7,052
ACT CD74ACT652M 14157B 0.913 0.858 0.527 0.527 765 573 6,882
ACT CD74ACT652M96 141578 1.289 1.212 0.527 0.527 765 573 6,882
ACT CD74ACT652MS2298 14157B 1.331 1.251 0.527 0.527 765 573 6,882
ACT CD74ACT74E 141088 0.130 0.122 0.156 0.086 1,629 1,222 14,664
ACT CD74ACT74M 14108CXXXCT 0.103 0.097 0.134 0.068 3,135 2,352 28,218
ACT CD74ACT74M96 14108CXXXCT 0.124 0.117 0.134 0.082 3,135 2,352 28,218
ACT CD74ACT74M96S2497 14108CXXXCT 0.130 0.122 0.136 0.086 3,135 2,352 28,218
ACT CD74ACT86E 14127B 0.159 0.149 0.122 0.105 3,071 2,303 27,637
ACT CD74ACT86M 14127BXXXCT 0.160 0.150 0.120 0.106 3,071 2,303 27,637
ACT CD74ACT86M96 14127BXXXCT 0.128 0.120 0.120 0.084 3,071 2,303 27,637
CD4000 18892 10900X 0.236 0.222 0.041 0.041 2,522 1,892 22,699
CD4000 18893 06911A 0.307 0.289 0.082 0.082 1,256 942 11,307
CD4000 41053 06947X 0.290 0.273 0.111 0.111 926 694 8,331
CD4000 98634 06586C 0.133 0.125 0.032 0.032 3,211 2,408 28,901
CD4000 99395 10705A 0.177 0.166 0.058 0.058 1,755 1,316 15,792
CD4000 99397 11196X 0.207 0.195 0.075 0.075 1,287 966 11,587
CD4000 99398 069368 0.125 0.118 0.032 0.032 3,166 2,375 28,496
CD4000 99399 10941X 0.203 0.191 0.079 0.079 1,305 979 11,749
CD4000 CD14S38BE 130248 0.191 0.180 0.091 0.091 1,115 836 10031
CD4000 CD14538BES2515 130248 0.156 0.147 0.091 0.091 1,115 836 10,031
</TABLE>
11
<PAGE>
SCHEDULE 1(a)[C]
COMMERCIAL PRODUCTS FOR SUPPLY AGREEMENT
<TABLE>
<CAPTION>
FG STD DIE STD DIE
FAMILY DEVICE DIE ASP TRF PRICE DIE COST TRF PRICE NDW MDPW MLQ
- - ------ ------ --- --- --------- -------- --------- --- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CD4000 CD14538BF 130248 1.458 1.371 0.087 0.087 1,115 836 10,031
CD4000 CD4001BE 08939X 0.081 0.076 0.036 0.036 2,781 2,086 25,029
CD4000 CD4001BER3589 06939X 0.141 0.133 0.037 0.037 2,781 2,086 25,029
CD4000 CD4001BES2325 06939X 0.108 0.102 0.036 0.036 2,781 2,086 25,029
CD4000 CD4001BF 06939X 0.455 0.428 0.038 0.038 2,781 2,086 25,029
CD4000 CD4001BFS2065 06939X 0.420 0.395 0.038 0.038 2,781 2,086 25,029
CD4000 CD4001BM 06939XXXXCT 0.088 0.083 0.038 0.038 2,781 2,086 25,029
CD4000 CD4001BM96 06939XXXXCT 0.102 0.096 0.038 0.038 2,781 2,086 25,029
CD4000 CD4001BW 06939X 0.199 0.187 0.036 0.036 2,781 2,086 25,029
CD4000 CD4001UBE 06924X 0.084 0.079 0.037 0.037 2,765 2,074 24,883
CD4000 CD4001UBF 06924X 0.840 0.790 0.038 0.038 2,765 2,074 24,883
CD4000 CD4002BE 10255X 0.096 0.090 0.037 0.037 2,781 2,086 25,029
CD4000 CD4002BF 10255X 0.490 0.461 0.038 0.038 2,781 2,086 25,029
CD4000 CD4007UBE 06938X 0.097 0.091 0.029 0.029 3,476 2,607 31,282
CD4000 CD4007UBF 06938X 0.485 0.456 0.030 0.030 3,476 2,607 31,282
CD4000 CD4007UBH 06938X 0.227 0.213 0.031 0.031 3,476 2,607 31,282
CD4000 CD4007UBW 06938X 0.180 0.169 0.029 0.029 3,476 2,607 31,282
CD4000 CD4009UBE 06868X 0.131 0.123 0.037 0.037 2,719 2,039 24,472
CD4000 CD40102BE 06653X 0.283 0.266 0.127 0.127 804 603 7,237
CD4000 CD40103BE 06629X 0.217 0.204 0.130 0.130 785 589 7,067
CD4000 CD40103BF 06629X 1.198 1.126 0.134 0.134 785 589 7,067
CD4000 CD40103BW 06629X 0.283 0.266 0.128 0.126 785 589 7,067
CD4000 CD40105BE 06751X 0.362 0.340 0.155 0.155 658 493 5,918
CD4000 CD40105BF 06751X 0.629 0.591 0.160 0.160 658 493 5,918
CD4000 CD40106BE 10900X 0.112 0.105 0.040 0.040 2,522 1,892 22,699
CD4000 CD40106BER3592 10900X 0.129 0.121 0.040 0.040 2,522 1,892 22,699
CD4000 CD40106BES2300 10900X 0.112 0.105 0.040 0.040 2,522 1,892 22,699
CD4000 CD40108BES2515 10900X 0.100 0.094 0.041 0.041 2,522 1,892 22,699
CD4000 CD40106BES5001 10900X 0.110 0.103 0.041 0.041 2,522 1,892 22,699
CD4000 CD40106BEX 10900X 0.249 0.234 0.041 0.041 2,522 1,892 22,699
</TABLE>
12
<PAGE>
SCHEDULE 1(a)[C]
COMMERCIAL PRODUCTS FOR SUPPLY AGREEMENT
<TABLE>
<CAPTION>
FG STD DIE STD DIE
FAMILY DEVICE DIE ASP TRF PRICE DIE COST TRF PRICE NDW MDPW MLQ
- - ------ ------ --- --- --------- -------- --------- --- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CD4000 CD40106BF 10900X 0.828 0.778 0.042 0.042 2,522 1,892 22,699
CD4000 CD40106BM 10900XXXXCT 0.101 0.095 0.042 0.042 2,522 1,892 22,699
CD4000 CD40106BM96 10900XXXXCT 0.142 0.133 0.042 0.042 2,522 1,892 22,699
CD4000 CD40106BW 10900X 0.157 0.148 0.039 0.039 2,522 1,892 22,699
CD4000 CD40107BE 0670X 0.133 0.125 0.029 0.029 3,513 2,634 31,613
CD4000 CD40107BF 06706X 0.840 0.790 0.030 0.030 3,513 2,634 31,613
CD4000 CD40109BE 11377A 0.261 0.245 0.075 0.075 1,346 1,010 12,118
CD4000 CD40109BF 11377A 0.886 0.833 0.078 0.078 1,346 1,010 12,118
CD4000 CD40109BW 11377A 0.349 0.328 0.074 0.074 1,346 1,010 12,118
CD4000 CD4010BE 06869X 0.113 0.106 0.038 0.038 2,689 2,017 24,203
CD4000 CD4010BF 06869X 0.800 0.752 0.039 0.039 2,689 2,017 24,203
CD4000 CD40110BE 06830B 0.271 0.255 0.163 0.163 627 470 5,640
CD4000 CD40117BE 10933X 0.157 0.148 0.035 0.035 2,904 2,178 26,140
CD4000 CD4011BE 10256A 0.087 0.082 0.028 0.028 3,680 2,760 33,120
CD4000 CD4011BES2325 10256A 0.108 0.102 0.028 0.028 3,680 2,760 33,120
CD4000 CD4011BF 10256A 0.472 0.444 0.029 0.029 3,680 2,760 33,120
CD4000 CD4011BM 10256AXXXCT 0.091 0.086 0.029 0.029 3,680 2,760 33,120
CD4000 CD4011BM96 10256AXXXCT 0.113 0.106 0.029 0.029 3,680 2,760 33,120
CD4000 CD4011BW 10256A 0.167 0.157 0.027 0.027 3,680 2,780 33,120
CD4000 CD4011UBE 06982X 0.092 0.086 0.044 0.044 2,341 1,755 21,065
CD4000 CD4012BE 10257X 0.095 0.089 0.041 0.041 1,853 1390 16,677
CD4000 CD4012BES2064 10257X 0.085 0.080 0.041 0.041 1,853 1,390 16,677
CD4000 CD4012BM96 10257XXXCT 0.100 0.094 0.042 0.042 2,511 1,883 22,599
CD4000 CD4013BE 069368 0.084 0.079 0.032 0.032 3,166 2,375 28,496
CD4000 CD4013BES2325 06936B 0.108 0.102 0.032 0.032 3,166 2,375 28,496
CD4000 CD40138ES2497 06936B 0.110 0.103 0.033 0.033 3,166 2,375 28,496
CD4000 CD4013BES2515 06936B 0.067 0.063 0.033 0.033 3,166 2,375 28,496
CD4000 CD40138ES2540 069368 0.095 0.089 0.033 0.033 3,166 2,375 28,496
CD4000 CD4013BEX 06936B 0.143 0.134 0.032 0.032 3,166 2,375 28,496
CD4000 CD4013BF 06936B 0.490 0.461 0.033 0.033 3,166 2,375 28,496
</TABLE>
13
<PAGE>
SCHEDULE 1(a)[C]
COMMERCIAL PRODUCTS FOR SUPPLY AGREEMENT
<TABLE>
<CAPTION>
FG STD DIE STD DIE
FAMILY DEVICE DIE ASP TRF PRICE DIE COST TRF PRICE NDW MDPW MLQ
- - ------ ------ --- --- --------- -------- --------- --- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CD4000 CD40138H 06936B 0.181 0.170 0.034 0.034 3,166 2,315 28,496
CD4000 CD4013BM 06936BXXXCT 0.086 0.081 0.033 0.033 3,166 2,315 28,496
CD4000 CD40138M96 06936BXXXCT 0.120 0.113 0.033 0.033 3,166 2,375 28,496
CD4000 CD4013BW 06936B 0.163 0.153 0.031 0.031 3,166 2,375 28,496
CD4000 CD4014BE 10163X 0.205 0.193 0.085 0.085 1,202 901 10,817
CD4000 CD4015BE 06911A 0.142 0.133 0.081 0.081 1,256 942 11,307
CD4000 CD4015BF 06911A 0.478 0.449 0.084 0.084 1,256 942 11,307
CD4000 CD40158W 06911A 0.267 0.251 0.079 0.079 1,256 942 11,307
CD4000 CD40161BE 10215X 0.305 0.287 0.097 0.097 1,056 792 9,501
CD4000 CD40161BW 10215X 0.317 0.298 0.094 0.094 1,056 792 9,501
CD4000 CD4016BE 069408 0.116 0.109 0.028 0.028 3,644 2,733 32,793
CD4000 CD40168F 069408 0.463 0.435 0.029 0.029 3,644 2,733 32,793
CD4000 CD40108M 009408XXXCT 0.099 0.093 0.029 0.029 3,644 2,733 32,793
CD4000 CD4016BW 089408 0.173 0.163 0.027 0.027 3,644 2,733 32,793
CD4000 CD401748E 10276X 0.132 0.124 0.060 0.060 1,690 1,267 15,206
CD4000 CD401748E116 10276X 0.130 0.122 0.080 0.060 1,690 1,267 15,206
CD4000 CD401748F 10278X 0.797 0.749 0.062 0.062 1,690 1,267 15,206
CD4000 CD40174BW 10276X 0.180 0.169 0.059 0.059 1,690 1,267 15,206
CD4000 CD40175BE 11180X 0.135 0.127 0.052 0.052 1,945 1,459 17,508
CD4000 CD4017BE 10494B 0.134 0.126 0.102 0.088 998 748 8,981
CD4000 CD4017BF 10494B 0.980 0.921 0.105 0.105 998 748 8,981
CD4000 CD4017BW 10494B 0.331 0.311 0.099 0.099 998 748 8,981
CD4000 CD4018BE 10113X 0.161 0.151 0.073 0.073 1,388 1,041 12,492
CD4000 CD4018BES2064 10113X 0.171 0.161 0.073 0.073 1,388 1,041 12,492
CD4000 CD40192BE 06729X 0.184 0.173 0.111 0.111 916 687 8,247
CD4000 CD40193BE 06730X 0.200 0.188 0.113 0.113 906 679 8,150
CD4000 CD40194BE 10485A 0.178 0.167 0.098 0.098 1,037 778 9,333
CD4000 CD4019BE 10939X 0.125 0.118 0.041 0.041 2,467 1,850 22,200
CD4000 CD4019BES2260 10939X 0.160 0.150 0.041 0.041 2,467 1,850 22,200
CD4000 CD40198F 10939X 0.754 0.709 0.043 0.043 2,467 1,850 22,200
</TABLE>
14
<PAGE>
SCHEDULE 1(a)[C]
COMMERCIAL PRODUCTS FOR SUPPLY AGREEMENT
<TABLE>
<CAPTION>
FG STD DIE STD DIE
FAMILY DEVICE DIE ASP TRF PRICE DIE COST TRF PRICE NDW MDPW MLQ
- - ------ ------ --- --- --------- -------- --------- --- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CD4000 CD4020BE 06947X 0.171 0.161 0.110 0.110 926 694 8,331
CD4000 CD4020BF 06947X 0.913 0.858 0.114 0.114 926 694 8,331
CD4000 CD4020BW 06947X 0.352 0.331 0.107 0.107 926 694 8,331
CD4000 CD4021BE 10164X 0.135 0.127 0.081 0.081 1,260 945 11,338
CD4000 CD40218ES2515 10164X 0.111 0.104 0.082 0.073 1,260 945 11,338
CD4000 CD4021BF 10164X 0.669 0.629 0.083 0.083 1,260 945 11,338
CD4000 CD40228E 10495B 0.155 0.146 0.087 0.087 1,176 882 10,584
CD4000 CD4022BF 10495B 0.511 0.480 0.089 0.089 1,176 882 10,584
CD4000 CD4022BW 104958 0.250 0.235 0.084 0.084 1,176 882 10,584
CD4000 CD40238E 10258X 0.088 0.083 0.040 0.040 2,539 1,904 22,850
CD4000 CD40238F 10258X 0.509 0.478 0.041 0.041 2,539 1,904 22,850
CD4000 CD4023BM 10258XXXXCT 0.070 0.066 0.041 0.041 2,539 1,904 22,850
CD4000 CD4023BM96 10258XXXXCT 0.099 0.093 0.041 0.041 2,539 1,904 22,850
CD4000 CD40238W 10258X 0.133 0.125 0.039 0.039 2,539 1,904 22,850
CD4000 CD4024BE 06903X 0.147 0.138 0.064 0.064 1,596 1,197 14,367
CD4000 CD4024BF 06903X 0.571 0.537 0.068 0.066 1,596 1,197 14,367
CD4000 CD4024BM 06003XXXXCT 0.131 0.123 0.066 0.066 1,596 1,197 14,367
CD4000 CD40248M96 00903XXXXCT 0.137 0.129 0.066 0.066 1,596 1,197 14,367
CD4000 CD40258E 10259X 0.097 0.091 0.041 0.041 2,511 1,883 22,599
CD4000 CD40258ES2064 10259X 0.095 0.089 0.041 0.041 2,511 1,883 22,599
CD4000 CD4025BF 10259X 0.358 0.337 0.041 0.041 2,511 1,883 22,599
CD4000 CD4025BM 10259XXXXCT 0.050 0.047 0.042 0.033 2,511 1,883 22,599
CD4000 CD4025BM96 10259XXXXCT 0.099 0.093 0.042 0.042 2,511 1,883 22,599
CD4000 CD4025BW 10259X 0.134 0.126 0.039 0.039 2,511 1,883 22,599
CD4000 CD4026BE 06995X 0.146 0.137 0.106 0.096 964 723 8,679
CD4000 CD4027BE 06904A 0.143 0.134 0.052 0.052 1,945 1,459 17,503
CD4000 CD4027BES2065 06904A 0.130 0.122 0.052 0.052 1,945 1,459 17,503
CD4000 CD4027BF 06904A 0.656 0.617 0.054 0.054 1,945 1,459 17,503
CD4000 CD4027BM 06904AXXXCT 0.108 0.102 0.054 0.054 1,945 1,459 17,503
CD4000 CD4027BW 06904A 0.152 0.143 0.051 0.051 1,945 1,459 17,503
</TABLE>
15
<PAGE>
SCHEDULE 1(a)[C]
COMMERCIAL PRODUCTS FOR SUPPLY AGREEMENT
<TABLE>
<CAPTION>
FG STD DIE STD DIE
FAMILY DEVICE DIE ASP TRF PRICE DIE COST TRF PRICE NDW MDPW MLQ
- - ------ ------ --- --- --------- -------- --------- --- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CD4000 CD4028BE 06984X 0.147 0.138 0.057 0.057 1,788 1,341 16,093
CD4000 CD4028BF 06984X 0.818 0.769 0.059 0.059 1,788 1,341 16,093
CD4000 CD4029BE 06836X 0.198 0.186 0.104 0.104 994 746 8,949
CD4000 CD4029BF 06836X 0.882 0.829 0.106 0.106 994 746 8,949
CD4000 CD40296W 06836X 0.316 0.297 0.100 0.100 994 746 8,949
CD4000 CD4030BE 06950X 0.146 0.137 0.051 0.051 1,985 1,489 17,868
CD4000 CD4030BF 06950X 0.818 0.769 0.053 0.053 1,985 1,489 17,868
CD4000 CD4030BW 06950X 0.197 0.185 0.050 0.050 1,985 1,489 17,868
CD4000 CD40338E 06996X 0.189 0.178 0.100 0.100 1,022 766 9,195
CD4000 CD4035BF 10165X 0.964 0.906 0.082 0.082 1,285 964 11,567
CD4000 CD4040BE 06948X 0.162 0.152 0.109 0.107 937 703 8,430
CD4000 CD4040BF 06948X 0.902 0.848 0.112 0.112 937 703 8,430
CD4000 CD4040BFS2065 06948X 0.690 0.649 0.112 0.112 937 703 8,430
CD4000 CD4040BW 06948X 0.350 0.329 0.106 0.106 937 703 8,430
CD4000 CD4041UBE 06905A 0.357 0.338 0.054 0.054 1,885 1,414 16,965
CD4000 CD4041UBF 06905A 2.331 2.191 0.056 0.056 1,885 1,414 16,965
CD4000 CD4041UBW 06905A 0.296 0.278 0.053 0.053 1,885 1,414 16,965
CD4000 CD4042BE 06917X 0.116 0.109 0.047 0.047 2,156 1,617 19,403
CD4000 CD4042BF 06917X 0.446 0.419 0.049 0.049 2,156 1,617 19,403
CD4000 CD4042BW 06917X 0.171 0.161 0.046 0.046 2,156 1,617 19,403
CD4000 CD4043BE 10125X 0.132 0.124 0.050 0.050 2,043 1,533 18,391
CD4000 CD4044BE 10126X 0.122 0.115 0.050 0.050 2,043 1,533 18,391
CD4000 CD4044BF 10126X 0.483 0.454 0.051 0.051 2,043 1,533 18,391
CD4000 CD4045BW 06942X 0.411 0.386 0.091 0.091 1,093 820 9,835
CD4000 CD4046BE 10005A 0.147 0.138 0.091 0.091 1,124 843 10,116
CD4000 CD4046BES2064 10005A 0.180 0.169 0.091 0.091 1,124 843 10,116
CD4000 CD4046BF 10005A 0.409 0.384 0.094 0.094 1,124 843 10,116
CD4000 CD4046BW 10005A 0.365 0.343 0.088 0.088 1,124 843 10,116
CD4000 CD4047BE 06943C 0.190 0.179 0.067 0.067 1,528 1,146 13,749
CD4000 CD4047BES2497 06943C 0.420 0.395 0.067 0.067 1,528 1,146 13,749
</TABLE>
16
<PAGE>
SCHEDULE 1(a)[C]
COMMERCIAL PRODUCTS FOR SUPPLY AGREEMENT
<TABLE>
<CAPTION>
FG STD DIE STD DIE
FAMILY DEVICE DIE ASP TRF PRICE DIE COST TRF PRICE NDW MDPW MLQ
- - ------ ------ --- --- --------- -------- --------- --- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CD4000 CD4047BF 06943C 1.124 1.057 0.069 0.069 1,528 1,146 13,749
CD4000 CD4047BW 06943C 0.318 0.299 0.065 0.065 1,528 1,146 13,749
CD4000 CD4048BE 06944A 0.165 0.155 0.054 0.054 1,886 1,415 16,975
CD4000 CD4049UBE 10889X 0.111 0.104 0.041 0.041 2,466 1,850 22,194
CD4000 CD4049UBER3817 10889X 0.110 0.103 0.041 0.041 2,466 1,850 22,194
CD4000 CD4049UBES2064 10889X 0.116 0.109 0.041 0.041 2,466 1,850 22,194
CD4000 CD4049UBES2065 10889X 0.116 0.109 0.041 0.041 2,466 1,850 22,194
CD4000 CD4049UBF 10889X 0.606 0.570 0.043 0.043 2,466 1,850 22,194
CD4000 CD4049UBW 10889X 0.146 0.137 0.040 0.040 2,466 1,850 22,194
CD4000 CD4050BE 10966A 0.117 0.110 0.040 0.040 2,506 1,880 22,555
CD4000 CD4050BF 10966A 0.584 0.549 0.042 0.042 2,506 1,880 22555
CD4000 CD4050BW 10966A 0.151 0.142 0.040 0.040 2,506 1,880 22,555
CD4000 CD4051BE 10905X 0.117 0.110 0.098 0.077 1,066 800 9,598
CD4000 CD4051BER4248 10905X 0.550 0.517 0.096 0.096 1,066 800 9,598
CD4000 CD4051BES2325 10905X 0.164 0.154 0.096 0.096 1,066 800 9,598
CD4000 CD4051BF 10905X 0.895 0.653 0.099 0.099 1,066 600 9,598
CD4000 CD4051BH 10905X 0.283 0.266 0.101 0.101 1,066 800 9,598
CD4000 CD4051BM 52164AXXXCT 0.102 0.096 0.092 0.067 1,149 862 10,342
CD4000 CD4051BW 10905X 0.322 0.303 0.093 0.093 1,066 800 9,598
CD4000 CD4052BE 10940X 0.127 0.119 0.078 0.078 1,231 923 11,081
CD4000 CD4052BES2065 10940X 0.150 0.141 0.078 0.078 1,231 923 11,081
CD4000 CD4052BF 10940X 0.879 0.826 0.080 0.080 1,231 923 11,081
CD4000 CD4053BE 10941X 0.118 0.111 0.081 0.078 1,305 979 11,749
CD0000 CD4053BF 10941X 0.752 0.707 0.080 0.080 1,305 979 11,749
CD4000 CD4053BH 10941X 0.281 0.264 0.083 0.083 1,305 979 11,749
CD4000 CD4053BW 10941X 0.254 0.239 0.076 0.076 1,305 979 11,749
CD4000 CD4054BE 06881X 0.165 0.155 0.049 0.049 2,072 1,554 18,644
CD4000 CD4054BW 06881X 0.363 0.341 0.048 0.048 2,072 1,554 18,644
CD4000 CD4055BE 06715M 0.209 0.196 0.078 0.078 1,311 983 11,796
CD4000 CD4056BE 06716M 0.166 0.156 0.077 0.077 1,326 994 11,933
</TABLE>
17
<PAGE>
SCHEDULE 1(a)[C]
COMMERCIAL PRODUCTS FOR SUPPLY AGREEMENT
<TABLE>
<CAPTION>
FG STD DIE STD DIE
FAMILY DEVICE DIE ASP TRF PRICE DIE COST TRF PRICE NDW MDPW MLQ
- - ------ ------ --- --- --------- -------- --------- --- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CD4000 CD4056BF 06716M 1.507 1.417 0.079 0.079 1,326 994 11,933
CD4000 CD4059AE 06006A 1.303 1.225 0.258 0.258 380 285 3,423
CD4000 CD4059AW 06006A 1.899 1.785 0.246 0.246 380 285 3,423
CD4000 CD4060BE 06949A 0.141 0.133 0.110 0.093 926 694 8,331
CD4000 CD4060BF 06949A 0.758 0.713 0.112 0.112 926 694 8,331
CD4000 CD4060BW 06949A 0.350 0.329 0.107 0.107 926 694 8,331
CD4000 CD4063BE 06415X 0.176 0.165 0.052 0.052 1,961 1,471 17,647
CD4000 CD4063BF 06415X 1.491 1.402 0.054 0.054 1,961 1,471 17,647
CD4000 CD4066BE 06941X 0.089 0.084 0.047 0.047 2,156 1,617 19,400
CD4000 CD4066BES2272 06941X 0.143 0.134 0.047 0.047 2,156 1,617 19,400
CD4000 CD40668ES2325 06941X 0.132 0.124 0.047 0.047 2,156 1,617 19,400
CD4000 CD4066BES2497 06941X 0.130 0.122 0.047 0.047 2,156 1,617 19,400
CD4000 CD4066BEX 06941X 0.252 0.237 0.048 0.048 2,156 1,617 19,400
CD4000 CD4066BF 06941X 0.499 0.469 0.049 0.049 2,156 1,617 19,400
CD4000 CD4066BM96 06941XXXXCT 0.110 0.103 0.049 0.049 2,156 1,617 19,400
CD4000 CD4066BW 06941X 0.140 0.132 0.048 0.046 2,156 1,617 19,400
CD4000 CD4067BE 06589A 0.510 0.479 0.109 0.109 958 718 8,620
CD4000 CD4067BF 06589A 1.316 1.237 0.110 0.110 958 718 8,620
CD4000 CD4067BH 06589A 0.630 0.592 0.108 0.108 958 718 8,620
CD4000 CD4067BW 06589A 0.460 0.432 0.103 0.103 958 718 8,620
CD4000 CD4068BE 10087X 0.092 0.086 0.036 0.036 2,797 2,098 25,176
CD4000 CD4068BES2325 10087X 0.117 0.110 0.036 0.036 2,797 2,098 25,176
CD4000 CD4068BF 10087X 0.564 0.530 0.038 0.038 2,797 2,098 25,176
CD4000 CD4069UBE 11149X 0.077 0.072 0.022 0.022 4,626 3,470 41,638
CD4000 CD4069UBE35 11149X 0.140 0.132 0.022 0.022 4,626 3,470 41,638
CD4000 CD4069UBES2325 11149X 0.116 0.109 0.022 0.022 4,626 3,470 41,638
CD4000 CD4069UBES2515 11149X 0.067 0.063 0.022 0.022 4,626 3,470 41,638
CD4000 CD4069UBF 11149X 0.473 0.445 0.023 0.023 4,626 3,470 41,638
CD4000 CD4069UBM 11149XXXXCT 0.083 0.078 0.023 0.023 4,626 3,470 41,638
CD4000 CD4069UBM96 11149XXXXCT 0.166 0.156 0.023 0.023 4,626 3,470 41,638
</TABLE>
18
<PAGE>
SCHEDULE 1(a)[C]
COMMERCIAL PRODUCTS FOR SUPPLY AGREEMENT
<TABLE>
<CAPTION>
FG STD DIE STD DIE
FAMILY DEVICE DIE ASP TRF PRICE DIE COST TRF PRICE NDW MDPW MLQ
- - ------ ------ --- --- --------- -------- --------- --- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CD4000 CD4069UBW 11149X 0.143 0.134 0.021 0.021 4,626 3,470 41,638
CD4000 CD4070BE 06950X 0.093 0.087 0.051 0.051 1,985 1,489 17,868
CD4000 CD4070BF 06950X 0.523 0.492 0.053 0.053 1,985 1,489 17,868
CD4000 CD4070BM 06950XXXXCT 0.150 0.141 0.053 0.053 1,985 1,489 17,868
CD4000 CD4070BW 06950X 0.174 0.164 0.050 0.050 1,985 1,489 17,868
CD4000 CD4071BE 10088X 0.091 0.086 0.038 0.038 2,693 2,020 24,238
CD4000 CD4071BES2325 10088X 0.107 0.101 0.038 0.038 2,693 2,020 24,238
CD4000 CD4071BES2515 10088X 0.067 0.063 0.038 0.038 2,693 2,020 24,238
CD4000 CD4071BF 10088X 0.496 0.466 0.039 0.039 2,693 2,020 24,238
CD4000 CD4071BM 10088XXXXCT 0.078 0.073 0.039 0.039 2,693 2,020 24,238
CD4000 CD4071BW 10088X 0.132 0.124 0.037 0.037 2,693 2,020 24,238
CD4000 CD4072BE 10027X 0.101 0.095 0.032 0.032 3,182 2,387 28,642
CD4000 CD40728F 10027X 0.408 0.384 0.033 0.033 3,182 2,387 28,642
CD4000 CD40738E 10089X 0.088 0.083 0.038 0.038 2,705 2,029 24,349
CD4000 CD40738ES2325 10089X 0.107 0.101 0.038 0.038 2,705 2,029 24,349
CD4000 CD40738F 10089X 0.429 0.403 0.039 0.039 2,705 2,029 24,349
CD4000 CD40738M 10089XXXXCT 0.068 0.064 0.039 0.039 2,705 2,029 24,349
CD4000 CD4073BW 10089X 0.134 0.126 0.037 0.037 2,705 2,029 24,349
CD4000 CD4075BE 10090X 0.090 0.085 0.037 0.037 2,713 2,034 24,413
CD4000 CD4075BF 10090X 0.442 0.415 0.039 0.039 2,713 2,034 24,413
CD4000 CD4076BE 06584A 0.181 0.170 0.062 0.062 1,642 1,232 14,779
CD4000 CD40768F 06584A 0.927 0.871 0.064 0.064 1,642 1,232 14,779
CD4000 CD4077BE 06953X 0.090 0.085 0.049 0.049 2,077 1,557 18,690
CD4000 CD4077BES2515 06953X 0.067 0.063 0.050 0.044 2,077 1,557 18,690
CD4000 CD4077BF 06953X 0.525 0.494 0.050 0.050 2,077 1,557 18,690
CD4000 CD4077BM 06953XXXXCT 0.068 0.064 0.051 0.045 2,077 1,557 18,690
CD4000 CD4077BW 06953X 0.180 0.169 0.048 0.048 2,077 1,557 18,690
CD4000 CD4078BE 10091X 0.094 0.088 0.033 0.033 3,130 2,347 28,169
CD4000 CD4078BM 10091XXXXCT 0.150 0.141 0.034 0.034 3,130 2,347 28,169
CD4000 CD40788W 10091X 0.115 0.108 0.032 0.032 3,130 2,347 28,169
</TABLE>
19
<PAGE>
SCHEDULE 1(a)[C]
COMMERCIAL PRODUCTS FOR SUPPLY AGREEMENT
<TABLE>
<CAPTION>
FG STD DIE STD DIE
FAMILY DEVICE DIE ASP TRF PRICE DIE COST TRF PRICE NDW MDPW MLQ
- - ------ ------ --- --- --------- -------- --------- --- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CD4000 CD4081BE 10092X 0.087 0.082 0.037 0.037 2,765 2,074 24,883
CD4000 CD4081BES2325 10092X 0.108 0.102 0.037 0.037 2,765 2,074 24,883
CD4000 CD4081BES2515 10092X 0.067 0.063 0.037 0.037 2,765 2,074 24,883
CD4000 CD4081BEX 10092X 0.206 0.194 0.038 0.038 2,765 2,074 24,883
CD4000 CD4081BF 10092X 0.476 0.447 0.038 0.038 2,765 2,074 24,883
CD4000 CD4081BM 10092XXXXCT 0.074 0.070 0.038 0.038 2,765 2,074 24883
CD4000 CD4081BW 10092X 0.124 0.117 0.036 0.036 2,765 2,074 24,883
CD4000 CD4082BE 10093X 0.094 0.088 0.037 0.037 2,773 2,079 24,954
CD4000 CD4082BES2064 10093X 0.093 0.087 0.037 0.037 2,773 2,079 24,954
CD4000 CD4082BF 10093X 0.425 0.400 0.038 0.038 2,773 2,079 24,954
CD4000 CD4082BW 10093X 0.128 0.120 0.036 0.036 2,773 2,079 24,954
CD4000 CD4085BE 06562A 0.192 0.180 0.030 0.030 3,422 2,567 30,800
CD4000 CD4085BF 06562A 0.632 0.594 0.031 0.031 3,422 2,567 30,800
CD4000 CD4086BE 06561A 0.107 0.101 0.026 0.026 3,938 2,953 35,441
CD4000 CD4089BE 10416X 0.329 0.309 0.106 0.106 960 720 8,638
CD4000 CD4093BE 06586C 0.102 0.096 0.032 0.032 3,211 2,408 28,901
CD4000 CD4093BEXS2064 06586C 0.215 0.202 0.032 0.032 3,211 2,408 28,901
CD4000 CD4093BF 06586C 0.535 0.503 0.033 0.033 3,211 2,408 28,901
CD4000 CD4093BH 06586C 0.161 0.151 0.034 0.034 3,211 2,408 28,901
CD4000 CD4093BM 06586CXXXCT 0.095 0.089 0.033 0.033 3,211 2,408 28,901
CD4000 CD4093BM96 06S86CXXXCT 0.196 0.184 0.033 0.033 3,211 2,408 28,901
CD4000 CD4093BW 06586C 0.161 0.151 0.031 0.031 3,211 2,408 28,901
CD4000 CD4094BE 06602X 0.133 0.125 0.093 0.088 1,098 823 9,881
CD4000 CD4094BES2515 06602X 0.111 0.104 0.094 0.073 1,098 823 9,881
CD4000 CD4094BF 06602X 0.946 0.889 0.096 0.096 1,098 823 9,881
CD4000 CD4094BW 06602X 0.336 0.316 0.090 0.090 1,098 823 9,881
CD4000 CD4097BE 06607A 0.453 0.426 0.105 0.105 992 744 8,932
CD4000 CD4098BE 06946X 0.158 0.149 0.079 0.079 1,297 973 11,672
CD4000 CD4098BF 06946X 1.117 1.050 0.081 0.081 1,297 973 11,672
CD4000 CD4098BW 06946X 0.317 0.298 0.076 0.076 1,297 973 11,672
</TABLE>
20
<PAGE>
SCHEDULE 1(a)[C]
COMMERCIAL PRODUCTS FOR SUPPLY AGREEMENT
<TABLE>
<CAPTION>
FG STD DIE STD DIE
FAMILY DEVICE DIE ASP TRF PRICE DIE COST TRF PRICE NDW MDPW MLQ
- - ------ ------ --- --- --------- -------- --------- --- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CD4000 CD4099BE 06610X 0.168 0.158 0.088 0.086 1,192 894 10,727
CD4000 CD4099BES2497 06610X 0.210 0.197 0.086 0.086 1,192 894 10,727
CD4000 CD4099BF 06610X 0.839 0.789 0.088 0.088 1,192 894 10,727
CD4000 CD4099BW 06610X 0.349 0.328 0.083 0.083 1,192 894 10,727
CD4000 CD4502BE 06859X 0.231 0.217 0.079 0.079 1,290 968 11,613
CD4000 CD4S02BW 06859X 0.250 0.235 0.077 0.077 1,290 968 11,613
CD4000 CD4503BE 10705A 0.146 0.137 0.058 0.058 1,755 1,316 15,792
CD4000 CD4503BES2325 10705A 0.199 0.187 0.058 0.058 1,755 1,316 15,792
CD4000 CD4S03BW 10705A 0.214 0.201 0.056 0.056 1,755 1,316 15,792
CD4000 CD4504BE 11901A 0.196 0.184 0.095 0.095 1,146 860 10,315
CD4000 CD4508BE 06785A 0.539 0.507 0.099 0.099 1,054 791 9,486
CD4000 CD4510BE 06803X 1.132 1.064 0.100 0.100 1,015 761 9,133
CD4000 CD4511BE 10480X 0.157 0.148 0.114 0.104 892 669 8,031
CD4000 CD4511BF 10480X 0.875 0.823 0.118 0.118 892 669 8,031
CD4000 CD4512BE 10213X 0.168 0.158 0.059 0.059 1,727 1,295 15,539
CD4000 CD4514BE 10075X 0.395 0.371 0.091 0.091 1,144 858 10,297
CD4000 CD4514BM 10075X 0.340 0.320 0.090 0.090 1,144 858 10,297
CD4000 CD4514BW 10075X 0.492 0.462 0.087 0.087 1,144 858 10,297
CD4000 CD4515BE 10076X 0.446 0.419 0.088 0.088 1,185 889 10,664
CD4000 CD4516BE 06875X 0.172 0.162 0.080 0.080 1,268 951 11,409
CD4000 CD4516BF 06875X 0.604 0.568 0.083 0.083 1,268 951 11,409
CD4000 CD4510BW 00875X 0.260 0.244 0.078 0.078 1,268 951 11,409
CD4000 CD4517SE 10482X 0.510 0.479 0.180 0.180 567 425 5,105
CD4000 CD4517BW 10482X 0.673 0.633 0.175 0.175 567 425 5,105
CD4000 CD4518BE 10914A 0.143 0.134 0.080 0.080 1,278 958 11,502
CD4000 CD4518BF 10914A 0.784 0.737 0.081 0.081 1,278 958 11,502
CD4000 CD451BBW 10914A 0.278 0.261 0.078 0.078 1,278 958 11,502
CD4000 CD4520BE 10915A 0.166 0.156 0.080 0.080 1,278 958 11,502
CD4000 CD4520BES2325 10915A 0.233 0.219 0.080 0.080 1,278 958 11,502
CD4000 CD4520BF 10915A 0.720 0.677 0.082 0.082 1,278 958 11,502
</TABLE>
21
<PAGE>
SCHEDULE 1(a)[C]
COMMERCIAL PRODUCTS FOR SUPPLY AGREEMENT
<TABLE>
<CAPTION>
FG STD DIE STD DIE
FAMILY DEVICE DIE ASP TRF PRICE DIE COST TRF PRICE NDW MDPW MLQ
- - ------ ------ --- --- --------- -------- --------- --- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CD4000 CD4520BW 10915A 0.296 0.278 0.078 0.078 1,278 958 11,502
CD4000 CD4521BE 11903B 0.174 0.164 0.077 0.077 1,324 993 11,919
CD4000 CD4522BE 11904A 0.215 0.202 0.066 0.066 1,550 1,163 13,953
CD4000 CD4527BE 10415X 0.242 0.227 0.114 0.114 893 670 8,035
CD4000 CD4532BE 06634X 0.141 0.133 0.053 0.053 1,915 1,436 17,237
CD4000 CD4538BE 10523X 0.257 0.242 0.138 0.138 738 553 6,640
CD4000 CD4536BW 10523X 0.310 0.291 0.134 0.134 738 553 6,640
CD4000 CD4541BE 11196X 0.103 0.097 0.074 0.068 1,287 966 11,587
CD4000 CD4541BES2260 11196X 0.230 0.216 0.074 0.074 1,287 966 11,587
CD4000 CD4541BF 11196X 1.175 1.105 0.075 0.075 1,287 966 11,587
CD4000 CD4541BW 11196X 0.280 0.263 0.072 0.072 1,287 966 11,587
CD4000 CD4543BE 11049A 0.151 0.142 0.061 0.061 1,660 1,245 14,937
CD4000 CD4555BE 06627X 0.127 0.119 0.064 0.064 1,586 1,189 14,274
CD4000 CD4556BE 06628X 0.146 0.137 0.064 0.064 1,586 1,189 14,274
CD4000 CD4556BF 06628X 0.796 0.748 0.066 0.066 1,586 1,189 14,274
CD4000 CD4572UBE 11909A 0.153 0.144 0.030 0.030 3,371 2,528 30,341
CD4000 CD4572UBW 11909A 0.247 0.232 0.029 0.029 3,371 2,528 30,341
CD4000 CD4S8SBE 10519X 0.144 0.135 0.080 0.080 1,282 961 11,536
CD4000 CD4724BE 10463X 0.361 0.339 0.086 0.086 1,191 893 10,717
FCT CD54FCT244E 13752B 0.893 0.839 0.174 0.174 1,499 1,124 13,488
FCT CD54FCT244MS2298 13752B 1.391 1.308 0.177 0.177 1,499 1,124 13,488
FCT CD54FCT245E 13762B 1.365 1.283 0.435 0.435 587 441 5,287
FCT CD54FCT245MS2298 13762B 1.502 1.412 0.433 0.433 587 441 5,287
FCT CD74FCT240E 13750B 0.915 0.860 0.174 0.174 1,499 1,124 13,488
FCT CD74FCT24CM 13750B 0.870 0.618 0.174 0.174 1,499 1,124 13,488
FCT CD74FCT240M90 13750B 0.834 0.784 0.174 0.174 1,499 1,124 13,488
FCT CD74FCT244ATE 13752B 0.487 0.458 0.174 0.174 1,499 1,124 13,488
FCT CD74FCT244E 13752B 0.905 0.851 0.174 0.174 1,499 1,124 13,488
FCT CD74FCT244M 13752B 0.539 0.507 0.174 0.174 1,499 1,124 13,488
FCT CD74FCT244M96 13752B 0.698 0.656 0.174 0.174 1,499 1,124 13,488
</TABLE>
22
<PAGE>
SCHEDULE 1(a)[C]
COMMERCIAL PRODUCTS FOR SUPPLY AGREEMENT
<TABLE>
<CAPTION>
FG STD DIE STD DIE
FAMILY DEVICE DIE ASP TRF PRICE DIE COST TRF PRICE NDW MDPW MLQ
- - ------ ------ --- --- --------- -------- --------- --- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
FCT CD74FCT245E 13762B 0.860 0.808 0.435 0.435 587 441 5,287
FCT CD74FCT245M 13762B 0.935 0.879 0.438 0.438 587 441 5,287
FCT CD74FCT245M96 13762B 0.928 0.872 0.433 0.433 587 441 5,287
FCT CD74FCT273E 13761B 0.917 0.862 0.162 0.162 1,591 1,193 14,318
FCT CD74FCT273M96 13761B 0.491 0.462 0.162 0.162 1,591 1,193 14318
FCT CD74FCT2952AM 13769A 1.180 1.109 0.397 0.397 644 483 5,795
FCT CD74FCT373E 13753B 0.695 0.653 0.176 0.176 1,491 1,118 13,416
FCT CD74FCT313M 13753B 0.545 0.512 0.176 0.176 1,491 1,118 13,416
FCT CD74FCT373M9S 13753B 0.820 0.771 0.177 0.177 1,491 1,118 13,416
FCT CD74FCT374E 13754B 0.640 0.602 0.168 0.168 1,568 1,176 14,113
FCT CD74FCT374M 13754B 0.717 0.674 0.167 0.167 1,568 1,176 14,113
FCT CD74FCT374M96 13754B 1.432 1.346 0.174 0.174 1,568 1,176 14,113
FCT CD74FCT540E 13765A 0.472 0.444 0.199 0.199 1,299 974 11,689
FCT CD74FCT540M 13765A 0.915 0.860 0.198 0.198 1,299 974 11,689
FCT CD74FCT540M96 13765A 0.700 0.658 0.198 0.198 1,299 974 11,689
FCT CD74FCT541E 13766A 0.745 0.700 0.275 0.275 921 690 8,286
FCT CD74FCT541M 13766A 0.598 0.562 0.274 0.274 921 690 8,286
FCT CD74FCTS43EN 13767A 0.980 0.921 0.397 0.397 657 493 5,912
FCT CD74FCT543M 13767A 1.023 0.962 0.391 0.391 657 493 5,912
FCT CD74FCT543M96 13767A 1.156 1.087 0.391 0.391 657 493 5,912
FCT CD74FCT564E 13760B 0.758 0.713 0.222 0.222 1,151 863 10,357
FCT CD74FCT584M 13760B 0.538 0.506 0.221 0.221 1,151 863 10,357
FCT CD74FCT573E 13757B 0.616 0.579 0.206 0.206 1,266 949 11,393
FCT CD74FCT573M 13757B 0.722 0.679 0.203 0.203 1,266 949 11,393
FCT CD74FCT573M96 13757B 0.716 0.673 0.203 0.203 1,266 949 11,393
FCT CD74FCT573SM96 13757BXXXCT 0.670 0.630 0.210 0.210 1,266 949 11,393
FCT CD74FCT574E 13758B 0.602 0.566 0.195 0.195 1,332 999 11,985
FCT CD74FCT574M 13758B 0.242 0.227 0.194 0.160 1,332 999 11,985
FCT CD74FCT574SM 13758BXXXCT 0.850 0.799 0.215 0.215 1,249 937 11,245
FCT CD74FCT623M 13763B 0.998 0.938 0.350 0.350 737 553 6,632
</TABLE>
23
<PAGE>
SCHEDULE 1(a)[C]
COMMERCIAL PRODUCTS FOR SUPPLY AGREEMENT
<TABLE>
<CAPTION>
FG STD DIE STD DIE
FAMILY DEVICE DIE ASP TRF PRICE DIE COST TRF PRICE NDW MDPW MLQ
- - ------ ------ --- --- --------- -------- --------- --- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
FCT CD74FCT848EN 13779A 2.755 2.590 0.582 0.582 434 326 3,907
FCT CD74FCT652EN 13784A 0.951 0.894 0.574 0.574 441 330 3,966
FCT CD74FCT652M 13784A 1.722 1.619 0.565 0.565 441 330 3,966
FCT CD74FCT653EN 13798A 1.613 1.516 0.521 0.521 486 365 4,374
FCT CD74FCT6S3M 13798A 1.051 0.988 0.513 0.513 486 365 4,374
FCT CD74FCT654EN 13799A 1.800 1.692 0.632 0.632 402 301 3,616
FCT CD74FCT821AM96S2497 13771A 0.700 0.658 0.256 0.256 989 742 8,898
FCT CD74FCT823AEN 13775A 1.704 1.602 0.362 0.362 976 732 8,783
FCT CD74FCT824AEN 13776A 1.521 1.430 0.282 0.282 976 732 8,783
FCT CD74FCT841AEN 13773A 1.091 1.026 0.308 0.308 886 664 7,974
FCT CD74FCT641AM 13773A 1.048 0.985 0.284 0.284 886 664 7,974
FCT CD74FCT841AM96 13773A 1.280 1.203 0.303 0.303 886 664 7,974
FCT CD74FCT843AM 13777A 1.264 1.188 0.342 0.342 732 549 6,587
FCT CD74FCT843AM96 13777A 1.004 0.944 0.342 0.342 732 549 6,587
FCT CD74FCT844AEN 13778A 1.520 1.429 0.318 0.318 860 645 7,743
HCT 100935 11694A02XCT 0.230 0.216 0.060 0.060 2,447 1,835 22,025
HCT 135991 13702A02XCT 0.328 0.308 0.080 0.080 1,971 1,478 17,739
HCT CD54HCD0F 11600H 0.508 0.478 0.053 0.053 2,791 2,093 25,122
HCT CD54HCD0W 11600H 0.126 0.118 0.050 0.050 2,791 2,093 25,122
HCT CD54HCD2F 11678A01 0.452 0.425 0.045 0.045 3,341 2,506 30,067
HCT CD54HCD4F 11681B 0.510 0.479 0.051 0.051 2,885 2,164 25,966
HCT CDS4HCD4W 11681B 0.133 0.125 0.048 0.048 2,885 2,164 25,966
HCT CD54HCD8F 11718B01 0.509 0.478 0.048 0.048 3,058 2,293 27,521
HCT CD54HC109W 11690B01 0.206 0.194 0.044 0.044 3,187 2,390 28,682
HCT CD54HC10F 11683B01 0.534 0.502 0.058 0.058 2,567 1,925 23,101
HCT CD54HC11F 11684B01 0.518 0.487 0.044 0.044 3,387 2,540 30,483
HCT CD54HC125F 11727A01 0.877 0.824 0.053 0.053 2,779 2,064 25,010
HCT CD54HC125W 11727A01 0.198 0.186 0.050 0.050 2,779 2,054 25,010
HCT CD54HC132W 11677B01 0.314 0.295 0.038 0.038 3,658 2,743 32,921
HCT CD54HC13SF 11602F 0.707 0.665 0.062 0.062 2,371 1,718 21,335
</TABLE>
24
<PAGE>
SCHEDULE 1(a)[C]
COMMERCIAL PRODUCTS FOR SUPPLY AGREEMENT
<TABLE>
<CAPTION>
FG STD DIE STD DIE
FAMILY DEVICE DIE ASP TRF PRICE DIE COST TRF PRICE NDW MDPW MLQ
- - ------ ------ --- --- --------- -------- --------- --- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
HCT CD54HC130F 11610C01 0.782 0.735 0.050 0.050 2,930 2,108 26,372
HCT CD54HC130W 11610C01 0.270 0.254 0.048 0.048 2,930 2,198 26,372
HCT CD54HC14F 11885A 0.462 0.434 0.056 0.056 3,237 2,427 29,130
HCT CD54HC14W 11685A 0.276 0.259 0.053 0.053 3,237 2,427 29,130
HCT CD54HC154W 11632C01 0.677 0.636 0.097 0.097 1,430 1,073 12,873
HCT CD54HC157F 116280 0.799 0.751 0.055 0.055 2,868 2,151 25,812
HCT CD54HC157W 116280 0.218 0.205 0.052 0.052 2,868 2,151 25,812
HCT CD54HC161F 11635D01 0.925 0.870 0.080 0.080 1,888 1,415 16,994
HCT CD54HC161W 11635D01 0.328 0.308 0.074 0.074 1,888 1,416 16,994
HCT CDS4HC164F 11667B01 0.912 0.857 0.045 0.045 3,253 2,440 29,278
HCT CD54HC174F 11625D01 0.830 0.780 0.068 0.068 2,182 1,637 19,640
HCT CD54HC193W 11666C01 0.368 0.346 0.074 0.074 1,869 1,402 16,821
HCT CD54HC20W 11721B01 0.134 0.126 0.037 0.037 3,724 2,793 33,514
HCT CD54HC221F 11693D01 1.589 1.494 0.092 0.092 1,636 1,227 14,722
HCT CD54HC221W 11893D01 0.435 0.409 0.085 0.085 1,636 1,227 14,722
HCT CD54HC237F 11730B01 1.828 1.718 0.063 0.063 2,354 1,766 21,190
HCT CD54HC244F 11606C 1.144 1.075 0.100 0.100 1,609 1,207 14,483
HCT CD54HC244W 11606C01 0.472 0.444 0.094 0.094 1,609 1,207 14,483
HCT CD54HC245F 11617M 1.000 0.940 0.115 0.115 2,218 1,664 19,966
HCT CD54HC273F 11613G 1.632 1.534 0.088 0.088 1,928 1,446 17,353
HCT CD54HC299F 11615F01 1.000 0.940 0.127 0.127 1,159 869 10,429
HCT CD54HC299W 11615F01 1.170 1.100 0.120 0.120 1,159 869 10,429
HCT CD54HC30F 11724A01 0.751 0.706 0.038 0.038 3,938 2,954 35,446
HCT CD54HC30W 11724A01 0.133 0.125 0.035 0.035 3,938 2,954 35,446
HCT CD54HC32W 11687A01 0.135 0.127 0.035 0.035 3,967 2,975 35,705
HCT CD54HC354W 11672A 0.737 0.693 0.084 0.084 1,667 1,250 15,004
HCT CD54HC373F 11605C01 1.104 1.038 0.109 0.109 1,500 1,125 13,497
HCT CD54HC374W 11609C01 0.448 0.421 0.075 0.075 1,857 1,392 16,709
HCT CD54HC40103F 11709B01 1.981 1.862 0.104 0.104 1,412 1,059 12,711
HCT CD54HC40103W 11709B01 0.440 0.414 0.098 0.098 1,412 1,059 12,711
</TABLE>
25
<PAGE>
SCHEDULE 1(a)[C]
COMMERCIAL PRODUCTS FOR SUPPLY AGREEMENT
<TABLE>
<CAPTION>
FG STD DIE STD DIE
FAMILY DEVICE DIE ASP TRF PRICE DIE COST TRF PRICE NDW MDPW MLQ
- - ------ ------ --- --- --------- -------- --------- --- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
HCT CD54HC4015H 11697C01 0.400 0.376 0.096 0.096 1,577 1,183 14,192
HCT CD54HC4020F 11651D01 1.041 0.979 0.064 0.064 2,298 1,723 20,682
HCT CD54HC4024F 11699D01 1.307 1.229 0.042 0.042 3,523 2,642 31,703
HCT CD54HC4024W 11699D01 0.290 0.273 0.040 0.040 3,523 2,642 31,703
HCT CD54HC4040F 11652D01 1.169 1.099 0.064 0.064 2,298 1,723 20,682
HCT CD54HC4040W 11652D01 0.305 0.287 0.061 0.061 2,298 1,723 20,682
HCT CD54HC4048AF 11701A 2.248 2.113 0.083 0.083 1,789 1,342 16,099
HCT CD54HC4048AW 11701A 0.858 0.807 0.078 0.078 1,789 1,342 16,099
HCT CD54HC4049W 11674B01 0.171 0.161 0.047 0.047 2,948 2,211 26,532
HCT CD54HC4050W 11675B01 0.163 0.153 0.046 0.046 3,049 2,286 27,437
HCT CD54HC4051F 11702A 1.145 1.076 0.074 0.074 2,133 1,800 19,197
HCT CD54HC4051W 11702A 0.400 0.376 0.070 0.070 2,133 1,600 19,197
HCT CD54HC4052W 11703B 0.325 0.306 0.111 0.111 1,350 1,012 12,147
HCT CD54HC4053F 11704A 1.498 1.408 0.059 0.059 2,679 2,009 24,113
HCT CD54HC4053H 11704A 0.438 0.412 0.061 0.061 2,679 2,009 24,113
HCT CD54HC4053W 11704A 0.383 0.360 0.056 0.056 2,679 2,009 24,113
HCT CD54HC4059W 11740A01 0.890 0.837 0.197 0.197 708 531 6,371
HCT CD54HC40S0W 11653B 0.348 0.327 0.063 0.063 2,198 1,648 19,780
HCT CD54HC4066W 11705C01 0.164 0.154 0.048 0.048 3,122 2,342 28,099
HCT CD54HC4520F 11713B01 2.199 2.067 0.088 0.088 1,670 1,252 15,027
HCT CD54HC4520W 11713B01 0.360 0.338 0.083 0.083 1,670 1,252 15,027
HCT CD54HC4538F 11646C 1.118 1.051 0.060 0.060 2,445 1,834 22,008
HCT CD54HC4538W 11646C 0.472 0.444 0.057 0.057 2,445 1,834 22,008
HCT CD54HC540W 11611E 0.468 0.440 0.084 0.084 1,668 1,251 15,016
HCT CD54HC541W 116120 0.445 0.418 0.084 0.084 1,613 1,210 14,520
HCT CD54HC573F 11616M 1.641 1.543 0.076 0.076 3,179 2,384 28,608
HCT CD54HC574F 11604C 1.040 0.978 0.109 0.109 1,372 1,029 12,351
HCT CD54HC574W 11604C 0.719 0.676 0.102 0.102 1,372 1,029 12,351
HCT CD54HC73F 11655A01 0.708 0.668 0.043 0.043 3,470 2,603 31,234
HCT CD54HC74F 11601M 0.508 0.478 0.054 0.054 4,386 3,289 39,473
</TABLE>
26
<PAGE>
SCHEDULE 1(a)[C]
COMMERCIAL PRODUCTS FOR SUPPLY AGREEMENT
<TABLE>
<CAPTION>
FG STD DIE STD DIE
FAMILY DEVICE DIE ASP TRF PRICE DIE COST TRF PRICE NDW MDPW MLQ
- - ------ ------ --- --- --------- -------- --------- --- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
HCT CD54HC74W 11601F 0.199 0.187 0.051 0.051 2,752 2,064 24,771
HCT CD54HC86H 11657B01 0.080 0.075 0.045 0.045 3,356 2,517 30,205
HCT CD54HC86W 11857801 0.195 0.183 0.042 0.042 3,356 2,517 30,205
HCT CD54HCT00F 13600C 0.552 0.519 0.054 0.054 2,819 2,114 25,368
HCT CD54HCT00W 13600H 0.134 0.126 0.050 0.050 2,761 2,071 24,848
HCT CD54HCT04F 136818 0.551 0.518 0.051 0.051 2,885 2,164 25,966
HCT CD54HCT04H 13881B 0.170 0.160 0.053 0.053 2,885 2,164 25966
HCT CD54HCT04W 136818 0.135 0.127 0.048 0.048 2,885 2,164 25,966
HCT CD54HCT08F 13682B01 0.554 0.521 0.052 0.052 2,832 2,124 25,486
HCT CD54HCT08W 13682B01 0.160 0.150 0.049 0.049 2,832 2,124 25,486
HCT CD54HCT112W 13691A01 0.220 0.207 0.055 0.055 2,553 1,914 22,973
HCT CD54HCT123W 13645C 0.192 0.180 0.049 0.049 2,816 2,112 25,344
HCT CD54HCT125W 13727A01 0.231 0.217 0.044 0.044 3,147 2,360 28,324
HCT CD54HCT13BF 13602F 0.955 0.898 0.063 0.063 2,344 1,758 21,098
HCT CD54HCT138W 13602F 0.206 0.194 0.059 0.059 2,344 1,758 21,098
HCT CD54HCT139F 13610CD1 0.597 0.561 0.050 0.050 2,930 2,198 26,372
HCT CD54HCT14F 13685A 1.123 1.056 0.001 0.061 3,273 2,455 29,461
HCT CD54HCT14H 13685A 0.329 0.309 0.002 0.062 3,273 2,455 29,461
HCT CD54HCT163F 13636D01 0.621 0.584 0.079 0.079 1,909 1,432 17,183
HCT CD54HCT183W 13636D01 0.334 0.314 0.073 0.073 1,909 1,432 17,183
HCT CD54HCT164H 13667801 0.360 0.338 0.046 0.046 3,288 2,466 29,596
HCT CD54HCT174W 13625001 0.270 0.254 0.062 0.062 2,230 1,673 20,071
HCT CD54HCT175W 13626CD1 0.282 0.265 0.068 0.068 2,054 1,541 18,487
HCT CD54HCT240W 13607D01 0.451 0.424 0.085 0.085 1,627 1,220 14,644
HCT CD54HCT244F 13606C01 1.019 0.958 0.101 0.101 1,573 1,180 14,161
HCT CD54HCT245F 13617M 1.273 1.197 0.117 0.117 2,218 1,664 19,966
HCT CD54HCT245W 13617C 0.549 0.516 0.111 0.111 1,259 944 11,331
HCT CD54HCT273F 13613G 1.307 1.229 0.087 0.087 1,928 1,446 17,353
HCT CD54HCT273W 13613G 0.524 0.493 0.082 0.082 1,928 1,446 17,353
HCT CD54HCT30H 13724A01 0.290 0.273 0.037 0.037 3,981 2,986 35,832
</TABLE>
27
<PAGE>
SCHEDULE 1(a)[C]
COMMERCIAL PRODUCTS FOR SUPPLY AGREEMENT
<TABLE>
<CAPTION>
FG STD DIE STD DIE
FAMILY DEVICE DIE ASP TRF PRICE DIE COST TRF PRICE NDW MDPW MLQ
- - ------ ------ --- --- --------- -------- --------- --- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
HCT CD54HCT32F 13720A01 0.530 0.498 0.040 0.040 3,733 2,800 33,600
HCT CD54HCT367H 13662B01 0.250 0.235 0.080 0.080 1,888 1,416 16,991
HCT CD54HCT373F 13605C01 1.439 1.353 0.121 0.121 1,483 1,112 13,349
HCT CD54HCT373W 13605C01 0.544 0.511 0.114 0.114 1,483 1,112 13,349
HCT CD54HCT393F 13671B01 0.988 0.929 0.048 0.048 3,092 2,319 27,832
HCT CD54HCT4053W 13704A 0.388 0.365 0.053 0.053 2,808 2,106 25,275
HCT CD54HCT4514W 13711B01 0.660 0.620 0.125 0.125 1,086 815 9,776
HCT CD54HCT540W 136110 0.510 0.479 0.085 0.085 1,644 1,233 14,796
HCT CD54HCTS41F 136120 1.145 1.076 0.089 0.089 1,635 1,226 14,712
HCT CD54HCTS74F 13604C 1.488 1.399 0.107 0.107 1,388 1,041 12,490
HCT CD54HCT74F 13601F 0.605 0.569 0.055 0.055 2,694 2,020 24,244
HCT CD54HCT74W 13601F 0.220 0.207 0.052 0.052 2,694 2,020 24,244
HCT CD54HCT86W 13657B01 0.175 0.165 0.042 0.042 3,356 2,517 30,205
HCT CD54HCU04W 11649B01 0.171 0.161 0.033 0.033 4,217 3,163 37,952
HCT CD74HCD0M 11600HXXXCT 0.077 0.072 0.052 0.051 2,791 2,093 25,122
HCT CD74HCD0M96 11600HXXXCT 0.085 0.080 0.053 0.053 2,791 2,093 25,122
HCT CD74HCD2E 11678A01 0.076 0.071 0.043 0.043 3,341 2,506 30,067
HCT CD74HCD2M 11678A01XCT 0.082 0.077 0.044 0.044 3,341 2,506 30,067
HCT CD74HCD2M96 11678A01XCT 0.083 0.078 0.044 0.044 3,341 2,506 30,067
HCT CD74HCD2MR1901 11678A01XCT 0.090 0.085 0.044 0.044 3,341 2,506 30,067
HCT CD74HCD3E 11737A01 0.082 0.077 0.035 0.035 4,340 3,255 39,060
HCT CD74HCD3M 11737A01XCT 0.092 0.086 0.036 0.036 4,340 3,255 39,060
HCT CD74HCD3MN 11737A01XCT 0.091 0.086 0.036 0.036 4,340 3,255 39,060
HCT CD74HCD4E 11681M 0.087 0.082 0.050 0.050 4,792 3,594 43,126
HCT CD74HCD4M 11681BXXXCT 0.081 0.076 0.051 0.051 2,885 2,164 25,966
HCT CD74HC04M96 11681BXXXCT 0.092 0.086 0.051 0.051 2,885 2,164 25,966
HCT CD74HC04M96S2497 11681BXXXCT 0.083 0.078 0.051 0.051 2,885 2,164 25,966
HCT CD74HC08E 11718B01 0.075 0.071 0.047 0.047 3,058 2,293 27,521
HCT CD74HC08M 11718B01XCT 0.093 0.087 0.047 0.047 3,058 2,293 27,521
HCT CD74HC08M96 11718B01XCT 0.089 0.084 0.048 0.048 3,058 2,293 27,521
</TABLE>
28
<PAGE>
SCHEDULE 1(a)[C]
COMMERCIAL PRODUCTS FOR SUPPLY AGREEMENT
<TABLE>
<CAPTION>
FG STD DIE STD DIE
FAMILY DEVICE DIE ASP TRF PRICE DIE COST TRF PRICE NDW MDPW MLQ
- - ------ ------ --- --- --------- -------- --------- --- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
HCT CD74HC08M96S2466 11718B01XCT 0.110 0.103 0.048 0.048 3,058 2,293 27,521
HCT CD74HC08M96S2497 11718B01XCT 0.090 0.085 0.048 0.048 3,058 2,293 27,521
HCT CD74HC08M96S5001 11718B01XCT 0.090 0.085 0.048 0.048 3,058 2,293 27,521
HCT CD74HC08MS2075 11718B01XCT 0.085 0.080 0.048 0.048 3,058 2,293 27,521
HCT CD74HC107E 11642A01 0.191 0.180 0.042 0.042 3,484 2,613 31,353
HCT CD74HC107M 11642A01XCT 0.143 0.134 0.042 0.042 3,484 2,613 31,353
HCT CD74HC107M96 11642A01XCT 0.107 0.101 0.042 0.042 3,484 2,613 31,353
HCT CD74HC109E 11690B01 0.143 0.134 0.045 0.045 3,187 2,390 28,682
HCT CD74HC109M 11690B01XCT 0.141 0.133 0.046 0.046 3,187 2,390 28,682
HCT CD74HC109M96 11690B01XCT 0.141 0.133 0.046 0.046 3,187 2,390 28,682
HCT CD74HC10E 11683B01 0.090 0.085 0.056 0.056 2,567 1,925 23,101
HCT CD74HC10M 11683B01XCT 0.097 0.091 0.058 0.058 2,567 1,925 23,101
HCT CD74HC10M96 11683B01XCT 0.100 0.094 0.058 0.058 2,567 1,925 23,101
HCT CD74HC112E 11691A01 0.184 0.173 0.054 0.054 2,667 2,000 24,005
HCT CD74HC112ES2497 11691A01 0.160 0.150 0.054 0.054 2,667 2,000 24,005
HCT CD74HC112M96 11691A01XCT 0.198 0.186 0.055 0.055 2,667 2,000 24,005
HCT CD74HC11E 11684B01 0.081 0.076 0.043 0.043 3,387 2,540 30,483
HCT CD74HC11M 11684B01XCT 0.100 0.094 0.044 0.044 3,387 2,540 30,483
HCT CD74HC11M96 11684B01XCT 0.095 0.089 0.044 0.044 3,387 2,540 30,483
HCT CD74HC11M96S2497 11684B01XCT 0.100 0.094 0.044 0.044 3,387 2,540 30,483
HCT CD74HC123E 11645C 0.156 0.147 0.053 0.053 2,784 2,088 25,059
HCT CD74HC123M 11645CXXXCT 0.171 0.161 0.053 0.053 2,784 2,088 25,059
HCT CD74HC123M96 11645CXXXCT 0.153 0.144 0.053 0.053 2,784 2,088 25,059
HCT CD74HC125E 11727A01 0.112 0.105 0.052 0.052 2,779 2,084 25,010
HCT CD74HC125M 11727A01XCT 0.116 0.109 0.053 0.053 2,779 2,084 25,010
HCT CD74HC12SM96 11727A01XCT 0.119 0.112 0.053 0.053 2,779 2,084 25,010
HCT CD74HC125M96S2357 11727A01XCT 0.115 0.108 0.053 0.053 2,779 2,084 25,010
HCT CD74HC125MS2074 11727A01XCT 0.080 0.075 0.053 0.053 2,779 2,084 25,010
HCT CD74HC126E 11728A01 0.101 0.095 0.049 0.049 2,980 2,235 26,817
HCT CD74HC126M 11728A01XCT 0.108 0.102 0.049 0.049 2,980 2,235 26,817
</TABLE>
29
<PAGE>
SCHEDULE 1(a)[C]
COMMERCIAL PRODUCTS FOR SUPPLY AGREEMENT
<TABLE>
<CAPTION>
FG STD DIE STD DIE
FAMILY DEVICE DIE ASP TRF PRICE DIE COST TRF PRICE NDW MDPW MLQ
- - ------ ------ --- --- --------- -------- --------- --- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
HCT CD74HC126M96 11728A01XCT 0.118 0.111 0.050 0.050 2,980 2,235 26,817
HCT CD74HC126MS2074 11728A01XCT 0.130 0.122 0.050 0.050 2,980 2,235 26,817
HCT CD74HC132E 11677B01 0.123 0.116 0.040 0.040 3,658 2,743 32,921
HCT CD74HC132M 11677B01XCT 0.096 0.090 0.040 0.040 3,658 2,743 32,921
HCT CD74HC132M96 11677B01XCT 0.124 0.117 0.040 0.040 3,658 2,743 32,921
HCT CD74HC132M96S2300 11677B01XCT 0.112 0.105 0.040 0.040 3,658 2,743 32,921
HCT CD74HC132M96S2497 11677B01XCT 0.130 0.122 0.040 0.040 3,658 2,743 32,921
HCT CD74HC132M96S5001 11677B01XCT 0.130 0.122 0.040 0.040 3,658 2,743 32,921
HCT CD74HC137E 11729B01 0.162 0.152 0.064 0.064 2,250 1,687 20,248
HCT CD74HC138E 11602M 0.110 0.103 0.061 0.061 3,999 2,999 35,989
HCT CD74HC138M 11602MXXXCT 0.109 0.102 0.062 0.062 3,999 2,999 35,989
HCT CD74HC138M96 11602MXXXCT 0.111 0.104 0.062 0.062 3,999 2,999 35,989
HCT CD74HC139E 11610B 0.115 0.108 0.049 0.049 2,947 2,210 26,520
HCT CD74HC139M 11610C01XCT 0.110 0.103 0.050 0.050 2,930 2,198 26,372
HCT CD74HC139M96 11610C01XCT 0.116 0.109 0.050 0.050 2,930 2,198 26,372
HCT CD74HC139M96S2497 11610C01XCT 0.106 0.100 0.050 0.050 2,930 2,198 26,372
HCT CD74HC147E 11658A01 0.155 0.146 0.075 0.075 1,933 1,450 17,399
HCT CD74HC147M 11658A01XCT 0.195 0.183 0.076 0.076 1,933 1,450 17,399
HCT CD74HC14E 11685M 0.093 0.087 0.055 0.055 5,616 4,212 50,548
HCT CD74HC14M 11685AXXXCT 0.093 0.087 0.056 0.056 3,237 2,427 29,130
HCT CD74HC14M96 11685AXXXCT 0.096 0.090 0.056 0.056 3,237 2,427 29,130
HCT CD74HC14M96S2357 11885A02XCT 0.090 0.085 0.056 0.056 3,237 2,427 29,130
HCT CD74HC14M96S2497 11685AXXXCT 0.118 0.111 0.056 0.056 3,237 2,427 29,130
HCT CD74HC151E 11659B01 0.121 0.114 0.048 0.048 3,028 2,271 27,256
HCT CD74HC151M 11659B01XCT 0.157 0.148 0.049 0.049 3,028 2,271 27,256
HCT CD74HC151M96 11659B01XCT 0.141 0.133 0.049 0.049 3,028 2,271 27,256
HCT CD74HC153E 11660A 0.156 0.147 0.044 0.044 3,298 2,474 29,685
HCT CD74HC153M 11660AXXXCT 0.157 0.148 0.045 0.045 3,298 2,474 29,685
HCT CD74HC153M96 11660AXXXCT 0.142 0.133 0.045 0.045 3,298 2,474 29,685
HCT CD74HC154E 11632C01 0.426 0.400 0.103 0.103 1,430 1,073 12,873
</TABLE>
30
<PAGE>
SCHEDULE 1(a)[C]
COMMERCIAL PRODUCTS FOR SUPPLY AGREEMENT
<TABLE>
<CAPTION>
FG STD DIE STD DIE
FAMILY DEVICE DIE ASP TRF PRICE DIE COST TRF PRICE NDW MDPW MLQ
- - ------ ------ --- --- --------- -------- --------- --- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
HCT CD74HC154EN 11632C01 0.554 0.521 0.102 0.102 1,430 1,073 12,873
HCT CD74HC154M 11632C01 0.603 0.567 0.101 0.101 1,430 1,073 12,873
HCT CD74HC154M96 11632C01 0.513 0.482 0.101 0.101 1,430 1,073 12,873
HCT CD7411C157E 116280 0.127 0.119 0.054 0.054 2,868 2,151 25,812
HCT CD74HC157M 11628MXXXCT 0.145 0.136 0.055 0.055 5,162 3,872 46,462
HCT CD74HC157M96 11628MXXXCT 0.151 0.142 0.055 0.055 5,162 3,872 46,462
HCT CD74HC157M96S2497 11628MXXXCT 0.200 0.188 0.055 0.055 5,162 3,872 48,462
HCT CD74HC158E 11629B01 0.136 0.128 0.048 0.048 2,988 2,241 26,893
HCT CD74HC158M 11629B01XCT 0.157 0.148 0.049 0.049 2,988 2,241 26,893
HCT CD74HC161E 11635D01 0.146 0.137 0.077 0.077 1,888 1,416 16,994
HCT CD74HC161M 11635D01XCT 0.172 0.162 0.078 0.078 1,888 1,416 16,994
HCT CD74HC161M96 11635D01XCT 0.125 0.118 0.078 0.078 1,888 1,416 16,994
HCT CD74HC163E 11636D01 0.133 0.125 0.076 0.076 1,909 1,432 17,183
HCT CD74HC163M 11636D01XCT 0.132 0.124 0.077 0.077 1,909 1,432 17.183
HCT CD74HC163M96 11636D01XCT 0.146 0.137 0.077 0.077 1,909 1,432 17,183
HCT CD74HC164E 11667M 0.150 0.141 0.044 0.044 5,339 4,004 48,053
HCT CD74HC164ES2065 11667B01 0.157 0.148 0.044 0.044 3,253 2,440 29,278
HCT CD74HC164M 11667B01XCT 0.140 0.132 0.045 0.045 3,253 2,440 29,278
HCT CD74HC164M96 11667B01XCT 0.159 0.149 0.045 0.045 3,253 2,440 29,278
HCT CD74HC164MS2074 11667B01XCT 0.152 0.143 0.045 0.045 3,253 2,440 29,278
HCT CD74HC165E 11630C01 0.145 0.136 0.043 0.043 3,330 2,498 29,974
HCT CD74HC165ES2065 11630C01 0.162 0.152 0.043 0.043 3,330 2,498 29,974
HCT CD74HC165M 11630C01XCT 0.185 0.174 0.044 0.044 3,330 2,498 29,974
HCT CD74HC165M96 11630C01XCT 0.145 0.136 0.044 0.044 3,330 2,498 29,974
HCT CD74HC165M96S2357 11630C01XCT 0.134 0.126 0.044 0.044 3,330 2,498 29,974
HCT CD74HC166E 11654B 0.142 0.133 0.057 0.057 2,521 1,891 22,686
HCT CD74HC166M 11654BXXXCT 0.210 0.197 0.059 0.059 2,521 1,891 22,686
HCT CD74HC166M96 11654BXXXCT 0.201 0.189 0.059 0.059 2,521 1,891 22,686
HCT CD74HC173E 11656C01 0.116 0.109 0.081 0.077 1,780 1,335 16,022
HCT CD74HC173M 11656C01XCT 0.227 0.213 0.083 0.083 1,780 1,335 16,022
</TABLE>
31
<PAGE>
SCHEDULE 1(a)[C]
COMMERCIAL PRODUCTS FOR SUPPLY AGREEMENT
<TABLE>
<CAPTION>
FG STD DIE STD DIE
FAMILY DEVICE DIE ASP TRF PRICE DIE COST TRF PRICE NDW MDPW MLQ
- - ------ ------ --- --- --------- -------- --------- --- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
HCT CD74HC174E 11625D01 0.113 0.106 0.066 0.066 2,182 1,637 19,640
HCT CD74HC174M 11625D01XCT 0.128 0.120 0.068 0.068 2,182 1,637 19,640
HCT CD74HC174M96 1162SD01XCT 0.162 0.152 0.068 0.068 2,182 1,637 19,640
HCT CD74HC175E 11626C01 0.118 0.111 0.070 0.070 2,054 1,541 18,487
HCT CD74HC175M 11626C01XCT 0.109 0.102 0.072 0.072 2,054 1,541 18,487
HCT CD74HC175M96 11626C01XCT 0.157 0.148 0.072 0.072 2,054 1,541 18,487
HCT CD74HC190E 11692D01 0.203 0.191 0.082 0.082 1,762 1,322 15,860
HCT CD74HC191E 11664D01 0.192 0.180 0.080 0.080 1,802 1,351 16,216
HCT CD74HC191EX 11664D01 0.306 0.288 0.082 0.082 1,802 1,351 16,216
HCT CD74HC191M 11664D01XCT 0.171 0.161 0.062 0.082 1,802 1,351 16,216
HCT CD74HC191M96 11664D01XCT 0.238 0.224 0.082 0.082 1,802 1,351 16,216
HCT CD74HC192E 11665C 0.238 0.224 0.081 0.081 1,785 1,339 16,065
HCT CD74HC193E 11666C01 0.168 0.158 0.077 0.077 1,869 1,402 16,821
HCT CD74HC193M 11666C01XCT 0.247 0.232 0.079 0.079 1,869 1,402 16,821
HCT CD74HC193M96 11666C01XCT 0.187 0.176 0.079 0.079 1,869 1,402 16,821
HCT CD74HC194E 11668B01 0.222 0.209 0.048 0.048 3,025 2,269 27,224
HCT CD74HC194M 11668B01XCT 0.252 0.237 0.049 0.049 3,025 2,269 27,224
HCT CD74HC194M96 11668B01XCT 0.184 0.173 0.049 0.049 3,025 2,269 27,224
HCT CD74HC195E 11627A 0.206 0.194 0.047 0.047 3,191 2,393 28,716
HCT CD74HC195M 11627B01XCT 0.218 0.205 0.048 0.048 3,063 2,297 27,568
HCT CD74HC20E 11721B01 0.077 0.072 0.039 0.039 3,724 2,793 33,514
HCT CD74HC20M 11721B01XCT 0.079 0.074 0.040 0.040 3,523 2,642 31,704
HCT CD74HC20M96 11721B01XCT 0.084 0.079 0.040 0.040 3,523 2,642 31,704
HCT CD74HC20MS2074 11721B01XCT 0.090 0.085 0.040 0.040 3,523 2,642 31,704
HCT CD74HC21E l1736B01 0.088 0.083 0.037 0.037 4,347 3,260 39,120
HCT CD74HC21M 11736B01XCT 0.095 0.089 0.037 0.037 4,347 3,260 39,120
HCT CD74HC21M96 11736B01XCT 0.112 0.105 0.037 0.037 4,347 3,260 39,120
HCT CD74HC221E 11693D01 0.213 0.200 0.090 0.090 1,636 1,227 14,722
HCT CD74HC221M 11693D01XCT 0.185 0.174 0.090 0.090 1,636 1,227 14,722
HCT CD74HC221M96 11693D01XCT 0.239 0.225 0.090 0.090 1,636 1,227 14,722
</TABLE>
32
<PAGE>
SCHEDULE 1(a)[C]
COMMERCIAL PRODUCTS FOR SUPPLY AGREEMENT
<TABLE>
<CAPTION>
FG STD DIE STD DIE
FAMILY DEVICE DIE ASP TRF PRICE DIE COST TRF PRICE NDW MDPW MLQ
- - ------ ------ --- --- --------- -------- --------- --- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
HCT CD74HC221M96S5001 11693D01XCT 0.130 0.122 0.090 0.086 1,636 1,227 14,722
HCT CD74HC237E 11730B01 0.150 0.141 0.061 0.061 2,354 1,766 21,190
HCT CD74HC237M 11730B01XCT 0.216 0.203 0.063 0.063 2,354 1,766 21,190
HCT CD74HC237M96 11730B01XCT 0.167 0.157 0.063 0.063 2,354 1,766 21,190
HCT CD74HC238E 11603F 0.157 0.148 0.061 0.061 2,371 1,778 21,335
HCT CD74HC238M 11603FXXXCT 0.193 0.181 0.062 0.062 2,371 1,178 21,335
HCT CD74HC238M96 11603FXXXCT 0.196 0.184 0.062 0.062 2,371 1,778 21,335
HCT CD74HC238M96S2497 11603FXXXCT 0.180 0.169 0.062 0.062 2,371 1,778 21,335
HCT CD74HC240E 11607D01 0.121 0.114 0.089 0.080 1,627 1,220 14,644
HCT CD74HC240M 11607D01 0.098 0.092 0.088 0.065 1,627 1,220 14,644
HCT CD74HC240M96 11607D01 0.135 0.127 0.088 0.088 1,627 1,220 14,644
HCT CD74HC241E 11608D01 0.138 0.130 0.089 0.089 1,627 1,220 14,644
HCT CD74HC241M96 11608D01 0.194 0.182 0.088 0.088 1,627 1,220 14,644
HCT CD74HC243E 11822D01 0.152 0.143 0.077 0.077 1,887 1,415 16,981
HCT CD74HC243M 11622D01XCT 0.263 0.247 0.078 0.078 1,887 1,415 16,981
HCT CD74HC243M96 11622D01XCT 0.140 0.132 0.078 0.078 1,887 1,415 16,981
HCT CD74HC244E 11606C01 0.126 0.118 0.098 0.083 1,609 1,207 14,483
HCT CD74HC244M96 11606M 0.130 0.122 0.097 0.086 2,709 2,032 24,382
HCT CD74HC244M96S2463 11606C01 0.125 0.118 0.097 0.083 1,609 1,207 14,483
HCT CD74HC244M96S2497 11606M 0.118 0.111 0.097 0.078 2,709 2,032 24,382
HCT CD74HC245E 11617M 0.156 0.147 0.112 0.103 2,218 1,664 19,966
HCT CD74HC245M 11617M 0.138 0.130 0.112 0.091 2,218 1,664 19,966
HCT CD74HC245M96 11617M 0.125 0.118 0.112 0.083 2,218 1,664 19,966
HCT CD74HC251E 11614C01 0.129 0.121 0.067 0.067 2,155 1,616 19,392
HCT CD74HC251M 11614C01XCT 0.131 0.123 0.069 0.069 2,155 1,616 19,392
HCT CD74HC251M96 11614C01XCT 0.127 0.119 0.069 0.069 2,155 1,616 19,392
HCT CD74HC253E 11639B01 0.140 0.132 0.046 0.046 3,143 2,358 28,291
HCT CD74HC253M 11639B01XCT 0.178 0.167 0.047 0.047 3,143 2,358 28,291
HCT CD74HC257E 11620C01 0.146 0.137 0.046 0.046 3,169 2,377 28,525
HCT CD74HC257M 11020C01XCT 0.167 0.157 0.047 0.047 3,169 2,377 28,525
</TABLE>
33
<PAGE>
SCHEDULE 1(a)[C]
COMMERCIAL PRODUCTS FOR SUPPLY AGREEMENT
<TABLE>
<CAPTION>
FG STD DIE STD DIE
FAMILY DEVICE DIE ASP TRF PRICE DIE COST TRF PRICE NDW MDPW MLQ
- - ------ ------ --- --- --------- -------- --------- --- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
HCT CD74HC257M96 11620C01XCT 0.156 0.147 0.047 0.047 3,169 2,377 28,525
HCT CD74HC257M96S2463 11620C01XCT 0.150 0.141 0.047 0.047 3,169 2,377 28,525
HCT CD74HC259E 11694A 0.140 0.132 0.059 0.059 2,447 1,835 22,025
HCT CD74HC259M 11694MXXXCT 0.137 0.129 0.060 0.060 4,023 3,017 36,209
HCT CD74HC259M96 11694MXXXCT 0.133 0.125 0.060 0.060 4,023 3,017 36,209
HC1 CD74HC259M96S2497 11694MXXXCT 0.130 0.122 0.060 0.060 4,023 3,017 36,209
HCT CD74HC273E 11613G 0.123 0.116 0.086 0.081 1,928 1,446 17,353
HCT CD74HC273M 11613G 0.134 0.126 0.085 0.085 1,928 1,446 17,353
HCT CD74HC273M96 11613G 0.128 0.120 0.085 0.084 1,928 1,446 17,353
HCT CD74HC273M96S5001 11613G 0.167 0.157 0.085 0.085 1,928 1,446 17,353
HCT CD74HC27E 11686A 0.082 0.077 0.042 0.042 3,459 2,594 31,133
HCT CD74HC27M 11686AXXXCT 0.111 0.104 0.043 0.043 3,459 2,594 31,133
HCT CD74HC27M96 11686AXXXCT 0.110 0.103 0.043 0.043 3,459 2,594 31,133
HCT CD74HC280E 11640B01 0.124 0.117 0.044 0.044 3,290 2,468 29,610
HCT CD74HC280ES2065 11640B01 0.135 0.127 0.044 0.044 3,290 2,468 29,610
HCT CD74HC280M96 11840B01XCT 0.125 0.118 0.045 0.045 3,290 2,468 29,610
HCT CD74HC280MS2074 11640B01XCT 0.134 0.126 0.045 0.045 3,290 2,468 29,610
HCT CD74HC283E 11723A01 0.245 0.230 0.064 0.064 2,224 1,668 20,016
HCT CD74HC283M 11723A01XCT 0.266 0.250 0.065 0.065 2,224 1,668 20,016
HCT CD74HC283M96 11723A01XCT 0.237 0.223 0.065 0.065 2,224 1,668 20,016
HCT CD74HC297E 11680A01 0.566 0.532 0.135 0.135 1,072 804 9,647
HCT CD74HC299E 11615F01 0.254 0.239 0.125 0.125 1,159 869 10,429
HCT CD74HC299M 11615F01 0.308 0.290 0.124 0.124 1,159 869 10,429
HCT CD74HC299M96 11615F01 0.299 0.281 0.124 0.124 1,159 869 10,429
HCT CD74HC30E 11724A01 0.081 0.076 0.037 0.037 3,938 2,954 35,446
HCT CD74HC30M 11724A01XCT 0.094 0.088 0.038 0.038 3,938 2,954 35,446
HCT CD74HC30M96 11724A01XCT 0.089 0.084 0.038 0.038 3,938 2,954 35,446
HCT CD74HC30M96S2074 11724A01XCT 0.088 0.083 0.038 0.038 3,938 2,954 35,446
HCT CD74HC30M96S2497 11724A01XCT 0.103 0.097 0.038 0.038 3,938 2,954 35,446
HCT CD74HC32E 11687A01 0.080 0.075 0.037 0.037 3,967 2,975 35,705
</TABLE>
34
<PAGE>
SCHEDULE 1(a)[C]
COMMERCIAL PRODUCTS FOR SUPPLY AGREEMENT
<TABLE>
<CAPTION>
FG STD DIE STD DIE
FAMILY DEVICE DIE ASP TRF PRICE DIE COST TRF PRICE NDW MDPW MLQ
- - ------ ------ --- --- --------- -------- --------- --- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
HCT CD74HC32M 11687A01XCT 0.094 0.088 0.037 0.037 3,967 2,975 35,705
HCT CD74HC32M96 11887A01XCT 0.080 0.075 0.037 0.037 3,967 2,975 35,705
HCT CD74HC354E 11672A 0.219 0.206 0.087 0.087 1,667 1,250 15,004
HCT CD74HC365E 11695B01 0.161 0.151 0.077 0.077 1,888 1,416 16,991
HCT CD74HC365M 11695B01XCT 0.217 0.204 0.078 0.078 1,888 1,416 16,991
HCT CD74HC365M96 11695B01XCT 0.146 0.137 0.078 0.078 1,888 1,416 16,991
HCT CD74HC366E 11661B01 0.252 0.237 0.079 0.079 1,827 1,370 16,443
HCT CD74HC367E 11662B01 0.166 0.156 0.079 0.079 1,827 1,370 16,443
HCT CD74HC367M 11662B01XCT 0.229 0.215 0.081 0.081 1,827 1,370 16,443
HCT CD74HC367M96 11662B01XCT 0.208 0.196 0.081 0.081 1,827 1,370 16,443
HCT CD74HC367MS2075 11662B01XCT 0.164 0.154 0.081 0.081 1,827 1,370 16,443
HCT CD74HC368E 11663B01 0.202 0.190 0.077 0.077 1,868 1,401 16,808
HCT CD74HC368M 11663B01XCT 0.223 0.210 0.079 0.079 1,868 1,401 16,808
HCT CD74HC368M96 11663B01XCT 0.247 0.232 0.079 0.079 1,868 1,401 16,808
HCT CD74HC373E 11605C01 0.134 0.126 0,107 0.088 1,500 1,125 13,497
HCT CD74HC373ES2497 11605C01 0.160 0.150 0.107 0.106 1,500 1,125 13,497
HCT CD74HC373M 11605C01 0.135 0.127 0.106 0.089 1,500 1,125 13,497
HCT CD74HC373M96 11605C01 0.137 0.129 0.106 0.090 1,500 1,125 13,497
HCT CD74HC373M96S2093 11605C01 0.180 0.169 0.106 0.106 1,500 1,125 13,497
HCT CD74HC374E 11609C01 0.135 0.127 0.078 0.078 1,857 1,392 16,709
HCT CD74HC374M 11609M 0.148 0.139 0.078 0.078 3,478 2,609 31,302
HCT CD74HC374M96 11609M 0.142 0.133 0.078 0.078 3,478 2,609 31,302
HCT CD74HC377E 11648B01 0.136 0.128 0.064 0.064 2,259 1,694 20,329
HCT CD74HC377M 11648B01 0.157 0.148 0.064 0.064 2,259 1,694 20,329
HCT CD74HC377M96 11648B01 0.162 0.152 0.064 0.064 2,259 1,694 20,329
HC1 CD74HC390E 11670A 0.105 0.099 0.052 0.052 2,773 2,080 24,959
HCT CD74HC390M 11670A01XCT 0.187 0.176 0.053 0.053 2,773 2,080 24,959
HCT CD74HC390M96 11670A01XCT 0.147 0.138 0.053 0.053 2,773 2,080 24,959
HCT CD74HC393E 11671B01 0.144 0.135 0.045 0.045 3,195 2,397 28,759
HCT CD74HC393ES2065 11671B01 0.165 0.155 0.045 0.045 3,195 2,397 28,759
</TABLE>
35
<PAGE>
SCHEDULE 1(a)[C]
COMMERCIAL PRODUCTS FOR SUPPLY AGREEMENT
<TABLE>
<CAPTION>
FG STD DIE STD DIE
FAMILY DEVICE DIE ASP TRF PRICE DIE COST TRF PRICE NDW MDPW MLQ
- - ------ ------ --- --- --------- -------- --------- --- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
HCT CD74HC393M 11671B01XCT 0.173 0.163 0.046 0.046 3,195 2,397 28,759
HCT CD74HC393M96 11671B01XCT 0.166 0.156 0.046 0.046 3,195 2,397 28,759
HCT CD74HC4002E 11696A01 0.109 0.102 0.026 0.026 5,480 4,110 49,317
HCT CD74HC4002M 11696A01XCT 0.136 0.128 0.027 0.027 5,480 4,110 49,317
HCT CD74HC4002M96 11696A01XCT 0.130 0.122 0.027 0.027 5,480 4,110 49,317
HCT CD74HC4002M96S2497 11696A01XCT 0.140 0.132 0.027 0.027 5,480 4,110 49,317
HCT CD74HC40103E 11709B01 0.257 0.242 0.102 0.102 1,412 1,059 12,711
HCT CD74HC40103M 11709B01XC1 0.228 0.214 0.105 0.105 1,412 1,059 12,711
HCT CD74HC40103M96 11709B01XCT 0.233 0.219 0.105 0.105 1,412 1,059 12,711
HCT CD74HC40105E 11669M 0.270 0.254 0.076 0.076 3,205 2,404 28,849
HCT CD74HC40105M 11669A01XCT 0.278 0.261 0.077 0.077 1,910 1,432 17,188
HCT CD74HC40105M96 11669A01XCT 0.161 0.151 0.077 0.077 1,910 1,432 17,188
HCT CD74HC4015E 11697C01 0.222 0.209 0.092 0.092 1,577 1,183 14,192
HCT CD74HC4016E 11698B01 0.318 0.299 0.043 0.043 3,596 2,697 32,368
HCT CD74HC4016M96 11698B01XC1 0.208 0.196 0.044 0.044 3,596 2,697 32,368
HCT CD74HC4017E 11650B01 0.198 0.186 0.082 0.082 1,766 1,324 15,892
HCT CD74HC4017M96 11650B01XCT 0.146 0.137 0.084 0.084 1,766 1,324 15,892
HCT CD74HC4020E 11651D01 0.152 0.143 0.063 0.063 2,298 1,723 20,682
HCT CD74HC4020M 11651MXXXCT 0.152 0.143 0.064 0.064 3,909 2,931 35,177
HCT CD74HC4020M96 11651MXXXCT 0.171 0.161 0.064 0.064 3,909 2,931 35,177
HCT CD74HC4024E 11699D01 0.163 0.153 0.041 0.041 3,523 2,642 31,703
HCT CD74HC4024M 11699D01XCT 0.160 0.150 0.042 0.042 3,523 2,642 31,703
HCT CD74HC4024M96 11699D01XCT 0.156 0.147 0.042 0.042 3,523 2,642 31,703
HCT CD74HC4024M96S2497 11699D01XCT 0.150 0.141 0.042 0.042 3,523 2,642 31,703
HCT CD74HC4040E 11652M 0.144 0.135 0.063 0.063 3,909 2,931 35,177
HCT CD74HC4040ES2065 11652D01 0.167 0.157 0.063 0.063 2,298 1,723 20,682
HCT CD74HC4040M 11652MXXXCT 0.159 0.149 0.064 0.064 3,909 2,931 35,177
HCT CD74HC4040M96 11652MXXXCT 0.166 0.156 0.064 0.064 3,909 2,931 35,177
HCT CD74HC4040M96S2357 11652D02XCT 0.325 0.306 0.064 0.064 2,298 1,723 20,682
HCT CD74HC4040M96S2497 11652MXXXCT 0.170 0.160 0.064 0.064 3,909 2,931 35,177
</TABLE>
36
<PAGE>
SCHEDULE 1(a)[C]
COMMERCIAL PRODUCTS FOR SUPPLY AGREEMENT
<TABLE>
<CAPTION>
FG STD DIE STD DIE
FAMILY DEVICE DIE ASP TRF PRICE DIE COST TRF PRICE NDW MDPW MLQ
- - ------ ------ --- --- --------- -------- --------- --- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
HCT CD74HC4040MS2074 11652DXXXCT 0.280 0.263 0.064 0.064 2,298 1,723 20,682
HCT CD74HC4046AE 11701A 0.254 0.239 0.081 0.081 1,789 1,342 16,099
HCT CD74HC4046AM 11701AXXXCT 0.312 0.293 0.083 0.083 1,789 1,342 16,099
HCT CD74HC4046AM96 11701AXXXCT 0.308 0.290 0.083 0.083 1,789 1,342 16,099
HCT CD74HC4046AM96S2463 11701AXXXCT 0.330 0.310 0.083 0.083 1,789 1,342 16,099
HCT CD74HC4046AM96S2497 11701AXXXCT 0.420 0.395 0.083 0.083 1,789 1,342 16,099
HCT CD74HC4046AMR2854 11701AXXXCT 0.480 0.451 0.083 0.083 1,789 1,342 16,099
HCT CD74HC4046AMR3413 11701AXXXCT 0.507 0.477 0.083 0.083 1,789 1,342 16,099
HCT CD74HC4049E 11674B01 0.181. 0.170 0.049 0.049 2,948 2,211 26,532
HCT CD74HC4049M 11674B01XCT 0.194 0.182 0.050 0.050 2,948 2,211 26,532
HCT CD74HC4049M96 11674B01XCT 0.230 0.216 0.050 0.050 2,948 2,211 26,532
HCT CD74HC4050E 11675B01 0.154 0.145 0.047 0.047 3,049 2,286 27,437
HCT CD74HC4050M 11675B01XCT 0.173 0.163 0.048 0.048 3,049 2,286 27,437
HCT CD74HC4050M96 11675B01XCT 0.122 0.115 0.048 0.048 3,049 2,286 27,437
HCT CD74HC4051E 11702A 0.122 0.115 0.073 0.073 2,133 1,600 19,197
HCT CD74HC4051M 11702MXXXCT 0.177 0.166 0.074 0.074 4,093 3,070 36,835
HCT CD74HC4051M96 11702MXXXCT 0.193 0.181 0.074 0.074 4,093 3,070 36,835
HCT CD74HC4051M96S2075 11702MXXXCT 0.160 0.150 0.074 0.074 4,093 3,070 36,835
HCT CD74HC4051M96S2093 11702MXXXCT 0.160 0.150 0.074 0.074 4,093 3,070 36,835
HCT CD74HC4051M96S2497 11702MXXXCT 0.180 0.169 0.074 0.074 4,093 3,070 36,835
HCT CD74HC4051M96S2515 11702MXXXCT 0.136 0.128 0.074 0.074 4,093 3,070 36,835
HCT CD74HC4052E 11703B 0.154 0.145 0.115 0.102 1,350 1,012 12,147
HCT CD74HC4052ES2091 11703B 0.158 0.149 0,115 0.104 1,350 1,012 12,147
HCT CD74HC4052M 11703MXXXCT 0.128 0.120 0.116 0.084 2,957 2,218 26,615
HCT CD74HC4052M96 11703MXXXCT 0.174 0.164 0.117 0.115 2,957 2,218 26,615
HCT CD74HC4052M96S2093 11703MXXXCT 0.160 0.150 0.117 0.106 2,957 2,218 26,615
HCT CD74HC4053E 11704A 0.155 0.146 0.058 0.058 2,679 2,009 24,113
HCT CD74HC4053ES2091 11704A 0.165 0.155 0.058 0.058 2,679 2,009 24,113
HCT CD74HC4053M 11704MXXXCT 0.179 0.168 0.059 0.059 4,884 3,663 43,958
HCT CD74HC4053M96 11704MXXXCT 0.158 0.149 0.059 0.059 4,884 3,663 43,958
</TABLE>
37
<PAGE>
SCHEDULE 1(a)[C]
COMMERCIAL PRODUCTS FOR SUPPLY AGREEMENT
<TABLE>
<CAPTION>
FG STD DIE STD DIE
FAMILY DEVICE DIE ASP TRF PRICE DIE COST TRF PRICE NDW MDPW MLQ
- - ------ ------ --- --- --------- -------- --------- --- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
HCT CD74HC4053M96S2093 11704MXXXCT 0.170 0.160 0.059 0.059 4,884 3,663 43,958
HCT CD74HC4053M96S2497 11704MXXXCT 0.210 0.197 0.059 0.059 4,884 3,663 43,958
HCT CD74HC4059E 11740A01 0.824 0.775 0.213 0.213 708 531 6,371
HCT CD74HC4059M96 11740A01 0.851 0.800 0.203 0.203 708 531 6,371
HCT CD74HC4060E 11653B 0.148 0.139 0.066 0.066 2,198 1,648 19,780
HCT CD74HC4060M 11653BXXXCT 0.153 0.144 0.067 0.067 2,198 1,648 19,780
HCT CD74HC4060M96 11653BXXXCT 0.207 0.195 0.067 0.067 2,198 1,648 19,780
HCT CD74HC4066E 11705C01 0.141 0.133 0.050 0.050 3,122 2,342 28,099
HCT CD74HC4066ES2064 11705C01 0.160 0.150 0.050 0.050 3,122 2,342 28,099
HCT CD74HC4066M 11705C01XCT 0.114 0.107 0.051 0.051 3,122 2,342 28,099
HCT CD74HC4066M96 11705C01XCT 0.135 0.127 0.051 0.051 3,122 2,342 28,099
HCT CD74HC4066MR1896 11705C02XCT 0.120 0.113 0.051 0.051 3,122 2,342 28,099
HCT CD74HC4067E 11706B01 0.605 0.569 0.163 0.163 905 678 8,142
HCT CD74HC4067M 11706B01 0.551 0.518 0.159 0.159 905 676 8,142
HCT CD74HC4067M96 11706B01 0.594 0.558 0.159 0.159 905 678 8,142
HCT CD74HC4067M96S2497 11706B01 0.840 0.790 0.159 0.159 905 876 8,142
HCT CD74HC4075E 11707A01 0.134 0.126 0.052 0.052 2,764 2,073 24,876
HCT CD74HC4075M 11707A01XCT 0.103 0.097 0.053 0.053 2,764 2,073 24,876
HCT CD74HC4075M96 11707A01XCT 0.114 0.107 0.053 0.053 2,764 2,073 24,876
HCT CD74HC4075M96S2497 11707A01XCT 0.100 0.094 0.053 0.053 2,764 2,073 24,876
HCT CD74HC4094E 11708A01 0.143 0.134 0.001 0.061 2,371 1,778 21,335
HCT CD74HC4094M 11708A01XCT 0.167 0.157 0.062 0.062 2,371 1,778 21,335
HCT CD74HC4094M96 11708MXXCT 0.170 0.160 0.062 0.062 3,976 2,982 35,786
HCT CD74HC4094M96S2093 11708A01XCT 0.190 0.179 0.002 0.062 2,371 1,778 21,335
HCT CD74HC4094M96S2515 11708A01XCT 0.156 0.147 0.002 0.062 2,371 1,778 21,335
HCT CD74HC423E 11716C 0.211 0.198 0.052 0.052 2,784 2,088 25,059
HCT CD74HC423M 11716CXXXCT 0.235 0.221 0.053 0.053 2,784 2,088 25,059
HCT CD74HC42E 11715B 0.169 0.159 0.077 0.077 1,870 1,403 16,832
HCT CD74HC42M 11715BXXXCT 0.166 0.156 0.079 0.079 1,870 1,403 16,832
HCT CD74HC4316E 11732B 0.154 0.145 0.055 0.055 2,800 2,100 25,199
</TABLE>
38
<PAGE>
SCHEDULE 1(a)[C]
COMMERCIAL PRODUCTS FOR SUPPLY AGREEMENT
<TABLE>
<CAPTION>
FG STD DIE STD DIE
FAMILY DEVICE DIE ASP TRF PRICE DIE COST TRF PRICE NDW MDPW MLQ
- - ------ ------ --- --- --------- -------- --------- --- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
HCT CD74HC4316ES2065 11732A 0.137 0.129 0.055 0.055 2,800 2,100 25,199
HCT CD74HC4316M 11732MXXXCT 0.173 0.163 0.057 0.057 4,984 3,738 44,855
HCT CD74HC4316M96 11732MXXXCT 0.171 0.161 0.055 0.055 4,984 3,738 44,855
HCT CD74HC4316MS2074 11732AXXXCT 0.135 0.127 0.055 0.055 2,800 2,100 25,199
HCT CD74HC4351E 11741A01 0.304 0.286 0.085 0.085 1,814 1,361 16,330
HCT CD74MC43S1M 11741A01 0.329 0.309 0.085 0.085 1,814 1,361 16,330
HCT CD74HC4352E 11742A01 0.312 0.293 0.091 0.091 1,017 763 9,156
HCT CD74MC4511E 11710A01 0.200 0.188 0.067 0.067 2,163 1,622 19,467
HCT CD74MC4511M 11710A01XCT 0.190 0.179 0.068 0.068 2,163 1,622 19,467
HCT CD74HC4514E 11711B01 0.601 0.565 0.140 0.140 1,051 788 9,461
HCT CD74HC4514EN 11711B01 0.613 0.576 0.139 0.139 1,051 788 9,461
HCT CD74HC4514M96 11711B01 0.473 0.445 0.137 0.137 1,051 788 9,481
HCT CD74HC4515EN 11719B01 0.614 0.577 0.139 0.139 1,051 788 9,461
HCT CD74HC4515M 11719B01 0.634 0.596 0,137 0.137 1,051 788 9,461
HCT CD74HC4518E 11712B01 0.222 0.209 0.089 0.089 1,632 1,224 14,689
HCT CD74HC4520E 11713B01 0.244 0.229 0,087 0.087 1,670 1,252 15,027
HCT CD74HC4520M 11713B01XCT 0.267 0.251 0.069 0.089 1,670 1,252 15,027
HCT CD74HC4520M96 11713B01XCT 0.177 0.166 0,089 0.089 1,670 1,252 15,027
HCT CD74HC4538E 11646C 0.166 0.156 0,059 0.059 2,445 1,834 22,008
HCT CD74HC4538M 11646MXXXCT 0.219 0.206 0.060 0.060 4,093 3,069 36,833
HCT CD74HC4538M96 11646MXXXCT 0.216 0.203 0.000 0.060 4,093 3,069 36,833
HCT CD74MC4538M96105 11646C02XCT 0.250 0.235 0.060 0.060 2,445 1,834 22,008
HCT CD74HC4543E 11714A01 0.169 0.159 0.050 0.050 2,889 2,167 26,001
HCT CD74HC533E 11638C01 0.330 0.310 0.117 0.117 1,237 928 11,136
HCT CD74HC534E 11643C01 0.340 0.320 0.070 0.070 2,063 1,547 18,565
HCT CD74HC540E 11611E 0.160 0.150 0.087 0.087 1,668 1,251 15,016
HCT CD74HC540M 11611E 0.162 0.152 0.086 0.086 1,668 1,251 15,016
HCT CD74HC540M96 11611E 0.095 0.089 0.086 0.063 1,668 1,251 15,016
HCT CD74HC541E 116120 0.147 0.138 0.088 0.088 1,613 1,210 14,520
HCT CD74HC541M 116120 0.137 0.129 0.087 0.087 1,613 1,210 14,520
</TABLE>
39
<PAGE>
SCHEDULE 1(a)[C]
COMMERCIAL PRODUCTS FOR SUPPLY AGREEMENT
<TABLE>
<CAPTION>
FG STD DIE STD DIE
FAMILY DEVICE DIE ASP TRF PRICE DIE COST TRF PRICE NDW MDPW MLQ
- - ------ ------ --- --- --------- -------- --------- --- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
HCT CD74HC541M96 116120 0.160 0.150 0.087 0.087 1,613 1,210 14,520
HCT CD74HC563E 11637C01 0.196 0.184 0.074 0.074 1,953 1,465 17,580
HCT CD74HC504E 11644C 0.135 0.127 0.106 0.089 1,372 1,029 12,351
HCT CD74HC564M 11644C 0.368 0.346 0.105 0.105 1,372 1,029 12,351
HCT CD74HC573E 11616M 0.140 0.132 0.075 0.075 3,179 2,384 28,608
HCT CD74HC573M 11616M 0.149 0.140 0.074 0.074 3,179 2,384 28,608
HCT CD74HC573M96 11616M 0.121 0.114 0.074 0.074 3,179 2,384 28,608
HCT CD74HC573M96S2357 11616D02 0.205 0.193 0.074 0.074 1,953 1,465 17,580
HCT CD74HC573M96S2515 11616M 0.105 0.099 0.074 0.069 3,179 2,384 28,608
HCT CD74HC574E 11604C 0.135 0.127 0.107 0.089 1,372 1,029 12,351
HCT CD74HC574M 11604M 0.136 0.128 0.105 0.090 2,335 1,751 21,015
HCT CD74HC574M96 11604M 0.170 0.160 0.105 0.105 2,335 1,751 21,015
HCT CD74HC597E 11749A01 0.171 0.161 0.057 0.057 2,597 1,948 23,376
HCT CD74HC597M 11749A01XC1 0.181 0.170 0.058 0.058 2,597 1,948 23,376
HCT CD74HC597M96 11749A01XC1 0.176 0.165 0.058 0.058 2,597 1,948 23,376
HCT CD74HC640E 11618B 0.303 0.285 0.112 0.112 1,231 923 11,076
HCT CD74HC646M96 11623C01 1.056 0.993 0.262 0.262 556 417 5,005
HCT CD74HC652EN 11788A01 0.849 0.798 0.303 0.303 483 362 4,349
HCT CD74HC870E 11676B01 0.265 0.249 0.112 0.112 1,289 967 11,604
HCT CD74HC870M96 11676B01XCT 0.235 0.221 0.115 0.115 1,289 967 11,604
HCT CD74HC688E 11641B01 0.174 0.164 0.051 0.051 2,876 2,157 25,888
HCT CD74HC688M 11641B01 0.138 0.130 0.050 0.050 2,876 2,157 25,888
HCT CD74HC688M96 11641B01 0.179 0.168 0.050 0.050 2,876 2,157 25,888
HCT CD74HC7048AE 11733A01 0.513 0.482 0.082 0.082 1,817 1,363 16,356
HCT CD74MC7046AM 11733A01XCT 0.419 0.394 0.083 0.083 1,817 1,363 16,356
HCT CD74HC7046AM96 11733A01XCT 0.527 0.495 0.083 0.083 1,817 1,363 16,356
HCT CD74HC7266E 11739A01 0.179 0.168 0.035 0.035 4,107 3,080 36,960
HCT CD74HC7268M 11739A01XCT 0.151 0.142 0.036 0.036 4,107 3,080 36,960
HCT CD74HC7266M96 11739A01XCT 0.177 0.166 0.036 0.036 4,107 3,080 36,960
HCT CD74HC73E 11655A01 0.105 0.099 0.042 0.042 3,470 2,603 31,234
</TABLE>
40
<PAGE>
SCHEDULE 1(a)[C]
COMMERCIAL PRODUCTS FOR SUPPLY AGREEMENT
<TABLE>
<CAPTION>
FG STD DIE STD DIE
FAMILY DEVICE DIE ASP TRF PRICE DIE COST TRF PRICE NDW MDPW MLQ
- - ------ ------ --- --- --------- -------- --------- --- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
HCT CD74HC73M 11655A01XCT 0.146 0.137 0.043 0.043 3,470 2,603 31,234
HCT CD74HC73M9682404 11855A01XCT 0.100 0.094 0.043 0.043 3,470 2,603 31,234
HCT CD74HC74E 11601M 0.102 0.096 0.052 0.052 4,386 3,289 39,473
HCT CD74HC74M 11601FXXXCT 0.088 0.083 0.054 0.054 2,752 2,064 24,771
HCT CD74HC741496 11601FXXXCT 0.100 0.094 0.054 0.054 2,752 2,064 24,771
HCT CD74HC74M98S2093 11601FXXXCT 0.083 0.078 0.054 0.054 2,752 2,064 24,771
HCT CD74HC74MR4099 11601F02XCT 0.220 0.207 0.054 0.054 2,752 2,064 24,771
HCT CD74HC75E 11688A01 0.123 0.116 0.052 0.052 2,783 2,087 25,043
HCT CD74HC75M 11688A01XCT 0.126 0.118 0.053 0.053 2,783 2,087 25,043
HCT CD74HC75M96 11688A01XCT 0.109 0.102 0.053 0.053 2,783 2,087 25,043
HCT CD74HC85E 11689A01 0.135 0.127 0.075 0.075 1,915 1,436 17,234
HCT CD74HC85M 11689A01XCT 0.185 0.174 0.077 0.077 1,915 1,436 17,234
HCT CD74HC85M96 11089A01XCT 0.166 0.156 0.077 0.077 1,915 1,436 17,234
HCT CD74HC85M96S2497 11689A01XCT 0.166 0.156 0.077 0.077 1,915 1,436 17,234
HCT CD74HC86E 11657B01 0.102 0.096 0.043 0.043 3,356 2,517 30,205
HCT CD74HC86M 11657B01XCT 0.113 0.106 0.044 0.044 3,356 2,517 30,205
HCT CD74HC86M96 11657B01XC1 0.103 0.097 0.044 0.044 3,356 2,517 30,205
HCT CD74HC86M96S2378 11657B01XCT 0.110 0.103 0.044 0.044 3,356 2,517 30,205
HCT CD74HC93E 11738A01 0.197 0.185 0.031 0.031 4,783 3,587 43,044
HCT CD74HC93M 11738A01XCT 0.201 0.189 0.032 0.032 4,783 3,587 43,044
HCT CD74HC93M96 11731A01XCT 0.146 0.137 0.032 0.032 4,783 3,587 43,044
HCT CD74HC93M96S2300 11738A01XCT 0.133 0.125 0.032 0.032 4,783 3,587 43,044
HCT CD74HCT00E 13600H 0.087 0.082 0.052 0.052 2,761 2,071 24,848
HCT CD74HCT00E82065 13600C 0.142 0.133 0.052 0.052 2,819 2,114 25,368
HCT CD74HCT00M 13600HXXXCT 0.077 0.072 0.054 0.051 2,761 2,071 24,848
HCT CD74HCT00M96 13600HXXXCT 0.065 0.061 0.053 0.043 2,761 2,071 24,848
HCT CD74HCT00MS2074 13600HXXXCT 0.092 0.086 0.054 0.054 2,761 2,071 24,848
HCT CD74HCT02E 13678A01 0.079 0.074 0.045 0.045 3,234 2,426 29,107
HCT CD74HCT02EX 13678A01 0.181 0.170 0.045 0.045 3,234 2,426 29,107
HCT CD74HCT02M 13678A01XCT 0.082 0.077 0.045 0.045 3,234 2,426 29,107
</TABLE>
41
<PAGE>
SCHEDULE 1(a)[C]
COMMERCIAL PRODUCTS FOR SUPPLY AGREEMENT
<TABLE>
<CAPTION>
FG STD DIE STD DIE
FAMILY DEVICE DIE ASP TRF PRICE DIE COST TRF PRICE NDW MDPW MLQ
- - ------ ------ --- --- --------- -------- --------- --- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
HCT CD74HCT02M96 13678A01XCT 0.094 0.088 0.046 0.046 3,234 2,426 29,107
HCT CD74HCT03E 13737A01 0.064 0.060 0.033 0.033 4,323 3,242 38,904
HCT CD74HCT03M 13737A01XCT 0.068 0.064 0.034 0.034 4,323 3,242 38,904
HCT CD74HCT03M96 13737A01XCT 0.086 0.081 0.034 0.034 4,323 3,242 38,904
HCT CD74HCT03M96S2497 13737A01XCT 0.094 0.088 0.034 0.034 4,323 3,242 38,904
HCT CD74HCT04E 13681M 0.090 0.085 0.050 0.050 4,741 3,556 42,672
HCT CD74HCT04ES2065 13681B 0.088 0.083 0.050 0.050 2,885 2,164 25,966
HCT CD74HCT04EX 13681B 0.184 0.173 0.050 0.050 2,885 2,164 25,966
HCT CD74HCT04M 13681BXXXCT 0.068 0.064 0.051 0.045 2,885 2,164 25,966
HCT CD74HCT04M96 13681BXXXCT 0.079 0.074 0.051 0.051 2,885 2,164 25,966
HCT CD74HCT04M96S2075 13681BXXXCT 0.092 0.086 0.051 0.051 2,885 2,164 25,966
HCT CD74HCT04M96S2497 13681BXXXCT 0.095 0.089 0.051 0.051 2,885 2,164 25,966
HCT CD74HCT04MS2075 13681BXXXCT 0.087 0.082 0.051 0.051 2,885 2,164 25,966
HCT CD74HCT08E 13682B01 0.082 0.077 0.051 0.051 2,832 2,124 25,486
HCT CD74HCT08EX 13682B01 0.178 0.167 0.051 0.051 2,832 2,124 25,486
HCT CD74HCT08M 13682B01XCT 0.083 0.078 0.052 0.052 2,832 2,124 25,486
HCT CD74HCT08M96 13682B01XCT 0.083 0.078 0.052 0.052 2,832 2,124 25,486
HCT CD74HCT08M96S2497 13682B01XC1 0.080 0.075 0.052 0.052 2,832 2,124 25,486
HCT CD74HCT08MR2499 13682B01XCT 0.115 0.108 0.052 0.052 2,832 2,124 25,486
HCT CD74HCT08MS2074 13682B01XCT 0.088 0.083 0.052 0.052 2,832 2,124 25,486
HCT CD74HCT107E 13642A01 0.163 0.153 0.044 0.044 3,298 2,474 29,685
HCT CD74HCT109E 13690801 0.165 0.155 0.045 0.045 3,152 2,364 26,370
HCT CD74HCT109M 13690B01XCT 0.150 0.141 0.047 0.047 3,152 2,364 28,370
HCT CD74HCT109M96 13690B01XCT 0.144 0.135 0.047 0.047 3,152 2,364 28,370
HCT CD74HCT10E 13683B01 0.079 0.074 0.058 0.052 2,510 1,882 22,588
HCT CD74HCT10M 13683B01XCT 0.079 0.074 0.059 0.052 2,510 1,882 22,588
HCT CD74HCT10M96 13683B01XCT 0.075 0.071 0.059 0.050 2,510 1,882 22,588
HCT CD74HCT11M 13684B01XCT 0.054 0.051 0.045 0.036 3,275 2,457 29,478
HCT CD74HCT11M96 13684B01XCT 0.089 0.084 0.045 0.045 3,275 2,457 29,478
HCT CD74HCT11M96S2497 13684B01XCT 0.133 0.125 0.045 0.045 3,275 2,457 29,478
</TABLE>
42
<PAGE>
SCHEDULE 1(a)[C]
COMMERCIAL PRODUCTS FOR SUPPLY AGREEMENT
<TABLE>
<CAPTION>
FG STD DIE STD DIE
FAMILY DEVICE DIE ASP TRF PRICE DIE COST TRF PRICE NDW MDPW MLQ
- - ------ ------ --- --- --------- -------- --------- --- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
HCT CD74HCT123E 13645C 0.157 0.148 0.053 0.053 2,816 2,112 25,344
HCT CD74HCT123M 13645CXXXCT 0.187 0.176 0.052 0.052 2,816 2,112 25,344
HCT CD74HCT123M96 13645CXXXCT 0.137 0.129 0.052 0.052 2,816 2,112 25,344
HCT CD74HCT123M96S5001 13645CXXXCT 0.180 0.169 0.052 0.052 2,816 2,112 25,344
HCT CD74HCT125E 13727A01 0.111 0.104 0.045 0.045 3,147 2,360 28324
HCT CD74HCT125M 13727A01XCT 0.103 0.097 0.046 0.046 3,147 2,360 28,324
HCT CD74HCT125M96 13727A01XCT 0.096 0.090 0.046 0.046 3,147 2,360 28,324
HCT CD74HCT125M96S2497 13727A01XCT 0.110 0.103 0.047 0.047 3,147 2,360 28,324
HCT CD74HCT126E 13728A 0.118 0.111 0.047 0.047 3,080 2,310 27,721
HCT CD74HCT126M 13728A01XCT 0.126 0.118 0.047 0.047 3,080 2,310 27,721
HCT CD74HCT126M96 13728A01XCT 0.126 0.118 0.047 0.047 3,080 2,310 27,721
HCT CD74HCT120M96S2497 13728A01XCT 0.140 0.132 0.048 0.048 3,080 2,310 27,721
HCT CD74HCT132E 13746A01 0.117 0.110 0.040 0.040 3,675 2,756 33,072
HCT CD74HCT132M 13746A01XCT 0.125 0.118 0.040 0.040 3,675 2,756 33,072
HCT CD74HCT132M96 13746A01XCT 0.117 0.110 0.040 0.040 3,675 2,756 33,072
HCT CD74HCT132M96S2478 13746A01XCT 0.142 0.133 0.041 0.041 3,675 2,756 33,072
HCT CD74HCT132M96S2497 13746A01XCT 0.114 0.107 0.041 0.041 3,675 2,756 33,072
HCT CD74HCT132M96S5001 13746A01XCT 0.157 0.148 0.041 0.041 3,675 2,756 33,072
HCT CD74HCT132MR3170 13746A01XCT 0.130 0.122 0.041 0.041 3,675 2,756 33,072
HCT CD74HCT137M96 13729B01XCT 0.191 0.180 0.063 0.063 2,354 1,766 21,190
HCT CD74HCT138E 13602M 0.114 0.107 0.061 0.061 3,999 2,999 35,989
HCT CD74HCT138M 13602MXXXCT 0.118 0.111 0.062 0.062 3,999 2,999 35,989
HCT CD74HCT138M96 13602MXXXCT 0.118 0.109 0.062 0.062 3,999 2,999 35,989
HCT CD74HCT138M96S2497 13802MXXXCT 0.105 0.099 0.063 0.063 3,999 2,999 35,989
HCT CD74HCT139E 13610B 0.118 0.111 0.049 0.049 2,959 2,219 26,628
HCT CD74HCT139M 13610C01XCT 0.068 0.064 0.050 0.045 2,930 2,198 26,372
HCT CD74HCT139M96 13610C01XCT 0.096 0.090 0.050 0.050 2,930 2,198 26,372
HCT CD74HCT139M96S2497 13610C01XCT 0.110 0.103 0.050 0.050 2,930 2,198 26,372
HCT CD74HCT147E 13658A01 0.161 0.151 0.076 0.076 1,912 1,434 17,205
HCT CD74HCT14E 13685M 0.103 0.097 0.059 0.059 5,616 4,212 50,548
</TABLE>
43
<PAGE>
SCHEDULE 1(a)[C]
COMMERCIAL PRODUCTS FOR SUPPLY AGREEMENT
<TABLE>
<CAPTION>
FG STD DIE STD DIE
FAMILY DEVICE DIE ASP TRF PRICE DIE COST TRF PRICE NDW MDPW MLQ
- - ------ ------ --- --- --------- -------- --------- --- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
HCT CD74HCT14M 13685AXXXCT 0.103 0.097 0.060 0.060 3,273 2,455 29,461
HCT CD74HCT14M96 13685AXXXCT 0.107 0.101 0.060 0.060 3,273 2,455 29,461
HCT CD74HCT14M96S2497 13685AXXXCT 0.097 0.091 0.060 0.060 3,273 2,455 29,461
HCT CD74HCT151E 13659B01 0.138 0.128 0.049 0.049 2,962 2,221 26,657
HCT CD74HCT151M 13659B01XCT 0.137 0.129 0.050 0.050 2,962 2,221 26,657
HCT CD74HCT151M96 13659B01XCT 0.156 0.147 0.050 0.050 2,962 2,221 26,657
HCT CD74HCT151M96S5001 13659B01XCT 0.150 0.141 0.050 0.050 2,962 2,221 26,657
HCT CD74HCT153E 13660A01 0.140 0.132 0.041 0.041 3,484 2,613 31,353
HCT CD74HCT153M 13660A01XCT 0.142 0.133 0.042 0.042 3,484 2,613 31,353
HCT CD74HCT153M96 13660A01XCT 0.124 0.117 0.042 0.042 3,484 2,613 31,353
HCT CD74HCT153M96S2497 13660A01XCT 0.130 0.122 0.042 0.042 3,484 2,613 31,353
HCT CD74HCT153M96S2515 13660A01XCT 0.123 0.116 0.042 0.042 3,484 2,613 31,353
HCT CD74HCT154E 13632C 0.487 0.458 0.104 0.104 1,414 1,060 12,725
HCT CD74HCT154EN 13632C 1.042 0.979 0.104 0.104 1,414 1,060 12,725
HCT CD74HCT154M 13632C01 0.459 0.431 0.102 0.102 1,414 1,060 12,725
HCT CD74HCT157E 136280 0.134 0.126 0.059 0.059 2,824 2,118 25,416
HCT CD74HCT157M 13628MXXXCT 0.149 0.140 0.060 0.060 2,824 2,118 25,416
HCT CD74HCT157M96 13628MXXXCT 0.119 0.112 0.060 0.060 2,824 2,118 25,416
HCT CD74HCT157M96S2497 13628MXXXCT 0.153 0.144 0.060 0.060 2,824 2,118 25,416
HCT CD74HCT158E 13629B01 0.169 0.159 0.051 0.051 2,826 2,119 25,432
HCT CD74HC1161E 13635D01 0.120 0.113 0.075 0.075 1,930 1,448 17,371
HCT CD74HCT161M 13635D01XCT 0.108 0.102 0.077 0.071 1,930 1,448 17,371
HCT CD74HCT161M96 13635D01XCT 0.143 0.134 0.077 0.077 1,930 1,448 17,371
HCT CD74HCT163E 13636D01 0.152 0.143 0.076 0.076 1,909 1,432 17,183
HCT CD74HCT163M 13636D01XCT 0.146 0.137 0.077 0.077 1,909 1,432 17,183
HCT CD74HCT163M96 13636D01XCT 0.168 0.158 0.077 0.077 1,909 1,432 17,183
HCT CD74HCT163M96S2497 13636D01XCT 0.100 0.094 0.077 0.066 1,909 1,432 17,183
HCT CD74HCT164E 13667B01 0.143 0.134 0.044 0.044 3,288 2,466 29,596
HCT CD74HCT164ES2497 13667B01 0.180 0.169 0.044 0.044 3,288 2,466 29,596
HCT CD74HCT164M 13667B01XCT 0.131 0.123 0.044 0.044 3,288 2,466 29,596
</TABLE>
44
<PAGE>
SCHEDULE 1(a)[C]
COMMERCIAL PRODUCTS FOR SUPPLY AGREEMENT
<TABLE>
<CAPTION>
FG STD DIE STD DIE
FAMILY DEVICE DIE ASP TRF PRICE DIE COST TRF PRICE NDW MDPW MLQ
- - ------ ------ --- --- --------- -------- --------- --- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
HCT CD74HCT164M96 13667B01XCT 0.140 0.132 0.044 0.044 3,288 2,466 29,596
HCT CD74HCT164MS2074 13667B01XCT 0.143 0.134 0.044 0.044 3,288 2,466 29,596
HCT CD74HCT165E 13630C01 0.155 0.146 0.043 0.043 3,330 2,498 29,974
HCT CD74HCT165ER2489 13630C01 0.175 0.165 0.043 0.043 3,330 2,498 29,974
HCT CD74HCT165M 13630C01XCT 0.171 0.161 0,044 0.044 3,330 2,498 29,974
HCT CD74HCT165M96 13630CXXXCT 0.140 0.132 0.044 0.044 3,330 2,498 29,974
HCT CD74HCT165M96S2074 13630C01XCT 0.139 0.131 0.044 0.044 3,330 2,498 29,974
HCT CD74HCT165MS2075 13630C01XCT 0.143 0.134 0.044 0.044 3,330 2,498 29,974
HCT CD74HCT166E 13654B01 0.158 0.149 0.057 0.057 2,548 1,911 22,936
HCT CD74HCT166M 13654B01XCT 0.203 0.191 0.058 0.058 2,548 1,911 22,936
HCT CD74HCT166M96 13654B01XCT 0.173 0.163 0.058 0.058 2,548 1,911 22,936
HCT CD74HCT166M96S2497 13654B01XCT 0.110 0.103 0.058 0.058 2,548 1,911 22,936
HCT CD74HCT173E 13656C01 0.127 0.119 0,079 0.079 1,820 1,365 16,378
HCT CD74HCT173M96 13656C01XCT 0.234 0.220 0.061 0.081 1,820 1,385 16,378
HCT CD74HCT174E 13625D01 0.107 0.101 0.065 0.065 2,230 1,673 20,071
HCT CD74HCT174M 13625D01XCT 0.129 0.121 0.066 0.066 2,230 1,673 20,071
HCT CD74HCT174M96 13625D01XCT 0.123 0.116 0.066 0.066 2,230 1,673 20,071
HCT CD74HCT175E 13626C01 0.129 0.121 0.070 0.070 2,054 1,541 18,487
HCT CD74HCT175ES2497 13626C01 0.180 0.169 0.070 0.070 2,054 1,541 18,487
HCT CD74HCT175M 13626C01XCT 0.150 0.141 0.072 0.072 2,054 1,541 18,487
HCT CD74HCT175M96 13626C01XCT 0.086 0.081 0.072 0.057 2,054 1,541 18,487
HCT CD74HCT175M96S2497 13626C01XCT 0.100 0.094 0.072 0.066 2,054 1,541 18,487
HCT CD74HCT191E 13664D01 0.212 0.199 0.080 0.080 1,802 1,351 16,216
HCT CD74HCT191M 13664BXXXCT 0.237 0.223 0.082 0.082 1,437 1,078 12,936
HCT CD74HCT193E 13666C01 0.254 0.239 0.078 0.078 1,848 1,386 16,632
HCT CD74HCT20E 13679B01 0.080 0.075 0.039 0.039 3,682 2,782 33,139
HCT CD74HCT21E 13736B01 0.099 0.093 0.037 0.037 4,129 3,091 37,164
HCT CD74HCT21M 13736B01XCT 0.080 0.075 0.038 0.038 4,129 3,091 37,164
HCT CD74HCT21M96 13736B01XCT 0.091 0.086 0.038 0.038 4,129 3,097 37,164
HCT CD74HCT221E 13693D01 0.236 0.222 0.089 0.089 1,617 1,213 14,557
</TABLE>
45
<PAGE>
SCHEDULE 1(a)[C]
COMMERCIAL PRODUCTS FOR SUPPLY AGREEMENT
<TABLE>
<CAPTION>
FG STD DIE STD DIE
FAMILY DEVICE DIE ASP TRF PRICE DIE COST TRF PRICE NDW MDPW MLQ
- - ------ ------ --- --- --------- -------- --------- --- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
HCT CD74HCT221M 13693D01XCT 0.195 0.183 0.091 0.091 1,617 1,213 14,557
HCT CD74HCT221M96 13693D01XC1 0.306 0.288 0.091 0.091 1,617 1,213 14,557
HCT CD74HCT237E 13730B01 0.208 0.196 0.061 0.061 2,381 1,785 21,425
HCT CD74HCT238E 13603F 0.223 0.210 0.062 0.062 2,344 1,758 21,098
HCT CD74HCT238M 13603FXXXCT 0.199 0.187 0.063 0.063 2,344 1,758 21,098
HCT CD74HCT240E 13607D01 0.137 0.129 0.089 0.089 1,627 1,220 14,644
HCT CD74HCT240M 13607D01 0.162 0.152 0.089 0.089 1,627 1,220 14,644
HCT CD74HCT240M96 13607D01 0.143 0.134 0.089 0.089 1,627 1,220 14,644
HCT CD74HCT241E 13608D01 0.169 0.159 0.089 0.089 1,627 1,220 14,644
HCT CD74HCT241M96 13608D01 0.232 0.218 0.088 0.088 1,627 1,220 14,644
HCT CD74HCT244E 13606C01 0.145 0.136 0.099 0.096 1,573 1,180 14,161
HCT CD74HCT244ES2497 13606C01 0.155 0.146 0.099 0.099 1,573 1,180 14,161
HCT CD74HCT244M 13606M 0.122 0.115 0.099 0.081 2,709 2,032 24,382
HCT CD74HCT244M96 13606M 0.120 0.113 0.099 0.079 2,709 2,032 24,382
HCT CD74HCT244MS2075 13606C01 0.157 0.148 0.099 0.099 1,573 1,180 14,161
HCT CD74HCT245E 13617M 0.139 0.131 0.114 0.092 2,218 1,664 19,966
HCT CD74HCT245M 13617M 0.143 0.134 0.113 0.094 2,218 1,664 19,966
HCT CD74HCT245M96 13617M 0.128 0.120 0.113 0.084 2,218 1,664 19,966
HCT CD74HCT245M96S5001 13617M 0.170 0.160 0.113 0.112 2,218 1,664 19,966
HCT CD74HCT245MS2075 13617M 0.143 0.134 0.112 0.094 2,218 1,664 19,966
HCT CD74HCT251E 13614C01 0.153 0.144 0.068 0.068 2,131 1,598 19,181
HCT CD74HCT251M 13614C01XCT 0.119 0.112 0.069 0.069 2,131 1,598 19,181
HCT CD74HCT251M96 13614C01XCT 0.157 0.148 0.069 0.069 2,131 1,598 19,181
HCT CD74HCT251MS2075 13614C01XCT 0.180 0.169 0.069 0.069 2,131 1,598 19,181
HCT CD74HCT253E 13639B01 0.166 0.156 0.047 0.047 3,110 2,332 27,986
HCT CD74HCT253M 13639B01XCT 0.275 0.259 0.048 0.048 3,110 2,332 27,986
HCT CD74HCT253M96 13639B01XCT 0.132 0.124 0.048 0.048 3,110 2,332 27,986
HCT CD74HCT257E 13620C01 0.154 0.145 0.045 0.045 3,169 2,377 28,525
HCT CD74HCT257ES2064 13620C01 0.155 0.146 0.046 0.046 3,169 2,377 28,525
HCT CD74HCT257ES2497 13620C01 0.200 0.188 0.046 0.046 3,169 2,377 28,525
</TABLE>
46
<PAGE>
SCHEDULE 1(a)[C]
COMMERCIAL PRODUCTS FOR SUPPLY AGREEMENT
<TABLE>
<CAPTION>
FG STD DIE STD DIE
FAMILY DEVICE DIE ASP TRF PRICE DIE COST TRF PRICE NDW MDPW MLQ
- - ------ ------ --- --- --------- -------- --------- --- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
HCT CD74HCT257M 13620MXXXCT 0.147 0.138 0.046 0.046 5,162 3,872 46,462
HCT CD74HCT257M96 13620MXXXCT 0.143 0.134 0.047 0.047 5,162 3,872 46,462
HCT CD74HCT258E 13747A01 0.176 0.165 0.055 0.055 2,119 1,589 19,068
HCT CD74HCT259E 13694A 0.159 0.149 0.063 0.063 2,314 1,736 20,828
HCT CD74HCT259M 13694MXXXCT 0.172 0.162 0.064 0.064 4,023 3,017 36209
HCT CD74HCT259M96 13694MXXXCT 0.162 0.152 0.063 0.063 4,023 3,017 36,209
HCT CD74HCT259M96S2497 13694MXXXCT 0.390 0.367 0.064 0.064 4,023 3,017 36,209
HCT CD74HCT259M96S5001 13694MXXXCT 0.170 0.160 0.084 0.064 4,023 3,017 36,209
HCT CD74HCT259MS2075 13694MXXXCT 0.145 0.136 0.063 0.063 4,023 3,017 36,209
HCT CD74HCT273E 13613G 0.139 0.131 0.065 0.085 1,928 1,446 17,353
HCT CD74HCT273ES2065 13613G 0.148 0.139 0.084 0.084 1,928 1,446 17,353
HCT CD74HCT273M 13613GXXXCT 0.099 0.093 0.084 0.065 1,928 1,446 17,353
HCT CD74HCT273M96 13613GXXXCT 0.123 0.116 0.084 0.081 1,928 1,446 17,353
HCT CD74HCT273M96S2497 13613G 0.100 0.094 0.085 0.066 1,928 1,446 17,353
HCT CD74HCT27E 13686A01 0.070 0.066 0.042 0.042 3,422 2,566 30,794
HCT CD74HCT27M 13686A01XCT 0.069 0.065 0.043 0.043 3,422 2,566 30,794
HCT CD74HCT27M96 13686A01XCT 0.098 0.092 0.043 0.043 3,422 2,566 30,794
HCT CD74HCT27M96S2497 13686A01XCT 0.110 0.103 0.043 0.043 3,422 2,566 30,794
HCT CD74HCT280E 13640B01 0.150 0.141 0.044 0.044 3,290 2,468 29,610
HCT CD74HCT283E 13723A01 0.270 0.254 0.060 0.060 2,411 1,808 21,696
HCT CD74HCT283M 13723A01XCT 0.227 0.213 0.061 0.061 2,411 1,808 21,696
HCT CD74HCT297E 13680A01 0.680 0.639 0.140 0.140 1,035 776 9,314
HCT CD74HCT299E 13615F01 0.322 0.303 0.126 0.126 1,146 859 10,312
HCT CD74HCT299M 13615F01 0.319 0.300 0.126 0.126 1,146 859 10,312
HCT CD74HCT30E 13724A01 0.079 0.074 0.036 0.036 3,981 2,986 35,832
HCT CD74HCT30M 13724A01XCT 0.088 0.083 0.036 0.036 3,981 2,988 35,832
HCT CD74HCT30M96 13724A01XCT 0.105 0.099 0.036 0.036 3,981 2,988 35,832
HCT CD74HCT30M96S2497 13724A01XCT 0.090 0.085 0.036 0.036 3,981 2,986 35,832
HCT CD74HCT32E 13720A01 0.088 0.083 0.038 0.038 3,733 2,800 33,600
HCT CD74HCT32ES2064 13720A01 0.100 0.094 0.039 0.039 3,733 2,800 33,600
</TABLE>
47
<PAGE>
SCHEDULE 1(a)[C]
COMMERCIAL PRODUCTS FOR SUPPLY AGREEMENT
<TABLE>
<CAPTION>
FG STD DIE STD DIE
FAMILY DEVICE DIE ASP TRF PRICE DIE COST TRF PRICE NDW MDPW MLQ
- - ------ ------ --- --- --------- -------- --------- --- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
HCT CD74HCT32EX 13720A01 0.147 0.138 0.038 0.038 3,733 2,800 33,600
HCT CD74HCT32M 13720A01XCT 0.081 0.076 0.039 0.039 3,733 2,800 33,600
HCT CD74HCT32M96 13720A01XCT 0.082 0.077 0.039 0.039 3,733 2,800 33,600
HCT CD74HCT32M96S2497 13720A01XCT 0.090 0.085 0.040 0.040 3,733 2,800 33,600
HCT CD74HCT32MR2499 13720A01XCT 0.115 0.108 0.039 0.039 3,733 2,800 33,600
HCT CD74HCT354E 13672A 0.292 0.274 0.084 0.084 1,722 1,292 15,499
HCT CD74HCT365E 13695B01 0.203 0.191 0,077 0.077 1,868 1,401 16,808
HCT CD74HCT365M 13095B01XCT 0.204 0.192 0.079 0.079 1,868 1,401 16,808
HCT CD74HCT365M96 13895B01XCT 0.165 0.155 0.079 0.079 1,868 1,401 16,808
HCT CD74HCT367E 13662B01 0.192 0.180 0.077 0.077 1,888 1,416 16,991
HCT CD74HCT367M 13662B01XCT 0.207 0.195 0.078 0.078 1,888 1,416 16,991
HCT CD74HCT367M96 13862B01XCT 0.131 0.123 0.078 0.078 1,888 1,416 16,991
HCT CD74HCT367MS2516 13662B01XCT 0.187 0.176 0.078 0.078 1,888 1,418 16,991
HCT CD74HCT368M 13663B01XCT 0.198 0.186 0.078 0.078 1,888 1,416 16,991
HCT CD74HCT373E 13605C01 0.122 0.115 0.119 0.081 1,483 1,112 13,349
HCT CD74HCT373M 13605C01 0.129 0.121 0.118 0.085 1,483 1,112 13,349
HCT CD74HCT373M96 13605C01 0.151 0.142 0.118 0.100 1,483 1,112 13,349
HCT CD74HCT373M96S2497 13605C01 0.130 0.122 0.118 0.086 1,483 1,112 13,349
HCT CD74HCT374E 13609C01 0.138 0.130 0.068 0.068 2,109 1,581 18,978
HCT CD74HCT374M 13609C01 0.074 0.070 0.068 0.049 2,109 1,581 18,978
HCT CD74HCT374M96 13609C01 0.099 0.093 0.068 0.065 2,109 1,581 18,978
HCT CD74HCT374M96S2497 13609C01 0.121 0.114 0.068 0.068 2,109 1,581 18,978
HCT CD74HCT374MS2075 13609C01 0.147 0.138 0.068 0.068 2,109 1,581 18,978
HCT CD74HCT377E 13648B01 0.126 0.118 0.062 0.062 2,310 1,732 20,786
HCT CD74HCT377M 13848B01 0.144 0.135 0.062 0.062 2,310 1,732 20,786
HCT CD74HCT377M96 13648B01 0.179 0.168 0.062 0.062 2,310 1,732 20,786
HCT CD74HCT390M 13670A01XCT 0.178 0.167 0.053 0.053 2,773 2,080 24,959
HCT CD74HCT390M96 13670A01XCT 0.210 0.197 0.053 0.053 2,773 2,080 24,959
HCT CD74HCT393E 13671B01 0.143 0.134 0.047 0.047 3,092 2,319 27,832
HCT CD74HCT393ES2064 13671B01 0.180 0.169 0.047 0.047 3,092 2,319 27,832
</TABLE>
48
<PAGE>
SCHEDULE 1(a)[C]
COMMERCIAL PRODUCTS FOR SUPPLY AGREEMENT
<TABLE>
<CAPTION>
FG STD DIE STD DIE
FAMILY DEVICE DIE ASP TRF PRICE DIE COST TRF PRICE NDW MDPW MLQ
- - ------ ------ --- --- --------- -------- --------- --- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
HCT CD74HCT393ES2497 13671B01 0.230 0.216 0.047 0.047 3,092 2,319 27,832
HCT CD74HCT393M 13671B01XCT 0.137 0.129 0.048 0.048 3,092 2,319 27,832
HCT CD74HCT393M96 13671B01XCT 0.171 0.161 0.048 0.048 3,092 2,319 27,832
HCT CD74HCT393M96S2497 13671B01XCT 0.136 0.128 0.048 0.048 3,092 2,319 27,832
HCT CD74HCT393MS2075 13671B01XCT 0.180 0.169 0.048 0.048 3,092 2,319 27,832
HCT CD74HCT40103E 13709B01 0.271 0.255 0.106 0.106 1,366 1,024 12,292
HCT CD74HCT40103M 13709B01XCT 0.247 0.232 0.108 0.108 1,366 1,024 12,292
HCT CD74HCT40103M96 13709B01XCT 0.237 0.223 0.108 0.108 1,366 1,024 12,292
HCT CD74HCT40105E 13669A01 0.204 0.192 0.082 0.082 1,761 1,321 15,851
HCT CD74HCT40105ES2064 13669A01 0.190 0.179 0.082 0.082 1,761 1,321 15,651
HCT CD74HCT40105M 13669A01XCT 0.238 0.224 0.084 0.084 1,761 1,321 15,851
HCT CD74HCT40105M96 13669A01XCT 0.346 0.325 0.084 0.084 1,761 1,321 15,851
HCT CD74HCT4020E 13651D01 0.167 0.157 0.062 0.062 2,298 1,723 20,682
HCT CD74HCT4020ER2489 13651D01 0.250 0.235 0.063 0.063 2,298 1,723 20,682
HCT CD74HCT4020M 13651D01XCT 0.189 0.178 0.064 0.064 2,298 1,723 20,682
HCT CD74HCT4020M96 13651D01XCT 0.173 0.163 0.064 0.064 2,298 1,723 20,682
HCT CD74HCT4024M 13699D01XCT 0.244 0.229 0.042 0.042 3,523 2,642 31,703
HCT CD74HCT4040E 13652D01 0.159 0.149 0.062 0.062 2,324 1,743 20,914
HCT CD74HCT4040ES2497 13652D01 0.200 0.188 0.062 0.062 2,324 1,743 20,914
HCT CD74HCT4040M 13652MXXXCT 0.136 0.128 0.063 0.063 3,909 2,931 35,177
HCT CD74HCT4040AE 13701A 0.364 0.342 0.081 0.081 1,789 1,342 16,099
HCT CD74HCT4046AM 13701AXXXCT 0.360 0.338 0.083 0.083 1,789 1,342 16,099
HCT CD74HCT4046AM96 13701AXXXCT 0.424 0.399 0.083 0.083 1,789 1,342 16,099
HCT CD74HCT4046AM96S246 13701AXXXCT 0.332 0.312 0.083 0.083 1,789 1,342 16,099
HCT CD74HCT4046AMS2074 13701AXXXCT 0.266 0.250 0.083 0.083 1,789 1,342 16,099
HCT CD74HCT4051E 13702A 0.177 0.166 0.079 0.079 1,971 1,478 17,739
HCT CD74HCT4051M 13702AXXXCT 0.154 0.145 0,080 0.080 1,971 1,478 17,739
HCT CD74HCT4052E 13703B 0.133 0.125 0.101 0.088 1,545 1,159 13,907
HCT CD74HCT4052M 13703BXXXCT 0.110 0.103 0.101 0.073 1,545 1,159 13,907
</TABLE>
49
<PAGE>
SCHEDULE 1(a)[C]
COMMERCIAL PRODUCTS FOR SUPPLY AGREEMENT
<TABLE>
<CAPTION>
FG STD DIE STD DIE
FAMILY DEVICE DIE ASP TRF PRICE DIE COST TRF PRICE NDW MDPW MLQ
- - ------ ------ --- --- --------- -------- --------- --- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
HCT CD74HCT4053E 13704A 0.168 0.158 0.055 0.055 2,808 2,106 25,275
HCT CD74HCT4053M 13704MXXXCT 0.160 0.150 0.056 0.056 4,884 3,683 43,958
HCT CD74HCT4053M96 13704MXXXCT 0.181 0.170 0.056 0.056 4,884 3,663 43,958
HCT CD74HCT4053M96S2378 13704MXXXCT 0.160 0.150 0.056 0.056 4,884 3,663 43,958
HCT CD74HCT4060E 13653B 0.169 0.159 0.066 0.066 2,198 1,648 19,780
HCT CD74HCT4060ER2489 13653B 0.360 0.338 0.066 0.066 2,198 1,648 19,780
HCT CD74HCT4060M 13653BXXXCT 0.147 0.138 0.067 0.067 2,198 1,648 19,780
HCT CD74HCT4060M96 13653BXXXCT 0.127 0.119 0.067 0.067 2,198 1,648 19,780
HCT CD74HCT4066E 13705C 0.164 0.154 0.049 0.049 3,157 2,368 28,415
HCT CD74HCT4066ER3170 13705C02 0.159 0.149 0.049 0.049 3,157 2,368 28,415
HCT CD74HCT4066M 13705MXXXCT 0.169 0.159 0.050 0.050 5,277 3,958 47,494
HCT CD74HCT4066M96 13705MXXXCT 0.192 0.180 0.050 0.050 5,277 3,958 47,494
HCT CD74HCT4066M96S2378 13705MXXXCT 0.150 0.141 0.050 0.050 5,277 3,958 47,494
HCT CD74HCT4066MR3170 13705C02XCT 0.160 0.150 0.050 0.050 3,157 2,368 28,415
HCT CD74HCT4075E 13707A01 0.137 0.129 0.052 0.052 2,764 2,073 24,876
HCT CD74HCT4094E 13708M 0.163 0.153 0.060 0.060 3,976 2,982 35,788
HCT CD74HCT4094M 13708A01XCT 0.171 0.161 0.062 0.062 2,397 1,798 21,572
HCT CD74HCT4004M96 13708A01XCT 0.213 0.200 0.062 0.062 2,397 1,798 21,572
HCT CD74HCT423E 13716C 0.272 0.256 0.055 0.055 2,626 1,970 23,635
HCT CD74HCT423M96 13716CXXXCT 0.200 0.188 0.056 0.056 2,626 1,970 23,635
HCT CD74HCT42E 13715B01 0.193 0.181 0.07? 0.077 1,893 1,420 17,040
HCT CD74HCT4316E 13732A 0.255 0.240 0.056 0.056 2,767 2,075 24,903
HCT CD74HCT4316M 13732AXXXCT 0.191 0.180 0.057 0.057 2,767 2,075 24,903
HCT CD74HCT4316M96 13732AXXXCT 0.242 0.227 0.057 0.057 2,767 2,075 24,903
HCT CD74HCT4351E 13741A 0.286 0.269 0.093 0.093 1,667 1,251 15,006
HCT CD74HCT14520E 13713801 0.233 0.219 0.086 0.086 1,688 1,266 15,196
HCT CD74HCT4520M 13713B01XCT 0.158 0.149 0.088 0.088 1,688 1,266 15,196
HCT CD74HCT4520M96 13713B01XCT 0.342 0.321 0.088 0.088 1,688 1,266 15,196
HCT CD74HCT4538E 13646M 0.247 0.232 0.059 0.059 4,093 3,069 36,833
HCT CD74HCT4538M 13646MXXXCT 0.232 0.218 0.060 0.060 4,093 3,069 36,833
</TABLE>
50
<PAGE>
SCHEDULE 1(a)[C]
COMMERCIAL PRODUCTS FOR SUPPLY AGREEMENT
<TABLE>
<CAPTION>
FG STD DIE STD DIE
FAMILY DEVICE DIE ASP TRF PRICE DIE COST TRF PRICE NDW MDPW MLQ
- - ------ ------ --- --- --------- -------- --------- --- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
HCT CD74HCT4538M96 13648MXXXCT 0.247 0.232 0.060 0.060 4,093 3,069 36,833
HCT CD74HCT4543E 13714A01 0.167 0.157 0.049 0.049 2,953 2,215 26,579
HCT CD74HCT533E 13638C01 0.308 0.290 0.123 0.123 1,181 886 10,629
HCT CD74HCT534E 13843C 0.273 0.257 0.073 0.073 1,994 1,496 17,946
HCT CD74HCT540E 136110 0.155 0.146 0.089 0.089 1,644 1,233 14,796
HCT CD74HCT540M 136110 0.149 0.140 0.088 0.088 1,644 1,233 14,796
HCT CD74HCT541E 136120 0.139 0.131 0.088 0.088 1,635 1,226 14,712
HCT CD74HCT541M 136120 0.150 0.141 0.086 0.086 1,635 1,226 14,712
HCT CD74HCT541M96 136120 0.186 0.175 0.086 0.086 1,635 1,226 14,712
HCT CD74HCT541M96S5001 136120 0.179 0.168 0.087 0.087 1,635 1,226 14,712
HCT CD74HCT563E 13637C01 0.235 0.221 0.079 0.079 1,829 1,371 16,458
HCT CD74HCT563M 13637C01 0.268 0.252 0.079 0.079 1,829 1,371 16,458
HCT CD74HCT564E 13644C01 0.288 0.271 0.114 0.114 1,264 948 11,380
HCT CD74HCT564M 13644C01 0.320 0.301 0.114 0.114 1,264 948 11,380
HCT CD74HCT573E 13616D01 0.156 0.147 0.074 0.074 1,933 1,449 17,393
HCT CD74HCT573ER3170 13616D02 0.164 0.154 0.075 0.075 1,933 1,449 17,393
HCT CD74HCT573M 13616D01 0.130 0.122 0.074 0.074 1,933 1,449 17,393
HCT CD74HCT573M96 13616D01 0.145 0.138 0.074 0.074 1,933 1,449 17,393
HCT CD74HCT574E 13604C 0.130 0.122 0.105 0.086 1,388 1,041 12,490
HCT CD74HCT574ES2064 13604C 0.190 0.179 0.104 0.104 1,388 1,041 12,490
HCT CD74HCT574M 13604M 0.142 0.133 0.104 0.094 2,335 1,751 21,015
HCT CD74HCT574M96 13604M 0.167 0.157 0.104 0.104 2,335 1,751 21,015
HCT CD74HCT597E 13749A01 0.162 0.152 0.057 0.057 2,589 1,942 23,304
HCT CD74HCT597M96 13749A01XCT 0.181 0.170 0.058 0.058 2,589 1,942 23,304
HCT CD74HCT640E 13618B 0.306 0.288 0.118 0.118 1,291 968 11,616
HCT CD74HCT640M 13618C01 0.313 0.294 0.117 0.117 1,230 922 11,068
HCT CD74HCT646M96 13623C 0.352 0.331 0.258 0.232 563 422 5,064
HCT CD74HCT652M 13788A01 0.424 0.399 0.253 0.253 569 427 5,124
HCT CD74HCT688E 13641B01 0.203 0.191 0.051 0.051 2,846 2,134 25,612
HCT CD74HCT688M 13641B01 0.188 0.177 0.051 0.051 2,846 2,134 25,612
</TABLE>
51
<PAGE>
SCHEDULE 1(a)[C]
COMMERCIAL PRODUCTS FOR SUPPLY AGREEMENT
<TABLE>
<CAPTION>
FG STD DIE STD DIE
FAMILY DEVICE DIE ASP TRF PRICE DIE COST TRF PRICE NDW MDPW MLQ
- - ------ ------ --- --- --------- -------- --------- --- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
HCT CD74HCT688M96 13641B01 0.256 0.241 0.051 0.051 2,846 2,134 25,612
HCT CD74HCT688M96S2497 13641B01 0.250 0.235 0.051 0.051 2,846 2,134 25,612
HCT CD74HCT7046AE 13733A01 0.618 0.581 0.096 0.096 1,637 1,228 14,736
HCT CD74HCT7046AM 13733A01XCT 0.756 0.711 0.098 0.098 1,637 1,228 14,736
HCT CD74HCT7046AM96 13733A01XCT 0.499 0.469 0.098 0.098 1,637 1,228 14,736
HCT CD74HCT73E 13655A01 0.388 0.365 0.044 0.044 3,323 2,492 29,905
HCT CD74HCT74E 13601M 0.093 0.087 0.054 0.054 4,386 3,289 39,473
HCT CD74HCT74ES2065 13601F 0.100 0.094 0.053 0.053 2,694 2,020 24,244
HCT CD74HCT74ES2497 13601M 0.100 0.094 0.054 0.054 4,386 3,289 39,473
HCT CD74HCT74M 13601FXXXCT 0.095 0.089 0.055 0.055 2,694 2,020 24,244
HCT CD74HCT174M96 13601FXXXCT 0.095 0.089 0.055 0.055 2,694 2,020 24,244
HCT CD74HCT74MR2499 13601FXXXCT 0.170 0.160 0.055 0.055 2,694 2,020 24,244
HCT CD74HCT75E 13688A 0.154 0.145 0.051 0.051 2,846 2,134 25,612
HCT CD74HCT85E 13689A01 0.270 0.254 0.075 0.075 1,937 1,452 17,430
HCT CD74HCT85M 13689A01XCT 0.219 0.206 0.076 0.076 1,937 1,452 17,430
HCT CD74HCT86E 13657B01 0.108 0.102 0.043 0.043 3,356 2,517 30,205
HCT CD74HCT86M 13657B01XCT 0.114 0.107 0.044 0.044 3,356 2,517 30,205
HCT CD74HCT86M96 13657B01XCT 0.124 0.117 0.044 0.044 3,356 2,517 30,205
HCT CD74HCT86MS2074 13657B01XCT 0.115 0.108 0.044 0.044 3,356 2,517 30,205
HCT CD74HCT93E 13738A01 0.190 0.179 0.030 0.030 4,880 3,660 43,920
HCT CD74HCU04E 11649B01 0.084 0.079 0.034 0.034 4,217 3,163 37,952
HCT CD74HCU04M 11649B01XCT 0.099 0.093 0.035 0.035 4,217 3,163 37,952
HCT CD74HCU04M96 11849B01XCT 0.091 0.086 0.035 0.035 4,217 3,163 37,952
</TABLE>
52
<PAGE>
SCHEDULE 2.1(C)
EXPENSED ASSETS (COMMERCIAL PRODUCTS)
<TABLE>
<CAPTION>
ITEM FAMILY APPROX QTY DESCRIPTION LOCATION CONTACT
- - -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1X Master Masks* CD4000 125 Complete sets of 5" masks, for use on Canon Palm Bay Don Koch
proximity aligner and 4" wafers.
500X Mylar Plot* CD4000 30 Physical Layout Plots on a portion of the Palm Bay Don Koch
CD4000 Family
Full set of masks* CD4000 1100 Proximity masks for producing 4" wafers Findlay Dick Hachey
HC/HCT 1200 Projection masks for producing 4" wafers Findlay Dick Hachey
394 Projection masks for producing 5" wafers Findlay Dick Hachey
AC/ACT 454 Projection masks for producing 4" wafers Findlay Dick Hachey
115 Projection masks for producing 5" wafers Findlay Dick Hachey
178 Stepper reticles Findlay Dick Hachey
FCT 150 Projection masks for producing 4" wafers Findlay Dick Hachey
Burn-in Boards CD4000 840 Static Burn-in Boards that are dedicated to Logic. KL Dick Hachey
HC/HCT CD4000, HC/HCT and AC/ACT all share the same boards.
AC/ACT
</TABLE>
2
<PAGE>
SCHEDULE 2.1(E)
TESTING HARDWARE AND SOFTWARE
<TABLE>
<CAPTION>
ITEM FAMILY APPROX QTY DESCRIPTION
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Device software test programs CD4000 350 2 test programs for each mask commercial type (Teradyne J325 and
(electronic copy) Teradyne J283) and 1 hi-rel program for each type (Teradyne J283)
HC/HC 250 2 test programs for each type covers commercial and hi-rel on
T Teradyne J325, Sentry and Trillium testers
AC/AC 100 3 test programs for each type covers commercial and hi-rel on the
T Trillium, Teradyne J325 and Tektronix testers
FCT 50 2 test programs for each type covers commercial and hi-rel on the
Teradyne J325 and Trillium testers
Device probe cards and CD4000 200 Probe cards used at the probe operation, minimum of 1 per type, most
associated documentation have 2 cards.
HC/HC 125 Probe cards used at the probe operation, minimum of 1 per type, most
T have 2 cards.
AC/AC 100 Probe cards used at the probe operation, minimum of per type, most
T have 2 cards.
FCT 30 Probe cards used at the probe operation, minimum of 1 per type, most
have 2 cards.
Device test fixtures and CD4000 150 Test hardware used at probe and final test operations, unique to
associated documentation each test platform with documentation
HC/HC 270 Test hardware used at probe and final test operations, unique to
T each test platform with documentation
AC/AC 100 Test hardware used at probe and final test operations, unique to
T each test platform with documentation
</TABLE>
<TABLE>
<CAPTION>
ITEM LOCATION CONTRACT
- - -----------------------------------------------------------------
<S> <C> <C>
Device software test programs KL Dick Hachey
(electronic copy)
KL Dick Hachey
KL Dick Hachey
KL Dick Hachey
Device probe cards and CD4000 KL Dick Hachey
associated documentation
KL Dick Hachey
FINDLAY Dick Hachey
FINDLAY Dick Hachey
Device test fixtures and KL Dick Hachey
associated documentation
KL Dick Hachey
KL Dick Hachey
</TABLE>
2
<PAGE>
<TABLE>
ITEM FAMILY APPROX QTY DESCRIPTION
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
FCT 50 Test hardware used at probe and final test operations, unique to
each test platform with documentation
Sample probe software CD4000 1 Sample probe program on Keithly tester to monitor fab parameters
test programs HC/HCT 1 Sample probe program on Keithly tester to monitor fab parameters
T
AC/AC 1 Sample probe program on Keithly tester to monitor fab parameters
T
FCT 1 Sample probe program on Keithly tester to monitor fab parameters
Sample probe cards and CD4000 3 Hardware used in conjunction with the sample probe program on
associated documentation Keithly tester to monitor fab parameters
HC/HC 3 Hardware used in conjunction with the sample probe program on
T Keithly tester to monitor fab parameters
AC/AC 3 Hardware used in conjunction with the sample probe program on
T Keithly tester to monitor fab parameters
FCT 3 Hardware used in conjunction with the sample probe program on
Keithly tester to monitor fab parameters
</TABLE>
<TABLE>
<CAPTION>
ITEM LOCATION CONTRACT
- - -----------------------------------------------------------------
<S> <C> <C>
KL Dick Hachey
Sample probe software Findlay Dick Hachey
test programs Findlay Dick Hachey
Findlay Dick Hachey
Findlay Dick Hachey
Sample probe cards and CD4000 Findlay Dick Hachey
associated documentation
Findlay Dick Hachey
Findlay Dick Hachey
Findlay Dick Hachey
</TABLE>
2
<PAGE>
SCHEDULE 2.1(F)
PRODUCT SOFTWARE
<TABLE>
<CAPTION>
ITEM FAMILY APPROX QTY DESCRIPTION LOCATION CONTACT
- - ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Mask generation databases CD4000 15 Files in either MEBES stream format or GDSII Palm Bay Don Koch
format (incomplete set)
HC/HCT 120 GDSII Databases (all levels) and associated mask Plam Bay Don Koch
fab documents
AC/ACT 65 GDSII Databases (all levels) and associated mask Palm Bay Don Koch
fab documents
FCT 35 GDSII Databases (all levels) and associated mask Plam Bay Don Koch
fab documents
</TABLE>
<PAGE>
SCHEDULE 2.1(G)
TECHNICAL DATA
<TABLE>
<CAPTION>
ITEM FAMILY APPROX QTY DESCRIPTION
- - ---------------------------------------------------------------------------------------------------------------------------------
DESIGN
<S> <C> <C> <C>
Product Datasheets CD4000 120 Published datasheets that provides a circuit description,
screening and performance specifications for each device family.
HC/HCT 105 Published datasheets that provides a circuit description,
screening and performance specifications for each device family.
AC/ACT 40 Published datasheets that provides a circuit description,
screening and performance specifications for each device family.
FCT 16 Published datasheets that provides a circuit description,
screening and performance specifications for each device family.
Die Size A list by mask of the physical die size.
Circuit documentation Any and all available documentation in support of the design of
the circuits and circuits families.
Characterization data All available data from the characterization of the products.
ESD data 4 Representative ESD data for MM, CDM, HBM models for each
Technology
FAB
Yield Data for Fab 4 Fab yield data for calendar year 1997 and 1998 by technology.
by technology
</TABLE>
<TABLE>
<CAPTION>
ITEM LOCATION CONTACT
- - --------------------------------------------------------------
DESIGN
<S> <C> <C>
Product Datasheets Findlay Dick Hachey
Findlay Dick Hachey
Findlay Dick Hachey
Findlay Dick Hachey
Die Size Findlay Dick Hachey
Circuit documentation Findlay Dick Hachey
Characterization data Findlay Dick Hachey
ESD data Findlay Dick Hachey
FAB
Yield Data for Fab Findlay Dick Hachey
by technology
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ITEM FAMILY APPROX QTY DESCRIPTION
- - ---------------------------------------------------------------------------------------------------------------------------------
DESIGN
<S> <C> <C> <C>
Process qualification data 4 Package reliability data performed on a scheduled basis for each
(Matrix Monitor Data) technology
Fabrication processes 5 Fab processes for CD4000 Commercial and Hi-Rel, HC/HCT, AC/ACT
and FCT processes
Process flow data 5 Workstream factory control system flow for the above 5 processes
Diffusions recipe CD4000 11 The furnace recipes for all diffusion operations for each process
HC/HCT 14 The furnace recipes for all diffusion operations for each process
AC/ACT 14 The furnace recipes for all diffusion operations for each process
FCT 14 The furnace recipes for all diffusion operations for each process
Implant schedules CD4000 2 The implant schedule for all diffusion implants used on each
process
HC/HCT 5 The implant schedule for all diffusion implants used on each
process
AC/ACT 8 The implant schedule for all implants used on each process
FCT 8 The implant schedule for all implants used on each process
Substrate specifications CD4000 2 The substrate specification used on CD4000; one for Commercial
and one for Hi-rel process
HC/HCT 2 The substrate specification used on HC/HCT; one bulk and one epi
substrate based on part types
AC/ACT 1 The substrate specification for AC/ACT; same for all types
FCT 1 The substrate specification for FCT; same for all types
</TABLE>
<TABLE>
<CAPTION>
ITEM LOCATION CONTACT
- - --------------------------------------------------------------
DESIGN
<S> <C> <C>
Process qualification data Findlay Dick Hachey
(Matrix Monitor Data)
Fabrication processes Findlay Dick Hachey
Process flow data Findlay Dick Hachey
Diffusions recipe Findlay Dick Hachey
Findlay Dick Hachey
Findlay Dick Hachey
Findlay Dick Hachey
Implant schedules Findlay Dick Hachey
Findlay Dick Hachey
Findlay Dick Hachey
Findlay Dick Hachey
Substrate specifications Findlay Dick Hachey
Findlay Dick Hachey
Findlay Dick Hachey
Findlay Dick Hachey
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
ITEM FAMILY APPROX QTY DESCRIPTION
- - -----------------------------------------------------------------------------------------------------------------------------------
DESIGN
<S> <C> <C> <C>
Sample Probe Test Specifications 4 Internal document for each process that describes the conditions
(internal document) and specifications performed during sample probe test.
Fabrication equipment models For each process provide a detailed list of equipment used
including vendor and model number
Process parameter limits by Performance nodes is the data taken at each mask level to
Technology (Fab in-line data) monitor the fab process
Process history data by Technology Historical data on the Performance nodes
Process recipe modifications by device 0 All devices run under the standard flow
Sample probe criticized parameter data 3 The sample probe data for the criticized parameters for each
technology. Each parameter will have the Mean, Std Deviation,
Median number of datapoints, Min, Max, Sanity limits and
Specification limits.
TEST
Test Flows for Probe and Final Test CD4000 130 Each test flow shows the route the product follows during a
given test operation. Test flow by tester for circuit probe;
Test flow by type at final test.
HC/HCT 125 Each test flow shows the route the product follows during a
given test operation. Test flow by tester for each circuit
probe; Test flow by type at final test.
AC/ACT 50 Each test flow shows the route the product follows during a
given test operation. Test flow by tester for circuit probe;
Test flow by type at final test.
FCT 25 Each test flow shows the route the product follow during a given
test operation. Test flow by tester for circuit probe; Test
flow by type at final test.
</TABLE>
<TABLE>
<CAPTION>
ITEM LOCATION CONTACT
- - ---------------------------------------------------------------------
DESIGN
<S> <C> <C>
Sample Probe Test Specifications KL Dick Hachey
(internal document)
Fabrication equipment models Findlay Dick Hachey
Process parameter limits by Findlay Dick Hachey
Technology (Fab in-line data)
Process history data by Technology Findlay Dick Hachey
Process recipe modifications by device Findlay Dick Hachey
Sample probe criticized parameter data
TEST
Test Flows for Probe and Final Test Findlay and KL Dick Hachey
Findlay Dick Hachey
Findlay Dick Hachey
Findlay Dick Hachey
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
ITEM FAMILY APPROX QTY DESCRIPTION
- - --------------------------------------------------------------------------------------------------------------------------------
DESIGN
<S> <C> <C> <C>
Test Specifications Each test flow shows the route the product follows during a given
(internal document) test operation. Test flow by tester for circuit probe; Test flow
by type at final test.
CD4000 125 Test documents that provide limits and conditions for the test
programs
HC/HCT 125 Test documents that provide limits and conditions for the test
programs
AC/ACT 100 Test documents that provide limits and conditions for the test
programs.
FCT 25 Test documents that provide limits and conditions for the test
programs
Yield Data for Probe and Final Yield data for CY 1998 by type for probe and final test
test by type CD4000 75 Units that are known good devices to be used for test correlation
Electrical test and debug.
validation units (Sample) HC/HCT 200 Units that are known good devices to be used for test correlation
and debug.
AC/ACT 60 Units that are known good devices to be used for test correlation
and debug.
FCT 10 Units that are know good devices to be used for test correlation
and debug.
Electrical test validation CD4000 100 Wafers that have known good and bad die to be used for test
wafers (Sample) correlation and debug
HC/HCT 100 Wafers that have known good and bad die to be used for test
correlation and debug.
AC/ACT 100 Wafers that have known good and bad die to be used for test
correlation and debug.
FCT 15 Wafers that have known good and bad die to be used for test
correlation and debug.
</TABLE>
<TABLE>
<CAPTION>
ITEM LOCATION CONTACT
- - ---------------------------------------------------------------
DESIGN
<S> <C> <C>
Test Specifications KL Dick Hachey
(internal document)
KL Dick Hachey
KL Dick Hachey
KL Dick Hachey
KL Dick Hachey
Yield Data for Probe and Final KL Dick Hachey
test by type Electrical test KL Dick Hachey
validation units (Sample)
Findlay Dick Hachey
Findlay Dick Hachey
Findlay Dick Hachey
Electrical test validation Findlay Dick Hachey
wafers (Sample)
Findlay Dick Hachey
Findlay Dick Hachey
Findlay Dick Hachey
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
ITEM FAMILY APPROX QTY DESCRIPTION
- - ----------------------------------------------------------------------------------------------------------------------------------
DESIGN
<S> <C> <C> <C>
ASSEMBLY
Assembly flow by package type Assembly flow per package, including Cerdip, Flatpak, Pdip,
Sidebrazed, SOIC and SSOP packages
Assembly Diagrams by device CD4000 360 The assembly diagram provides a visual guide to mounting
orientation and bond wire routing per device type per package
type.
HC/HCT 750 The assembly diagram provides a visual guide to mounting
orientation and bond wire routing per device type per package
type.
AC/ACT 300 The assembly diagram provides a visual guide to mounting
orientation and bond wire routing per device type per package
type.
FCT 50 The assembly diagram provides a visual guide to mounting
orientation and bond wire routing per device type per package
type.
Materials list of packages 22 A piece parts list of all the material needed for all packages
Assembly qualification data All All available data used for the qualification of the assembly
process for CY'98 to date.
QCI flows and qualification data All All available QCI data used for the qualification of production
manufacturing for CY'98 to date.
CUSTOMER ISSUES
Outstanding specification waivers All Listing by customer and part of all specification waivers
Outstanding product change notices All Listing by product of all the change notices
Special customer requirements All Listing by part of deviations required by customer
</TABLE>
<TABLE>
<CAPTION>
ITEM LOCATION CONTACT
- - ----------------------------------------------------------------
DESIGN
<S> <C> <C>
ASSEMBLY
Assembly flow by package type KL Dick Hachey
Assembly Diagrams by device KL Dick Hachey
KL Dick Hachey
KL Dick Hachey
KL Dick Hachey
Materials list of packages KL Dick Hachey
Assembly qualification data KL Dick Hachey
QCI flows and qualification data KL Dick Hachey
CUSTOMER ISSUES
Outstanding specification waivers Findlay Dick Hanchey
Outstanding product change notices Findlay Dick Hachey
Special customer requirements Findlay Dick Hachey
</TABLE>
5
<PAGE>
SCHEDULE 3.1(b)
SPECIFIED DISTRIBUTORS (COMMERCIAL PRODUCTS)
6-Oct-98
<TABLE>
<CAPTION>
NORTH AMERICAN AUTHORIZED DISTRIBUTORS
COMPANY NAME AND CORPORATE ADDRESS TELEPHONE FAX
---------------------------------- --------- ---
<S> <C> <C>
Arrow Electronics, 25 Hub Drive, Melville, NY 11747 516-391-1300
Future Electronics, 237 Hymus Blvd., Pointe Claire, Quebec, Canada, H9R 5C7 514-694-7710 514-695-3707
Hamilton Hallmark, Avnet OMG, 9800 La Cienega Blvd., Inglewood, CA 90301-4417 310-665-2600 (C) 602-736-7979 (C)
Newark Electronics, 4801 N. Ravenswood, Chicago, IL 60640 773-784-5100 773-275-9596
Wyle Electronics, 15370 Barranca Parkway, Irvine, CA 92618 714-753-9953 800-283-9953
DISTRIBUTOR OF OBSOLETE PRODUCTS
Rochester Electronics, 10 Malcolm Hoyt Dr., Newburyport, MA 01950 978-462-9332 978-462-9512
DIE DISTRIBUTORS
Minco, 1805 Rutherford Lane, Austin, TX 78754 512-834-2022 512-837-6285
Chip Supply, 7725 N. Orange Blossom Trail, Orlando, FL 32810-2696 407-296-5603 407-290-00164
Elmo Semiconductor, 7590 North Glenoaks Blvd., Burbank, CA 91504-1052 818-768-7400
COMPANY NAME AND CORPORATE ADDRESS TELEPHONE FAX
---------------------------------- --------- ---
AUSTRIA
Avnet EMG, Waidhausenstrasse 19, A-1140 Vienna 43 1 911 28 47 43 1 911 38 53
EBV Elektronik, Diefenbachgasse 35/1, A-1150 Vienna 43 1 891 52 43 1 89 1 52 30
Spoerle Electronic, Heilingenstadterasse 50-52, A - 1190 Vienna 43 1 891 52 43 1 369 22 73
BELGIUM
EBV Elektronik, Excelsorlaan 35B, B - 1930 Zaventem 32 2 725 46 60 32 2 720 81 52
Spoerle Electronic, Keibert II, Minervastraat, 14/B2, B - 1930 Zaventem 32 2 725 46 60 32 2 725 45 11
DENMARK
Arrow Denmark, Smedeholm 13A, DK - 2730 Herlev 45 4450 8200 45 4450 8210
Avnet Nortec, Transformervej, 17, DK - 2730 Herlev 45 4488 0800 45 4488 0888
EBV Electronik, Gladsaxevej 370, DK - 2860 Soborg 45 39 69 05 11 45 39 69 05 04
Page 1
<PAGE>
COMPANY NAME AND CORPORATE ADDRESS TELEPHONE FAX
---------------------------------- --------- ---
EASTERN COUNTRIES
EBV Electronik, V Holesovickach 29, CZ - 180 00 Praha 8 Czechoslovakia 42 2 900 22 101 42 2 688 59 16
Avnet EMG, UI. Fort Wola 22, pok 15 p. IX, PL - 00961 Warszawa, Poland 48 22 63 44 736 48 22 63 44 738
Avnet EMG, E2000 Sertron S.R.O. Slevacska 744/1 Hloubetin,
CZ-19400 Praha 9 Czech 42 2 86 11 42 42 2 81 851 442
EBV Elektronik UI. Odrzanaka 24-29/11, PL-50114 Woclaw, Poland 48 71 34 229 44 48 71 34 299 10
EBV Elektronik, Dunajska c.22, SI - 1511 Ljubljana, Slovenia 386 61 133 02 16 386 61 133 04 57
EBV Elektronik, Dmitrowskoje Chaussee 9b, RUS-127434 Moscow, Russia 7 95 9763510 7 95 9764808
EBV Elektronik, Ryensvingen 3B, P.O. Box 101, Manglerud, N-0680 Oslo 47 22 67 17 80 47 22 67 17 89
FINLAND
Arrow Finland, Tyopajankatu 5, Box 25, SF-00521 Helsinki 358 9 476 660 358 9 476 663 29
Avnet Nortec, Italahdenkatu, 18A, FIN-00210 Helsinki 358 9 61 31 81 358 9 69 22 32 6
EBV Elektronik, Pihatorma 1A, FIN-02240, Espoo 358 9 855 7730 359 9 855 0450
FRANCE
Arrow Electronique, 73-79 Rue des Solets, Silic 585, F-94663 Rungis Cedex 33 1 49 78 49 78 33 1 49 78 06 99
Avnet EMG, 79, Rue Pierre Semard, P.B.90, F-92322 Chatillon Sous Bagneux 33 1 49 65 27 00 33 1 49 65 25 39
EBV Elektronik, 3, rue de la Renaissance, 92184 Antony cedex 33 1 49 96 30 00 33 1 40 96 30 30
Sonepar, Z.I. des Glaises, 6/8 Rue Ambroise Croizat, F-91127 Palaiseau 33 1 64 47 29 29 33 1 64 47 00 84
GERMANY
Avnet EMG, Stahlgruberring, 12, D-81829 Munchen 49 89 4511001 49 89 45110129
EBV Elektronik, Ammerthalstrasse 28, D-85551 Kirchheim-Heimstetten 49 89 99 11 40 49 89 99 11 44 22
Spoerle Electronic, Max-Planck Strasse 1-3, D-63303 Dreiech-bei-Frankfurt 49 6103 304-8 49 6103 3044 55
GREECE
EBV Elektronik, Anaxagora Street 1, GR-1778 Travros (Athens) 30 1 34 14 300 30 1 34 14 304
ITALY
Avnet EMG, Centro Direzionale, Via Novara, 570, I-20153 Milano 39 2 38 19 02 39 2 38 00 29 88
EBV Elektronik, VIA C. Frova, 34, I-20091 Cinisello Balsamo 39 2 660 96 290 39 2 660 170 20
Silverstar CELDIS, Viale Fulvio Testi 280, I-20126 Milano 39 2 661 251 29 2 661 013 59
NETHERLANDS
EBV Elektronik, Planetenbaan, 116, NL - 3606 AK, Maarssenbroek 31 346 58 30 10 31 346 58 30 25
Spoerle Electronic, Coltbaan 17, NL-3439 NG, Nieuwegein (Utrecht) 31 30 609 1234 31 30 603 5924
Spoerle Electronic, Postbus 7139, De Run 1120, NL - 5605 JC Eindhoven 31 40 230 99 99 31 40 253 5540
Page 2
<PAGE>
COMPANY NAME AND CORPORATE ADDRESS TELEPHONE FAX
---------------------------------- --------- ---
PORTUGAL
Amitron-Arrow, Quinta Grande, Lote 20, Alfragide, P-2700 Amadora 351 1 471 48 06 351 1 471 08 02
SOUTH AFRICA
Arrow Altech, 10, Skietlood Street, Isando, Ext. 3, 1600, PO Box 69, Isando,
1600, Transvaal 27 11 391 3804/19 27 11 974 9683
Avnet Kopp, 31 Commerce Crescent, Kramerville, SA-2148 Sandton, SA-2128 Rivonia 27 11 444 23 33 27 11 444 17 06
SPAIN
Amitron-Arrow, Albasanz, 75, SP-28037 Madrid 34 91 304 30 40 34 91 327 24 72
EBV Elektronik, Centro Empresarial Euronova, Ronda de Poniente, 4 Ala Derecha,
1A Planta, Officina A, SP-28760 Tres Cantos, Madrid 4 91 8 04 32 56 34 91 8 04 41 03
SWEDEN
Arrow, Isafjordsgatan 7, Box 67, S-164 94 Kista 46 8 562 655 00 46 8 562 655 50
Avnet Nortec, Englundavagen 7, PO Box 1830, S-171 27 Solna 46 8 629 1400 46 8 627 0280
EBV Elektronik, Derbyvagen 20, S-21235 Malmo 46 40 59 21 00 46 40 59 21 01
TURKEY
EBV Elektronik, Bayar Cad. Gulbahar Sok No. 17, Perdemsac Plaza,
D:91-93 Kozyatagi, TK - 81090 Istanbul 90 216 463 1352/3 90 216 463 1355
Empa, Besyol Londra Asfalti, TK - 34630 Sefakoy/Istanbul 90 212 599 3050 90 212 599 3059
UNITED KINGDOM
EBV Elektronik, Ballymount Trading Estates, Balymount Rd. Walkinstown, Dublin 12 353 1 456 4 034 353 1 456 4 035
Arrow Jermyn, St. Martins Business Centre, Cambridge Rd., Bedford MK41 OLF 44 1234 270027 44 1234 214674
Avnet-Access, Avnet House, Rutherford Close, Meadway Stevenage, Herts SG1 2EF 44 1438 788 300 44 1438 788 230
EBV Elektronik, 7 Frascati Way, Maidenhead, Berkshire SL6 4UY 44 1628 783 688 44 1628 783 811
ASIAN PACIFIC AUTHORIZED DISTRIBUTORS
COMPANY NAME AND CORPORATE ADDRESS TELEPHONE FAX
---------------------------------- --------- ---
AUSTRALIA
Avnet VSI Electronics Pty Ltd., Unit C 608 Lyon Park Rd., North Ryde NSW 2113 612 9 878 1299 612 9 878 1266
</TABLE>
Page 3
<PAGE>
SCHEDULE 4.3
PRODUCT INVENTORY PRICING
FINISHED GOODS INVENTORY
Finished goods inventory for each Commercial Logic Product will be valued in the
following manner:
MONTHS COMMERCIAL TRANSFER PRICE
------ -------------------------
0-3 94% times ASP
4-6 80% times ASP
7-12 50% times ASP
13-24 25% times ASP
>24 No Charge
Sellers will transfer at no charge to Purchaser all commercial inventory in
stock at the time of closing for which there were no sales by Sellers during
FY98.
The aggregate value assigned to the finished goods inventory pursuant to the
foregoing provisions shall be reduced by the sum of (i) an amount equal to three
percent (3%) of all Products held in inventory by the Specified Distributors at
the time of Closing plus (ii) $673,000.
As used above, (a) "Months" means average months of Sellers' FY98 unit sales;
(b) "ASP means Sellers' FY98 Average Selling Price; and (c) "FY98" means the
fiscal year ending July 3, 1998.
DIE INVENTORY
Each category of die inventory will be valued at the lower of the Standard Cost
Calculation or the ASP Calculation, as set forth below.
MONTHS STANDARD COST CALCULATION ASP CALCULATION
------ ------------------------- ---------------
0-6 100% times Standard Cost 66% times ASP
7-12 70% times Standard Cost 50% times ASP
12-30 30% times Standard Cost 25% times ASP
>30 No Charge No Charge
As used above, (a) "Months" means average months of Sellers' FY98 unit sales for
the packaged Product using such die inventory; (b) "APS" means Seller's FY98
Average Selling Price for the packaged Products using such die inventory; (c)
"Standard Cost" means Sellers' FY99 standard cost for such die inventory; (d)
"FY98" means the fiscal year ending July 3, 1998; and (e) "FY99" means the
fiscal year beginning July 4, 1998.
<PAGE>
SCHEDULE 6.5
FINANCIAL DATA "GAAP" EXCEPTIONS
Historical financial data used in this transaction was prepared in accordance
with generally accepted accounting principles (GAAP) except for the data
regarding the following matters:
(i) A constant exchange rate for Malaysia was used in all periods.
(ii) Corporate Headquarters or Sector charges pertaining to Management
Information Systems and other similar charges for systems used
throughout the business were not reflected in the historical
financial data.
(iii) Normal year-end adjustments to financial results, which were
immaterial when viewed in the aggregate, were not reflected in the
historical financial data.
<PAGE>
SCHEDULE 6.9(a)[C]
PR0DUCT LISTING BY PART NUMBER BY PRODUCT FAMILY [C0MMERCIAL]
<TABLE>
<CAPTION>
FAMILY DEVICE STATUS FAMILY DEVICE STATUS
- - ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
ACT CD54AC04W 11 ACT CD74AC280M96S2463 11
ACT CD54AC08W 11 ACT CD74AC32E 11
ACT CD54AC240W 11 ACT CD74AC32M 11
ACT CD54ACT00W 11 ACT CD74AC32M96 11
ACT CD74AC00E 11 ACT CD74AC373E 11
ACT CD74AC00M 11 ACT CD74AC373M 11
ACT CD74AC00M96 11 ACT CD74AC373M96 11
ACT CD74AC00M96S2497 11 ACT CD74AC373M96S2497 11
ACT CD74AC04E 11 ACT CD74AC541E 11
ACT CD74AC04M 11 ACT CD74AC541M 11
ACT CD74AC04M96 11 ACT CD74AC541M96 11
ACT CD74AC05E 11 ACT CD74AC573E 11
ACT CD74AC05M 11 ACT CD74AC573M 11
ACT CD74AC05M96 11 ACT CD74AC573M96 11
ACT CD74AC08E 11 ACT CD74AC574E 11
ACT CD74AC08M 11 ACT CD74AC574M 11
ACT CD74AC08M96 11 ACT CD74AC574M96 11
ACT CD74AC138E 11 ACT CD74AC646M 11
ACT CD74AC138M 11 ACT CD74AC646M96 11
ACT CD74AC138M96 11 ACT CD74AC74E 11
ACT CD74AC138M96S2463 11 ACT CD74AC74M 11
ACT CD74AC14E 11 ACT CD74AC74M96 11
ACT CD74AC14M 11 ACT CD74AC86E 11
ACT CD74AC14M96 11 ACT CD74AC86M 11
ACT CD74AC161E 11 ACT CD74AC86M96 11
ACT CD74AC161M 11 ACT CD74ACT00E 11
ACT CD74AC161M96 11 ACT CD74ACT00M 11
ACT CD74AC161M96S2463 11 ACT CD74ACT00M96 11
ACT CD74AC164E 11 ACT CD74ACT00M96S2378 11
ACT CD74AC164M 11 ACT CD74ACT02E 11
ACT CD74AC164M96 11 ACT CD74ACT02M 11
ACT CD74AC174M96 11 ACT CD74ACT02M96 11
ACT CD74AC175M96 11 ACT CD74ACT04E 11
ACT CD74AC244E 11 ACT CD74ACT04M 11
ACT CD74AC244M 11 ACT CD74ACT04M96 11
ACT CD74AC244M96 11 ACT CD74ACT04M96S2546 11
ACT CD74AC245E 11 ACT CD74ACT05E 11
ACT CD74AC245M 11 ACT CD74ACT05M 11
ACT CD74AC245M96 11 ACT CD74ACT05M96 11
ACT CD74AC245MS2074 11 ACT CD74ACT05M96S2074 11
ACT CD74AC253M96 11 ACT CD74ACT05MS2075 11
ACT CD74AC253M96S2463 11 ACT CD74ACT05MS2298 11
ACT CD74AC253M96S2497 11 ACT CD74ACT08E 11
ACT CD74AC257M 11 ACT CD74ACT08M 11
ACT CD74AC257M96 11 ACT CD74ACT08M96 11
ACT CD74AC257M96S2463 11 ACT CD74ACT08M96S2497 11
ACT CD74AC273E 11 ACT CD74ACT138E 11
ACT CD74AC273M 11 ACT CD74ACT138M 11
ACT CD74AC273M96 11 ACT CD74ACT138M96 11
<PAGE>
SCHEDULE 6.9(a)[C]
PR0DUCT LISTING BY PART NUMBER BY PRODUCT FAMILY [C0MMERCIAL]
<CAPTION>
FAMILY DEVICE STATUS FAMILY DEVICE STATUS
- - ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
ACT CD74AC280M 11 ACT CD74ACT14E 11
ACT CD74AC280M96 11 ACT CD74ACT14M 11
ACT CD74ACT14M96 11 ACT CD74ACT541M96 11
ACT CD74ACT14M96S2478 11 ACT CD74ACT573E 11
ACT CD74ACT157E 11 ACT CD74ACT573M 11
ACT CD74ACT157M 11 ACT CD74ACT573M96 11
ACT CD74ACT157M96 11 ACT CD74ACT573M96S2497 11
ACT CD74ACT164E 11 ACT CD74ACT574E 11
ACT CD74ACT164M 11 ACT CD74ACT574M 11
ACT CD74ACT164M96 11 ACT CD74ACT574M96 11
ACT CD74ACT174E 11 ACT CD74ACT574M96S2497 11
ACT CD74ACT174M 11 ACT CD74ACT646EN 11
ACT CD74ACT174M96 11 ACT CD74ACT646M 11
ACT CD74ACT175E 11 ACT CD74ACT646M96 11
ACT CD74ACT175M 11 ACT CD74ACT652EN 11
ACT CD74ACT175M96 11 ACT CD74ACT652M 11
ACT CD74ACT175M96S2463 11 ACT CD74ACT652M96 11
ACT CD74ACT175M96S2497 11 ACT CD74ACT652MS2298 11
ACT CD74ACT240E 11 ACT CD74ACT74E 11
ACT CD74ACT240M 11 ACT CD74ACT74M 11
ACT CD74ACT240M96 11 ACT CD74ACT74M96 11
ACT CD74ACT244E 11 ACT CD74ACT86E 11
ACT CD74ACT244M 11 ACT CD74ACT86M 11
ACT CD74ACT244M96 11 ACT CD74ACT86M96 11
ACT CD74ACT245E 11 ACT 99591 12
ACT CD74ACT245M 11 ACT CD54ACD0W 12
ACT CD74ACT245M96 11 ACT CD54AC241W 12
ACT CD74ACT245MS2074 11 ACT CD54AC273W 12
ACT CD74ACT257E 11 ACT CD54AC86W 12
ACT CD74ACT257M 11 ACT CD54ACT04W 12
ACT CD74ACT257M96 11 ACT CD54ACT244W 12
ACT CD74ACT273E 11 ACT CD54ACT245W 12
ACT CD74ACT273M 11 ACT CD54ACT74W 12
ACT CD74ACT273M96 11 ACT CD54ACT86W 12
ACT CD74ACT273M96S2497 11 ACT CD74ACD0M96S2357 12
ACT CD74ACT280E 11 ACT CD74ACD0M96S2463 12
ACT CD74ACT280M 11 ACT CD74ACD0MS2463 12
ACT CD74ACT280M96 11 ACT CD74ACD2E 12
ACT CD74ACT297M 11 ACT CD74ACD2ES2463 12
ACT CD74ACT32E 11 ACT CD74ACD2M 12
ACT CD74ACT32M 11 ACT CD74ACD2M96 12
ACT CD74ACT32M96 11 ACT CD74ACD2M96S2463 12
ACT CD74ACT373E 11 ACT CD74ACD2M96S5001 12
ACT CD74ACT373M 11 ACT CD74ACD4ES2463 12
ACT CD74ACT373M96 11 ACT CD74ACD4M96S2227 12
ACT CD74ACT373M96S2463 11 ACT CD74ACD4M96S2357 12
ACT CD74ACT374E 11 ACT CD74ACD4M96S2463 12
ACT CD74ACT374M 11 ACT CD74ACD4M96S5001 12
ACT CD74ACT374M96 11 ACT CD74ACD8ES2463 12
2
<PAGE>
SCHEDULE 6.9(a)[C]
PR0DUCT LISTING BY PART NUMBER BY PRODUCT FAMILY [C0MMERCIAL]
<CAPTION>
FAMILY DEVICE STATUS FAMILY DEVICE STATUS
- - ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
ACT CD74ACT374M96S2463 11 ACT CD74ACD8M96S2357 12
ACT CD74ACT374M96S2497 11 ACT CD74ACD8M96S2463 12
ACT CD74ACT541E 11 ACT CD74ACD8M96S5001 12
ACT CD74ACT541M 11 ACT CD74ACD8MS2463 12
ACT CD74AC109E 12 ACT CD74AC244ES2497 12
ACT CD74AC109M96 12 ACT CD74AC244M96S2497 12
ACT CD74AC109M96S2357 12 ACT CD74AC244SM 12
ACT CD74AC109M96S2463 12 ACT CD74AC244SM96 12
ACT CD74AC10E 12 ACT CD74AC245M96S2463 12
ACT CD74AC10M 12 ACT CD74AC245SM 12
ACT CD74AC10M96 12 ACT CD74AC251M 12
ACT CD74AC10M96S2357 12 ACT CD74AC251M96S2463 12
ACT CD74AC10M96S2463 12 ACT CD74AC253M 12
ACT CD74AC112E 12 ACT CD74AC257E 12
ACT CD74AC112M96 12 ACT CD74AC257M96S2497 12
ACT CD74AC138MS2463 12 ACT CD74AC257SM 12
ACT CD74AC139E 12 ACT CD74AC273SM 12
ACT CD74AC139EX 12 ACT CD74AC280E 12
ACT CD74AC139M96 12 ACT CD74AC280MS2074 12
ACT CD74AC139M96S2463 12 ACT CD74AC283E 12
ACT CD74AC14M96S2497 12 ACT CD74AC283M 12
ACT CD74AC14M96S5001 12 ACT CD74AC297MS2075 12
ACT CD74AC151E 12 ACT CD74AC299M96 12
ACT CD74AC151M96 12 ACT CD74AC323M 12
ACT CD74AC153E 12 ACT CD74AC32ES2463 12
ACT CD74AC153M96 12 ACT CD74AC32M96S2357 12
ACT CD74AC157E 12 ACT CD74AC32M96S2463 12
ACT CD74AC157M 12 ACT CD74AC32M96S2497 12
ACT CD74AC157M96 12 ACT CD74AC32M96S5001 12
ACT CD74AC158M 12 ACT CD74AC373ES2463 12
ACT CD74AC158M96S2328 12 ACT CD74AC374E 12
ACT CD74AC163E 12 ACT CD74AC374M 12
ACT CD74AC163M 12 ACT CD74AC374M96 12
ACT CD74AC163M96 12 ACT CD74AC374M96S2463 12
ACT CD74AC163M96S2497 12 ACT CD74AC374M96S2497 12
ACT CD74AC164M96S2463 12 ACT CD74AC374MS2075 12
ACT CD74AC174M 12 ACT CD74AC534M96 12
ACT CD74AC174M96S2463 12 ACT CD74AC540M 12
ACT CD74AC175M 12 ACT CD74AC541SM 12
ACT CD74AC175M96S2463 12 ACT CD74AC541SM96 12
ACT CD74AC175M96S2497 12 ACT CD74AC563E 12
ACT CD74AC175MS2534 12 ACT CD74AC623E 12
ACT CD74AC175MS2536 12 ACT CD74AC646M96S2463 12
ACT CD74AC191E 12 ACT CD74AC74M96S2497 12
ACT CD74AC20E 12 ACT CD74AC86M96S2357 12
ACT CD74AC20M 12 ACT CD74AC86M96S2463 12
ACT CD74AC20M96 12 ACT CD74AC86M96S2497 12
ACT CD74AC20M96S2463 12 ACT CD74ACT00M96S2463 12
ACT CD74AC238M96 12 ACT CD74ACT00M96S2497 12
3
<PAGE>
SCHEDULE 6.9(a)[C]
PR0DUCT LISTING BY PART NUMBER BY PRODUCT FAMILY [C0MMERCIAL]
<CAPTION>
FAMILY DEVICE STATUS FAMILY DEVICE STATUS
- - ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
ACT CD74AC240E 12 ACT CD74ACT04M96S2463 12
ACT CD74AC240M 12 ACT CD74ACT04M96S2497 12
ACT CD74AC240M96 12 ACT CD74ACT04MS2463 12
ACT CD74AC240M96S2497 12 ACT CD74ACT109E 12
ACT CD74AC241EX 12 ACT CD74ACT109M 12
ACT CD74AC244ES2463 12 ACT CD74ACT109M96 12
ACT CD74ACT10E 12 ACT CD74ACT258M 12
ACT CD74ACT10M 12 ACT CD74ACT258M96 12
ACT CD74ACT10M96 12 ACT CD74ACT273ES2064 12
ACT CD74ACT112M 12 ACT CD74ACT273M96S2463 12
ACT CD74ACT112M96 12 ACT CD74ACT273SM 12
ACT CD74ACT139E 12 ACT CD74ACT280MS2074 12
ACT CD74ACT139M 12 ACT CD74ACT283E 12
ACT CD74ACT139M96 12 ACT CD74ACT283M 12
ACT CD74ACT139M96S2497 12 ACT CD74ACT299M 12
ACT CD74ACT14M96S2463 12 ACT CD74ACT299M96 12
ACT CD74ACT14M96S2497 12 ACT CD74ACT32M96S2463 12
ACT CD74ACT14MS2463 12 ACT CD74ACT32M96S2497 12
ACT CD74ACT151M96 12 ACT CD74ACT373MS2463 12
ACT CD74ACT153E 12 ACT CD74ACT374ES2463 12
ACT CD74ACT153M 12 ACT CD74ACT374MS2463 12
ACT CD74ACT153M96 12 ACT CD74ACT540E 12
ACT CD74ACT157M96S2497 12 ACT CD74ACT540M 12
ACT CD74ACT158M96 12 ACT CD74ACT540MS2075 12
ACT CD74ACT161E 12 ACT CD74ACT541M96S2497 12
ACT CD74ACT161M 12 ACT CD74ACT541SM 12
ACT CD74ACT161M96 12 ACT CD74ACT573M96S2378 12
ACT CD74ACT161M96S2463 12 ACT CD74ACT574MS2075 12
ACT CD74ACT163E 12 ACT CD74ACT623M96 12
ACT CD74ACT163M 12 ACT CD74ACT646M96S2463 12
ACT CD74ACT163M96 12 ACT CD74ACT74M96S2463 12
ACT CD74ACT164MS2298 12 ACT CD74ACT74M96S2497 12
ACT CD74ACT174M96S2497 12 ACT CD74ACT74MS2463 12
ACT CD74ACT191M 12 ACT CD54ACT74H 13
ACT CD74ACT20E 12 ACT CD74A10M96S2463 13
ACT CD74ACT20M 12 ACT CD74ACD4MS2074 13
ACT CD74ACT20M96 12 ACT CD74ACD4MS2227 13
ACT CD74ACT238E 12 ACT CD74ACD8MS2074 13
ACT CD74ACT240M96S2497 12 ACT CD74AC112M 13
ACT CD74ACT241E 12 ACT CD74AC174E 13
ACT CD74ACT241M96S2497 12 ACT CD74AC191M96 13
ACT CD74ACT244ES2497 12 ACT CD74AC251M96 13
ACT CD74ACT244M96S2378 12 ACT CD74AC283M96 13
ACT CD74ACT244M96S2497 12 ACT CD74AC652M96 13
ACT CD74ACT244SM 12 ACT CD74AC86MS2074 13
ACT CD74ACT244SM96 12 ACT CD74ACT04ES2064 13
ACT CD74ACT245M96S2463 12 ACT CD74ACT241M96 13
ACT CD74ACT245M96S2497 12 ACT CD74ACT540M96 13
ACT CD74ACT245SM 12 ACT CD74ACT651M96 13
4
<PAGE>
SCHEDULE 6.9(a)[C]
PR0DUCT LISTING BY PART NUMBER BY PRODUCT FAMILY [C0MMERCIAL]
<CAPTION>
FAMILY DEVICE STATUS FAMILY DEVICE STATUS
- - ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
ACT CD74ACT245SM96 12 ACT CD74ACT652ENS2064 13
ACT CD74ACT253E 12
ACT CD74ACT253M 12
ACT CD74ACT253M96 12
ACT CD74ACT253M96S2463 12
ACT CD74ACT253M96S2497 12
ACT CD74ACT257M96S2463 12
ACT CD74ACT257SM 12
CD4000 CD14538BE 11 CD4000 CD40193BE 11
CD4000 CD14538BF 11 CD4000 CD4019BE 11
CD4000 CD4001BE 11 CD4000 CD4019BF 11
CD4000 CD4001BF 11 CD4000 CD4020BE 11
CD4000 CD4001BFS2065 11 CD4000 CD4020BF 11
CD4000 CD4001UBF 11 CD4000 CD4021BE 11
CD4000 CD4002BE 11 CD4000 CD4021BF 11
CD4000 CD4002BF 11 CD4000 CD4022BF 11
CD4000 CD4007UBE 11 CD4000 CD4023BE 11
CD4000 CD4007UBF 11 CD4000 CD4023BF 11
CD4000 CD4009UBE 11 CD4000 CD4023BM 11
CD4000 CD4009UBF 11 CD4000 CD4023BM96 11
CD4000 CD40102BE 11 CD4000 CD4024BE 11
CD4000 CD40103BE 11 CD4000 CD4024BF 11
CD4000 CD40103BF 11 CD4000 CD4024BM 11
CD4000 CD40105BF 11 CD4000 CD4024BM96 11
CD4000 CD40106BE 11 CD4000 CD4025BE 11
CD4000 CD40106BF 11 CD4000 CD4025BF 11
CD4000 CD40106BM 11 CD4000 CD4025BM 11
CD4000 CD40106BM96 11 CD4000 CD4025BM96 11
CD4000 CD40107BE 11 CD4000 CD4027BE 11
CD4000 CD40107BF 11 CD4000 CD4027BF 11
CD4000 CD40109BE 11 CD4000 CD4028BE 11
CD4000 CD40109BF 11 CD4000 CD4028BF 11
CD4000 CD4010BF 11 CD4000 CD4029BE 11
CD4000 CD40110BE 11 CD4000 CD4029BF 11
CD4000 CD40117BE 11 CD4000 CD4030BE 11
CD4000 CD4011BE 11 CD4000 CD4030BF 11
CD4000 CD4011BF 11 CD4000 CD4035BF 11
CD4000 CD4011BM 11 CD4000 CD4040BE 11
CD4000 CD4011BM96 11 CD4000 CD4040BF 11
CD4000 CD4011UBE 11 CD4000 CD4041UBF 11
CD4000 CD4011UBF 11 CD4000 CD4042BE 11
CD4000 CD4012BE 11 CD4000 CD4042BF 11
CD4000 CD4013BE 11 CD4000 CD4043BE 11
CD4000 CD4013BF 11 CD4000 CD4044BE 11
CD4000 CD4013BM 11 CD4000 CD4044BF 11
CD4000 CD4013BM96 11 CD4000 CD4046BE 11
CD4000 CD4013BW 11 CD4000 CD4046BF 11
CD4000 CD4014BE 11 CD4000 CD4047BE 11
CD4000 CD4015BE 11 CD4000 CD4047BF 11
5
<PAGE>
SCHEDULE 6.9(a)[C]
PR0DUCT LISTING BY PART NUMBER BY PRODUCT FAMILY [C0MMERCIAL]
<CAPTION>
FAMILY DEVICE STATUS FAMILY DEVICE STATUS
- - ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
CD4000 CD4015BF 11 CD4000 CD4048BE 11
CD4000 CD4016BE 11 CD4000 CD4049UBE 11
CD4000 CD4016BF 11 CD4000 CD4049UBF 11
CD4000 CD40174BE 11 CD4000 CD4050BE 11
CD4000 CD40174BF 11 CD4000 CD4050BF 11
CD4000 CD4017BE 11 CD4000 CD4051BE 11
CD4000 CD4017BF 11 CD4000 CD4051BF 11
CD4000 CD4018BF 11 CD4000 CD4051BM 11
CD4000 CD40192BE 11 CD4000 CD4051BM96 11
CD4000 CD40192BF 11 CD4000 CD4052BE 11
CD4000 CD4052BF 11 CD4000 CD4098BF 11
CD4000 CD4053BE 11 CD4000 CD4099BE 11
CD4000 CD4053BF 11 CD4000 CD4099BF 11
CD4000 CD4054BE 11 CD4000 CD4503BE 11
CD4000 CD4056BE 11 CD4000 CD4503BF 11
CD4000 CD4056BF 11 CD4000 CD4504BE 11
CD4000 CD4060BE 11 CD4000 CD4511BE 11
CD4000 CD4060BF 11 CD4000 CD4511BF 11
CD4000 CD4063BE 11 CD4000 CD4512BE 11
CD4000 CD4063BF 11 CD4000 CD4512BF 11
CD4000 CD4066BE 11 CD4000 CD4514BE 11
CD4000 CD4066BF 11 CD4000 CD4514BF 11
CD4000 CD4066BM 11 CD4000 CD4516BE 11
CD4000 CD4066BM96 11 CD4000 CD4516BF 11
CD4000 CD4067BE 11 CD4000 CD4518BE 11
CD4000 CD4067BF 11 CD4000 CD4518BF 11
CD4000 CD4068BE 11 CD4000 CD4520BE 11
CD4000 CD4068BF 11 CD4000 CD4520BF 11
CD4000 CD4069UBE 11 CD4000 CD4521BE 11
CD4000 CD4069UBM 11 CD4000 CD4532BE 11
CD4000 CD4069UBM96 11 CD4000 CD4536BE 11
CD4000 CD4070BE 11 CD4000 CD4541BE 11
CD4000 CD4070BF 11 CD4000 CD4541BF 11
CD4000 CD4071BE 11 CD4000 CD4543BE 11
CD4000 CD4071BF 11 CD4000 CD4555BE 11
CD4000 CD4072BE 11 CD4000 CD4556BF 11
CD4000 CD4072BF 11 CD4000 CD4585BE 11
CD4000 CD4073BE 11 CD4000 18892 12
CD4000 CD4073BF 11 CD4000 18893 12
CD4000 CD4075BE 11 CD4000 41053 12
CD4000 CD4075BF 11 CD4000 93213 12
CD4000 CD4076BE 11 CD4000 96505 12
CD4000 CD4076BF 11 CD4000 98634 12
CD4000 CD4077BE 11 CD4000 99395 12
CD4000 CD4077BF 11 CD4000 99397 12
CD4000 CD4077BM 11 CD4000 99398 12
CD4000 CD4078BE 11 CD4000 99399 12
CD4000 CD4078BF 11 CD4000 94046A 12
CD4000 CD4081BE 11 CD4000 CD14538BES2515 12
6
<PAGE>
SCHEDULE 6.9(a)[C]
PR0DUCT LISTING BY PART NUMBER BY PRODUCT FAMILY [C0MMERCIAL]
<CAPTION>
FAMILY DEVICE STATUS FAMILY DEVICE STATUS
- - ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
CD4000 CD4081BF 11 CD4000 CD4001BER3589 12
CD4000 CD4082BE 11 CD4000 CD4001BES2325 12
CD4000 CD4085BF 11 CD4000 CD4001BFS2534 12
CD4000 CD4093BE 11 CD4000 CD4001BM 12
CD4000 CD4093BF 11 CD4000 CD4001BM96 12
CD4000 CD4093BH 11 CD4000 CD4001BW 12
CD4000 CD4093BM 11 CD4000 CD4001UBE 12
CD4000 CD4093BM96 11 CD4000 CD4001UBM 12
CD4000 CD4094BE 11 CD4000 CD4007UBES2355 12
CD4000 CD4094BF 11 CD4000 CD4007UBH 12
CD4000 CD4097BF 11 CD4000 CD4007UBM 12
CD4000 CD4098BE 11 CD4000 CD4007UBW 12
CD4000 CD40103BW 12 CD4000 CD4020BES2535 12
CD4000 CD40105BE 12 CD4000 CD4020BW 12
CD4000 CD40105BH 12 CD4000 CD4021BES2515 12
CD4000 CD40106BER3592 12 CD4000 CD4021BW 12
CD4000 CD40106BES2064 12 CD4000 CD4022BE 12
CD4000 CD40106BES2300 12 CD4000 CD4022BW 12
CD4000 CD40106BES2463 12 CD4000 CD4023BFS2534 12
CD4000 CD40106BES2515 12 CD4000 CD4023BW 12
CD4000 CD40106BES2535 12 CD4000 CD4024BES2535 12
CD4000 CD40106BES5001 12 CD4000 CD4025BES2064 12
CD4000 CD40106BEX 12 CD4000 CD4025BW 12
CD4000 CD40106BMS5001 12 CD4000 CD4026BE 12
CD4000 CD40106BW 12 CD4000 CD4027BER4657 12
CD4000 CD40109BES2463 12 CD4000 CD4027BES2065 12
CD4000 CD40109BW 12 CD4000 CD4027BM 12
CD4000 CD4010BE 12 CD4000 CD4027BW 12
CD4000 CD4011BES2064 12 CD4000 CD4029BW 12
CD4000 CD4011BES2325 12 CD4000 CD4030BES2535 12
CD4000 CD4011BES2535 12 CD4000 CD4030BM 12
CD4000 CD4011BW 12 CD4000 CD4030BW 12
CD4000 CD4011UBM 12 CD4000 CD4031BE 12
CD4000 CD4012BES2064 12 CD4000 CD4033BE 12
CD4000 CD4012BES2535 12 CD4000 CD4034BES2491 12
CD4000 CD4012BM 12 CD4000 CD4034BW 12
CD4000 CD4012BM96 12 CD4000 CD4035BW 12
CD4000 CD4013BES2064 12 CD4000 CD4040BES2463 12
CD4000 CD4013BES2325 12 CD4000 CD4040BFS2065 12
CD4000 CD4013BES2463 12 CD4000 CD4040BW 12
CD4000 CD4013BES2497 12 CD4000 CD4041UBE 12
CD4000 CD4013BES2515 12 CD4000 CD4041UBW 12
CD4000 CD4013BES2534 12 CD4000 CD4042BM 12
CD4000 CD4013BES2535 12 CD4000 CD4042BW 12
CD4000 CD4013BES2540 12 CD4000 CD4043BM 12
CD4000 CD4013BEX 12 CD4000 CD4044BM 12
CD4000 CD4013BFS2534 12 CD4000 CD4045BE 12
CD4000 CD4013BH 12 CD4000 CD4045BW 12
CD4000 CD4015BW 12 CD4000 CD4046BES2064 12
7
<PAGE>
SCHEDULE 6.9(a)[C]
PR0DUCT LISTING BY PART NUMBER BY PRODUCT FAMILY [C0MMERCIAL]
<CAPTION>
FAMILY DEVICE STATUS FAMILY DEVICE STATUS
- - ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
CD4000 CD40161BE 12 CD4000 CD4046BW 12
CD4000 cd40161BW 12 CD4000 CD4047BES2065 12
CD4000 CD4016BM 12 CD4000 CD4047BES2497 12
CD4000 CD4016BW 12 CD4000 CD4047BW 12
CD4000 CD40174BE116 12 CD4000 CD4049UBER3817 12
CD4000 CD40174BW 12 CD4000 CD4049UBES2064 12
CD4000 CD40175BE 12 CD4000 CD4049UBES2065 12
CD4000 CD4017BES2535 12 CD4000 CD4049UBES2515 12
CD4000 CD4017BW 12 CD4000 CD4049UBES2535 12
CD4000 CD4018BE 12 CD4000 CD4049UBM 12
CD4000 CD4018BES2064 12 CD4000 CD4049UBM96 12
CD4000 CD40192BW 12 CD4000 CD4049UBW 12
CD4000 CD40194BE 12 CD4000 CD4050BES2535 12
CD4000 CD4019BES2260 12 CD4000 CD4050BM 12
CD4000 CD4050BW 12 CD4000 CD4075BM 12
CD4000 CD4051BER4248 12 CD4000 CD4077BES2515 12
CD4000 CD4051BER4666 12 CD4000 CD4077BW 12
CD4000 CD4051BES2325 12 CD4000 CD4078BM 12
CD4000 CD4051BH 12 CD4000 CD4078BW 12
CD4000 CD4051BW 12 CD4000 CD4081BES2325 12
CD4000 CD4052BES2065 12 CD4000 CD4081BES2515 12
CD4000 CD4052BES2515 12 CD4000 CD4081BEX 12
CD4000 CD4052BES2535 12 CD4000 CD4081BM 12
CD4000 CD4052BH 12 CD4000 CD4081BW 12
CD4000 CD4052BW 12 CD4000 CD4082BES2064 12
CD4000 CD4053BES2325 12 CD4000 CD4082BF 12
CD4000 CD4053BFS2463 12 CD4000 CD4082BW 12
CD4000 CD4053BFS2534 12 CD4000 CD4085BE 12
CD4000 CD4053BH 12 CD4000 CD4086BE 12
CD4000 CD4053BW 12 CD4000 CD4089BE 12
CD4000 CD4054BW 12 CD4000 CD4093BES2463 12
CD4000 CD4055BE 12 CD4000 CD4093BEXS2064 12
CD4000 CD4059AE 12 CD4000 CD4093BMS5001 12
CD4000 CD4059AW 12 CD4000 CD4093BW 12
CD4000 CD4060BW 12 CD4000 CD4094BES2463 12
CD4000 CD4066BES2272 12 CD4000 CD4094BES2515 12
CD4000 CD4066BES2325 12 CD4000 CD4094BW 12
CD4000 CD4066BES2378 12 CD4000 CD4097BE 12
CD4000 CD4066BES2497 12 CD4000 CD4098BW 12
CD4000 CD4066BEX 12 CD4000 CD4099BES2497 12
CD4000 CD4066BW 12 CD4000 CD4099BW 12
CD4000 CD4067BH 12 CD4000 CD4502BE 12
CD4000 CD4067BW 12 CD4000 CD4502BW 12
CD4000 CD4068BES2325 12 CD4000 CD4503BES2325 12
CD4000 CD4068BW 12 CD4000 CD4503BW 12
CD4000 CD4069UBE35 12 CD4000 CD4508BE 12
CD4000 CD4069UBES2325 12 CD4000 CD4510BE 12
CD4000 CD4069UBES2463 12 CD4000 CD4514BM 12
CD4000 CD4069UBES2515 12 CD4000 004514BW 12
8
<PAGE>
SCHEDULE 6.9(a)[C]
PR0DUCT LISTING BY PART NUMBER BY PRODUCT FAMILY [C0MMERCIAL]
<CAPTION>
FAMILY DEVICE STATUS FAMILY DEVICE STATUS
- - ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
CD4000 CD4069UBF 12 CD4000 CD4515BE 12
CD4000 CD4069UBW 12 CD4000 CD4515BM 12
CD4000 CD4070BES2515 12 CD4000 CD4516BW 12
CD4000 CD4070BEX 12 CD4000 CD4517BE 12
CD4000 CD4070BFS2534 12 CD4000 CD4517BES2463 12
CD4000 CD4070BM 12 CD4000 CD4517BES2535 12
CD4000 CD4070BW 12 CD4000 CD4517BW 12
CD4000 CD4071BER3812 12 CD4000 CD4518BW 12
CD4000 CD4071BES2325 12 CD4000 CD4520BES2325 12
CD4000 CD4071BES2515 12 CD4000 CD4520BFS2534 12
CD4000 CD4071BFS2534 12 CD4000 CD4520BFS2536 12
CD4000 CD4071BM 12 CD4000 CD4520BW 12
CD4000 CD4071BW 12 CD4000 CD4522BE 12
CD4000 CD4073BES2325 12 CD4000 CD4527BE 12
CD4000 CD4073BM 12 CD4000 CD4536BW 12
CD4000 CD4073BW 12 CD4000 CD4541BES2260 12
CD4000 CD4541BM 12
CD4000 CD4541BM96 12
CD4000 CD4541BW 12
CD4000 CD4555BW 12
CD4000 CD4556BE 12
CD4000 CD4556BES2534 12
CD4000 CD4571UBW 12
CD4000 CD4572UBE 12
CD4000 CD4572UBW 12
CD4000 CD4724BE 12
CD4000 18720 13
CD4000 18876 13
CD4000 18901 13
CD4000 19027 13
CD4000 19029 13
CD4000 93647 13
CD4000 94269 13
CD4000 96374 13
CD4000 96547 13
CD4000 CD4001BH 13
CD4000 CD4006BE 13
CD4000 CD40103BH 13
CD4000 CD40106BH 13
CD4000 CD4011BH 13
CD4000 CD4013BER3813 13
CD4000 CD4013BES2065 13
CD4000 CD40147BE 13
CD4000 CD4015BH 13
CD4000 CD4024BH 13
CD4000 CD40257BE 13
CD4000 CD4034BE 13
CD4000 CD4035BE 13
CD4000 CD4040BES2325 13
9
<PAGE>
SCHEDULE 6.9(a)[C]
PR0DUCT LISTING BY PART NUMBER BY PRODUCT FAMILY [C0MMERCIAL]
<CAPTION>
FAMILY DEVICE STATUS FAMILY DEVICE STATUS
- - ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
CD4000 CD4040BWR2608 13
CD4000 CD4042BER3814 13
CD4000 CD4043BER2489 13
CD4000 CD4046BH 13
CD4000 CD4047BH 13
CD4000 CD4049UBWR2608 13
CD4000 CD4050BH 13
CD4000 CD4056BES2325 13
CD4000 CD4060BH 13
CD4000 CD4060BWR2608 13
CD4000 CD4094BH 13
CD4000 CD44051BM 13
CD4000 CD4502BWR2608 13
CD4000 CD4516BH 13
CD4000 CD4556BES2325 13
10
<PAGE>
SCHEDULE 6.9(a)[C]
PR0DUCT LISTING BY PART NUMBER BY PRODUCT FAMILY [C0MMERCIAL]
<CAPTION>
FAMILY DEVICE STATUS FAMILY DEVICE STATUS
- - ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
FCT CD54FCT244E 11 FCT CD74FCT574M96 11
FCT CD54FCT244MS2298 11 FCT CD74FCT574SM 11
FCT CD54FCT245E 11 FCT CD74FCT623M 11
FCT CD54FCT245MS2298 11 FCT CD74FCT646EN 11
FCT CD74FCT240E 11 FCT CD74FCT646M 11
FCT CD74FCT240M 11 FCT CD74FCT646M96 11
FCT CD74FCT240M96 11 FCT CD74FCT646SM 11
FCT CD74FCT240SM 11 FCT CD74FCT652EN 11
FCT CD74FCT244ATE 11 FCT CD74FCT652M 11
FCT CD74FCT244E 11 FCT CD74FCT653EN 11
FCT CD74FCT244M 11 FCT CD74FCT653M 11
FCT CD74FCT244M96 11 FCT CD74FCT654EN 11
FCT CD74FCT244M96S2497 11 FCT CD74FCT821AM96S2497 11
FCT CD74FCT244SM 11 FCT CD74FCT822AEN 11
FCT CD74FCT245E 11 FCT CD74FCT823AEN 11
FCT CD74FCT245ES2540 11 FCT CD74FCT824AEN 11
FCT CD74FCT245M 11 FCT CD74FCT841AEN 11
FCT CD74FCT245M96 11 FCT CD74FCT841AM 11
FCT CD74FCT245SM 11 FCT CD74FCT841AM96 11
FCT CD74FCT273E 11 FCT CD74FCT843AM 11
FCT CD74FCT273M 11 FCT CD74FCT843AM96 11
FCT CD74FCT273M96 11 FCT CD74FCT844AEN 11
FCT CD74FCT2952AM 11 FCT CD74FCT821AMS2497 12
FCT CD74FCT373E 11 FCT CD74FCT373SM 13
FCT CD74FCT373M 11 FCT CD74FCT651EN 13
FCT CD74FCT373M96 11 FCT CD74FCT651M 13
FCT CD74FCT374E 11 FCT CD74FCT821AEN 13
FCT CD74FCT374M 11 FCT CD74FCT821AM 13
FCT CD74FCT374M96 11 FCT CDFCT821AM96 13
FCT CD74FCT374SM 11 FCT CD74FCT842AM 13
FCT CD74FCT540E 11 FCT CD74FCT842AM96 13
FCT CD74FCT540M 11 FCT CD74FCT861AM 13
FCT CD74FCT540M96 11 FCT CD74FCT861AM96 13
FCT CD74FCT541E 11 FCT CD74FCT863AM 13
FCT CD74FCT541M 11
FCT CD74FCT541M96 11
FCT CD74FCT541SM 11
FCT CD74FCT543EN 11
FCT CD74FCT543M 11
FCT CD74FCT543M96 11
FCT CD74FCT543SM 11
FCT CD74FCT564E 11
FCT CD74FCT564M 11
FCT CD74FCT573ATE 11
FCT CD74FCT573E 11
FCT CD74FCT573M 11
FCT CD74FCT573M96 11
FCT CD74FCT573SM 11
FCT CD74FCT573SM96 11
11
<PAGE>
SCHEDULE 6.9(a)[C]
PR0DUCT LISTING BY PART NUMBER BY PRODUCT FAMILY [C0MMERCIAL]
<CAPTION>
FAMILY DEVICE STATUS FAMILY DEVICE STATUS
- - ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
FCT CD74FCT574E 11
FCT CD74FCT574M 11
HCT CD54HC02F 11 HCT CD74HC02E 11
HCT CD54HC03F 11 HCT CD74HC02M 11
HCT CD54HC10F 11 HCT CD74HC02M96 11
HCT CD54HC11F 11 HCT CD74HC04E 11
HCT CD54HC123F 11 HCT CD74HC04M 11
HCT CD54HC125F 11 HCT CD74HC04M96 11
HCT CD54HC138F 11 HCT CD74HC08E 11
HCT CD54HC139F 11 HCT CD74HC08M 11
HCT CD54HC14F 11 HCT CD74HC08M96 11
HCT CD54HC157F 11 HCT CD74HC08M96S2466 11
HCT CD54HC161F 11 HCT CD74HC107E 11
HCT CD54HC164F 11 HCT CD74HC107M 11
HCT CD54HC173F 11 HCT CD74HC107M96 11
HCT CD54HC174F 11 HCT CD74HC10E 11
HCT CD54HC221F 11 HCT CD74HC10M 11
HCT CD54HC237F 11 HCT CD74HC10M96 11
HCT CD54HC243F 11 HCT CD74HC123E 11
HCT CD54HC251F 11 HCT CD74HC123M 11
HCT CD54HC299F 11 HCT CD74HC123M96 11
HCT CD54HC30F 11 HCT CD74HC125E 11
HCT CD54HC368F 11 HCT CD74HC125M 11
HCT CD54HC373F 11 HCT CD74HC125M96 11
HCT CD54HC373W 11 HCT CD74HC125M96S2357 11
HCT CD54HC40103F 11 HCT CD74HC125MS2074 11
HCT CD54HC4020F 11 HCT CD74HC126E 11
HCT CD54HC4024F 11 HCT CD74HC126M 11
HCT CD54HC4046AF 11 HCT CD74HC126M96 11
HCT CD54HC4051F 11 HCT CD74HC126MS2074 11
HCT CD54HC4052F 11 HCT CD74HC132E 11
HCT CD54HC4053F 11 HCT CD74HC132M 11
HCT CD54HC4520F 11 HCT CD74HC132M96 11
HCT CD54HC541F 11 HCT CD74HC138E 11
HCT CD54HC574F 11 HCT CD74HC138M 11
HCT CD54HC73F 11 HCT CD74HC138M96 11
HCT CD54HCT02F 11 HCT CD74HC139E 11
HCT CD54HCT11F 11 HCT CD74HC139M 11
HCT CD54HCT132F 11 HCT CD74HC139M96 11
HCT CD54HCT138F 11 HCT CD74HC14E 11
HCT CD54HCT139F 11 HCT CD74HC14M 11
HCT CD54HCT163F 11 HCT CD74HC14M96 11
HCT CD54HCT174F 11 HCT CD74HC14M96S2357 11
HCT CD54HCT241W 11 HCT CD74HC151E 11
HCT CD54HCT541F 11 HCT CD74HC151M 11
HCT CD54HCT563W 11 HCT CD74HC151M96 11
HCT CD54HCT573F 11 HCT CD74HC157E 11
HCT CD54HCT574F 11 HCT CD74HC157M 11
HCT CD54HCT688F 11 HCT CD74HC157M96 11
12
<PAGE>
SCHEDULE 6.9(a)[C]
PR0DUCT LISTING BY PART NUMBER BY PRODUCT FAMILY [C0MMERCIAL]
<CAPTION>
FAMILY DEVICE STATUS FAMILY DEVICE STATUS
- - ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
HCT CD54HCT86F 11 HCT CD74HC163E 11
HCT CD74HC00E 11 HCT CD74HC163M 11
HCT CD74HC00M 11 HCT CD74HC163M96 11
HCT CD74HC00M96 11 HCT CD74HC164E 11
HCT CD74HC164ES2065 11 HCT CD74HC377M 11
HCT CD74HC164M 11 HCT CD74HC377M96 11
HCT CD74HC164M96 11 HCT CD74HC393E 11
HCT CD74HC165E 11 HCT CD74HC393M 11
HCT CD74HC165M 11 HCT CD74HC393M96 11
HCT CD74HC165M96 11 HCT CD74HC4002M96S2497 11
HCT CD74HC165M96S2357 11 HCT CD74HC40103E 11
HCT CD74HC166E 11 HCT CD74HC40103M 11
HCT CD74HC166M 11 HCT CD74HC40103M96 11
HCT CD74HC166M96 11 HCT CD74HC40105E 11
HCT CD74HC174E 11 HCT CD74HC40105M 11
HCT CD74HC174M 11 HCT CD74HC40105M96 11
HCT CD74HC191E 11 HCT CD74HC4020E 11
HCT CD74HC191M 11 HCT CD74HC4020M 11
HCT CD74HC191M96 11 HCT CD74HC4020M96 11
HCT CD74HC238E 11 HCT CD74HC4040E 11
HCT CD74HC238M 11 HCT CD74HC4040M 11
HCT CD74HC238M96 11 HCT 0074HC4040M96 11
HCT CD74HC240E 11 HCT CD74HC4046AE 11
HCT CD74HC240M 11 HCT CD74HC4046AM 11
HCT CD74HC240M96 11 HCT CD74HC4046AM96 11
HCT CD74HC244E 11 HCT CD74HC4050E 11
HCT CD74HC244M 11 HCT CD74HC4050M 11
HCT CD74HC244M96 11 HCT CD74HC4050M96 11
HCT CD74HC245E 11 HCT CD74HC4051E 11
HCT CD74HC245M 11 HCT CD74HC4051M 11
HCT CD74HC245M96 11 HCT CD74HC4051M96 11
HCT CD74HC251E 11 HCT CD74HC4051M96S2515 11
HCT CD74HC251M 11 HCT CD74HC4052E 11
HCT CD74HC251M96 11 HCT CD74HC4052M 11
HCT CD74HC257E 11 HCT CD74HC4052M96 11
HCT CD74HC257M 11 HCT CD74HC4053E 11
HCT 0074HC257M96 11 HCT CD74HC4053M 11
HCT CD74HC259E 11 HCT CD74HC4053M96 11
HCT CD74HC259M 11 HCT CD74HC4060E 11
HCT CD74HC259M96 11 HCT CD74HC4060M 11
HCT CD74HC259M96S2497 11 HCT CD74HC4060M96 11
HCT 0074HC273E 11 HCT CD74HC4066E 11
HCT CD74HC273M 11 HCT CD74HC4066M 11
HCT CD74HC273M96 11 HCT CD74HC4066M96 11
HCT CD74HC32E 11 HCT CD74HC4075M96S2497 11
HCT CD74HC32M 11 HCT CD74HC4094E 11
HCT CD74HC32M96 11 HCT CD74HC4094M 11
HCT CD74HC373E 11 HCT CD74HC4094M96 11
HCT CD74HC373M 11 HCT CD74HC4316E 11
13
<PAGE>
SCHEDULE 6.9(a)[C]
PR0DUCT LISTING BY PART NUMBER BY PRODUCT FAMILY [C0MMERCIAL]
<CAPTION>
FAMILY DEVICE STATUS FAMILY DEVICE STATUS
- - ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
HCT CD74HC373M96 11 HCT CD74HC4316ES2065 11
HCT CD74HC374E 11 HCT CD74HC4316M 11
HCT CD74HC374ES2497 11 HCT CD74HC4316M96 11
HCT CD74HC374M 11 HCT CD74HC4316MS2074 11
HCT CD74HC374M96 11 HCT CD74HC4514E 11
HCT CD74HC377E 11 HCT CD74HC4514EN 11
HCT CD74HC4514M 11 HCT CD74HCT08MS2074 11
HCT CD74HC4514M96 11 HCT CD74HCT109E 11
HCT CD74HC4520E 11 HCT CD74HCT109M 11
HCT CD74HC4520M 11 HCT CD74HCT109M96 11
HCT CD74HC4520M96 11 HCT CD74HCT10E 11
HCT CD74HC4538E 11 HCT CD74HCT10M 11
HCT CD74HC4538M 11 HCT CD74HCT10M96 11
HCT CD74HC4538M96 11 HCT CD74HCT11E 11
HCT CD74HC4538M96105 11 HCT CD74HCT11M 11
HCT CD74HC4543E 11 HCT CD74HCT11M96 11
HCT CD74HC540E 11 HCT CD74HCT123E 11
HCT CD74HC540M 11 HCT CD74HCT123M 11
HCT CD74HC540M96 11 HCT CD74HCT123M96 11
HCT CD74HC541E 11 HCT CD74HCT123M96S5001 11
HCT CD74HC541M 11 HCT CD74HCT125E 11
HCT CD74HC541M96 11 HCT CD74HCT125M 11
HCT CD74HC573E 11 HCT CD74HCT125M96 11
HCT CD74HC573M 11 HCT CD74HCT126E 11
HCT CD74HC573M96 11 HCT CD74HCT126M 11
HCT CD74HC574E 11 HCT CD74HCT126M96 11
HCT CD74HC574M 11 HCT CD74HCT132E 11
HCT CD74HC574M96 11 HCT CD74HCT132M 11
HCT CD74HC597E 11 HCT CD74HCT132M96 11
HCT CD74HC597M 11 HCT CD74HCT132M96S2478 11
HCT CD74HC597M96 11 HCT CD74HCT138E 11
HCT CD74HC688E 11 HCT CD74HCT138M 11
HCT CD74HC688M 11 HCT CD74HCT138M96 11
HCT CD74HC688M96 11 HCT CD74HCT139E 11
HCT CD74HC7046AE 11 HCT CD74HCT139M 11
HCT CD74HC7046AM 11 HCT CD74HCT139M96 11
HCT CD74HC7046AM96 11 HCT CD74HCT14E 11
HCT CD74HC74E 11 HCT CD74HCT14ES2497 11
HCT CD74HC74M 11 HCT CD74HCT14M 11
HCT CD74HC74M96 11 HCT CD74HCT14M96 11
HCT CD74HC74MR4099 11 HCT CD74HCT153E 11
HCT CD74HC86E 11 HCT CD74HCT153M 11
HCT CD74HC86M 11 HCT CD74HCT153M96 11
HCT CD74HC86M96 11 HCT CD74HCT157E 11
HCT CD74HCT00E 11 HCT CD74HCT157ES2379 11
HCT CD74HCT00M 11 HCT CD74HCT157M 11
HCT CD74HCT00M96 11 HCT CD74HCT157M96 11
HCT CD74HCT02E 11 HCT CD74HCT161E 11
HCT CD74HCT02M 11 HCT CD74HCT161ES2497 11
14
<PAGE>
SCHEDULE 6.9(a)[C]
PR0DUCT LISTING BY PART NUMBER BY PRODUCT FAMILY [C0MMERCIAL]
<CAPTION>
FAMILY DEVICE STATUS FAMILY DEVICE STATUS
- - ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
HCT CD74HCT02M96 11 HCT CD74HCT161M 11
HCT CD74HCT04E 11 HCT CD74HCT161M96 11
HCT CD74HCT04M 11 HCT CD74HCT163E 11
HCT CD74HCT04M96 11 HCT CD74HCT163M 11
HCT CD74HCT08E 11 HCT CD74HCT163M96
HCT CD74HCT08M 11 HCT CD74HCT164E 11
HCT CD74HCT08M96 11 HCT CD74HCT164M 11
HCT CD74HCT08M96S2497 11 HCT CD74HCT164M96 11
HCT CD74HCT164MS2074 11 HCT CD74HCT32M96 11
HCT CD74HCT165E 11 HCT CD74HCT367E 11
HCT CD74HCT165M 11 HCT CD74HCT367M 11
HCT CD74HCT165M96 11 HCT CD74HCT367M96 11
HCT CD74HCT165MS2075 11 HCT CD74HCT367MS2516 11
HCT CD74HCT166E 11 HCT CD74HCT373E 11
HCT CD74HCT166M 11 HCT CD74HCT373M 11
HCT CD74HCT166M96 11 HCT CD74HCT373M96 11
HCT CD74HCT166M96S2497 11 HCT CD74HCT374E 11
HCT CD74HCT174E 11 HCT CD74HCT374ES2497 11
HCT CD74HCT174M 11 HCT CD74HCT374M 11
HCT CD74H0T174M96 11 HCT CD74HCT374M96 11
HCT CD74HCT175E 11 HCT CD74HCT393E 11
HCT CD74HCT175M 11 HCT CD74HCT393M 11
HCT CD74HCT175M96 11 HCT CD74HCT393M96 11
HCT CD74HCT240E 11 HCT CD74HCT40105E 11
HCT CD74HCT240M 11 HCT CD74HCT40105ES2497 11
HCT CD74HCT240M96 11 HCT CD74HCT40105M 11
HCT CD74HCT244E 11 HCT CD74HCT40105M96 11
HCT CD74HCT244M 11 HCT CD74HCT4040E 11
HCT CD74HCT244M96 11 HCT CD74HCT4040M 11
HCT CD74HCT244MS2075 11 HCT CD74HCT4040M96 11
HCT CD74HCT245E 11 HCT CD74HCT4046AE 11
HCT CD74HCT245M 11 HCT CD74HCT4046AM 11
HCT CD74HCT245M96 11 HCT CD74HCT4046AM96 11
HCT CD74HCT245MS2075 11 HCT CD74HCT4046AM96S2463 11
HCT CD74HCT251E 11 HCT CD74HCT4046AMS2074 11
HCT CD74HCT251M 11 HCT CD74HCT4051E 11
HCT CD74HCT251M96 11 HCT CD74HCT4051M 11
HCT CD74HCT253E 11 HCT CD74HCT4052E 11
HCT CD74HCT253M 11 HCT CD74HCT4052M 11
HCT CD74HCT253M96 11 HCT CD74HCT4052M96 11
HCT CD74HCT257E 11 HCT CD74HCT4053E 11
HCT CD74HCT257M 11 HCT CD74HCT4053M 11
HCT CD74HCT257M96 11 HCT CD74HCT4053M96 11
HCT CD74HCT259E 11 HCT CD74HCT4066E 11
HCT CD74HCT259M 11 HCT CD74HCT4066M 11
HCT CD74HCT259M96 11 HCT CD74HCT4066M96 11
HCT CD74HCT259M96S2074 11 HCT CD74HCT4094E 11
HCT CD74HCT259MS2075 11 HCT CD74HCT4094M 11
HCT CD74HCT273E 11 HCT CD74HCT4094M96 11
15
<PAGE>
SCHEDULE 6.9(a)[C]
PR0DUCT LISTING BY PART NUMBER BY PRODUCT FAMILY [C0MMERCIAL]
<CAPTION>
FAMILY DEVICE STATUS FAMILY DEVICE STATUS
- - ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
HCT CD74HCT273M 11 HCT CD74HCT4316E 11
HCT CD74HCT273M96 11 HCT CD74HCT4316M 11
HCT CD74HCT27E 11 HCT CD74HCT4316M96 11
HCT CD74HCT27M 11 HCT CD74HCT4538E 11
HCT 0074HCT27M96 11 HCT CD74HCT4538M 11
HCT CD74HCT30E 11 HCT CD74HCT4538M96 11
HCT CD74HCT30M 11 HCT CD74HCT4543E 11
HCT CD74HCT30M96 11 HCT CD74HCT540E 11
HCT CD74HCT32E 11 HCT CD74HCT540M 11
HCT CD74HCT32M 11 HCT CD74HCT541E 11
HCT CD74HCT541M 11 HCT CD54HC273F 12
HCT CD74HCT541M96 11 HCT CD54HC273W 12
HCT CD74HCT573E 11 HCT CD54HC299W 12
HCT CD74HCT573ER3170 11 HCT CD54HC30W 12
HCT CD74HCT573M 11 HCT CD54HC32W 12
HCT CD74HCT573M96 11 HCT CD54HC354W 12
HCT CD74HCT574E 11 HCT CD54HC374W 12
HCT CD74HCT574M 11 HCT CD54HC40103W 12
HCT CD74HCT574M96 11 HCT CD54HC4015H 12
HCT CD74HCT597E 11 HCT CD54HC4024W 12
HCT CD74HCT597M 11 HCT CD54HC4040F 12
HCT CD74HCT597M96 11 HCT CD54HC4040W 12
HCT CD74HCT688E 11 HCT CD54HC4046AW 12
HCT CD74HCT688M 11 HCT CD54HC4049W 12
HCT CD74HCT688M96 11 HCT CD54HC4050W 12
HCT CD74HCT74E 11 HCT CD54HC4051W 12
HCT CD74HCT74M 11 HCT CD54HC4052W 12
HCT CD74HCT74M96 11 HCT CD54HC4053H 12
HCT CD74HCT86E 11 HCT CD54HC4053W 12
HCT CD74HCT86M 11 HCT CD54HC4059W 12
HCT CD74HCT86M96 11 HCT CD54HC4060W 12
HCT CD74HCU04E 11 HCT CD54HC4066W 12
HCT CD74HCU04M 11 HCT CD54HC4520W 12
HCT CD74HCU04M96 11 HCT CD54HC4538F 12
HCT 100934 12 HCT CD54HC4538W 12
HCT 100935 12 HCT CD54HC540W 12
HCT 100946 12 HCT CD54HC541W 12
HCT 135991 12 HCT CD54HC573F 12
HCT CD3306DS2281 12 HCT CD54HC574W 12
HCT CD54HC00F 12 HCT CD54HC74F 12
HCT CD54HC00W 12 HCT CD54HC74W 12
HCT CD54HC04F 12 HCT CD54HC86H 12
HCT CD54HC04W 12 HCT CD54HC86W 12
HCT CD54HC08F 12 HCT CD54HCT00F 12
HCT CD54HC08W 12 HCT CD54HCT00W 12
HCT CD54HC109W 12 HCT CD54HCT04F 12
HCT CD54HC123W 12 HCT CD54HCT04H 12
HCT CD54HC125W 12 HCT CD54HCT04W 12
HCT CD54HC132W 12 HCT CD54HCT08F 12
16
<PAGE>
SCHEDULE 6.9(a)[C]
PR0DUCT LISTING BY PART NUMBER BY PRODUCT FAMILY [C0MMERCIAL]
<CAPTION>
FAMILY DEVICE STATUS FAMILY DEVICE STATUS
- - ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
HCT CD54HC139W 12 HCT CD54HCT08W 12
HCT CD54HC14W 12 HCT CD54HCT112W 12
HCT CD54HC154W 12 HCT CD54HCT11H 12
HCT CD54HC157W 12 HCT CD54HCT123W 12
HCT CD54HC161W 12 HCT CD54HCT125W 12
HCT CD54HC164W 12 HCT CD54HCT132W 12
HCT CD54HC193W 12 HCT CD54HCT138H 12
HCT CD54HC20W 12 HCT CD54HCT138W 12
HCT CD54HC221W 12 HCT CD54HCT14F 12
HCT CD54HC244F 12 HCT CD54HCT14H 12
HCT CD54HC244W 12 HCT CD54HCT163W 12
HCT CD54HC245F 12 HCT CD54HCT164H 12
HCT CD54HCT174W 12 HCT CD74HC137E 12
HCT CD54HCT175W 12 HCT CD74HC138SM 12
HCT CD54HCT240W 12 HCT CD74HC139M96S2497 12
HCT CD54HCT244F 12 HCT CD74HC147E 12
HCT CD54HCT245F 12 HCT CD74HC147M 12
HCT CD54HCT245W 12 HCT CD74HC14E22 12
HCT CD54HCT273F 12 HCT CD74HC14M96S2075 12
HCT CD54HCT273W 12 HCT CD74HC14M96S2404 12
HCT CD54HCT30H 12 HCT CD74HC14M96S2497 12
HCT CD54HCT32F 12 HCT CD74HC14MR1897 12
HCT CD54HCT367H 12 HCT CD74HC151M96S2537 12
HCT CD54HCT373F 12 HCT CD74HC153E 12
HCT CD54HCT373W 12 HCT CD74HC153M 12
HCT CD54HCT393F 12 HCT CD74HC153M96 12
HCT CD54HCT4053W 12 HCT CD74HC154E 12
HCT CD54HCT4514W 12 HCT CD74HC154EN 12
HCT CD54HCT540W 12 HCT CD74HC154M 12
HCT CD54HCT74F 12 HCT CD74HC154M96 12
HCT CD54HCT74W 12 HCT CD74HC154MS2534 12
HCT CD54HCT86W 12 HCT CD74HC154MS2535 12
HCT CD54HCU04W 12 HCT CD74HC157M96S2497 12
HCT CD74AC244M96S5001 12 HCT CD74HC157SM 12
HCT CD74HC00ES2403 12 HCT CD74HC158E 12
HCT CD74HC00ES2463 12 HCT CD74HC158ES2534 12
HCT CD74HC00MS2074 12 HCT CD74HC158M 12
HCT CD74HC02M96S5001 12 HCT CD74HC161E 12
HCT CD74HC02MR1901 12 HCT CD74HC161M 12
HCT CD74HC03E 12 HCT CD74HC161M96 12
HCT CD74HC03M 12 HCT CD74HC164MS2074 12
HCT CD74HC03M96 12 HCT CD74HC165ES2065 12
HCT CD74HC04M96S2404 12 HCT CD74HC173E 12
HCT CD74HC04M96S2497 12 HCT CD74HC173M 12
HCT CD74HC08M96S2497 12 HCT CD74HC174M96 12
HCT CD74HC08M96S5001 12 HCT CD74HC174M96S2497 12
HCT CD74HC08MS2075 12 HCT CD74HC174MS2534 12
HCT CD74HC107ES2534 12 HCT CD74HC175E 12
HCT CD74HC107MS2536 12 HCT CD74HC175ES2535 12
17
<PAGE>
SCHEDULE 6.9(a)[C]
PR0DUCT LISTING BY PART NUMBER BY PRODUCT FAMILY [C0MMERCIAL]
<CAPTION>
FAMILY DEVICE STATUS FAMILY DEVICE STATUS
- - ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
HCT CD74HC109E 12 HCT CD74HC175M 12
HCT CD74HC109M 12 HCT CD74HC175M96 12
HCT CD74HC109M96 12 HCT CD74HC175M96S2404 12
HCT CD74HC112E 12 HCT CD74HC190E 12
HCT CD74HC112ES2497 12 HCT CD74HC191ES2534 12
HCT CD74HC112M96 12 HCT CD74HC191EX 12
HCT CD74HC11E 12 HCT CD74HC192E 12
HCT CD74HC11M 12 HCT CD74HC193E 12
HCT CD74HC11M96 12 HCT CD74HC193M 12
HCT CD74HC11M96S2497 12 HCT CD74HC193M96 12
HCT CD74HC123ES2534 12 HCT CD74HC194E 12
HCT CD74HC132M96S2300 12 HCT CD74HC194M 12
HCT CD74HC132M96S2497 12 HCT CD74HC194M96 12
HCT CD74HC132M96S5001 12 HCT CD74HC195E 12
HCT CD74HC195ES2463 12 HCT CD74HC299ES2532 12
HCT CD74HC195M 12 HCT CD74HC299M 12
HCT CD74HC20E 12 HCT CD74HC299M96 12
HCT CD74HC20M 12 HCT CD74HC299M96S2093 12
HCT CD74HC20M96 12 HCT CD74HC30E 12
HCT CD74HC20MS2074 12 HCT CD74HC30M 12
HCT CD74HC21E 12 HCT CD74HC30M96 12
HCT CD74HC21M 12 HCT CD74HC30M96S2074 12
HCT CD74HC21M96 12 HCT CD74HC30M96S2497 12
HCT CD74HC21M96S2404 12 HCT CD74HC32M96S2378 12
HCT CD74HC221E 12 HCT CD74HC32M96S2404 12
HCT CD74HC221M 12 HCT CD74HC354E 12
HCT CD74HC221M96 12 HCT CD74HC365E 12
HCT CD74HC221M96S5001 12 HCT CD74HC365M 12
HCT CD74HC237E 12 HCT CD74HC365M96 12
HCT CD74HC237ES2535 12 HCT CD74HC366E 12
HCT CD74HC237M 12 HCT CD74HC367E 12
HCT CD74HC237M96 12 HCT CD74HC367M 12
HCT CD74HC238M96S2497 12 HCT CD74HC367M96 12
HCT CD74HC238MS2535 12 HCT CD74HC367MS2075 12
HCT CD74HC240MR3170 12 HCT CD74HC368E 12
HCT CD74HC241E 12 HCT CD74HC368M 12
HCT CD74HC241M 12 HCT CD74HC368M96 12
HCT CD74HC241M96 12 HCT CD74HC373ES2497 12
HCT CD74HC243E 12 HCT CD74HC373M962093 12
HCT CD74HC243M 12 HCT CD74HC373MS2535 12
HCT CD74HC243M96 12 HCT CD74HC3990E 12
HCT CD74HC244M96S2463 12 HCT CD74HC390M 12
HCT CD74HC244M96S2497 12 HCT CD74HC390M96 12
HCT 0074HC245ES2533 12 HCT CD74HC393ES2065 12
HCT CD74HC253E 12 HCT CD74HC4002E 12
HCT CD74HC253M 12 HCT CD74HC4002M 12
HCT CD74HC253MS2533 12 HCT CD74HC4002M96 12
HCT CD74HC257ES2534 12 HCT CD74HC40103MS2534 12
HCT CD74HC257M96S2463 12 HCT CD74HC40105ES2534 12
18
<PAGE>
SCHEDULE 6.9(a)[C]
PR0DUCT LISTING BY PART NUMBER BY PRODUCT FAMILY [C0MMERCIAL]
<CAPTION>
FAMILY DEVICE STATUS FAMILY DEVICE STATUS
- - ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
HCT CD74HC273M96S2533 12 HCT CD74HC4015E 12
HCT CD74HC273M96S5001 12 HCT CD74HC4016E 12
HCT CD74HC273MS2087 12 HCT CD74HC4016M96 12
HCT CD74HC27E 12 HCT CD74HC4017E 12
HCT CD74HC27M 12 HCT CD74HC4017M96 12
HCT CD74HC27M96 12 HCT CD74HC4020ES2463 12
HCT CD74HC280E 12 HCT CD74HC4024E 12
HCT CD74HC280ES2065 12 HCT CD74HC4024M 12
HCT CD74HC280ES2534 12 HCT CD74HC4024M96 12
HCT CD74HC280M96 12 HCT CD74HC4024M96S2497 12
HCT CD74HC280MS2074 12 HCT CD74HC4040ES2065 12
HCT CD74HC283E 12 HCT CD74HC4040M96S2357 12
HCT CD74HC283M 12 HCT CD74HC4040M96S2469 12
HCT CD74HC283M96 12 HCT CD74HC4040M96S2497 12
HCT CD74HC297E 12 HCT CD74HC4040M2074 12
HCT CD74HC299E 12 HCT CD74HC4046AM96S2326 12
HCT CD74HC4046AM96S2463 12 HCT CD74HC543E 12
HCT CD74HC4046AM96S2497 12 HCT CD74HC541ES2535 12
HCT CD74HC4046AMR2854 12 HCT CD74HC541SM 12
HCT CD74HC4046AMR3413 12 HCT CD74HC563E 12
HCT CD74HC4049E 12 HCT CD74HC564E 12
HCT CD74HC4049ER3170 12 HCT CD74HC564M 12
HCT CD74HC4049M 12 HCT CD74HC573ES2463 12
HCT CD74HC4049M96 12 HCT CD74HC573M96S2093 12
HCT CD74HC4051ES2091 12 HCT CD74HC573M962357 12
HCT CD74HC4051M96S2075 12 HCT CD74HC573M96S2515 12
HCT CD74HC4051M96S2093 12 HCT CD74HC574M96S2537 12
HCT CD74HC4051M96S2497 12 HCT CD74HC574MR2499 12
HCT CD74HC4052ES2091 12 HCT CD74HC640E 12
HCT CD74HC4052M96S2093 12 HCT CD74HC646M96 12
HCT CD74HC4052SM 12 HCT CD74HC652EN 12
HCT CD74HC4053ES2091 12 HCT CD74HC670E 12
HCT CD74HC4053M96S2093 12 HCT CD74HC670M96 12
HCT CD74HC4053M96S2497 12 HCT CD74HC688ES2536 12
HCT CD74HC4053M96S5001 12 HCT CD74HC688M96S2536 12
HCT CD74HC4059E 12 HCT CD74HC7266E 12
HCT CD74HC4059M96 12 HCT CD74HC7266M 12
HCT CD74HC4066ES2064 12 HCT CD74HC266M96 12
HCT CD74HC4066M96S5001 12 HCT CD74HC7266MR4658 12
HCT CD74HC4066MR1896 12 HCT CD74HC73E 12
HCT CD74HC4067E 12 HCT CD74HC73M 12
HCT CD74HC4067M 12 HCT CD74HC73M96S2404 12
HCT CD74HC4067M96 12 HCT CD74HC74M96S2093 12
HCT CD74HC4067M96S2497 12 HCT CD74HC75E 12
HCT 0074HC4075E 12 HCT CD74HC75M 12
HCT CD74HC4075M 12 HCT CD74HC75M96 12
HCT CD74HC4075M96 12 HCT CD74HC85E 12
HCT CD74HC4094M96S2093 12 HCT CD74HC85ES2535 12
HCT CD74HC4094M96S2515 12 HCT CD74HC85M 12
19
<PAGE>
SCHEDULE 6.9(a)[C]
PR0DUCT LISTING BY PART NUMBER BY PRODUCT FAMILY [C0MMERCIAL]
<CAPTION>
FAMILY DEVICE STATUS FAMILY DEVICE STATUS
- - ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
HCT CD74HC423E 12 HCT CD74HC85M96 12
HCT 0074HC423M 12 HCT CD74HC85M96S2497 12
HCT CD74HC42E 12 HCT CD74HC85M96S2534 12
HCT CD74HC42M 12 HCT CD74HC85M96S2536 12
HCT CD74HC4316M96S2093 12 HCT CD74HC86M96S2378 12
HCT CD74HC4316MS2534 12 HCT CD74HC93E 12
HCT CD74HC4351E 12 HCT CD74HC93M 12
HCT CD74HC4351M 12 HCT CD74HC93M96 12
HCT CD74HC4352E 12 HCT CD74HC93M96S2300 12
HCT CD74HC4511E 12 HCT CD74HCT00E2065 12
HCT CD74HC4511M 12 HCT CD74HCT00M96S2541 12
HCT 0074HC4515EN 12 HCT CD74HCT00M96S5001 12
HCT CD74HC4515M 12 HCT CD74HCT00MS2074 12
HCT CD74HC4518E 12 HCT CD74HCT02ES2064 12
HCT CD74HC4520ES2534 12 HCT CD74HCT02EX 12
HCT CD74HC4520MS2534 12 HCT CD74HCT02MR3170 12
HCT CD74HC4538M96S2463 12 HCT CD74HCT03E 12
HCT CD74HC533E 12 HCT CD74HCT03M 12
HCT CD74HCT03M96 12 HCT CD74HCT173M 12
HCT CD74HCT03M96S2497 12 HCT CD74HCT173M96 12
HCT CD74HCT04ES2065 12 HCT CD74HCT173M96S2532 12
HCT CD74HCT04ES2379 12 HCT CD74HCT174MS2379 12
HCT CD74HCT04ES2536 12 HCT CD74HCT175ES2065 12
HCT CD74HCT04EX 12 HCT CD74HCT175ES2497 12
HCT CD74HCT04M96S2075 12 HCT CD74HCT175M96S2497 12
HCT CD74HCT04M96S2497 12 HCT CD74HCT191E 12
HCT CD74HCT04M96S5001 12 HCT CD74HCT191M 12
HCT CD74HCT04MS2075 12 HCT CD74HCT193E 12
HCT CD74HCT08EX 12 HCT CD74HCT20E 12
HCT CD74HCT08MR2499 12 HCT CD74HCT20ER2489 12
HCT CD74HCT107E 12 HCT CD74HCT21E 12
HCT CD74HCT112E 12 HCT CD74HCT21M 12
HCT CD74HCT11M96S2497 12 HCT CD74HCT21M96 12
HCT CD74HCT125ES2064 12 HCT CD74HCT221E 12
HCT CD74HCT125ES2379 12 HCT CD74HCT221M 12
HCT CD74H0T125M96S2497 12 HCT CD74HCT221M96 12
HCT CD74HCT125M96S5001 12 HCT CD74HCT237E 12
HCT CD74HCT125MS2075 12 HCT CD74HCT238E 12
HCT CD74HCT126M96S2497 12 HCT CD74HCT238M 12
HCT CD74HCT132M96S2497 12 HCT CD74HCT241E 12
HCT CD74HCT132M96S5001 12 HCT CD74HCT241M96 12
HCT CD74HCT132MR3170 12 HCT CD74HCT243M 12
HCT CD74HCT137E 12 HCT CD74HCT244ES2379 12
HCT CD74HCT137M96 12 HCT CD74HCT244ES2497 12
HCT CD74HCT138ES2379 12 HCT CD74HCT245M9S5001 12
HCT CD74HCT138M96S2497 12 HCT CD74HCT251ES2379 12
HCT 0074HCT139M96S2497 12 HCT CD74HCT251MS2075 12
HCT CD74HCT147E 12 HCT CD74HCT257ES2064 12
HCT CD74HCT14E06 12 HCT CD74HCT257ES2497 12
20
<PAGE>
SCHEDULE 6.9(a)[C]
PR0DUCT LISTING BY PART NUMBER BY PRODUCT FAMILY [C0MMERCIAL]
<CAPTION>
FAMILY DEVICE STATUS FAMILY DEVICE STATUS
- - ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
HCT CD74HCT14M96S2497 12 HCT CD74HCT258E 12
HCT CD74HCT151E 12 HCT CD74HCT259M96S2497 12
HCT CD74HCT151M 12 HCT CD74HCT259M96S5001 12
HCT CD74HCT151M96 12 HCT CD74HCT273ES2065 12
HCT CD74HCT151M96S5001 12 HCT CD74HCT273M96S2497 12
HCT 0D74HCT153M96S2497 12 HCT CD74HCT27M96S2497 12
HCT CD74HCT153M96S2515 12 HCT CD74HCT280E 12
HCT CD74HCT153M96S5001 12 HCT CD74HCT283E 12
HCT CD74HCT154E 12 HCT CD74HCT283M 12
HCT CD74HCT154EN 12 HCT CD74HCT283M96 12
HCT CD74HCT154M 12 HCT CD74HCT297E 12
HCT CD74HCT157M96S2497 12 HCT CD74HCT299E 12
HCT CD74HCT158E 12 HCT CD74HCT299M 12
HCT CD74HCT163M96S2497 12 HCT CD74HCT30M96S2497 12
HCT CD74HCT164ES2379 12 HCT CD74HCT32ES2064 12
HCT CD74HCT164ES2497 12 HCT CD74HCT32EX 12
HCT CD74HCT164MS2379 12 HCT CD74HCT32M96S2497 12
HCT CD74HCT165ER2489 12 HCT CD74HCT32MR2499 12
HCT CD74HCT165M96S2074 12 HCT CD74HCT354E 12
HCT CD74HCT173E 12 HCT CD74HCT365E 12
HCT CD74HCT365M 12 HCT CD74HCT541M96S5001 12
HCT CD74HCT365M96 12 HCT CD74HCT563E 12
HCT CD74HCT368M 12 HCT CD74HCT563M 12
HCT CD74HCT368M96 12 HCT CD74HCT564E 12
HCT CD74HCT373ES2463 12 HCT CD74HCT564M 12
HCT CD74HCT373M96S2463 12 HCT CD74HCT574ES2064 12
HCT CD74HCT373M96S2497 12 HCT CD74HCT575M96S2540 12
HCT CD74HCT373MS2536 12 HCT CD74HCT574M96S5001 12
HCT CD74HCT374M96S2497 12 HCT CD74HCT640E 12
HCT CD74HCT374MS2075 12 HCT CD74HCT640M 12
HCT CD74HCT377E 12 HCT CD74HCT646M96 12
HCT CD74HCT377M 12 HCT CD74HCT652M 12
HCT CD74HCT377M96 12 HCT CD74HCT652M96S2497 12
HCT CD74HCT390E 12 HCT CD74HCT688M96S2497 12
HCT CD74HCT390M 12 HCT CD74HCT7046AE 12
HCT CD74HCT390M96 12 HCT CD74HCT7046AM 12
HCT CD74HCT393ES2064 12 HCT CD74HCT7046AM96 12
HCT CD74HCT393ES2497 12 HCT CD74HCT73E 12
HCT CD74HCT393M96S2497 12 HCT CD74HCT74ES2065 12
HCT CD74HCT393MS2075 12 HCT CD74HCT74ES2497 12
HCT CD74HCT40103E 12 HCT CD74HCT74EX 12
HCT CD74HCT40103M 12 HCT CD74HCT74MR2499 12
HCT CD74HCT40103M96 12 HCT CD74HCT75E 12
HCT CD74HCT40105ES2064 12 HCT CD74HCT85E 12
HCT CD74HCT4020E 12 HCT CD74HCT85ES2379 12
HCT 0074HCT4020ER2489 12 HCT CD74HCT85M 12
HCT CD74HCT4020M 12 HCT CD74HCT86MS2074 12
HCT CD74HCT4020M96 12 HCT CD74HCT93E 12
HCT CD74HCT4024M 12 HCT 18731 13
21
<PAGE>
SCHEDULE 6.9(a)[C]
PR0DUCT LISTING BY PART NUMBER BY PRODUCT FAMILY [C0MMERCIAL]
<CAPTION>
FAMILY DEVICE STATUS FAMILY DEVICE STATUS
- - ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
HCT CD74HCT4040ES2497 12 HCT 19009 13
HCT CD74HCT4053M96135 12 HCT 19026 13
HCT CD74HCT4053M96S2378 12 HCT 135452-96 13
HCT CD74HCT4060E 12 HCT CD54HC00H 13
HCT CD74HCT4060ER2489 12 HCT CD54HC04H 13
HCT CD74HCT4060ES2497 12 HCT CD54HC126H 13
HCT CD74HCT4060M 12 HCT CD54HC4020H 13
HCT CD74HCT4060M96 12 HCT CD54HC4046AH 13
HCT CD74HCT4066ER3170 12 HCT CD54HC4520H 13
HCT CD74HCT4066M96S2300 12 HCT CD54HCT02H 13
HCT CD74HCT4066M96S2378 12 HCT CD54HCT08H 13
HCT CD74HCT4066MR3170 12 HCT CD54HCT257H 13
HCT CD74HCT4075E 12 HCT CD54HCT32H 13
HCT CD74HCT423E 12 HCT CD54HCT32HS2293 13
HCT CD74HCT423M96 12 HCT CD54HCT373H 13
HCT CD74HCT42E 12 HCT CD54HCT390FR3332 13
HCT CD74HCT4351E 12 HCT CD54HCT74H 13
HCT CD74HCT4520E 12 HCT CD54HCU04H 13
HCT CD74HCT4520M 12 HCT CD74HC04MS2074 13
HCT CD74HCT4520M96 12 HCT CD74HC147M96 13
HCT CD74HCT533E 12 HCT CD74HC173M96 13
HCT CD74HCT534E 12 HCT CD74HC258M 13
HCT CD74HC273SM 13
HCT CD74HC299MS2075 13
HCT CD74HC366M 13
HCT CD74HC373MR2499 13
HCT CD74HC4015M 13
HCT CD74HC4017M 13
HCT CD74HC4515E 13
HCT CD74HC4515M96 13
HCT CD74HC541MS2075 13
HCT CD74HC563M 13
HCT CD74HC640M 13
HCT CD74HC646EN 13
HCT CD74HC646M 13
HCT CD74HC670M 13
HCT CD74HCT02ER2489 13
HCT CD74HCT04MS2074 13
HCT CD74HCT125ER2489 13
HCT CD74HCT139MS2075 13
HCT CD74HCT161ER2489 13
HCT CD74HCT161ES2065 13
HCT CD74HCT166ES2065 13
HCT CD74HCT194E 13
HCT CD74HCT20M 13
HCT CD74HCT20M96 13
HCT CD74HCT243E 13
HCT CD74HCT251ES2064 13
HCT CD74HCT253ER2489 13
</TABLE>
22
<PAGE>
SCHEDULE 6.9(a)[C]
PR0DUCT LISTING BY PART NUMBER BY PRODUCT FAMILY [C0MMERCIAL]
<TABLE>
<CAPTION>
FAMILY DEVICE STATUS FAMILY DEVICE STATUS
- - ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
HCT CD74HCT257MS2074 13
HCT CD74HCT32MS2074 13
HCT CD74HCT356E 13
HCT CD74HCT356M96 13
HCT CD74HCT368E 13
HCT CD74HCT40103ES2064 13
HCT CD74HCT4040ER2489 13
HCT CD74HCT4067M 13
HCT CD74HCT4511E 13
HCT CD74HCT4514E 13
HCT CD74HCT540M96 13
HCT CD74HCT652M96 13
HCT CD74HCT670E 13
HCT CD74HCT670M 13
HCT CD74HCT670M96 13
HCT CD74HCT688ER2489 13
HCT CD74HCT73M 13
HCT CD74HCT75M 13
</TABLE>
23
<PAGE>
SCHEDULE 6.9(C)
TERMS AND CONDITIONS OF SALE
Effective 7/1/93 (Form TC- 1)
HARRIS CORPORATION
SEMICONDUCTOR SECTOR
ARTICLE 1. GENERAL
Harris Corporation, Semiconductor Sector ("Seller"), In the interest of
processing orders in a prompt, and efficient manner has established this set of
Terms and Conditions of Sale to conform to current business and legal
requirements. These Terms and Conditions of Sale shall apply to all quotations
for Products (as defined in Section 3 below).
ARTICLE 2. SCOPE
Seller's offer to sell as stated herein whether or not in response to Buyer's
order is expressly conditioned upon Buyer's acceptance of Seller's Terms and
Conditions of Sale. Buyer's taking delivery of all or any part of product is
evidence of such assent. Any of Buyer's terms and conditions which are different
from or in addition to those contained herein are hereby objected to and of no
effect.
ARTICLE 3. DEFINITIONS
The following terms as used herein are defined as follows: Article 5. Minimum
Order Release.
(A) Products include integrated circuits, discrete devices, solid state chips,
hybrid circuits, electronic modules containing semiconductors, microprocessors,
memory circuits, varistors and optoelectronic devices.
(B) Standard Products are those Products which are manufactured to Seller's
specifications for sale to all customers.
(C) Custom or Semicustom Products are those Products manufactured in whole or in
part to a specific customer's specifications and identified by a distinctive
custom type number.
(D) Developmental Products are those products which have not been manufactured
in production quantities or commercially introduced and do not bear a
distinctive type number.
ARTICLE 4. PRICES
(A) Purchase Order - Buyer is required to provide a written Purchase Order to
include as a minimum, product, quantity, price and delivery date. An EDI
equivalent is acceptable. The Seller's order acknowledgement completes the
written agreement between the parties.
<PAGE>
(B) Billing-Subject to the provisions of sub-paragraph C below:
1. All billings for Standard Products will be at Seller's established prices for
the quantities ordered which are in effect on the order receipt date.
2. All billings for Custom or Semicustom Products will be at prices set by
competitive award or negotiated with the Buyer.
3. Transportation shall be at Buyer's expense.
(C) Order Scheduling - Orders may be placed for shipment over a period of up to
12 months from the date of order receipt Seller reserves the right to cancel any
order for which no release has issued three (3) months from the order receipt
date. Seller reserves the right to reject any revision to an existing open
purchase order when, in its opinion, any such revision substantially alters the
scope of the original order
(D) Price Adjustment - Seller reserves the right to change or withdraw prices at
any time for its Products without notice. If Seller's established price for any
Standard Product is i) increased, the price in effect prior to the increase will
apply to all shipments against orders received prior to the effective date of
the increase for a period of 30 days after the effective date of the increase;
or ii) decreased, Buyer will be billed at the lower price for all shipments made
on or after the effective date of the decrease.
If Buyer fails within 12 months of the order receipt date to release and accept
delivery of the quantity of Product upon which the billing price was based, the
purchase price will be determined by the quantity actually released and shipped
and the Buyer will be billed for any price difference.
(E) Taxes - Unless otherwise specified or required by law, all prices will be
quoted and billed exclusive of federal, state and local excise, sales and
similar taxes. Such taxes, when applicable, will be billed as separate,
additional items on Sellers invoices, unless the Buyer provides Seller with a
properly executed tax exemption certificate.
ARTICLE 5. MINIMUM ORDER RELEASE
Minimum order and shipping release quantities are defined by product specific
minimum line quantities (MLQ's) as listed in the current Harris Cost and Resale
or OEM Price List. The MLQ's are multiples of the standard pack. Exceptions to
the MLQ requirement must be specifically negotiated between Buyer and Seller.
Orders for less than MLQ will be automatically Increased to meet minimum
requirements. If not in standard pack increment, orders will be changed to
standard pack quantities in accordance with previous Seller/Buyer agreements.
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<PAGE>
ARTICLE 6. DELIVERY, TITLE AND RISKS
(A) All sales are F.O.B., freight collect Seller's named shipping point.
(B) Seller reserves the right to make deliveries in installments. Partial
shipments will be billed as made and payments therefor are subject to the terms
of payment noted below. All delivery Indications are estimated and are dependent
in part upon prompt receipt of all necessary information to service an order.
Seller reserves the right to allocate inventories and production when such
allocation becomes necessary. IN NO EVENT WILL SELLER BE LIABLE FOR ANY PREMIUM
TRANSPORTATION, REPROCUREMENT, OR OTHER COSTS OR LOSSES INCURRED BY BUYER AS A
RESULT OF SELLER'S FAILURE TO DELIVER PRODUCT IN ACCORDANCE WITH INDICATED
DELIVERY SCHEDULES.
(C) Seller will endeavor to meet scheduled delivery dates but shall be excused
from performance and not be liable for delay in delivery or non-delivery
attributable in whole or in part to (i) any cause beyond Seller's reasonable
control including but not limited to, act of government, whether in sovereign or
contractual capacity, judicial action, war, civil disturbances, insurrection,
sabotage, act of a public enemy, labor difficulties or disputes, failure of or
delay in delivery by Seller's suppliers or carriers, commercial impracticability
(irrespective of conjectural foreseeability at time of contracting), shortages
of energy, raw materials, labor, or equipment, inadequate yield of product
despite Seller's reasonable efforts, accident, fire, flood, storm or other act
of God, or (ii) Buyer's fault or negligence,
(D) Seller may overship or undership quantities by up to three percent (3 %)
(five percent (5%) in the case of Custom Semicustom or Developmental Products),
which shall constitute compliance with Buyer's order, but Buyer shall pay for
only the quantity actually delivered, at the applicable extended unit price.
(E) Title and risk of loss or damage to the Products shall pass to Buyer at the
time Seller delivers possession thereof to the carrier. Any Products (whether
finished or partially completed) held by Seller at Buyer's request beyond
scheduled delivery date shall be at Buyer's risk.
(F) Notwithstanding passage of title, Seller reserves and Buyer grants a
security interest in and right of repossession of Products until fully paid by
Buyer.
ARTICLE 7. MODIFICATION AND SUBSTITUTION OF GOODS
Seller may modify the specifications of Products of its own design at any time
without notice and may substitute delivery of such Products provided such
modification does not in Seller's sole judgment materially affect form, fit or
function.
ARTICLE 8. PAYMENT
(A) Subject to prior approval and extension of credit by Seller, Buyer shall pay
the net invoiced amount in United States currency within thirty (30) days from
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<PAGE>
date of Seller's invoice. Seller reserves the right at any time to withdraw
previously approved credit and in such event Buyer shall comply with the new
payment terms as a condition for delivery.
(B) Buyer shall make payment without regard to prior inspection of the Products,
but Buyer's right of inspection pursuant to this contract shall not be impaired
thereby.
ARTICLE 9. WARRANTIES
(A) Seller warrants that its Products at the time of shipment by Seller are free
from defects in material and workmanship and possess the electrical
characteristics as set forth in, and will perform in accordance with the
applicable data sheet or agreed upon written specifications when operated within
the temperature and all other operating condition limitations set forth therein.
(B) The foregoing shall apply only to failures to meet said warranties which
appear and are reported to Seller within one (1) year from the date of shipment,
or with respect to unassembled Product in wafer or die form thirty (30) days
from the date of shipment.
(C) Seller's warranty does not apply if; and Seller shall have no liability for
Products returned by Buyer as to which Seller's examination discovers that: i)
the Product has been exposed to unusual or excessive environmental, mechanical,
electrical or thermal stress during the course of installation or use; or ii)
the absolute maximum ratings are exceeded for any reason including, but not
limited to, equipment variations, environment variations, the effects of changes
in operating conditions due to variations in device characteristics, improper
equipment design, improper device installation or application; or iii) Product
malfunction is the result of misuse, abuse, improper Installation or
application, alteration, accident, or negligence in use, storage, transportation
or handling or if the original identification markings on the Product have been
removed, defaced or altered; or iv) Product is "burned in" and/or tested for
Buyer by anyone other than Seller unless such procedures have Seller's prior
written approval; or v) the Product is classified as other than a commercial
production unit, e.g. a design verification unit, sample, preproduction unit,
developmental unit, prototype unit, Incomplete (with notice) or "fallout" (i.e.
out of specification with notice) unit. All warranty claims are subject to
verification by Seller.
(D) The liability of Seller hereunder is solely and exclusively limited to
replacement, repair or credit at the purchase price at Seller's option for any
Product which is returned by Buyer during the applicable warranty period and
which is found by Seller to be subject to adjustment under this warranty.
(E) The foregoing warranties extend to Buyer only, and not to Buyer's customers
or to users of Buyer's products. These warranties are the only warranties made
by Seller and shall not be enlarged by representations, descriptions, course of
dealing, trade usage, rendering of technical advice, service, samples, models,
or otherwise.
(F) EXCEPT FOR THE WARRANTY OF TITLE, SELLER MAKES NO OTHER WARRANTIES EXPRESS,
IMPLIED, OR STATUTORY, INCLUDING BUT NOT LIMITED TO ANY IMPLIED WARRANTY OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
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<PAGE>
ARTICLE 10. RETURNS AND OTHER DISPOSITION
(A) In order to avoid administrative difficulties that result from unauthorized
returns, Buyer shall request a formal Manufacturer's Return Authorization (MRA)
from Seller through Seller's Sales Representative office or Customer Return
Services before returning Product for any reason. Seller shall not be
responsible for packing, inspection or labor costs in connection with the return
of Products. Nor shall Seller be responsible for return of any Product without
authorization.
(B) Buyer may return the affected Products F.O.B. Seller's plant upon receipt of
the MRA from Seller. Buyer must return product with original paperwork. The MRA
numbers must be prominently displayed on the outside packing. Returned items
should be packaged to prevent damage in transit in original containers, if
possible. Buyer shall give Seller a detailed statement of alleged deficiencies
and shall otherwise comply with Seller's Instructions contained In the MRA.
(C) Seller shall have no liability for Products returned or otherwise disposed
of by Buyer, where Seller is unable to verify the alleged deficiency as provided
in Article 9. Such returned Product will be returned to Buyer at Buyer's
expense.
ARTICLE 11. PATENT INDEMNITY
(A) Subject to the following provisions Seller shall defend any suit or
proceeding brought against Buyer insofar as such suit or proceeding is based on
a claim that Products manufactured and supplied by Seller to Buyer constitutes
direct infringement of any duly issued United States patent and Seller shall pay
all damages and costs finally awarded therein against Buyer, provided that
Seller (1) is promptly informed and furnished a copy of each communication or
notice in connection with such suit or proceeding and the alleged infringement,
and (2) is given authority, information and assistance (at Seller's expense)
necessary to defend or settle such suit or proceeding. Seller shall not be
obligated to defend or be liable for costs and damages for any infringement
arising out of i) compliance with Buyer's specifications; ii) any additions to
or modifications of the Products by the Buyers; (iii) use of the Products in
combination with other goods or with each other after delivery by Seller; or
(iv) use of the Products in a patented process. Seller shall not be obligated to
defend or be liable for costs and damages for any suit claiming that the
Products infringe a patent in which the Buyer, or any subsidiary or affiliate
thereof, has a direct or indirect ownership Interest in such patent.
(B) If any Products manufactured and supplied by Seller to Buyer are held to
infringe a United States patent and Buyer is enjoined from using such Products,
Seller at its option and expense will either (i) procure for Buyer the fight to
continue using such Products free of any liability for patent infringement, or
replace such Products with non-infringing but otherwise conforming products, or
(iii) refund the purchase price for any such Products returned by Buyer to
Seller.
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<PAGE>
(C) If a claim of alleged infringement is made prior to completion of delivery
by Seller under this contract, Seller may decline to make further shipments
without being in breach of this contract, and provided Seller has not been
enjoined from selling such Products to Buyer, Seller agrees to supply same to
Buyer at Buyer's option whereupon Buyer shall defend and indemnify Seller (on
the same basis as would otherwise have been required of Seller to Buyer
hereunder) for any continuing infringement arising therefrom subsequent to
Buyer's exercise of such option.
(D) If any suit or proceeding is brought against Seller based on a claim that
Products manufactured and/or supplied hereunder by Seller constitute direct
infringement of any duly Issued United States patent, and such claim arises from
any of the reasons in Paragraph A(i) through A(iv) above then Buyer shall defend
and indemnify Seller on the same basis as would otherwise have been required of
Seller to Buyer hereunder.
(E) THE FOREGOING INDEMNITY EXTENDS TO BUYER ONLY AND STATES THE SOLE AND
EXCLUSIVE LIABILITY AND REMEDY OF THE PARTIES HERETO FOR PATENT INFRINGEMENT,
AND IS IN LIEU OF ALL WARRANTIES, EXPRESS, IMPLIED. OR STATUTORY, IN REGARD
THERETO.
ARTICLE 12. TERMINATION AND CANCELLATION
DAMAGES INCLUDING BUT NOT LIMITED TO, LOSS OF PROFITS OR REVENUE, LOSS OF USE OF
THE PRODUCT, DAMAGE TO ASSOCIATED EQUIPMENT, DOWNTIME OF PLANT OR EQUIPMENT,
COST OF SUBSTITUTE EQUIPMENT OR PRODUCTS OR CLAIMS OF BUYER'S CUSTOMERS FOR SUCH
DAMAGES.
(A) Buyer shall not terminate, suspend performance under, or issue a `hold'
order on this contract in whole or in part without Seller's written consent
thereto. Buyer's liability for termination, suspension. or `hold' shall include
Seller's charges therefor beyond the price of finished goods delivered and/or
held for Buyer's disposition, such charges including but not limited to costs
for work in process and other adjustment of the billing price to Seller's
established price applicable to the quantity actually delivered plus an amount
equal to twenty percent (20%) of the purchase price for the undelivered product.
(B) Buyer may reschedule its order upon written notice to Seller at least 90
days prior to scheduled delivery for Semicustom and Custom Products or 30 days
prior to scheduled delivery for Standard Products. Scheduled delivery is defined
as the delivery date specified in the Harris Order Acknowledgement column
heading "Harris Date". Orders rescheduled with less than the above specified
notice may, at Seller's option, be treated as terminated and subject to the
termination charges set forth above. Buyer may reschedule an initial order only
once.
(C) Neither party shall cancel this contract for breach of any of its provisions
by the other party without giving such other party advance written notice
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<PAGE>
thereof and a reasonable time in which to cure the alleged breach, except in the
event of (i) insolvency of such other party, or (ii) failure of Buyer to make
timely payment. Upon cancellation the parties shall be entitled to rights and
remedies available at law or under this contract. except to the extent excluded
or limited by this contract.
(D) Seller, without canceling this contract, may decline to make further
deliveries hereunder in the event of a breach by Buyer, but should Seller elect
to continue delivering despite the breach such action shall not constitute a
waiver of Buyer's breach or in any way affect Seller's remedies therefor.
ARTICLE 13. LIMITATION OF BUYER'S REMEDIES AND DAMAGES
(A) IN NO EVENT SHALL SELLER BE LIABLE TO BUYER OR TO ANY PARTY CLAIMING UNDER
BUYER WHETHER AS A RESULT OF BREACH OF CONTRACT, WARRANTY, TORT (INCLUDING
NEGLIGENCE OR OTHERWISE), FAILURE OF A REMEDY TO ACCOMPLISH ITS PURPOSE OR
OTHERWISE, FOR SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES.
(B) The liability of Seller on any claim of any kind, whether based upon breach
of contract, warranty, tort (including negligence or otherwise), for any loss or
damage arising out of, or resulting from this agreement or from its performance
or breach, or from any product furnished hereunder, shall in no event exceed the
price of the product which gives rise to the claim. Except as to title, all such
liability shall terminate upon the expiration of the applicable warranty period
set forth in Article 9 above.
ARTICLE 14. SOURCE INSPECTION; INDEMNIFICATION; AUTHORIZATION
(A) Source inspection by Buyer or Buyer's customer shall be subject to Seller's
prior authorization and reasonable charges based on Impact thereof on Seller's
resources.
(B) Buyer shall indemnify and hold Seller harmless from any and all suits,
damages, and expenses for the personal injury (including death) or loss or
damage to property of Buyer's employees or agents during or in connection with
any visit to Seller's plant regarding this contract.
ARTICLE 15. U.S. EXPORT LAWS
Seller's obligations are subject to the export administration and control laws
and regulations of the U.S. Government. The Buyer shall comply fully with such
laws and regulations in the export, resale or disposition of products.
ARTICLE 16. LIFE SUPPORT INDEMNITY
EXCEPT UPON THE PRIOR EXPRESS WRITTEN APPROVAL OF SELLER'S VICE PRESIDENT AND
GENERAL MANAGER, SELLER'S PRODUCTS ARE NOT INTENDED OR AUTHORIZED FOR USE AS
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<PAGE>
COMPONENTS IN ANY (i) LIFE SUPPORT DEVICE OR SYSTEM OR (ii) ANY DEVICE INTENDED
FOR SURGICAL IMPLANT INTO THE HUMAN BODY.
Buyer shall indemnify and hold Seller harmless from all liability and costs
(Including court costs and attorney's fees) resulting from claims, demands, or
actions brought against Seller by anyone on account of any injuries (including
death) or property damage caused directly or indirectly from the use of Seller's
Products as components in (i) any life support device or system or (ii) any
device intended for surgical implant into the human body.
ARTICLE 17. MISCELLANEOUS TERMS
(A) Buyer shall not assign this contract or any right or interest therein
without the prior written consent of Seller
(B) This contract supersedes all previous communications, transactions. and
understandings, whether oral, or written, and constitutes the sole and entire
agreement between the parties pertaining to the subject matter hereof. No
modification or deletion of, or addition to these terms shall be binding on
Seller unless made in writing and signed by a duly authorized contracts
representative of Seller at Seller's home office.
(C) This contract shall be in all respects governed by the laws of the State of
Florida.
(D) The invalidity, In whole or in part of any provision shall not affect the
validity or enforceability of any other provision herein.
(E) All orders are subject to acceptance on these Terms and Conditions of Sale
at Seller's home office
APPENDIX I - SUPPLEMENTAL FOR U.S. GOVERNMENT END-USE
In addition to the above Terms and Conditions of Sale the following terms and
conditions apply to Seller's Products when sold for United States Government
end-use. In such cases for custom and semicustom products only, Paragraphs 4B,
4C and I 2A shall not apply.
A. CHANGES
The Buyer may at any time, by a written notice, make changes within the general
scope of the order, in any one or more of the following (i) drawings, designs or
specifications, where the supplies to be furnished are to be specially
manufactured for the Government in accordance therewith; (ii) method of shipment
or packing; (iii) place of inspection, delivery or acceptance; or (iv) Increase
or decrease the quantity ordered. If any such change causes an increase or
decrease in the cost of, or the time required for, the performance of any part
of the work under the order, whether changed or not changed by any such order,
an equitable adjustment shall be made in the price or delivery schedule, or
both, and the order shall be modified in writing accordingly.
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<PAGE>
B. INSPECTION DURING PERFORMANCE
Subject to the limitations set forth in Article 14, all goods shall be subject
to Inspection and test at the request of representatives of the Government at
all reasonable times and places. For this purpose Seller shall allow authorized
Government personnel access to Seller's plant at all reasonable times, and shall
furnish such facilities, supplies and services as may reasonably be required for
this work.
C. TITLE AND RISK OF LOSS
Except as otherwise provided in the order, (i) Seller shall be responsible for
the supplies covered by the order until they are delivered to the F.O.B. point,
regardless of the point of inspection; (ii) after delivery to Buyer at his
designated delivery point and prior to acceptance by Buyer, the Buyer shall be
responsible for the loss or destruction of or damage to the supplies only if
such loss, destruction or damage results from the negligence of officers,
agents, or employees of the Buyer and (iii) Seller shall bear all risks as to
rejected supplies after notice of rejection, except that the Buyer shall be
responsible for the loss or destruction of or damage to the supplies if such
loss, destruction or damage results from the negligence of officers, agents or
employees of Buyer.
D. TERMINATION FOR CONVENIENCE
FAR 52.249-2 is made a part hereof to the extent that such termination is made
necessary in whole or in part, by a termination action on the part of the U.S.
Government.
E. TERMINATION FOR DEFAULT
In the event of a termination for default pursuant to FAR 52.2498 or 52.249-9.
Seller shall have thirty (30) days in which to cure any failure to deliver, make
progress or perform. Further, Seller shall have no liability for excess costs.
F. STOP WORK ORDER
(A) The Buyer may at any time, by written notice require Seller to stop all, or
any part, of the work called for by the order for a period of 90 days, and for
any further period to which Seller may agree in writing. Within such period the
Buyer shall either: (i) cancel the stop work notice, or (ii) terminate the work
as provided in the `Termination' clause `E' above.
(B) If a stop work notice Issued under this clause is cancelled or the period of
the stop work notice expires, Seller shall resume work. An equitable adjustment
shall be made in the price or delivery schedule or both, and the order shall be
modified In writing accordingly, if: (i) the stop work notice results in an
Increase in the time required for, or in Seller's cost property allocable to.
the performance of any part of the order, and (11) Seller asserts a claim for
such adjustment within 60 days after the end of the period of work stoppage;
provided that the Buyer may receive and act upon any such claim asserted at any
time prior to final payment.
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<PAGE>
(C) If a stop work notice is not canceled and the work covered by such order is
terminated for the convenience of the Government, the reasonable costs resulting
from the stop work notice shall be allowed In arriving at the termination
settlement.
G. BUYER DELAY OF WORK
If the performance of all or any part of the work is delayed or interrupted by
Buyer by failure to act within the time specified or within a reasonable time if
no time is specified - and such act is not expressly or through implication
authorized by the contract, an adjustment shall be made in the cost of
performance of the contract caused by such delay or interruption and the
contract modified in writing accordingly. Adjustment will also be made in the
delivery or performance dates and any other contractual provisions affected by
such delay or interruption.
H. DEFECTIVE PRICING
In the event the price negotiated in connection with any prime contract was
increased by any significant amount because Seller's cost or pricing data was
not current, accurate and complete on the date certified in the Seller's
Certificate of Current Cost or Pricing Data, and Seller is obligated to refund
money on the prime contract, the price or cost of the relevant subcontract shall
be adjusted to reflect the reduction of Seller's costs, but in no event shall
any reduction Include cost, fees or any markups of Buyer.
I. SPECIAL TOOLING
Bum-in boards, masks, and other fabrication and test tooling are considered
expendable proprietary items. These items are not deliverable under any
subcontract or purchase orders.
J. RIGHTS IN TECHNICAL DATA
Unless otherwise agreed in a written document signed by the parties, no rights
in technical data, information, software, or other proprietary data of Seller,
Seller's licensors or subcontractors shall be transferred by Seller to Buyer or
Buyer's customer.
K. INCORPORATIONS BY REFERENCE
(A) The following clauses set forth in the Federal Acquisition Regulation are
incorporated herein by reference:
AUTHORIZATION AND CONSENT
(April 1984) 52.227-1
NOTICE AND ASSISTANCE REGARDING PATENT
AND COPYRIGHT INFRINGEMENT
(April 1984) 52.227-2
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EXAMINATION OF RECORDS BY COMPTROLLER
GENERAL
(Feb. 1993) 52.215-1
EQUAL OPPORTUNITY (April 1984) 52.222-26
(B) In the following clauses, which are incorporated herein by reference, where
necessary to make the context applicable hereto, the term Government or
Contracting Officer shall mean Buyer's customer; Contract shall mean Buyer's
Order: and Contractor shall mean Seller
UTILIZATION OF SMALL BUSINESS CONCERNS AND SMALL DISADVANTAGED
BUSINESS CONCERNS
(Feb. 1990) 52.219-8
Orders over $ 10,000
SUBCONTRACTING PLAN FOR SMALL BUSINESS AND SMALL DISADVANTAGED
BUSINESS CONCERNS
(Jan. 1991) 52.219-9
Orders over $500,000
UTILIZATION OF LABOR SURPLUS AREA CONCERNS
(April 1984) 52.220-3
Orders over $25,000
LABOR SURPLUS AREA SUBCONTRACTING PROGRAM
(April 1984) 52.2204
Orders over $500,000
RESTRICTIONS ON CERTAIN FOREIGN PURCHASES (May 1992) 225-11
DEFENSE PRIORITY AND ALLOCATION
REQUIREMENTS (Sep. 1990) 52.212-8
CONTRACT WORK HOURS AND SAFETY STANDARDS
ACT-OVERTIME COMPENSATION (March 1986) 52.222-4
WALSH-HEALEY PUBLIC CONTRACTS ACT (April 1984) 52.222-20
AFFIRMATIVE ACTION FOR DISABLED VETERANS AND
VETERANS OF THE VIETNAM ERA (April 1984) 52.222-35
AFFIRMATIVE ACTION FOR HANDICAPPED WORKERS
(April 1984) 222-36
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CLEAN AIR AND WATER (April 1984) 52.223-2
LIMITATION OF LIABILITY (April 1984) 246-23
<PAGE>
SCHEDULE 6.9(D)
WARRANTY, STOCK ROTATION, SHIP AND DEBIT, AND PRODUCT LIABILITY
<TABLE>
<CAPTION>
ITEM QTR 1 QTR 2 QTR 3 QTR 4 TOT YR
---- ----- ----- ----- ----- ------
FY'
96
<S> <C> <C> <C> <C> <C> <C>
WARRANTY (C&M) 70 49 260 110 489
STOCK ROTATION (C&M) 986 642 632 725 2,985
SHIP & DEBIT (C) 1,050 1,140 1,298 1,805 5,293
SHIP & DEBIT (M) 222 297 352 285 1,157
TOTAL 2,328 2,128 2,542 2,925 9,924
FY'
97
WARRANTY (C&M) 162 114 43 63 382
STOCK ROTATION 614 477 507 490 2,088
(C&M)
SHIP & DEBIT (C) 2,607 2,641 2,922 3,405 11,575
SHIP & DEBIT (M) 275 344 227 295 1,140
TOTAL 3,658 3,576 3,698 4,252 15,185
<PAGE>
FY'
98
WARRANTY (C&M) 14 49 46 227 336
STOCK ROTATION 638 329 464 342 1,773
(C&M)
SHIP & DEBIT (C) 2,975 1,618 1,671 843 7,107
SHIP & DEBIT (M) 337 311 318 317 1,283
TOTAL 3,964 2,307 2,499 1,729 10,499
TOTAL FY'96 THROUGH
FY'98
WARRANTY (C&M) 246 212 349 400 1,207
STOCK ROTATION 2,238 1,448 1,603 1,557 6,846
(C&M)
SHIP & DEBIT (C) 6,568 4,901 5,225 4,973 21,667
SHIP & DEBIT (M) 1,662 1,795 1,842 2,417 7,716
TOTAL 10,714 8,356 9,019 9,346 37,436
</TABLE>
PRODUCT LIABILITY - NO CLAIMS
FY '96 TO DATE
<PAGE>
A_D
SCHEDULE 6.11 SALES BY CUSTOMER BY DEVICE BY QUARTER FOR PREVIOUS FOUR QUARTERS
<TABLE>
<CAPTION>
CUSTOMER DEVICE Q298$ Q398$ Q498$ Q199$
- - -------- ------ ----- ----- ----- -----
<S> <C> <C> <C> <C>
ABB $ 1,765 $ 2,414 $ 978 $ 2,945
ACAL $ 5,475 $ 7,317 $ (1,474) $ 3,877
ACCESS $ 89,355 $ 77,743 $ 58,282 $ 61,430
ACKERM $ -- $ -- $ -- $ --
ACME $ 1,275 $ 1,275 $ -- $ 510
ADTRAN $ 22,595 $ 4,850 $ 48,709 $ 164,772
ADVANC $ -- $ -- $ 190 $ --
AEG $ (140) $ -- $ -- $ --
ALCATE $ 13,414 $ 19,414 $ 39,538 $ 33,677
ALEXAN $ 3,260 $ -- $ -- $ .
ALLELE $ (5,587) $ (80) $ -- $ --
ALLEN $ 25,315 $ 25,045 $ 20,995 $ 8,515
ALLIED $ 47,656 $ 26,207 $ 25,827 $ 10,096
ALLORG $ 16,681 $ 7,228 $ -- $ --
AMERIC $ -- $ -- $ -- $ --
AMITRO $ 1,310 $ (0) $ -- $ (348)
APC $ 38,906 $ 55,624 $ 29,648 $ 70,375
APPLIE $ 41,730 $ 6,587 $ 8,755 $ 4,703
ARRAY $ 37,459 $ 65,250 $ 273,156 $ 48,114
ARRONZ $ 2,176 $ 3,870 $ 367 $ 2,072
ARROW $ 2,175,651 $ 1,831,224 $ 1,027,365 $ 1,184,957
ARROWN $ 37,781 $ 36,175 $ 14,220 $ 32,060
ARTESY $ 1850 $ 1,485 $ 2,195 $ 3,575
ASCOM $ 6.400 $ -- $ -- $ --
ASTEC $ 300 $ 405 $ 2,500 $ --
ATT $ 1,225 $ 650 $ 350 $ --
AVEX $ 3,068 $ 425 $ 655 $ 2,960
AVG $ 17,758 $ 38,220 $ 29,831 $ 5,214
AVIV $ 14,972 $ (30,929) $ 32,983 $ 9,864
AVNAUS $ 11,735 $ 16,223 $ 13,708 $ 5,816
AVNET $ 179,444 $ 134,472 $ 315,029 $ 86,578
AVNETG $ 35,174 $ 57,036 $ (2,234) $ 4.185
BAFNA $ -- $ -- $ -- $ 9,588
BARON $ -- $ -- $ 1,020 $ --
BASIX $ 17,478 $ 4,850 $ 6,587 $ (14,271)
BBS $ 423,766 $ 230,197 $ 153,295 $ 46,533
BBSAUS $ 38,379 $ 13,310 $ 76,250 $ 32,284
BBSIN $ 139,712 $ 43,697 $ 79,827 $ 26,347
BELLMI $ 155,166 $ 33,090 $ 169,299 $ 17,044
BENCHM $ 461 $ -- $ 1,979 $ 1,666
BENNIN $ 2,037 $ 2,702 $ 2,687 $ 1,599
BENTLY $ 2,500 $ 2,500 $ 2,500 $ 2,200
BIZERB $ 2,148 $ 1,312 $ 1,065 $ 490
BLACKC $ 1,450 $ -- $ -- $ --
BLUEGU $ 5,100 $ 20,238 $ 17,600 $ 700
BOEING $ 2,740 $ -- $ 13.886 $ 3,600
BOSCH $ 86,660 $ 76,163 $ 61,830 $ 30,221
CARIBE $ 5,670 $ -- $ 543 $ 638
CCI $ 47,674 $ 116,464 $ 127,189 $ 6,823
CED $ 13,388 $ (2,536) $ 524 $ 1,377
CELEST $ 1,203 $ 626 $ 12,446 $ (8,707)
PAGE 1
A_D
CERONI $ 2,800 $ -- $ -- $ --
CHEROK $ 400 $ 200 $ (200) $ --
CHIP $ 7,673 $ 10,310 $ 6,382 $ 12,842
CHRYSL $ 119,000 $ 168,560 $ 154,718 $ 128,875
CIWESC $ 1,450 $ 950 $ -- $ --
CK $ -- $ -- $ -- $ --
CLAITR $ (435) $ (1,227) $ (932) $ (252)
CMAC $ 3,070 $ 400 $ 960 $ --
CMC $ 11,945 $ 16,175 $ 13,209 $ 980
COLEMA $ 14,350 $ 12,460 $ 8,390 $ 17,635
COMPAQ $ 5,600 $ 700 $ 513 $ --
COMTEK $ 36,500 $ 1,150 $ -- $ --
CURTIS $ 280 $ 240 $ 480 $ 240
DAAN $ 7,359 $ 24,488 $ 2,650 $ 11,236
DAE $ 3,538 $ -- $ -- $ --
DAERYU $ -- $ -- $ 1,300 $ 6,335
DAIMLE $ 4,385 $ 2,317 $ 2,692 $ --
DATA $ 1,830 $ 11,610 $ 1,200 $ --
DELCO $ 3,850 $ 9,350 $ 8,050 $ 6,050
DELPHI $ 1,300 $ 2,245 $ 1,260 $ --
DELTA $ 1,222 $ 1,404 $ 1,700 $ 8,107
DELTEC $ 28,575 $ 69,205 $ 37,820 $ --
DETEWE $ -- $ 1,753 $ 2,883 $ --
DIALER $ -- $ -- $ -- $ --
DIE $ 70,492 $ 69,189 $ 63,127 $ 83,048
DIG! $ 37,308 $ 49,810 $ 38,450 $ 38,902
DORNIE $ -- $ -- $ 997 $ --
DOVATR $ 38,190 $ 26,268 $ 2,525 $ 7,238
DYNA $ (1,148) $ 7,766 $ -- $ (9,983)
DYNALA $ -- $ -- $ -- $ --
Total A_D From Sheet Two $ 4,173,066 $ 3,416,064 $ 3,018,270 $ 2,215,331
Total E_M From Sheet Three $ 6,136,686 $ 6,112,241 $ 6,285,574 $ 5,512,577
Total N_Z $ 3,711,266 $ 3,872,935 $ 3,511,020 $ 1,754,844
Grand Total $ 14,021,019 $ 13,401,240 $ 12,814,864 $ 9,482,752
Page 2
<PAGE>
E_M
SCHEDULE 6.11 SALES BY CUSTOMER BY DEVICE BY QUARTER FOR PREVIOUS FOUR QUARTERS
CUSTOMER DEVICE Q298$ Q398$ Q498$ Q199$
- - -------- ------ ----- ----- ----- -----
EBV $ 1,344,295 $ 1,338,056 $ 1,578,700 $ 1,657,993
ECI $ 62,788 $ 56,866 $ 50,412 $ 18,174
ECKER $ 6,108 $ 2,077 $ 4,129 $ -
EDAL $ 377,956 $ 429,984 $ 278,541 $ 70,269
EDGETE $ (627) $ - $ - $ -
EFW $ 4,432 $ 6,660 $ 7,833 $ 2,237
ELBIT $ 16,216 $ 7,751 $ 7,524 $ 3,584
ELCOTE $ - $ 2,138 $ 1,538 $ 1,313
ELECTR $ 74,412 $ 39,831 $ 89,337 $ 37,038
ELISRA $ - $ - $ 930 $ 271
ELMO $ 45,554 $ 57,982 $ 73,013 $ 39,443
ELOP $ 1,452 $ 8,526 $ 74 $ -
ELSAG $ 4,097 $ 4,943 $ 1,145 $ -
EMPA $ 11,466 $ 23,221 $ 3,348 $ 23,365
EMPRES $ - $ 9,114 $ 4,222 $ -
EMULEX $ 3,290 $ 570 $ - $ -
ERICSS $ 11,449 $ 11,542 $ 13,477 $ 5,200
ES $ 42,760 $ 21,169 $ 4,929 $ 30,929
EURODI $ $ - $ - $ -
EVERBR $ 2,450 $ 6,335 $ 5,120 $ 6,055
FARNEL $ 25,257 $ 16,698 $ 13,413 $ 13,923
FIAR $ - $ - $ - $ -
FIBRON $ - $ - $ - $ -
FLEXTE $ - $ 8,348 $ 3,877 $ 3,053
FLEXTR $ - $ - $ - $ 2,633
FLUKE $ 19,275 $ 15,165 $ 2,250 $ 11,230
FORD $ 252 $ - $ - $ -
FRIWO $ 2,394 $ 4,159 $ 2,898 $ 3,890
FUTELE $ 42,326 $ 28,826 $ 32,500 $ 17,911
FUTURE $ 479,250 $ 207,592 $ 150,549 $ 487,517
GALAXY $ 54,967 $ 20,051 $ 38,953 $ 71,764
GDY $ 250 $ 250 $ - $ 2,287
GE $ 2,400 $ 2,000 $ 2,000 $ 3,600
GENERA $ - $ 48,450 $ 85,025 $ 117,857
GERBER $ 41,119 $ 13,988 $ 44,490 $ 19,086
GOLDEN $ 100,284 $ 135,694 $ 121,921 $ 39,986
GOLDST $ 4,640 $ 2,060 $ - $ 360
GOVERN $ - $ - $ - $ 347
GP $ - $ 130 $ - $ -
GPT $ 17,154 $ 24,859 $ 11,232 $ 8,653
GRAFTE $ 98,396 $ 59,041 $ 62,006 $ 34,745
GROUP $ 4,421 $ 22,108 $ 15,846 $ 13,069
GRUNDI $ - $ - $ 618 $ 15,680
HAKUTO $ 1,316 $ 1,154 $ 638 $ (230)
HAMILT $ 1,711,641 $ 1,952,750 $ 2,019,159 $ 1,377,229
PAGE 1
<PAGE>
E_M
HANA $ 10,260 $ 11,430 $ 16,170 $ 4,145
HANNA $ 1,050 $ 3,675 $ 1,400 $ 1,361
HARRIS $ - $ 40 $ - $ -
HCM $ 3,840 $ 1,018 $ - $ 479
HEIDEL $ 12,611 $ 11,770 $ 9,970 $ 13,860
HELLA $ 29,927 $ 99,890 $ 248,464 $ 218,207
HEWLET $ 2,855 $ 1,740 $ 765 $ -
HINDUS $ - $ - $ - $ 248
HITRON $ - $ - $ 900 $ 1,500
HONEYW $ 36,063 $ 45,217 $ 29,632 $ 16,692
HR $ 72,180 $ 56,401 $ 8,809 $ 65,310
HUGHES $ 2,183 $ 5,435 $ 19,570 $ 7,575
HUGHME $ 18,426 $ 17,105 $ 32,891 $ 34,581
HUNGCH $ - $ 429 $ 944 $ 2,234
IBM $ 13,475 $ 12,250 $ 21,570 $ 41,575
IEC $ 148,810 $ 105,047 $ 160,759 $ 102,233
IGG $ - $ - $ - $ -
INDEG $ 11,940 $ 357 $ (1,238) $ (10,051)
INHWA $ 1,497 $ - $ 280 $ 102
INNOWA $ - $ - $ - $ 250
INTEL $ - $ - $ 400 $ 3,400
INTRAC $ 1,770 $ - $ 7,970 $ 320
IPD $ - $ - $ 625 $ 1,250
IPM $ 5,030 $ 29,068 $ 388 $ 4,186
ITALAM $ - $ - $ 964 $ -
ITALTE $ 131,553 $ 84,934 $ 41,405 $ 61,257
ITRON $ 4,000 $ 5,000 $ - $ -
ITT $ 65,708 $ 44,004 $ 5,550 $ 4,848
JABIL $ 16,050 $ 10,360 $ 4,180 $ 3,150
JOHNSO $ 600 $ - $ - $ -
KEITHL $ 2,642 $ 947 $ 1,481 $ 328
KIMBAL $ 260 $ 5,980 $ 6,500 $ 1,820
KIRYUN $ - $ 270 $ 5,140 $ 1,435
KLIM $ 44,000 $ 26,000 $ - $ -
KOREA $ 8,800 $ - $ 3,250 $ 2,600
KOSTAL $ 356 $ 2,767 $ 3,235 $ 2,010
KRYSTA $ 1,628 $ - $ - $ -
KSLTRA $ - $ - $ 1,150$ $ -
KYREL $ - $ 375 $ - $ -
LECROY $ 510 $ - $ 510 $ -
LEX $ 113,083 $ 146,359 $ 36,781 $ 167,743
LEXMAR $ - $ - $ 5,850 $ 1,800
LG INF $ 19,119 $ - $ 18,396 $ -
LGELEC $ 18,436 $ 8,531 $ 15,924 $ 10,691
LGINTE $ - $ 4,900 $ 100,200 $ 28
LITTON $ - $ - $ 1,012 $ 712
LMERIC $ 9,016 $ 20,275 $ 1,000 $ 780
Page 2
<PAGE>
E_M
LOCKHE $ 35,759 $ 3,775 $ 2,679 $ 3,581
LORAIN $ 480 $ 1,970 $ 960 $ 1,440
LUCAS $ 57,189 $ 54,438 $ 53,628 $ 30,893
LUCENT $ 210,304 $ 213,604 $ 228,061 $ 258,372
MACNIC $ 9,145 $ 4,918 $ 1,768 $ (3,182)
MAGNET $ 10,535 $ 10,094 $ 17,531 $ 13,867
MANNES $ 27,451 $ 10,561 $ 19,437 $ 4,473
MANUFA $ 11,938 $ 12,764 $ 4,987 $ 1,043
MARCON $ 20,962 $ 13,748 $ 77,397 $ 57,095
MARELL $ 31,777 $ 46,663 $ 57,302 $ 38,785
MATRA $ 9,385 $ 6,126 $ 6,159 $ 9,057
MATROX $ - $ 130 $ 260 $ 390
MAXMEG $ - $ 475 $ 9,320 $ 9,979
MAXON $ 9,874 $ 4,972 $ 7,048 $ 16,967
MEANS $ 42,554 $ 92,568 $ 76,486 $ 52,960
MEDISO $ 1,925 $ - $ 735 $ 350
MERCUR $ 3,700 $ 2,290 $ - $ -
METEX $ 2,429 $ - $ - $ 3,168
MF $ 6,250 $ 12,852 $ 16,512 $ 11,250
MICROM $ (1,779) $ (2,326) $ (1,378) $ (1,180)
MICRON $ 2,328 $ 6,601 $ 3,169 $ (3,346)
MINCO $ 1,885 $ 7,798 $ 1,387 $ 12,932
MINIST $ 672 $ 259 $ 428 $ 1,200
MKTECH $ 11,500 $ - $ - $ -
MKTRAD $ 93,005 $ 134,170 $ 78,070 $ 5,708
MODINF $ - $ - $ - $ -
MOTORO $ 116,300 $ 122,136 $ 79,187 $ 77,655
Total E_M $ 6,136,686 $ 6,112,241 $ 6,285,574 $ 5,512,577
<PAGE>
N_Z
SCHEDULE 6.11 SALES BY CUSTOMER BY DEVICE BY QUARTER FOR PREVIOUS FOUR QUARTERS
CUSTOMER DEVICE Q298$ Q398$ Q498$ Q199$
- - --------- ------ ----- ----- ----- -----
NAGARE $ 6,800 $ 6,800 $ 19,550 $ 17,808
NATSTE $ 53,075 $ 37,613 $ 56,090 $ 168,695
NEWARK $ 70,989 $ 59,263 $ 22,905 $ 18,165
NEXTLE $ 66,000 $ - $ - $ -
NOKIA $ 111,620 $ 95,420 $ 77,550 $ 61,135
NORTEL $ 10,829 $ 2,068 $ 1,855 $ 3,431
NORTHE $ 42,508 $ 28,741 $ 27,879 $ 3,565
NRI $ 4,225 $ 3,000 $ - $ 722
OKURA $ 33,421 $ 64,840 $ 70,641 $ 8,026
OUTBOA $ 3,520 $ 4,180 $ 3,080 $ -
PACE $ 52,981 $ 22,586 $ 55,498 $ 43,208
PANTEL $ 1,240 $ 1,470 $ - $ 2,650
PHILIP $ 525 $ 752 $ 8,690 $ -
PHOENI $ 1,645 $ 2,910 $ 1,240 $ 1,750
POWERT $ - $ - $ - $ 6,250
PRIMEX $ - $ - $ - $ -
PROCON $ 17,276 $ 5,845 $ 4,607 $ 7,416
PROTEC $ 7,015 $ 5,681 $ 13,870 $ 1,931
QUALIT $ 480 $ 480 $ - $ -
QUANTA $ - $ - $ - $ 190
RAYTHE $ 68,914 $ 8,287 $ 77,051 $ 27,987
RELTEC $ - $ - $ - $ -
RF $ - $ 1,741 $ - $ -
ROCKWE $ 74,026 $ 119,319 $ 87,609 $ 77,550
ROHDE $ 67,565 $ 53,926 $ 31,742 $ 35,809
SAGEM $ 3,358 $ 12,109 $ 24,095 $ 13,269
SAMSUN $ 137,071 $ 249,994 $ 97,984 $ 24,926
SANMIN $ - $ 280 $ 422 $ 761
SAPURA $ - $ - $ - $ -
SATURN $ 11,505 $ 12,285 $ 8,580 $ 24,055
SCHLAF $ 7,472 $ 1,934 $ 2,486 $ 1,038
SCHLEI $ 615 $ (18) $ - $ 397
SCHNEI $ 27,344 $ 47,742 $ 61.408 $ 5,802
SCI $ 43,023 $ 15,199 $ 20,587 $ 20,826
SEGYUN $ 108,097 $ 71,145 $ 58,115 $ 15,559
SEMELA $ 4,919 $ 788 $ 4,625 $ 2,349
SEMICO $ 145 $ 788 $ 128 $ 956
SEMTEX $ 1,575 $ - $ - $ -
SEPA $ 255 $ 364 $ 925 $ -
SHANGH $ - $ - $ 7,300 $ -
SIAERO $ 903 $ 400 $ 285 $ 625
SIELEC $ - $ - $ - $ 19,285
SIEMEN $ 24,373 $ 16,122 $ (77) $ 9,354
SILVER $ 152,947 $ 194,457 $ 117,103 $ 49,472
SIMPLE $ 23,984 $ 26,073 $ 32,775 $ 29,368
SIRONA $ 6 $ 308 $ - $ 306
SK $ - $ - $ 4,431 $ 125
SMCREA $ 12,740 $ 23,143 $ 1,398 $ 1,367
SMITHS $ 52,052 $ 92,200 $ 86,668 $ 91,861
SOLECT $ 66,980 $ 67,316 $ 39,983 $ 45,551
Page 1
<PAGE>
SONEPA $ 118,628 $ 84,807 $ 144,392 $ 49,550
SPARTO $ - $ - $ - $ -
SPOERL $ 433,460 $ 511,125 $ 261,368 $ 153,939
STADIU $ 16,655 $ 18,768 $ 18,774 $ -
STANDA $ 576 $ - $ - $ -
STILL $ 1,058 $ - $ 700 $ 1,686
STN $ 9,175 $ 1,704 $ 10,498 $ -
SUNNIC $ 671,074 $ 236,863 $ 748,208 $ 183,016
TADIRA $ 69,976 $ 53,469 $ 61,173 $ 65,896
TAIKWA $ - $ - $ - $ -
TAISEL $ 900 $ - $ - $ -
TAKACH $ 372 $ 157 $ 1,674 $ (11,763)
TAKOSA $ 1,207 $ (10) $ - $ -
TAKUMI $ 19,745 $ 12,437 $ 554 $ (34,125)
TALLAH $ 33,740 $ 35,980 $ 17,405 $ -
TATUNG $ 450 $ - $ - $ -
TECO $ 220,178 $ 196,888 $ 157,416 $ 96,533
TECOM $ 675 $ - $ - $ -
TELDIX $ 820 $ - $ - $ -
TELECO $ - $ - $ - $ 1,206
TELION $ - $ - $ 30,856 $ 5,670
TELRAD $ 65,660 $ 54,830 $ 108,433 $ 39,358
TEMIC $ 18,975 $ 14,759 $ 1,000 $ 1,375
THOMSO $ 32,727 $ 19,037 $ 24,934 $ 981
TMX $ 28,064 $ 14,625 $ 23,200 $ 17,426
TOKYO $ - $ - $ - $ 4,080
TONFUN $ 275 $ 160 $ - $ -
TRANS $ - $ - $ - $ 2,200
TRANSY $ 11,000 $ 33,000 $ - $ -
TRW $ - $ - $ - $ -
UNIDUX $ - $ - $ - $ 878
UNITE $ 32,000 $ 32,000 $ - $ -
UNITED $ 240 $ 230 $ - $ -
UNIVER $ - $ - $ - $ -
VARIAN $ - $ - $ - $ -
WABCO $ 22,171 $ 21,115 $ 28,030 $ 25,925
WECAN $ 375 $ - $ - $ -
WELWYN $ 18,347 $ 5,006 $ 2,474 $ (2,130)
WESTER $ - $ 144 $ - $
WING $ - $ - $ - $ 66,441
WKK $ - $ - $ 750 $ 375
WYLE $ 492,174 $ 1,171,175 $ 740,105 $ 242,788
XEROX $ 16,553 $ (2,880) $ - $ -
YUH SI $ - $ - $ - $ -
Total N_Z $ 3,711,266 $ 3,872,935 $ 3,511,020 $ 1,754,844
</TABLE>
Page 2
<PAGE>
SCHEDULE 8.9:
PRICING REDUCTIONS
1. Commercial Logic Products (North America):
a. CD4000 - The amount of the price adjustment is equal to 5% of the
distributor inventory.
b. HC/HCT - The amount of the price adjustment is equal to 7% of the
distributor inventory.
c. AC/ACT - The amount of the price adjustment is equal to 19% of the
distributor inventory.
d. FCT - No price adjustment required.
2. Commercial Logic Products (Europe): No price adjustments required.
EXHIBIT 10.44
Page 1
LAND OFFICE
FORM 11B
(SECTION 177)
(Temporary Property Equals to Property Under the Land Office)
Registration: Area Hulu Klang No. H.S. (M) 2603
State: SELANGOR
Certificate of Leasehold Property
Purpose of this land: Industrial
Location: AU2, Ampang/Hulu Klang
Land Office No. 7668
Tenure of Land: 99 Years Area of Land: 214,703 sq. Ft.
Expiry Date: 4-8-2086 Yearly Taxation: RM12,882.20
Special Conditions of Leased Property
This property is made in accordance to the provisions of the Land Code and all
conditions and provisions as stated below:
Conditions:
i. This land is to be used only for Industrial purposes.
ii. The owner must erect a factory within 2 years from the date of
registration of this property title.
iii. The owner must maintain the cleanliness and control air pollution from
smoke, smell from chemical components and remnant waste which can endanger
public health.
iv. The owner is not permitted to dispose or outflow any oil supplies and
components, industrial waste, and medical supplies which contain chemical
or poisonous substances which endanger public health into the rivers from
the drainage systems.
v. The owner is required to ensure that 40% of the workforce must be
Bumiputra (reference as Malays and other indigenous people)
vi. The owner is required to comply with the provisions of the Environmental
Quality Act 1974.
vii. The building plans must be approved by the local authorities.
Important provision:
This land which is granted herewith can not be sold, leased, mortgaged or have
its ownership transferred in any way unless approved by the State Executive
Authorities
<PAGE>
Page 2
2. In this plan outline below, the boundary colored in red is temporary and
not as yet confirmed by specific survey.
Plan Drawing of the Property:
Land Office No. 7668
Area: Hulu Klang
District: Gombak
- - --------------------------------------------------------------------------------
The owner of this land as recorded below Published Statement, released on
Registered on 5 August, 1987 17th August, 1987
District: GOMBAK District: GOMBAK
- - --------------------------------------------------------------------------------
To be filled up for any extension:
Effective date of Grant: ............................................
Original Land Title (Permanent or Temporary) ...............................
<PAGE>
Page 3
Property Record and Associated transactions.
Registration transfer No. 3806/91 Volume No. 101 Folio: 144
separated parts under PKNS as a Quasi Government Body
in Selangor Government, 1964 is transferred to Harris Semiconductor
(M) Sdn Bhd, a company incorporated under the Companies Act 1965, address:
33 Lot 2, Lorong Enggang, Ulu Kelang FTZ, P O Box 4, jalan Gurney, 54007 K.L.
Registered on 13, September 1991 at 10:59 am.
Release # 6875/95 (Chane Name) Volume: 3 Folio 67.
Name of lease ownership: Harris Semiconductor (M) Sdn Bhd
to Harris Airport Systems (M) Sdn Bhd. Registered on 29th December
1995 at 8:45am.
Registration transfer No. 6380/95 Volume No. 164 Folio: 119
unappropriated portion to Harris Airport Systems (M) Sdn Bhd,
an established Co. under the Co. Act 1965 transferred the land title to
Harris Advanced Technology (M) Sdn Bhd, a company incorporated under the
Companies Act 1965, address at 73 Jalan Enggang, Ulu Kelang Free Trade Zone,
54200 Kuala Lumpur.
Registered on 29, December 1995 at 8:46am.
EXHIBIT 10.45
LAND OFFICE
FORM 5 C
(SECTION 86)
State: SELANGOR
STATE LEASE
Tenure: 99 Years Maturity Date: 9.11.2086
Registration No. 7128
Purpose of the land: MANUFACTURING
The scheduled land as shown in the attached site plan is to establish that, for
the tenure mentioned above, the ownership of the property is as stated in the
reverse side of this document. In accordance with the Rules and regulation of
the Land Department of States subject to the purpose and conditions listed
below. The yearly tax payable amount to RM33,953.00
On order of the State Authority
Registered on 22nd December 1993
Registrar of Properties
Ref No.
Bil PHN.Sel.2/19/91
LAND SCHEDULE
District Gombak
*Area: Hulu Kelang
Lot No: 7716 Area of Log: 52,470 m(2)
<PAGE>
Page 1 (continuation)
Conditions:
i. This land is to be used only for Industrial purposes.
ii. The owner must erect a factory within 2 years from the date of
registration of this property title.
iii. The owner must maintain the cleanliness and control air pollution
from smoke, smell from chemical components and remnant waste which
can endanger public health.
iv. The owner is not permitted to dispose or outflow any oil supplies
and components, industrial waste, and medical supplies which contain
chemical or poisonous substances which endanger public health into
the rivers from the drainage systems.
v. The owner is required to ensure that 40% of the workforce must be
Bumiputra (reference as Malays and other indigenous people)
vi. The owner is required to comply with the provisions of the
Environmental Quality Act 1974.
vii. The building plans must be approved by the local authorities.
Important provision:
This land which is granted herewith can not be sold, leased, mortgaged or have
its ownership transferred in any way unless approved by the State Executive
Authorities.
To be filled up by the owner for any extension of land title
Effective date of grant: 10.11.1987
Original Land Title (permanent or temporary) HS.(D) 17902
<PAGE>
Page 2
Your property record and associated transactions
Harris Solid State (Malaysia) Sdn Bhd
RCA Sdn Bhd, Op. O. Box 12311
50774 Kuala Lumpur
Expiry Date:
21 April 1995
No. 17267/95 transfer ownership volume 33 folio/72
From: Harris Solid-State (Malaysia) Sdn Bhd
To: Harris Advanced Technology (Malaysia) Sdn Bhd
Address: 73 Jln Enggang, Ulu Klang Free Trade Zone,
54200 Kuala Lumpur
Authorized & Registered in Shah Alam
on 21 April 1995 Time: 2:53pm.
<PAGE>
Page 3
Site plan drawing...........
to recognize and comply with Section 3 in Land & Mineral act (Photocopy) 1950.
This is a certified true copy of the plan made on 18.11.93 for Lot 7716 in Hulu
Kelang, District: Gombak as shown in plan 10-055048.
EXHIBIT 10.46
Page 1
LAND OFFICE
FORM 11B
(SECTION 177)
(Temporary Property Equals to Property Under the Land Office)
Registration: Area Hulu Klang No. H.S. (M) 2601
State: SELANGOR
Certificate of Leasehold Property
Purpose of this land: Industrial
Location: AU2, Ampang/Hulu Klang
Land Title No. 7666
Tenure of Land: 99 Years Area of Land: 201,828 sq. Ft.
Expiry Date: 4-8-2086 Yearly Taxation: RM12,109.70
Special Conditions of Leased property
This property is made in accordance to the provisions of the Land Code and all
conditions and provisions as stated below:
Conditions:
i. This land is to be used only for Industrial purposes.
ii. The owner must erect a factory within 2 years from the date of
registration of this property title.
iii. The owner must maintain the cleanliness and control air pollution
from smoke, smell from chemical components and remnant waste which
can endanger public health.
iv. The owner is not permitted to dispose or outlaw any oil supplies and
components, industrial waste, and medical supplies which contain
chemical or poisonous substances which endanger public health into
the rivers from the drainage systems.
v. The owner is required to ensure that 40% of the workforce must be
Bumiputra (reference as Malays and other indigenous people)
vi. The owner is required to comply with the provisions of the
Environmental Quality Act 1974.
vii. The building plans must be approved by the local authorities.
<PAGE>
Page 2
Important provision:
This land which is granted herewith can not be sold, leased, mortgaged or have
its ownership transferred in any way unless approved by the State Executive
Authorities
2. In this plan outline below, the boundary colored in red is temporary and
not as yet confirmed by specific survey.
Plan Drawing of the Property:
Land Office No. 7666
Area: Hulu Klang
District: Gombak
- - --------------------------------------------------------------------------------
The owner of this land as recorded below Published Statement, released on
Registered on 5 August, 1987 17th august, 1987
District: GOMBAK District: GOMBAK
- - --------------------------------------------------------------------------------
To be filled up for any extension:
Effective date of grant:...............................................
Original Land Title (Permanent or Temporary) ...................................
<PAGE>
Page 3
Property Record and Associated transactions.
Registration transfer No. 4310/90 Volume No. 87 Folio: 125
separated parts under PKNS as a Quasi Government Body
in Selangor Government, 1964 is transferred to Harris Advanced
Technology (M) Sdn Bhd, a company incorporated under the Companies Act of 1965,
address: 73 Lorong Enggang, 54200 Kuala Lumpur. Registered on 6 Julai
1970 at 9:38am.
EXHIBIT 21.01
Subsidiaries of Holding
Name of Subsidiary State or Other Jurisdiction of
Incorporation or Organization
- - --------------------------------------------------------------------------------
Intersil Corporation Delaware
Intersil (FL), LLC Delaware
Intersil (OH), LLC Delaware
Intersil (PA), LLC Delaware
Choice-Intersil Microsystems, Inc. Kansas
Intersil (Cayman) Corporation British West Indies
Sapphire Worldwide Investments, Inc. British Virgin Islands
Harris Semiconductor (Suzhou) Co. Ltd. China
Anshan Harris Broadcast Equipment Co. Ltd. China
Guangzhou Harris Telecommunications Company Ltd. China
Intersil China Limited Hong Kong
Intersil KK Japan
Intersil YH Korea
Intersil Technology Sdn Bhd Malaysia
Intersil Advanced Technology (Labuan) Sdn Bhd Malaysia
Intersil Pte. Ltd. Singapore
Intersil Ltd. Taiwan
Intersil S.A Belgium
Intersil S.A.R.L France
Intersil GmbH Germany
Intersil Srl Italy
Intersil Limited UK
EXHIBIT 4.01
===============================================================================
WARRANT AGREEMENT
Dated as of
August 13, 1999
between
INTERSIL HOLDING CORPORATION
and
UNITED STATES TRUST COMPANY OF NEW YORK,
as Warrant Agent
---------------------------------------------
Warrants for
Class A Common Stock of
Intersil Holding Corporation
---------------------------------------------
================================================================================
<PAGE>
1
TABLE OF CONTENTS
Page
----
ARTICLE I
Definitions
SECTION 1.01. Definitions.....................................................1
SECTION 1.02. Other Definitions...............................................5
SECTION 1.03. Rules of Construction...........................................6
ARTICLE II
Warrant Certificates
SECTION 2.01. Form and Dating.................................................6
SECTION 2.02. Execution and Countersignature..................................8
SECTION 2.03. Certificate Register............................................9
SECTION 2.04. Transfer and Exchange...........................................9
SECTION 2.05. Certificated Warrants..........................................16
SECTION 2.06. Replacement Certificates.......................................16
SECTION 2.07. Outstanding Warrants...........................................17
SECTION 2.08. Temporary Certificates.........................................17
SECTION 2.09. Cancelation....................................................17
SECTION 2.10. CUSIP Numbers..................................................17
ARTICLE III
Exercise Terms
SECTION 3.01. Exercise.......................................................18
SECTION 3.02. Exercise Periods...............................................18
SECTION 3.03. Expiration.....................................................18
SECTION 3.04. Manner of Exercise.............................................18
SECTION 3.05. Issuance of Warrant Shares.....................................19
SECTION 3.06. Fractional Warrant Shares......................................20
SECTION 3.07. Reservation of Warrant Shares..................................20
SECTION 3.08. Compliance with Law............................................21
ARTICLE IV
Antidilution Provisions
SECTION 4.01. Changes in Common Stock........................................21
SECTION 4.02. Cash Dividends and Other
Distributions.............................................22
SECTION 4.03. Common Stock Issue.............................................23
SECTION 4.04. Issuance of Rights or Options..................................24
SECTION 4.05. Combination; Liquidation.......................................25
SECTION 4.06. Other Events...................................................25
SECTION 4.07. Superseding Adjustment.........................................26
SECTION 4.08. Minimum Adjustment.............................................26
SECTION 4.09. Notice of Adjustment...........................................27
<PAGE>
2
Page
----
SECTION 4.10. Notice of Certain Transactions.................................27
SECTION 4.11. Adjustment to Warrant Certificate..............................28
ARTICLE V
Registration Rights; Indemnification
SECTION 5.01. Effectiveness of Registration
Statement.................................................29
SECTION 5.02. Suspension.....................................................30
SECTION 5.03. Blue Sky.......................................................31
SECTION 5.04. Accuracy of Disclosure.........................................31
SECTION 5.05. Indemnification................................................31
SECTION 5.06. Additional Acts................................................35
SECTION 5.07. Expenses.......................................................36
ARTICLE VI
Warrant Agent
SECTION 6.01. Appointment of Warrant Agent...................................36
SECTION 6.02. Rights and Duties of Warrant Agent.............................36
SECTION 6.03. Individual Rights of Warrant Agent.............................37
SECTION 6.04. Warrant Agent's Disclaimer.....................................38
SECTION 6.05. Compensation and Indemnity.....................................38
SECTION 6.06. Successor Warrant Agent........................................38
ARTICLE VII
Option Agreement
SECTION 7.01. Option Agreement...............................................40
ARTICLE VIII
Miscellaneous
SECTION 8.01. SEC Reports....................................................40
SECTION 8.02. Persons Benefitting............................................41
SECTION 8.03. Rights of Holders..............................................41
SECTION 8.04. Amendment......................................................41
SECTION 8.05. Notices........................................................42
SECTION 8.06. Governing Law..................................................43
SECTION 8.07. Successors.....................................................43
SECTION 8.08. Multiple Originals.............................................43
SECTION 8.09. Table of Contents..............................................43
SECTION 8.10. Severability...................................................43
EXHIBIT A Form of Face of Warrant Certificate
<PAGE>
WARRANT AGREEMENT dated as of August 13, 1999 (this "Agreement"), between
INTERSIL HOLDING CORPORATION, a Delaware corporation (the "Company"), and UNITED
STATES TRUST COMPANY OF NEW YORK, a New York banking corporation, as Warrant
Agent (the "Warrant Agent").
The Company desires to issue the warrants (the "Warrants") described
herein. The Warrants will initially entitle the holders thereof (the "Holders")
to purchase, in the aggregate, 5,555,560 shares of Class A Common Stock, par
value $0.01 per share, of the Company ("Class A Common Stock") in connection
with an offering (the "Offering") by the Company and Intersil Corporation of
200,000 units (the "Units"). Each Unit consists of (i) one 13 1/4% Senior
Subordinated Note Due 2009 with a principal amount at maturity of $1,000 (a
"Note") and (ii) one warrant (each, a "Warrant") to purchase 27.7778 shares of
Class A Common Stock.
The Warrants will not trade separately from the Notes until the earliest
date (the "Separation Date") to occur of: (i) the commencement of a registered
exchange offer for the Notes, (ii) the effective date of a shelf registration
statement with respect to the Notes and (iii) such earlier date after October
12, 1999, as may be determined by the Initial Purchasers (as defined herein).
The Company further desires the Warrant Agent to act on behalf of the
Company in connection with the issuance of the Warrants as provided herein and
the Warrant Agent is willing to so act.
Each party agrees as follows for the benefit of the other party and for the
equal and ratable benefit of the Holders of Warrants:
ARTICLE I
Definitions
SECTION 1.01. Definitions.
"Affiliate" of any Person means (i) any other Person which, directly or
indirectly, is in control of, is controlled by or is under common control with
such Person, or (ii) any other Person who is a director or executive officer (A)
of such Person, (B) of any subsidiary of such
<PAGE>
2
Person or (C) of any Person described in clause (i) above. For purposes hereof,
(a) "control" of a Person means the power, direct or indirect, to direct or
cause the direction of the management and policies of such Person whether by
contract or otherwise and (b) beneficial ownership of 5% or more of the voting
common equity (on a fully diluted basis) or warrants to purchase such equity
(whether or not currently exercisable) of a Person shall be deemed to be in
control of such Person; and the terms "controlling" and "controlled" have
meanings correlative to the foregoing.
"Board" means the Board of Directors of the Company or any committee
thereof duly authorized to act on behalf of such Board of Directors.
"Business Day" means each day that is not a Saturday, a Sunday or a day on
which banking institutions are not required to be open in the State of New York.
"Capital Stock" of any Person means any and all shares, interests, rights
to purchase, warrants, options, participations or other equivalents of or
interests in (however designated) equity of such Person, including any Preferred
Stock, but excluding any debt securities convertible into such equity.
"Cashless Exercise Ratio" means a fraction, the numerator of which is the
excess of the Current Market Value per share of Class A Common Stock on the
Exercise Date over the Exercise Price per share as of the Exercise Date and the
denominator of which is the Current Market Value per share of the Class A Common
Stock on the Exercise Date.
"Certificated Warrants" means certificated Warrants in fully registered
definitive form.
"Class B Common Stock" means the $0.01 par value Class B Common Stock of
the Company.
"Combination" means an event in which the Company consolidates with, merges
with or into, or sells all or substantially all of its assets to, another
Person.
"Common Stock" means the Class A Common Stock and the Class B Common
Stock".
"Current Market Value" per share of Class A Common Stock or any other
security at any date means (i) if the security is not registered under the
Exchange Act, (a) the value of the security, determined in good faith by the
Board and certified in a board resolution, based on the most recently completed
arm's-length transaction between the Company and a Person other than an
Affiliate of the Company, the closing of which shall have occurred on such date
or within the six-month period preceding such date, or (b) if
<PAGE>
3
no such transaction shall have occurred on such date or within such six-month
period, the value of the security as determined by an independent financial
expert or (ii) if the security is registered under the Exchange Act, the average
of the daily closing bid prices (or the equivalent in an over-the-counter
market) for each Business Day during the period commencing 15 Business Days
before such date and ending on the date one day prior to such date, or if the
security has been registered under the Exchange Act for less than 15 consecutive
Business Days before such date, then the average of the daily closing bid prices
(or such equivalent) for all of the Business Days before such date for which
daily closing bid prices are available; provided, however, that if the closing
bid price is not determinable for at least ten Business Days in such period, the
"Current Market Value" of the security shall be determined as if the security
were not registered under the Exchange Act.
"Depositary" means The Depository Trust Company, its nominees and their
respective successors.
"Exchange Act" means the U.S. Securities Exchange Act of 1934, as amended.
"Exercise Date" means, for a given Warrant, the day on which such Warrant
is exercised pursuant to Section 3.04.
"Extraordinary Cash Dividend" means that portion, if any, of the aggregate
amount of all dividends paid by the Company on the Common Stock in any fiscal
year that exceeds $10 million.
"Indenture" means the Indenture dated as of August 13, 1999, among Intersil
Corporation, the Company, the Subsidiary Guarantors named therein and the
Trustee, with respect to the Notes, as it may be amended or supplemented from
time to time.
"Initial Purchasers" means Credit Suisse First Boston Corporation, J.P.
Morgan Securities Inc. and Salomon Smith Barney Inc.
"Intersil Corporation" means Intersil Corporation, a Delaware corporation
and wholly owned subsidiary of the Company.
"Issue Date" means the date on which the Warrants are initially issued.
"Offering Circular" means the Confidential Offering Circular dated August
6, 1999, of the Company and Intersil Corporation.
<PAGE>
4
"Officer" means the Chairman of the Board, the President, any Vice
President, the Treasurer, or an Assistant Treasurer, or the Secretary or an
Assistant Secretary of the Company.
"Officers' Certificate" means a certificate signed by two Officers.
"Opinion of Counsel" means a written opinion from legal counsel who is
reasonably acceptable to the Warrant Agent. Such counsel may be an employee of
or counsel to the Company or the Warrant Agent.
"Person" means any individual, corporation, partnership, joint venture,
limited liability company, joint venture, association, joint-stock company,
trust, unincorporated organization, government or any agency or political
subdivision thereof or any other entity.
"Preferred Stock", as applied to the Capital Stock of any Person, means
Capital Stock of any class or classes (however designated) which is preferred as
to the payment of dividends or distributions, or as to the payment of assets
upon any voluntary or involuntary liquidation or dissolution of such Person,
over shares of Capital Stock of any other class of such Person.
"Purchase Agreement" means the Purchase Agreement dated August 6, 1999,
among Intersil Corporation, the Company, the Subsidiary Guarantors named therein
and the Initial Purchasers.
"QIB" means a "qualified institutional buyer" as defined in Rule 144A.
"Regulation S" means Regulation S under the Securities Act.
"Rule 144A" means Rule 144A under the Securities Act.
"SEC" means the Securities and Exchange Commission.
"Securities" means the Warrants and the Warrant Shares.
"Securities Act" means the U.S. Securities Act of 1933, as amended.
"Transfer Restricted Securities" means the Warrants and the Class A Common
Stock which may be issued to Holders upon exercise of the Warrants, whether or
not such exercise has been effected. Each such security shall cease to be a
Transfer Restricted Security when (i) it has been
<PAGE>
5
disposed of pursuant to a registration statement of the Company filed with the
SEC and declared effective by the SEC that covers the disposition of such
Transfer Restricted Security, (ii) it has been distributed pursuant to Rule 144
promulgated under the Securities Act (or any similar provisions under the
Securities Act then in effect) or (iii) it may be resold without registration
under the Securities Act, whether pursuant to Rule 144(k) under the Securities
Act or otherwise.
"Trustee" means United States Trust Company of New York, or any successor
trustee under the Indenture.
"Warrant Certificates" mean the registered certificates (including the
Global Warrants) issued by the Company under this Agreement representing the
Warrants.
"Warrant Custodian" means the custodian with respect to a Global Warrant
(as appointed by the Depositary) or any successor person thereto and shall
initially be the Warrant Agent.
"Warrant Shares" mean the shares of Class A Common Stock (and any other
securities) for which the Warrants are exercisable or which have been issued
upon exercise of Warrants.
SECTION 1.02. Other Definitions.
Defined in
Term Section
---- ----------
"Agreement"........................................................ Recitals
"Agent Members".................................................... 2.01(b)
"Cashless Exercise"................................................ 3.04
"Certificate Register"............................................. 2.03
"Common Shelf Registration Statement".............................. 5.01
"Class A Common Stock"............................................. Recitals
"Company".......................................................... Recitals
"Definitive Warrant"............................................... 2.01(c)
"Exercise Price"................................................... 3.01
"Expiration Date".................................................. 3.02(b)
"Global Warrant"................................................... 2.01(a)
"Holders".......................................................... Recitals
"Indemnified Parties".............................................. 5.05(a)
"Offering"......................................................... Recitals
"Registration Statement"........................................... 5.01
"Separability Legend".............................................. 2.04(e)
"Separation Date".................................................. Recitals
"Stock Transfer Agent"............................................. 3.05
"Successor Company"................................................ 4.05(a)
"Units"............................................................ Recitals
"Warrant".......................................................... Recitals
"Warrant Agent".................................................... Recitals
"Warrant Shelf Registration Statement"............................. 5.01
<PAGE>
6
SECTION 1.03. Rules of Construction. Unless the text otherwise requires:
(i) a defined term has the meaning assigned to it;
(ii) an accounting term not otherwise defined has the meaning assigned to
it in accordance with generally accepted accounting principles as in effect
from time to time;
(iii) "or" is not exclusive;
(iv) "including" means including, without limitation; and
(v) words in the singular include the plural and words in the plural
include the singular.
ARTICLE II
Warrant Certificates
SECTION 2.01. Form and Dating. The Warrants shall be offered and sold by
the Company pursuant to the Purchase Agreement. Each Warrant shall initially be
issued as part of a Unit consisting of one Note and one Warrant. Prior to the
Separation Date, the Warrants may not be transferred or exchanged separately
from, but may be transferred or exchanged only together with, the Notes attached
to such Warrants. Prior to the Separation Date, the transfer agent for the Notes
shall act as transfer agent ("Note Transfer Agent") for both the Warrants and
the Notes. Any request for transfer of a Warrant prior to the Separation Date
made to the Note Transfer Agent shall be accompanied by the Note attached
thereto and the Note Transfer Agent will not execute any such transfer without
such Note attached thereto. Such Warrant and Note will be duly endorsed and
accompanied by a written instrument of transfer in form satisfactory to the
Company, duly executed by the Holder thereof or the Holder's attorneys duly
authorized in writing. In the event of the commencement of a registered exchange
offer for the Notes or the effectiveness of a shelf registration statement with
respect to the Notes, the Company shall provide notice to the Note Transfer
Agent and the Warrant Agent of the Separation Date not less than two Business
Days prior to such date and the Company will cause the Note Transfer Agent to
notify the Depositary of such date. In the event of a determination by the
Initial Purchasers to separate the Warrants and the Notes, the Company shall
promptly, but in no event later than the next following Business Day after
receiving notice of such determination, provide notice to the Note Transfer
Agent and the Warrant Agent of the Separation Date and cause
<PAGE>
7
the Note Transfer Agent to notify the Depositary of such date. In acting as the
transfer agent for the Warrants prior to the Separation Date, the Note Transfer
Agent shall be entitled to all the rights, privileges and immunities to which
the Warrant Agent is entitled in performing such role pursuant to the terms of
this Agreement.
(a) Global Warrants. Warrants offered and sold to a QIB in reliance on Rule
144A, as provided in the Purchase Agreement, shall be issued initially in the
form of one or more permanent Global Warrants in definitive, fully registered
form with the Global securities legend and restricted securities legend set
forth in Exhibit A hereto (each, a "Global Warrant"), which shall be deposited
on behalf of the Initial Purchasers with, subject to the first paragraph of this
Section 2.01, the Warrant Agent, as custodian for the Depositary (or with such
other custodian as the Depositary may direct), and registered in the name of the
Depositary or a nominee of the Depositary, duly executed by the Company and
countersigned by the Warrant Agent as hereinafter provided. The number of
Warrants represented by the Global Warrant may from time to time be increased or
decreased by adjustments made on the records of the Warrant Agent and the
Depositary or its nominee as hereinafter provided.
(b) Book-Entry Provisions. (i) This Section 2.01(b) shall apply only to a
Global Warrant deposited with or on behalf of the Depositary.
The Company shall execute and the Warrant Agent shall, in accordance with
Section 2.02, countersign and deliver initially one or more Global Warrants that
(a) shall be registered in the name of the Depositary for such Global Warrant or
Global Warrants or the nominee of the Depositary and (b) shall be delivered by
the Warrant Agent to the Depositary or pursuant to the Depositary's instructions
or held by the Warrant Agent as custodian for the Depositary.
(ii) Members of, or participants in, the Depositary ("Agent Members") shall
have no rights under this Agreement with respect to any Global Warrant held on
their behalf by the Depositary or by the Warrant Agent as the custodian of the
Depositary or under such Global Warrant, and the Depositary may be treated by
the Company, the Warrant Agent and any agent of the Company or the Warrant Agent
as the absolute owner of such Global Warrant for all purposes whatsoever.
Notwithstanding the foregoing, nothing herein shall prevent the Company, the
Warrant Agent or any agent of the Company or the Warrant Agent from giving
effect to any written certification, proxy or other authorization furnished by
the Depositary or impair, as between the Depositary and its Agent Members, the
operation of customary practices of the Depositary governing the exercise of the
<PAGE>
8
rights of a holder of a beneficial interest in any Global Warrant.
(c) Certificated Securities. Except as provided in this Section 2.01 or
Section 2.03 or 2.04, owners of beneficial interests in Global Warrants will not
be entitled to receive physical delivery of certificated Warrants. Warrants
offered and sold in reliance on Regulation S under the Securities Act
("Regulation S"), as provided in the Purchase Agreement, will be issued
initially in the form of individual certificates in definitive, fully registered
form and with the restricted securities legend set forth in Exhibit A hereto
(each, a "Definitive Warrant"); provided, however, that upon transfer of any
such Definitive Warrant to a QIB in accordance with the provisions of this
Agreement, such Definitive Warrant will be exchanged for an interest in a Global
Warrant pursuant to the provisions of Section 2.04.
SECTION 2.02. Execution and Countersignature. Two Officers shall sign the
Warrant Certificates for the Company by manual or facsimile signature.
If an Officer whose signature is on a Warrant Certificate no longer holds
that office at the time the Warrant Agent countersigns the Warrant Certificate,
the Warrants evidenced by such Warrant Certificate shall be valid nevertheless.
The Warrant Agent shall initially countersign and deliver Warrant
Certificates entitling the Holders thereof to purchase in the aggregate not more
than 5,555,560 Warrant Shares upon a written order of the Company signed by two
Officers of the Company.
The Warrant Agent may appoint an agent reasonably acceptable to the Company
to countersign the Warrant Certificates. Unless limited by the terms of such
appointment, such agent may countersign Warrant Certificates whenever the
Warrant Agent may do so. Each reference in this Agreement to countersignature by
the Warrant Agent includes countersignature by such agent. Such agent will have
the same rights as the Warrant Agent for service of notices and demands.
At any time and from time to time after the execution of this Agreement,
the Warrant Agent or an agent reasonably acceptable to the Company shall upon
receipt of a written order of the Company signed by two Officers of the Company
manually countersign for original issue a Warrant Certificate evidencing the
number of Warrants specified in such order; provided that the Warrant Agent
shall be entitled to receive an Officers' Certificate and an Opinion of Counsel
of the Company that it may reasonably request in connection with such
countersignature of Warrants. Such
<PAGE>
9
order shall specify the number of Warrants to be evidenced on the Warrant
Certificate to be countersigned, the date on which such Warrant Certificate is
to be countersigned and the number of Warrants then authorized.
The Warrants evidenced by a Warrant Certificate shall not be valid until an
authorized signatory of the Warrant Agent or its agent as provided above
manually countersigns the Warrant Certificate. The signature shall be conclusive
evidence that the Warrant Certificate has been countersigned under this
Agreement.
SECTION 2.03. Certificate Register. The Warrant Agent shall keep a register
("Certificate Register") of the Warrant Certificates and of their transfer and
exchange. The Certificate Register shall show the names and addresses of the
respective Holders and the date and number of Warrants evidenced on the face of
each of the Warrant Certificates. The Company and the Warrant Agent may deem and
treat the Person in whose name a Warrant Certificate is registered as the
absolute owner of such Warrant Certificate for all purposes whatsoever and
neither the Company nor the Warrant Agent shall be affected by notice to the
contrary.
SECTION 2.04. Transfer and Exchange. (a) Transfer and Exchange of
Definitive Warrants. When Definitive Warrants are presented to the Warrant Agent
with a request:
(x) to register the transfer of such Definitive Warrants; or
(y) to exchange such Definitive Warrants for an equal number of Definitive
Warrants of other authorized denominations;
the Warrant Agent shall register the transfer or make the exchange as requested
if its reasonable requirements for such transaction are met; provided, however,
that the Definitive Warrants surrendered for transfer or exchange:
(i) shall be duly endorsed or accompanied by a written instrument of
transfer in form reasonably satisfactory to the Company and the Warrant Agent,
duly executed by the Holder thereof or his attorney duly authorized in
writing; and
(ii) if being transferred or exchanged pursuant to an effective
registration statement under the Securities Act, pursuant to Section 2.04(b)
or pursuant to clause (A), (B) or (C) below, shall be accompanied by the
following additional information and documents, as applicable:
<PAGE>
10
(A) if such Definitive Warrants are being delivered to the Warrant
Agent by a Holder for registration in the name of such Holder, without
transfer, a certification from such Holder to that effect (in the form set
forth on the reverse of the Warrant); or
(B) if such Definitive Warrants are being transferred to the Company,
a certification to that effect (in the form set forth on the reverse of the
Warrant); or
(C) if such Definitive Warrants are being transferred (w) pursuant to
an exemption from registration in accordance with Rule 144A, Regulation S
or Rule 144 under the Securities Act; or (x) in reliance on another
exemption from the registration requirements of the Securities Act: (1) a
certification to that effect (in the form set forth on the reverse of the
Warrant) and (2) if the Company or Warrant Agent so requests, an opinion of
counsel or other evidence reasonably satisfactory to them as to the
compliance with the restrictions set forth in the legend set forth in
Section 2.04(e)(i).
(b) Restrictions on Transfer of a Definitive Warrant for a Beneficial
Interest in a Global Warrant. A Definitive Warrant may not be exchanged for a
beneficial interest in a Global Warrant except upon satisfaction of the
requirements set forth below. Upon receipt by the Warrant Agent of a Definitive
Warrant, duly endorsed or accompanied by appropriate instruments of transfer, in
form satisfactory to the Warrant Agent, together with:
(i) certification, in the form set forth on the reverse of the Warrant,
that such Definitive Warrant is being transferred to a QIB in accordance with
Rule 144A; and
(ii) written instructions directing the Warrant Agent to make an adjustment
on its books and records with respect to such Global Warrant to reflect an
increase in the aggregate number of the Warrants represented by the Global
Warrant, such instructions to contain information regarding the Depositary
account to be credited with such increase;
then the Warrant Agent shall cancel such Definitive Warrant and cause, in
accordance with the standing instructions and procedures existing between the
Depositary and the Warrant Agent, the aggregate number of Warrants represented
by the Global Warrant to be increased by the aggregate number of Definitive
Warrants to be exchanged and shall credit or cause to be credited to the account
of the Person specified
<PAGE>
11
in such instructions a beneficial interest in the Global Warrant equal to the
number of Definitive Warrants so canceled. If no Global Warrants are then
outstanding, the Company shall execute and the Warrant Agent shall countersign
and deliver, upon written order of the Company in the form of an Officers'
Certificate, a new Global Warrant in the appropriate number.
(c) Transfer and Exchange of Global Warrants. (i) The transfer and exchange
of Global Warrants or beneficial interests therein shall be effected through the
Depositary, in accordance with this Agreement (including applicable restrictions
on transfer set forth herein) and the procedures of the Depositary therefor. A
transferor of a beneficial interest in a Global Warrant shall deliver to the
Warrant Agent a written order given in accordance with the Depositary's
procedures containing information regarding the participant account of the
Depositary to be credited with a beneficial interest in the Global Warrant. The
Warrant Agent shall, in accordance with such instructions instruct the
Depositary to credit to the account of the Person specified in such instructions
a beneficial interest in the Global Warrant and to debit the account of the
Person making the transfer the beneficial interest in the Global Warrant being
transferred.
(ii) Notwithstanding any other provisions of this Agreement (other than the
provisions set forth in Section 2.05), a Global Warrant may not be transferred
as a whole except by the Depositary to a nominee of the Depositary or by a
nominee of the Depositary to the Depositary or another nominee of the Depositary
or by the Depositary or any such nominee to a successor Depositary or a nominee
of such successor Depositary.
(iii) In the event that a Global Warrant is exchanged for Warrants in
definitive registered form pursuant to Section 2.05 or Section 2.08, prior to
the effectiveness of a Warrant Shelf Registration Statement with respect to such
Warrants, such Warrants may be exchanged only in accordance with such procedures
as are substantially consistent with the provisions of this Section 2.04
(including the certification requirements set forth on the reverse of the
Warrants intended to ensure that such transfers comply with Rule 144A or
Regulation S, as the case may be) and such other procedures as may from time to
time be adopted by the Company.
(d) Transfer of a Beneficial Interest in a Global Warrant for a Definitive
Warrant. (i) Upon the transfer of a beneficial interest in a Global Warrant
pursuant to Regulation S, subject to Section 2.04(e)(iii), the interest being
transferred in the Global Warrant may not continue to be held in book-entry form
through the Depositary, will be exchanged for a Definitive Warrant only and will
require the
<PAGE>
12
delivery by the transferee of a transfer certificate substantially in the form
of the certifications set forth on the reverse of the Warrants.
(ii) Definitive Warrants issued in exchange for a beneficial interest in a
Global Warrant pursuant to this Section 2.04(d) shall be registered in such
names and in such authorized denominations as the Depositary, pursuant to
instructions from its participants or indirect participants or otherwise, shall
instruct the Warrant Agent. The Warrant Agent shall deliver such Warrants to the
persons in whose names such Warrants are so registered in accordance with the
instructions of the Depositary.
(e) Legend. (i) Except as permitted by the following paragraphs (ii) and
(iii), and to the extent permitted by applicable law, each Warrant certificate
evidencing the Global Warrants and Definitive Warrants (and all Warrants and
Warrant Shares issued in exchange therefor or in substitution thereof) shall
bear a legend in substantially the following form:
"THIS SECURITY (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION
EXEMPT FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), AND THIS SECURITY MAY NOT BE OFFERED, SOLD
OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN
APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THIS SECURITY IS HEREBY
NOTIFIED THAT THE SELLER OF THIS SECURITY MAY BE RELYING ON THE EXEMPTION
FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE
144A THEREUNDER. HEDGING TRANSACTIONS INVOLVING THE UNITS OR THE WARRANTS
MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE SECURITIES ACT.
THE HOLDER OF THIS SECURITY AGREES FOR THE BENEFIT OF THE COMPANY THAT (A)
THIS SECURITY MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY
(I) INSIDE THE UNITED STATES TO A PERSON WHOM THE SELLER REASONABLY
BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A
UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE
144A, (II) OUTSIDE THE UNITED STATES IN A TRANSACTION IN ACCORDANCE WITH
RULE 904 UNDER THE SECURITIES ACT, (III) PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF
AVAILABLE), (IV) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OR (V) TO THE ISSUER, IN EACH OF CASES (I) THROUGH (V) IN
ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED
STATES OR ANY OTHER APPLICABLE JURISDICTION, AND (B) THE HOLDER
<PAGE>
13
WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF
THIS SECURITY FROM IT OF THE RESALE RESTRICTIONS REFERRED TO IN (A) ABOVE.
THE WARRANT EVIDENCED BY THIS CERTIFICATE AND THE SECURITIES TO BE ISSUED
UPON ITS EXERCISE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT AND THE
WARRANT MAY NOT BE EXERCISED BY OR ON BEHALF OF ANY U.S. PERSON UNLESS
REGISTERED UNDER THE SECURITIES ACT OR AN EXEMPTION FROM SUCH REGISTRATION
IS AVAILABLE."
Each Definitive Warrant will also bear the following legend:
"IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE WARRANT
AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS SUCH WARRANT AGENT MAY
REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING
RESTRICTIONS."
Each Warrant Certificate issued prior to the Separation Date will also bear
the following legend (the "Separability Legend"):
"THE WARRANTS EVIDENCED BY THIS CERTIFICATE WERE INITIALLY ISSUED AS PART
OF AN ISSUANCE OF UNITS, EACH OF WHICH CONSISTS OF ONE 13 1/4% SENIOR
SUBORDINATED NOTE DUE 2009 OF INTERSIL CORPORATION WITH A PRINCIPAL AMOUNT
OF $1,000 (A "NOTE") AND ONE WARRANT. THE NOTES AND WARRANTS WILL NOT TRADE
SEPARATELY UNTIL THE EARLIEST OF (I) THE COMMENCEMENT OF A REGISTERED
EXCHANGE OFFER FOR THE NOTES, (II) THE EFFECTIVENESS OF A SHELF
REGISTRATION STATEMENT WITH RESPECT TO THE NOTES AND (III) SUCH EARLIER
DATE AFTER OCTOBER 12, 1999, AS THE INITIAL PURCHASERS MAY DETERMINE."
(ii) Upon any sale or transfer of a Transfer Restricted Security (including
any Transfer Restricted Security represented by a Global Warrant) pursuant to
Rule 144 under the Securities Act:
(A) in the case of any Transfer Restricted Security that is a
Definitive Warrant, the Warrant Agent shall permit the Holder thereof to
exchange such Transfer Restricted Security for a certificated Warrant that
does not bear the legends set forth above (other than the Separability
Legend) and rescind any restriction on the transfer of such Transfer
Restricted Security; and
(B) in the case of any Transfer Restricted Security that is
represented by a Global Warrant, the Warrant Agent shall permit the Holder
thereof to exchange such Transfer Restricted Security for a
<PAGE>
14
certificated Warrant that does not bear the legends set forth above (other
than the Separability Legend) and rescind any restriction on the transfer
of such Transfer Restricted Security, if the Holder certifies in writing to
the Warrant Agent that its request for such exchange was made in reliance
on Rule 144 (such certification to be in the form set forth on the reverse
of the Warrant).
(iii) After a transfer of any Warrants during the period of the
effectiveness of a Warrant Shelf Registration Statement with respect to such
Warrants, all requirements pertaining to legends on such Warrant (other than the
Separability Legend) will cease to apply, the requirements requiring any such
Warrant issued to certain Holders to be issued in global form will cease to
apply, and a certificated Warrant without legends (other than the Separability
Legend) will be available to the transferee of the Holder of such Warrants upon
exchange of such transferring Holder's certificated Warrant or directions to
transfer such Holder's interest in the Global Warrant, as applicable.
(iv) On or after the Separation Date, the Holder of a Warrant Certificate
containing a Separability Legend may surrender such Warrant Certificate
accompanied by a written application to the Warrant Agent, duly executed by the
Holder thereof, for a new Warrant Certificate or certificates not containing the
Separability Legend.
(f) Cancelation or Adjustment of Global Warrant. At such time as all
beneficial interests in a Global Warrant have been exchanged for certificated
Warrants, redeemed, repurchased or canceled, such Global Warrant shall be
returned to the Depositary for cancelation or retained and canceled by the
Warrant Agent. At any time prior to such cancelation, if any beneficial interest
in a Global Warrant is exchanged for certificated Warrants, redeemed, repur-
chased or canceled, the number of Warrants represented by such Global Warrant
shall be reduced and an adjustment shall be made on the books and records of the
Warrant Agent (if it is then the Warrant Custodian for such Global Warrant) with
respect to such Global Warrant, by the Warrant Agent, to reflect such reduction.
(g) Obligations with Respect to Transfers and Exchanges of Warrants. (i) To
permit registrations of transfers and exchanges, the Company shall execute and
the Warrant Agent shall countersign certificated Warrants, Definitive Warrants
and Global Warrants as required pursuant to the provisions of Section 2.02 and
this Section 2.04.
(ii) No service charge shall be made to a Holder for any registration of
transfer or exchange, but the Company may require payment of a sum sufficient to
cover any
<PAGE>
15
transfer tax, assessments, or similar governmental charge payable in connection
therewith.
(iii) Prior to the due presentation for registration of transfer of any
Warrant, the Company and the Warrant Agent may deem and treat the Person in
whose name a Warrant is registered as the absolute owner of such Warrant, and
neither the Company nor the Warrant Agent shall be affected by notice to the
contrary.
(iv) All Warrants issued upon any transfer or exchange pursuant to the
terms of this Agreement shall be the valid obligations of the Company, entitled
to the same benefits under this Agreement as the Warrants surrendered upon such
transfer or exchange.
(h) No Obligation of the Warrant Agent. (i) The Warrant Agent shall have no
responsibility or obligation to any beneficial owner of a Global Warrant, a
member of, or a participant in the Depositary or other Person with respect to
the accuracy of the records of the Depositary or its nominee or of any
participant or member thereof, with respect to any ownership interest in the
Warrants or with respect to the delivery to any participant, member, beneficial
owner or other Person (other than the Depositary) of any notice or the payment
of any amount, under or with respect to such Warrants. All notices and
communications to be given to the Holders and all payments to be made to Holders
under the Warrants shall be given or made only to or upon the order of the
registered Holders (which shall be the Depositary or its nominee in the case of
a Global Warrant). The rights of beneficial owners in any Global Warrant shall
be exercised only through the Depositary subject to the applicable rules and
procedures of the Depositary. The Warrant Agent may rely and shall be fully
protected in relying upon information furnished by the Depositary with respect
to its members, participants and any beneficial owners.
(ii) The Warrant Agent shall have no obligation or duty to monitor,
determine or inquire as to compliance with any restrictions on transfer imposed
under this Agreement or under applicable law with respect to any transfer of any
interest in any Warrant (including any transfers between or among the Depositary
participants, members or beneficial owners in any Global Warrant) other than to
require delivery of such certificates and other documentation or evidence as are
expressly required by, and to do so if and when expressly required by, the terms
of this Agreement, and to examine the same to determine substantial compliance
as to form with the express requirements hereof.
(i) No Registration of Transfer. The Company shall not, and shall cause the
Warrant Agent not to, register any transfer of Warrants or Warrant Shares not
made in
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16
accordance with the provisions of Regulation S, pursuant to registration under
the Securities Act or pursuant to an available exemption from registration.
SECTION 2.05. Certificated Warrants. (a) A Global Warrant deposited with
the Depositary or with the Warrant Agent as custodian for the Depositary
pursuant to Section 2.01 shall be transferred to the beneficial owners thereof
in the form of certificated Warrants in a number equal to the number of Warrants
represented by such Global Warrant, in exchange for such Global Warrant, only if
such transfer complies with Section 2.04 and (i) the Depositary notifies the
Company that it is unwilling or unable to continue as depositary for such Global
Warrant or if at any time the Depositary ceases to be a "clearing agency"
registered under the Exchange Act and a successor depositary is not appointed by
the Company within 90 days of such notice or (ii) the Company, in its sole
discretion, notifies the Warrant Agent in writing that it elects to cause the
issuance of Certificated Warrants under this Agreement.
(b) Any Global Warrant that is transferable to the beneficial owners
thereof pursuant to this Section shall be surrendered by the Depositary to the
Warrant Agent, to be so transferred, in whole or from time to time in part,
without charge, and the Warrant Agent shall countersign and deliver, upon such
transfer of each portion of such Global Warrant, an equal number of Certificated
Warrants. Any certificated Warrant delivered in exchange for an interest in the
Global Warrant shall, except as otherwise provided by Section 2.04(g), bear the
restricted securities legend set forth in Section 2.04(e) hereto.
(c) Subject to the provisions of Section 2.05(b), the registered Holder of
a Global Warrant may grant proxies and otherwise authorize any Person, including
Agent Members and Persons that may hold interests through Agent Members, to take
any action which a Holder is entitled to take under this Agreement or the
Warrants.
(d) In the event of the occurrence of either of the events specified in
Section 2.05(a), the Company will promptly make available to the Warrant Agent a
reasonable supply of Certificated Warrants in definitive, fully registered form
Warrants.
SECTION 2.06. Replacement Certificates. If a mutilated Warrant Certificate
is surrendered to the Warrant Agent or if the Holder of a Warrant Certificate
claims that the Warrant Certificate has been lost, destroyed or wrong fully
taken, the Company shall issue and the Warrant Agent shall countersign a
replacement Warrant Certificate if the reasonable requirements of the Warrant
Agent and of Section 8-405 of the Uniform Commercial Code as in effect in the
State of New York are met. If required by the Warrant
<PAGE>
17
Agent or the Company, such Holder shall furnish an indemnity bond sufficient in
the judgment of the Company and the Warrant Agent to protect the Company and the
Warrant Agent from any loss which either of them may suffer if a Warrant
Certificate is replaced. The Company and the Warrant Agent may charge the Holder
for their expenses in replacing a Warrant Certificate. Every replacement Warrant
Certificate evidences an additional obligation of the Company.
SECTION 2.07. Outstanding Warrants. Warrants outstanding at any time are
all Warrants evidenced on all Warrant Certificates authenticated by the Warrant
Agent except for those canceled by it and those delivered to it for cancelation.
A Warrant does not cease to be outstanding because an Affiliate of the Company
holds the Warrant. A Warrant ceases to be outstanding if the Company holds the
Warrant.
If a Warrant Certificate is replaced pursuant to Section 2.06, the Warrants
evidenced thereby cease to be outstanding unless the Warrant Agent and the
Company receive proof satisfactory to them that the replaced Warrant Certificate
is held by a bona fide purchaser.
SECTION 2.08. Temporary Certificates. Until definitive Warrant Certificates
are ready for delivery, the Company may prepare and the Warrant Agent shall
countersign temporary Warrant Certificates. Temporary Warrant Certificates shall
be substantially in the form of definitive Warrant Certificates but may have
variations that the Company considers appropriate for temporary Warrant
Certificates. Without unreasonable delay following the occurrence of either of
the events specified in Section 2.05(a), the Company shall prepare and the
Warrant Agent shall countersign definitive Warrant Certificates and deliver them
in exchange for temporary Warrant Certificates.
SECTION 2.09. Cancelation. (a) In the event the Company shall purchase or
otherwise acquire Certificated Warrants, the same shall thereupon be delivered
to the Warrant Agent for cancelation.
(b) The Warrant Agent and no one else shall cancel and destroy all Warrant
Certificates surrendered for transfer, exchange, replacement, exercise or
cancelation and deliver a certificate of such destruction to the Company unless
the Company directs the Warrant Agent to deliver canceled Warrant Certificates
to the Company. The Company may not issue new Warrant Certificates to replace
Warrant Certificates to the extent they evidence Warrants which have been
exercised or Warrants which the Company has purchased or otherwise acquired.
SECTION 2.10. CUSIP Numbers. The Company in issuing the Warrants may use
"CUSIP" numbers (if then
<PAGE>
18
generally in use) and, if so, the Warrant Agent shall use "CUSIP" numbers in
notices as a convenience to Holders; provided, however, that any such notice may
state that no representation is made as to the correctness of such numbers
either as printed on the Warrant Certificates or as contained in any notice and
that reliance may be placed only on the other identification numbers printed on
the Warrant Certificates.
ARTICLE III
Exercise Terms
SECTION 3.01. Exercise. Each Warrant shall initially entitle the Holder
thereof, subject to adjustment pursuant to the terms of this Agreement, to
purchase 27.7778 shares of Class A Common Stock. The exercise price (the
"Exercise Price") of each Warrant is $0.001 per share.
SECTION 3.02. Exercise Periods. (a) Subject to the terms and conditions set
forth herein, the Warrants shall be exercisable at any time and from time to
time on any Business Day after the first anniversary of the Issue Date;
provided, however, that holders of Warrants will be able to exercise their
Warrants only if (i) the Common Shelf Registration Statement relating to the
Warrant Shares is effective or (ii) the exercise of such Warrants is exempt from
the registration requirements of the Securities Act, and the Warrant Shares are
qualified for sale or exempt from qualification under the applicable securities
laws of the states or other jurisdictions in which such holders reside.
(b) No Warrant shall be exercisable after August 15, 2009 (the "Expiration
Date").
SECTION 3.03. Expiration. A Warrant shall terminate and become void as of
the earlier of (i) the close of business on the Expiration Date or (ii) the date
such Warrant is exercised. The Company shall give notice not less than 90, and
not more than 120, days prior to the Expiration Date to the Holders of all then
outstanding Warrants to the effect that the Warrants will terminate and become
void as of the close of business on the Expiration Date; provided, however, that
if the Company fails to give notice as provided in this Section 3.03, the
Warrants will nevertheless expire and become void on the Expiration Date.
SECTION 3.04. Manner of Exercise. Warrants may be exercised upon (i)
surrender to the Warrant Agent at the office of the Warrant Agent of the related
Warrant Certificate, together with the form of election attached thereto to
purchase Class A Common Stock on the reverse thereof duly filled in and signed
by the Holder thereof and (ii) payment to the Warrant Agent, for the account of
the
<PAGE>
19
Company, of the Exercise Price for each Warrant Share or other security issuable
upon the exercise of such Warrants then exercised. Such payment shall be made
(i) in cash or by certified or official bank check payable to the order of the
Company or by wire transfer of funds to an account designated by the Company for
such purpose or (ii) without the payment of cash, by reducing the number of
shares of Common Stock obtainable upon the exercise of a Warrant and payment of
the Exercise Price in cash so as to yield a number of shares of Common Stock
upon the exercise of such Warrant equal to the product of (a) the number of
shares of Common Stock issuable as of the Exercise Date upon the exercise of
such Warrant (if payment of the Exercise Price were being made in cash) and (b)
the Cashless Exercise Ratio. An exercise of a Warrant in accordance with the
immediately preceding sentence is herein called a "Cashless Exercise". Upon
surrender of a Warrant Certificate representing more than one Warrant in
connection with the holder's option to elect a Cashless Exercise, the number of
shares of Common Stock deliverable upon a Cashless Exercise shall be equal to
the number of shares of Common Stock issuable upon the exercise of Warrants that
the holder specifies are to be exercised pursuant to a Cashless Exercise
multiplied by the Cashless Exercise Ratio. All provisions of this Agreement
shall be applicable with respect to a surrender of a Warrant Certificate
pursuant to a Cashless Exercise for less than the full number of Warrants
represented thereby. Subject to Section 3.02, the rights represented by the
Warrants shall be exercisable at the election of the Holders thereof either in
full at any time or from time to time in part and in the event that a Warrant
Certificate is surrendered for exercise of less than all the Warrants
represented by such Warrant Certificate at any time prior to the Expiration
Date, a new Warrant Certificate representing the remaining Warrants shall be
issued. The Warrant Agent shall countersign and deliver the required new Warrant
Certificates, and the Company, at the Warrant Agent's request, shall supply the
Warrant Agent with Warrant Certificates duly signed on behalf of the Company for
such purpose.
SECTION 3.05. Issuance of Warrant Shares. Subject to Section 2.06, upon the
surrender of Warrant Certificates and payment of the per share Exercise Price,
as set forth in Section 3.04, the Company shall issue and cause the Warrant
Agent or, if appointed, a transfer agent for the Common Stock ("Stock Transfer
Agent") to countersign and deliver to or upon the written order of the Holder
and in such name or names as the Holder may designate, a certificate or
certificates for the number of full Warrant Shares so purchased upon the
exercise of such Warrants or other securities or property to which it is
entitled, registered or otherwise, to the Person or Persons entitled to receive
the same (including any depositary institution so designated by a Holder),
together with cash as provided in
<PAGE>
20
Section 3.06 in respect of any fractional Warrant Shares otherwise issuable upon
such exercise. Such certificate or certificates shall be deemed to have been
issued and any Person so designated to be named therein shall be deemed to have
become a holder of record of such Warrant Shares as of the date of the surrender
of such Warrant Certificates and payment of the per share Exercise Price, as
aforesaid; provided, however, that if, at such date, the transfer books for the
Warrant Shares shall be closed, the certificates for the Warrant Shares in
respect of which such Warrants are then exercised shall be issuable as of the
date on which such books shall next be opened and until such date the Company
shall be under no duty to deliver any certificates for such Warrant Shares;
provided further, however, that such transfer books, unless otherwise required
by law, shall not be closed at any one time for a period longer than 20 calendar
days.
SECTION 3.06. Fractional Warrant Shares. The Company shall not be required
to issue fractional Warrant Shares on the exercise of Warrants. If more than one
Warrant shall be exercised in full at the same time by the same Holder, the
number of full Warrant Shares which shall be issuable upon such exercise shall
be computed on the basis of the aggregate number of Warrant Shares which may be
purchasable pursuant thereto. If any fraction of a Warrant Share would, except
for the provisions of this Section 3.06, be issuable upon the exercise of any
Warrant (or specified portion thereof), the Company shall pay an amount in cash
equal to the Current Market Value per Warrant Share, as determined on the day
immediately preceding the date the Warrant is presented for exercise, multiplied
by such fraction, computed to the nearest whole cent.
SECTION 3.07. Reservation of Warrant Shares. The Company shall at all times
keep reserved out of its authorized shares of Class A Common Stock a number of
shares of Class A Common Stock sufficient to provide for the exercise of all
outstanding Warrants. The registrar for the Class A Common Stock (the
"Registrar") shall at all times until the Expiration Date reserve such number of
authorized shares as shall be required for such purpose. The Company will keep a
copy of this Agreement on file with the Stock Transfer Agent. The Company will
supply such Stock Transfer Agent with duly executed stock certificates for such
purpose and will itself provide or otherwise make available any cash which may
be payable as provided in Section 3.06. The Company will furnish to such Stock
Transfer Agent a copy of all notices of adjustments (and certificates related
thereto) transmitted to each Holder.
Before taking any action which would cause an adjustment pursuant to
Article IV to reduce the Exercise Price below the then par value (if any) of the
Common Stock, the Company shall take any and all corporate action which
<PAGE>
21
may, in the opinion of its counsel, be necessary in order that the Company may
validly and legally issue fully paid and nonassessable shares of Class A Common
Stock at the Exercise Price as so adjusted.
The Company covenants that all Warrant Shares which may be issued upon
exercise of Warrants shall, upon issue, be fully paid, nonassessable, free of
preemptive rights, free from all taxes and free from all liens, charges and
security interests with respect to the issue thereof.
SECTION 3.08. Compliance with Law. (a) Notwithstanding anything in this
Agreement to the contrary, in no event shall a Holder be entitled to exercise a
Warrant unless (i) a registration statement filed under the Securities Act in
respect of the issuance of the Warrant Shares is then effective or (ii) in the
opinion of counsel to the Company addressed to the Warrant Agent the exercise of
such Warrants is exempt from the registration requirements of the Securities Act
and such securities are qualified for sale or exempt from qualification under
the applicable securities laws of the states or other jurisdictions in which
such Holders reside.
(b) If any shares of Class A Common Stock required to be reserved for
purposes of the exercise of Warrants require, under any other Federal or state
law or applicable governing rule or regulation of any national securities
exchange, registration with or approval of any governmental authority, or
listing on any such national securities exchange before such shares may be
issued upon exercise, the Company will cause such shares to be duly registered
or approved by such governmental authority or listed on the relevant national
securities exchange, as the case may be.
ARTICLE IV
Antidilution Provisions
SECTION 4.01. Changes in Common Stock. In the event that at any time and
from time to time the Company shall (i) pay a dividend or make a distribution on
the Common Stock in shares of Common Stock or other shares of Capital Stock,
(ii) subdivide its outstanding shares of Common Stock into a larger number of
shares of Common Stock, (iii) combine its outstanding shares of Common Stock
into a smaller number of shares of Common Stock or (iv) increase or decrease the
number of shares of Class A Common Stock outstanding by reclassification of its
Common Stock, then the number of shares of Class A Common Stock issuable upon
exercise of each Warrant immediately after the happening of such event shall be
adjusted so that, after giving effect to such adjustment, the Holder of each
Warrant shall be
<PAGE>
22
entitled to receive the number of shares of Class A Common Stock upon exercise
of such Warrant that such Holder would have owned or have been entitled to
receive had such Warrants been exercised immediately prior to the happening of
the events described above (or, in the case of a dividend or distribution of
Common Stock, immediately prior to the record date therefor). An adjustment made
pursuant to this Section 4.01 shall become effective immediately after the
distribution date, retroactive to the record date therefor in the case of a
dividend or distribution in shares of Common Stock or other shares of Capital
Stock, and shall become effective immediately after the effective date in the
case of a subdivision, combination or reclassification.
SECTION 4.02. Cash Dividends and Other Distributions. In the event that at
any time and from time to time the Company shall distribute to all holders of
Common Stock (i) any dividend or other distribution (including any dividend or
distribution made in connection with a consolidation or merger in which the
Company is the continuing corporation) of cash, evidences of its indebtedness,
shares of its Capital Stock or any other properties or securities or (ii) any
options, warrants or other rights to subscribe for or purchase any of the
foregoing (other than, in the case of clause (i) and (ii) above, (A) any
dividend or distribution described in Section 4.01, (B) any rights, options,
warrants or securities described in Section 4.03 or Section 4.04 and (C) any
cash dividends or other cash distributions from current or retained earnings
other than Extraordinary Cash Dividends), then the number of shares of Class A
Common Stock issuable upon the exercise of each Warrant immediately prior to
such record date for any such dividend or distribution shall be increased to a
number determined by multiplying the number of shares of Class A Common Stock
issuable upon the exercise of such Warrant immediately prior to such record date
for any such dividend or distribution by a fraction, the numerator of which
shall be the Current Market Value per share of Class A Common Stock on the
record date for such dividend or distribution, and the denominator of which
shall be such Current Market Value per share of Class A Common Stock less the
sum of (x) the amount of cash, if any, distributed per share of Common Stock and
(y) the then fair value (as determined in good faith by the Board, whose
determination shall be evidenced by a board resolution filed with the Warrant
Agent, a copy of which will be sent to Holders upon request) of the portion, if
any, of the distribution applicable to one share of Class A Common Stock
consisting of evidences of indebtedness, shares of stock, securities, other
property, warrants, options or subscription or purchase rights; and subject to
Section 4.08, the Exercise Price shall be adjusted to a number determined by
dividing the Exercise Price immediately prior to such record date by the above
fraction. Such adjustments shall be made, and shall only become effective,
whenever any dividend or
<PAGE>
23
distribution is made; provided, however, that the Company is not required to
make an adjustment pursuant to this Section 4.02 if at the time of such
distribution the Company makes the same distribution to Holders of Warrants as
it makes to holders of Common Stock pro rata based on the number of shares of
Class A Common Stock for which such Warrants are exercisable (whether or not
currently exercisable). No adjustment shall be made pursuant to this Section
4.02 which shall have the effect of decreasing the number of shares of Common
Stock issuable upon exercise of each Warrant or increasing the Exercise Price.
SECTION 4.03. Common Stock Issue. In the event that at any time or from
time to time the Company shall issue shares of Common Stock for a consideration
per share that is less than the Current Market Value per share of Common Stock
as of the issuance date of such shares, the number of shares of Class A Common
Stock issuable upon the exercise of each Warrant immediately after such issuance
date shall be determined by multiplying the number of shares of Class A Common
Stock issuable upon exercise of each Warrant immediately prior to such issuance
date by a fraction, the numerator of which shall be the number of shares of
Common Stock outstanding immediately preceding the issuance of such shares plus
the number of additional shares of Common Stock to be issued in such
transaction, and the denominator of which shall be the number of shares of
Common Stock outstanding immediately preceding the date for the issuance of such
shares plus the total number of shares of Common Stock which the aggregate
consideration expected to be received by the Company upon the issuance of such
shares (as determined in good faith by the Board, whose determination shall be
evidenced by a board resolution filed with the Warrant Agent, a copy of which
will be sent to Holders upon request) would purchase at the Current Market Value
per share of Common Stock as of the date of such issuance; and, subject to
Section 4.08, in the event of any such adjustment, the Exercise Price shall be
adjusted to a number determined by dividing the Exercise Price immediately prior
to such date of issuance by the aforementioned fraction; provided, however, that
no adjustment to the number of Warrant Shares issuable upon the exercise of the
Warrants or to the Exercise Price shall be made as a result of (i) the issuance
of shares of Common Stock in bona fide public offerings that are underwritten or
in which a placement agent is retained by the Company, (ii) the issuance of
shares of Class A Common Stock upon conversion of Class B Common Stock and the
issuance of shares of Class B Common Stock upon conversion of Class A Common
Stock, in each case as provided in the Certificate of Incorporation of the
Company as in effect on the Issue Date, (iii) the issuance of shares of Common
Stock (including the exercise of options) to officers, directors or employees of
the Company, (iv) the issuance of shares of Common Stock in connection with
acquisitions of products and businesses
<PAGE>
24
other than to Affiliates of the Company and (v) the issuance of shares of Common
Stock upon the conversion, exchange or exercise of convertible, exchangeable or
exercisable securities of the Company outstanding on the Issue Date. Such
adjustment shall be made, and shall only become effective, whenever such shares
are issued. No adjustment shall be made pursuant to this Section 4.03 which
shall have the effect of decreasing the number of shares of Class A Common Stock
issuable upon exercise of each Warrant or increasing the Exercise Price.
SECTION 4.04. Issuance of Rights or Options. In the event that at any time
or from time to time the Company shall issue to all holders of Common Stock (i)
rights, options or warrants to acquire (provided, however, that no adjustment
shall be made under Section 4.03 or 4.04 upon the exercise of such rights,
options or warrants), or (ii) securities convertible or exchangeable into
(provided, however, that no adjustment shall be made under Section 4.03 or 4.04
upon the conversion or exchange of such securities (other than issuances
specified in (i) or (ii) which are made as the result of anti-dilution
adjustments in such securities)), Common Stock entitling the holders thereof to
subscribe for or purchase shares of Common Stock at a price per share that is
less than the Current Market Value per share of Common Stock in effect
immediately prior to such issuance other than in connection with the adoption of
a shareholder rights plan by the Company, the number of shares of Class A Common
Stock issuable upon the exercise of each Warrant immediately after such issuance
shall be determined by multiplying the number of shares of Class A Common Stock
issuable upon exercise of each Warrant immediately prior to such issuance by a
fraction, the numerator of which shall be the number of shares of Common Stock
outstanding immediately prior to the issuance of such rights, options, warrants
or securities plus the number of additional shares of Common Stock offered for
subscription or purchase or into which such securities are convertible or
exchangeable, and the denominator of which shall be the number of shares of
Common Stock outstanding immediately prior to the issuance of such rights,
options, warrants or securities plus the total number of shares of Common Stock
which the aggregate consideration expected to be received by the Company upon
the exercise, conversion or exchange of such rights, options, warrants or
securities (as determined in good faith by the Board, whose determination shall
be evidenced by a board resolution filed with the Warrant Agent, a copy of which
will be sent to Holders upon request) would purchase at the Current Market Value
per share of Common Stock as of the record date; and, subject to Section 4.08,
in the event of any such adjustment, the Exercise Price shall be adjusted to a
number determined by dividing the Exercise Price immediately prior to such date
of issuance by the aforementioned fraction. Such adjustment shall be made, and
shall only become effective, whenever such rights, options,
<PAGE>
25
warrants or securities are issued. No adjustment shall be made pursuant to this
Section 4.04 which shall have the effect of decreasing the number of shares of
Class A Common Stock issuable upon exercise of each Warrant or increasing the
Exercise Price.
SECTION 4.05. Combination; Liquidation. (a) Except as provided in Section
4.05(b), in the event of a Combination, each Holder shall have the right to
receive upon exercise of the Warrants the kind and amount of shares of Capital
Stock or other securities or property which such Holder would have been entitled
to receive upon completion of or as a result of such Combination had such
Warrant been exercised immediately prior to such event or to the relevant record
date for any such entitlement. Unless paragraph (b) is applicable to a
Combination, the Company shall provide that the surviving or acquiring Person
(the "Successor Company") in such Combination will enter into an agreement with
the Warrant Agent confirming the Holders' rights pursuant to this Section
4.05(a) and providing for adjustments, which shall be as nearly equivalent as
may be practicable to the adjustments provided for in this Article IV. The
provisions of this Section 4.05(a) shall similarly apply to successive
Combinations involving any Successor Company.
(b) In the event of (i) a Combination where consideration to the holders of
Class A Common Stock in exchange for their shares is payable solely in cash or
(ii) the dissolution, liquidation or winding-up of the Company, the Holders of
the Warrants shall be entitled to receive, upon surrender of their Warrant
Certificates, such cash distributions on an equal basis with the holders of
Class A Common Stock or other securities issuable upon exercise of the Warrants,
as if the Warrants had been exercised immediately prior to such event, less the
Exercise Price.
In the event of any Combination described in this Section 4.05(b), the
surviving or acquiring Person and, in the event of any dissolution, liquidation
or winding-up of the Company, the Company, shall deposit promptly with the
Warrant Agent the funds, if any, necessary to pay the Holders of the Warrants
the amounts to which they are entitled as described above. After such funds and
the surrendered Warrant Certificates are received, the Warrant Agent shall make
payment to the Holders by delivering a check in such amount as is appropriate
(or, in the case of consideration other than cash, such other consideration as
is appropriate) to such Person or Persons as it may be directed in writing by
the Holders surrendering such Warrants.
SECTION 4.06. Other Events. If any event occurs as to which the foregoing
provisions of this Article IV are
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26
not strictly applicable or, if strictly applicable, would not, in the good faith
judgment of the Board, fairly and adequately protect the purchase rights of the
Warrants in accordance with the essential intent and principles of such
provisions, then such Board shall make such adjustments in the application of
such provisions, in accordance with such essential intent and principles, as
shall be reasonably necessary, in the good faith opinion of such Board, to
protect such purchase rights as aforesaid, but in no event shall any such
adjustment have the effect of increasing the Exercise Price or decreasing the
number of shares of Class A Common Stock issuable upon exercise of the Warrants.
SECTION 4.07. Superseding Adjustment. Upon the expiration of any rights,
options, warrants or conversion or exchange privileges which resulted in
adjustments pursuant to this Article IV, if any thereof shall not have been
exercised, the number of Warrant Shares issuable upon the exercise of each
Warrant shall be readjusted pursuant to the applicable section of Article IV as
if (i) the only shares of Common Stock issuable upon exercise of such rights,
options, warrants, conversion or exchange privileges were the shares of Common
Stock, if any, actually issued upon the exercise of such rights, options,
warrants or conversion or exchange privileges and (ii) shares of Common Stock
actually issued, if any, were issuable for the consideration actually received
by the Company upon such exercise plus the aggregate consideration, if any,
actually received by the Company for the issuance, sale or grant of all such
rights, options, warrants or conversion or exchange privileges whether or not
exercised and the Exercise Price shall be readjusted inversely; provided,
however, that no such readjustment (except by reason of an intervening
adjustment under Section 4.01) shall have the effect of decreasing the number of
Warrant Shares issuable upon the exercise of each Warrant or increasing the
Exercise Price by an amount in excess of the amount of the adjustment initially
made in respect of the issuance, sale or grant of such rights, options, warrants
or conversion or exchange privileges.
SECTION 4.08. Minimum Adjustment. The adjustments required by the
preceding sections of this Article IV shall be made whenever and as often as any
specified event requiring an adjustment shall occur, except that no adjustment
of the Exercise Price or the number of shares of Class A Common Stock issuable
upon exercise of the Warrants that would otherwise be required shall be made
unless and until such adjustment either by itself or with other adjustments not
previously made increases or decreases by at least 1% the Exercise Price or the
number of shares of Class A Common Stock issuable upon exercise of the Warrants
immediately prior to the making of such adjustment. Any adjustment representing
a change of less than such minimum amount shall be carried forward and made as
soon as such adjustment, together with other adjustments required by this
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27
Article IV and not previously made, would result in a minimum adjustment. For
the purpose of any adjustment, any specified event shall be deemed to have
occurred at the close of business on the date of its occurrence. In computing
adjustments under this Article IV, fractional interests in Common Stock shall be
taken into account to the nearest one-hundredth of a share.
SECTION 4.09. Notice of Adjustment. Whenever the Exercise Price or the
number of shares of Class A Common Stock and other property, if any, issuable
upon exercise of the Warrants is adjusted, as herein provided, the Company shall
deliver to the Warrant Agent a certificate of a firm of independent accountants
selected by the Board (who may be the regular accountants employed by the
Company) setting forth, in reasonable detail, the event requiring the adjustment
and the method by which such adjustment was calculated (including a description
of the basis on which (i) the Board determined the then fair value of any
evidences of indebtedness, other securities or property or warrants, options or
other subscription or purchase rights and (ii) the Current Market Value of the
Common Stock was determined, if either of such determinations were required),
and specifying the Exercise Price and the number of shares of Class A Common
Stock issuable upon exercise of the Warrants after giving effect to such
adjustment. The Company shall promptly cause the Warrant Agent to mail a copy of
such certificate to each Holder in accordance with Section 8.05. The Warrant
Agent shall be entitled to rely on such certificate and shall be under no duty
or responsibility with respect to any such certificate, except to exhibit the
same from time to time, to any Holder desiring an inspection thereof during
reasonable business hours. The Warrant Agent shall not at any time be under any
duty or responsibility to any Holder to determine whether any facts exist which
may require any adjustment of the Exercise Price or the number of shares of
Class A Common Stock or other stock or property issuable on exercise of the
Warrants, or with respect to the nature or extent of any such adjustment when
made, or with respect to the method employed in making such adjustment or the
validity or value of any shares of Common Stock, evidences of indebtedness,
warrants, options, or other securities or property.
SECTION 4.10. Notice of Certain Transactions. In the event that the Company
shall propose to (a) pay any dividend payable in securities of any class to the
holders of its Common Stock or to make any other non-cash dividend or
distribution to the holders of its Common Stock, (b) offer the holders of its
Common Stock rights to subscribe for or to purchase any securities convertible
into shares of Common Stock or shares of stock of any class or any other
securities, rights or options, (c) issue any (i) shares of Common Stock, (ii)
rights, options or warrants entitling the holders thereof to subscribe for
shares of
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28
Common Stock or (iii) securities convertible into or exchangeable or exercisable
for Common Stock (in the case of (i), (ii) and (iii), if such issuance or
adjustment would result in an adjustment hereunder), (d) effect any capital
reorganization, reclassification, consolidation or merger, (e) effect the
voluntary or involuntary dissolution, liquidation or winding-up of the Company
or (f) make a tender offer or exchange offer with respect to the Common Stock,
the Company shall within five days after any such action or offer send to the
Warrant Agent a notice and the Warrant Agent shall within five days after
receipt thereof send the Holders a notice (in such form as shall be furnished to
the Warrant Agent by the Company) of such proposed action or offer. Such notice
shall be mailed by the Warrant Agent to the Holders at their addresses as they
appear in the Certificate Register, which shall specify the record date for the
purposes of such dividend, distribution or rights, or the date such issuance or
event is to take place and the date of participation therein by the holders of
Common Stock, if any such date is to be fixed, and shall briefly indicate the
effect, if any, of such action on the Common Stock and on the number and kind of
any other shares of stock and on other property, if any, and the number of
shares of Class A Common Stock and other property, if any, issuable upon
exercise of each Warrant and the Exercise Price after giving effect to any
adjustment pursuant to Article IV which will be required as a result of such
action. Such notice shall be given as promptly as possible and (x) in the case
of any action covered by clause (a) or (b) above, at least 10 days prior to the
record date for determining holders of the Common Stock for purposes of such
action or (y) in the case of any other such action, at least 20 days prior to
the date of the taking of such proposed action or the date of participation
therein by the holders of Common Stock, whichever shall be the earlier.
SECTION 4.11. Adjustment to Warrant Certificate. The form of Warrant
Certificate need not be changed because of any adjustment made pursuant to this
Article IV, and Warrant Certificates issued after such adjustment may state the
same Exercise Price and the same number of shares of Class A Common Stock
issuable upon exercise of the Warrants as are stated in the Warrant Certificates
initially issued pursuant to this Agreement. The Company, however, may at any
time in its sole discretion make any change in the form of Warrant Certificate
that it may deem appropriate to give effect to such adjustments and that does
not affect the substance of the Warrant Certificate, and any Warrant Certificate
thereafter issued or countersigned, whether in exchange or substitution for an
outstanding Warrant Certificate or otherwise, may be in the form as so changed.
<PAGE>
29
ARTICLE V
Registration Rights; Indemnification
SECTION 5.01. Effectiveness of Registration Statement. Subject to Section
5.02, the Company shall cause to be filed pursuant to Rule 415 (or any successor
provision) of the Securities Act not later than 90 days after the Issue Date, a
shelf registration statement relating to the offer and sale of the Warrants by
the Holders from time to time in accordance with the methods of distribution
elected by such holders and set forth in such registration statement (the
"Warrant Shelf Registration Statement"), and shall use its best efforts to cause
the Warrant Shelf Registration Statement to be declared effective under the
Securities Act on or before 150 days after the Issue Date and a shelf
registration statement covering the issuance of Warrant Shares to the Holders
upon exercise of the Warrants by the Holders thereof (the "Common Shelf
Registration Statement", and together with the Warrant Shelf Registration
Statement, the "Registration Statements") and shall use its best efforts to
cause the Common Shelf Registration Statement to be declared effective on or
before 365 days after the Issue Date. The Company shall use its best efforts to
cause (a) the Warrant Shelf Registration Statement to remain effective until the
earliest of (i) such time as all Warrants have been sold thereunder, (ii) two
years after its effective date and (iii) until all Warrants can be sold without
restriction under the Securities Act and (b) the Common Shelf Registration
Statement to remain effective until the earlier of (i) such time as all Warrants
have been exercised and (ii) the Expiration Date. In connection with any
Registration Statement, (i) the Company shall furnish to the Warrant Agent,
prior to the filing with the Commission, a copy of any Registration Statement,
and each amendment thereof and each amendment or supplement, if any, to the
prospectus included therein and shall use its reasonable best efforts to reflect
in each such document, when filed with the Commission, such comments as the
Warrant Agent may reasonably propose, (ii) the Company shall furnish to each
Holder, without charge, at least one copy of any Registration Statement and any
post-effective amendment thereto, including financial statements and schedules,
and, if the Holder so requests in writing, all exhibits thereto (including those
incorporated by reference), (iii) the Company shall, for so long as any
Registration Statement is effective, deliver to each Holder, without charge, as
many copies of the prospectus (including each preliminary prospectus) included
in such Registration Statement and any amendment or supplement thereto as such
Holder may reasonably request, and the Company consents to the proper use of the
prospectus therein and any amendment or supplement thereto by each of the
selling Holders in connection with the offering and sale of the Warrants or the
Warrant Shares, as the case may be, covered by such
<PAGE>
30
prospectus and any amendment or supplement thereto, (iv) the Company may require
each Holder of Warrants to be sold pursuant to the Warrant Shelf Registration
Statement or to be exercised in connection with the Common Shelf Registration
Statement to furnish to the Company such information regarding the Holder and
the distribution of such Warrants or Warrant Shares as the Company may from time
to time reasonably request for inclusion in such Registration Statement, (v) the
Company shall, if requested, promptly incorporate in a prospectus supplement or
post-effective amendment to such Registration Statement such information as a
majority in interest of the Holders reasonably agree should be included therein
and shall make all required filings of such prospectus supplement or
post-effective amendment as soon as notified of the matters to be incorporated
in such prospectus supplement or post-effective amendment, (vi) the Company
shall enter into such agreements (including underwriting agreements) as are
appropriate, customary and reasonably necessary in connection with any such
Registration Statement and (vii) the Company shall (A) make available all
material customary for reasonable due diligence examinations in connection with
such Registration Statements, (B) make such representations and warranties to
the Holders of Warrants and the underwriters, if any, as are customary and
reasonable in connection with such Registration Statements, (C) obtain such
opinions of counsel to the Company addressed to and reasonably satisfactory to
the Holders as are customary and reasonable in connection with such Registration
Statements and (D) obtain such "comfort" letters and updates thereof from the
independent certified public accountants of the Company addressed to the Holders
as are customary and reasonable in connection with such Registration Statements.
The Company will furnish the Warrant Agent with current prospectuses meeting the
requirements of the Securities Act in sufficient quantity to permit the Warrant
Agent to deliver, at the Company's expense, a prospectus to each holder of a
Warrant upon the exercise thereof. The Company shall promptly inform the Warrant
Agent of any change in the status of the effectiveness or availability of any
Registration Statement.
SECTION 5.02. Suspension. During any consecutive 365-day period, the
Company shall be entitled to suspend the availability of each of the Warrant
Shelf Registration Statement and the Common Shelf Registration Statement for up
to two 45 consecutive-day periods (except for the 45 consecutive-day period
immediately prior to the Expiration Date) if the Company's Board determines in
the exercise of its reasonable judgment that there is a valid business purpose
for such suspension and provides notice that such determination was made to the
Holders of the Warrants; provided, however, that in no event shall the Company
be required to disclose the business purpose for such suspension if the Company
determines in good faith that such business purpose must remain confidential.
<PAGE>
31
SECTION 5.03. Blue Sky. The Company shall use its best efforts to register
or qualify the Warrants and the Warrant Shares under all applicable securities
laws, blue sky laws or similar laws of all jurisdictions in the United States
and Canada in which any holder of Warrants may or may be deemed to purchase
Warrants or Warrant Shares upon the exercise of Warrants and shall use its best
efforts to maintain such registration or qualification for so long as it is
required to cause the Warrant Shelf Registration Statement (in the case of the
Warrants) and the Common Shelf Registration Statement (in the case of the
Warrant Shares) to remain effective under the Securities Act pursuant to Section
5.01; provided, however, that the Company shall not be required to qualify
generally to do business in any jurisdiction where it would not otherwise be
required to qualify but for this Section 5.03 or to take any action which would
subject it to general service of process or to taxation in any such jurisdiction
where it is not then so subject.
SECTION 5.04. Accuracy of Disclosure. The Company represents and warrants
to each Holder and agrees for the benefit of each Holder that (i) each of the
Warrant Shelf Registration Statement and the Common Shelf Registration Statement
and any amendment thereto will not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements contained therein not misleading and (ii) each of the
prospectus furnished to such Holder for delivery in connection with the sale of
Warrants and the prospectus delivered to such Holder upon the exercise of
Warrants and the documents incorporated by reference therein will not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements contained
therein, in light of the circumstances under which they were made, not
misleading; provided, however, that the Company shall have no liability under
clauses (i) or (ii) of this Section 5.04 with respect to any such untrue
statement or omission made in any Registration Statement in reliance upon and in
conformity with information furnished to the Company by or on behalf of the
Holders specifically for inclusion therein.
SECTION 5.05. Indemnification. (a) In connection with any Registration
Statement, the Company agrees to indemnify and hold harmless each Holder of the
Securities, and each person, if any, who controls such Holder within the meaning
of the Securities Act or the Exchange Act (each Holder and such controlling
persons being referred to collectively as the "Indemnified Parties") from and
against any losses, claims, damages or liabilities, joint or several, or any
actions in respect thereof (including, but not limited to, any losses, claims,
damages, liabilities or actions relating to purchases and sales of
<PAGE>
32
the Securities) to which each Indemnified Party may become subject under the
Securities Act, the Exchange Act or otherwise, insofar as such losses, claims,
damages, liabilities or actions arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in a
Registration Statement or prospectus or in any amendment or supplement thereto
or in any preliminary prospectus relating to a Registration Statement, or arise
out of, or are based upon, the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, and shall reimburse, as incurred, the Indemnified Parties for any
legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or action in
respect thereof; provided, however, that (i) the Company shall not be liable in
any such case to the extent that such loss, claim, damage or liability arises
out of or is based upon any untrue statement or alleged untrue statement or
omission or alleged omission made in a Registration Statement or prospectus or
in any amendment or supplement thereto or in any preliminary prospectus relating
to a Registration Statement in reliance upon and in conformity with written
information pertaining to such Holder and furnished to the Company by or on
behalf of such Holder specifically for inclusion therein and (ii) with respect
to any untrue statement or omission or alleged untrue statement or omission made
in any preliminary prospectus relating to a Registration Statement, the
indemnity agreement contained in this subsection (a) shall not inure to the
benefit of any Holder from whom the person asserting any such losses, claims,
damages or liabilities purchased the Securities concerned, to the extent that a
prospectus relating to such Securities was required to be delivered by such
Holder under the Securities Act in connection with such purchase and any such
loss, claim, damage or liability of such Holder results from the fact that there
was not sent or given to such person, at or prior to the written confirmation of
the sale of such Securities to such person, a copy of the final prospectus if
the Company had previously furnished copies thereof to such Holder; provided
further, however, that this indemnity agreement will be in addition to any
liability which the Company may otherwise have to such Indemnified Party. The
Company shall also indemnify underwriters, selling brokers, dealer-managers and
similar securities industry professionals participating in the distribution (in
each case as described in the Registration Statement), their officers and
directors and each person who controls such persons within the meaning of the
Securities Act or the Exchange Act to the same extent as provided above with
respect to the indemnification of the Holders of the Securities if requested by
such Holders.
<PAGE>
33
(b) In connection with any Registration Statement, each Holder of the
Securities, severally and not jointly, will indemnify and hold harmless the
Company and each person, if any, who controls the Company within the meaning of
the Securities Act or the Exchange Act (and the directors, officers, agents and
employees of the Company and any such controlling person) from and against any
losses, claims, damages or liabilities or any actions in respect thereof
(including, but not limited to, any losses, claims, damages, liabilities or
actions relating to purchases and sales of the Securities) to which the Company
or any such controlling person (or the directors, officers, agents and employees
of the Company and any such controlling person) may become subject under the
Securities Act, the Exchange Act or otherwise, insofar as such losses, claims,
damages, liabilities or actions arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in a
Registration Statement or prospectus or in any amendment or supplement thereto
or in any preliminary prospectus relating to a Registration Statement, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, but in each case only to the extent that the untrue statement or
alleged untrue statement or omission or alleged omission was made in reliance
upon and in conformity with written information pertaining to such Holder and
furnished to the Company by or on behalf of such Holder specifically for
inclusion therein; and, subject to the limitation set forth immediately
preceding this clause, shall reimburse, as incurred, the Company for any legal
or other expenses reasonably incurred by the Company or any such controlling
person (or the directors, officers, agents and employees of the Company and any
such controlling person) in connection with investigating or defending any loss,
claim, damage, liability or action in respect thereof. This indemnity agreement
will be in addition to any liability which such Holder may otherwise have to the
Company or any of its controlling persons.
(c) Promptly after receipt by an indemnified party under this Section 5.05
of notice of the commencement of any action or proceeding (including a
governmental investigation), such indemnified party will, if a claim in respect
thereof is to be made against the indemnifying party under this Section 5.05,
notify the indemnifying party of the commencement thereof; but the failure to so
notify the indemnifying party will not, in any event, relieve the indemnifying
party from any obligations to any indemnified party other than the
indemnification obligation provided in paragraph (a) or (b) above (except to the
extent that it is prejudiced or harmed in any material respect by failure to
give such prompt notice). In case any such action is brought against any
indemnified party, and it notifies the
<PAGE>
34
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to participate therein and, to the extent that it may wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel reasonably satisfactory to such indemnified party (who
shall not, except with the consent of the indemnified party, act as both counsel
to the indemnified and indemnifying parties in such action if, in the reasonable
opinion of both counsel to the indemnified party and the indemnifying party, a
conflict exists which makes such joint representation not advisable), and after
notice from the indemnifying party to such indemnified party of its election to
so assume the defense thereof the indemnifying party will not be liable to such
indemnified party under this Section 5.05 for any legal or other expenses, other
than reasonable costs of investigation, subsequently incurred by such
indemnified party in connection with the defense thereof. No indemnifying party
shall, without the prior written consent of the indemnified party, not to be
unreasonably withheld, effect any settlement of any pending or threatened action
in respect of which any indemnified party is or could have been a party and
indemnity could have been sought hereunder by such indemnified party unless such
settlement includes an unconditional release of such indemnified party from all
liability on any claims that are the subject matter of such action. No
indemnifying party shall be liable for any amounts paid in settlement of any
action or claim without its written consent, which consent shall not be
unreasonably withheld.
(d) If the indemnification provided for in this Section 5.05 is unavailable
or insufficient to hold harmless an indemnified party under subsections (a) or
(b) above, then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of the losses, claims, damages or
liabilities (or actions in respect thereof) referred to in subsection (a) or (b)
above (i) in such proportion as is appropriate to reflect the relative benefits
received by the indemnifying party or parties on the one hand and the
indemnified party on the other from the Registration Statement, or (ii) if the
allocation provided by the foregoing clause (i) is not permitted by applicable
law, in such proportion as is appropriate to reflect not only the relative
benefits referred to in clause (i) above but also the relative fault of the
indemnifying party or parties on the one hand and the indemnified party on the
other in connection with the statements or omissions that resulted in such
losses, claims, damages or liabilities (or actions in respect thereof) as well
as any other relevant equitable considerations. The relative fault of the
parties shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact
<PAGE>
35
relates to information supplied by the Company on the one hand or such Holder or
such other indemnified person, as the case may be, on the other, and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The amount paid by an indemnified
party as a result of the losses, claims, damages or liabilities referred to in
the first sentence of this subsection (d) shall be deemed to include any legal
or other expenses reasonably incurred by such indemnified party in connection
with investigating or defending any action or claim which is the subject of this
subsection (d). Notwithstanding any other provision of this Section 5.05(d),
the Holders of the Securities shall not be required to contribute any amount in
excess of the amount by which the net proceeds received by such Holders from the
sale of the Warrants pursuant to the Warrant Shelf Registration Statement or the
Warrant Shares pursuant to the Common Shelf Registration Statement exceeds the
amount of damages which such Holders have otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. For purposes
of this paragraph (d), each person, if any, who controls such indemnified party
within the meaning of the Securities Act or the Exchange Act shall have the same
rights to contribution as such indemnified party and each person, if any, who
controls the Company within the meaning of the Securities Act or the Exchange
Act shall have the same rights to contribution as the Company.
(e) The agreements contained in this Section 5.05 shall survive the sale of
the Securities pursuant to the Registration Statements and shall remain in full
force and effect, regardless of any termination or cancelation of this Agreement
or any investigation made by or on behalf of any indemnified party.
SECTION 5.06. Additional Acts. If the sale of Warrants or the issuance or
sale of any Class A Common Stock or other securities issuable upon the exercise
of the Warrants requires registration or approval of any governmental authority
(other than the registration requirements under the Securities Act), or the
taking of any other action under the laws of the United States or any political
subdivision thereof before such securities may be validly offered or sold in
compliance with such laws, then the Company covenants that it will, in good
faith and as expeditiously as reasonably possible, use its reasonable best
efforts to secure and maintain such registration or approval or to take such
other action, as the case may be. The Company shall promptly notify the Warrant
Agent in writing when (i) the Company has obtained all such governmental
approvals and authorizations and (ii) such
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36
approvals and authorizations thereafter cease to be in effect.
SECTION 5.07. Expenses. All expenses incident to the Company's performance
of or compliance with its obligations under this Article V will be borne by the
Company, including without limitation: (i) all SEC, stock exchange or National
Association of Securities Dealers, Inc. registration and filing fees, (ii) all
reasonable fees and expenses incurred in connection with the compliance with
state securities or blue sky laws, (iii) all expenses of any Persons incurred by
or on behalf of the Company in preparing or assisting in preparing, printing and
distributing the Warrant Shelf Registration Statement, the Common Shelf
Registration Statement or any other registration statement, prospectus, any
amendments or supplements thereto and other documents relating to the
performance of and compliance with this Article V, (iv) the fees and
disbursements of the Warrant Agent as agreed, (v) the fees and disbursements of
counsel for the Company and the Warrant Agent as agreed and (vi) the fees and
disbursements of the independent public accountants of the Company, including
the expenses of any special audits or comfort letters required by or incident to
such performance and compliance.
ARTICLE VI
Warrant Agent
SECTION 6.01. Appointment of Warrant Agent. The Company hereby appoints the
Warrant Agent to act as agent for the Company in accordance with the provisions
of this Agreement and the Warrant Agent hereby accepts such appointment.
SECTION 6.02. Rights and Duties of Warrant Agent. (a) Agent for the
Company. In acting under this Warrant Agreement and in connection with the
Warrant Certificates, the Warrant Agent is acting solely as agent of the Company
and does not assume any obligation or relationship or agency or trust for or
with any of the holders of Warrant Certificates or beneficial owners of
Warrants.
(b) Counsel. The Warrant Agent may consult with counsel satisfactory to it
(who may be counsel to the Company), and the advice of such counsel shall be
full and complete authorization and protection in respect of any action taken,
suffered or omitted by it hereunder in good faith and in accordance with the
advice of such counsel.
(c) Documents. The Warrant Agent shall be protected and shall incur no
liability for or in respect of any action taken or thing suffered by it in
reliance upon any Warrant Certificate, notice, direction, consent,
<PAGE>
37
certificate, affidavit, statement or other paper or document reasonably believed
by it to be genuine and to have been presented or signed by the proper parties.
(d) No Implied Obligations. The Warrant Agent shall be obligated to perform
only such duties as are specifically set forth herein and in the Warrant
Certificates, and no implied duties or obligations of the Warrant Agent shall be
read into this Agreement or the Warrant Certificates against the Warrant Agent.
The Warrant Agent shall not be under any obligation to take any action hereunder
which may tend to involve it in any expense or liability for which it does not
receive indemnity if such indemnity is reasonably requested. The Warrant Agent
shall not be accountable or under any duty or responsibility for the use by the
Company of any of the Warrant Certificates countersigned by the Warrant Agent
and delivered by it to the Holders or on behalf of the Holders pursuant to this
Agreement or for the application by the Company of the proceeds of the Warrants.
The Warrant Agent shall have no duty or responsibility in case of any default by
the Company in the performance of its covenants or agreements contained herein
or in the Warrant Certificates or in the case of the receipt of any written
demand from a Holder with respect to such default, including any duty or
responsibility to initiate or attempt to initiate any proceedings at law or
otherwise.
(e) Not Responsible for Adjustments or Validity of Stock. The Warrant Agent
shall not at any time be under any duty or responsibility to any Holder to
determine whether any facts exist that may require an adjustment of the number
of shares of Common Stock issuable upon exercise of each Warrant or the Exercise
Price, or with respect to the nature or extent of any adjustment when made, or
with respect to the method employed, or herein or in any supplemental agreement
provided to be employed, in making the same. The Warrant Agent shall not be
accountable with respect to the validity or value of any shares of Common Stock
or of any securities or property which may at any time be issued or delivered
upon the exercise of any Warrant or upon any adjustment pursuant to Article IV,
and it makes no representation with respect thereto. The Warrant Agent shall not
be responsible for any failure of the Company to make any cash payment or to
issue, transfer or deliver any shares of Common Stock or stock certificates upon
the surrender of any Warrant Certificate for the purpose of exercise or upon any
adjustment pursuant to Article IV, or to comply with any of the covenants of the
Company contained in Article IV.
SECTION 6.03. Individual Rights of Warrant Agent. The Warrant Agent and any
stockholder, director, officer or employee of the Warrant Agent may buy, sell or
deal in any of the Warrants or other securities of the Company or its
<PAGE>
38
affiliates or become pecuniarily interested in transactions in which the Company
or its affiliates may be interested, or contract with or lend money to the
Company or its affiliates or otherwise act as fully and freely as though it were
not the Warrant Agent under this Agreement. Nothing herein shall preclude the
Warrant Agent from acting in any other capacity for the Company or for any other
legal entity.
SECTION 6.04. Warrant Agent's Disclaimer. The Warrant Agent shall not be
responsible for and makes no representation as to the validity or adequacy of
this Agreement or the Warrant Certificates and it shall not be responsible for
any statement in this Agreement or the Warrant Certificates other than its
countersignature thereon.
SECTION 6.05. Compensation and Indemnity. The Company agrees to pay the
Warrant Agent from time to time reasonable compensation for its services as
agreed and to reimburse the Warrant Agent upon request for all reasonable
out-of-pocket expenses incurred by it, including the reasonable compensation and
expenses of the Warrant Agent's agents and counsel as agreed. The Company shall
indemnify the Warrant Agent, its officers, directors, agents and counsel against
any loss, liability or expense (including reasonable agents' and attorneys' fees
and expenses) incurred by it without negligence or bad faith on its part arising
out of or in connection with the acceptance or performance of its duties under
this Agreement. The Warrant Agent shall notify the Company promptly of any claim
for which it may seek indemnity. The Company need not reimburse any expense or
indemnify against any loss or liability incurred by the Warrant Agent through
wilful misconduct, negligence or bad faith. The Company's payment obligations
pursuant to this Section 6.05 shall survive the termination of this Agreement.
To secure the Company's payment obligations under this Agreement, the
Warrant Agent shall have a lien prior to the Holders on all money or property
held or collected by the Warrant Agent.
SECTION 6.06. Successor Warrant Agent. (a) The Company To Provide and
Maintain Warrant Agent. The Company agrees for the benefit of the Holders that
there shall at all times be a Warrant Agent hereunder until all the Warrants
have been exercised or are no longer exercisable.
(b) Resignation and Removal. The Warrant Agent may at any time resign by
giving written notice to the Company of such intention on its part, specifying
the date on which its desired resignation shall become effective; provided,
however, that such date shall not be less than 60 days after the date on which
such notice is given unless the Company otherwise agrees. The Warrant Agent
hereunder
<PAGE>
39
may be removed at any time by the filing with it of an instrument in writing
signed by or on behalf of the Company and specifying such removal and the date
when it shall become effective, which date shall not be less than 60 days after
such notice is given unless the Warrant Agent otherwise agrees. Any removal
under this Section 6.06 shall take effect upon the appointment by the Company as
hereinafter provided of a successor Warrant Agent (which shall be a bank or
trust company authorized under the laws of the jurisdiction of its organization
to exercise corporate trust powers) and the acceptance of such appointment by
such successor Warrant Agent.
(c) The Company To Appoint Successor. In the event that at any time the
Warrant Agent shall resign, or shall be removed, or shall become incapable of
acting, or shall be adjudged a bankrupt or insolvent, or shall commence a
voluntary case under the Federal bankruptcy laws, as now or hereafter
constituted, or under any other applicable U.S. Federal or state bankruptcy,
insolvency or similar law or shall consent to the appointment of or taking
possession by a receiver, custodian, liquidator, assignee, trustee, sequestrator
(or other similar official) of the Warrant Agent or its property or affairs, or
shall make an assignment for the benefit of creditors, or shall admit in writing
its inability to pay its debts generally as they become due, or shall take
corporate action in furtherance of any such action, or a decree or order for
relief by a court having jurisdiction in the premises shall have been entered in
respect of the Warrant Agent in an involuntary case under the Federal bankruptcy
laws, as now or hereafter constituted, or any other applicable Federal or state
bankruptcy, insolvency or similar law, or a decree or order by a court having
jurisdiction in the premises shall have been entered for the appointment of a
receiver, custodian, liquidator, assignee, trustee, sequestrator (or similar
official) of the Warrant Agent or of its property or affairs, or any public
officer shall take charge or control of the Warrant Agent or of its property or
affairs for the purpose of rehabilitation, conservation, winding up or
liquidation, a successor Warrant Agent, qualified as aforesaid, shall be
appointed by the Company by an instrument in writing, filed with the successor
Warrant Agent. Upon the appointment as aforesaid of a successor Warrant Agent
and acceptance by the successor Warrant Agent of such appointment, the Warrant
Agent shall cease to be Warrant Agent hereunder; provided, however, that in the
event of the resignation of the Warrant Agent under this subsection (c), such
resignation shall be effective on the earlier of (i) the date specified in the
Warrant Agent's notice of resignation and (ii) the appointment and acceptance of
a successor Warrant Agent hereunder.
(d) Successor To Expressly Assume Duties. Any successor Warrant Agent
appointed hereunder shall execute,
<PAGE>
40
acknowledge and deliver to its predecessor and to the Company an instrument
accepting such appointment hereunder, and thereupon such successor Warrant
Agent, without any further act, deed or conveyance, shall become vested with all
the rights and obligations of such predecessor with like effect as if originally
named as Warrant Agent hereunder, and such predecessor, upon payment of its
charges and disbursements then unpaid, shall thereupon become obligated to
transfer, deliver and pay over, and such successor Warrant Agent shall be
entitled to receive, all monies, securities and other property on deposit with
or held by such predecessor, as Warrant Agent hereunder.
(e) Successor by Merger. Any corporation into which the Warrant Agent
hereunder may be merged or consolidated, or any corporation resulting from any
merger or consolidation to which the Warrant Agent shall be a party, or any
corporation to which the Warrant Agent shall sell or otherwise transfer all or
substantially all of its assets and business; provided, however, that it shall
be qualified as aforesaid, shall be the successor Warrant Agent under this
Agreement without the execution or filing of any paper or any further act on the
part of any of the parties hereto.
ARTICLE VII
Option Agreement
SECTION 7.01. Option Agreement. The Company shall cause Intersil
Corporation to enter into an option agreement (the "Option Agreement") with
Intersil Prism, LLC or any other entity which has the option to purchase assets
of Intersil Corporation as described in the offering circular for the Units
under "The Transactions-Option Agreement". The Option Agreement shall provide
that prior to consummating the transactions contemplated by the Option
Agreement, Intersil Prism LLC or such holder of such option shall have offered
to the Holders of the Warrants and the Warrant Shares the right and opportunity
to participate in the purchase of such assets upon payment of their pro rata
share of the option purchase price (including any extension price) and the
option exercise price.
ARTICLE VIII
Miscellaneous
SECTION 8.01. SEC Reports. The Company shall file with the Warrant Agent
for the benefit of the Holders of Warrants, within 15 days after it files them
with the SEC, copies of its annual and quarterly reports and other information,
documents and other reports (or copies of such portions of any of the foregoing
as the SEC may by rules and
<PAGE>
41
regulations prescribe) which the Company is required to file with the SEC
pursuant to Section 13 or 15(d) of the Exchange Act. Notwithstanding that the
Company may not be subject to the reporting requirements of Section 13 or 15(d)
of the Exchange Act, the Company shall file with the SEC (to the extent the SEC
will accept such filings) and provide the Warrant Agent and Holders with such
annual reports and such information, documents and other reports as are
specified in Sections 13 and 15(d) of the Exchange Act and applicable to a U.S.
corporation subject to such Sections, such information, documents and other
reports to be so filed and provided at the times specified for the filing of
such information, documents and reports under such Sections.
SECTION 8.02. Persons Benefitting. Nothing in this Agreement is intended or
shall be construed to confer upon any Person other than the Company, the Warrant
Agent and the Holders any right, remedy or claim under or by reason of this
Agreement or any part hereof.
SECTION 8.03. Rights of Holders. Holders of unexercised Warrants are not
entitled to (i) receive dividends or other distributions, (ii) receive notice of
or vote at any meeting of the stockholders, (iii) consent to any action of the
stockholders, (iv) receive notice of any other proceedings of the Company, (v)
exercise any preemptive right or (vi) exercise any other rights whatsoever as
stockholders of the Company.
SECTION 8.04. Amendment. This Agreement may be amended by the parties
hereto without the consent of any Holder for the purpose of curing any
ambiguity, or of curing, correcting or supplementing any defective provision
contained herein or adding or changing any other provisions with respect to
matters or questions arising under this Agreement as the Company and the Warrant
Agent may deem necessary or desirable (including without limitation any addition
or modification to provide for compliance with the transfer restrictions set
forth herein); provided, however, that such action shall not adversely affect
the rights of any of the Holders. Any amendment or supplement to this Agreement
that has an adverse effect on the interests of the Holders shall require the
written consent of the Holders of a majority of the then outstanding Warrants.
The consent of each Holder affected shall be required for any amendment pursuant
to which the Exercise Price would be increased or the number of Warrant Shares
issuable upon exercise of Warrants would be decreased (other than pursuant to
adjustments provided herein). In determining whether the Holders of the required
number of Warrants have concurred in any direction, waiver or consent, Warrants
owned by the Company or by any Person directly or indirectly controlling or
controlled by or under direct or indirect common control with the Company shall
be disregarded and deemed not to be outstanding, except that, for the purpose of
determining
<PAGE>
42
whether the Warrant Agent shall be protected in relying on any such direction,
waiver or consent, only Warrants which the Warrant Agent knows are so owned
shall be so disregarded. Also, subject to the foregoing, only Warrants
outstanding at the time shall be considered in any such determination.
SECTION 8.05. Notices. Any notice or communication shall be in writing and
delivered in Person or mailed by first-class mail addressed as follows:
if to the Company:
Intersil Holding Corporation
2401 Palm Bay Road Northeast
Palm Bay, FL 32905
Telephone: (407) 724-7000
Facsimile: (407) 729-5392
Attention: General Counsel
with a copy to:
Dechert Price & Rhoads
4000 Bell Atlantic Tower
1717 Arch Street
Philadelphia, PA 19103-2793
Telephone: (215) 994-4000
Facsimile: (215) 994-2222
Attention: Christopher G. Karras, Esq.
if to the Warrant Agent:
United States Trust Company of New York
114 West 47th Street, 25th Floor
New York, NY 10036
Telephone: (212) 852-1614
Facsimile: (212) 852-1626
Attention: Corporate Trust Department
with a copy to:
Carter, Ledyard & Milburn
2 Wall Street
New York, NY 10005
Telephone: (212) 944-7711
Facsimile: (212) 732-3232
Attention: Bertil Nordin, Esq.
The Company or the Warrant Agent by notice to the other may designate
additional or different addresses for subsequent notices or communications.
<PAGE>
43
Any notice or communication mailed to a Holder shall be mailed to the
Holder at the Holder's address as it appears on the Certificate Register and
shall be sufficiently given if so mailed within the time prescribed.
Failure to mail a notice or communication to a Holder or any defect in it
shall not affect its sufficiency with respect to other Holders. If a notice or
communication is mailed in the manner provided above, it is duly given, whether
or not the addressee receives it.
SECTION 8.06. Governing Law. The laws of the State of New York shall govern
this Agreement and the Warrant Certificates.
SECTION 8.07. Successors. All agreements of the Company in this Agreement
and the Warrant Certificates shall bind its successors. All agreements of the
Warrant Agent in this Agreement shall bind its successors.
SECTION 8.08. Multiple Originals. The parties may sign any number of copies
of this Agreement. Each signed copy shall be an original, but all of them
together represent the same agreement. One signed copy is enough to prove this
Agreement.
SECTION 8.09. Table of Contents. The table of contents and headings of the
Articles and Sections of this Agreement have been inserted for convenience of
reference only, are not intended to be considered a part hereof and shall not
modify or restrict any of the terms or provisions hereof.
SECTION 8.10. Severability. The provisions of this Agreement are severable,
and if any clause or provision shall be held invalid, illegal or unenforceable
in whole or in part in any jurisdiction, then such invalidity or
unenforceability shall affect in that jurisdiction only such clause or
provision, or part thereof, and shall not in any manner affect such clause or
provision in any other jurisdiction or any other clause or provision of this
Agreement in any jurisdiction.
<PAGE>
44
IN WITNESS WHEREOF, the parties have caused this Warrant Agreement to be
duly executed as of the date first written above.
INTERSIL HOLDING CORPORATION,
by /s/ Gregory L. Williams
-------------------------------
Gregory L. Williams
Chief Executive Officer
UNITED STATES TRUST COMPANY OF
NEW YORK, as Warrant Agent,
by /s/ Gerard F. Ganey
-------------------------------
Gerard F. Ganey
Senior Vice President
<PAGE>
EXHIBIT A
[FORM OF FACE OF WARRANT CERTIFICATE]
[Separability Legend]
THE WARRANTS EVIDENCED BY THIS CERTIFICATE WERE INITIALLY ISSUED AS PART OF
AN ISSUANCE OF UNITS, EACH OF WHICH CONSISTS OF ONE 13 1/4% SENIOR SUBORDINATED
NOTE DUE 2009 OF INTERSIL CORPORATION WITH A PRINCIPAL AMOUNT OF $1,000 (A
"NOTE") AND ONE WARRANT. THE NOTES AND WARRANTS WILL NOT TRADE SEPARATELY UNTIL
THE EARLIEST OF (I) THE COMMENCEMENT OF A REGISTERED EXCHANGE OFFER FOR THE
NOTES, (II) THE EFFECTIVENESS OF A SHELF REGISTRATION STATEMENT WITH RESPECT TO
THE NOTES AND (III) SUCH DATE AFTER OCTOBER 12, 1999, AS THE INITIAL PURCHASERS
MAY DETERMINE.
[Restricted Securities Legend]
THIS SECURITY (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A
TRANSACTION EXEMPT FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), AND THIS SECURITY MAY NOT BE OFFERED,
SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN
APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THIS SECURITY IS HEREBY
NOTIFIED THAT THE SELLER OF THIS SECURITY MAY BE RELYING ON THE EXEMPTION FROM
THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A
THEREUNDER. HEDGING TRANSACTIONS INVOLVING THE UNITS OR THE WARRANTS MAY NOT BE
CONDUCTED UNLESS IN COMPLIANCE WITH THE SECURITIES ACT.
THE HOLDER OF THIS SECURITY AGREES FOR THE BENEFIT OF THE COMPANY THAT (A)
THIS SECURITY MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (I)
INSIDE THE UNITED STATES TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A
"QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES
ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (II) OUTSIDE THE
UNITED STATES IN A TRANSACTION IN ACCORDANCE WITH RULE 904 UNDER THE SECURITIES
ACT, (III) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT
PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE) OR (IV) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH OF CASES (I) THROUGH
(IV) IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE
UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION, AND (B) THE HOLDER WILL, AND
EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THIS SECURITY
FROM IT OF THE RESALE RESTRICTIONS REFERRED TO IN (A) ABOVE. THE WARRANT
EVIDENCED BY THIS CERTIFICATE AND THE SECURITIES TO BE ISSUED UPON ITS EXERCISE
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT AND THE WARRANT MAY NOT BE
EXERCISED BY OR ON BEHALF OF ANY U.S. PERSON UNLESS REGISTERED UNDER THE
SECURITIES ACT OR AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE.
[Definitive Warrants Legend]
[IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE WARRANT
AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS SUCH WARRANT AGENT MAY
REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING
RESTRICTIONS.](1)
[Global Securities Legend]
[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("THE DEPOSITARY"), NEW
YORK, NEW YORK, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
- - -----------
(1) To be included only if the Warrant is in definitive form.
<PAGE>
2
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY (AND ANY PAYMENT IS
MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITARY) ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE,
BUT NOT IN PART, TO NOMINEES OF THE DEPOSITARY OR TO A SUCCESSOR THEREOF OR SUCH
SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE
LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE
WARRANT AGREEMENT REFERRED TO ON THE REVERSE HEREOF.](2)
- - --------
(2) To be included only if the Warrant is in global form.
<PAGE>
3
No. [ ] Certificate for [ ] Warrants
WARRANTS TO PURCHASE COMMON STOCK OF
INTERSIL HOLDING CORPORATION
THIS CERTIFIES THAT [ ], or its registered assigns,
is the registered holder of the number of Warrants set forth above (the
"Warrants"). Each Warrant entitles the holder thereof (the "Holder"), at its
option and subject to the provisions contained herein and in the Warrant
Agreement referred to below, to purchase from INTERSIL HOLDING CORPORATION, a
Delaware corporation ("the Company"), 27.7778 shares of Class A Common Stock,
par value of $0.01 per share, of the Company (the "Common Stock") at the per
share exercise price of $0.001 (the "Exercise Price"), or by Cashless Exercise
referred to below. This Warrant Certificate shall terminate and become void as
of the close of business on August 15, 2009 (the "Expiration Date") or upon the
exercise hereof as to all the shares of Common Stock subject hereto. The number
of shares issuable upon exercise of the Warrants and the Exercise Price per
share shall be subject to adjustment from time to time as set forth in the
Warrant Agreement.
This Warrant Certificate is issued under and in accordance with a Warrant
Agreement dated as of August 13, 1999 (the "Warrant Agreement"), between the
Company and United States Trust Company of New York (the "Warrant Agent", which
term includes any successor Warrant Agent under the Warrant Agreement), and is
subject to the terms and provisions contained in the Warrant Agreement, to all
of which terms and provisions the Holder of this Warrant Certificate consents by
acceptance hereof. The Warrant Agreement is hereby incorporated herein by
reference and made a part hereof. Reference is hereby made to the Warrant
Agreement for a full statement of the respective rights, limitations of rights,
duties and obligations of the Company, the Warrant Agent and the Holders of the
Warrants. Capitalized terms used but not defined herein shall have the meanings
ascribed thereto in the Warrant Agreement. A copy of the Warrant Agreement may
be obtained for inspection by the Holder hereof upon written request to the
Warrant Agent at [ Address ], Attention: Corporate Trust Department.
Subject to the terms of the Warrant Agreement, the Warrants may be
exercised in whole or in part (i) by presentation of this Warrant Certificate
with the Election to Purchase attached hereto duly executed and with the
simultaneous payment of the Exercise Price in cash (subject to adjustment) to
the Warrant Agent for the account of the Company at the office of the Warrant
Agent or (ii) by Cashless Exercise. Payment of the Exercise Price in cash shall
be made by certified or official bank check payable to the order of the Company
or by wire transfer of funds to an account designated by the Company for such
purpose. Payment by Cashless Exercise shall be made without the payment of cash
by reducing the amount of Class A Common Stock that would be obtainable upon the
exercise of a Warrant and payment of the Exercise Price in cash so as to yield a
number of shares of Common Stock upon the exercise of such Warrant equal to the
product of (1) the number of shares of Class A Common Stock for which such
Warrant is exercisable as of the Exercise Date (if the Exercise Price were being
paid in cash) and (2) a fraction, the numerator of which is the excess of the
Current Market Value per share of Class A Common Stock on the Exercise Date over
the Exercise Price per share as of the Exercise Date and the denominator of
which is the Current Market Value per share of the Class A Common Stock on the
Exercise Date.
As provided in the Warrant Agreement and subject to the terms and
conditions therein set forth, the Warrants shall be exercisable at any time and
from time to time on any Business Day after the first anniversary of the Issue
Date; provided, however, that Holders
<PAGE>
4
of Warrants will be able to exercise their Warrants only if the Common Shelf
Registration Statement relating to the Class A Common Stock underlying the
Warrants is effective or the exercise of such Warrants is exempt from the
registration requirements of the Securities Act of 1933 and such securities are
qualified for sale or exempt from qualification under the applicable securities
laws of the states or other jurisdictions in which such Holders reside; provided
further, however, that no Warrant shall be exercisable after August 15, 2009.
In the event of a Combination, the Holder hereof will be entitled to
receive upon exercise of the Warrants the kind and amount of shares of capital
stock or other securities or other property as the Holder would have received
had the Holder exercised its Warrants immediately prior to such Combination;
provided, however, that in the event that, in connection with such Combination,
consideration to holders of Class A Common Stock in exchange for their shares is
payable solely in cash or in the event of the dissolution, liquidation or
winding-up of the Company, the Holder hereof will be entitled to receive such
cash distributions on an equal basis with the holders of Common Stock or other
securities issuable upon exercise of the Warrants, as if the Warrants had been
exercised immediately prior to such Combination, less the Exercise Price.
As provided in the Warrant Agreement, the number of shares of Class A
Common Stock issuable upon the exercise of the Warrants and the Exercise Price
are subject to adjustment upon the happening of certain events.
The Company may require payment of a sum sufficient to pay all taxes,
assessments or other governmental charges in connection with the transfer or
exchange of the Warrant Certificates pursuant to Section 2.04 of the Warrant
Agreement, but not for any exchange or original issuance (not involving a
transfer) with respect to temporary Warrant Certificates, the exercise of the
Warrants or the Warrant Shares.
Upon any partial exercise of the Warrants, there shall be countersigned and
issued to the Holder hereof a new Warrant Certificate representing those
Warrants which were not exercised. This Warrant Certificate may be exchanged at
the office of the Warrant Agent by presenting this Warrant Certificate properly
endorsed with a request to exchange this Warrant Certificate for other Warrant
Certificates evidencing an equal number of Warrants. No fractional Warrant
Shares will be issued upon the exercise of the Warrants, but the Company shall
pay an amount in cash equal to the Current Market Value per Warrant Share on the
day immediately preceding the date the Warrant is exercised, multiplied by the
fraction of a Warrant Share that would be issuable on the exercise of any
Warrant.
All shares of Common Stock issuable by the Company upon the exercise of the
Warrants shall, upon such issue, be duly and validly issued and fully paid and
non-assessable.
The holder in whose name the Warrant Certificate is registered may be
deemed and treated by the Company and the Warrant Agent as the absolute owner of
the Warrant Certificate for all purposes whatsoever and neither the Company nor
the Warrant Agent shall be affected by notice to the contrary.
<PAGE>
5
The Warrants do not entitle any Holder hereof to any of the rights of a
stockholder of the Company.
This Warrant Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Warrant Agent.
INTERSIL HOLDING CORPORATION,
by
--------------------------------
Name:
Title:
by
--------------------------------
Name:
Title:
DATED:
Countersigned:
UNITED STATES TRUST COMPANY OF NEW YORK,
as Warrant Agent,
by
----------------------------
Authorized Signatory
<PAGE>
6
FORM OF ELECTION TO PURCHASE WARRANT SHARES
(to be executed only upon exercise of Warrants)
INTERSIL HOLDING CORPORATION
The undersigned hereby irrevocably elects to exercise __________________
Warrants to acquire shares of Class A Common Stock, par value $0.01 per share,
of INTERSIL HOLDING CORPORATION, at an exercise price per share of Common Stock
of $0.001, and otherwise on the terms and conditions specified in the within
Warrant Certificate and the Warrant Agreement therein referred to, surrenders
this Warrant Certificate and all right, title and interest therein to INTERSIL
HOLDING CORPORATION and directs that the shares of Class A Common Stock
deliverable upon the exercise of such Warrants be registered or placed in the
name and at the address specified below and delivered thereto.
Date:
--------------------, -------
----------------------------(3)
(Signature of Owner)
----------------------------------
(Street Address)
----------------------------------
(City) (State) (Zip Code)
Signature Guaranteed by:
----------------------------------
- - -----------
(3) The signature must correspond with the name as written upon the face of the
within Warrant Certificate in every particular, without alteration or
enlargement or any change whatever, and must be guaranteed by a national bank or
trust company or by a member firm of any national securities exchange.
<PAGE>
7
Securities and/or check to be issued to:
Please insert social security or identifying number:
Name:
Street Address:
City, State and Zip Code:
A new Warrant Certificate evidencing any unexercised Warrants evidenced by the
within Warrant Certificate is to be issued to:
Please insert social security or identifying number:
Name:
Street Address:
City, State and Zip Code:
<PAGE>
8
In connection with any transfer of any of the Warrants evidenced by this
certificate occurring prior to the expiration of the period referred to in Rule
144(k) under the Securities Act after the later of the date of original issuance
of such Warrants and the last date, if any, on which such Warrants were owned by
the Company or any Affiliate of the Company, the undersigned certifies that such
Warrants are being transferred in accordance with its terms:
CHECK ONE BOX BELOW
(1) / / to the Company; or
(2) / / pursuant to an effective registration statement under
the Securities Act of 1933; or
(3) / / outside the United States in an offshore transaction
within the meaning of Regulation S under the Securities
Act in compliance with Rule 904 under the Securities
Act of 1933; or
(4) / / pursuant to Rule 144A under the Securities Act of 1933;
or
(5) / / pursuant to another available exemption from
registration provided by Rule 144 under the Securities
Act of 1933.
If such transfer is being made pursuant to an offshore transaction in
accordance with Rule 904 under the Securities Act, the undersigned further
certifies that:
(i) the offer of the Warrants was not made to a person in the United
States;
(ii) either (a) at the time the buy offer was originated, the transferee
was outside the United States or we and any person acting on our behalf
reasonably believed that the transferee was outside the United States, or (b)
the transaction was executed in, on or through the facilities of a designated
offshore securities market and neither we nor any person acting on our behalf
knows that the transaction has been pre-arranged with a buyer in the United
States;
(iii) no directed selling efforts have been made in the United States in
contravention of the requirements of Rule 903 or Rule 904 of Regulation S, as
applicable;
(iv) the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act;
(v) we have advised the transferee of the transfer restrictions applicable
to the Warrants;
(vi) if the circumstances set forth in Rule 904(b)(1) under the Securities
Act are applicable, either (a) neither we nor any person acting on our behalf
knows that the transferee is a U.S. person or (b) we have complied with the
additional conditions therein, including (if applicable) sending a
confirmation or other notice stating that the Warrants may be offered and sold
during the distribution compliance period specified in Rule 903 of Regulation
S only in accordance with Regulation S; pursuant to registration of the
Warrants under the Securities Act; or pursuant to an available exemption from
the registration requirements under the Securities Act; and
<PAGE>
9
(vii) we have advised the transferee that hedging transactions involving
the Units or the Warrants may not be conducted unless in compliance with the
Securities Act.
Unless one of the boxes is checked, the Warrant Agent will refuse to
register any of the Warrants evidenced by this certificate in the name of any
person other than the registered holder thereof; provided, however, that if box
(3) or (4) is checked, the Warrant Agent may require, prior to registering any
such transfer of the Warrants, such legal opinions, additional certifications
and other information as the Company has reasonably requested to confirm that
such transfer is being made pursuant to an exemption from, or in a transaction
not subject to, the registration requirements of the Securities Act of 1933,
such as the exemption provided by Rule 144 under such Act.
----------------------------
Signature
Signature Guarantee:
- - ---------------------------- ----------------------------
Signature must be guaranteed Signature
- - --------------------------------------------------------------------------------
<PAGE>
10
SCHEDULE OF EXCHANGES OF CERTIFICATED WARRANTS(4)
The following exchanges of a part of this Global Warrant Certificate for
definitive Warrants have been made:
<TABLE>
<CAPTION>
Number of
Amount of change Warrants in
in Number of this Global
Warrants in Warrant Signature of
this Global Certificate authorized
Date of Warrant following officer of
Exchange Certificate such change Warrant Agent
- - -------- ---------------- ----------- -------------
<S> <C> <C> <C>
</TABLE>
- - --------------
(4) To be included only if the Warrant is in global form.
EXHIBIT 10.03
CONFORMED COPY
================================================================================
CREDIT AGREEMENT
dated as of August 13, 1999,
among
INTERSIL CORPORATION,
INTERSIL HOLDING CORPORATION,
THE LENDERS NAMED HEREIN
and
CREDIT SUISSE FIRST BOSTON,
as Lead Arranger and Administrative Agent
---------------------------
SALOMON SMITH BARNEY INC.,
as Syndication Agent
MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
as Documentation Agent
================================================================================
[CS&M Ref No. 5865-048]
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
ARTICLE I
Definitions
<S> <C> <C>
SECTION 1.01. Defined Terms............................................................... 1
SECTION 1.02. Terms Generally............................................................. 21
SECTION 1.03. Pro Forma Calculations...................................................... 21
ARTICLE II
The Credits
SECTION 2.01. Commitments................................................................. 22
SECTION 2.02. Loans....................................................................... 22
SECTION 2.03. Borrowing Procedure......................................................... 23
SECTION 2.04. Evidence of Debt; Repayment of Loans........................................ 24
SECTION 2.05. Fees........................................................................ 24
SECTION 2.06. Interest on Loans........................................................... 25
SECTION 2.07. Default Interest............................................................ 25
SECTION 2.08. Alternate Rate of Interest.................................................. 26
SECTION 2.09. Termination and Reduction of Commitments.................................... 26
SECTION 2.10. Conversion and Continuation of Borrowings................................... 26
SECTION 2.11. Repayment of Term Borrowings................................................ 27
SECTION 2.12. Prepayment.................................................................. 28
SECTION 2.13. Mandatory Prepayments....................................................... 29
SECTION 2.14. Reserve Requirements; Change in Circumstances............................... 31
SECTION 2.15. Change in Legality.......................................................... 32
SECTION 2.16. Indemnity................................................................... 32
SECTION 2.17. Pro Rata Treatment.......................................................... 33
SECTION 2.18. Sharing of Setoffs.......................................................... 33
SECTION 2.19. Payments.................................................................... 34
SECTION 2.20. Taxes....................................................................... 34
SECTION 2.21. Assignment of Commitments Under Certain Circumstances; Duty to Mitigate..... 35
SECTION 2.22. Swingline Loans............................................................. 36
SECTION 2.23. Letters of Credit........................................................... 38
<PAGE>
ARTICLE III
Representations and Warranties
SECTION 3.01. Organization; Powers........................................................ 41
SECTION 3.02. Authorization............................................................... 41
SECTION 3.03. Enforceability.............................................................. 41
SECTION 3.04. Governmental Approvals...................................................... 41
SECTION 3.05. Financial Statements........................................................ 42
SECTION 3.06. No Material Adverse Change.................................................. 42
SECTION 3.07. Title to Properties; Possession Under Leases................................ 42
SECTION 3.08. Subsidiaries................................................................ 42
SECTION 3.09. Litigation; Compliance with Laws............................................ 43
SECTION 3.10. Agreements.................................................................. 43
SECTION 3.11. Federal Reserve Regulations................................................. 43
SECTION 3.12. Investment Company Act; Public Utility Holding Company Act.................. 43
SECTION 3.13. Use of Proceeds............................................................. 43
SECTION 3.14. Tax Returns................................................................. 43
SECTION 3.15. No Material Misstatements................................................... 44
SECTION 3.16. Employee Benefit Plans...................................................... 44
SECTION 3.17. Environmental Matters....................................................... 44
SECTION 3.18. Insurance................................................................... 45
SECTION 3.19. Security Documents.......................................................... 45
SECTION 3.20. Location of Real Property and Leased Premises............................... 46
SECTION 3.21. Labor Matters............................................................... 46
SECTION 3.22. Solvency.................................................................... 46
SECTION 3.23. Representatives and Warranties in Documents................................. 46
SECTION 3.24. Year 2000................................................................... 47
ARTICLE IV
Conditions of Lending
SECTION 4.01. All Credit Events........................................................... 47
SECTION 4.02. First Credit Event.......................................................... 47
ARTICLE V
Affirmative Covenants
SECTION 5.01. Existence; Businesses and Properties........................................ 50
SECTION 5.02. Insurance................................................................... 51
SECTION 5.03. Obligations and Taxes....................................................... 51
SECTION 5.04. Financial Statements, Reports, etc. ........................................ 52
SECTION 5.05. Litigation and Other Notices................................................ 54
SECTION 5.06. Employee Benefits........................................................... 54
SECTION 5.07. Maintaining Records; Access to Properties and Inspections................... 54
SECTION 5.08. Use of Proceeds............................................................. 54
SECTION 5.09. Compliance with Environmental Laws.......................................... 54
SECTION 5.10. Preparation of Environmental Reports........................................ 54
SECTION 5.11. Further Assurances.......................................................... 54
SECTION 5.12. Interest Rate Protection.................................................... 55
<PAGE>
ARTICLE VI
Negative Covenants
SECTION 6.01. Indebtedness................................................................ 55
SECTION 6.02. Liens....................................................................... 57
SECTION 6.03. Sale and Lease-Back Transactions............................................ 58
SECTION 6.04. Investments, Loans and Advances............................................. 59
SECTION 6.05. Mergers, Consolidations, Sales of Assets and Acquisitions................... 60
SECTION 6.06. Dividends................................................................... 61
SECTION 6.07. Transactions with Affiliates................................................ 62
SECTION 6.08. Capital Expenditures........................................................ 63
SECTION 6.09. Consolidated Interest Coverage Ratio........................................ 63
SECTION 6.10. Consolidated Fixed Charge Coverage Ratio.................................... 63
SECTION 6.11. Maximum Leverage Ratio...................................................... 64
SECTION 6.12. Limitation on Modifications of Indebtedness; Modifications of Certificate
of Incorporation, By-laws and Certain Other Agreements, etc................. 64
SECTION 6.13. Limitation on Certain Restrictions on Subsidiaries.......................... 65
SECTION 6.14. Limitation on Issuance of Capital Stock..................................... 65
SECTION 6.15. Limitation on Creation of Subsidiaries...................................... 65
SECTION 6.16. Business.................................................................... 65
SECTION 6.17. Designated Senior Indebtedness.............................................. 66
SECTION 6.18. Fiscal Year................................................................. 66
ARTICLE VII
Events of Default 66
ARTICLE VIII
The Administrative Agent and the Collateral Agent 68
ARTICLE IX
Miscellaneous
SECTION 9.01. Notices..................................................................... 70
SECTION 9.02. Survival of Agreement....................................................... 70
SECTION 9.03. Binding Effect.............................................................. 71
SECTION 9.04. Successors and Assigns...................................................... 71
SECTION 9.05. Expenses; Indemnity......................................................... 74
SECTION 9.06. Right of Setoff............................................................. 75
SECTION 9.07. Applicable Law.............................................................. 75
SECTION 9.08. Waivers; Amendment.......................................................... 75
SECTION 9.09. Interest Rate Limitation.................................................... 76
<PAGE>
SECTION 9.10. Entire Agreement............................................................ 76
SECTION 9.11. WAIVER OF JURY TRIAL........................................................ 76
SECTION 9.12. Severability................................................................ 76
SECTION 9.13. Counterparts................................................................ 77
SECTION 9.14. Headings.................................................................... 77
SECTION 9.15. Jurisdiction; Consent to Service of Process................................. 77
SECTION 9.16. Judgment Currency........................................................... 77
SECTION 9.17. Confidentiality............................................................. 78
</TABLE>
Schedule 1.01(a) Mortgaged Properties
Schedule 1.01(b) Subsidiary Guarantors
Schedule 2.01 Lenders and Commitments
Schedule 3.01 Qualifications and Good Standing
Schedule 3.04 Post Closing Filings
Schedule 3.07(a) Certain Title Matters
Schedule 3.07(c) Condemnation Proceedings
Schedule 3.08 Subsidiaries
Schedule 3.09 Litigation
Schedule 3.17 Environmental Matters
Schedule 3.18 Insurance
Schedule 3.19(d) Mortgage Filing Offices
Schedule 3.20(a) Real Property Owned In Fee
Schedule 3.20(b) Leased Real Property
Schedule 4.02(a) Other Local Counsel
Schedule 6.01 Outstanding Indebtedness on Closing Date
Schedule 6.02 Liens Existing on Closing Date
Schedule 6.05(h) Permitted Option Grant
Exhibit A Form of Administrative Questionnaire
Exhibit B Form of Assignment and Acceptance
Exhibit C Form of Borrowing Request
Exhibit D Form of Indemnity, Subrogation and Contribution Agreement
Exhibit E-1 Form of Mortgage
Exhibit E-2 Form of Deed of Trust
Exhibit F Form of Parent Guarantee Agreement
Exhibit G Form of Pledge Agreement
Exhibit H Form of Security Agreement
Exhibit I Form of Subsidiary Guarantee Agreement
Exhibit J-1 Form of Opinion of Dechert, Price & Rhoads
Exhibit J-2 Form of Opinion of Local Counsel
<PAGE>
CREDIT AGREEMENT dated as of August 13,
1999, among INTERSIL CORPORATION, a Delaware
corporation (the "Borrower"), INTERSIL HOLDING
CORPORATION, a Delaware corporation ("Holdings"), the
Lenders (as defined in Article I), CREDIT SUISSE
FIRST BOSTON, a bank organized under the laws of
Switzerland, acting through its New York branch, as
swingline lender (in such capacity, the "Swingline
Lender"), as an Issuing Bank (as defined in Article
I), and as administrative agent (in such capacity,
the "Administrative Agent") and as collateral agent
(in such capacity, the "Collateral Agent") for the
Lenders, SALOMON SMITH BARNEY INC., as syndication
agent (in such capacity, the "Syndication Agent") and
MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as
documentation agent (in such capacity, the
"Documentation Agent").
Pursuant to the Master Transaction Agreement (such term and each other
capitalized term used but not defined herein having the meaning given it in
Article I), Holdings and the Borrower intend to acquire (the "Acquisition") from
Harris and certain of its subsidiaries the Transferred Assets for aggregate
consideration of $610,000,000, including (a) $520,000,000 in cash (the "Cash
Consideration") and (b) the issuance to Harris of the Seller Subordinated Notes,
all subject to adjustment as provided in the Master Transaction Agreement.
The Borrower has requested the Lenders to extend credit in the form of
(a) Term Loans on the Closing Date, in an aggregate principal amount not in
excess of $205,000,000, and (b) Revolving Loans at any time and from time to
time prior to the Revolving Credit Maturity Date, in an aggregate principal
amount at any time outstanding not in excess of $70,000,000. The Borrower has
requested the Swingline Lender to extend credit, at any time and from time to
time prior to the Revolving Credit Maturity Date, in the form of Swingline
Loans. The Borrower has requested the Issuing Bank to issue letters of credit,
in an aggregate face amount at any time outstanding not in excess of $20,000,000
to support payment obligations incurred in the ordinary course of business by
the Borrower and its Subsidiaries. The proceeds of the Term Loans and a portion
of the proceeds of the Revolving Loans to be made on the Closing Date are to be
used, together with the proceeds of the Units, the proceeds of the Equity
Contribution and the proceeds of the Holdings Subordinated Notes, solely to
finance the Cash Consideration and to pay related fees and expenses. Thereafter,
the proceeds of the Revolving Loans and the Swingline Loans are to be used
solely for general corporate purposes.
The Lenders are willing to extend such credit to the Borrower and the
Issuing Bank is willing to issue letters of credit for the account of the
Borrower on the terms and subject to the conditions set forth herein.
Accordingly, the parties hereto agree as follows:
ARTICLE I
Definitions
SECTION 1.01. Defined Terms. As used in this Agreement, the following
terms shall have the meanings specified below:
<PAGE>
"ABR Borrowing" shall mean a Borrowing comprised of ABR Loans.
"ABR Loan" shall mean any ABR Term Loan or ABR Revolving Loan.
"ABR Revolving Loan" shall mean any Revolving Loan bearing interest at
a rate determined by reference to the Alternate Base Rate in accordance with the
provisions of Article II.
"ABR Term Borrowing" shall mean a Borrowing comprised of ABR Term
Loans.
"ABR Term Loan" shall mean any Term Loan bearing interest at a rate
determined by reference to the Alternate Base Rate in accordance with the
provisions of Article II.
"Acquisition" shall have the meaning assigned to such term in the first
introductory paragraph hereof.
"Additional Subsidiaries" shall mean the Subsidiaries of the Borrower
in Belgium, Germany, Taiwan, Korea and Singapore.
"Adjusted LIBO Rate" shall mean, with respect to any Eurodollar
Borrowing for any Interest Period, an interest rate per annum equal to the
product of (a) the LIBO Rate in effect for such Interest Period and (b)
Statutory Reserves.
"Administrative Agent Fees" shall have the meaning assigned to such
term in Section 2.05(b).
"Administrative Questionnaire" shall mean an Administrative
Questionnaire in the form of Exhibit A, or such other form as may be supplied
from time to time by the Administrative Agent.
"Affiliate" shall mean, when used with respect to a specified person,
another person that directly, or indirectly through one or more intermediaries,
Controls or is Controlled by or is under common Control with the person
specified; provided, however, that for purposes of Section 6.07, the term
"Affiliate" shall also include any person that directly or indirectly owns more
than 5% of any class of Equity Interests of the person specified or that is an
officer or director of the person specified.
"Aggregate Revolving Credit Exposure" shall mean the aggregate amount
of the Lenders' Revolving Credit Exposures.
"Alternate Base Rate" shall mean, for any day, a rate per annum
(rounded upwards, if necessary, to the next 1/16 of 1%) equal to the greater of
(a) the Prime Rate in effect on such day and (b) the rate that is 1/2 of 1% in
excess of the Federal Funds Effective Rate in effect on such day. If the
Administrative Agent shall have determined (which determination shall be
conclusive absent manifest error) that it is unable to ascertain the Federal
Funds Effective Rate for any reason, including the inability or failure of the
Administrative Agent to obtain sufficient quotations in accordance with the
terms of the definition thereof, the Alternate Base Rate shall be determined
without regard to clause (b) of the preceding sentence until the circumstances
giving rise to such inability no longer exist. Any change in the Alternate Base
Rate due to a change in the Prime Rate or the Federal Funds Effective Rate shall
be effective on the effective date of such change in the Prime Rate or the
Federal Funds Effective Rate, respectively. The term "Prime Rate" shall mean the
rate of interest per annum publicly announced from time to time by the
Administrative Agent as its prime rate in effect at its principal office in New
York City; each change in the Prime Rate shall be effective on the date such
change is publicly announced as being effective. The term "Federal Funds
Effective Rate" shall mean, for any day, the weighted average of the rates on
overnight Federal funds transactions with
<PAGE>
3
members of the Federal Reserve System arranged by Federal funds brokers, as
published on the next succeeding Business Day by the Federal Reserve Bank of New
York, or, if such rate is not so published for any day that is a Business Day,
the average of the quotations for the day for such transactions received by the
Administrative Agent from three Federal funds brokers of recognized standing
selected by it.
"Applicable Percentage" shall mean, for any day, with respect to any
Eurodollar Loan or ABR Loan, as the case may be, (a) 4.00% for Eurodollar Term
Loans or 3.00% for ABR Term Loans, as the case may be, or (b) the applicable
percentage set forth below under the caption "Eurodollar Spread--Revolving
Loans" or "ABR Spread--Revolving Loans", as the case may be, based upon the
Leverage Ratio as of the relevant date of determination:
<TABLE>
<CAPTION>
=====================================================================================================
Eurodollar
Leverage Spread- ABR Spread-
Ratio Revolving Loans Revolving Loans
----- --------------- ---------------
------------------------------------------------------
<S> <C> <C>
Category 1 3.25% 2.25%
- - ----------
Equal to or greater than 4.00 to 1.00
- - -----------------------------------------------------------------------------------------------------
Category 2 3.00% 2.00%
- - ----------
Equal to or greater than 3.50 to 1.00, but less
than 4.00 to 1.00
- - -----------------------------------------------------------------------------------------------------
Category 3 2.75% 1.75%
- - ----------
Equal to or greater than 3.25 to 1.00, but less
than 3.50 to 1.00
- - -----------------------------------------------------------------------------------------------------
Category 4 2.50% 1.50%
- - ----------
Equal to or greater than 3.00 to 1.00, but less
than 3.25 to 1.00
- - -----------------------------------------------------------------------------------------------------
Category 5 2.25% 1.25%
- - ----------
Equal to or greater than 2.75 to 1.00, but less
than 3.00 to 1.00
- - -----------------------------------------------------------------------------------------------------
Category 6 2.00% 1.00%
- - ----------
Less than 2.75 to 1.00
=====================================================================================================
</TABLE>
<PAGE>
4
Each change in the Applicable Percentage resulting from a change in the
Leverage Ratio shall be effective with respect to all Loans and Letters of
Credit outstanding on and after the date of delivery to the Administrative Agent
of the financial statements and certificates required by Section 5.04(a) or (b)
and Section 5.04(d), respectively, indicating such change until the date
immediately preceding the next date of delivery of such financial statements and
certificates indicating another such change. Notwithstanding the foregoing,
until December 31, 1999, the Leverage Ratio shall be deemed to be in Category 1
for purposes of determining the Applicable Percentage; provided, however, that
(a) at any time during which the Borrower has failed to deliver the financial
statements and certificates required by Section 5.04(a) or (b) and Section
5.04(d), respectively, or (b) at any time after the occurrence and during the
continuance of an Event of Default, the Leverage Ratio shall be deemed to be in
Category 1 for purposes of determining the Applicable Percentage.
"Asset Sale" shall mean the sale, transfer or other disposition (by way
of merger or otherwise) by Holdings, the Borrower or any of the Subsidiaries to
any person other than the Borrower or any Subsidiary Guarantor of (a) any Equity
Interests of any of the Subsidiaries (other than directors' qualifying shares)
or (b) any other assets of Holdings, the Borrower or any of the Subsidiaries
(other than (i) inventory, excess, uneconomical, damaged, obsolete or worn out
assets, scrap and Cash Equivalents, in each case disposed of in the ordinary
course of business, (ii) dispositions resulting in Casualty Proceeds or
Condemnation Proceeds or (iii) dispositions between or among Foreign
Subsidiaries), provided that none of (A) any asset sale or series of related
asset sales described in clause (b) above having a value not in excess of
$250,000, (B) the sale or contribution of the Malaysian Business to the
Malaysian Joint Venture for the fair market value thereof or (C) the sale or
contribution of the China Subsidiaries in accordance with the Master Transaction
Agreement shall constitute an "Asset Sale" for purposes of this Agreement.
"Assignment and Acceptance" shall mean an assignment and acceptance
entered into by a Lender and an assignee, and accepted by the Administrative
Agent, in the form of Exhibit B, or such other form as shall be approved by the
Administrative Agent.
"Board" shall mean the Board of Governors of the Federal Reserve System
of the United States of America.
"Borrowing" shall mean a group of Loans of a single Type made by the
Lenders on a single date and as to which a single Interest Period is in effect.
"Borrowing Request" shall mean a request by the Borrower in accordance
with the terms of Section 2.03 and substantially in the form of Exhibit C, or
such other form as shall be approved by the Administrative Agent.
"Business" shall have the meaning assigned to the term "Business" in
the Master Transaction Agreement.
"Business Day" shall mean any day other than a Saturday, Sunday or day
on which banks in New York City are authorized or required by law to close;
provided, however, that when used in connection with a Eurodollar Loan, the term
"Business Day" shall also exclude any day on which banks are not open for
dealings in dollar deposits in the London interbank market.
<PAGE>
5
"Capital Expenditures" shall mean, with respect to any person, all
expenditures by such person that should be capitalized in accordance with GAAP,
including all such expenditures with respect to fixed or capital assets
(including expenditures for maintenance and repairs that should be capitalized
in accordance with GAAP) and the amount of Capital Lease Obligations incurred by
such person; provided, however, that the following shall in any event be
excluded from the definition of Capital Expenditures: (a) any such expenditures
made with, or subsequently reimbursed out of, Casualty Proceeds or Condemnation
Proceeds, so long as such expenditures are made within 360 days of the later of
the occurrence of the damage to or loss of the assets being replaced or repaired
and the receipt of such proceeds in respect thereof, and (b) any such
expenditures constituting the reinvestment of proceeds from the sales of assets
in equipment or other productive assets of the Borrower and its Subsidiaries, so
long as such expenditures are made within 360 days of the receipt of such
proceeds; and provided further, however, that Capital Expenditures shall not
include any expenditures made by the Borrower or any of its Subsidiaries to
acquire in a Permitted Acquisition the business, property or assets of any
person, or the Equity Interests of any person that, as a result of such
acquisition, becomes a Subsidiary of the Borrower.
"Capital Lease Obligations" of any person shall mean the obligations of
such person to pay rent or other amounts under any lease of (or other
arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such person under GAAP,
and the amount of such obligations shall be the capitalized amount thereof
determined in accordance with GAAP.
"Cash Equivalents" shall mean, as to any person, (a) securities issued
or directly and fully guaranteed or insured by the United States or any agency
or instrumentality thereof (provided that the full faith and credit of the
United States is pledged in support thereof) having maturities of not more than
one year from the date of acquisition by such person, (b) time deposits and
certificates of deposit of any Lender or any commercial bank having, or which is
the principal banking subsidiary of a bank holding company organized under the
laws of the United States, any State thereof or the District of Columbia, having
capital, surplus and undivided profits aggregating in excess of $500,000,000
(each Lender and each such commercial bank being herein referred to as a "Cash
Equivalent Bank"), with maturities of not more than one year from the date of
acquisition by such person, (c) repurchase obligations with a term of not more
than 30 days for underlying securities of the types described in clause (a)
above entered into with any Cash Equivalent Bank, (d) commercial paper issued by
any person incorporated in the United States rated at least A-1 or the
equivalent thereof by Standard & Poor's Rating Service or at least P-1 or the
equivalent thereof by Moody's Investors Service, Inc., and in each case maturing
not more than one year after the date of acquisition by such person, (e)
investments in money market funds substantially all of whose assets are
comprised of securities of the types described in clauses (a) through (d) above
(f) Eurodollar time deposits having a maturity of less than one year purchased
directly from any Cash Equivalent Bank (provided such deposit is with such Cash
Equivalent Bank or any other Cash Equivalent Bank), (g) demand deposit accounts
maintained in the ordinary course of business and (h) other short-term
investments utilized by Foreign Subsidiaries in accordance with normal
investment practices for cash management in investments of a type and with
financial institutions analogous to the foregoing.
"Casualty" shall have the meaning set forth in each of the Mortgages.
"Casualty Proceeds" shall have the meaning set forth in each of the
Mortgages.
<PAGE>
6
"Cayman Loan" shall have the meaning assigned to such term in Section
6.01.
A "Change in Control" shall be deemed to have occurred if (a) Holdings
shall at any time cease to own 100% of the capital stock of the Borrower, (b) at
any time a "Change of Control" under and as defined in the Senior Subordinated
Note Indenture, the Seller Subordinated Note Indenture, the Holdings
Subordinated Credit Agreement or in any documentation relating to any
Indebtedness refinancing all or any part thereof shall have occurred, (c) at any
time prior to the consummation of a Qualified Public Offering, and for any
reason whatsoever, (i) the CVC Permitted Holders shall own less than (x) 30% of
the then outstanding Voting Stock at such time and (y) 50% of the economic
interests represented by the then outstanding Equity Interests at such time or
(ii) the CVC Permitted Holders and the Management Investors, taken together,
shall own less than a majority of the outstanding Voting Stock, (d) at any time
after the consummation of a Qualified Public Offering any "Person" or "group"
(as such terms are used in Sections 13(d) and 14(d) of the Exchange Act),
excluding the CVC Permitted Holders and the Management Investors, is or shall
become the "beneficial owner" (as defined in Rules 13(d)-3 and 13(d)-5 under the
Exchange Act), directly or indirectly, of more than 35% of the outstanding
Voting Stock, or (e) at any time the Board of Directors of Holdings shall cease
to consist of a majority of Continuing Directors.
"China Subsidiaries" shall mean Harris Semiconductor (Suzhou) Co. Ltd.,
Anshan Harris Broadcast Equipment Co. Ltd. and Guangzhou Harris
Telecommunications Company Ltd.
"Closing Date" shall mean August 13, 1999.
"CMP" shall mean Citicorp Mezzanine Partners, L.P.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
"Collateral" shall mean all the "Collateral" as defined in any Security
Document and shall also include the Mortgaged Properties.
"Commitment" shall mean, with respect to any Lender, such Lender's
Revolving Credit Commitment, Term Loan Commitment
and Swingline Commitment.
"Commitment Fee" shall have the meaning assigned to such term in
Section 2.05(a).
"Condemnation" shall have the meaning set forth in each of the
Mortgages.
"Condemnation Proceeds" shall have the meaning set forth in each of the
Mortgages.
"Confidential Information Memorandum" shall mean the Confidential
Information Memorandum of the Borrower dated July 1999.
"Consolidated Current Assets" shall mean, at any time, the consolidated
current assets (other than cash and Cash Equivalents) of Holdings and its
consolidated Subsidiaries. For purposes of determining Excess Cash Flow for the
portion of the fiscal year ending June 30, 2000, Consolidated Current Assets at
July 2, 1999 shall be deemed to be $258,000,000.
<PAGE>
7
"Consolidated Current Liabilities" shall mean, at any time, the
consolidated current liabilities of Holdings and its consolidated Subsidiaries
at such time, but excluding (a) the current portion of any Indebtedness under
this Agreement and any other long-term Indebtedness which would otherwise be
included therein, (b) accrued but unpaid interest with respect to the
Indebtedness described in clause (a), and (c) the current portion of
Indebtedness constituting Capital Lease Obligations. For purposes of determining
Excess Cash Flow for the portion of the fiscal year ending June 30, 2000,
Consolidated Current Liabilities at July 2, 1999 shall be deemed to be
$88,000,000.
"Consolidated EBITDA" shall mean, for any period, Consolidated
Operating Income, adjusted by adding thereto the amount of all amortization of
intangibles and depreciation, in each case that were deducted in arriving at
Consolidated Operating Income for such period. For purposes of determining the
Consolidated Fixed Charge Coverage Ratio, the Consolidated Interest Coverage
Ratio and the Leverage Ratio as of or for the periods ended December 31, 1999,
March 31, 2000 and June 30, 2000, Consolidated EBITDA will be deemed to be equal
to (i) for the fiscal quarter ended April 2, 1999, $31,900,000, (ii) for the
fiscal quarter ended July 2, 1999, $35,200,000 and (iii) for the fiscal quarter
ended October 1, 1999, Consolidated EBITDA for the period commencing on the
Closing Date and ending on October 1, 1999, multiplied by 9/5.
"Consolidated Fixed Charge Coverage Ratio" for any period shall mean
the ratio of Consolidated EBITDA to Consolidated Fixed Charges for such period.
"Consolidated Fixed Charges" for any period shall mean the sum, without
duplication, of (a) Consolidated Interest Expense for such period, (b) the
amount of all Capital Expenditures made by Holdings and its Subsidiaries during
such period, (c) all cash payments in respect of income taxes made during such
period (net of any cash refund in respect of income taxes actually received
during such period), which for any period ended prior to the Closing Date shall
be deemed to be zero, and (d) the scheduled principal amount of all amortization
payments on all Indebtedness (including the principal component of all Capital
Lease Obligations) of Holdings and its Subsidiaries for such period (as
determined on the first day of the respective period), which for any period
ended prior to the Closing Date shall be deemed to be zero.
"Consolidated Indebtedness" shall mean, as at any date of
determination, the aggregate stated balance sheet amount of all Indebtedness
(but including in any event the then outstanding principal amount of all Loans,
all Senior Subordinated Notes, all Capital Lease Obligations and all L/C
Exposure) of Holdings and its Subsidiaries on a consolidated basis as determined
in accordance with GAAP; provided that Indebtedness outstanding pursuant to (a)
the Seller Subordinated Notes, (b) the Holdings Junior Subordinated Debentures,
(c) the Holdings Subordinated Notes and (d) trade payables and accrued expenses
incurred in the ordinary course of business shall be excluded in determining
Consolidated Indebtedness.
"Consolidated Interest Coverage Ratio" shall mean, for any period, the
ratio of (i) Consolidated EBITDA for such period to (ii) Consolidated Interest
Expense for such period.
"Consolidated Interest Expense" shall mean, for any period, the total
consolidated interest expense of Holdings and its consolidated Subsidiaries for
such period (calculated without regard to any limitations on the payment
thereof) plus, without duplication, the portion of Capital Lease
<PAGE>
8
Obligations of Holdings and its consolidated Subsidiaries representing the
interest factor for such period, but excluding (a) the amortization of any
deferred financing costs incurred in connection with this Agreement, the
issuance of the Units or the entering into of any Interest Rate Protection
Agreements in accordance with Section 5.12 and (b) any interest expense in
respect of (i) the Seller Subordinated Notes, (ii) the Holdings Junior
Subordinated Debentures and (iii) the Holdings Subordinated Notes. For purposes
of determining the Consolidated Interest Coverage Ratio for the periods ended
December 31, 1999, March 31, 2000 and June 30, 2000, Consolidated Interest
Expenses will be deemed to be equal to Consolidated Interest Expense for the
period commencing on October 2, 1999, and ending on (i) December 31, 1999,
multiplied by 4, (ii) March 31, 2000, multipied by 2 and (iii) June 30, 2000,
multiplied by 4/3, respectively.
"Consolidated Net Income" shall mean, for any period, the consolidated
net after tax income of Holdings and its consolidated Subsidiaries determined in
accordance with GAAP.
"Consolidated Operating Income" shall mean, for any period, the
Consolidated Net Income for such period, before interest expense and provision
for taxes based on income and without giving effect to (a) any extraordinary
gains or losses, (b) gains or losses from sales of assets other than inventory
sold in the ordinary course of business, (c) noncash restructuring charges, (d)
restructuring charges not to exceed $10,000,000 in any fiscal year and (e) other
nonrecurring noncash charges.
"Contingent Obligation" shall mean, as to any person, any obligation of
such person guaranteeing or intended to guarantee any Indebtedness, leases,
dividends or other obligations ("primary obligations") of any other person (the
"primary obligor") in any manner, whether directly or indirectly, including,
without limitation, any obligation of such person, whether or not contingent,
(a) to purchase any such primary obligation or any property constituting direct
or indirect security therefor, (b) to advance or supply funds (i) for the
purchase or payment of any such primary obligation or (ii) to maintain working
capital or equity capital of the primary obligor or otherwise to maintain the
net worth or solvency of the primary obligor, (c) to purchase property,
securities or services primarily for the purpose of assuring the owner of any
such primary obligation of the ability of the primary obligor to make payment of
such primary obligation or (d) otherwise to assure or hold harmless the holder
of such primary obligation against loss in respect thereof; provided, however,
that the term Contingent Obligation shall not include endorsements of
instruments for deposit or collection in the ordinary course of business and any
products warranties for deposit or collection in the ordinary course of
business. The amount of any Contingent Obligation shall be deemed to be an
amount equal to the stated or determinable amount of the primary obligation in
respect of which such Contingent Obligation is made (or, if less, the maximum
amount of such primary obligation for which such person may be liable pursuant
to the terms of the instrument evidencing such Contingent Obligation) or, if not
stated or determinable, the maximum reasonably anticipated liability in respect
thereof (assuming such person is required to perform thereunder) as determined
by such person in good faith.
"Continuing Directors" shall mean (a) the directors of Holdings on the
Closing Date and (b) each other director, if (i) such director's nomination for
election to the Board of Directors of Holdings is recommended by a majority of
then Continuing Directors or (ii) such director became a member of the Board of
Directors pursuant to, and in accordance with Article VI of the Securities
Purchase and Holders Agreement prior to the termination of the voting agreements
pursuant to Section 6.6 of the Securities Purchase and Holders Agreement.
<PAGE>
9
"Control" shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of a
person, whether through the ownership of voting securities, by contract or
otherwise, and the terms "Controlling" and "Controlled" shall have meanings
correlative thereto.
"Credit Event" shall have the meaning assigned to such term in Section
4.01.
"CVC" shall mean Citicorp Venture Capital Ltd.
"CVC Permitted Holders" shall mean (a) CVC, (b) any officer, employee
or director of CVC or any trust, partnership or other entity established solely
for the benefit of such officers, employees or directors and (c) Sterling (or
any successor) so long as CVC, employees, officers and directors of CVC and
corporations, partnerships and other entities at least a majority of the equity
in which is held in the aggregate by CVC and its employees, officers and
directors, hold no less than a majority of the aggregate economic interests in
Sterling or such successor.
"Default" shall mean any event or condition which upon notice, lapse of
time or both would constitute an Event of Default.
"Disqualified Stock" shall mean any capital stock which, by its terms
(or by the terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, (a) matures (excluding any
maturity as the result of an optional redemption by the issuer thereof) or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or
is redeemable at the option of the holder thereof, in whole or in part, on or
prior to the first anniversary of the Term Loan Maturity Date, or (b) is
convertible into or exchangeable (unless at the sole option of the issuer
thereof) for (i) debt securities or (ii) any capital stock referred to in (a)
above, in each case at any time prior to the first anniversary of the Term Loan
Maturity Date, or (c) otherwise contains terms which are materially more
restrictive (or provide the holders thereof materially greater rights) than the
Holdings Series A Preferred Stock in the form issued on or prior to the Closing
Date.
"Dividend" with respect to any person shall mean that such person has
declared or paid a dividend or returned any equity capital to its stockholders
or authorized or made any other distribution, payment or delivery of property
(other than common stock of such person) or cash to its stockholders as such, or
redeemed, retired, purchased or otherwise acquired, directly or indirectly, for
a consideration any shares of any class of its capital stock outstanding on or
after the Closing Date (or any options or warrants issued by such person with
respect to its capital stock), or set aside any funds for any of the foregoing
purposes, or shall have permitted any of its Subsidiaries to purchase or
otherwise acquire for a consideration any shares of any class of the capital
stock of such person outstanding on or after the Closing Date (or any options or
warrants issued by such person with respect to its capital stock). Without
limiting the foregoing, "Dividends" with respect to any person shall also
include all payments made or required to be made by such person with respect to
any stock appreciation rights, plans, equity incentive or achievement plans or
any similar plans or setting aside of any funds for the foregoing purposes.
"Documents" shall mean the Loan Documents and the Transaction
Documents.
"dollars" or "$" shall mean lawful money of the United States of
America.
<PAGE>
10
"Domestic Subsidiaries" shall mean all Subsidiaries incorporated or
organized under the laws of the United States of America, any State thereof or
the District of Columbia.
"environment" shall mean ambient air, surface water and groundwater
(including potable water, navigable water and wetlands), the land surface or
subsurface strata, the workplace or as otherwise defined in any Environmental
Law.
"Environmental Claim" shall mean any written accusation, allegation,
notice of violation, claim, demand, order, directive, cost recovery action or
other cause of action by, or on behalf of, any Governmental Authority or any
person for damages, injunctive or equitable relief, personal injury (including
sickness, disease or death), Remedial Action costs, tangible or intangible
property damage, natural resource damages, nuisance, pollution, any adverse
effect on the environment caused by any Hazardous Material, or for fines,
penalties or restrictions, resulting from or based upon (a) the existence, or
the continuation of the existence, of a Release (including sudden or non-sudden,
accidental or non-accidental Releases), (b) exposure to any Hazardous Material,
(c) the presence, use, handling, transportation, storage, treatment or disposal
of any Hazardous Material or (d) the violation or alleged violation of any
Environmental Law or Environmental Permit.
"Environmental Law" shall mean any and all applicable present and
future treaties, laws, rules, regulations, codes, ordinances, orders, decrees,
judgments, injunctions or binding agreements issued, promulgated or entered into
by any Governmental Authority, relating in any way to the environment,
preservation or reclamation of natural resources, the management, Release or
threatened Release of any Hazardous Material or to health and safety matters,
including the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended by the Superfund Amendments and Reauthorization Act of
1986, 42 U.S.C. ss.ss. 9601 et seq. (collectively "CERCLA"), the Solid Waste
Disposal Act, as amended by the Resource Conservation and Recovery Act of 1976
and Hazardous and Solid Waste Amendments of 1984, 42 U.S.C. ss.ss. 6901 et seq.,
the Federal Water Pollution Control Act, as amended by the Clean Water Act of
1977, 33 U.S.C. ss.ss. 1251 et seq., the Clean Air Act of 1970, as amended 42
U.S.C. ss.ss. 7401 et seq., the Toxic Substances Control Act of 1976, 15 U.S.C.
ss.ss. 2601 et seq., the Occupational Safety and Health Act of 1970, as amended,
29 U.S.C. ss.ss. 651 et seq., the Emergency Planning and Community Right-to-Know
Act of 1986, 42 U.S.C. ss.ss. 11001 et seq., the Safe Drinking Water Act of
1974, as amended, 42 U.S.C. ss.ss. 300(f) et seq., the Hazardous Materials
Transportation Act, 49 U.S.C. ss.ss. 5101 et seq., and any similar or
implementing state, local or foreign law, and all amendments or regulations
promulgated under any of the foregoing.
"Environmental Permit" shall mean any permit, approval, authorization,
certificate, license, variance, filing or permission required by or from any
Governmental Authority pursuant to any Environmental Law.
"Equity Contribution" shall mean the contribution by Sterling Holding
Company LLC and certain other investors of $81,000,000 to Holdings, the
contribution by Harris of $9,000,000 to Holdings and the contribution by
Holdings of the amounts so received to the Borrower as common equity.
<PAGE>
11
"Equity Interests" shall mean shares of capital stock, partnership
interests, membership interests in a limited liability company, beneficial
interests in a trust or other equity ownership interests in a person.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as the same may be amended from time to time.
"ERISA Affiliate" shall mean any trade or business (whether or not
incorporated) that, together with the Borrower, is treated as a single employer
under Section 414(b) or (c) of the Code, or solely for purposes of Section 302
of ERISA and Section 412 of the Code, is treated as a single employer under
Section 414 of the Code.
"ERISA Event" shall mean (a) any "reportable event", as defined in
Section 4043 of ERISA or the regulations issued thereunder, with respect to a
Plan (other than an event for which the 30-day notice period is waived); (b) the
existence with respect to any Plan of an "accumulated funding deficiency" (as
defined in Section 412 of the Code or Section 302 of ERISA), whether or not
waived; (c) the filing pursuant to Section 412(d) of the Code or Section 303(d)
of ERISA of an application for a waiver of the minimum funding standard with
respect to any Plan; (d) the incurrence by the Borrower or any of its ERISA
Affiliates of any liability under Title IV of ERISA with respect to the
termination of any Plan; (e) the receipt by the Borrower or any of its ERISA
Affiliates from the PBGC or a plan administrator of any notice relating to the
intention to terminate any Plan or Plans or to appoint a trustee to administer
any Plan; (f) the incurrence by the Borrower or any of its ERISA Affiliates of
any liability with respect to the withdrawal from any Plan or Multiemployer
Plan; (g) the receipt by the Borrower or any of its ERISA Affiliates of any
notice, or the receipt by any Multiemployer Plan from the Borrower or any of its
ERISA Affiliates of any notice, concerning the imposition of Withdrawal
Liability or a determination that a Multiemployer Plan is, or is expected to be,
insolvent or in reorganization, within the meaning of Title IV of ERISA; and (h)
any Foreign Benefit Event.
"Eurodollar Borrowing" shall mean a Borrowing comprised of Eurodollar
Loans.
"Eurodollar Loan" shall mean any Eurodollar Revolving Loan or
Eurodollar Term Loan.
"Eurodollar Revolving Loan" shall mean any Revolving Loan bearing
interest at a rate determined by reference to the Adjusted LIBO Rate in
accordance with the provisions of Article II.
"Eurodollar Term Borrowing" shall mean a Borrowing comprised of
Eurodollar Term Loans.
"Eurodollar Term Loan" shall mean any Term Loan bearing interest at a
rate determined by reference to the Adjusted LIBO Rate in accordance with the
provisions of Article II.
"Event of Default" shall have the meaning assigned to such term in
Article VII.
"Excess Cash Flow" shall mean, for any fiscal year (or, in the case of
the fiscal year ending June 30, 2000, the portion thereof commencing on the
Closing Date and ending on June 30, 2000) of Holdings, the amount by which (a)
the sum, without duplication, of (i) Consolidated EBITDA for such fiscal year
(or portion thereof), (ii) extraordinary cash receipts of Holdings and its
consolidated Subsidiaries, if any, during such fiscal year (or portion thereof)
and not included in Consolidated
<PAGE>
12
EBITDA (including any amounts received by Holdings or any of its Subsidiaries by
way of a purchase price adjustment pursuant to the Master Transaction Agreement)
and (iii) reductions to noncash working capital of Holdings and its consolidated
Subsidiaries for such fiscal year (i.e., the decrease, if any, in Consolidated
Current Assets minus Consolidated Current Liabilities from the beginning (which
shall be July 2, 1999, for the fiscal year ending June 30, 2000) to the end of
such fiscal year) exceeds (b) the sum, without duplication, of (i) the amount of
any cash income taxes payable by Holdings and its consolidated Subsidiaries with
respect to such fiscal year (or portion thereof), (ii) cash interest paid (net
of cash interest received) by Holdings and its consolidated Subsidiaries during
such fiscal year (or portion thereof), (iii) Capital Expenditures made in cash
in accordance with Section 6.08 during such fiscal year (or portion thereof),
except to the extent financed with the proceeds of Indebtedness, Casualty
Proceeds or Condemnation Proceeds, (iv) permanent repayments of Indebtedness
made by Holdings and its consolidated Subsidiaries during such fiscal year (or
portion thereof), (v) optional and mandatory prepayments of the principal of
Loans during such fiscal year (or portion thereof), but only to the extent that
such prepayments by their terms cannot be reborrowed or redrawn and do not occur
in connection with a refinancing of all or any portion of the Loans, (vi)
extraordinary cash expenses and cash restructuring charges paid by Holdings and
its consolidated Subsidiaries, if any, during such fiscal year (or portion
thereof) and not included in Consolidated EBITDA, (vii) additions to noncash
working capital for such fiscal year (i.e., the increase, if any, in
Consolidated Current Assets minus Consolidated Current Liabilities from the
beginning (which shall be July 2, 1999, for the fiscal year ending June 30,
2000) to the end of such fiscal year), (viii) cash severance and similar
payments made during such fiscal year (or portion thereof), to the extent not
deducted in determining Consolidated EBITDA for such fiscal year (or portion
thereof), and (ix) if any amount representing permitted Capital Expenditures is
being carried forward from such fiscal year into the immediately succeeding
fiscal year pursuant to the provisions of Section 6.08(b), the amount being so
carried forward, net of any amount of permitted Capital Expenditures carried
forward into such fiscal year from the immediately preceding fiscal year
pursuant to the provisions of Section 6.08(b) to the extent such amount has
lapsed and terminated at the end of such fiscal year pursuant to the proviso to
Section 6.08(b); provided that to the extent otherwise included therein, the Net
Cash Proceeds of Asset Sales and dispositions resulting in Casualty Proceeds or
Condemnation Proceeds shall be excluded from the calculation of Excess Cash
Flow.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Excluded Taxes" shall mean, with respect to the Administrative Agent,
any Lender, the Issuing Bank or any other recipient of any payment to be made by
or on account of any obligation of the Borrower hereunder, (a) income or
franchise taxes imposed on (or measured by) its net income by the United States,
or by the jurisdiction under the laws of which such recipient is organized or in
which its principal office is located or, in the case of any Lender, in which
its applicable lending office is located, (b) any branch profits taxes imposed
by the United States of America or any similar tax imposed by any other
jurisdiction in which the Borrower is located and (c) in the case of a Foreign
Lender (other than an assignee pursuant to a request by the Borrower under
Section 2.21(a)), any withholding tax that is imposed on amounts payable to such
Foreign Lender at the time such Foreign Lender becomes a party to this Agreement
(or designates a new lending office) or is attributable to such Foreign Lender's
failure to comply with Section 2.20(e), except to the extent that such Foreign
Lender (or its assignor, if any) was entitled, at the time of designation of a
new lending office (or assignment), to receive additional amounts from the
Borrower with respect to such withholding tax pursuant to Section 2.20(a).
<PAGE>
13
"Fee Letter" shall mean the Senior Secured Credit Facilities Fee Letter
dated July 5, 1999, among the Borrower, Credit Suisse First Boston and Salomon
Smith Barney Inc.
"Fees" shall mean the Commitment Fees, the Administrative Agent's Fees,
the L/C Participation Fees and the Issuing Bank Fees.
"Financial Officer" of any corporation shall mean the chief financial
officer, principal accounting officer, Treasurer or Controller of such
corporation.
"Foreign Benefit Event" shall mean, with respect to any Foreign Pension
Plan, (a) the existence of unfunded liabilities in excess of the amount
permitted under any applicable law, or in excess of the amount that would be
permitted absent a waiver from a Governmental Authority, (b) the failure to make
the required contributions or payments, under any applicable law, on or before
the due date for such contributions or payments, (c) the receipt of a notice by
a Governmental Authority relating to the intention to terminate any such Foreign
Pension Plan or to appoint a trustee or similar official to administer any such
Foreign Pension Plan, or alleging the insolvency of any such Foreign Pension
Plan and (d) the incurrence of any liability in excess of $2,500,000 (or the
equivalent thereof in another currency) by Holdings or any of its Subsidiaries
under applicable law on account of the complete or partial termination of such
Foreign Pension Plan or the complete or partial withdrawal of any participating
employer therein, or (e) the occurrence of any transaction that is prohibited
under any applicable law and could reasonably be expected to result in the
incurrence of any liability by Holdings or any of its Subsidiaries, or the
imposition on Holdings or any of its Subsidiaries of any fine, excise tax or
penalty resulting from any noncompliance with any applicable law, in each case
in excess of $2,500,000 (or the equivalent thereof in another currency).
"Foreign Lender" shall mean any Lender that is organized under the laws
of a jurisdiction other than that in which the Borrower is located. For purposes
of this definition, the United States of America, each State thereof and the
District of Columbia shall be deemed to constitute a single jurisdiction.
"Foreign Pension Plan" shall mean any plan, fund (including any
superannuation fund) or other similar program established or maintained outside
the United States by Holdings or any one or more of its Subsidiaries primarily
for the benefit of employees of Holdings or such Subsidiaries residing outside
the United States, which plan, fund or other similar program provides, or
results in, retirement income, a deferral of income in contemplation of
retirement or payments to be made upon termination of employment, and which plan
is not subject to ERISA or the Code.
"Foreign Subsidiary" shall mean any Subsidiary that is not a Domestic
Subsidiary.
"GAAP" shall mean generally accepted accounting principles applied on a
consistent basis.
"Governmental Authority" shall mean any Federal, state, local or
foreign court or governmental agency, authority, instrumentality or regulatory
body.
"Granting Lender" has the meaning specified in Section 9.04(i).
<PAGE>
14
"Guarantee Agreements" shall mean the Parent Guarantee Agreement and
the Subsidiary Guarantee Agreement.
"Guarantors" shall mean Holdings and the Subsidiary Guarantors.
"Harris" shall mean Harris Corporation, a Delaware corporation.
"Hazardous Materials" shall mean all explosive or radioactive
substances or wastes, hazardous or toxic substances or wastes, pollutants,
solid, liquid or gaseous wastes, including petroleum or petroleum distillates,
asbestos or asbestos containing materials, polychlorinated biphenyls ("PCBs") or
PCB-containing materials or equipment, radon gas, infectious or medical wastes
and all other substances or wastes of any nature regulated pursuant to any
Environmental Law.
"Holdings Junior Subordinated Debentures" shall have the meaning
provided in Section 6.01(l).
"Holdings Series A Preferred Stock" shall mean shares of Holdings' 12%
Series A Cumulative Compounding Preferred Stock.
"Holdings Subordinated Credit Agreement" shall mean the credit
agreement dated as of August 13, 1999, between Holdings and CMP, as in effect on
the Closing Date and as thereafter amended from time to time in accordance with
the requirements thereof and this Agreement.
"Holdings Subordinated Notes" shall mean the subordinated pay-in-kind
notes issued by Holdings to CMP in the principal amount of $30,000,000 pursuant
to the Holdings Subordinated Credit Agreement.
"Indebtedness" of any person shall mean, without duplication, (a) all
obligations of such person for borrowed money or with respect to deposits or
advances of any kind, (b) all obligations of such person evidenced by bonds,
debentures, notes or similar instruments, (c) all obligations of such person
upon which interest charges are customarily paid, (d) all obligations of such
person under conditional sale or other title retention agreements relating to
property or assets purchased by such person, (e) all obligations of such person
issued or assumed as the deferred purchase price of property or services
(excluding trade accounts payable and accrued obligations incurred in the
ordinary course of business), (f) all Indebtedness of others secured by (or for
which the holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any Lien on property owned or acquired by such
person, whether or not the obligations secured thereby have been assumed, (g)
all Contingent Obligations of such person, (h) all Capital Lease Obligations of
such person, (i) all obligations of such person in respect of interest rate
protection agreements, foreign currency exchange agreements or other interest or
exchange rate hedging arrangements and (j) all obligations of such person as an
account party in respect of letters of credit and bankers' acceptances. The
Indebtedness of any person shall include the Indebtedness of any partnership in
which such person is a general partner.
"Indemnified Taxes" shall mean Taxes other than Excluded Taxes.
<PAGE>
15
"Indemnity, Subrogation and Contribution Agreement" shall mean the
Indemnity, Subrogation and Contribution Agreement, substantially in the form of
Exhibit D, among the Borrower, the Subsidiary Guarantors and the Collateral
Agent.
"Interest Payment Date" shall mean, with respect to any Loan, the last
day of the Interest Period applicable to the Borrowing of which such Loan is a
part and, in the case of a Eurodollar Borrowing with an Interest Period of more
than three months' duration, each day that would have been an Interest Payment
Date had successive Interest Periods of three months' duration been applicable
to such Borrowing, and, in addition, the date of any prepayment of a Eurodollar
Borrowing or conversion of a Eurodollar Borrowing to an ABR Borrowing.
"Interest Period" shall mean (a) as to any Eurodollar Borrowing, the
period commencing on the date of such Borrowing and ending on the numerically
corresponding day (or, if there is no numerically corresponding day, on the last
day) in the calendar month that is 1, 2, 3 or 6 months thereafter, as the
Borrower may elect, and (b) as to any ABR Borrowing, the period commencing on
the date of such Borrowing and ending on the earlier of (i) the next succeeding
last Business Day of March, June, September or December, and (ii) the Revolving
Credit Maturity Date or the Term Loan Maturity Date, as applicable; provided,
however, that if any Interest Period would end on a day other than a Business
Day, such Interest Period shall be extended to the next succeeding Business Day
unless, in the case of a Eurodollar Borrowing only, such next succeeding
Business Day would fall in the next calendar month, in which case such Interest
Period shall end on the next preceding Business Day. Interest shall accrue from
and including the first day of an Interest Period to but excluding the last day
of such Interest Period.
"Interest Rate Protection Agreement" shall mean any interest rate swap
agreement, interest rate cap agreement, interest rate collar agreement or
similar agreement or arrangement designed to protect Holdings or any of its
Subsidiaries against fluctuations in interest rates, and not entered into for
speculation.
"Issuing Bank" shall mean, as the context may require, (a) Credit
Suisse First Boston, with respect to Letters of Credit issued by it, (b) any
other Lender that may become an Issuing Bank pursuant to Section 2.23(i) or (k),
with respect to Letters of Credit issued by such Lender, or (c) collectively,
all the foregoing.
"Issuing Bank Fees" shall have the meaning assigned to such term in
Section 2.05(c).
"Joint Venture" shall mean any person in which Holdings, the Borrower
and its Subsidiaries own, directly or indirectly, at least 20% but 50% or less
of the equity interests.
"L/C Commitment" shall mean the commitment of the Issuing Bank to issue
Letters of Credit pursuant to Section 2.23.
"L/C Disbursement" shall mean a payment or disbursement made by the
Issuing Bank pursuant to a Letter of Credit.
"L/C Exposure" shall mean at any time the sum of (a) the aggregate
undrawn amount of all outstanding Letters of Credit at such time plus (b) the
aggregate principal amount of all L/C
<PAGE>
16
Disbursements that have not yet been reimbursed at such time. The L/C Exposure
of any Revolving Credit Lender at any time shall mean its Pro Rata Percentage of
the aggregate L/C Exposure at such time.
"L/C Participation Fee" shall have the meaning assigned to such term in
Section 2.05(c).
"Lenders" shall mean (a) the financial institutions listed on Schedule
2.01 (other than any such financial institution that has ceased to be a party
hereto pursuant to an Assignment and Acceptance) and (b) any financial
institution that has become a party hereto pursuant to an Assignment and
Acceptance. Unless the context clearly indicates otherwise, the term "Lenders"
shall include the Swingline Lender.
"Letter of Credit" shall mean any letter of credit issued pursuant to
Section 2.23.
"Leverage Ratio" shall mean, at any date of determination, the ratio of
Consolidated Indebtedness on such date to Consolidated EBITDA for the period of
four consecutive fiscal quarters of the Borrower most recently ended as of such
date.
"LIBO Rate" shall mean, with respect to any Eurodollar Borrowing for
any Interest Period, the rate per annum determined by the Administrative Agent
at approximately 11:00 a.m. (London time) on the date that is two Business Days
prior to the beginning of the relevant Interest Period by reference to the
British Bankers' Association Interest Settlement Rates for deposits in dollars
(as set forth by the Bloomberg Information Service or any successor thereto or
any other service selected by the Administrative Agent which has been nominated
by the British Bankers' Association as an authorized information vendor for the
purpose of displaying such rates) for a period equal to such Interest Period;
provided that, to the extent that an interest rate is not ascertainable pursuant
to the foregoing provisions of this definition, the "LIBO Rate" shall be the
interest rate per annum determined by the Administrative Agent to be the average
of the rates per annum at which deposits in dollars are offered for such
relevant Interest Period to major banks in the London interbank market in
London, England by the Administrative Agent at approximately 11:00 a.m. (London
time) on the date that is two Business Days prior to the beginning of such
Interest Period.
"Lien" shall mean, with respect to any asset, (a) any mortgage, deed of
trust, lien, pledge, encumbrance, charge or security interest in or on such
asset, (b) the interest of a vendor or a lessor under any conditional sale
agreement, capital lease or title retention agreement (or any financing lease
having substantially the same economic effect as any of the foregoing) relating
to such asset and (c) in the case of securities, any purchase option, call or
similar right of a third party with respect to such securities.
"LLC Subsidiaries" shall mean Harris Semiconductor (Pennsylvania), LLC,
Harris Semiconductor (Ohio), LLC and Harris Semiconductor, LLC.
"Loan Documents" shall mean this Agreement, the Letters of Credit, the
Guarantee Agreements, the Security Documents and the Indemnity, Subrogation and
Contribution Agreement.
"Loan Parties" shall mean the Borrower and the Guarantors.
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17
"Loans" shall mean the Revolving Loans, the Term Loans and the
Swingline Loans.
"Malaysian Business" shall mean the assembly and testing business
operated by the Borrower and its Subsidiaries in Kuala Lumpur, Malaysia.
"Malaysian Joint Venture" shall mean any Joint Venture formed by the
Borrower or any of its Subsidiaries with a third party following the sale or
other disposition of the Malaysian Business for the purpose of owning and/or
operating the Malaysian Business.
"Management Investors" shall mean Gregory L. Williams, Daniel J.
Heneghan and certain other key employees of the Borrower who purchased capital
stock of Holdings pursuant to the Securities Purchase and Holders Agreement.
"Margin Stock" shall have the meaning assigned to such term in
Regulation U.
"Master Transaction Agreement" shall mean the Master Transaction
Agreement dated as of June 2, 1999, among Holdings, the Borrower and Harris, as
amended, supplemented or otherwise modified from time to time in accordance with
the provisions hereof and thereof.
"Material Adverse Effect" shall mean (a) a materially adverse effect on
the business, results of operations, prospects or condition, financial or
otherwise, of Holdings and its Subsidiaries, taken as a whole, (b) material
impairment of the ability of the Loan Parties to perform any of their
obligations under the Loan Documents or (c) material impairment of the rights of
or benefits available to the Lenders or the Collateral Agent under any Loan
Document.
"Mortgaged Properties" shall mean the owned real properties of the Loan
Parties specified on Schedule 1.01(a).
"Mortgages" shall mean the mortgages, deeds of trust, assignments of
leases and rents, modifications and other security documents delivered pursuant
to clause (i) of Section 4.02(j) or pursuant to Section 5.11, each substantially
in the form of Exhibit E.
"Multiemployer Plan" shall mean a multiemployer plan as defined in
Section 4001(a)(3) of ERISA.
"Net Cash Proceeds" shall mean (a) with respect to any Asset Sale, the
cash proceeds (including cash proceeds subsequently received (but only as and
when received) in respect of noncash consideration initially received, net of
(i) selling expenses (including reasonable broker's fees or commissions, legal
fees, transfer and similar taxes and Holdings' good faith estimate of income
taxes paid or payable in connection with such sale), (ii) amounts provided as a
reserve, in accordance with GAAP, against any liabilities under any
indemnification obligations associated with such Asset Sale (provided that, to
the extent and at the time any such amounts are released from such reserve, such
amounts shall constitute Net Cash Proceeds), (iii) Holdings' good faith estimate
of payments required to be made with respect to unassumed liabilities relating
to the assets sold within 90 days of such Asset Sale (provided that, to the
extent such cash proceeds are not used to make payments in respect of such
unassumed liabilities within 90 days of such Asset Sale, such cash proceeds
shall constitute Net Cash Proceeds) and (iv) the principal amount, premium or
penalty, if any, interest and other amounts on any Indebtedness for borrowed
money which is secured by the asset sold in such Asset
<PAGE>
18
Sale and which is repaid with such proceeds (other than any such Indebtedness
assumed by the purchaser of such asset), (b) with respect to any issuance or
disposition of Indebtedness, the cash proceeds thereof, net of all taxes and
customary fees, commissions, costs and other expenses incurred in connection
therewith and (c) with respect to any Public Equity Offering, the cash proceeds
thereof, net of all customary fees, commissions, costs and other expenses
incurred in connection therewith.
"Obligation Currency" shall have the meaning assigned to such term in
Section 9.16.
"Obligations" shall mean all obligations defined as "Obligations" in
the Guarantee Agreements and the Security Documents.
"Operating Agreements" shall mean the Intellectual Property Agreement,
Patent Assignment and Services Agreement, License Assignment Agreement, Harris
Trademark License Agreement, Secondary Trademark Assignment and License
Agreement and Transitional Services Agreement, all of which as contemplated by
the Master Transaction Agreement.
"Other Hedging Agreement" shall mean any foreign exchange contracts,
currency swap agreements, commodity agreements or other similar agreements or
arrangements designed to protect against the fluctuations in currency or
commodity values.
"Other Taxes" shall mean any and all present or future stamp or
documentary taxes or any other excise or property taxes, charges or similar
levies arising from any payment made under any Loan Document or from the
execution, delivery or enforcement of, or otherwise with respect to, any Loan
Document.
"Parent Guarantee Agreement" shall mean the Parent Guarantee Agreement,
substantially in the form of Exhibit F, made by Holdings in favor of the
Collateral Agent for the benefit of the Secured Parties.
"PBGC" shall mean the Pension Benefit Guaranty Corporation referred to
and defined in ERISA.
"Pennsylvania Loans" shall mean the loans outstanding on the Closing
Date and set forth on Schedule 6.01 made by the Commonwealth of Pennsylvania
and/or certain agencies or authorities thereof to Harris and/or one or more
Subsidiaries.
"Perfection Certificate" shall mean the Perfection Certificate
substantially in the form of Annex 2 to the Security Agreement.
"Permitted Acquisition" shall mean the acquisition by the Borrower or a
Wholly Owned Subsidiary of 100% of the Equity Interests of, or all or
substantially all the assets of, a person or line of business of such person
(referred to herein as the "Acquired Entity"); provided that (a) the Acquired
Entity shall be a going concern and shall be in a similar line of business as
that of the Borrower and its Subsidiaries as conducted during the current and
most recent calendar year and (b) at the time of such transaction and after
giving effect thereto, (i) no Event of Default or Default shall have occurred
and be continuing or shall exist, (ii) the Borrower would be in Pro Forma
Compliance and (iii) the aggregate consideration for all such Permitted
Acquisitions shall not exceed $25,000,000.
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19
"person" shall mean any natural person, corporation, business trust,
joint venture, association, company, limited liability company, partnership or
government, or any agency or political subdivision thereof.
"Plan" shall mean any employee pension benefit plan (other than a
Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section
412 of the Code or Section 307 of ERISA, and in respect of which the Borrower or
any ERISA Affiliate is (or, if such plan were terminated, would under Section
4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5) of
ERISA.
"Pledge Agreement" shall mean the Pledge Agreement, substantially in
the form of Exhibit G, between the Borrower, Holdings, the Subsidiaries party
thereto and the Collateral Agent for the benefit of the Secured Parties.
"Pro Forma Basis" shall mean, with respect to compliance with any test
or covenant hereunder, compliance with such covenant or test after giving effect
to any proposed Permitted Acquisition (including pro forma adjustments arising
out of events which are directly attributable to the proposed Permitted
Acquisition, are factually supportable and are expected to have a continuing
impact, in each case determined on a basis consistent with Article 11 of
Regulation S-X of the Securities Act and as interpreted by the Staff of the
Securities and Exchange Commission which (to the extent consistent therewith)
may include cost savings resulting from head count reductions, closure of
facilities and similar restructuring charges or integration activities or other
adjustments certified by a Financial Officer of the Borrower, together with such
other pro forma adjustments certified by a Financial Officer of the Borrower as
being reasonable and having been made in good faith as may be reasonably
acceptable to the Administrative Agent) using, for purposes of determining such
compliance, the historical financial statements of all entities or assets so
acquired or to be acquired and the consolidated financial statements of Holdings
and its Subsidiaries which shall be reformulated as if such Permitted
Acquisition, and any other Permitted Acquisitions that have been consummated
during the period, and any Indebtedness or other liabilities incurred in
connection with any such Permitted Acquisitions had been consummated at the
beginning of such period and assuming that such Indebtedness bears interest
during any portion of the applicable measurement period prior to the relevant
acquisition at the weighted average of the interest rates applicable to
outstanding Loans during such period.
"Pro Forma Compliance" shall mean, at any date of determination, that
Holdings shall be in pro forma compliance with the covenants set forth in
Sections 6.09, 6.10 and 6.11 as of the last day of the most recent fiscal
quarter-end (computed on the basis of (a) balance sheet amounts as of the most
recently completed fiscal quarter, and (b) income statement amounts for the most
recently completed period of four consecutive fiscal quarters, in each case, for
which financial statements shall have been delivered to the Administrative Agent
and calculated on a Pro Forma Basis in respect of the event giving rise to such
determination).
"Pro Rata Percentage" of any Revolving Credit Lender at any time shall
mean the percentage of the Total Revolving Credit Commitment represented by such
Lender's Revolving Credit
Commitment.
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20
"Public Equity Offering" shall mean an underwritten public offering of
common stock of, and by, Holdings pursuant to a registration statement filed
with the Securities and Exchange Commission in accordance with the Securities
Act.
"Qualified Capital Stock" of any person shall mean any capital stock of
such person that is not Disqualified Stock; provided that in any event the
Holdings Series A Preferred Stock in the form issued on or prior to the Closing
Date shall constitute Qualified Capital Stock.
"Qualified Public Offering" shall mean an underwritten public offering
of common stock of, and by, Holdings pursuant to a registration statement filed
with the Securities and Exchange Commission in accordance with the Securities
Act, which public equity offering results in gross proceeds to Holdings of not
less than $50,000,000; provided, however, that the Net Cash Proceeds from any
such underwritten public offering are contributed by Holdings to the common
equity of the Borrower.
"Register" shall have the meaning given such term in Section 9.04(d).
"Regulation T" shall mean Regulation T of the Board as from time to
time in effect and all official rulings and interpretations thereunder or
thereof.
"Regulation U" shall mean Regulation U of the Board as from time to
time in effect and all official rulings and interpretations thereunder or
thereof.
"Regulation X" shall mean Regulation X of the Board as from time to
time in effect and all official rulings and interpretations thereunder or
thereof.
"Related Fund" shall mean, with respect to any Lender that is a fund
that invests in bank loans, any other fund that invests in bank loans and is
advised or managed by the same investment advisor as such Lender or by an
Affiliate of such investment advisor.
"Release" shall mean any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, dumping, disposing,
depositing, dispersing, emanating or migrating of any Hazardous Material in,
into, onto or through the environment.
"Remedial Action" shall mean (a) "remedial action" as such term is
defined in CERCLA, 42 U.S.C. Section 9601(24), and (b) all other actions
required by any Governmental Authority to: (i) clean up, remove, treat, abate or
in any other way address any Hazardous Material in the environment; (ii) prevent
the Release or threat of Release, or minimize the further Release of any
Hazardous Material so it does not migrate or endanger or threaten to endanger
public health, welfare or the environment; or (iii) perform studies and
investigations in connection with, or as a precondition to, (i) or (ii) above.
"Required Lenders" shall mean, at any time, Lenders having Loans
(excluding Swingline Loans), L/C Exposure, Swingline Exposure and unused
Revolving Credit and Term Loan Commitments representing at least a majority of
the sum of all Loans (excluding Swingline Loans) outstanding, L/C Exposure,
Swingline Exposure and unused Revolving Credit and Term Loan Commitments at such
time.
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21
"Responsible Officer" of any corporation shall mean any executive
officer or Financial Officer of such corporation and any other officer or
similar official thereof responsible for the administration of the obligations
of such corporation in respect of this Agreement.
"Revolving Credit Borrowing" shall mean a Borrowing comprised of
Revolving Loans.
"Revolving Credit Commitment" shall mean, with respect to each Lender,
the commitment of such Lender to make Revolving Loans hereunder as set forth on
Schedule 2.01, or in the Assignment and Acceptance pursuant to which such Lender
assumed its Revolving Credit Commitment, as applicable, as the same may be (a)
reduced from time to time pursuant to Section 2.09 and (b) reduced or increased
from time to time pursuant to assignments by or to such Lender pursuant to
Section 9.04.
"Revolving Credit Exposure" shall mean, with respect to any Lender at
any time, the aggregate principal amount at such time of all outstanding
Revolving Loans of such Lender, plus the aggregate amount at such time of such
Lender's L/C Exposure, plus the aggregate amount at such time of such Lender's
Swingline Exposure.
"Revolving Credit Lender" shall mean a Lender with a Revolving Credit
Commitment.
"Revolving Credit Maturity Date" shall mean June 30, 2005.
"Revolving Loans" shall mean the revolving loans made by the Lenders to
the Borrower pursuant to clause (b) of Section 2.01. Each Revolving Loan shall
be a Eurodollar Revolving Loan or an ABR Revolving Loan.
"Secured Parties" shall have the meaning assigned to such term in the
Security Agreement.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Securities Purchase and Holders Agreement" shall mean the Securities
Purchase and Holders Agreement dated as of August 13, 1999, among Holdings,
Sterling, Harris Far East Ltd., Intersil Prism, LLC, William N. Stout and the
Management Investors.
"Security Agreement" shall mean the Security Agreement, substantially
in the form of Exhibit H, among the Borrower, the Subsidiaries party thereto and
the Collateral Agent for the benefit of the Secured Parties.
"Security Documents" shall mean the Mortgages, the Security Agreement,
the Pledge Agreement and each of the security agreements, mortgages and other
instruments and documents executed and delivered pursuant to any of the
foregoing or pursuant to Section 5.11.
"Seller Subordinated Note Indenture" shall mean the indenture dated as
of August 13, 1999, between Holdings and United States Trust Company of New
York, as trustee, as in effect, on the Closing Date and as thereafter amended
from time to time in accordance with the requirements thereof and of this
Agreement.
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22
"Seller Subordinated Notes" shall mean the subordinated pay-in-kind
notes issued by Holdings to Harris in the principal amount of $90,000,000
pursuant to the Master Transaction Agreement and the Seller Subordinated Note
Indenture.
"Senior Subordinated Note Documents" shall mean the Senior Subordinated
Notes, the Senior Subordinated Note Indenture and all other documents executed
and delivered with respect to the Senior Subordinated Notes, the Senior
Subordinated Note
Indenture or the Units.
"Senior Subordinated Note Indenture" shall mean the indenture dated as
of August 13, 1999, between the Borrower and United States Trust Company of New
York, as trustee, as in effect on the Closing Date and as thereafter amended
from time to time in accordance with the requirements thereof and of this
Agreement.
"Senior Subordinated Notes" shall mean the Borrower's 13 1/4% Senior
Subordinated Notes Due 2009 issued pursuant to the Senior Subordinated Note
Indenture and any notes issued by the Borrower in exchange for, and as
contemplated by, the Senior Subordinated Notes with substantially identical
terms as the Senior Subordinated Notes.
"SPC" has the meaning specified in Section 9.04(i).
"Statutory Reserves" shall mean a fraction (expressed as a decimal),
the numerator of which is the number one and the denominator of which is the
number one minus the aggregate of the maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by the Board and any other banking authority, domestic or foreign,
to which the Administrative Agent or any Lender (including any branch,
Affiliate, or other fronting office making or holding a Loan) is subject for
Eurocurrency Liabilities (as defined in Regulation D of the Board). Such reserve
percentages shall include those imposed pursuant to such Regulation D.
Eurodollar Loans shall be deemed to constitute Eurocurrency Liabilities and to
be subject to such reserve requirements without benefit of or credit for
proration, exemptions or offsets that may be available from time to time to any
Lender under such Regulation D. Statutory Reserves shall be adjusted
automatically on and as of the effective date of any change in any reserve
percentage.
"Sterling" shall mean Sterling Holding Company, LLC, a Delaware limited
liability company.
"subsidiary" shall mean, with respect to any person (herein referred to
as the "parent"), any corporation, partnership, association or other business
entity (a) of which securities or other ownership interests representing more
than 50% of the equity or more than 50% of the ordinary voting power or more
than 50% of the general partnership interests are, at the time any determination
is being made, owned, controlled or held, or (b) that is, at the time any
determination is made, otherwise Controlled, by the parent or one or more
subsidiaries of the parent or by the parent and one or more subsidiaries of the
parent.
"Subsidiary" shall mean any subsidiary of Holdings or the Borrower but
shall exclude the China Subsidiaries.
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23
"Subsidiary Guarantee Agreement" shall mean the Subsidiary Guarantee
Agreement, substantially in the form of Exhibit I, made by the Subsidiary
Guarantors in favor of the Collateral Agent for the benefit of the Secured
Parties.
"Subsidiary Guarantor" shall mean each Subsidiary listed on Schedule
1.01(b), and each other Subsidiary that is or becomes a party to a Subsidiary
Guarantee Agreement.
"Swingline Commitment" shall mean the commitment of the Swingline
Lender to make loans pursuant to Section 2.22, as the same may be reduced from
time to time pursuant to Section 2.09 or Section 2.22.
"Swingline Exposure" shall mean at any time the aggregate principal
amount at such time of all outstanding Swingline Loans. The Swingline Exposure
of any Revolving Credit Lender at any time shall equal its Pro Rata Percentage
of the aggregate Swingline Exposure at such time.
"Swingline Loan" shall mean any loan made by the Swingline Lender
pursuant to Section 2.22.
"Taxes" shall mean any and all present or future taxes, levies,
imposts, duties, deductions, charges or withholdings imposed by any Governmental
Authority.
"Tax Sharing Agreement" means any tax sharing agreement between the
Borrower and Holdings or any other person with which the Borrower is required
to, or is permitted to, file a consolidated tax return or with which the
Borrower is or could be part of a consolidated group for tax purposes.
"Term Borrowing" shall mean a Borrowing comprised of Term Loans.
"Term Loan Commitment" shall mean, with respect to each Lender, the
commitment of such Lender to make Term Loans hereunder as set forth on Schedule
2.01, or in the Assignment and Acceptance pursuant to which such Lender assumed
its Term Loan Commitment, as applicable, as the same may be (a) reduced from
time to time pursuant to Section 2.09 and (b) reduced or increased from time to
time pursuant to assignments by or to such Lender pursuant to Section 9.04.
"Term Loan Maturity Date" shall mean June 30, 2005.
"Term Loan Repayment Dates" shall have the meaning assigned to such
term in Section 2.11(a).
"Term Loans" shall mean the term loans made by the Lenders to the
Borrower pursuant to clause (a) of Section 2.01. Each Term Loan shall be either
a Eurodollar Term Loan or an ABR Term Loan.
"Total Revolving Credit Commitment" shall mean, at any time, the
aggregate amount of the Revolving Credit Commitments, as in effect at such time.
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24
"Transactions" shall mean, collectively, the transactions to occur on
or prior to the Closing Date pursuant to the Documents, including (a) the
consummation of the Acquisition, (b) the execution and delivery of the Loan
Documents and the initial borrowings hereunder, (c) the execution and delivery
of the Senior Subordinated Note Documents and the issuance of the Units, (d) the
issuance of the Seller Subordinated Notes, (e) the issuance of the Holdings
Subordinated Notes, (f) the Equity Contribution and (g) the payment of all fees
and expenses to be paid on or prior to the Closing Date and owing in connection
with the foregoing.
"Transaction Documents" shall mean the Master Transaction Agreement and
all other documents entered into or delivered in connection with the Master
Transaction Agreement (including the Operating Agreements).
"Transferred Assets" shall have the meaning assigned to the term
"Transferred Assets" in the Master Transaction Agreement.
"Type", when used in respect of any Loan or Borrowing, shall refer to
the Rate by reference to which interest on such Loan or on the Loans comprising
such Borrowing is determined. For purposes hereof, the term "Rate" shall include
the Adjusted LIBO Rate and the Alternate Base Rate.
"Units" shall mean the units consisting of the Borrower's Senior
Subordinated Notes and the warrants to purchase, in the aggregate, up to
5,555,560 shares of Class A Common Stock of Holdings.
"Voting Stock" shall mean any class or classes of capital stock of
Holdings pursuant to which the holders thereof have the general voting power
under ordinary circumstances to elect at least a majority of the Board of
Directors of Holdings.
"Wholly Owned Subsidiary" shall mean, as to any person, (a) any
corporation 100% of whose capital stock (other than directors's qualifying
shares) is at the time owned by such person and/or one or more Wholly Owned
Subsidiaries of such person and (b) any partnership, association, joint venture,
limited liability company or other entity in which such person and/or one or
more Wholly Owned Subsidiaries of such person has a 100% equity interest at such
time.
"Withdrawal Liability" shall mean liability to a Multiemployer Plan as
a result of a complete or partial withdrawal from such Multiemployer Plan, as
such terms are defined in Part I of Subtitle E of Title IV of ERISA.
SECTION 1.02. Terms Generally. The definitions in Section 1.01 shall
apply equally to both the singular and plural forms of the terms defined.
Whenever the context may require, any pronoun shall include the corresponding
masculine, feminine and neuter forms. The words "include", "includes" and
"including" shall be deemed to be followed by the phrase "without limitation".
All references herein to Articles, Sections, Exhibits and Schedules shall be
deemed references to Articles and Sections of, and Exhibits and Schedules to,
this Agreement unless the context shall otherwise require. Except as otherwise
expressly provided herein, (a) any reference in this Agreement to any Loan
Document shall mean such document as amended, restated, supplemented or
otherwise modified from time to time and (b) all terms of an accounting or
financial nature shall be construed in accordance with GAAP, as in effect from
time to time; provided, however, that if the Borrower notifies the
Administrative Agent that the Borrower wishes to amend any covenant in Article
VI or
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25
any related definition to eliminate the effect of any change in GAAP occurring
after the date of this Agreement on the operation of such covenant (or if the
Administrative Agent notifies the Borrower that the Required Lenders wish to
amend Article VI or any related definition for such purpose), then the
Borrower's compliance with such covenant shall be determined on the basis of
GAAP in effect immediately before the relevant change in GAAP became effective,
until either such notice is withdrawn or such covenant is amended in a manner
satisfactory to the Borrower and the Required Lenders.
SECTION 1.03. Pro Forma Calculations. With respect to any period during
which any Permitted Acquisition occurs as permitted pursuant to the terms
hereof, for purposes of determining compliance or Pro Forma Compliance with the
financial covenants set forth in Sections 6.09, 6.10 and 6.11, Consolidated
EBITDA, Consolidated Interest Expense and Consolidated Fixed Charges shall be
calculated with respect to such periods and such Permitted Acquisition on a Pro
Forma Basis.
ARTICLE II
The Credits
SECTION 2.01. Commitments. Subject to the terms and conditions and
relying upon the representations and warranties herein set forth, each Lender
agrees, severally and not jointly, (a) to make a Term Loan to the Borrower on
the Closing Date in a principal amount not to exceed its Term Loan Commitment,
and (b) to make Revolving Loans to the Borrower, at any time and from time to
time on or after the date hereof, and until the earlier of the Revolving Credit
Maturity Date and the termination of the Commitment of such Lender in accordance
with the terms hereof, in an aggregate principal amount at any time outstanding
that will not result in such Lender's Revolving Credit Exposure exceeding such
Lender's Revolving Credit Commitment. Within the limits set forth in clause (b)
of the preceding sentence and subject to the terms, conditions and limitations
set forth herein, the Borrower may borrow, pay or prepay and reborrow Revolving
Loans. Amounts paid or prepaid in respect of Term Loans may not be reborrowed.
SECTION 2.02. Loans. (a) Each Loan (other than Swingline Loans) shall
be made as part of a Borrowing consisting of Loans made by the Lenders ratably
in accordance with their applicable Commitments; provided, however, that the
failure of any Lender to make any Loan shall not in itself relieve any other
Lender of its obligation to lend hereunder (it being understood, however, that
no Lender shall be responsible for the failure of any other Lender to make any
Loan required to be made by such other Lender). Except for Loans deemed made
pursuant to Section 2.02(f), the Loans comprising any Borrowing shall be in an
aggregate principal amount that is (i) an integral multiple of $1,000,000 and
not less than $3,000,000 or (ii) equal to the remaining available balance of the
applicable Commitments.
(b) Subject to Sections 2.08 and 2.15, each Borrowing shall be
comprised entirely of ABR Loans or Eurodollar Loans as the Borrower may request
pursuant to Section 2.03. Each Lender may at its option make any Eurodollar Loan
by causing any domestic or foreign branch or Affiliate of such Lender to make
such Loan; provided that any exercise of such option shall not affect the
obligation of the Borrower to repay such Loan in accordance with the terms of
this Agreement. Borrowings of
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26
more than one Type may be outstanding at the same time; provided, however, that
the Borrower shall not be entitled to request any Borrowing that, if made, would
result in more than 8 Eurodollar Borrowings outstanding hereunder at any time.
For purposes of the foregoing, Borrowings having different Interest Periods,
regardless of whether they commence on the same date, shall be considered
separate Borrowings.
(c) Except with respect to Loans made pursuant to Section 2.02(f), each
Lender shall make each Loan to be made by it hereunder on the proposed date
thereof by wire transfer of immediately available funds to such account in New
York City as the Administrative Agent may designate not later than 1:00 p.m.,
New York City time, and the Administrative Agent shall promptly credit the
amounts so received to an account as directed by the Borrower in the applicable
Borrowing Request or, if a Borrowing shall not occur on such date because any
condition precedent herein specified shall not have been met, return the amounts
so received to the respective Lenders.
(d) Unless the Administrative Agent shall have received notice from a
Lender prior to the date of any Borrowing that such Lender will not make
available to the Administrative Agent such Lender's portion of such Borrowing,
the Administrative Agent may assume that such Lender has made such portion
available to the Administrative Agent on the date of such Borrowing in
accordance with paragraph (c) above and the Administrative Agent may, in
reliance upon such assumption, make available to the Borrower on such date a
corresponding amount. If the Administrative Agent shall have so made funds
available then, to the extent that such Lender shall not have made such portion
available to the Administrative Agent, such Lender and the Borrower severally
agree to repay to the Administrative Agent forthwith on demand such
corresponding amount together with interest thereon, for each day from the date
such amount is made available to the Borrower until the date such amount is
repaid to the Administrative Agent at (i) in the case of the Borrower, the
interest rate applicable at the time to the Loans comprising such Borrowing and
(ii) in the case of such Lender, a rate determined by the Administrative Agent
to represent its cost of overnight or short-term funds (which determination
shall be conclusive absent manifest error). If such Lender shall repay to the
Administrative Agent such corresponding amount, such amount shall constitute
such Lender's Loan as part of such Borrowing for purposes of this Agreement.
(e) Notwithstanding any other provision of this Agreement, the Borrower
shall not be entitled to request any Revolving Credit Borrowing if the Interest
Period requested with respect thereto would end after the Revolving Credit
Maturity Date.
(f) If the Issuing Bank shall not have received from the Borrower the
payment required to be made by Section 2.23(e) within the time specified in such
Section, the Issuing Bank will promptly notify the Administrative Agent of the
L/C Disbursement and the Administrative Agent will promptly notify each
Revolving Credit Lender of such L/C Disbursement and its Pro Rata Percentage
thereof. Each Revolving Credit Lender shall pay by wire transfer of immediately
available funds to the Administrative Agent on such date (or, if such Revolving
Credit Lender shall have received such notice later than 12:00 (noon), New York
City time, on any day, not later than 10:00 a.m., New York City time, on the
immediately following Business Day), an amount equal to such Lender's Pro Rata
Percentage of such L/C Disbursement (it being understood that such amount shall
be deemed to constitute an ABR Revolving Loan of such Lender and such payment
shall be deemed to have reduced the L/C Exposure), and the Administrative Agent
will promptly pay to the Issuing Bank amounts so received by it from the
Revolving Credit Lenders. The Administrative Agent will promptly pay to the
Issuing Bank any amounts received by it from the Borrower pursuant to Section
2.23(e) prior to the
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27
time that any Revolving Credit Lender makes any payment pursuant to this
paragraph (f); any such amounts received by the Administrative Agent thereafter
will be promptly remitted by the Administrative Agent to the Revolving Credit
Lenders that shall have made such payments and to the Issuing Bank, as their
interests may appear. If any Revolving Credit Lender shall not have made its Pro
Rata Percentage of such L/C Disbursement available to the Administrative Agent
as provided above, such Lender and the Borrower severally agree to pay interest
on such amount, for each day from and including the date such amount is required
to be paid in accordance with this paragraph to but excluding the date such
amount is paid, to the Administrative Agent for the account of the Issuing Bank
at (i) in the case of the Borrower, a rate per annum equal to the interest rate
applicable to Revolving Loans pursuant to Section 2.06(a), and (ii) in the case
of such Lender, for the first such day, the Federal Funds Effective Rate, and
for each day thereafter, the Alternate Base Rate.
SECTION 2.03. Borrowing Procedure. In order to request a Borrowing
(other than a Swingline Loan or deemed Borrowing pursuant to Section 2.02(f), as
to which this Section 2.03 shall not apply), the Borrower shall hand deliver or
fax to the Administrative Agent a duly completed Borrowing Request (a) in the
case of a Eurodollar Borrowing, not later than 11:00 a.m., New York City time,
three Business Days before a proposed Borrowing, and (b) in the case of an ABR
Borrowing, not later than 11:00 a.m., New York City time, on the day of a
proposed Borrowing. Each Borrowing Request shall be irrevocable, shall be signed
by or on behalf of the Borrower and shall specify the following information: (i)
whether the Borrowing then being requested is to be a Term Borrowing or a
Revolving Credit Borrowing, and whether such Borrowing is to be a Eurodollar
Borrowing or an ABR Borrowing (provided that until the Administrative Agent
shall have notified the Borrower that the primary syndication of the Commitments
has been completed (which notice shall be given as promptly as practicable and,
in any event, within 14 days after the Closing Date), the Borrower shall not be
permitted to request a Eurodollar Borrowing); (ii) the date of such Borrowing
(which shall be a Business Day), (iii) the number and location of the account to
which funds are to be disbursed (which shall be an account that complies with
the requirements of Section 2.02(c)); (iv) the amount of such Borrowing; and (v)
if such Borrowing is to be a Eurodollar Borrowing, the Interest Period with
respect thereto; provided, however, that, notwithstanding any contrary
specification in any Borrowing Request, each requested Borrowing shall comply
with the requirements set forth in Section 2.02. If no election as to the Type
of Borrowing is specified in any such notice, then the requested Borrowing shall
be an ABR Borrowing. If no Interest Period with respect to any Eurodollar
Borrowing is specified in any such notice, then the Borrower shall be deemed to
have selected an Interest Period of one month's duration. The Administrative
Agent shall promptly advise the applicable Lenders of any notice given pursuant
to this Section 2.03 (and the contents thereof), and of each Lender's portion of
the requested Borrowing.
SECTION 2.04. Evidence of Debt; Repayment of Loans. (a) The Borrower
hereby unconditionally promises to pay to the Administrative Agent (i) for the
account of the Swingline Lender, the then unpaid principal amount of each
Swingline Loan, on the last day of the Interest Period applicable to such Loan
or, if earlier, on the Revolving Credit Maturity Date, (ii) for the account of
each Lender holding Term Loans, the principal amount of each Term Loan of such
Lender as provided in Section 2.11 and (iii) for the account of each Revolving
Credit Lender, the then unpaid principal amount of each Revolving Loan of such
Lender on the Revolving Credit Maturity Date.
(b) Each Lender shall maintain in accordance with its usual practice an
account or accounts evidencing the indebtedness of the Borrower to such Lender
resulting from each Loan made by such
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28
Lender from time to time, including the amounts of principal and interest
payable and paid such Lender from time to time under this Agreement.
(c) The Administrative Agent shall maintain accounts in which it will
record (i) the amount of each Loan made hereunder, the Type thereof and the
Interest Period applicable thereto, (ii) the amount of any principal or interest
due and payable or to become due and payable from the Borrower to each Lender
hereunder and (iii) the amount of any sum received by the Administrative Agent
hereunder from the Borrower or any Guarantor and each Lender's share thereof.
(d) The entries made in the accounts maintained pursuant to paragraphs
(b) and (c) above shall be prima facie evidence of the existence and amounts of
the obligations therein recorded; provided, however, that the failure of any
Lender or the Administrative Agent to maintain such accounts or any error
therein shall not in any manner affect the obligations of the Borrower to repay
the Loans in accordance with their terms.
(e) Any Lender may request that the Loans made by it hereunder be
evidenced by a promissory note. In such event, the Borrower shall execute and
deliver to such Lender a promissory note payable to such Lender and its
registered assigns and in a form and substance reasonably acceptable to the
Administrative Agent and the Borrower. Notwithstanding any other provision of
this Agreement, in the event any Lender shall request and receive such a
promissory note, the interests represented by such note shall at all times
(including after any assignment of all or part of such interests pursuant to
Section 9.04) be represented by one or more promissory notes payable to the
payee named therein or its registered assigns.
SECTION 2.05. Fees. (a) The Borrower agrees to pay to each Lender,
through the Administrative Agent, on the last Business Day of March, June,
September and December in each year and on each date on which any Commitment of
such Lender shall expire or be terminated as provided herein, a commitment fee
(a "Commitment Fee") equal to 1/2 of 1% per annum on the average daily unused
amount of the Commitments of such Lender (other than the Swingline Commitment)
during the preceding quarter (or other period commencing with the date hereof or
ending with the Revolving Credit Maturity Date or the date on which the
Commitments of such Lender shall expire or be terminated). All Commitment Fees
shall be computed on the basis of the actual number of days elapsed in a year of
360 days. The Commitment Fee due to each Lender shall commence to accrue on the
date hereof and shall cease to accrue on the date on which the Commitment of
such Lender shall expire or be terminated as provided herein. For purposes of
calculating Commitment Fees only, no portion of the Revolving Credit Commitments
shall be deemed utilized under Section 2.17 as a result of outstanding Swingline
Loans.
(b) The Borrower agrees to pay to the Administrative Agent, for its own
account, the administrative fees separately agreed to by the Borrower and the
Administrative Agent (the "Administrative Agent Fees").
(c) The Borrower agrees to pay (i) to each Revolving Credit Lender,
through the Administrative Agent, on the last Business Day of March, June,
September and December of each year and on the date on which the Revolving
Credit Commitment of such Lender shall be terminated as provided herein, a fee
(an "L/C Participation Fee") calculated on such Lender's Pro Rata Percentage of
the average daily aggregate L/C Exposure (excluding the portion thereof
attributable
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29
to unreimbursed L/C Disbursements) during the preceding quarter (or shorter
period commencing with the date hereof or ending with the Revolving Credit
Maturity Date or the date on which all Letters of Credit have been canceled or
have expired and the Revolving Credit Commitments of all Lenders shall have been
terminated) at a rate equal to the Applicable Percentage from time to time used
to determine the interest rate on Revolving Credit Borrowings comprised of
Eurodollar Loans pursuant to Section 2.06, and (ii) to the Issuing Bank with
respect to each Letter of Credit, on the last Business Day of March, June,
September and December of each year and on the Revolving Credit Maturity Date, a
fronting fee equal to 0.25% per annum on the aggregate outstanding face amount
of such Letter of Credit (the "Issuing Bank Fees"). All L/C Participation Fees
and Issuing Bank Fees shall be computed on the basis of the actual number of
days elapsed in a year of 360 days.
(d) All Fees shall be paid on the dates due, in immediately available
funds, to the Administrative Agent for distribution, if and as appropriate,
among the Lenders, except that the Issuing Bank Fees shall be paid directly to
the Issuing Bank. Once paid, none of the Fees shall be refundable under any
circumstances.
SECTION 2.06. Interest on Loans. (a) Subject to the provisions of
Section 2.07, the Loans comprising each ABR Borrowing, including each Swingline
Loan, shall bear interest (computed on the basis of the actual number of days
elapsed over a year of 365 or 366 days, as the case may be, when the Alternate
Base Rate is determined by reference to the Prime Rate and over a year of 360
days at all other times) at a rate per annum equal to the Alternate Base Rate
plus the Applicable Percentage in effect from time to time.
(b) Subject to the provisions of Section 2.07, the Loans comprising
each Eurodollar Borrowing shall bear interest (computed on the basis of the
actual number of days elapsed over a year of 360 days) at a rate per annum equal
to the Adjusted LIBO Rate for the Interest Period in effect for such Borrowing
plus the Applicable Percentage in effect from time to time.
(c) Interest on each Loan shall be payable on the Interest Payment
Dates applicable to such Loan except as otherwise provided in this Agreement.
The applicable Alternate Base Rate or Adjusted LIBO Rate for each Interest
Period or day within an Interest Period, as the case may be, shall be determined
by the Administrative Agent, and such determination shall be conclusive absent
manifest error.
SECTION 2.07. Default Interest. If the Borrower shall default in the
payment of the principal of or interest on any Loan or any other amount becoming
due hereunder, by acceleration or otherwise, or under any other Loan Document,
the Borrower shall on demand from time to time pay interest, to the extent
permitted by law, on such defaulted amount to but excluding the date of actual
payment (after as well as before judgment) (a) in the case of overdue principal,
at the rate otherwise applicable to such Loan pursuant to Section 2.06 plus
2.00% per annum and (b) in all other cases, at a rate per annum (computed on the
basis of the actual number of days elapsed over a year of 365 or 366 days, as
the case may be, when determined by reference to the Prime Rate and over a year
of 360 days at all other times) equal to the rate that would be applicable to an
ABR Revolving Loan plus 2.00%.
SECTION 2.08. Alternate Rate of Interest. In the event, and on each
occasion, that on the day two Business Days prior to the commencement of any
Interest Period for a Eurodollar Borrowing the Administrative Agent shall have
determined that dollar deposits in the principal amounts of the Loans comprising
such Borrowing are not generally available in the London interbank market, or
that
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30
the rates at which such dollar deposits are being offered will not adequately
and fairly reflect the cost to any Lender of making or maintaining its
Eurodollar Loan during such Interest Period, or that reasonable means do not
exist for ascertaining the Adjusted LIBO Rate, the Administrative Agent shall,
as soon as practicable thereafter, give written or fax notice of such
determination to the Borrower and the Lenders. In the event of any such
determination, until the Administrative Agent shall have advised the Borrower
and the Lenders that the circumstances giving rise to such notice no longer
exist, any request by the Borrower for a Eurodollar Borrowing pursuant to
Section 2.03 or 2.10 shall be deemed to be a request for an ABR Borrowing. Each
determination by the Administrative Agent hereunder shall be conclusive absent
manifest error.
SECTION 2.09. Termination and Reduction of Commitments. (a) The Term
Loan Commitments shall automatically terminate at 5:00 p.m., New York City time,
on the Closing Date. The Revolving Credit Commitments, the Swingline Commitment
and the L/C Commitment shall automatically terminate on the Revolving Credit
Maturity Date. Notwithstanding the foregoing, all the Commitments shall
automatically terminate at 5:00 p.m., New York City time, on September 30, 1999,
if the initial Credit Event shall not have occurred by such time.
(b) Upon at least three Business Days' prior irrevocable written or fax
notice to the Administrative Agent, the Borrower may at any time in whole
permanently terminate, or from time to time in part permanently reduce, the Term
Loan Commitments or the Revolving Credit Commitments; provided, however, that
(i) each partial reduction of the Term Loan Commitments or the Revolving Credit
Commitments shall be in an integral multiple of $1,000,000 and in a minimum
amount of $5,000,000 and (ii) the Total Revolving Credit Commitment shall not be
reduced to an amount that is less than the Aggregate Revolving Credit Exposure
at the time.
(c) Each reduction in the Term Loan Commitments or the Revolving Credit
Commitments hereunder shall be made ratably among the Lenders in accordance with
their respective applicable Commitments. The Borrower shall pay to the
Administrative Agent for the account of the applicable Lenders, on the date of
each termination or reduction, the Commitment Fees on the amount of the
Commitments so terminated or reduced accrued to but excluding the date of such
termination or reduction.
SECTION 2.10. Conversion and Continuation of Borrowings. The Borrower
shall have the right at any time upon prior irrevocable notice to the
Administrative Agent (a) not later than 11:00 am., New York City time, on the
day of conversion, to convert any Eurodollar Borrowing into an ABR Borrowing,
(b) not later than 10:00 a.m., New York City time, three Business Days prior to
conversion or continuation, to convert any ABR Borrowing into a Eurodollar
Borrowing or to continue any Eurodollar Borrowing as a Eurodollar Borrowing for
an additional Interest Period, and (c) not later than 10:00 a.m., New York City
time, three Business Days prior to conversion, to convert the Interest Period
with respect to any Eurodollar Borrowing to another permissible Interest Period,
subject in each case to the following:
(i) each conversion or continuation shall be made pro rata
among the Lenders in accordance with the respective principal amounts
of the Loans comprising the converted or continued Borrowing;
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31
(ii) if less than all the outstanding principal amount of any
Borrowing shall be converted or continued, then each resulting
Borrowing shall satisfy the limitations specified in Sections 2.02(a)
and 2.02(b) regarding the principal amount and maximum number of
Borrowings of the relevant Type;
(iii) each conversion shall be effected by each Lender and the
Administrative Agent by recording for the account of such Lender the
new Loan of such Lender resulting from such conversion and reducing the
Loan (or portion thereof) of such Lender being converted by an
equivalent principal amount; accrued interest on any Eurodollar Loan
(or portion thereof) being converted shall be paid by the Borrower at
the time of conversion;
(iv) if any Eurodollar Borrowing is converted at a time other
than the end of the Interest Period applicable thereto, the Borrower
shall pay, upon demand, any amounts due to the Lenders pursuant to
Section 2.16;
(v) any portion of a Borrowing maturing or required to be
repaid in less than one month may not be converted into or continued as
a Eurodollar Borrowing;
(vi) any portion of a Eurodollar Borrowing that cannot be
converted into or continued as a Eurodollar Borrowing by reason of the
immediately preceding clause shall be automatically converted at the
end of the Interest Period in effect for such Borrowing into an ABR
Borrowing;
(vii) no Interest Period may be selected for any Eurodollar
Term Borrowing that would end later than a Term Loan Repayment Date
occurring on or after the first day of such Interest Period if, after
giving effect to such selection, the aggregate outstanding amount of
(A) the Eurodollar Term Borrowings with Interest Periods ending on or
prior to such Term Loan Repayment Date and (B) the ABR Term Borrowings
would not be at least equal to the principal amount of Term Borrowings
to be paid on such Term Loan Repayment Date;
(viii) upon notice to the Borrower from the Administrative
Agent given at the request of the Required Lenders, after the
occurrence and during the continuance of a Default or Event of Default,
no outstanding Loan may be converted into, or continued as, a
Eurodollar Loan; and
(ix) until the Administrative Agent shall have notified the
Borrower that the primary syndication of the Commitments has been
completed (which notice shall be given by the Administrative Agent as
promptly as practicable and, in any event, within 14 days after the
Closing Date), no ABR Borrowing may be converted into a Eurodollar
Borrowing.
Each notice pursuant to this Section 2.10 shall be irrevocable and
shall refer to this Agreement and specify (i) the identity and amount of the
Borrowing that the Borrower requests be converted or continued, (ii) whether
such Borrowing is to be converted to or continued as a Eurodollar Borrowing or
an ABR Borrowing, (iii) if such notice requests a conversion, the date of such
conversion (which shall be a Business Day) and (iv) if such Borrowing is to be
converted to or continued as a Eurodollar
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32
Borrowing, the Interest Period with respect thereto. If no Interest Period is
specified in any such notice with respect to any conversion to or continuation
as a Eurodollar Borrowing, the Borrower shall be deemed to have selected an
Interest Period of one month's duration. The Administrative Agent shall advise
the Lenders of any notice given pursuant to this Section 2.10 and of each
Lender's portion of any converted or continued Borrowing. If the Borrower shall
not have given notice in accordance with this Section 2.10 to continue any
Borrowing into a subsequent Interest Period (and shall not otherwise have given
notice in accordance with this Section 2.10 to convert such Borrowing), such
Borrowing shall, at the end of the Interest Period applicable thereto (unless
repaid pursuant to the terms hereof), automatically be continued into a new
Interest Period as an ABR Borrowing.
SECTION 2.11. Repayment of Term Borrowings. (a) The Borrower shall pay
to the Administrative Agent, for the account of the Lenders, on the dates set
forth below, or if any such date is not a Business Day, on the next preceding
Business Day (each such date being a "Term Loan Repayment Date"), a principal
amount of the Term Loans (as adjusted from time to time pursuant to Sections
2.11(b), 2.12 and 2.13(g)) equal to the amount set forth below for such date,
together in each case with accrued and unpaid interest on the principal amount
to be paid to but excluding the date of such payment:
Date Amount
---- ------
September 30, 2000 $ 512,500
December 31, 2000 $ 512,500
March 31, 2001 $ 512,500
June 30, 2001 $ 512,500
September 30, 2001 $ 512,500
December 31, 2001 $ 512,500
March 31, 2002 $ 512,500
June 30, 2002 $ 512,500
September 30, 2002 $ 512,500
December 31, 2002 $ 512,500
March 31, 2003 $ 512,500
June 30, 2003 $ 512,500
September 30, 2003 $ 512,500
December 31, 2003 $ 512,500
March 31, 2004 $ 512,500
June 30, 2004 $ 512,500
September 30, 2004 $ 49,200,000
December 31, 2004 $ 49,200,000
March 31, 2005 $ 49,200,000
Term Loan Maturity Date $ 49,200,000
(b) In the event and on each occasion that any Term Loan Commitment
shall be reduced or shall expire or terminate other than as a result of the
making of a Term Loan, the installments payable on each Term Loan Repayment Date
shall be reduced pro rata by an aggregate amount equal to the amount of such
reduction, expiration or termination.
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33
(c) To the extent not previously paid, all Term Loans shall be due and
payable on the Term Loan Maturity Date and, together with accrued and unpaid
interest on the principal amount to be paid to but excluding the date of
payment.
(d) All repayments pursuant to this Section 2.11 shall be subject to
Section 2.16, but shall otherwise be without premium or penalty, except as
provided below in Section 2.13(j).
SECTION 2.12. Prepayment. (a) The Borrower shall have the right at any
time and from time to time to prepay any Borrowing, in whole or in part, upon at
least three Business Days' prior written or fax notice (or telephone notice
promptly confirmed by written or fax notice) in the case of Eurodollar Loans, or
written or fax notice (or telephone notice promptly confirmed by written or fax
notice) on or prior to the date of prepayment in the case of ABR Loans, to the
Administrative Agent before 11:00 a.m., New York City time; provided, however,
that each partial prepayment shall be in an amount that is an integral multiple
of $1,000,000 and not less than $3,000,000.
(b) Optional prepayments of Term Loans shall be applied pro rata
against the remaining scheduled installments of principal due in respect of the
Term Loans under Section 2.11(a).
(c) Each notice of prepayment shall specify the prepayment date and the
principal amount of each Borrowing (or portion thereof) to be prepaid, shall be
irrevocable and shall commit the Borrower to prepay such Borrowing by the amount
stated therein on the date stated therein. All prepayments under this Section
2.12 shall be subject to Section 2.16 but otherwise without premium or penalty
other than as provided in Section 2.13(j). All prepayments of Eurodollar Loans
under this Section 2.12 shall be accompanied by accrued interest on the
principal amount being prepaid to the date of payment. Interest on any ABR Loan
prepaid under this Section 2.12 shall be paid on the next Interest Payment Date
applicable to such Loan that follows the date of such prepayment.
SECTION 2.13. Mandatory Prepayments. (a) In the event of any
termination of all the Revolving Credit Commitments, the Borrower shall, on the
date of such termination, repay or prepay all its outstanding Revolving Credit
Borrowings and all outstanding Swingline Loans and replace all outstanding
Letters of Credit and/or deposit an amount equal to the L/C Exposure in cash in
a cash collateral account established with the Collateral Agent for the benefit
of the Secured Parties. In the event of any partial reduction of the Revolving
Credit Commitments, then (i) at or prior to the effective date of such
reduction, the Administrative Agent shall notify the Borrower and the Revolving
Credit Lenders of the Aggregate Revolving Credit Exposure after giving effect
thereto and (ii) if the Aggregate Revolving Credit Exposure would exceed the
Total Revolving Credit Commitment after giving effect to such reduction or
termination, then the Borrower shall, on the date of such reduction or
termination, repay or prepay Revolving Credit Borrowings or Swingline Loans (or
a combination thereof) and/or replace or cash collateralize outstanding Letters
of Credit in an amount sufficient to eliminate such excess.
(b) Not later than the 10th day following the receipt of any Net Cash
Proceeds of any Asset Sale, the Borrower shall apply 100% of the Net Cash
Proceeds received with respect thereto to prepay outstanding Term Loans in
accordance with Section 2.13(g); provided that, if the Borrower shall deliver to
the Administrative Agent a certificate of a Financial Officer to the effect that
the Borrower and the Subsidiaries intend to apply the Net Cash Proceeds from
such Asset Sale (or a portion thereof specified in such certificate) within 360
days after receipt thereof, to acquire real property, equipment or other assets
to be used in the business of the Borrower and the Subsidiaries, and certifying
that no
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34
Default has occurred and is continuing, then no prepayment shall be required
pursuant to this paragraph in respect of the Net Cash Proceeds of such Asset
Sale (or the portion thereof specified in such certificate, if applicable)
except (i) to the extent the aggregate amount of all such Net Cash Proceeds
subject to such a certificate would exceed $10,000,000 in any period of four
consecutive fiscal quarters of the Borrower or (ii) to the extent of any such
Net Cash Proceeds that have not been so applied by the end of such 360-day
period, at which time a prepayment shall be required in an amount equal to such
Net Cash Proceeds that have not been so applied.
(c) In the event and on each occasion that a Public Equity Offering
occurs, the Borrower shall, substantially simultaneously with (and in any event
not later than the third Business Day next following) the occurrence of such
Public Equity Offering, apply 75% of the Net Cash Proceeds therefrom to prepay
outstanding Term Loans in accordance with Section 2.13(g); provided, however,
that such percentage shall be decreased to 50% of the Net Cash Proceeds from a
Public Equity Offering if the Leverage Ratio at the time of such Public Equity
Offering (and after giving pro forma effect to the prepayment of Consolidated
Indebtedness from the proceeds thereof) shall be less than 3.25 to 1.00;
provided further, however, that, so long as the Net Cash Proceeds of each such
Public Equity Offering are used to prepay the Senior Subordinated Notes, the
Seller Subordinated Notes and/or the Holdings Junior Subordinated Debentures,
the Borrower shall not be required to apply the first $50,000,000 of Net Cash
Proceeds from all such Public Equity Offerings to the prepayment of Term Loans
in accordance with this Section.
(d) No later than the earlier of (i) 90 days after the end of each
fiscal year of the Borrower, commencing with the fiscal year ending on June 30,
2000, and (ii) the date on which the financial statements with respect to such
period are delivered pursuant to Section 5.04(a), the Borrower shall prepay
outstanding Term Loans in accordance with Section 2.13(g) in an aggregate
principal amount equal to 75% of Excess Cash Flow for the fiscal year then
ended; provided, however, that such percentage shall be decreased to 50% for any
year if the Leverage Ratio at the end of such year shall be less than 3.25 to
1.00.
(e) In the event that any Loan Party or any subsidiary of a Loan Party
shall receive Net Cash Proceeds from the issuance or other disposition of
Indebtedness for money borrowed of any Loan Party or any subsidiary of a Loan
Party (other than Indebtedness for money borrowed permitted pursuant to Section
6.01), the Borrower shall, substantially simultaneously with (and in any event
not later than the third Business Day next following) the receipt of such Net
Cash Proceeds by such Loan Party or such subsidiary, apply an amount equal to
100% of such Net Cash Proceeds to prepay outstanding Term Loans in accordance
with Section 2.13(g).
(f) In the event that there shall occur any Casualty or Condemnation
and, pursuant to the applicable Mortgage, the Casualty Proceeds or Condemnation
Proceeds, as the case may be, are required to be used to prepay the Term Loans,
then the Borrower shall apply an amount equal to 100% (or such lesser portion as
is permitted by the Mortgages) of such Casualty Proceeds or Condemnation
Proceeds, as the case may be, to prepay outstanding Term Loans in accordance
with Section 2.13(g).
(g) Mandatory prepayments of outstanding Term Loans under this
Agreement shall be, applied pro rata against the remaining scheduled
installments of principal due in respect of the Term Loans under Section
2.11(a).
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35
(h) The Borrower shall deliver to the Administrative Agent, at the time
of each prepayment required under this Section 2.13, (i) a certificate signed by
a Financial Officer of the Borrower setting forth in reasonable detail the
calculation of the amount of such prepayment and (ii) to the extent practicable,
at least three days prior written notice of such prepayment. Each notice of
prepayment shall specify the prepayment date, the Type of each Loan being
prepaid and the principal amount of each Loan (or portion thereof) to be
prepaid. All prepayments of Borrowings under this Section 2.13 shall be subject
to Section 2.16, but shall otherwise be without premium or penalty other than as
provided in Section 2.13(j).
(i) Amounts to be applied pursuant to this Section 2.13 to the
prepayment of Term Loans and Revolving Loans shall be applied, as applicable,
first to reduce outstanding ABR Term Loans and ABR Revolving Loans. Any amounts
remaining after each such application shall, at the option of the Borrower, be
applied to prepay Eurodollar Term Loans or Eurodollar Revolving Loans, as the
case may be, immediately and/or shall be deposited in the Prepayment Account (as
defined below). The Administrative Agent shall apply any cash deposited in the
Prepayment Account (i) allocable to Term Loans to prepay Eurodollar Term Loans
and (ii) allocable to Revolving Loans to prepay Eurodollar Revolving Loans, in
each case on the last day of their respective Interest Periods (or, at the
direction of the Borrower, on any earlier date) until all outstanding Term Loans
or Revolving Loans, as the case may be, have been prepaid or until all the
allocable cash on deposit with respect to such Loans has been exhausted. For
purposes of this Agreement, the term "Prepayment Account" shall mean an account
established by the Borrower with the Administrative Agent and over which the
Administrative Agent shall have exclusive dominion and control, including the
exclusive right of withdrawal for application in accordance with this paragraph
(i). The Administrative Agent will, at the request of the Borrower, invest
amounts on deposit in the Prepayment Account in Cash Equivalents that mature
prior to the last day of the applicable Interest Periods of the Eurodollar Term
Borrowings or Eurodollar Revolving Borrowings to be prepaid, as the case may be;
provided, however, that (i) the Administrative Agent shall not be required to
make any investment that, in its sole judgment, would require or cause the
Administrative Agent to be in, or would result in any, violation of any law,
statute, rule or regulation and (ii) the Administrative Agent shall have no
obligation to invest amounts on deposit in the Prepayment Account if a Default
or Event of Default shall have occurred and be continuing. The Borrower shall
indemnify the Administrative Agent for any losses relating to the investments so
that the amount available to prepay Eurodollar Borrowings on the last day of the
applicable Interest Period is not less than the amount that would have been
available had no investments been made pursuant thereto. Other than any interest
earned on such investments, the Prepayment Account shall not bear interest.
Interest or profits, if any, on such investments shall be deposited in the
Prepayment Account and reinvested and disbursed as specified above. If the
maturity of the Loans has been accelerated pursuant to Article VII, the
Administrative Agent may, in its sole discretion, apply all amounts on deposit
in the Prepayment Account to satisfy any of the Obligations. The Borrower hereby
grants to the Administrative Agent, for its benefit and the benefit of the
Issuing Bank and the Lenders, a security interest in the Prepayment Account to
secure the Obligations.
(j) In the event of and on each occasion of any prepayment of any Term
Borrowing pursuant to Section 2.12 or Section 2.13(b), (c), (e) or (f), the
Borrower shall pay to the Lenders whose Term Loans are being prepaid a
prepayment premium equal to (i) if such prepayment (or the date on which such
prepayment is required to be made) occurs on or prior to the date that is one
year after the Closing Date, 2.0% of the principal amount of the Term Loans,
being prepaid or (ii) if such prepayment (or the date on which such prepayment
is required to be made) occurs more than one year
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36
after the Closing Date but on or prior to the date that is two years after the
Closing Date, 1.0% of the principal amount of the Term Loans, being prepaid.
SECTION 2.14. Reserve Requirements; Change in Circumstances. (a)
Notwithstanding any other provision of this Agreement, if after the date of this
Agreement any change in applicable law or regulation or in the interpretation or
administration thereof by any Governmental Authority charged with the
interpretation or administration thereof (whether or not having the force of
law) shall impose, modify or deem applicable any reserve, special deposit or
similar requirement against assets of, deposits with or for the account of or
credit extended by any Lender or the Issuing Bank (except any such reserve
requirement which is reflected in the Adjusted LIBO Rate) or shall impose on
such Lender or the Issuing Bank or the London interbank market any other
condition affecting this Agreement or Eurodollar Loans made by such Lender or
any Letter of Credit or participation therein, and the result of any of the
foregoing shall be to increase the cost to such Lender or the Issuing Bank of
making or maintaining any Eurodollar Loan or increase the cost to any Lender of
issuing or maintaining any Letter of Credit or purchasing or maintaining a
participation therein or to reduce the amount of any sum received or receivable
by such Lender or the Issuing Bank hereunder (whether of principal, interest or
otherwise) by an amount deemed by such Lender or the Issuing Bank to be
material, then the Borrower will pay to such Lender or the Issuing Bank, as the
case may be, upon demand such additional amount or amounts as will compensate
such Lender or the Issuing Bank, as the case may be, for such additional costs
incurred or reduction suffered.
(b) If any Lender or the Issuing Bank shall have determined that the
adoption after the date hereof of any law, rule, regulation, agreement or
guideline regarding capital adequacy, or any change after the date hereof in any
such law, rule, regulation, agreement or guideline (whether such law, rule,
regulation, agreement or guideline has been adopted) or in the interpretation or
administration thereof by any Governmental Authority charged with the
interpretation or administration thereof, or compliance by any Lender (or any
lending office of such Lender) or the Issuing Bank or any Lender's or the
Issuing Bank's holding company with any request or directive regarding capital
adequacy (whether or not having the force of law) of any Governmental Authority
has or would have the effect of reducing the rate of return on such Lender's or
the Issuing Bank's capital or on the capital of such Lender's or the Issuing
Bank's holding company, if any, as a consequence of this Agreement or the Loans
made or participations in Letters of Credit purchased by such Lender pursuant
hereto or the Letters of Credit issued by the Issuing Bank pursuant hereto to a
level below that which such Lender or the Issuing Bank or such Lender's or the
Issuing Bank's holding company could have achieved but for such applicability,
adoption, change or compliance (taking into consideration such Lender's or the
Issuing Bank's policies and the policies of such Lender's or the Issuing Bank's
holding company with respect to capital adequacy) by an amount deemed by such
Lender or the Issuing Bank to be material, then from time to time the Borrower
shall pay to such Lender or the Issuing Bank, as the case may be, such
additional amount or amounts as will compensate such Lender or the Issuing Bank
or such Lender's or the Issuing Bank's holding company for any such reduction
suffered.
(c) A certificate of a Lender or the Issuing Bank, setting forth in
reasonable detail the reason therefor, the amount or amounts necessary to
compensate such Lender or the Issuing Bank or its holding company, as
applicable, as specified in paragraph (a) or (b) above, and the calculation
thereof, shall be delivered to the Borrower and shall be conclusive absent
manifest error. The Borrower shall pay such Lender or the Issuing Bank the
amount shown as due on any such certificate delivered by it within 10 days after
its receipt of the same.
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37
(d) Failure or delay on the part of any Lender or the Issuing Bank to
demand compensation for any increased costs or reduction in amounts received or
receivable or reduction in return on capital shall not constitute a waiver of
such Lender's or the Issuing Bank's right to demand such compensation; provided
that the Borrower shall not be under any obligation to compensate any Lender or
the Issuing Bank under paragraph (a) or (b) above with respect to increased
costs or reductions with respect to any period prior to the date that is six
months prior to such request if such Lender or the Issuing Bank knew or could
reasonably have been expected to be aware of the circumstances giving rise to
such increased costs or reductions and of the fact that such circumstances would
in fact result in a claim for increased compensation by reason of such increased
costs or reductions; provided further that the foregoing limitation shall not
apply to any increased costs or reductions arising out of the retroactive
application of any law, regulation, rule, guideline or directive as aforesaid
within such six-month period. The protection of this Section shall be available
to each Lender and the Issuing Bank regardless of any possible contention of the
invalidity or inapplicability of the law, rule, regulation, agreement, guideline
or other change or condition that shall have occurred or been imposed.
SECTION 2.15. Change in Legality. (a) Notwithstanding any other
provision of this Agreement, if, after the date hereof, any change in any law or
regulation or in the interpretation thereof by any Governmental Authority
charged with the administration or interpretation thereof shall make it unlawful
for any Lender to make or maintain any Eurodollar Loan or to give effect to its
obligations as contemplated hereby with respect to any Eurodollar Loan, then, by
written notice to the Borrower and to the Administrative Agent:
(i) such Lender may declare that Eurodollar Loans will not
thereafter (for the duration of such unlawfulness) be made by such
Lender hereunder (or be continued for additional Interest Periods and
ABR Loans will not thereafter (for such duration) be converted into
Eurodollar Loans), whereupon any request for a Eurodollar Borrowing (or
to convert an ABR Borrowing to a Eurodollar Borrowing or to continue a
Eurodollar Borrowing for an additional Interest Period) shall, as to
such Lender only, be deemed a request for an ABR Loan (or a request to
continue an ABR Loan as such for an additional Interest Period or to
convert a Eurodollar Loan into an ABR Loan, as the case may be), unless
such declaration shall be subsequently withdrawn; and
(ii) such Lender may require that all outstanding Eurodollar
Loans made by it be converted to ABR Loans, in which event all such
Eurodollar Loans shall be automatically converted to ABR Loans as of
the effective date of such notice as provided in paragraph (b) below.
In the event any Lender shall exercise its rights under (i) or (ii) above, all
payments and prepayments of principal that would otherwise have been applied to
repay the Eurodollar Loans that would have been made by such Lender or the
converted Eurodollar Loans of such Lender shall instead be applied to repay the
ABR Loans made by such Lender in lieu of, or resulting from the conversion of,
such Eurodollar Loans.
(b) For purposes of this Section 2.15, a notice to the Borrower by any
Lender shall be effective as to each Eurodollar Loan made by such Lender, if
lawful, on the last day of the Interest
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38
Period currently applicable to such Eurodollar Loan; in all other cases such
notice shall be effective on the date of receipt by the Borrower.
SECTION 2.16. Indemnity. The Borrower shall indemnify each Lender
against any loss or expense that such Lender may sustain or incur as a
consequence of (a) any event, other than a default by such Lender in the
performance of its obligations hereunder, which results in (i) such Lender
receiving or being deemed to receive any amount on account of the principal of
any Eurodollar Loan prior to the end of the Interest Period in effect therefor,
(ii) the conversion of any Eurodollar Loan to an ABR Loan, or the conversion of
the Interest Period with respect to any Eurodollar Loan, in each case other than
on the last day of the Interest Period in effect therefor, or (iii) any
Eurodollar Loan to be made by such Lender (including any Eurodollar Loan to be
made pursuant to a conversion or continuation under Section 2.10) not being made
after notice of such Loan shall have been given by the Borrower hereunder (any
of the events referred to in this clause (a) being called a "Breakage Event") or
(b) any default in the making of any payment or prepayment required to be made
hereunder. In the case of any Breakage Event, such loss shall include an amount
equal to the excess, as reasonably determined by such Lender, of (i) its cost of
obtaining funds for the Eurodollar Loan that is the subject of such Breakage
Event for the period from the date of such Breakage Event to the last day of the
Interest Period in effect (or that would have been in effect) for such Loan over
(ii) the amount of interest likely to be realized by such Lender in redeploying
the funds released or not utilized by reason of such Breakage Event for such
period. A certificate of any Lender setting forth any amount or amounts which
such Lender is entitled to receive pursuant to this Section 2.16 shall be
delivered to the Borrower and shall be conclusive absent manifest error.
SECTION 2.17. Pro Rata Treatment. Except as provided below in this
Section 2.17 with respect to Swingline Loans and as required under Sections
2.13(j) and 2.15, each Borrowing, each payment or prepayment of principal of any
Borrowing, each payment of interest on the Loans, each payment of the Commitment
Fees, each reduction of the Term Loan Commitments or the Revolving Credit
Commitments and each conversion of any Borrowing to or continuation of any
Borrowing as a Borrowing of any Type shall be allocated pro rata among the
Lenders in accordance with their respective applicable Commitments (or, if such
Commitments shall have expired or been terminated, in accordance with the
respective principal amounts of their outstanding Loans). For purposes of
determining the available Revolving Credit Commitments of the Lenders at any
time, each outstanding Swingline Loan shall be deemed to have utilized the
Revolving Credit Commitments of the Lenders (including those Lenders which shall
not have made Swingline Loans) pro rata in accordance with such respective
Revolving Credit Commitments. Each Lender agrees that in computing such Lender's
portion of any Borrowing to be made hereunder, the Administrative Agent may, in
its discretion, round each Lender's percentage of such Borrowing to the next
higher or lower whole dollar amount.
SECTION 2.18. Sharing of Setoffs. Each Lender agrees that if it shall,
through the exercise of a right of banker's lien, setoff or counterclaim against
the Borrower or any other Loan Party, or pursuant to a secured claim under
Section 506 of Title 11 of the United States Code or other security or interest
arising from, or in lieu of, such secured claim, received by such Lender under
any applicable bankruptcy, insolvency or other similar law or otherwise, or by
any other means, obtain payment (voluntary or involuntary) in respect of any
Loan or Loans or L/C Disbursement as a result of which the unpaid principal
portion of its Term Loans and Revolving Loans and participations in L/C
Disbursements shall be proportionately less than the unpaid principal portion of
the Term Loans and Revolving Loans and participations in L/C Disbursements of
any other Lender, it shall be deemed
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39
simultaneously to have purchased from such other Lender at face value, and shall
promptly pay to such other Lender the purchase price for, a participation in the
Term Loans and Revolving Loans and L/C Exposure, as the case may be, of such
other Lender, so that the aggregate unpaid principal amount of the Term Loans
and Revolving Loans and L/C Exposure and participations in Term Loans and
Revolving Loans and L/C Exposure held by each Lender shall be in the same
proportion to the aggregate unpaid principal amount of all Term Loans and
Revolving Loans and L/C Exposure then outstanding as the principal amount of its
Term Loans and Revolving Loans and L/C Exposure prior to such exercise of
banker's lien, setoff or counterclaim or other event was to the principal amount
of all Term Loans and Revolving Loans and L/C Exposure outstanding prior to such
exercise of banker's lien, setoff or counterclaim or other event; provided,
however, that if any such purchase or purchases or adjustments shall be made
pursuant to this Section 2.18 and the payment giving rise thereto shall
thereafter be recovered, such purchase or purchases or adjustments shall be
rescinded to the extent of such recovery and the purchase price or prices or
adjustment restored without interest. The Borrower and Holdings expressly
consent to the foregoing arrangements and agree that any Lender holding a
participation in a Term Loan or Revolving Loan or L/C Disbursement deemed to
have been so purchased may exercise any and all rights of banker's lien, setoff
or counterclaim with respect to any and all moneys owing by the Borrower and
Holdings to such Lender by reason thereof as fully as if such Lender had made a
Loan directly to the Borrower in the amount of such participation.
SECTION 2.19. Payments. (a) The Borrower shall make each payment
(including principal of or interest on any Borrowing or any L/C Disbursement or
any Fees or other amounts) hereunder and under any other Loan Document not later
than 12:00 (noon), New York City time, on the date when due in immediately
available dollars, without setoff, defense or counterclaim. Each such payment
(other than (i) Issuing Bank Fees, which shall be paid directly to the Issuing
Bank, and (ii) principal of and interest on Swingline Loans, which shall be paid
directly to the Swingline Lender except as otherwise provided in Section
2.22(e)) shall be made to the Administrative Agent at its offices at Eleven
Madison Avenue, New York, New York.
(b) Except as otherwise expressly provided herein, whenever any payment
(including principal of or interest on any Borrowing or any Fees or other
amounts) hereunder or under any other Loan Document shall become due, or
otherwise would occur, on a day that is not a Business Day, such payment may be
made on the next succeeding Business Day, and such extension of time shall in
such case be included in the computation of interest or Fees, if applicable.
SECTION 2.20. Taxes. (a) Any and all payments by or on account of any
obligation of the Borrower or any Loan Party hereunder or under any other Loan
Document shall be made free and clear of and without deduction for any
Indemnified Taxes or Other Taxes; provided that if the Borrower or any Loan
Party shall be required to deduct any Indemnified Taxes or Other Taxes from such
payments, then (i) the sum payable shall be increased as necessary so that after
making all required deductions (including deductions applicable to additional
sums payable under this Section) the Administrative Agent or such Lender (as the
case may be) receives an amount equal to the sum it would have received had no
such deductions been made, (ii) the Borrower or such Loan Party shall make such
deductions and (iii) the Borrower or such Loan Party shall pay the full amount
deducted to the relevant Governmental Authority in accordance with applicable
law.
(b) In addition, the Borrower shall pay any Other Taxes to the relevant
Governmental Authority in accordance with applicable law.
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(c) The Borrower shall indemnify the Administrative Agent and each
Lender, within 10 days after written demand therefor, for the full amount of any
Indemnified Taxes or Other Taxes paid by the Administrative Agent or such
Lender, as the case may be, on or with respect to any payment by or on account
of any obligation of the Borrower or any Loan Party hereunder or under any other
Loan Document (including Indemnified Taxes or Other Taxes imposed or asserted on
or attributable to amounts payable under this Section) and any penalties,
interest and reasonable expenses arising therefrom or with respect thereto,
whether or not such Indemnified Taxes or Other Taxes were correctly or legally
imposed or asserted by the relevant Governmental Authority. A certificate as to
the amount of such payment or liability delivered to the Borrower by a Lender,
or by the Administrative Agent on its behalf or on behalf of a Lender, shall be
conclusive absent manifest error.
(d) As soon as practicable after any payment of Indemnified Taxes or
Other Taxes by the Borrower or any other Loan Party to a Governmental Authority,
the Borrower shall deliver to the Administrative Agent the original or a
certified copy of a receipt issued by such Governmental Authority evidencing
such payment, a copy of the return reporting such payment or other evidence of
such payment reasonably satisfactory to the Administrative Agent.
(e) Any Foreign Lender that is entitled to an exemption from or
reduction of withholding tax under the law of the jurisdiction in which the
Borrower is located, or any treaty to which such jurisdiction is a party, with
respect to payments under this Agreement shall deliver to the Borrower (with a
copy to the Administrative Agent), at the time or times prescribed by applicable
law, such properly completed and executed documentation prescribed by applicable
law or reasonably requested by the Borrower as will permit such payments to be
made without withholding or at a reduced rate, it being agreed by the parties
hereto, without limitation, that in the case of a Foreign Lender which is not a
"bank" (within the meaning of Section 881(c)(3)(A) of the Code) and intends to
claim exemption from U.S. Federal withholding tax under Section 871(h) or 881(c)
of the Code with respect to payments of "portfolio interest," the delivery of
the following documents are sufficient for such Foreign Lender currently to
obtain the benefits of Section 2.20: (i) a Form W-8BEN (or any subsequent
version(s) thereof or successor(s) thereto), and (ii) a certificate representing
that such Foreign Lender is not a: (x) "bank" for purposes of Section 881(c) of
the Code, (y) "10-percent shareholder" (within the meaning of Section
871(h)(3)(B) or 881(c)(3)(B) of the Code) of the Borrower and (z) controlled
foreign corporation related to the Borrower (within the meaning of Section
864(d)(4)), properly completed and duly executed by such Foreign Lender claiming
complete exemption from U.S. Federal withholding tax on payments of interest by
the Borrower under this Agreement and the other Loan Documents. Notwithstanding
the foregoing, each Foreign Lender agrees that (i) on or before the date that
any predecessor documentation described in this Section 2.20(e) expires or
becomes obsolete, (ii) after the occurrence of any event requiring a change in
the most recent documentation previously delivered to the Borrower, or (iii)
after any change in circumstances which renders the previous documentation
obsolete or inaccurate in any respect, such Foreign Lender shall deliver to the
Borrower (with a copy to the Administrative Agent) such properly completed and
executed new documentation prescribed by applicable law or reasonably requested
by Borrower as will permit payments under this Agreement to be made without
withholding or at a reduced rate.
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41
(f) If the Administrative Agent or any Lender receives a refund in
respect of Indemnified Taxes or Other Taxes paid by the Borrower, which in the
good faith judgment of the Administrative Agent or such Lender is allocable to
such payment, it shall promptly pay such refund (together with any amounts
received solely attributable to such refund) to the Borrower, net of all
out-of-pocket expenses (including any Taxes to which such Lender has become
subject as a result of its receipt of such refund) of the Administrative Agent
or such Lender incurred in obtaining such refund and without interest (other
than any interest paid by the relevant Governmental Authority with respect to
such refund); provided, however, that the Borrower agrees to promptly return
such refund (plus any penalties, interest or other charges imposed by the
relevant Governmental Authority) to the Administrative Agent or the applicable
Lender, as the case may be, if it receives notice from the Administrative Agent
or the applicable Lender that the Administrative Agent or such Lender is
required to repay such refund to such Governmental Authority. Nothing contained
in this Section 2.20(f) shall require the Administrative Agent or any Lender to
make available its tax returns (or any other information relating to its taxes
which it deems to be confidential) to the Borrower or any other person.
(g) Notwithstanding anything to the contrary in this Section, if the
Internal Revenue Service determines that a Lender is participating in a conduit
financing arrangement as defined in Section 7701(l) of the Code and the
regulations thereunder (a "Conduit Financing Arrangement"), then (i) any Taxes
that the Borrower is required to withhold from payments to such Lender shall be
excluded from the definition of "Indemnified Taxes" and (ii) such Lender shall
indemnify the Borrower in full for any and all Taxes for which the Borrower is
held directly liable under Section 1461 of the Code by virtue of such Conduit
Financing Arrangement. Each Lender represents that it is not participating in a
Conduit Financing Arrangement.
SECTION 2.21. Assignment of Commitments Under Certain Circumstances;
Duty to Mitigate. (a) In the event (i) any Lender or the Issuing Bank delivers a
certificate requesting compensation pursuant to Section 2.14, (ii) any Lender or
the Issuing Bank delivers a notice described in Section 2.15 or (iii) the
Borrower is required to pay any additional amount to any Lender or the Issuing
Bank or any Governmental Authority on account of any Lender or the Issuing Bank
pursuant to Section 2.20, the Borrower may, at its sole expense and effort
(including with respect to the processing and recordation fee referred to in
Section 9.04(b)), upon notice to such Lender or the Issuing Bank and the
Administrative Agent, require such Lender or the Issuing Bank to transfer and
assign, without recourse (in accordance with and subject to the restrictions
contained in Section 9.04), all of its interests, rights and obligations under
this Agreement to an assignee that shall assume such assigned obligations (which
assignee may be another Lender, if a Lender accepts such assignment); provided
that (x) such assignment shall not conflict with any law, rule or regulation or
order of any court or other Governmental Authority having jurisdiction, (y) the
Borrower shall have received the prior written consent of the Administrative
Agent (and, if a Revolving Credit Commitment is being assigned, of the Issuing
Bank and the Swingline Lender), which consent shall not unreasonably be
withheld, and (z) the Borrower or such assignee shall have paid to the affected
Lender or the Issuing Bank in immediately available funds an amount equal to the
sum of the principal of and interest accrued to the date of such payment on the
outstanding Loans or L/C Disbursements of such Lender or the Issuing Bank and
the Swingline Lender, respectively, plus all Fees and other amounts accrued for
the account of such Lender or the Issuing Bank hereunder (including any amounts
under Section 2.14 and Section 2.16); provided further that, if prior to any
such transfer and assignment the circumstances or event that resulted in such
Lender's or the Issuing Bank's claim for compensation
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42
under Section 2.14 or notice under Section 2.15 or the amounts paid pursuant to
Section 2.20, as the case may be, cease to cause such Lender or the Issuing Bank
to suffer increased costs or reductions in amounts received or receivable or
reduction in return on capital, or cease to have the consequences specified in
Section 2.15, or cease to result in amounts being payable under Section 2.20, as
the case may be (including as a result of any action taken by such Lender or the
Issuing Bank pursuant to paragraph (b) below), or if such Lender or the Issuing
Bank shall waive its right to claim further compensation under Section 2.14 in
respect of such circumstances or event or shall withdraw its notice under
Section 2.15 or shall waive its right to further payments under Section 2.20 in
respect of such circumstances or event, as the case may be, then such Lender or
the Issuing Bank shall not thereafter be required to make any such transfer and
assignment hereunder.
(b) If (i) any Lender or the Issuing Bank shall request compensation
under Section 2.14, (ii) any Lender or the Issuing Bank delivers a notice
described in Section 2.15 or (iii) the Borrower is required to pay any
additional amount to any Lender or the Issuing Bank or any Governmental
Authority on account of any Lender or the Issuing Bank, pursuant to Section
2.20, then such Lender or the Issuing Bank shall use reasonable efforts (which
shall not require such Lender or the Issuing Bank to incur an unreimbursed loss
or unreimbursed cost or expense or otherwise take any action inconsistent with
its internal policies or legal or regulatory restrictions or suffer any
disadvantage or burden deemed by it to be significant) (x) to file any
certificate or document reasonably requested in writing by the Borrower or (y)
to assign its rights and delegate and transfer its obligations hereunder to
another of its offices, branches or affiliates, if such filing or assignment
would reduce its claims for compensation under Section 2.14 or enable it to
withdraw its notice pursuant to Section 2.15 or would reduce amounts payable
pursuant to Section 2.20, as the case may be, in the future. The Borrower hereby
agrees to pay all reasonable costs and expenses incurred by any Lender or the
Issuing Bank in connection with any such filing or assignment, delegation and
transfer.
SECTION 2.22. Swingline Loans. (a) Swingline Commitment. Subject to the
terms and conditions and relying upon the representations and warranties herein
set forth, the Swingline Lender agrees to make loans to the Borrower at any time
and from time to time on and after the Closing Date and until the earlier of the
Revolving Credit Maturity Date and the termination of the Revolving Credit
Commitments in accordance with the terms hereof, in an aggregate principal
amount at any time outstanding that will not result in (i) the aggregate
principal amount of all Swingline Loans exceeding $10,000,000 or (ii) the
Aggregate Revolving Credit Exposure, after giving effect to any Swingline Loan,
exceeding the Total Revolving Credit Commitment. Each Swingline Loan shall be in
a principal amount that is an integral multiple of $250,000. The Swingline
Commitment may be terminated or reduced from time to time as provided herein.
Within the foregoing limits, the Borrower may borrow, pay or prepay and reborrow
Swingline Loans hereunder, subject to the terms, conditions and limitations set
forth herein.
(b) Swingline Loans. The Borrower shall notify the Administrative Agent
by fax, or by telephone (confirmed by fax), not later than 12:00 p.m., New York
City time, on the day of a proposed Swingline Loan. Such notice shall be
delivered on a Business Day, shall be irrevocable and shall refer to this
Agreement and shall specify the requested date (which shall be a Business Day)
and amount of such Swingline Loan. The Administrative Agent will promptly advise
the Swingline Lender of any notice received from the Borrower pursuant to this
paragraph (b). The Swingline Lender shall make each Swingline Loan available to
the Borrower by means of a credit to an account as directed by the
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Borrower in the notice requesting such Swingline Loan on the date such Swingline
Loan is so requested.
(c) Prepayment. The Borrower shall have the right at any time and from
time to time to prepay any Swingline Loan, in whole or in part, upon giving
written or fax notice (or telephone notice promptly confirmed by written, or fax
notice) to the Swingline Lender and to the Administrative Agent before 12:00
(noon), New York City time on the date of prepayment at the Swingline Lender's
address for notices specified in Schedule 2.01. Interest on any Swingline Loan
being prepaid under this Section 2.22(c) shall be paid on the next Interest
Payment Date applicable to such Loan that follows the date of such prepayment.
(d) Interest. Each Swingline Loan shall be an ABR Loan and, subject to
the provisions of Section 2.07, shall bear interest as provided in Section
2.06(a).
(e) Participations. The Swingline Lender may by written notice given to
the Administrative Agent not later than 11:00 a.m., New York City time, on any
Business Day require the Revolving Credit Lenders to acquire participations on
such Business Day in all or a portion of the Swingline Loans outstanding. Such
notice shall specify the aggregate amount of Swingline Loans in which the
Revolving Credit Lenders will participate. The Administrative Agent will,
promptly upon receipt of such notice, give notice to each Revolving Credit
Lender, specifying in such notice such Lender's Pro Rata Percentage of such
Swingline Loan or Loans. In furtherance of the foregoing, each Revolving Credit
Lender hereby absolutely and unconditionally agrees, upon receipt of notice as
provided above, to pay to the Administrative Agent, for the account of the
Swingline Lender, such Revolving Credit Lender's Pro Rata Percentage of such
Swingline Loan or Loans. Each Revolving Credit Lender acknowledges and agrees
that its obligation to acquire participations in Swingline Loans pursuant to
this paragraph is absolute and unconditional and shall not be affected by any
circumstance whatsoever, including the occurrence and continuance of a Default
or an Event of Default, and that each such payment shall be made without any
offset, abatement, withholding or reduction whatsoever. Each Revolving Credit
Lender shall comply with its obligation under this paragraph by wire transfer of
immediately available funds, in the same manner as provided in Section 2.02(c)
with respect to Loans made by such Lender (and Section 2.02(c) shall apply,
mutatis mutandis, to the payment obligations of the Lenders) and the
Administrative Agent shall promptly pay to the Swingline Lender the amounts so
received by it from the Lenders. The Administrative Agent shall notify the
Borrower of any participations in any Swingline Loan acquired pursuant to this
paragraph and thereafter payments in respect of such Swingline Loan shall be
made to the Administrative Agent and not to the Swingline Lender. Any amounts
received by the Swingline Lender from the Borrower (or other party on behalf of
the Borrower) in respect of a Swingline Loan after receipt by the Swingline
Lender of the proceeds of a sale of participations therein shall be promptly
remitted to the Administrative Agent; any such amounts received by the
Administrative Agent shall be promptly remitted by the Administrative Agent to
the Lenders that shall have made their payments pursuant to this paragraph and
to the Swingline Lender, as their interests may appear. The purchase of
participations in a Swingline Loan pursuant to this paragraph shall not relieve
the Borrower (or other party liable for obligations of the Borrower) of any
default in the payment thereof.
SECTION 2.23. Letters of Credit. (a) General. The Borrower may request
the issuance of a Letter of Credit for its own account, in a form reasonably
acceptable to the Administrative Agent and the Issuing Bank, at any time and
from time to time while the Revolving Credit Commitments remain
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44
in effect. This Section shall not be construed to impose an obligation upon the
Issuing Bank to issue any Letter of Credit that is inconsistent with the terms
and conditions of this Agreement.
(b) Notice of Issuance, Amendment, Renewal, Extension; Certain
Conditions. In order to request the issuance of a Letter of Credit (or to amend,
renew or extend an existing Letter of Credit), the Borrower shall hand deliver
or fax to the Issuing Bank and the Administrative Agent (reasonably in advance
of the requested date of issuance, amendment, renewal or extension) a notice
requesting the issuance of a Letter of Credit, or identifying the Letter of
Credit to be amended, renewed or extended, the date of issuance, amendment,
renewal or extension, the date on which such Letter of Credit is to expire
(which shall comply with paragraph (c) below), the amount of such Letter of
Credit, the name and address of the beneficiary thereof and such other
information as shall be necessary to prepare such Letter of Credit. A Letter of
Credit shall be issued, amended, renewed or extended only if, and upon issuance,
amendment, renewal or extension of each Letter of Credit the Borrower shall be
deemed to represent and warrant that, after giving effect to such issuance,
amendment, renewal or extension (i) the L/C Exposure shall not exceed
$20,000,000 and (ii) the Aggregate Revolving Credit Exposure shall not exceed
the Total Revolving Credit Commitment.
(c) Expiration Date. Each Letter of Credit shall expire at the close of
business on the earlier of the date one year after the date of the issuance of
such Letter of Credit and the date that is five Business Days prior to the
Revolving Credit Maturity Date, unless such Letter of Credit expires by its
terms on an earlier date.
(d) Participations. By the issuance of a Letter of Credit and without
any further action on the part of the Issuing Bank or the Lenders, the Issuing
Bank hereby grants to each Revolving Credit Lender, and each such Lender hereby
acquires from the applicable Issuing Bank, a participation in such Letter of
Credit equal to such Lender's Pro Rata Percentage of the aggregate amount
available to be drawn under such Letter of Credit, effective upon the issuance
of such Letter of Credit. In consideration and in furtherance of the foregoing,
each Revolving Credit Lender hereby absolutely and unconditionally agrees to pay
to the Administrative Agent, for the account of the Issuing Bank, such Lender's
Pro Rata Percentage of each L/C Disbursement made by the Issuing Bank and not
reimbursed by the Borrower (or, if applicable, another party pursuant to its
obligations under any other Loan Document) forthwith on the date due as provided
in Section 2.02(f). Each Revolving Credit Lender acknowledges and agrees that
its obligation to acquire participations pursuant to this paragraph in respect
of Letters of Credit is absolute and unconditional and shall not be affected by
any circumstance whatsoever, including the occurrence and continuance of a
Default or an Event of Default, and that each such payment shall be made without
any offset, abatement, withholding or reduction whatsoever.
(e) Reimbursement. If the Issuing Bank shall make any L/C Disbursement
in respect of a Letter of Credit, the Borrower shall pay to the Administrative
Agent an amount equal to such L/C Disbursement not later than the end of the day
on which the Borrower shall have received notice from the Issuing Bank that
payment of such draft will be made, or, if the Borrower shall have received such
notice later than 10:00 a.m., New York City time, on any Business Day, not later
than 10:00 a.m., New York City time, on the immediately following Business Day.
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45
(f) Obligations Absolute. The Borrower's obligations to reimburse L/C
Disbursements as provided in paragraph (e) above shall be absolute,
unconditional and irrevocable, and shall be performed strictly in accordance
with the terms of this Agreement, under any and all circumstances whatsoever,
and irrespective of:
(i) any lack of validity or enforceability of any Letter of
Credit or any Loan Document, or any term or provision therein;
(ii) any amendment or waiver of or any consent to departure
from all or any of the provisions of any Letter of Credit or any Loan
Document;
(iii) the existence of any claim, setoff, defense or other
right that the Borrower, any other party guaranteeing, or otherwise
obligated with, the Borrower, any Subsidiary or other Affiliate thereof
or any other person may at any time have against the beneficiary under
any Letter of Credit, the Issuing Bank, the Administrative Agent or any
Lender or any other person, whether in connection with this Agreement,
any other Loan Document or any other related or unrelated agreement or
transaction;
(iv) any draft or other document presented under a Letter of
Credit proving to be forged, fraudulent, invalid or insufficient in any
respect or any statement therein being untrue or inaccurate in any
respect;
(v) payment by the Issuing Bank under a Letter of Credit
against presentation of a draft or other document that does not comply
with the terms of such Letter of Credit; and
(vi) any other act or omission to act or delay of any kind of
the Issuing Bank, the Lenders, the Administrative Agent or any other
person or any other event or circumstance whatsoever, whether or not
similar to any of the foregoing, that might, but for the provisions of
this Section, constitute a legal or equitable discharge of the
Borrower's obligations hereunder.
Without limiting the generality of the foregoing, it is expressly
understood and agreed that the absolute and unconditional obligation of the
Borrower hereunder to reimburse L/C Disbursements will not be excused by the
gross negligence or wilful misconduct of the Issuing Bank. However, the
foregoing shall not be construed to excuse the Issuing Bank from liability to
the Borrower to the extent of any direct damages (as opposed to consequential
damages, claims in respect of which are hereby waived by the Borrower to the
extent permitted by applicable law) suffered by the Borrower that are caused by
the Issuing Bank's gross negligence or wilful misconduct in determining whether
drafts and other documents presented under a Letter of Credit comply with the
terms thereof; it is understood that the Issuing Bank may accept documents that
appear on their face to be in order, without responsibility for further
investigation, regardless of any notice or information to the contrary and, in
making any payment under any Letter of Credit (i) the Issuing Bank's exclusive
reliance on the documents presented to it under such Letter of Credit as to any
and all matters set forth therein, including reliance on the amount of any draft
presented under such Letter of Credit, whether or not the amount due to the
beneficiary thereunder equals the amount of such draft and whether or not any
document presented
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46
pursuant to such Letter of Credit proves to be insufficient in any respect, if
such document on its face appears to be in order, and whether or not any other
statement or any other document presented pursuant to such Letter of Credit
proves to be forged or invalid or any statement therein proves to be inaccurate
or untrue in any respect whatsoever and (ii) any noncompliance in any immaterial
respect of the documents presented under such Letter of Credit with the terms
thereof shall, in each case, be deemed not to constitute wilful misconduct or
gross negligence of the Issuing Bank.
(g) Disbursement Procedures. The Issuing Bank shall, promptly following
its receipt thereof, examine all documents purporting to represent a demand for
payment under a Letter of Credit. The Issuing Bank shall as promptly as possible
give telephonic notification, confirmed by fax, to the Administrative Agent and
the Borrower of such demand for payment and whether the Issuing Bank has made or
will make an L/C Disbursement thereunder; provided that any failure to give or
delay in giving such notice shall not relieve the Borrower of its obligation to
reimburse the Issuing Bank and the Revolving Credit Lenders with respect to any
such L/C Disbursement. The Administrative Agent shall promptly give each
Revolving Credit Lender notice thereof.
(h) Interim Interest. If the Issuing Bank shall make any L/C
Disbursement in respect of a Letter of Credit, then, unless the Borrower shall
reimburse such L/C Disbursement in full on such date, the unpaid amount thereof
shall bear interest for the account of the Issuing Bank, for each day from and
including the date of such L/C Disbursement, to but excluding the earlier of the
date of payment by the Borrower or the date on which interest shall commence to
accrue thereon as provided in Section 2.02(f), at the rate per annum that would
apply to such amount if such amount were an ABR Revolving Loan.
(i) Resignation or Removal of the Issuing Bank. The Issuing Bank may
resign at any time by giving 180 days' prior written notice to the
Administrative Agent, the Lenders and the Borrower, and may be removed at any
time by the Borrower by notice to the Issuing Bank, the Administrative Agent and
the Lenders. Subject to the next succeeding paragraph, upon the acceptance of
any appointment as the Issuing Bank hereunder by a Lender that shall agree to
serve as successor Issuing Bank, such successor shall succeed to and become
vested with all the interests, rights and obligations of the retiring Issuing
Bank and the retiring Issuing Bank shall be discharged from its obligations to
issue additional Letters of Credit hereunder. At the time such removal or
resignation shall become effective, the Borrower shall pay all accrued and
unpaid fees pursuant to Section 2.05(c)(ii). The acceptance of any appointment
as the Issuing Bank hereunder by a successor Lender shall be evidenced by an
agreement entered into by such successor, in a form satisfactory to the Borrower
and the Administrative Agent, and, from and after the effective date of such
agreement, (i) such successor Lender shall have all the rights and obligations
of the previous Issuing Bank under this Agreement and the other Loan Documents
and (ii) references herein and in the other Loan Documents to the term "Issuing
Bank" shall be deemed to refer to such successor or to any previous Issuing
Bank, or to such successor and all previous Issuing Banks, as the context shall
require. After the resignation or removal of the Issuing Bank hereunder, the
retiring Issuing Bank shall remain a party hereto and shall continue to have all
the rights and obligations of an Issuing Bank under this Agreement and the other
Loan Documents with respect to Letters of Credit issued by it prior to such
resignation or removal, but shall not be required to issue additional Letters of
Credit.
(j) Cash Collateralization. If any Event of Default shall occur and be
continuing, the Borrower shall, on the Business Day it receives notice from the
Administrative Agent or the Required Lenders (or, if the maturity of the Loans
has been accelerated, Revolving Credit Lenders holding participations in
outstanding Letters of Credit representing greater than 50% of the aggregate
undrawn
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47
amount of all outstanding Letters of Credit) thereof and of the amount to be
deposited, deposit in an account with the Collateral Agent, for the benefit of
the Revolving Credit Lenders, an amount in cash equal to the L/C Exposure as of
such date. Such deposit shall be held by the Collateral Agent as collateral for
the payment and performance of the Obligations. The Collateral Agent shall have
exclusive dominion and control, including the exclusive right of withdrawal,
over such account. Other than any interest earned on the investment of such
deposits in Permitted Investments, which investments shall be made at the option
and sole discretion of the Collateral Agent, such deposits shall not bear
interest. Interest or profits, if any, on such investments shall accumulate in
such account. Moneys in such account shall (i) automatically be applied by the
Administrative Agent to reimburse the Issuing Bank for L/C Disbursements for
which it has not been reimbursed, (ii) be held for the satisfaction of the
reimbursement obligations of the Borrower for the L/C Exposure at such time and
(iii) if the maturity of the Loans has been accelerated (but subject to the
consent of Revolving Credit Lenders holding participations in outstanding
Letters of Credit representing greater than 50% of the aggregate undrawn amount
of all outstanding Letters of Credit), be applied to satisfy the Obligations. If
the Borrower is required to provide an amount of cash collateral hereunder as a
result of the occurrence of an Event of Default, such amount (to the extent not
applied as aforesaid) shall be returned to the Borrower within three Business
Days after all Events of Default have been cured or waived.
(k) Additional Issuing Banks. The Borrower may, at any time and from
time to time with the consent of the Administrative Agent (which consent shall
not be unreasonably withheld) and such Lender, designate one or more additional
Lenders to act as an issuing bank under the terms of this Agreement. Any Lender
designated as an issuing bank pursuant to this paragraph (k) shall be deemed (in
addition to being a Lender) to be the Issuing Bank with respect to Letters of
Credit issued or to be issued by such Lender, and all references herein and in
the other Loan Documents to the term "Issuing Bank" shall, with respect to such
Letters of Credit, be deemed to refer to such Lender in its capacity as Issuing
Bank, as the context shall require.
ARTICLE III
Representations and Warranties
Each of Holdings and the Borrower represents and warrants to the
Administrative Agent, the Collateral Agent, the Issuing Bank and each of the
Lenders that:
SECTION 3.01. Organization; Powers. Each of Holdings, the Borrower and
each of the Subsidiaries (a) is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization, (b) has all
requisite power and authority to own its property and assets and to carry on its
business as now conducted and as proposed to be conducted, (c) except as set
forth in Schedule 3.01 with respect to the LLC Subsidiaries, is qualified to do
business in, and is in good standing in, every jurisdiction where such
qualification is required, except where the failure so to qualify could not
reasonably be expected to result in a Material Adverse Effect, and (d) has the
power and authority to execute, deliver and perform its obligations under each
of the Loan Documents and each other agreement or instrument contemplated hereby
to which it is or will be a party and, in the case of the Borrower, to borrow
hereunder.
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48
SECTION 3.02. Authorization. The execution, delivery and performance by
each Loan Party of each of the Documents and the consummation by the Loan
Parties of the Transactions (including the borrowings hereunder) (a) have been
duly authorized by all requisite corporate and, if required, stockholder action
and (b) will not (i) violate (A) any provision of law, statute, rule or
regulation, or of the certificate or articles of incorporation or other
constitutive documents or by-laws of Holdings, the Borrower or any Subsidiary,
(B) any order of any Governmental Authority or (C) any provision of any
indenture, agreement or other instrument to which Holdings, the Borrower or any
Subsidiary is a party or by which any of them or any of their property is or may
be bound, (ii) be in conflict with, result in a breach of or constitute (alone
or with notice or lapse of time or both) a default under, or give rise to any
right to accelerate or to require the prepayment, repurchase or redemption of
any obligation under any such indenture, agreement or other instrument or (iii)
result in the creation or imposition of any Lien upon or with respect to any
property or assets now owned or hereafter acquired by Holdings, the Borrower or
any Subsidiary (other than any Lien created hereunder or under the Security
Documents).
SECTION 3.03. Enforceability. This Agreement has been duly executed and
delivered by Holdings and the Borrower and constitutes, and each other Loan
Document when executed and delivered by the each Loan Party thereto will
constitute, a legal, valid and binding obligation of such Loan Party enforceable
against such Loan Party in accordance with its terms.
SECTION 3.04. Governmental Approvals. No action, consent or approval
of, registration or filing with or any other action by any Governmental
Authority is or will be required in connection with the Transactions, except for
(a) the filing of Uniform Commercial Code financing statements and filings with
the United States Patent and Trademark Office and the United States Copyright
Office, (b) recordation of the Mortgages, (c) such as have been made or obtained
and are in full force and effect and (d) those filings required to be made
following the Closing Date which are set forth on Schedule 3.04.
SECTION 3.05. Financial Statements. (a) The Borrower has heretofore
delivered to the Lenders the consolidated balance sheets and related statements
of income, stockholder's equity and cash flows of the Business with respect to
such balance sheet, as of July 3, 1998, and July 2, 1999 and with respect to
such other statements, for the fiscal years ended June 27, 1997, July 3, 1998
and July 2,1999, audited by and accompanied by the opinion of Ernst & Young LLP,
independent public accountants. Such financial statements present fairly the
financial condition and results of operations and cash flows of the Business, as
of such dates and for such periods. Such balance sheets and the notes thereto
disclose all material liabilities, direct or contingent, of the Business as of
the dates thereof. Such financial statements were prepared in accordance with
GAAP applied on a consistent basis.
(b) The Borrower has heretofore delivered to the Lenders its unaudited
pro forma consolidated balance sheet and related statement of income as of July
2, 1999, prepared giving effect to the Transactions as if they had occurred,
with respect to such balance sheet, on such date, and with respect to such
income statement, on July 2, 1998. Such pro forma financial statements have been
prepared in good faith by the Borrower, based on the assumptions used to prepare
the pro forma financial information contained in the Confidential Information
Memorandum (which assumptions are believed by the Borrower on the date hereof
and on the Closing Date to be reasonable), are based on the best information
available to the Borrower as of the date of delivery thereof, accurately reflect
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49
all adjustments required to be made to give effect to the Transactions and
present fairly on a pro forma basis the estimated consolidated financial
position of the Borrower and its consolidated Subsidiaries as of such dates,
assuming that the Transactions had actually occurred at such dates.
SECTION 3.06. No Material Adverse Change. There has been no material
adverse change in the business, results of operations, prospects, condition,
financial or otherwise, or material agreements of Holdings, the Borrower and the
Subsidiaries, taken as a whole, since July 3, 1999.
SECTION 3.07. Title to Properties; Possession Under Leases. (a) Except
as set forth on Schedule 3.07(a), each of Holdings, the Borrower and the
Subsidiaries has good and marketable title to, or valid leasehold interests in,
all its material properties and assets (including all Mortgaged Property),
except for minor defects in title that do not materially interfere with its
ability to conduct its business as currently conducted or to utilize such
properties and assets for their intended purposes. All such material properties
and assets are free and clear of Liens, other than Liens expressly permitted by
Section 6.02.
(b) Each of Holdings, the Borrower and the Subsidiaries has complied in
all material respects with all obligations under all material leases to which it
is a party and all such leases are in full force and effect. Each of Holdings,
the Borrower and the Subsidiaries enjoys peaceful and undisturbed possession
under all such material leases.
(c) Except as set forth on Schedule 3.07(c), neither Holdings nor the
Borrower has received any written notice of, nor has any actual knowledge of,
any pending or contemplated condemnation proceeding affecting the Mortgaged
Properties or any sale or disposition thereof in lieu of condemnation.
(d) None of Holdings, the Borrower or any of the Subsidiaries is
obligated under any right of first refusal, option or other contractual right to
sell, assign or otherwise dispose of any Mortgaged Property or any interest
therein.
SECTION 3.08. Subsidiaries. Schedule 3.08 sets forth as of the Closing
Date a list of all Subsidiaries and the percentage ownership interest of
Holdings or the Borrower therein. The Equity Interests so indicated on Schedule
3.08 are fully paid and non-assessable and are owned by Holdings or the
Borrower, directly or indirectly, free and clear of all Liens other than Liens
created by the Pledge Agreement.
SECTION 3.09. Litigation; Compliance with Laws. (a) Except as set forth
on Schedule 3.09 or Schedule 3.17, there are not any actions, suits or
proceedings at law or in equity or by or before any Governmental Authority now
pending or, to the knowledge of Holdings or the Borrower, threatened against or
affecting Holdings or the Borrower or any Subsidiary or any business, property
or rights of any such person (i) that involve any Loan Document or the
Transactions or (ii) as to which there is a reasonable possibility of an adverse
determination and that, if adversely determined, could reasonably be expected,
individually or in the aggregate, to result in a Material Adverse Effect.
(b) Except for matters covered by Section 3.17, none of Holdings, the
Borrower or any of the Subsidiaries or any of their respective material
properties or assets is in violation of, nor will the continued operation of
their material properties and assets as currently conducted violate, any law,
rule
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50
or regulation (including any zoning or building ordinance, code or approval or
any building permits) or any restrictions of record or agreements affecting the
Mortgaged Property, or is in default with respect to any judgment, writ,
injunction, decree or order of any Governmental Authority, where such violation
or default could reasonably be expected to result in a Material Adverse Effect.
SECTION 3.10. Agreements. (a) None of Holdings, the Borrower or any of
the Subsidiaries is a party to any agreement or instrument or subject to any
corporate restriction that has resulted or could reasonably be expected to
result in a Material Adverse Effect.
(b) None of Holdings, the Borrower or any of the Subsidiaries is in
default in any manner under any provision of any indenture or other agreement or
instrument evidencing Indebtedness, or any other material agreement or
instrument to which it is a party or by which it or any of its properties or
assets are or may be bound, where such default could reasonably be expected to
result in a Material Adverse Effect.
SECTION 3.11. Federal Reserve Regulations. (a) None of Holdings, the
Borrower or any of the Subsidiaries is engaged principally, or as one of its
important activities, in the business of extending credit for the purpose of
buying or carrying Margin Stock.
(b) No part of the proceeds of any Loan or any Letter of Credit will be
used, whether directly or indirectly, and whether immediately, incidentally or
ultimately, for any purpose that entails a violation of, or that is inconsistent
with, the provisions of the Regulations of the Board, including Regulation T, U
or X.
SECTION 3.12. Investment Company Act; Public Utility Holding Company
Act. None of Holdings, the Borrower or any Subsidiary is (a) an "investment
company" as defined in, or subject to regulation under, the Investment Company
Act of 1940 or (b) a "holding company" as defined in, or subject to regulation
under, the Public Utility Holding Company Act of 1935.
SECTION 3.13. Use of Proceeds. The Borrower will use the proceeds of
the Loans and will request the issuance of Letters of Credit only for the
purposes specified in the preamble to this Agreement.
SECTION 3.14. Tax Returns. Each of Holdings, the Borrower and the
Subsidiaries has filed or caused to be filed all Federal Tax returns and all
material, state, local and foreign Tax returns or materials required to have
been filed by it and has paid or caused to be paid all material Taxes due and
payable by it and all assessments received by it, except Taxes that are being
contested in good faith by appropriate proceedings and for which Holdings, the
Borrower or such Subsidiary, as applicable, shall have set aside on its books
adequate reserves with respect thereto in accordance with GAAP.
SECTION 3.15. No Material Misstatements. None of (a) the Confidential
Information Memorandum or (b) any other information, report, financial
statement, exhibit or schedule furnished by or on behalf of Holdings or the
Borrower to the Administrative Agent or any Lender in connection with the
negotiation of any Loan Document or included therein or delivered pursuant
thereto contained, contains or will contain any material misstatement of fact or
omitted, omits or will omit to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they were, are
or will be made, not misleading as of the date such information is dated or
certified; provided that to the extent any such information, report, financial
statement, exhibit or
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51
schedule was based upon or constitutes a forecast or projection, each of
Holdings and the Borrower represents only that it acted in good faith and
utilized reasonable assumptions and due care in the preparation of such
information, report, financial statement, exhibit or schedule.
SECTION 3.16. Employee Benefit Plans. (a) Each of the Borrower and its
ERISA Affiliates is in compliance in all material respects with the applicable
provisions of ERISA and the Code and the regulations and published
interpretations thereunder. No ERISA Event has occurred or is reasonably
expected to occur that, when taken together with all other such ERISA Events,
could reasonably be expected to result in material liability of the Borrower or
any of its ERISA Affiliates. The present value of all benefit liabilities under
all underfunded Plans (based on those assumptions used to fund each such Plan)
did not, as of the last annual valuation date applicable thereto, exceed the
fair market value of the assets of all such underfunded Plans by an amount that
could reasonably be expected to have a Material Adverse Effect.
(b) Each Foreign Pension Plan is in compliance in all material respects
with all requirements of law applicable thereto and the respective requirements
of the governing documents for such plan except to the extent such
non-compliance could not reasonably be expected to result in a Material Adverse
Effect. With respect to each Foreign Pension Plan, none of the Holdings, its
Affiliates or any of its directors, officers, employees or agents has engaged in
a transaction that subject the Holdings or any of its Subsidiaries, directly or
indirectly, to a material tax or civil penalty. With respect to each Foreign
Pension Plan, reserves have been established in the financial statements
furnished to Lenders in respect of any unfunded liabilities in accordance with
applicable law and prudent business practice or, where required, in accordance
with ordinary accounting practices in the jurisdiction in which such Foreign
Pension Plan is maintained. The aggregate unfunded liabilities, with respect to
such Foreign Pension Plans could not reasonably be expected to result in a
Material Adverse Effect. There are no actions, suits or claims (other than
routine claims for benefits) pending or threatened against the Holdings or any
of its Affiliates with respect to any Foreign Pension Plan which could
reasonably be expected, individually or in the aggregate, to result in a
Material Adverse Effect.
SECTION 3.17. Environmental Matters. Except as set forth in Schedule
3.17:
(a) The properties owned or operated by Holdings, the Borrower and the
Subsidiaries (the "Properties") do not contain any Hazardous Materials in
amounts or concentrations which (i) constitute, or constituted a violation of,
(ii) require Remedial Action under, or (iii) could give rise to liability under,
Environmental Laws, which violations, Remedial Actions and liabilities, in the
aggregate, could reasonably be expected to result in a Material Adverse Effect;
(b) The Properties and all operations of the Borrower and the
Subsidiaries are in compliance, and, to the knowledge of Holdings, the Borrower
and the Subsidiaries have, for the last six years, been in compliance, with all
Environmental Laws and all necessary Environmental Permits have been obtained
and are in effect (or applications for renewals have been submitted entitling
Holdings, the Borrower, and the Subsidiaries to a permit shield), except to the
extent that such non-compliance or failure to obtain any necessary permits, in
the aggregate, could not reasonably be expected to result in a Material Adverse
Effect;
(c) There have been no Releases or threatened Releases by the Borrower
or any Subsidiary or, to their knowledge, by any other party, at, from, under or
proximate to the Properties or otherwise
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52
in connection with the operations of the Borrower or the Subsidiaries, which
Releases or threatened Releases, in the aggregate, could reasonably be expected
to result in a Material Adverse Effect;
(d) None of Holdings, the Borrower or any of the Subsidiaries has
received any notice of an Environmental Claim in connection with the Properties
or the operations of the Borrower or the Subsidiaries or with regard to any
person whose liabilities for environmental matters Holdings, the Borrower or the
Subsidiaries has retained or assumed, in whole or in part, contractually, by
operation of law or otherwise, which, in the aggregate, could reasonably be
expected to result in a Material Adverse Effect; and
(e) Hazardous Materials have not been transported from the Properties
by or on behalf of Holdings, the Borrower or any Subsidiary, nor have Hazardous
Materials been generated, treated, stored or disposed of at, on or under any of
the Properties in a manner that could give rise to liability to Holdings, the
Borrower or the Subsidiaries under any Environmental Law, nor have the Borrower
or the Subsidiaries retained or assumed any liability, contractually or by
operation of law, with respect to the generation, treatment, storage or disposal
of Hazardous Materials, which transportation, generation, treatment, storage or
disposal, or retained or assumed liabilities, in the aggregate, could reasonably
be expected to result in a Material Adverse Effect.
SECTION 3.18. Insurance. Schedule 3.18 sets forth a true, complete and
correct description of all insurance maintained by the Borrower or by the
Borrower for its Subsidiaries as of the date hereof and the Closing Date. As of
each such date, such insurance is in full force and effect and all premiums have
been duly paid. The Borrower and its Subsidiaries have insurance in such amounts
and covering such risks and liabilities as are in accordance with normal
industry practice.
SECTION 3.19. Security Documents. (a) The Pledge Agreement is effective
to create in favor of the Collateral Agent, for the ratable benefit of the
Secured Parties, a legal, valid and enforceable security interest in the
Collateral (as defined in the Pledge Agreement) and, when the Collateral is
delivered to the Collateral Agent, the Pledge Agreement shall constitute a fully
perfected first priority Lien on, and security interest in, all right, title and
interest of the pledgors thereunder in such Collateral, in each case prior and
superior in right to any other person.
(b) The Security Agreement is effective to create in favor of the
Collateral Agent, for the ratable benefit of the Secured Parties, a legal, valid
and enforceable security interest in the Collateral (as defined in the Security
Agreement) and, when financing statements in appropriate form are filed in the
offices specified on Schedule 6 to the Perfection Certificate, the Security
Agreement shall constitute a fully perfected Lien on, and security interest in,
all right, title and interest of the grantors thereunder in such Collateral
(other than the Intellectual Property, as defined in the Security Agreement), in
each case prior and superior in right to any other person, other than with
respect to Liens expressly permitted by Section 6.02.
(c) When the Security Agreement is filed in the United States Patent
and Trademark Office and the United States Copyright Office and the filings in
paragraph (b) have been made, the Security Agreement shall constitute a fully
perfected Lien on, and security interest in, all right, title and interest of
the grantors thereunder in the Intellectual Property (as defined in the Security
Agreement), in each case prior and superior in right to any other person (it
being understood that subsequent recordings in the United States Patent and
Trademark Office and the United States Copyright Office may be
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necessary to perfect a lien on registered trademarks, trademark applications and
copyrights acquired by the grantors after the date hereof), subject to Liens
permitted by Section 6.02.
(d) The Mortgages are effective to create in favor of the Collateral
Agent, for the ratable benefit of the Secured Parties, a legal, valid and
enforceable Lien on all of the Loan Parties' right, title and interest in and to
the Mortgaged Property thereunder and the proceeds thereof, and when the
Mortgages are filed in the offices specified on Schedule 3.19(d), the Mortgages
shall constitute a fully perfected Lien on, and security interest in, all right,
title and interest of the Loan Parties in such Mortgaged Property and the
proceeds thereof, in each case prior and superior in right to any other person,
other than with respect to the rights of persons pursuant to Liens expressly
permitted by Section 6.02.
SECTION 3.20. Location of Real Property and Leased Premises. (a)
Schedule 3.20(a) lists completely and correctly as of the Closing Date all real
property owned by the Borrower and the Subsidiaries and the addresses thereof.
The Borrower and the Subsidiaries own in fee all the real property set forth on
Schedule 3.20(a).
(b) Schedule 3.20(b) lists completely and correctly as of the Closing
Date all real property leased by the Borrower and the Subsidiaries and the
addresses thereof. The Borrower and the Subsidiaries have valid leases in all
the real property set forth on Schedule 3.20(b).
SECTION 3.21. Labor Matters As of the date hereof and the Closing Date,
there are no strikes, lockouts or slowdowns against Holdings, the Borrower or
any Subsidiary pending or, to the knowledge of Holdings or the Borrower,
threatened. The hours worked by and payments made to employees of Holdings, the
Borrower and the Subsidiaries have not been in violation of the Fair Labor
Standards Act or any other applicable Federal, state, local or foreign law
dealing with such matters in any manner which could reasonably be expected to
have a Material Adverse Effect. All payments due from Holdings, the Borrower or
any Subsidiary, or for which any claim may be made against Holdings, the
Borrower or any Subsidiary, on account of wages and employee health and welfare
insurance and other benefits, have been paid or accrued as a liability on the
books of Holdings, the Borrower or such Subsidiary except where the failure to
do so could not reasonably be expected to have a Material Adverse Effect. The
consummation of the Transactions will not give rise to any right of termination
or right of renegotiation on the part of any union under any collective
bargaining agreement to which Holdings, the Borrower or any Subsidiary is bound.
SECTION 3.22. Solvency. Immediately after the consummation of the
Transactions to occur on the Closing Date and immediately following the making
of each Loan and after giving effect to the application of the proceeds of each
Loan, (a) the fair value of the assets of the Loan Parties taken as a whole, at
a fair valuation, will exceed their debts and liabilities, subordinated,
contingent or otherwise; (b) the present fair saleable value of the property of
the Loan Parties taken as a whole will be greater than the amount that will be
required to pay the probable liability of their debts and other liabilities,
subordinated, contingent or otherwise, as such debts and other liabilities
become absolute and matured; (c) the Loan Parties taken as a whole will be able
to pay their debts and liabilities, subordinated, contingent or otherwise, as
such debts and liabilities become absolute and matured; and (d) the Loan Parties
taken as a whole will not have unreasonably small capital with which to conduct
the businesses in which they are engaged as such businesses are now conducted
and are proposed to be conducted following the Closing Date.
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54
SECTION 3.23. Representations and Warranties in Documents. All
representations and warranties set forth in the other Documents were true and
correct in all material respects at the time as of which such representations
and warranties were made (or deemed made), provided that to the extent the
representations and warranties in the Transaction Documents are made by persons
other than the Loan Parties and the CVC Permitted Holders, then the
representations and warranties so made by such persons shall be deemed to be
true and correct in all material respects for purposes of this Section 3.23
unless the aggregate effect of all misrepresentations made by such other persons
in the Transaction Documents are such as would evidence a material adverse
change in the operations, properties, condition (financial or otherwise) or
prospects of the Business from that which would have applied if all
representations made by such other persons in the Transaction Documents had been
true and correct in all respects.
SECTION 3.24. Year 2000. Any reprogramming required to permit the
proper functioning, in and following the year 2000, of (a) Holdings' and its
Subsidiaries' computer systems and (b) equipment containing embedded microchips
(including systems and equipment supplied by others or with which the Holdings'
or its Subsidiaries' systems interface) and the testing of all such systems and
equipment, as so reprogrammed, has been substantially completed. The cost to
Holdings and its Subsidiaries of such reprogramming and testing and of the
reasonably foreseeable consequences of the year 2000 (including reprogramming
errors and the failure of others' systems or equipment) will not result in a
Material Adverse Effect. The computer and management information systems of
Holdings and its Subsidiaries are and, with ordinary course upgrading and
maintenance, will continue for the term of this Agreement to be, sufficient to
permit Holdings and its Subsidiaries to conduct their business without Material
Adverse Effect.
ARTICLE IV
Conditions of Lending
The obligations of the Lenders to make Loans and of the Issuing Bank to
issue Letters of Credit hereunder are subject to the satisfaction of the
following conditions:
SECTION 4.01. All Credit Events. On the date of each Borrowing,
including each Borrowing of a Swingline Loan, and on the date of each issuance,
amendment, extension or renewal of a Letter of Credit (each such event being
called a "Credit Event"):
(a) The Administrative Agent shall have received a notice of such
Borrowing as required by Section 2.03 (or such notice shall have been deemed
given in accordance with Section 2.03) or, in the case of the issuance,
amendment, extension or renewal of a Letter of Credit, the Issuing Bank and the
Administrative Agent shall have received a notice requesting the issuance,
amendment, extension or renewal of such Letter of Credit as required by Section
2.23(b) or, in the case of the Borrowing of a Swingline Loan, the Swingline
Lender and the Administrative Agent shall have received a notice requesting such
Swingline Loan as required by Section 2.22(b).
(b) The representations and warranties set forth in Article III hereof
or in any other Loan Document shall be true and correct in all material respects
on and as of the date of such Credit Event
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55
with the same effect as though made on and as of such date, except to the extent
such representations and warranties expressly relate to an earlier date.
(c) The Borrower and each other Loan Party shall be in compliance in
all material respects with all the terms and provisions set forth herein and in
each other Loan Document on its part to be observed or performed, and at the
time of and immediately after such Credit Event, no Event of Default or Default
shall have occurred and be continuing.
Each Credit Event shall be deemed to constitute a representation and
warranty by the Borrower and Holdings on the date of such Credit Event as to the
matters specified in paragraphs (b) and (c) of this Section 4.01.
SECTION 4.02. First Credit Event. On the Closing Date:
(a) The Administrative Agent shall have received, on behalf of itself,
the Lenders and the Issuing Bank, a favorable written opinion of (i) Dechert,
Price & Rhoads, special counsel for Holdings and the Borrower, substantially to
the effect set forth in Exhibit J-1, and (ii) each local counsel listed on
Schedule 4.02(a), substantially to the effect set forth in Exhibit J-2, in each
case (A) dated the Closing Date, (B) addressed to the Issuing Bank, the
Administrative Agent and the Lenders, and (C) covering such other matters
relating to the Loan Documents and the Transactions as the Administrative Agent
shall reasonably request, and Holdings and the Borrower hereby request such
counsel to deliver such opinions.
(b) All legal matters incident to this Agreement, the Borrowings and
extensions of credit hereunder and the other Loan Documents shall be
satisfactory to the Lenders, to the Issuing Bank and to the Administrative
Agent.
(c) The Administrative Agent shall have received (i) a copy of the
certificate or articles of incorporation, including all amendments thereto, of
each Loan Party, certified as of a recent date by the Secretary of State of the
state of its organization, and a certificate as to the good standing of each
Loan Party as of a recent date, from such Secretary of State; (ii) a certificate
of the Secretary or Assistant Secretary of each Loan Party dated the Closing
Date and certifying (A) that attached thereto is a true and complete copy of the
by-laws of such Loan Party as in effect on the Closing Date and at all times
since a date prior to the date of the resolutions described in clause (B) below,
(B) that attached thereto is a true and complete copy of resolutions duly
adopted by the Board of Directors of such Loan Party authorizing the execution,
delivery and performance of the Loan Documents to which such person is a party
and, in the case of the Borrower, the borrowings hereunder, and that such
resolutions have not been modified, rescinded or amended and are in full force
and effect, (C) that the certificate or articles of incorporation of such Loan
Party have not been amended since the date of the last amendment thereto shown
on the certificate of good standing furnished pursuant to clause (i) above, and
(D) as to the incumbency and specimen signature of each officer executing any
Loan Document or any other document delivered in connection herewith on behalf
of such Loan Party; (iii) a certificate of another officer as to the incumbency
and specimen signature of the Secretary or Assistant Secretary executing the
certificate pursuant to (ii) above; and (iv) such other documents as the
Lenders, the Issuing Bank or the Administrative Agent may reasonably request.
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56
(d) The Administrative Agent shall have received a certificate, dated
the Closing Date and signed by a Financial Officer of the Borrower, confirming
compliance with the conditions precedent set forth in paragraphs (b) and (c) of
Section 4.01.
(e) The Administrative Agent shall have received all Fees and other
amounts due and payable on or prior to the Closing Date, including, to the
extent invoiced, reimbursement or payment of all out-of-pocket expenses required
to be reimbursed or paid by the Borrower hereunder or under any other Loan
Document.
(f) The Pledge Agreement shall have been duly executed by the parties
thereto and delivered to the Collateral Agent and shall be in full force and
effect, and all the outstanding Equity Interests of the Borrower and the
Subsidiaries shall have been duly and validly pledged thereunder to the
Collateral Agent for the ratable benefit of the Secured Parties and certificates
representing such shares and interests, accompanied by instruments of transfer
and stock powers endorsed in blank, shall be in the actual possession of the
Collateral Agent; provided that to the extent to do so would cause adverse tax
consequences to the Borrower, (i) neither the Borrower nor any Domestic
Subsidiary shall be required to pledge more than 65% of the voting stock of any
Foreign Subsidiary and (ii) no Foreign Subsidiary shall be required to pledge
the capital stock of any of its Foreign Subsidiaries.
(g) The Security Agreement shall have been duly executed by the Loan
Parties party thereto and shall have been delivered to the Collateral Agent and
shall be in full force and effect on such date and each document (including each
Uniform Commercial Code financing statement) required by law or reasonably
requested by the Administrative Agent to be filed, registered or recorded in
order to create in favor of the Collateral Agent for the benefit of the Secured
Parties a valid, legal and perfected first-priority security interest in and
lien on the Collateral (subject to any Lien expressly permitted by Section 6.02)
described in such agreement shall have been delivered to the Collateral Agent.
(h) The Collateral Agent shall have received the results of a search of
the Uniform Commercial Code filings (or equivalent filings) made with respect to
the Loan Parties in the states (or other jurisdictions) in which the chief
executive office of each such person is located, any offices of such persons in
which records have been kept relating to accounts and the other jurisdictions in
which Uniform Commercial Code filings (or equivalent filings) are to be made
pursuant to the preceding paragraph, together with copies of the financing
statements (or similar documents) disclosed by such search, and accompanied by
evidence satisfactory to the Collateral Agent that the Liens indicated in any
such financing statement (or similar document) would be permitted under Section
6.02 or have been released.
(i) The Collateral Agent shall have received a Perfection Certificate
with respect to the Loan Parties dated the Closing Date and duly executed by a
Responsible Officer of the Borrower.
(j) (i) Each of the Security Documents, in form and substance
satisfactory to the Lenders, relating to each of the Mortgaged Properties shall
have been duly executed by the parties thereto and delivered to the Collateral
Agent and shall be in full force and effect, (ii) each of such Mortgaged
Properties shall not be subject to any Lien other than those permitted under
Section 6.02, (iii) each of such Security Documents shall have been filed and
recorded in the recording office as specified on Schedule 3.19(d) (or a lender's
title insurance policy, in form and substance acceptable to the Collateral
Agent, insuring such Security Document as a first lien on such Mortgaged
Property (subject
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57
to any Lien permitted by Section 6.02) shall have been received by the
Collateral Agent) and, in connection therewith, the Collateral Agent shall have
received evidence satisfactory to it of each such filing and recordation and
(iv) the Collateral Agent shall have received such other documents, including a
policy or policies of title insurance issued by a nationally recognized title
insurance company, together with such endorsements, coinsurance and reinsurance
as may be requested by the Collateral Agent and the Lenders, insuring the
Mortgages as valid first liens on the Mortgaged Properties, free of Liens other
than those permitted under Section 6.02, together with such surveys, abstracts,
appraisals and legal opinions required to be furnished pursuant to the terms of
the Mortgages or as reasonably requested by the Collateral Agent or the Lenders.
(k) Each of the Parent Guarantee Agreement, the Subsidiary Guarantee
Agreement and the Indemnity, Subrogation and Contribution Agreement shall have
been duly executed by the parties thereto, shall have been delivered to the
Collateral Agent and shall be in full force and effect.
(l) The Administrative Agent shall have received a copy of, or a
certificate as to coverage under, the insurance policies required by Section
5.02 and the applicable provisions of the Security Documents, each of which
shall be endorsed or otherwise amended to include a "standard" or "New York"
lender's loss payable endorsement and to name the Collateral Agent as additional
insured, in form and substance satisfactory to the Administrative Agent.
(m) The Transactions shall have been consummated or shall be
consummated simultaneously on the Closing Date, in each case in all material
respects in accordance with the terms hereof, the terms of the Transaction
Documents and applicable law (and without the waiver of any such terms not
approved by the Administrative Agent, the Syndication Agent and the
Documentation Agent (such approval not to be unreasonably withheld)), and all of
the representations and warranties set forth in the Loan Documents would be,
immediately after giving effect to the Transactions, true and correct in all
material respects.
(n) The Units shall be issued in the form required by the terms of the
Senior Subordinated Note Documents.
(o) There shall be no litigation or administrative proceedings,
governmental investigations or other legal or regulatory developments, actual or
threatened, that, singly or in the aggregate, could reasonably by expected to
result in a Material Adverse Effect, or could materially and adversely affect
the ability of Holdings and its subsidiaries to fully and timely perform its
obligations under the Transaction Documents, or the ability of the parties to
consummate the financings or the other Transactions contemplated hereby.
(p) The Lenders shall be reasonably satisfied as to the amount and
nature of any environmental and employee health and safety exposures to which
Holdings and its subsidiaries may be subject, and the plans of Holdings and its
subsidiaries with respect thereto.
(q) All requisite governmental authorities and third parties shall have
approved or consented to the Transactions and the other transactions
contemplated hereby and there shall be no governmental or judicial action,
actual or threatened, that has or would have, singly or in the aggregate, a
reasonable likelihood of restraining, preventing or imposing burdensome
conditions on the Transactions or the other transaction contemplated hereby.
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(r) After giving effect to the Transactions and the other transactions
contemplated hereby, neither Holdings nor any of its Subsidiaries shall have
outstanding any Indebtedness or preferred stock other than (i) the Loans and
extensions of credit hereunder, (ii) the Senior Subordinated Notes, (iii) the
Holdings Series A Preferred Stock, (iv) the Seller Subordinated Notes, (v) the
Holdings Subordinated Notes and (vi) Indebtedness listed on Schedule 6.01.
ARTICLE V
Affirmative Covenants
Each of Holdings and the Borrower covenants and agrees with each Lender
that so long as this Agreement shall remain in effect and until the Commitments
have been terminated and the principal of and interest on each Loan, all Fees
and all other expenses or amounts payable under any Loan Document shall have
been paid in full and all Letters of Credit have been canceled or have expired
and all amounts drawn thereunder have been reimbursed in full, unless the
Required Lenders shall otherwise consent in writing, each of Holdings and the
Borrower will, and will cause each of its Subsidiaries to:
SECTION 5.01. Existence; Businesses and Properties. (a) Do or cause to
be done all things necessary to preserve, renew and keep in full force and
effect its legal existence and to qualify the LLC Subsidiaries to do business in
every jurisdiction where such qualification is required, except as otherwise
expressly permitted under Section 6.05.
(b) Do or cause to be done all things necessary to obtain, preserve,
renew, extend and keep in full force and effect the rights, licenses, permits,
franchises, authorizations, patents, copyrights, trademarks and trade names
material to the conduct of its business; maintain and operate such business in
substantially the manner in which it is presently conducted and operated; comply
in all material respects with all applicable laws, rules, regulations (including
any zoning, building, Environmental Law, ordinance, code or approval or any
building permits or any restrictions of record or agreements affecting the
Mortgaged Properties) and decrees and orders of any Governmental Authority,
whether now in effect or hereafter enacted, except where the failure to comply
could not reasonably be expected to have a Material Adverse Effect; and at all
times maintain and preserve all property material to the conduct of such
business and keep such property in good repair, working order and condition and
from time to time make, or cause to be made, all needful and proper repairs,
renewals, additions, improvements and replacements thereto necessary in order
that the business carried on in connection therewith may be properly conducted
at all times provided, however, that nothing in this Section 5.01(b) shall
prevent (i) sales of assets, consolidations or mergers by or involving Holdings,
the Borrower or any of their respective Subsidiaries in accordance with Section
6.05, (ii) the withdrawal by Holdings, the Borrower or any of their respective
Subsidiaries of their qualification as a foreign corporation in any jurisdiction
where such withdrawal could not reasonably be expected to have a Material
Adverse Effect or (iii) the abandonment by Holdings, the Borrower or any of
their respective Subsidiaries of any rights, franchises, licenses and patents
that the Borrower reasonably determines are not useful to its business.
SECTION 5.02. Insurance. (a) Keep its insurable properties adequately
insured at all times by financially sound and reputable insurers; maintain such
other insurance, to such extent and against
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59
such risks, including fire and other risks insured against by extended coverage,
as is customary with companies in the same or similar businesses operating in
the same or similar locations, including public liability insurance against
claims for personal injury or death or property damage occurring upon, in, about
or in connection with the use of any properties owned, occupied or controlled by
it; and maintain such other insurance as may be required by law.
(b) Cause all such policies covering any Collateral to be endorsed or
otherwise amended to include a "standard" or "New York" lender's loss payable
endorsement, in form and substance satisfactory to the Administrative Agent and
the Collateral Agent, which endorsement shall provide that, from and after the
Closing Date, if the insurance carrier shall have received written notice from
the Administrative Agent or the Collateral Agent of the occurrence of an Event
of Default which is continuing, the insurance carrier shall pay all proceeds
otherwise payable to the Borrower or the Loan Parties under such policies
directly to the Collateral Agent; cause all such policies to provide that
neither the Borrower, the Administrative Agent, the Collateral Agent nor any
other party shall be a coinsurer thereunder and to contain a "Replacement Cost
Endorsement", without any deduction for depreciation, and such other provisions
as the Administrative Agent or the Collateral Agent may reasonably require from
time to time to protect their interests; deliver original or certified copies of
all such policies to the Collateral Agent; cause each such policy to provide
that it shall not be canceled, modified or not renewed (i) by reason of
nonpayment of premium upon not less than 10 days' prior written notice thereof
by the insurer to the Administrative Agent and the Collateral Agent (giving the
Administrative Agent and the Collateral Agent the right to cure defaults in the
payment of premiums) or (ii) for any other reason upon not less than 30 days'
prior written notice thereof by the insurer to the Administrative Agent and the
Collateral Agent; deliver to the Administrative Agent and the Collateral Agent,
prior to the cancellation, material modification or nonrenewal of any such
policy of insurance, a copy of a renewal or replacement policy (or other
evidence of renewal of a policy previously delivered to the Administrative Agent
and the Collateral Agent) together with evidence satisfactory to the
Administrative Agent and the Collateral Agent of payment of the premium
therefor.
(c) If at any time the area in which the Premises (as defined in the
Mortgages) are located is designated (i) a "flood hazard area" in any Flood
Insurance Rate Map published by the Federal Emergency Management Agency (or any
successor agency), obtain flood insurance in such total amount as the
Administrative Agent, the Collateral Agent or the Required Lenders may from time
to time require, and otherwise comply with the National Flood Insurance Program
as set forth in the Flood Disaster Protection Act of 1973, as it may be amended
from time to time, or (ii) a "Zone" 1 area, obtain earthquake insurance in such
total amount as the Administrative Agent, the Collateral Agent or the Required
Lenders may from time to time require.
(d) With respect to any Mortgaged Property, carry and maintain
comprehensive general liability insurance including the "broad form CGL
endorsement" and coverage on an occurrence basis against claims made for
personal injury (including bodily injury, death and property damage) and
comprehensive umbrella liability insurance, in no event for a combined single
limit of less than $25,000,000, naming the Collateral Agent as an additional
insured, on forms satisfactory to the Collateral Agent.
(e) Notify the Administrative Agent and the Collateral Agent
immediately whenever any separate insurance concurrent in form or contributing
in the event of loss with that required to be
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maintained under this Section 5.02 is taken out by the Borrower; and promptly
deliver to the Administrative Agent and the Collateral Agent a duplicate
original copy of such policy or policies.
SECTION 5.03. Obligations and Taxes. Pay its Indebtedness and other
obligations promptly and in accordance with their terms and pay and discharge
promptly when due all Taxes, assessments and governmental charges or levies
imposed upon it or upon its income or profits or in respect of its property,
before the same shall become delinquent or in default, as well as all lawful
claims for labor, materials and supplies or otherwise that, if unpaid, might
give rise to a Lien upon such properties or any part thereof; provided, however,
that such payment and discharge shall not be required with respect to any such
Tax, assessment, charge, levy or claim so long as the validity or amount thereof
shall be contested in good faith by appropriate proceedings and the Borrower
shall have set aside on its books adequate reserves with respect thereto in
accordance with GAAP and such contest operates to suspend collection of the
contested obligation, tax, assessment or charge and enforcement of a Lien and,
in the case of a Mortgaged Property, there is no risk of forfeiture of such
property.
SECTION 5.04. Financial Statements, Reports, etc. In the case of
Holdings and the Borrower, furnish to the Administrative Agent and each Lender:
(a) within 90 days after the end of each fiscal year, its
consolidated and consolidating balance sheet and related statements of
income and cash flows showing the financial condition of each of
Holdings and the Borrower and their respective consolidated
Subsidiaries as of the close of such fiscal year and the results of its
operations and the operations of such Subsidiaries during such year,
all audited by Ernst & Young LLP or other independent public
accountants of recognized national standing and accompanied by an
opinion of such accountants (which shall not be qualified in any
material respect) to the effect that such consolidated financial
statements fairly present the financial condition and results of
operations of each of Holdings and the Borrower and their respective
consolidated Subsidiaries on a consolidated basis in accordance with
GAAP consistently applied;
(b) within 45 days after the end of each of the first three
fiscal quarters of each fiscal year, its consolidated and consolidating
balance sheet and related statements of income and cash flows showing
the financial condition of each of Holdings and the Borrower and their
respective consolidated Subsidiaries as of the close of such fiscal
quarter and the results of its operations and the operations of such
Subsidiaries during such fiscal quarter and the then elapsed portion of
the fiscal year, all certified by one of its Financial Officers as
fairly presenting the financial condition and results of operations of
each of Holdings and the Borrower and their respective consolidated
Subsidiaries on a consolidated basis in accordance with GAAP
consistently applied, subject to normal year-end audit adjustments;
(c) within 30 days after the end of the first two fiscal
months of each fiscal quarter, its consolidated balance sheet and
related statements of income and cash flows showing the financial
condition of Holdings and its consolidated Subsidiaries (which
statements shall contain a footnote providing the total consolidated
interest expense of the Borrower and its consolidated Subsidiaries)
during such fiscal month and the then elapsed portion of the fiscal
year, all certified by one of its Financial Officers as fairly
presenting the financial condition and results of operations of each of
Holdings and the Borrower and their respective
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consolidated Subsidiaries on a consolidated basis in accordance with
GAAP consistently applied, subject to normal year-end audit
adjustments;
(d) (i) concurrently with any delivery of financial statements
under sub-paragraph (a), (b) or (c) above, a certificate of a Financial
Officer opining on or certifying such statements certifying that no
Event of Default or Default has occurred or, if such an Event of
Default or Default has occurred, specifying the nature and extent
thereof and any corrective action taken or proposed to be taken with
respect thereto, (ii) concurrently with any delivery of financial
statements under sub-paragraph (a) or (b) above, a certificate of a
Financial Officer opining on or certifying such statements setting
forth computations in reasonable detail satisfactory to the
Administrative Agent demonstrating compliance with the covenants
contained in Sections 6.08, 6.09, 6.10 and 6.11 and, in the case of
paragraph (a) above, setting forth Holdings' calculation of Excess Cash
Flow and (iii) in the case of paragraph (a) above, a report of the
accounting firm opining on or certifying such financial statements
stating that in the course of its regular audit of the financial
statements of Holdings, the Borrower and their respective Subsidiaries,
which audit was conducted in accordance with GAAP, such accounting firm
obtained no knowledge that any Event of Default or Default has occurred
or, if in the opinion of such accounting firm such an Event of Default
or Default has occurred, specifying the nature and extent thereof;
(e) promptly after the same become publicly available, copies
of all periodic and other reports, proxy statements and other materials
filed by Holdings or any Subsidiary with the Securities and Exchange
Commission, or any Governmental Authority succeeding to any or all of
the functions of said Commission, or with any national securities
exchange, or distributed to holders of its Indebtedness pursuant to the
terms of the documentation governing such Indebtedness (or any trustee,
agent or other representative therefor), as the case may be;
(f) promptly after the receipt thereof by Holdings, the
Borrower or any of their respective Subsidiaries, a copy of any
"management letter" received by any such person from its certified
public accountants and the management's responses thereto;
(g) no later than 30 days following the first day of each
fiscal year of Holdings, a budget in form reasonably satisfactory to
the Administrative Agent (including budgeted statements of income by
each of the Borrower's business units and sources and uses of cash and
balance sheets) prepared by Holdings for (i) each of the four quarters
of such fiscal year prepared in detail and (ii) each of the five years
immediately following such fiscal year prepared in summary form, in
each case, of Holdings and its Subsidiaries, accompanied by the
statement of a Financial Officer of Holdings to the effect that the
budget is a reasonable estimate for the period covered thereby.
(h) promptly, from time to time, such other information
regarding the operations, business affairs and financial condition of
Holdings, the Borrower or any Subsidiary, or compliance with the terms
of any Loan Document, as the Administrative Agent or any Lender may
reasonably request.
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SECTION 5.05. Litigation and Other Notices. Furnish to the
Administrative Agent, the Issuing Bank and each Lender prompt written notice of
the following:
(a) any Event of Default or Default, specifying the nature and
extent thereof and the corrective action (if any) taken or proposed to
be taken with respect thereto;
(b) the filing or commencement of, or any threat or notice of
intention of any person to file or commence, any action, suit or
proceeding, whether at law or in equity or by or before any
Governmental Authority, against the Borrower or any Affiliate thereof
that could reasonably be expected to result in a Material Adverse
Effect; and
(c) any development that has resulted in, or could reasonably
be expected to result in, a Material Adverse Effect.
SECTION 5.06. Employee Benefits. (a) Comply in all material respects
with the applicable provisions of ERISA and the Code and (b) furnish to the
Administrative Agent (i) as soon as possible after, and in any event within 10
days after any Responsible Officer of Holdings or any ERISA Affiliate knows or
has reason to know that, any ERISA Event has occurred that, alone or together
with any other ERISA Event could reasonably be expected to result in liability
of Holdings in an aggregate amount exceeding $500,000, a statement of a
Financial Officer of Holdings setting forth details as to such ERISA Event and
the action, if any, that Holdings proposes to take with respect thereto.
SECTION 5.07. Maintaining Records; Access to Properties and
Inspections. Keep proper books of record and account in which full, true and
correct entries in conformity with GAAP and all requirements of law are made of
all dealings and transactions in relation to its business and activities. Each
Loan Party will, and will cause each of its Subsidiaries to, permit any
representatives designated by the Administrative Agent or any Lender to visit
and inspect the financial records and the properties of Holdings, the Borrower
or any Subsidiary at reasonable times and as often as reasonably requested and
to make extracts from and copies of such financial records, and permit any
representatives designated by the Administrative Agent or any Lender to discuss
the affairs, finances and condition of Holdings, the Borrower or any Subsidiary
with the officers thereof and independent accountants therefor.
SECTION 5.08. Use of Proceeds. Use the proceeds of the Loans and
request the issuance of Letters of Credit only for the purposes set forth in the
preamble to this Agreement.
SECTION 5.09. Compliance with Environmental Laws. Comply, and cause all
lessees and other persons occupying its Properties to comply, in all material
respects with all Environmental Laws and Environmental Permits applicable to its
operations and Properties; obtain and renew all material Environmental Permits
necessary for its operations and Properties; and conduct any Remedial Action in
accordance with Environmental Laws; provided, however, that none of Holdings,
the Borrower or any of the Subsidiaries shall be required to undertake any
Remedial Action required by Environmental Laws to the extent that its obligation
to do so is being contested in good faith and by proper proceedings and
appropriate reserves are being maintained with respect to such circumstances in
accordance with GAAP.
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SECTION 5.10. Preparation of Environmental Reports. If a Default caused
by reason of a breach of Section 3.17 or 5.09 shall have occurred and be
continuing for more than 20 days without the Borrower or its Subsidiaries
commencing activities reasonably likely to cure such Default, at the written
request of the Required Lenders through the Administrative Agent, provide to the
Lenders within 45 days after such request, at the expense of the Borrower, an
environmental site assessment report regarding the matters which are the subject
of such Default prepared by an environmental consulting firm reasonably
acceptable to the Administrative Agent and indicating the presence or absence of
Hazardous Materials and the estimated cost of any compliance or Remedial Action
in connection with such Default.
SECTION 5.11. Further Assurances. Execute any and all further
documents, financing statements, agreements and instruments, and take all
further action (including filing Uniform Commercial Code and other financing
statements, mortgages and deeds of trust) that may be required under applicable
law, or that the Required Lenders, the Administrative Agent or the Collateral
Agent may reasonably request, in order to effectuate the transactions
contemplated by the Loan Documents and in order to grant, preserve, protect and
perfect the validity and first priority of the security interests created or
intended to be created by the Security Documents. Within 10 days after the
Closing Date, Holdings will make the request to Harris described in Section 5 of
the Patent Assignment and Services Agreement dated as of August 13, 1999, among
Harris, Harris Semiconductor Patents, Inc. and Holdings, with respect to the
transfer of patents by Harris to Intersil. Holdings will cause any subsequently
acquired or organized Domestic Subsidiary promptly to execute a Subsidiary
Guarantee Agreement, Indemnity Subrogation and Contribution Agreement and each
applicable Security Document in favor of the Collateral Agent. In addition, from
time to time, the Borrower will, at its cost and expense, promptly secure the
Obligations by pledging or creating, or causing to be pledged or created,
perfected security interests with respect to such of its assets and properties
as the Administrative Agent or the Required Lenders shall designate (it being
understood that it is the intent of the parties that the Obligations shall be
secured by, among other things, substantially all the assets of the Loan Parties
(including real and other properties acquired subsequent to the Closing Date)).
Such security interests and Liens will be created under the Security Documents
and other security agreements, mortgages, deeds of trust and other instruments
and documents in form and substance satisfactory to the Collateral Agent, and
Holdings or the Borrower shall deliver or cause to be delivered to the Lenders
all such instruments and documents (including legal opinions, title insurance
policies and lien searches) as the Collateral Agent shall reasonably request to
evidence compliance with this Section. The Borrower agrees to provide such
evidence as the Collateral Agent shall reasonably request as to the perfection
and priority status of each such security interest and Lien.
SECTION 5.12. Interest Rate Protection. No later than the 90th day
after the Closing Date, the Borrower shall enter into, and for a minimum of two
years thereafter maintain, Interest Rate Protection Agreements acceptable to the
Administrative Agent that results in at least 50% of the aggregate principal
amount of the Borrower's Consolidated Indebtedness being effectively subject to
a fixed or maximum interest rate acceptable to the Administrative Agent.
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ARTICLE VI
Negative Covenants
Each of Holdings and the Borrower covenants and agrees with each Lender
that, so long as this Agreement shall remain in effect and until the Commitments
have been terminated and the principal of and interest on each Loan, all Fees
and all other expenses or amounts payable under any Loan Document have been paid
in full and all Letters of Credit have been cancelled or have expired and all
amounts drawn thereunder have been reimbursed in full, unless the Required
Lenders shall otherwise consent in writing, neither Holdings nor the Borrower
will, nor will they cause or permit any of their respective Subsidiaries to:
SECTION 6.01. Indebtedness. Incur, create, assume or permit to exist
any Indebtedness, except:
(a) Indebtedness incurred pursuant to this Agreement and the
other Loan Documents;
(b) Indebtedness of the Borrower and the senior subordinated
guarantee thereof by its Domestic Subsidiaries and Holdings pursuant to
the Senior Subordinated Notes in an aggregate principal amount not to
exceed $200,000,000 less the aggregate amount of all repayments of
Senior Subordinated Notes effected after the Closing Date;
(c) the Pennsylvania Loans (whether in the form of direct
obligations of Harris Semiconductor (Pennsylvania), LLC on the Closing
Date or assumed or borrowed thereafter from Harris pursuant to the
Master Transaction Agreement) and other Indebtedness actually
outstanding on the Closing Date and listed on Schedule 6.01, and
refinancings or renewals thereof; provided that (i) any such
refinancing Indebtedness is in an aggregate principal amount not
greater than the aggregate principal amount of the Indebtedness being
renewed or refinanced, plus the amount of any premiums required to be
paid thereon and fees and expenses associated therewith, (ii) such
refinancing Indebtedness has a later or equal final maturity and longer
or equal weighted average life than the Indebtedness being renewed or
refinanced and (iii) the covenants, events of default subordination and
other provisions thereof (including any guarantees thereof) shall be,
in the aggregate, no less favorable to the Lenders than those contained
in the Indebtedness being renewed or refinanced;
(d) Indebtedness under Interest Rate Protection Agreements
entered into in compliance with Section 5.12, and such other
non-speculative Interest Rate Protection Agreements which may be
entered into from time to time by the Borrower and which the Borrower
in good faith believes will provide protection against fluctuations in
interest rates with respect to floating rate Indebtedness then
outstanding, and permitted to remain outstanding, pursuant to the other
provisions of this Section 6.01;
(e) Indebtedness evidenced by Capital Lease Obligations to the
extent permitted pursuant to Section 6.08; provided that in no event
shall the aggregate principal amount of Capital Lease Obligations
permitted by this paragraph (e) exceed $15,000,000 at any time
outstanding;
(f) Indebtedness subject to Liens permitted under Section
6.02(f), so long as the outstanding amount of such Indebtedness does
not exceed the amount provided in said Section 6.02(f);
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65
(g) intercompany Indebtedness of the Borrower and its
Subsidiaries outstanding to the extent permitted by Section 6.04(f) and
(i);
(h) in addition to any Indebtedness permitted by the preceding
paragraph (g), Indebtedness of any Wholly Owned Subsidiary to the
Borrower or another Wholly Owned Subsidiary constituting the purchase
price in respect of intercompany transfers of goods and services made
in the ordinary course of business to the extent not constituting
Indebtedness for borrowed money;
(i) Indebtedness under performance bonds, letter of credit
obligations to provide security for worker's compensation claims and
bank overdrafts, in each case incurred in the ordinary course of
business; provided that any obligations arising in connection with such
bank overdraft Indebtedness is extinguished within five Business Days;
(j) Indebtedness evidenced by Other Hedging Agreements entered
into pursuant to Section 6.04(e);
(k) Indebtedness of Foreign Subsidiaries so long as the
aggregate principal amount of all Indebtedness (including letters of
credit) incurred pursuant to this paragraph (k) at any time outstanding
does not exceed $15,000,000, with no more than $10,000,000 of the
Indebtedness permitted pursuant to this paragraph (k) directly or
indirectly guaranteed by Holdings, the Borrower, or any Domestic
Subsidiaries of Holdings or the Borrower;
(l) Indebtedness of Holdings constituting junior subordinated
debentures issued in exchange for the Holdings Series A Preferred Stock
pursuant to the terms of such Holdings Series A Preferred Stock
("Holdings Junior Subordinated Debentures"), so long as (i) the
Leverage Ratio for purposes of determining the Applicable Percentage
shall be in Category 6 both before and after giving effect to the
incurrence of such Indebtedness, (ii) such Indebtedness shall in no
event be incurred to exchange in the aggregate more than 50% of the
Holdings Series A Preferred Stock issued on or prior to the Closing
Date and (iii) the Holdings Junior Subordinated Debentures shall be in
the form provided in the certificate of incorporation of Holdings as in
effect on the Closing Date;
(m) Indebtedness of Holdings pursuant to the Seller
Subordinated Notes and the Holdings Subordinated Notes;
(n) Indebtedness consisting of (i) industrial revenue or
industrial development bonds or similar obligations or (ii) Capital
Lease Obligations, in each case of any Subsidiary that exists at the
time such person becomes a Subsidiary and that was not incurred in
contemplation of or in connection with the acquisition by the Borrower
or a Subsidiary of such person;
(o) Indebtedness of any Subsidiary that exists at the time
such person becomes a Subsidiary and that was not incurred in
contemplation of or in connection with the acquisition by the Borrower
or the Subsidiary of such person in an aggregate principal amount not
to exceed $25,000,000 at any time outstanding; and
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(p) additional Indebtedness of the Borrower and its
Subsidiaries to the extent not permitted by the foregoing clauses of
this Section 6.01 not to exceed $20,000,000 in aggregate principal
amount at any time outstanding.
SECTION 6.02. Liens. Create, incur, assume or permit to exist any Lien
on any property or assets (including stock or other securities of any person,
including any Subsidiary) now owned or hereafter acquired by it or on any income
or revenues or rights in respect of any thereof, except:
(a) inchoate Liens for taxes, assessments or governmental
charges or levies not yet due and payable or Liens for taxes,
assessments or governmental charges or levies being contested in good
faith and by appropriate proceedings for which adequate reserves have
been established in accordance with GAAP in the United States (or the
equivalent thereof in any country in which a Foreign Subsidiary is
doing business, as applicable);
(b) Liens in respect of property or assets of the Borrower or
any of its Subsidiaries imposed by law, which were incurred in the
ordinary course of business and do not secure Indebtedness for borrowed
money, such as carriers', warehousemen's, materialmen's, landlord's and
mechanics' liens and other similar Liens arising in the ordinary course
of business, and (i) which do not in the aggregate materially detract
from the value of the property or assets of Holdings and its
Subsidiaries, taken as a whole, or the Borrower and do not materially
impair the use thereof in the operation of the business of Holdings and
its Subsidiaries, taken as a whole, or the Borrower, or (ii) which are
being contested in good faith by appropriate proceedings, which
proceedings (or orders entered in connection with such proceedings)
have the effect of preventing the forfeiture or sale of the property or
assets subject to any such Lien;
(c) Liens and other matters in existence on the Closing Date
and set forth on Schedule 6.02 (including Liens and other matters set
out on any applicable title insurance policy on the Closing Date);
provided that (i) the aggregate principal amount of the Indebtedness,
if any, secured by such Liens does not increase and (ii) such Liens do
not encumber any additional assets or properties of Holdings or any of
its Subsidiaries;
(d) Liens created pursuant to the Security Documents;
(e) Liens upon assets of the Borrower and its Subsidiaries
subject to Capital Lease Obligations to the extent permitted by Section
6.01; provided that (i) such Liens only serve to secure the payment of
Indebtedness arising under such Capital Lease Obligation and (ii) the
Lien encumbering the asset giving rise to the Capital Lease Obligation
does not encumber any other asset (other than proceeds thereof) of the
Borrower or any Subsidiary of the Borrower;
(f) Liens placed upon assets used in the ordinary course of
business of the Borrower or any of its Subsidiaries at the time of
acquisition thereof by the Borrower or any such Subsidiary or within 90
days thereafter to secure Indebtedness incurred to pay all or a portion
of the purchase price thereof; provided that (i) the aggregate
outstanding principal amount of all Indebtedness secured by Liens
permitted by this paragraph (f) shall not at any time exceed
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67
$15,000,000 and (ii) in all events, the Lien encumbering the assets so
acquired does not encumber any other asset (other than proceeds
thereof) of the Borrower or such Subsidiary;
(g) easements, rights-of-way, restrictions (including zoning
restrictions), covenants encroachments, protrusions and other similar
charges or encumbrances, and minor title deficiencies, in each case
whether now or hereafter in existence, not securing Indebtedness and
not materially interfering with the conduct of the business of Holdings
and its Subsidiaries taken as a whole or the Borrower;
(h) Liens arising out of judgments or awards in respect of
which the Borrower or any of its Subsidiaries shall in good faith be
prosecuting an appeal or proceedings for review in respect of which
there shall be secured a subsisting stay of execution pending such
appeal or proceedings; provided that the aggregate amount of all such
judgments or awards (and any cash and the fair market value of any
property subject to such Liens) does not exceed $3,000,000 at any time
outstanding;
(i) Liens (other than any Lien imposed by ERISA) (i) incurred
or deposits made in the ordinary course of business in connection with
workers' compensation, unemployment insurance and other types of social
security, (ii) to secure the performance of tenders, statutory
obligations (other than excise taxes), surety, stay, customs and appeal
bonds, statutory bonds, bids, leases, government contracts, trade
contracts, performance and return of money bonds and other similar
obligations (exclusive of obligations for the payment of borrowed
money) or (iii) arising by virtue of deposits made in the ordinary
course of business to secure liability for premiums to insurance
carriers; provided that the aggregate amount of deposits at any time
pursuant to clause (ii) and clause (iii) shall not exceed $1,000,000 in
the aggregate;
(j) any interest or title of a lessor, sublessor, licensee or
licensor under any lease or license agreement permitted by this
Agreement and any interest of any mortgagee or other person claiming
under any such lessor, sublessor, licensor or licensee;
(k) Liens in favor of customs and revenue authorities arising
as a matter of law to secure the payment of customs duties in
connection with the importation of goods;
(l) Liens arising out of conditional sale, title retention,
consignment or similar arrangements for the sale of goods entered into
by the Borrower or any of its Subsidiaries in the ordinary course of
business in accordance with the past practices of the Borrower and its
Subsidiaries;
(m) Liens on assets of Foreign Subsidiaries; provided that (i)
such Liens do not extend to, or encumber, assets which constitute
Collateral or the Equity Interests of the Borrower or any of its
Subsidiaries, and (ii) such Liens extending to the assets of any
Foreign Subsidiary secure only Indebtedness incurred by such Foreign
Subsidiary pursuant to Section 6.01(k);
(n) Liens securing Indebtedness permitted by Section 6.01(n);
provided that (i) such Liens were not created in contemplation of or in
connection with the related acquisition and
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(ii) such Liens do not apply to any property or assets of the Borrower
or any Subsidiary other than the assets subject thereto prior to the
related acquisition; and
(o) Liens not otherwise permitted by the foregoing paragraphs
(a) through (n) to the extent attaching to properties and assets with
an aggregate fair value not in excess of, and securing liabilities not
in excess of, $6,000,000 in the aggregate at any time outstanding.
SECTION 6.03. Sale and Lease-Back Transactions. Enter into any
arrangement, directly or indirectly, with any person whereby it shall sell or
transfer any property, real or personal, used or useful in its business, whether
now owned or hereafter acquired, and thereafter rent or lease such property or
other property which it intends to use for substantially the same purpose or
purposes as the property being sold or transferred unless (i) the sale of such
property is permitted by Section 6.05 and (ii) any Liens arising in connection
with its use of such property are permitted by Section 6.02(e).
SECTION 6.04. Investments, Loans and Advances. Directly or indirectly,
lend money or credit or make advances to any person, or purchase or acquire any
stock, obligations or securities of, or any other interest in, or make any
capital contribution to, any other person, or purchase or own a futures contract
or otherwise become liable for the purchase or sale of currency or other
commodities at a future date in the nature of a futures contract, except that
the following shall be permitted:
(a) the Borrower and its Subsidiaries may acquire and hold
accounts receivables owing to any of them;
(b) the Borrower and its Subsidiaries may make loans and
advances in the ordinary course of business to their respective
employees so long as the aggregate principal amount thereof at any time
outstanding (determined without regard to any write-downs or write-offs
of such loans and advances) shall not exceed $5,000,000;
(c) the Borrower may enter into Interest Rate Protection
Agreements to the extent permitted in Section 6.01(d);
(d) Holdings, the Borrower and the Subsidiaries may consummate
the Transactions;
(e) the Borrower may enter into and perform its obligations
under Other Hedging Agreements entered into in the ordinary course of
business and so long as any such Other Hedging Agreement is not
speculative in nature and is (i) related to income derived from foreign
operations of the Borrower or any Subsidiary or otherwise related to
purchases permitted hereunder from foreign suppliers or (ii) entered
into to protect the Borrower and/or its Subsidiaries against
fluctuations in the prices of raw materials used in their businesses;
(f) any Wholly Owned Subsidiary may make intercompany loans to
the Borrower or any Wholly Owned Subsidiary and the Borrower may make
intercompany loans and advances to any Wholly Owned Subsidiary;
provided that any promissory notes evidencing such intercompany loans
shall be pledged (and delivered) by the Borrower or the respective
Domestic Wholly Owned Subsidiary that is the lender of such
intercompany loan as Collateral pursuant to the Pledge Agreement,
provided further that (i) neither the Borrower nor any
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69
Domestic Subsidiaries of the Borrower may make loans to any Foreign
Subsidiaries of the Borrower pursuant to this paragraph (f) and (ii)
any loans made by any Foreign Subsidiaries to the Borrower or any of
its Domestic Subsidiaries pursuant to this paragraph (f) shall be
subordinated to the obligations of the Loan Parties pursuant to
subordinated provisions in substantially the form of Exhibit K;
(g) Holdings, the Borrower and its Subsidiaries may hold the
investments in their respective Subsidiaries existing on the Closing
Date and may make additional investments in Wholly Owned Domestic
Subsidiaries following the Closing Date;
(h) the Borrower and its Subsidiaries may make (i) loans and
advances to Foreign Subsidiaries, (ii) an equity investment in Intersil
(Cayman) Corporation and in Intersil Advanced Technology (Labuan) Ltd.
in an aggregate amount not to exceed $94,275,000 (or such adjusted
amount as may finally be determined by the parties to the Master
Transaction Agreement as being the purchase price for the acquisition
of Harris Advanced Technology (Malaysia) Sdn Bhd) and (iii) an equity
investment in the Additional Subsidiaries in an aggregate amount not to
exceed $2,000,000, on or about the Closing Date and/or the date of any
Deferred Closing (as defined in the Master Transaction Agreement) for
the sole purpose of financing the acquisition by such Foreign
Subsidiaries, Intersil (Cayman) Corporation or the Additional
Subsidiaries, as the case may be, of assets comprising a portion of the
Business; provided that all such loans or advances made by the Borrower
or a Domestic Subsidiary, and any loans or advances made by Intersil
(Cayman) Corporation to Intersil Advanced Technology (Labuan) Ltd.
(each a "Cayman Loan"), shall be evidenced by a senior intercompany
note pledged to the Collateral Agent for the benefit of the Secured
Parties pursuant to the Pledge Agreement;
(i) if the Borrower receives a distribution from Intersil
(Cayman) Corporation of all or a portion of a Cayman Loan, the Borrower
shall be permitted to make an investment of such Cayman Loan in
Intersil Advanced Technology (Labuan) Ltd. (or any Foreign Subsidiary
then owning all or substantially all the Equity Interests of Intersil
Advanced Technology (Labuan) Ltd.; provided, however, that such
investment may only be made if (i) it would have the effect of
optimizing the consolidated income tax treatment associated with
Holdings and its Subsidiaries and (ii) no Default or Event of Default
shall have occurred or be continuing;
(j) the Borrower and its Subsidiaries may sell or transfer
amounts to the extent permitted by Section 6.05;
(k) the Borrower may establish Subsidiaries to the extent
permitted by Section 6.15;
(l) the Borrower and its Domestic Wholly Owned Subsidiaries
may make loans and advances to, or other investments in, Foreign
Subsidiaries of the Borrower so long as the aggregate amount of any
loans, advances or other investments at any time outstanding
(determined without regard to any write-downs or write-offs thereof)
pursuant to this paragraph (l) shall not exceed $25,000,000;
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(m) Holdings, the Borrower and the Subsidiaries may make
investments in Cash Equivalents;
(n) the Borrower and the Subsidiaries may hold investments
consisting of noncash consideration received in connection with any
sale of assets permitted by Section 6.05;
(o) the Borrower or any Wholly Owned Subsidiary may make
Permitted Acquisitions;
(p) the Borrower and the Subsidiaries may contribute the
Malaysian Business, or all or part of the proceeds of the sale thereof,
to the Malaysian Joint Venture in exchange for an interest therein;
(q) in addition to investments permitted by clauses (a)
through (p) above, the Borrower and its Subsidiaries may make
investments in Joint Ventures so long as the aggregate amount invested
pursuant to this paragraph (q) does not exceed $25,000,000 in the
aggregate; and
(r) in addition to the investments permitted by clauses (a)
through (q) above, the Borrower and its Subsidiaries may make other
investments, loans and advances (other than investments in and loans
and advances to Foreign Subsidiaries) in an aggregate amount (valued at
cost or outstanding principal amount, as the case may be) not greater
than $20,000,000 at any time outstanding.
SECTION 6.05. Mergers, Consolidations, Sales of Assets and
Acquisitions. Wind up, liquidate or dissolve its affairs or enter into any
transaction of merger or consolidation, or convey, sell, lease or otherwise
dispose of (or agree to do any of the foregoing at any future time) all or any
part of its property or assets as part of an Asset Sale, or purchase or
otherwise acquire (in one or a series of related transactions) any part of the
property or assets (other than purchases or other acquisitions of inventory,
materials, equipment and intangible assets in the ordinary course of business)
of any person (or agree to do any of the foregoing at any future time), except
that:
(a) Capital Expenditures by the Borrower and its Subsidiaries
shall be permitted to the extent not in violation of Section 6.08;
(b) each of the Borrower and its Subsidiaries may, subject to
Section 2.13(b), make any Asset Sale so long as (i) the Borrower or its
Subsidiaries receive consideration at the time of such Asset Sale at
least equal to the fair market value (as determined in good faith by
the Board of Directors of the Borrower or such Subsidiary) of the
assets sold, (ii) at least 75% of the consideration received by the
Borrower and the Subsidiaries in respect thereof is in the form of cash
or Cash Equivalents and (iii) the aggregate consideration received in
respect of all Asset Sales pursuant to this paragraph (b) shall not
exceed $10,000,000 in any four consecutive fiscal quarters of the
Borrower;
(c) investments and Permitted Acquisitions may be made to the
extent permitted by Section 6.04;
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(d) each of the Borrower and its Subsidiaries may lease (as
lessee) real or personal property in the ordinary course of business
(so long as any such lease does not create a Capital Lease Obligation
except to the extent permitted by Section 6.01);
(e) the Borrower and its Subsidiaries may sell or discount, in
each case without recourse and in the ordinary course of business,
overdue accounts receivable arising in the ordinary course of business,
but only in connection with the compromise or collection thereof
consistent with customary industry practice (and not as part of any
bulk sale);
(f) licenses, cross-licenses or sublicenses by the Borrower
and its Subsidiaries of software, trademarks and other intellectual
property in the ordinary course of business and which do not materially
interfere with the business of Holdings and its Subsidiaries, taken as
a whole, shall be permitted;
(g) the Acquisition shall be permitted;
(h) the Borrower or any Domestic Wholly Owned Subsidiary of
the Borrower may transfer assets or lease to or acquire or lease assets
from the Borrower or any other Domestic Wholly Owned Subsidiary or any
Domestic Wholly Owned Subsidiary may be merged into the Borrower (as
long as the Borrower is the surviving corporation of such merger as a
Wholly Owned Subsidiary of) or any other Domestic Wholly Owned
Subsidiary of the Borrower; and
(i) the grant of the option described in Schedule 6.05(h)
shall be permitted; provided that the sale contemplated thereby shall
not be permitted without the prior written consent of the Required
Lenders.
To the extent the Required Lenders waive the provisions of this Section 6.05
with respect to the sale of any Collateral, or any Collateral is sold as
permitted by this Section 6.05, such Collateral (unless sold to Holdings or a
Subsidiary of Holdings) shall be sold free and clear of the Liens created by the
Security Documents, and the Administrative Agent and Collateral Agent shall be
authorized to take any actions deemed appropriate in order to effect the
foregoing.
SECTION 6.06. Dividends. Authorize, declare or pay any Dividends with
respect to Holdings or any of its Subsidiaries, except that:
(a) any Subsidiary of the Borrower (i) may pay cash Dividends
to the Borrower or any Wholly Owned Subsidiary of the Borrower and (ii)
if such Subsidiary is not a Wholly Owned Subsidiary, may pay cash
Dividends to its shareholders generally so long as the Borrower or its
respective Subsidiary which owns the equity interest or interests in
the Subsidiary paying such Dividends receives at least its
proportionate share thereof (based upon its relative holdings of equity
interests in the Subsidiary paying such Dividends and taking into
account the relative preferences, if any, of the various classes of
equity interests in such Subsidiary);
(b) so long as there shall exist no Default or Event of
Default (both before and after giving effect to the payment thereof),
Holdings may repurchase outstanding shares of its
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common stock (or options to purchase such common stock) following the
death, disability, retirement or termination of employment of
employees, officers or directors of Holdings or any of its
Subsidiaries; provided that (i) all amounts used to effect such
repurchases are obtained by Holdings from a substantially concurrent
issuance of its common stock (or options to purchase such common stock)
to other employees, members of management, executive officers or
directors of Holdings or any of its Subsidiaries or (ii) to the extent
the proceeds used to effect any repurchase pursuant to this clause (ii)
are not obtained as described in preceding clause (i), the aggregate
amount of Dividends paid by Holdings pursuant to this paragraph (b)
(exclusive of amounts paid as described pursuant to preceding clause
(i)) shall not exceed $5,000,000 in any fiscal year of Holdings;
provided that, in the event that the maximum amount which is permitted
to be expended in respect of Dividends during any fiscal year pursuant
to this clause (b)(ii) is not fully expended during such fiscal year,
the maximum amount which may be expended during the immediately
succeeding fiscal year pursuant to this clause (b) (ii) shall be
increased by such unutilized amount;
(c) the Borrower may pay cash Dividends to Holdings for the
purpose of paying, so long as all proceeds thereof are promptly used by
Holdings to pay, its operating expenses incurred in the ordinary course
of business and other corporate overhead costs and expenses (including,
without limitation, legal and accounting expenses and similar
expenses); provided that the aggregate amount of Dividends paid by
Holdings pursuant to this clause (c) shall not exceed $500,000 in any
fiscal year of Holdings;
(d) the Borrower may pay cash Dividends to Holdings pursuant
to a Tax Sharing Agreement for the purpose of paying, so long as all
proceeds thereof are promptly used by Holdings to pay, franchise taxes
and Federal, state and local income taxes and interest and penalties
with respect thereto, if any, payable by Holdings; provided, however,
that the amount of any such payment shall not exceed the amount of
taxes that the Borrower would have been liable for on a stand-alone
basis; provided further, however, that any refund shall be promptly
returned by Holdings to the Borrower;
(e) the Borrower may pay cash Dividends to Holdings for the
purpose of enabling Holdings to pay the Dividends referred to in clause
(b) above, so long as all proceeds thereof are promptly used by
Holdings to pay such Dividends; and
(f) the exchange of Holdings Junior Subordinated Debentures
for Holdings Series A Preferred Stock, to the extent permitted as
provided in Section 6.01(l), shall be permitted.
SECTION 6.07. Transactions with Affiliates. Enter into any transaction
or series of related transactions, whether or not in the ordinary course of
business, with any Affiliate of Holdings or any of its Subsidiaries, other than
in the ordinary course of business and on terms and conditions substantially as
favorable to Holdings or such Subsidiary as would reasonably be obtained by
Holdings or such Subsidiary at that time in a comparable arm's-length
transaction with a person other than an Affiliate, except that:
(a) Dividends may be paid to the extent provided in Section
6.06;
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(b) loans may be made and other transactions may be entered
into between and among the Borrower, Holdings, the Subsidiaries and
their respective Affiliates to the extent permitted by Sections 6.01
and 6.04;
(c) customary fees may be paid to non-officer directors of
Holdings;
(d) the Borrower may pay management fees to Holdings from time
to time in an amount not in excess of Holdings' compensation expenses
for its employees;
(e) Holdings and its Subsidiaries may enter into the Operating
Agreements;
(f) the Acquisition shall be effected; and
(g) the transaction described in Schedule 6.05(h) shall be
permitted; provided that the sale contemplated thereby shall not be
permitted without the prior written consent of the Required Lenders.
SECTION 6.08. Capital Expenditures. (a) Make any Capital Expenditures,
except that during any period set forth below, in each case taken as one
accounting period, the Borrower and the Subsidiaries may make Capital
Expenditures in an aggregate amount not to exceed the amount set forth opposite
such period below:
Period Amount
------ ------
July 2, 1999 to June 30, 2000 $ 50,000,000
July 1, 2000 to June 29, 2001 $ 60,000,000
June 30, 2001 to June 28, 2002 $ 75,000,000
June 29, 2002 to June 27, 2003 $105,000,000
June 28, 2003 to July 2, 2004 $115,000,000
July 1, 2004 to July 1, 2005 $125,000,000
(b) Notwithstanding anything to the contrary contained in paragraph (a)
above, to the extent that the aggregate amount of Capital Expenditures made by
the Borrower and its Subsidiaries pursuant to Section 6.08(a) in any fiscal year
of the Borrower is less than the amount permitted by Section 6.08(a) with
respect to such fiscal year, the amount of such difference may be carried
forward and used to make Capital Expenditures in the immediately succeeding
fiscal year (after the full amount of Capital Expenditures otherwise permitted
to be made under Section 6.08(a) in such fiscal year, without regard to the
provisions of this paragraph (b), have been made); provided that amounts once
carried forward to such succeeding fiscal year shall lapse and terminate at the
end of such fiscal year.
SECTION 6.09. Consolidated Interest Coverage Ratio. Permit the
Consolidated Interest Coverage Ratio for any period of four consecutive fiscal
quarters, in each case taken as one accounting period, ended during any period
set forth below to be less than the amount set forth opposite such period below:
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74
Period Ratio
------ -----
December 31, 1999 to June 29, 2001 1.75:1.00
June 30, 2001 to June 28, 2002 2.25:1.00
June 29, 2002 to June 27, 2003 2.75:1.00
June 28, 2003 and thereafter 3.00:1.00
SECTION 6.10. Consolidated Fixed Charge Coverage Ratio. Permit the
Consolidated Fixed Charge Coverage Ratio for any period of four consecutive
fiscal quarters, in each case taken as one accounting period, ended during any
period set forth below to be less than the amount set forth opposite such period
below:
Period Ratio
------ -----
December 31, 1999 to June 29, 2001 1.00:1.00
June 30, 2001 to June 28, 2002 1.05:1.00
June 29, 2002 to June 27, 2003 1.05:1.00
June 28, 2003 and thereafter 1.10:1.00
SECTION 6.11. Maximum Leverage Ratio. Permit the Leverage Ratio at any
time during a period set forth below to be greater than the ratio set forth
opposite such period below:
Period Ratio
------ -----
December 31, 1999 to June 29, 2001 4.50:1.00
June 30, 2001 to June 28, 2002 3.75:1.00
June 29, 2002 to June 27, 2003 3.25:1.00
June 28, 2003 to July 2, 2004 2.75:1.00
July 3, 2004 and thereafter 2.50:1.00
SECTION 6.12. Limitation on Modifications of Indebtedness;
Modifications of Certificate of Incorporation, By-laws and Certain Other
Agreements, etc. (i) amend or modify, or permit the amendment or modification
of, any provision of existing Indebtedness or of any agreement (including,
without limitation, any purchase agreement, indenture, loan agreement or
security agreement) relating thereto other than any amendments or modifications
to Indebtedness which do not in any way materially adversely affect the
interests of the Lenders and are otherwise permitted under Section 6.01(c), (ii)
make (or give any notice in respect of) any payment of any nature whatsoever
(whether principal, interest or otherwise) with respect to, or any payment
(including any prepayment) on or redemption or acquisition for value of the
Seller Subordinated Notes, the Holdings Subordinated Notes or (after the
issuance thereof) any Holdings Junior Subordinated Debentures (except that, so
long as no Default or Event of Default has occurred and is continuing, Holdings
may use up to $50,000,000 of Net Cash Proceeds from a Public Equity Offering to
prepay, redeem or acquire for value the Senior Subordinated Notes, the Seller
Subordinated Notes and/or any Holdings Junior Subordinated Debentures), (iii)
make (or give any notice in respect thereof) any voluntary or optional payment
or prepayment on or redemption or acquisition for value of, or any prepayment or
redemption as a result of any asset sale, change of control or similar event of,
any Senior Subordinated Notes, (iv)
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75
amend or modify, or permit the amendment or modification of, any provision of
any Senior Subordinated Notes, any Seller Subordinated Notes, any Holdings
Subordinated Notes or (after the issuance thereof) any Holdings Junior
Subordinated Debentures or any agreement (including any Senior Subordinated Note
Document, the Seller Subordinated Note Indenture or the Holdings Subordinated
Credit Agreement) relating thereto other than amendments or modifications which
do not in any way adversely affect the interests of the Lenders, (v) amend or
modify, or permit the amendment or modification of, the Master Transaction
Agreement, any Operating Agreement, any other Transaction Document, or any tax
sharing agreement, in each case except for amendments or modifications which are
not in any way adverse in any material respect to the interests of the Lenders
or (vi) amend, modify or change its Certificate of Incorporation (including,
without limitation, by the filing or modification of any certificate of
designation) or By-laws, or any agreement entered into by it, with respect to
its capital stock (including any shareholders' agreement), or enter into any new
agreement with respect to its capital stock, other than any amendments,
modifications or changes pursuant to this clause (vi) or any such new agreements
pursuant to this clause (vi) which do not in any way materially adversely affect
in any material respect the interests of the Lenders; provided that nothing in
this clause (vi) shall prevent Holdings or any of its Subsidiaries from amending
its Certificate of Incorporation or By-laws to provide indemnification to any
officer or director of Holdings or any such Subsidiary to the maximum extent
permitted by the law of its jurisdiction of incorporation; and provided further
that Holdings may issue such capital stock as is not prohibited by Section 6.14
and may amend its Certificate of Incorporation to authorize any such capital
stock.
SECTION 6.13. Limitation on Certain Restrictions on Subsidiaries.
Directly or indirectly, create or otherwise cause or suffer to exist or become
effective any encumbrance or restriction on the ability of any Subsidiary to (a)
pay dividends or make any other distributions on its capital stock or any other
interest or participation in its profits owned by the Borrower or any Subsidiary
of the Borrower, or pay any Indebtedness owed to the Borrower or a Subsidiary of
the Borrower, (b) make loans or advances to the Borrower or any of the
Borrower's Subsidiaries or (c) transfer any of its properties or assets to the
Borrower or any of the Borrower's Subsidiaries, except for such encumbrances or
restrictions existing under or by reason of (i) applicable law, (ii) this
Agreement and the other Loan Documents, (iii) the Senior Subordinated Note
Documents, (iv) customary provisions restricting subletting or assignment of any
lease governing a leasehold interest of the Borrower or a Subsidiary of the
Borrower, (v) customary provisions restricting assignment of any agreement
entered into by the Borrower or a Subsidiary of the Borrower in the ordinary
course of business, (vi) any holder of a Lien permitted by Section 6.02 may
restrict the transfer of the asset or assets subject thereto and (vii)
restrictions which are not more restrictive than those contained in this
Agreement contained in any documents governing any Indebtedness incurred after
the Closing Date in accordance with the provisions of this Agreement.
SECTION 6.14. Limitation on Issuance of Capital Stock. (a) With respect
to Holdings, issue any capital stock that is not Qualified Capital Stock.
(b) Holdings will not permit any of its Subsidiaries to issue any
capital stock (including by way of sales of treasury stock) or any options or
warrants to purchase, or securities convertible into, capital stock, except (i)
for transfers and replacements of then outstanding shares of capital stock, (ii)
for stock splits, stock dividends and additional issuances which do not decrease
the percentage ownership of Holdings or any of its Subsidiaries in any class of
the capital stock of such Subsidiary, (iii) in the case of Foreign Subsidiaries
of the Borrower, to qualify directors to the extent required by
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76
applicable law, and (iv) Subsidiaries of the Borrower formed after the Closing
Date pursuant to Section 6.15 may issue capital stock to the Borrower or the
respective Subsidiary of the Borrower which is to own such stock. All capital
stock issued in accordance with this Section 6.14(b) shall, to the extent
required by the Pledge Agreement, be delivered to the Collateral Agent for
pledge pursuant to the Pledge Agreement.
SECTION 6.15. Limitation on Creation of Subsidiaries. Establish, create
or acquire any additional Subsidiaries without the prior written consent of the
Required Lenders; provided that the Borrower may establish or create one or more
Wholly Owned Subsidiaries of the Borrower without such consent so long as (a)
100% of the Equity Interests of any new Domestic Subsidiary (or all Equity
Interests of any new Foreign Subsidiary which is owned by any Loan Party, except
that not more than 65% of the voting stock of any such Foreign Subsidiary shall
be required to be so pledged) is upon the creation or establishment of any such
new Subsidiary pledged and delivered to the Collateral Agent for the benefit of
the Secured Parties under the Pledge Agreement and (b) upon the creation or
establishment of any such new Domestic Subsidiary such Domestic Subsidiary
becomes a party to the applicable Security Documents in accordance with Section
5.11 and the other Loan Documents.
SECTION 6.16. Business. (a) With respect to Holdings, engage in any
business activities or have any assets or liabilities, other than (i) its
ownership of the capital stock of the Borrower and liabilities incident thereto,
including its liabilities pursuant to the Pledge Agreement and its guarantee
pursuant to the Parent Guarantee Agreement and its guarantee of the Senior
Subordinated Notes, (ii) its obligations pursuant to the Seller Subordinated
Notes, the Holdings Subordinated Notes, the Holdings Series A Preferred Stock
and the Holdings Junior Subordinated Debentures, if issued, and (iii) its
employment of members of management of the Borrower.
(b) With respect to the Borrower and its Subsidiaries, engage (directly
or indirectly) in any business other than the business in which the Borrower and
its Subsidiaries are engaged on the Closing Date and other businesses reasonably
related thereto.
SECTION 6.17. Designated Senior Indebtedness. Designate any
indebtedness as "Designated Senior Indebtedness" for purposes of the Senior
Subordinated Note Indenture unless the Required Lenders specifically consent
thereto in writing.
SECTION 6.18. Fiscal Year. With respect to Holdings and the Borrower,
change its fiscal year-end to a date other than the Friday closest to June 30.
ARTICLE VII
Events of Default
In case of the happening of any of the following events ("Events of
Default"):
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77
(a) any representation or warranty made or deemed made in or in
connection with any Loan Document or the borrowings or issuances of Letters of
Credit hereunder, or any representation, warranty, statement or information
contained in any report, certificate, financial statement or other instrument
furnished in connection with or pursuant to any Loan Document, shall prove to
have been false or misleading in any material respect when so made, deemed made
or furnished;
(b) default shall be made in the payment of any principal of any Loan
or the reimbursement with respect to any L/C Disbursement when and as the same
shall become due and payable, whether at the due date thereof or at a date fixed
for prepayment thereof or by acceleration thereof or otherwise;
(c) default shall be made in the payment of any interest on any Loan or
any Fee or L/C Disbursement or any other amount (other than an amount referred
to in (b) above) due under any Loan Document, when and as the same shall become
due and payable, and such default shall continue unremedied for a period of
three Business Days;
(d) default shall be made in the due observance or performance by
Holdings, the Borrower or any Subsidiary of any covenant, condition or agreement
contained in Section 5.01(a), 5.05 or 5.08 or in Article VI;
(e) default shall be made in the due observance or performance by
Holdings, the Borrower or any Subsidiary of any covenant, condition or agreement
contained in any Loan Document (other than those specified in (b), (c) or (d)
above) and such default shall continue unremedied or shall not be waived for a
period of 20 days after written notice thereof from the Administrative Agent or
any Lender to the Borrower;
(f) Holdings, the Borrower or any Subsidiary shall (i) fail to pay any
principal or interest, regardless of amount, due in respect of any Indebtedness
(other than the Obligations) in a principal amount in excess of $3,000,000 when
and as the same shall become due and payable, or (ii) fail to observe or perform
any other term, covenant, condition or agreement contained in any agreement or
instrument evidencing or governing any such Indebtedness (other than any such
agreement or instrument evidencing the Pennsylvania Loans to the extent such
failure results solely from the conversion of the obligor thereunder to a
limited liability company) if the effect of any failure referred to in this
clause (ii) is to cause, or to permit the holder or holders of such Indebtedness
or a trustee on its or their behalf (with or without the giving of notice, the
lapse of time or both) to cause, such Indebtedness to become due prior to its
stated maturity;
(g) an involuntary proceeding shall be commenced or an involuntary
petition shall be filed in a court of competent jurisdiction seeking (i) relief
in respect of Holdings, the Borrower or any Subsidiary, or of a substantial part
of the property or assets of Holdings, the Borrower or a Subsidiary, under Title
11 of the United States Code, as now constituted or hereafter amended, or any
other Federal, state or foreign bankruptcy, insolvency, receivership or similar
law, (ii) the appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official for Holdings, the Borrower or any Subsidiary or
for a substantial part of the property or assets of Holdings, the Borrower or a
Subsidiary or (iii) the winding-up or liquidation of Holdings, the Borrower or
any Subsidiary; and such proceeding or petition shall continue undismissed for
60 days or an order or decree approving or ordering any of the foregoing shall
be entered;
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78
(h) Holdings, the Borrower or any Subsidiary shall (i) voluntarily
commence any proceeding or file any petition seeking relief under Title 11 of
the United States Code, as now constituted or hereafter amended, or any other
Federal, state or foreign bankruptcy, insolvency, receivership or similar law,
(ii) consent to the institution of, or fail to contest in a timely and
appropriate manner, any proceeding or the filing of any petition described in
(g) above, (iii) apply for or consent to the appointment of a receiver, trustee,
custodian, sequestrator, conservator or similar official for Holdings, the
Borrower or any Subsidiary or for a substantial part of the property or assets
of Holdings, the Borrower or any Subsidiary, (iv) file an answer admitting the
material allegations of a petition filed against it in any such proceeding, (v)
make a general assignment for the benefit of creditors, (vi) become unable,
admit in writing its inability or fail generally to pay its debts as they become
due or (vii) take any action for the purpose of effecting any of the foregoing;
(i) one or more judgments for the payment of money in an aggregate
amount in excess of $3,000,000 shall be rendered against Holdings, the Borrower,
any Subsidiary or any combination thereof and the same shall remain undischarged
for a period of 30 consecutive days during which execution shall not be
effectively stayed, or any action shall be legally taken by a judgment creditor
to levy upon assets or properties of Holdings, the Borrower or any Subsidiary to
enforce any such judgment;
(j) an ERISA Event shall have occurred that, in the opinion of the
Required Lenders, when taken together with all other such ERISA Events, could
reasonably be expected to result in liability of the Borrower and its ERISA
Affiliates in an aggregate amount exceeding $1,000,000;
(k) any security interest purported to be created by any Security
Document shall cease to be, or shall be asserted by the Borrower or any other
Loan Party not to be, a valid, perfected, first priority (except as otherwise
expressly provided in this Agreement or such Security Document) security
interest in the securities, assets or properties covered thereby, except to the
extent that any such loss of perfection or priority results from the failure of
the Collateral Agent to maintain possession of certificates representing
securities pledged under the Pledge Agreement and except to the extent that such
loss is covered by a lender's title insurance policy and the related insurer
promptly after such loss shall have acknowledged in writing that such loss is
covered by such title insurance policy;
(l) any of the Obligations shall cease to constitute "Senior
Indebtedness" under and as defined in the Senior Subordinated Note Indenture,
the Seller Subordinated Note Indenture or the Holdings Subordinated Credit
Agreement or under the Holdings Junior Subordinated Debentures, if issued; or
(m) there shall have occurred a Change in Control;
(n) any guarantee under the Guarantee Agreements of the Obligations of
the Borrower, for any reason other than the satisfaction in full of all
Obligations (other than indemnification obligations not due and payable), shall
cease to be in full force and effect (other than in accordance with its terms)
or is declared to be null and void, or any Loan Party shall deny in writing that
it has any further liability, including without limitation with respect to
future advances by the Lenders, under any Loan Document to which it is a party;
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79
then, and in every such event (other than an event with respect to Holdings or
the Borrower described in paragraph (g) or (h) above), and at any time
thereafter during the continuance of such event, the Administrative Agent may,
and at the request of the Required Lenders shall, by notice to the Borrower,
take either or both of the following actions, at the same or different times:
(i) terminate forthwith the Commitments and (ii) declare the Loans then
outstanding to be forthwith due and payable in whole or in part, whereupon the
principal of the Loans so declared to be due and payable, together with accrued
interest thereon and any unpaid accrued Fees and all other liabilities of the
Borrower accrued hereunder and under any other Loan Document, shall become
forthwith due and payable, without presentment, demand, protest or any other
notice of any kind, all of which are hereby expressly waived by the Borrower,
anything contained herein or in any other Loan Document to the contrary
notwithstanding; and in any event with respect to Holdings or the Borrower
described in paragraph (g) or (h) above, the Commitments shall automatically
terminate and the principal of the Loans then outstanding, together with accrued
interest thereon and any unpaid accrued Fees and all other liabilities of the
Borrower accrued hereunder and under any other Loan Document, shall
automatically become due and payable, without presentment, demand, protest or
any other notice of any kind, all of which are hereby expressly waived by the
Borrower, anything contained herein or in any other Loan Document to the
contrary notwithstanding.
ARTICLE VIII
The Administrative Agent and the Collateral Agent
In order to expedite the transactions contemplated by this Agreement,
Credit Suisse First Boston is hereby appointed to act as Administrative Agent
and Collateral Agent on behalf of the Lenders and the Issuing Bank (for purposes
of this Article VIII, the Administrative Agent and the Collateral Agent are
referred to collectively as the "Agents"). Each of the Lenders and each assignee
of any such Lender, hereby irrevocably authorizes the Agents to take such
actions on behalf of such Lender or assignee or the Issuing Bank and to exercise
such powers as are specifically delegated to the Agents by the terms and
provisions hereof and of the other Loan Documents, together with such actions
and powers as are reasonably incidental thereto. The Administrative Agent is
hereby expressly authorized by the Lenders and the Issuing Bank, without hereby
limiting any implied authority, (a) to receive on behalf of the Lenders and the
Issuing Bank all payments of principal of and interest on the Loans, all
payments in respect of L/C Disbursements and all other amounts due to the
Lenders hereunder, and promptly to distribute to each Lender or the Issuing Bank
its proper share of each payment so received; (b) to give notice on behalf of
each of the Lenders to the Borrower of any Event of Default specified in this
Agreement of which the Administrative Agent has actual knowledge acquired in
connection with its agency hereunder; and (c) to distribute to each Lender
copies of all notices, financial statements and other materials delivered by the
Borrower or any other Loan Party pursuant to this Agreement or the other Loan
Documents as received by the Administrative Agent. Without limiting the
generality of the foregoing, the Agents are hereby expressly authorized to
execute any and all documents (including releases and supplements) with respect
to the Collateral and the rights of the Secured Parties with respect thereto, as
contemplated by and in accordance with the provisions of this Agreement and the
Security Documents.
Neither the Agents nor any of their respective directors, officers,
employees or agents shall be liable as such for any action taken or omitted by
any of them except for its or his own gross
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80
negligence or wilful misconduct, or be responsible for any statement, warranty
or representation herein or the contents of any document delivered in connection
herewith, or be required to ascertain or to make any inquiry concerning the
performance or observance by the Borrower or any other Loan Party of any of the
terms, conditions, covenants or agreements contained in any Loan Document. The
Agents shall not be responsible to the Lenders for the due execution,
genuineness, validity, enforceability or effectiveness of this Agreement or any
other Loan Documents, instruments or agreements. The Agents shall in all cases
be fully protected in acting, or refraining from acting, in accordance with
written instructions signed by the Required Lenders and, except as otherwise
specifically provided herein, such instructions and any action or inaction
pursuant thereto shall be binding on all the Lenders. Each Agent shall, in the
absence of knowledge to the contrary, be entitled to rely on any instrument or
document believed by it in good faith to be genuine and correct and to have been
signed or sent by the proper person or persons. Neither the Agents nor any of
their respective directors, officers, employees or agents shall have any
responsibility to the Borrower or any other Loan Party on account of the failure
of or delay in performance or breach by any Lender or the Issuing Bank of any of
its obligations hereunder or to any Lender or the Issuing Bank on account of the
failure of or delay in performance or breach by any other Lender or the Issuing
Bank or the Borrower or any other Loan Party of any of their respective
obligations hereunder or under any other Loan Document or in connection herewith
or therewith. Each of the Agents may execute any and all duties hereunder by or
through agents or employees and shall be entitled to rely upon the advice of
legal counsel selected by it with respect to all matters arising hereunder and
shall not be liable for any action taken or suffered in good faith by it in
accordance with the advice of such counsel.
The Lenders hereby acknowledge that neither Agent shall be under any
duty to take any discretionary action permitted to be taken by it pursuant to
the provisions of this Agreement unless it shall be requested in writing to do
so by the Required Lenders.
Subject to the appointment and acceptance of a successor Agent as
provided below, either Agent may resign at any time by notifying the Lenders and
the Borrower. Upon any such resignation, the Required Lenders shall have the
right to appoint a successor. If no successor shall have been so appointed by
the Required Lenders and shall have accepted such appointment within 30 days
after the retiring Agent gives notice of its resignation, then the retiring
Agent may, on behalf of the Lenders, appoint a successor Agent which shall be a
bank with an office in New York, New York, having a combined capital and surplus
of at least $500,000,000 or an Affiliate of any such bank. Upon the acceptance
of any appointment as Agent hereunder by a successor bank, such successor shall
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring Agent and the retiring Agent shall be discharged from its duties
and obligations hereunder. After the Agent's resignation hereunder, the
provisions of this Article and Section 9.05 shall continue in effect for its
benefit in respect of any actions taken or omitted to be taken by it while it
was acting as Agent.
With respect to the Loans made by it hereunder, each Agent in its
individual capacity and not as Agent shall have the same rights and powers as
any other Lender and may exercise the same as though it were not an Agent, and
the Agents and their Affiliates may accept deposits from, lend money to and
generally engage in any kind of business with Holdings, the Borrower or any
Subsidiary or other Affiliate thereof as if it were not an Agent.
Each Lender agrees (a) to reimburse the Agents, on demand, in the
amount of its pro rata share (based on the aggregate amount of its outstanding
Term Loans and Revolving Credit
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81
Commitment hereunder) of any reasonable expenses incurred for the benefit of the
Lenders by the Agents, including reasonable counsel fees and compensation of
agents and employees paid for services rendered on behalf of the Lenders, that
shall not have been reimbursed by the Borrower and (b) to indemnify and hold
harmless each Agent and any of its directors, officers, employees or agents, on
demand, in the amount of such pro rata share, from and against any and all
liabilities, taxes, obligations, losses, damages, penalties, actions, judgments,
suits, costs, and reasonable expenses or disbursements of any kind or nature
whatsoever that may be imposed on, incurred by or asserted against it in its
capacity as Agent or any of them in any way relating to or arising out of this
Agreement or any other Loan Document or any action taken or omitted by it or any
of them under this Agreement or any other Loan Document, to the extent the same
shall not have been reimbursed by the Borrower or any other Loan Party, provided
that no Lender shall be liable to an Agent or any such other indemnified person
for any portion of such liabilities, taxes, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements are
determined by a court of competent jurisdiction by final and nonappealable
judgment to have resulted from the gross negligence or wilful misconduct of such
Agent or any of its directors, officers, employees or agents. Each Revolving
Credit Lender agrees to reimburse the Issuing Bank and its directors, employees
and agents, in each case, to the same extent and subject to the same limitations
as provided above for the Agents.
Each Lender acknowledges that it has, independently and without
reliance upon the Agents or any other Lender and based on such documents and
information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. Each Lender also acknowledges that it
will, independently and without reliance upon the Agents or any other Lender and
based on such documents and information as it shall from time to time deem
appropriate, continue to make its own decisions in taking or not taking action
under or based upon this Agreement or any other Loan Document, any related
agreement or any document furnished hereunder or thereunder. Each of the parties
hereto acknowledge and agrees that neither the Syndication Agent nor the
Documentation Agent shall have any duties, responsibilities, obligations or
liabilities, as such, hereunder or under the other Loan Documents.
ARTICLE IX
Miscellaneous
SECTION 9.01. Notices. Notices and other communications provided for
herein shall be in writing and shall be delivered by hand or overnight courier
service, mailed by certified or registered mail or sent by fax, as follows:
(a) if to the Borrower or Holdings, to it at 2401 Palm Bay
Road NE, Palm Bay, FL 32905, Attention of
Controller (Fax No. 407-729-5773);
(b) if to the Administrative Agent, to Credit Suisse First
Boston, Eleven Madison Avenue, New York, New York 10010, Attention of
Agency Administration (Fax No. (212) 325-8304); and
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(c) if to a Lender, to it at its address (or fax number) set
forth on Schedule 2.01 or in the Assignment and Acceptance pursuant to
which such Lender shall have become a party hereto.
All notices and other communications given to any party hereto in accordance
with the provisions of this Agreement shall be deemed to have been given on the
date of receipt if delivered by hand or overnight courier service or sent by fax
or on the date five Business Days after dispatch by certified or registered mail
if mailed, in each case delivered, sent or mailed (properly addressed) to such
party as provided in this Section 9.01 or in accordance with the latest
unrevoked direction from such party given in accordance with this Section 9.01.
SECTION 9.02. Survival of Agreement. All covenants, agreements,
representations and warranties made by the Borrower or Holdings herein and in
the certificates or other instruments prepared or delivered in connection with
or pursuant to this Agreement or any other Loan Document shall be considered to
have been relied upon by the Lenders and the Issuing Bank and shall survive the
making by the Lenders of the Loans and the issuance of Letters of Credit by the
Issuing Bank, regardless of any investigation made by the Lenders or the Issuing
Bank or on their behalf, and shall continue in full force and effect as long as
the principal of or any accrued interest on any Loan or any Fee or any other
amount payable under this Agreement or any other Loan Document is outstanding
and unpaid or any Letter of Credit is outstanding and so long as the Commitments
have not been terminated. The provisions of Sections 2.14, 2.16, 2.20 and 9.05
shall remain operative and in full force and effect regardless of the expiration
of the term of this Agreement, the consummation of the transactions contemplated
hereby, the repayment of any of the Loans, the expiration of the Commitments,
the expiration of any Letter of Credit, the invalidity or unenforceability of
any term or provision of this Agreement or any other Loan Document, or any
investigation made by or on behalf of the Administrative Agent, the Collateral
Agent, any Lender or the Issuing Bank.
SECTION 9.03. Binding Effect. This Agreement shall become effective
when it shall have been executed by the Borrower, Holdings and the
Administrative Agent and when the Administrative Agent shall have received
counterparts hereof which, when taken together, bear the signatures of each of
the other parties hereto, and thereafter shall be binding upon and inure to the
benefit of the parties hereto and their respective permitted successors and
assigns.
SECTION 9.04. Successors and Assigns. (a) Whenever in this Agreement
any of the parties hereto is referred to, such reference shall be deemed to
include the permitted successors and assigns of such party; and all covenants,
promises and agreements by or on behalf of the Borrower, Holdings, the
Administrative Agent, the Issuing Bank or the Lenders that are contained in this
Agreement shall bind and inure to the benefit of their respective successors and
assigns.
(b) Each Lender may assign to one or more assignees all or a portion of
its interests, rights and obligations under this Agreement (including all or a
portion of its Commitment and the Loans at the time owing to it); provided,
however, that (i) except in the case of an assignment to a Lender or an
Affiliate or Related Fund of such Lender, (x) the Borrower and the
Administrative Agent (and, in the case of any assignment of a Revolving Credit
Commitment, the Issuing Bank and the Swingline Lender) must give their prior
written consent to such assignment (which consent shall not be unreasonably
withheld or delayed); provided, however, that the consent of the Borrower shall
not be required to any such assignment during the continuance of any Event of
Default described in
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subsection (g) or (h) of Article VII and (y) the amount of the Commitment of the
assigning Lender subject to each such assignment (determined as of the date the
Assignment and Acceptance with respect to such assignment is delivered to the
Administrative Agent) shall not be less than $5,000,000 (or, if less, the entire
remaining amount of such Lender's Commitment) or such lesser amount as the
Borrower and the Administrative Agent may from time to time agree (such
agreement to be conclusively evidenced by the execution of the related
Assignment and Acceptance), (ii) the parties to each such assignment shall
execute and deliver to the Administrative Agent an Assignment and Acceptance,
together (except in the case of an assignment to an Affiliate or a Related Fund)
with a processing and recordation fee of $3,500 and (iii) the assignee, if it
shall not be a Lender, shall deliver to the Administrative Agent an
Administrative Questionnaire. Upon acceptance and recording pursuant to
paragraph (e) of this Section 9.04, from and after the effective date specified
in each Assignment and Acceptance, (A) the assignee thereunder shall be a party
hereto and, to the extent of the interest assigned by such Assignment and
Acceptance, have the rights and obligations of a Lender under this Agreement and
(B) the assigning Lender thereunder shall, to the extent of the interest
assigned by such Assignment and Acceptance, be released from its obligations
under this Agreement (and, in the case of an Assignment and Acceptance covering
all or the remaining portion of an assigning Lender's rights and obligations
under this Agreement, such Lender shall cease to be a party hereto but shall
continue to be entitled to the benefits of Sections 2.14, 2.16, 2.20 and 9.05,
as well as to any Fees accrued for its account and not yet paid).
(c) By executing and delivering an Assignment and Acceptance, the
assigning Lender thereunder and the assignee thereunder shall be deemed to
confirm to and agree with each other and the other parties hereto as follows:
(i) such assigning Lender warrants that it is the legal and beneficial owner of
the interest being assigned thereby free and clear of any adverse claim and that
its Term Loan Commitment and Revolving Credit Commitment, and the outstanding
balances of its Term Loans and Revolving Loans, in each case without giving
effect to assignments thereof which have not become effective, are as set forth
in such Assignment and Acceptance, (ii) except as set forth in (i) above, such
assigning Lender makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with this Agreement, or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of this Agreement,
any other Loan Document or any other instrument or document furnished pursuant
hereto, or the financial condition of the Borrower or any Subsidiary or the
performance or observance by the Borrower or any Subsidiary of any of its
obligations under this Agreement, any other Loan Document or any other
instrument or document furnished pursuant hereto; (iii) such assignee represents
and warrants that it is legally authorized to enter into such Assignment and
Acceptance; (iv) such assignee confirms that it has received a copy of this
Agreement, together with copies of the most recent financial statements referred
to in Section 3.05(a) or delivered pursuant to Section 5.04 and such other
documents and information as it has deemed appropriate to make its own credit
analysis and decision to enter into such Assignment and Acceptance; (v) such
assignee will independently and without reliance upon the Administrative Agent,
the Collateral Agent, such assigning Lender or any other Lender and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
this Agreement; (vi) such assignee appoints and authorizes the Administrative
Agent and the Collateral Agent to take such action as agent on its behalf and to
exercise such powers under this Agreement as are delegated to the Administrative
Agent and the Collateral Agent, respectively, by the terms hereof, together with
such powers as are reasonably incidental thereto; and (vii) such assignee agrees
that it will perform in accordance with their terms
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all the obligations which by the terms of this Agreement are required to be
performed by it as a Lender.
(d) The Administrative Agent, acting for this purpose as an agent of
the Borrower, shall maintain at one of its offices in The City of New York a
copy of each Assignment and Acceptance delivered to it and a register for the
recordation of the names and addresses of the Lenders, and the Commitment of,
and principal amount of the Loans owing to, each Lender pursuant to the terms
hereof from time to time (the "Register"). The entries in the Register shall be
conclusive and the Borrower, the Administrative Agent, the Issuing Bank, the
Collateral Agent and the Lenders may treat each person whose name is recorded in
the Register pursuant to the terms hereof as a Lender hereunder for all purposes
of this Agreement, notwithstanding notice to the contrary. The Register shall be
available for inspection by the Borrower, the Issuing Bank, the Collateral Agent
and any Lender, at any reasonable time and from time to time upon reasonable
prior notice.
(e) Upon its receipt of a duly completed Assignment and Acceptance
executed by an assigning Lender and an assignee, an Administrative Questionnaire
completed in respect of the assignee (unless the assignee shall already be a
Lender hereunder), the processing and recordation fee referred to in paragraph
(b) above and, if required, the written consent of the Borrower, the Swingline
Lender, the Issuing Bank and the Administrative Agent to such assignment, the
Administrative Agent shall (i) accept such Assignment and Acceptance, (ii)
record the information contained therein in the Register and (iii) give prompt
notice thereof to the Lenders, the Swingline Lender and the Issuing Bank. No
assignment shall be effective unless it has been recorded in the Register as
provided in this paragraph (e).
(f) Each Lender may without the consent of the Borrower, the Swingline
Lender, the Issuing Bank or the Administrative Agent sell participations to one
or more banks or other entities in all or a portion of its rights and
obligations under this Agreement (including all or a portion of its Commitment
and the Loans owing to it); provided, however, that (i) such Lender's
obligations under this Agreement shall remain unchanged, (ii) such Lender shall
remain solely responsible to the other parties hereto for the performance of
such obligations, (iii) the participating banks or other entities shall be
entitled to the benefit of the cost protection provisions contained in Sections
2.14, 2.16 and 2.20 to the same extent as if they were Lenders and (iv) the
Borrower, the Administrative Agent, the Issuing Bank and the Lenders shall
continue to deal solely and directly with such Lender in connection with such
Lender's rights and obligations under this Agreement, and such Lender shall
retain the sole right to enforce the obligations of the Borrower relating to the
Loans or L/C Disbursements and to approve any amendment, modification or waiver
of any provision of this Agreement (other than amendments, modifications or
waivers decreasing any fees payable hereunder or the amount of principal of or
the rate at which interest is payable on the Loans, extending any scheduled
principal payment date or date fixed for the payment of interest on the Loans,
increasing or extending the Commitments or releasing any Guarantor or all or any
substantial part of the Collateral).
(g) Any Lender or participant may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this Section
9.04, disclose to the assignee or participant or proposed assignee or
participant any information relating to the Borrower furnished to such Lender by
or on behalf of the Borrower; provided that, prior to any such disclosure of
information designated by the Borrower as confidential, each such assignee or
participant or proposed assignee or participant shall execute an agreement
whereby such assignee or participant shall agree
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(subject to customary exceptions) to preserve the confidentiality of such
confidential information on terms no less restrictive than those applicable to
the Lenders pursuant to Section 9.17.
(h) Any Lender may at any time assign all or any portion of its rights
under this Agreement to secure extensions of credit to such Lender or in support
of obligations owed by such Lender; provided that no such assignment shall
release a Lender from any of its obligations hereunder or substitute any such
assignee for such Lender as a party hereto.
(i) Notwithstanding anything to the contrary contained herein, any
Lender (a "Granting Lender") may grant to a special purpose funding vehicle (an
"SPC"), identified as such in writing from time to time by the Granting Lender
to the Administrative Agent and the Borrower, the option to provide to the
Borrower all or any part of any Loan that such Granting Lender would otherwise
be obligated to make to the Borrower pursuant to this Agreement; provided that
(i) nothing herein shall constitute a commitment by any SPC to make any Loan and
(ii) if an SPC elects not to exercise such option or otherwise fails to provide
all or any part of such Loan, the Granting Lender shall be obligated to make
such Loan pursuant to the terms hereof. The making of a Loan by an SPC hereunder
shall utilize the Commitment of the Granting Lender to the same extent, and as
if, such Loan were made by such Granting Lender. Each party hereto hereby agrees
that no SPC shall be liable for any indemnity or similar payment obligation
under this Agreement (all liability for which shall remain with the Granting
Lender). In furtherance of the foregoing, each party hereto hereby agrees (which
agreement shall survive the termination of this Agreement) that, prior to the
date that is one year and one day after the payment in full of all outstanding
commercial paper or other senior indebtedness of any SPC, it will not institute
against, or join any other person in instituting against, such SPC any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings
under the laws of the United States or any State thereof. In addition,
notwithstanding anything to the contrary contained in this Section 9.04, any SPC
may (i) with notice to, but without the prior written consent of, the Borrower
and the Administrative Agent and without paying any processing fee therefore,
assign all or a portion of its interests in any Loans to the Granting Lender or
to any financial institutions (consented to by the Borrower and Administrative
Agent) providing liquidity and/or credit support to or for the account of such
SPC to support the funding or maintenance of Loans and (ii) disclose on a
confidential basis any non-public information relating to its Loans to any
rating agency, commercial paper dealer or provider of any surety, guarantee or
credit or liquidity enhancement to such SPC.
(j) Neither Holdings nor the Borrower shall assign or delegate any of
its rights or duties hereunder without the prior written consent of the
Administrative Agent, the Issuing Bank and each Lender, and any attempted
assignment without such consent shall be null and void.
(k) In the event that Standard & Poor's Ratings Group, Moody's
Investors Service, Inc., and Thompson's BankWatch (or InsuranceWatch Ratings
Service, in the case of Lenders that are insurance companies (or Best's
Insurance Reports, if such insurance company is not rated by Insurance Watch
Ratings Service)) shall, after the date that any Lender becomes a Revolving
Credit Lender, downgrade the long-term certificate deposit ratings of such
Lender, and the resulting ratings shall be below BBB-, Baa3 and C (or BB, in the
case of a Lender that is an insurance company (or B, in the case of an insurance
company not rated by InsuranceWatch Ratings Service)), then the Issuing Bank
shall have the right, but not the obligation, at its own expense, upon notice to
such Lender and the Administrative Agent, to replace (or to request the Borrower
to use its reasonable efforts to
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replace) such Lender with an assignee (in accordance with and subject to the
restrictions contained in paragraph (b) above), and such Lender hereby agrees to
transfer and assign without recourse (in accordance with and subject to the
restrictions contained in paragraph (b) above) all its interests, rights and
obligations in respect of its Revolving Credit Commitment to such assignee;
provided, however, that (i) no such assignment shall conflict with any law, rule
and regulation or order of any Governmental Authority and (ii) the Issuing Bank
or such assignee, as the case may be, shall pay to such Lender in immediately
available funds on the date of such assignment the principal of and interest
accrued to the date of payment on the Loans made by such Lender hereunder and
all other amounts accrued for such Lender's account or owed to it hereunder.
SECTION 9.05. Expenses; Indemnity. (a) The Borrower and Holdings agree,
jointly and severally, to pay all out-of-pocket expenses (i) incurred by the
Administrative Agent, the Collateral Agent, the Swingline Lender and the Issuing
Bank in connection with the syndication of the credit facilities provided for
herein and the preparation and administration of this Agreement and the other
Loan Documents or in connection with any amendments, modifications or waivers of
the provisions hereof or thereof (whether or not the transactions hereby or
thereby contemplated shall be consummated) or (ii) incurred by the
Administrative Agent, the Collateral Agent or any Lender in connection with the
enforcement or protection of its rights in connection with this Agreement and
the other Loan Documents or in connection with the Loans made or Letters of
Credit issued hereunder, including the fees, charges and disbursements of
Cravath, Swaine & Moore, counsel for the Administrative Agent and the Collateral
Agent, and, in connection with any such enforcement or protection, the fees,
charges and disbursements of any other counsel for the Administrative Agent, the
Collateral Agent or any Lender.
(b) The Borrower and Holdings agree, jointly and severally, to
indemnify the Administrative Agent, the Collateral Agent, each Lender and the
Issuing Bank, each Affiliate of any of the foregoing persons and each of their
respective directors, officers, trustees, employees and agents (each such person
being called an "Indemnitee") against, and to hold each Indemnitee harmless
from, any and all losses, claims, damages, liabilities and related expenses,
including reasonable counsel fees, charges and disbursements, incurred by or
asserted against any Indemnitee arising out of, in any way connected with, or as
a result of (i) the execution or delivery of this Agreement or any other Loan
Document or any agreement or instrument contemplated thereby, the performance by
the parties thereto of their respective obligations thereunder or the
consummation of the Transactions and the other transactions contemplated
thereby, (ii) the use of the proceeds of the Loans or issuance of Letters of
Credit, (iii) any claim, litigation, investigation or proceeding relating to any
of the foregoing, whether or not any Indemnitee is a party thereto, or (iv) any
actual or alleged presence or Release of Hazardous Materials on any property
owned or operated by the Borrower or any of the Subsidiaries, or any
Environmental Claim related in any way to the Borrower or the Subsidiaries;
provided that such indemnity shall not, as to any Indemnitee, be available to
the extent that such losses, claims, damages, liabilities or related expenses
are determined by a court of competent jurisdiction by final and nonappealable
judgment to have resulted from the gross negligence or wilful misconduct of such
Indemnitee.
(c) The provisions of this Section 9.05 shall remain operative and in
full force and effect regardless of the expiration of the term of this
Agreement, the consummation of the transactions contemplated hereby, the
repayment of any of the Loans, the expiration of the Commitments, the expiration
of any Letter of Credit, the invalidity or unenforceability of any term or
provision of this
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Agreement or any other Loan Document, or any investigation made by or on behalf
of the Administrative Agent, the Collateral Agent, any Lender or the Issuing
Bank. All amounts due under this Section 9.05 shall be payable on written demand
therefor accompanied by reasonable documentation with respect to any
reimbursement, indemnification or other amount requested.
SECTION 9.06. Right of Setoff. If an Event of Default shall have
occurred and be continuing, each Lender is hereby authorized at any time and
from time to time, except to the extent prohibited by law, to set off and apply
any and all deposits (general or special, time or demand, provisional or final)
at any time held and other indebtedness at any time owing by such Lender to or
for the credit or the account of the Borrower or Holdings against any of and all
the obligations of the Borrower or Holdings now or hereafter existing under this
Agreement and other Loan Documents held by such Lender, irrespective of whether
or not such Lender shall have made any demand under this Agreement or such other
Loan Document and although such obligations may be unmatured. The rights of each
Lender under this Section 9.06 are in addition to other rights and remedies
(including other rights of setoff) which such Lender may have.
SECTION 9.07. Applicable Law. THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS (OTHER THAN LETTERS OF CREDIT AND AS EXPRESSLY SET FORTH IN OTHER LOAN
DOCUMENTS) SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE
STATE OF NEW YORK. EACH LETTER OF CREDIT SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED IN ACCORDANCE WITH, THE LAWS OR RULES DESIGNATED IN SUCH LETTER OF
CREDIT, OR IF NO SUCH LAWS OR RULES ARE DESIGNATED, THE UNIFORM CUSTOMS AND
PRACTICE FOR DOCUMENTARY CREDITS (1993 REVISION), INTERNATIONAL CHAMBER OF
COMMERCE, PUBLICATION NO. 500 (THE "UNIFORM CUSTOMS") AND, AS TO MATTERS NOT
GOVERNED BY THE UNIFORM CUSTOMS, THE LAWS OF THE STATE OF NEW YORK.
SECTION 9.08. Waivers; Amendment. (a) No failure or delay of the
Administrative Agent, the Collateral Agent, any Lender or the Issuing Bank in
exercising any power or right hereunder or under any other Loan Document shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such right or power, or any abandonment or discontinuance of steps to enforce
such a right or power, preclude any other or further exercise thereof or the
exercise of any other right or power. The rights and remedies of the
Administrative Agent, the Collateral Agent, the Issuing Bank and the Lenders
hereunder and under the other Loan Documents are cumulative and are not
exclusive of any rights or remedies that they would otherwise have. No waiver of
any provision of this Agreement or any other Loan Document or consent to any
departure by the Borrower or any other Loan Party therefrom shall in any event
be effective unless the same shall be permitted by paragraph (b) below, and then
such waiver or consent shall be effective only in the specific instance and for
the purpose for which given. No notice or demand on the Borrower or Holdings in
any case shall entitle the Borrower or Holdings to any other or further notice
or demand in similar or other circumstances.
(b) Neither this Agreement nor any provision hereof may be waived,
amended or modified except pursuant to an agreement or agreements in writing
entered into by the Borrower, Holdings and the Required Lenders; provided,
however, that no such agreement shall (i) decrease the principal amount of, or
extend the maturity of or any scheduled principal payment date or date for the
payment of any interest on any Loan or any date for reimbursement of an L/C
Disbursement, or waive or excuse
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any such payment or any part thereof, or decrease the rate of interest on any
Loan or L/C Disbursement, without the prior written consent of each Lender
affected thereby, (ii) increase or extend the Commitment or decrease or extend
the date for payment of the Commitment Fees of any Lender without the prior
written consent of such Lender, (iii) amend or modify the pro rata requirements
of Section 2.17, the provisions of Section 9.04(j), the provisions of this
Section 9.08, the definition of the term "Required Lenders" or release any
Guarantor (other than in connection with a transaction permitted hereunder) or
all or any substantial part of the Collateral, without the prior written consent
of each Lender, (iv) change the provisions of any Loan Document in a manner that
by its terms adversely affects the rights in respect of payments due to Lenders
holding Term Loans or Revolving Loans (as used in this Section, each a "Class"
of Loans) differently from the rights in respect of payments due to Lenders
holding the other Class of Loans without the prior written consent of Lenders
holding a majority of the aggregate outstanding principal amount of the Loans
(or, if no Revolving Loans are outstanding, the Revolving Commitments) of the
adversely affected Class of Loans, or (v) amend or modify the protections
afforded to an SPC pursuant to the provisions of Section 9.04(i) without the
written consent of such SPC; provided further that no such agreement shall
amend, modify or otherwise affect the rights or duties of the Administrative
Agent, the Collateral Agent, the Issuing Bank or the Swingline Lender hereunder
or under any other Loan Document without the prior written consent of the
Administrative Agent, the Collateral Agent, the Issuing Bank or the Swingline
Lender, respectively.
SECTION 9.09. Interest Rate Limitation. Notwithstanding anything herein
to the contrary, if at any time the interest rate applicable to any Loan or
participation in any L/C Disbursement, together with all fees, charges and other
amounts which are treated as interest on such Loan or participation in such L/C
Disbursement under applicable law (collectively the "Charges"), shall exceed the
maximum lawful rate (the "Maximum Rate") which may be contracted for, charged,
taken, received or reserved by the Lender holding such Loan or participation in
accordance with applicable law, the rate of interest payable in respect of such
Loan or participation hereunder, together with all Charges payable in respect
thereof, shall be limited to the Maximum Rate and, to the extent lawful, the
interest and Charges that would have been payable in respect of such Loan or
participation but were not payable as a result of the operation of this Section
9.09 shall be cumulated and the interest and Charges payable to such Lender in
respect of other Loans or participations or periods shall be increased (but not
above the Maximum Rate therefor) until such cumulated amount, together with
interest thereon at the Federal Funds Effective Rate to the date of repayment,
shall have been received by such Lender.
SECTION 9.10. Entire Agreement. This Agreement, the Fee Letter and the
other Loan Documents constitute the entire contract between the parties relative
to the subject matter hereof. Any other previous agreement among the parties
with respect to the subject matter hereof is superseded by this Agreement and
the other Loan Documents. Nothing in this Agreement or in the other Loan
Documents, expressed or implied, is intended to confer upon any party other than
the parties hereto and thereto any rights, remedies, obligations or liabilities
under or by reason of this Agreement or the other Loan Documents.
SECTION 9.11. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL
BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF,
UNDER OR IN CONNECTION WITH THIS AGREEMENT
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OR ANY OF THE OTHER LOAN DOCUMENTS. EACH PARTY HERETO (A) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER
PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION 9.11.
SECTION 9.12. Severability. In the event any one or more of the
provisions contained in this Agreement or in any other Loan Document should be
held invalid, illegal or unenforceable in any respect, the validity, legality
and enforceability of the remaining provisions contained herein and therein
shall not in any way be affected or impaired thereby (it being understood that
the invalidity of a particular provision in a particular jurisdiction shall not
in and of itself affect the validity of such provision in any other
jurisdiction). The parties shall endeavor in good-faith negotiations to replace
the invalid, illegal or unenforceable provisions with valid provisions the
economic effect of which comes as close as possible to that of the invalid,
illegal or unenforceable provisions.
SECTION 9.13. Counterparts. This Agreement may be executed in
counterparts (and by different parties hereto on different counterparts), each
of which shall constitute an original but all of which when taken together shall
constitute a single contract, and shall become effective as provided in Section
9.03. Delivery of an executed signature page to this Agreement by facsimile
transmission shall be as effective as delivery of a manually signed counterpart
of this Agreement.
SECTION 9.14. Headings. Article and Section headings and the Table of
Contents used herein are for convenience of reference only, are not part of this
Agreement and are not to affect the construction of, or to be taken into
consideration in interpreting, this Agreement.
SECTION 9.15. Jurisdiction; Consent to Service of Process. (a) Each of
Holdings and the Borrower hereby irrevocably and unconditionally submits, for
itself and its property, to the nonexclusive jurisdiction of any New York State
court or Federal court of the United States of America sitting in New York City,
and any appellate court from any thereof, in any action or proceeding arising
out of or relating to this Agreement or the other Loan Documents, or for
recognition or enforcement of any judgment, and each of the parties hereto
hereby irrevocably and unconditionally agrees that all claims in respect of any
such action or proceeding may be heard and determined in such New York State or,
to the extent permitted by law, in such Federal court. Each of the parties
hereto agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law. Nothing in this Agreement shall affect any
right that the Administrative Agent, the Collateral Agent, the Issuing Bank or
any Lender may otherwise have to bring any action or proceeding relating to this
Agreement or the other Loan Documents against the Borrower, Holdings or their
respective properties in the courts of any jurisdiction.
(b) Each of Holdings and the Borrower hereby irrevocably and
unconditionally waives, to the fullest extent it may legally and effectively do
so, any objection which it may now or hereafter have to the laying of venue of
any suit, action or proceeding arising out of or relating to this Agreement or
the other Loan Documents in any New York State or Federal court. Each of the
parties
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hereto hereby irrevocably waives, to the fullest extent permitted by law, the
defense of an inconvenient forum to the maintenance of such action or proceeding
in any such court.
(c) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 9.01. Nothing in this
Agreement will affect the right of any party to this Agreement to serve process
in any other manner permitted by law.
SECTION 9.16. Judgment Currency. (a) The obligations of the Borrower
and the other Loan Parties hereunder and under the other Loan Documents to make
payments in dollars (the "Obligation Currency") shall not be discharged or
satisfied by any tender or recovery pursuant to any judgment expressed in or
converted into any currency other than the Obligation Currency, except to the
extent that such tender or recovery results in the effective receipt by the
Administrative Agent or a Lender or the Issuing Bank of the full amount of the
Obligation Currency expressed to be payable to the Administrative Agent or such
Lender or the Issuing Bank under this Agreement or the other Loan Documents. If,
for the purpose of obtaining or enforcing judgment against the Borrower or any
other Loan Party or in any court or in any jurisdiction, it becomes necessary to
convert into or from any currency other than the Obligation Currency (such other
currency being hereinafter referred to as the "Judgment Currency") an amount due
in the Obligation Currency, the conversion shall be made at the rate of exchange
(as quoted by the Administrative Agent or if the Administrative Agent does not
quote a rate of exchange on such currency, by a known dealer in such currency
designated by the Administrative Agent) determined, in each case, as of the date
immediately preceding the day on which the judgment is given (such Business Day
being hereinafter referred to as the "Judgment Currency Conversion Date").
(b) If there is a change in the rate of exchange prevailing between the
Judgment Currency Conversion Date and the date of actual payment of the amount
due, the Borrower covenants and agrees to pay, or cause to be paid, as a
separate obligation and notwithstanding any judgment, such additional amounts,
if any (but in any event not a lesser amount), as may be necessary to ensure
that the amount paid in the Judgment Currency, when converted at the rate of
exchange prevailing on the date of payment, will produce the amount of the
Obligation Currency which could have been purchased with the amount of Judgment
Currency stipulated in the judgment or judicial award at the rate of exchange
prevailing on the Judgment Currency Conversion Date.
(c) For purposes of determining the rate of exchange for this Section,
such amounts shall include any premium and costs payable in connection with the
purchase of the Obligation Currency.
SECTION 9.17. Confidentiality. The Administrative Agent, the Collateral
Agent, the Issuing Bank and each of the Lenders agrees to keep confidential (and
to use its best efforts to cause its respective agents and representatives to
keep confidential) the Information (as defined below) and all copies thereof,
extracts therefrom and analyses or other materials based thereon, except that
the Administrative Agent, the Collateral Agent, the Issuing Bank or any Lender
shall be permitted to disclose Information (a) to such of its respective
officers, directors, employees, agents, affiliates and representatives as need
to know such Information, (b) to a potential assignee or participant of such
Lender or any direct or indirect contractual counterparty in any swap agreement
relating to the Loans or such potential assignee's or participant's or
counterparty's advisors who need to know such Information (provided that any
such potential assignee or participant or counterparty shall, and shall use its
best efforts to cause its advisors to, keep confidential all such information on
the terms set forth
<PAGE>
91
in this Section 9.17, (c) to the extent requested by any regulatory authority,
(d) to the extent otherwise required by applicable laws and regulations or by
any subpoena or similar legal process, (e) in connection with any suit, action
or proceeding relating to the enforcement of its rights hereunder or under the
other Loan Documents or (f) to the extent such Information (i) becomes publicly
available other than as a result of a breach of this Section 9.17 or (ii)
becomes available to the Administrative Agent, the Issuing Bank, any Lender or
the Collateral Agent on a nonconfidential basis from a source other than the
Borrower or Holdings. For the purposes of this Section, "Information" shall mean
all financial statements, certificates, reports, agreements and information
(including all analyses, compilations and studies prepared by the Administrative
Agent, the Collateral Agent, the Issuing Bank or any Lender based on any of the
foregoing) that are received from the Borrower or Holdings and related to the
Borrower or Holdings, any shareholder of the Borrower or Holdings or any
employee, customer or supplier of the Borrower or Holdings, other than any of
the foregoing that were available to the Administrative Agent, the Collateral
Agent, the Issuing Bank or any Lender on a nonconfidential basis prior to its
disclosure thereto by the Borrower or Holdings, and which are in the case of
Information provided after the date hereof, clearly identified at the time of
delivery as confidential. The provisions of this Section 9.17 shall remain
operative and in full force and effect regardless of the expiration and term of
this Agreement. Borrower or Holdings, other than any of the foregoing that were
available to the Administrative Agent, the Collateral Agent, the Issuing Bank or
any Lender on a nonconfidential basis prior to its disclosure thereto by the
Borrower or Holdings, and which are in the case of Information provided after
the date hereof, clearly identified at the time of delivery as confidential. The
provisions of this Section 9.17 shall remain operative and in full force and
effect regardless of the expiration and term of this Agreement.
<PAGE>
92
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
INTERSIL CORPORATION,
by /s/ Greg Williams
----------------------------------------
Name: Greg Williams
Title: President and CEO
INTERSIL HOLDING CORPORATION,
by /s/ Greg Williams
----------------------------------------
Name: Greg Williams
Title: President and CEO
CREDIT SUISSE FIRST BOSTON, individually,
and as Administrative Agent, Collateral
Agent, Swingline Lender and an Issuing
Bank,
by /s/ Chris T. Horgan
----------------------------------------
Name: Chris T. Horgan
Title: Vice President
by /s/ Julia P. Kingsbury
----------------------------------------
Name: Julia P. Kingsbury
Title: Vice President
SALOMON SMITH BARNEY INC., individually,
and as Syndication Agent,
by /s/ Nicolas T. Erni
----------------------------------------
Name: Nicolas T. Erni
Title: First Vice President
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, individually, and as
Documentation Agent,
by /s/ Charles O. O'Brian
----------------------------------------
Name: Charles O. O'Brian
Title: Managing Director
<PAGE>
93
SCOTIABANC INC,
by /s/ W. J. Brown
----------------------------------------
Name: W.J. Brown
Title: Managing Director
TRANSAMERICA COMMERCIAL FINANCE
CORPORATION,
by /s/ Christopher C. Meals
----------------------------------------
Name: Christopher C. Meals
Title: Vice President-Credit
IBM CREDIT CORPORATION,
by /s/ Thomas S. Curcio
----------------------------------------
Name: Thomas S. Curcio
Title: Manager of Credit
SUNTRUST BANK, CENTRAL FLORIDA,
NATIONAL ASSOCIATION,
by /s/ W. David Wisdom
----------------------------------------
Name: W. David Wisdom
Title: Vice President
BANKBOSTON, N.A., as Trust Administrator for
LONGLAND MASTER TRUST IV,
by /s/ Renee A. Ross
----------------------------------------
Name: Renee A. Ross
Title: Managing Director
Credit Derivatives
SRF TRADING, INC.,
by /s/ Kelly C. Walker
----------------------------------------
Name: Kelly C. Walker
Title: Vice President
<PAGE>
94
BANKBOSTON, N.A., as Trust Administrator for
LONGLAND MASTER TRUST IV,
by /s/ Renee A. Ross
----------------------------------------
Name: Renee A. Ross
Title: Managing Director
Credit Derivatives
STEIN ROE FLOATING RATE LIMITED
LIABILITY COMPANY,
by /s/ Kelly C. Walker
----------------------------------------
Name: Kelly C. Walker
Title: Vice President
BANKBOSTON, N.A.,
by /s/ Lynn R. Schade
----------------------------------------
Name: Lynn R. Schade
Title: Vice President
MERRILL LYNCH SENIOR FLOATING RATE
FUND, INC.,
by /s/ Joseph Moroney
----------------------------------------
Name: Joseph Moroney
Title: Authorized Signatory
THE FUJI BANK, LIMITED,
by /s/ Teiji Teramoto
----------------------------------------
Name: Teiji Meramoto
Title: Vice President & Manager
OLYMPIC FUNDING TRUST, SERIES 1999-1,
by /s/ Kelly C. Walker
----------------------------------------
Name: Kelly C. Walker
Title: Authorized Agent
<PAGE>
95
MORGAN STANLEY DEAN WITTER PRIME
INCOME TRUST,
by /s/ Peter Gewirtz
----------------------------------------
Name: Peter Gewirtz
Title: Authorized Signatory
SALOMON BROTHERS HOLDING COMPANY
INC,
by /s/ Timothy L. Freeman
----------------------------------------
Name: Timothy L. Freeman
Title: Attorney-in-Fact
NORTH AMERICAN SENIOR FLOATING
RATE FUND
By: CypressTree Investment Management
Company, Inc, as Portfolio Manager,
by /s/ Timothy M. Barns
----------------------------------------
Name: Timothy M. Barns
Title: Managing Director
<PAGE>
SCHEDULE 1.01(a)
MORTGAGED PROPERTIES
- - --------------------------------------------------------------------------------
Owner Interest Held Property Address
- - --------------------------------------------------------------------------------
Intersil Corporation Fee Title 2401 Palm Bay Road NE,
Palm Bay, Brevard County,
Florida 32905
- - --------------------------------------------------------------------------------
Harris Semiconductor (Ohio), Fee Title 1700 Fostoria Road, Findlay,
LLC Hancock County, Ohio 45840-
6287
- - --------------------------------------------------------------------------------
Harris Semiconductor Fee Title 125 Crestwood Industrial
(Pennsylvania), LLC Park, Mountaintop, Luzerne
County, Pennsylvania
(There are two (2) parcels to
this site, a 38.29 +/- acre
parcel and a 46.12 +/- acre
parcel)
- - --------------------------------------------------------------------------------
<PAGE>
SCHEDULE 1.01(b)
SUBSIDIARY GUARANTORS
ARTICLE I Harris Semiconductor (Ohio), LLC
ARTICLE II Harris Semiconductor (Pennsylvania), LLC
ARTICLE III Harris Semiconductor, LLC
ARTICLE IV Choice Microsystems, Inc.
<PAGE>
Schedule 2.01
Lenders and Commitments
<TABLE>
<CAPTION>
============================================================================================================
Institution Revolving Term B Total
Commitment Commitment Commitment
- - ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Credit Suisse First Boston $10,000,000.00 $85,000,000.00 $915,000,000.00
- - ------------------------------------------------------------------------------------------------------------
SSB/Citibank 10,000,000.00 10,000,000.00
- - ------------------------------------------------------------------------------------------------------------
Morgan Guaranty Trust 10,000,000.00 10,000,000.00
Company of New York
- - ------------------------------------------------------------------------------------------------------------
Scotiabanc Inc. 10,000,000.00 $5,000,000.00 15,000,000.00
- - ------------------------------------------------------------------------------------------------------------
Transamerica Commercial 10,000,000.00 10,000,000.00
Finance Corporation
- - ------------------------------------------------------------------------------------------------------------
IBM Credit Corporation 10,000,000.00 15,000,000.00 25,000,000.00
SunTrust Bank, Central 10,000,000.00 5,000,000.00 15,000,000.00
Florida, National
Association
- - ------------------------------------------------------------------------------------------------------------
BankBoston, N,A., as 10,000,000.00 10,000,000.00
Administrator for Longlane
Master Trust IV
- - ------------------------------------------------------------------------------------------------------------
BankBoston, N.A. 8,000,000.00 8,000,000.00
- - ------------------------------------------------------------------------------------------------------------
SRF Trading, Inc. 5,000,000.00 5,000,000.00
- - ------------------------------------------------------------------------------------------------------------
Stein Roe Floating Rate 1,000,000.00 1,000,000.00
Limited Liability Company
- - ------------------------------------------------------------------------------------------------------------
Merrill Lynch Senior 35,000,000.00 35,000,000.00
Floating Rate Fund, Inc.
- - ------------------------------------------------------------------------------------------------------------
Fuji Bank, Limited 10,000,000.00 10,000,000.00
- - ------------------------------------------------------------------------------------------------------------
Olympic Funding Trust, 5,000,000.00 5,000,000.00
Series 1999-1
- - ------------------------------------------------------------------------------------------------------------
CypressTree Investment 9,000,000.00 9,000,000.00
Management Company, Inc.
- - ------------------------------------------------------------------------------------------------------------
Morgan Stanley Dean 12,000,000.00 12,000,000.00
Witter Prime Income Trust
- - ------------------------------------------------------------------------------------------------------------
Total $70,000,000.00 $205,000,000.00 $275,000,000.00
============================================================================================================
</TABLE>
<PAGE>
SCHEDULE 3.01
QUALIFICATIONS AND GOOD STANDINGS
Harris Semiconductor (Pennsylvania), LLC
Delaware
Florida
Harris Semiconductor (Ohio), LLC
Delaware
Ohio
Harris Semiconductor, LLC
Delaware
Florida
<PAGE>
SCHEDULE 3.04
POST CLOSING FILINGS
1. Foreign qualifications of limited liability companies
<PAGE>
SCHEDULE 3.07(A)
(a) With respect to any Mortgaged Property, all of the Permitted Encumbrances
(as such term is defined in the Mortgage encumbering such Mortgaged Property)
existing on the Closing Date.
(b) Certain of the Patents and Patent Applications (see attached list) owned by
Harris were acquired by Harris through acquisitions of businesses. Harris chose
not to record the assignment of the patents to Harris with the Patent and
Trademark Office until such time as the patents and applications had to be
defended or transferred. The Borrower intends to complete these transfers as
soon as possible after the Closing.
<PAGE>
ISSUED PATENTS
OWNER: HARRIS CORPORATION
RECORD OWNER IN PATENT AND TRADEMARK OFFICE:
GENERAL ELECTRIC COMPANY
------------------------------------------
Patent Number Issue Date
------------------------------------------
4252263 24-Feb-1981
------------------------------------------
4263058 21-Apr-1981
------------------------------------------
4268843 19-May-1981
------------------------------------------
4331970 25-May-1982
------------------------------------------
4333964 08-Jun-1982
------------------------------------------
4333965 08-Jun-1982
------------------------------------------
4339869 20-Jul-1982
------------------------------------------
4341594 27-Jul-1982
------------------------------------------
4343015 03-Aug-1982
------------------------------------------
4345266 17-Aug-1982
------------------------------------------
4349621 14-Sep-1982
------------------------------------------
4356503 26-Oct-1982
------------------------------------------
4374389 15-Feb-1983
------------------------------------------
4377322 22-Mar-1983
------------------------------------------
4378565 29-Mar-1983
------------------------------------------
4390393 28-Jun-1983
------------------------------------------
4394712 19-Jul-1983
------------------------------------------
4396467 02-Aug-1983
------------------------------------------
4409278 11-Oct-1983
------------------------------------------
4412142 25-Oct-1983
------------------------------------------
4412868 01-Nov-1983
------------------------------------------
4413766 08-Nov-1983
------------------------------------------
4414243 08-Nov-1983
------------------------------------------
4415955 15-Nov-1983
------------------------------------------
4417385 29-Nov-1983
------------------------------------------
4427993 24-Jan-1984
------------------------------------------
4429011 31-Jan-1984
------------------------------------------
4430792 14-Feb-1984
------------------------------------------
4439856 27-Mar-1984
------------------------------------------
4443931 24-Apr-1984
------------------------------------------
4444618 24-Apr-1984
------------------------------------------
4466176 21-Aug-1984
------------------------------------------
4468574 28-Aug-1984
------------------------------------------
4471004 11-Sep-1984
------------------------------------------
4472628 18-Sep-1984
------------------------------------------
4472821 18-Sep-1984
------------------------------------------
4475280 09-Oct-1984
------------------------------------------
4484087 20-Nov-1984
------------------------------------------
4492738 08-Jan-1985
------------------------------------------
4492739 08-Jan-1985
------------------------------------------
4494134 15-Jan-1985
------------------------------------------
4496634 29-Jan-1985
------------------------------------------
4498172 05-Feb-1985
------------------------------------------
4498923 12-Feb-1985
------------------------------------------
4498924 12-Feb-1985
------------------------------------------
4498925 12-Feb-1985
------------------------------------------
4498926 12-Feb-1985
------------------------------------------
4499558 12-Feb-1985
------------------------------------------
4500029 19-Feb-1985
------------------------------------------
4500609 19-Feb-1985
------------------------------------------
4500898 19-Feb-1985
------------------------------------------
4505029 19-Mar-1985
------------------------------------------
<PAGE>
------------------------------------------
Patent Number Issue Date
------------------------------------------
4521695 04-Jun-1985
------------------------------------------
4523111 11-Jun-1985
------------------------------------------
4528582 09-Jul-1985
------------------------------------------
4536782 20-Aug-1985
------------------------------------------
4538170 27-Aug-1985
------------------------------------------
4571815 25-Feb-1986
------------------------------------------
4581626 08-Apr-1986
------------------------------------------
4583281 22-Apr-1986
------------------------------------------
4584207 22-Apr-1986
------------------------------------------
4585493 29-Apr-1986
------------------------------------------
4587712 13-May-1986
------------------------------------------
4590130 20-May-1986
------------------------------------------
4593458 10-Jun-1986
------------------------------------------
4597002 24-Jun-1986
------------------------------------------
4597822 01-Jul-1986
------------------------------------------
4598461 08-Jul-1986
------------------------------------------
4602210 22-Jul-1986
------------------------------------------
4609932 02-Sep-1986
------------------------------------------
4613882 23-Sep-1986
------------------------------------------
4620258 28-Oct-1986
------------------------------------------
4628174 09-Dec-1986
------------------------------------------
4635092 06-Jan-1987
------------------------------------------
4638400 20-Jan-1987
------------------------------------------
4641162 03-Feb-1987
------------------------------------------
4641174 03-Feb-1987
------------------------------------------
4644637 24-Feb-1987
------------------------------------------
4645957 24-Feb-1987
------------------------------------------
4646117 24-Feb-1987
------------------------------------------
4646129 24-Feb-1987
------------------------------------------
4648174 10-Mar-1987
------------------------------------------
4656493 07-Apr-1987
------------------------------------------
4661838 28-Apr-1987
------------------------------------------
4663547 05-May-1987
------------------------------------------
4677736 07-Jul-1987
------------------------------------------
4680603 14-Jul-1987
------------------------------------------
4684878 04-Aug-1987
------------------------------------------
4685040 04-Aug-1987
------------------------------------------
4691433 08-Sep-1987
------------------------------------------
4695489 22-Sep-1987
------------------------------------------
4707455 17-Nov-1987
------------------------------------------
4716124 29-Dec-1987
------------------------------------------
4717679 05-Jan-1988
------------------------------------------
4720308 19-Jan-1988
------------------------------------------
4722654 02-Feb-1988
------------------------------------------
4722912 02-Feb-1988
------------------------------------------
4725875 16-Feb-1988
------------------------------------------
4727515 23-Feb-1988
------------------------------------------
4729005 01-Mar-1988
------------------------------------------
4729079 01-Mar-1988
------------------------------------------
4730131 08-Mar-1988
------------------------------------------
4731695 15-Mar-1988
------------------------------------------
4732838 22-Mar-1988
------------------------------------------
4733039 22-Mar-1988
------------------------------------------
4733104 22-Mar-1988
------------------------------------------
4735917 05-Apr-1988
------------------------------------------
4735919 05-Apr-1988
------------------------------------------
4737033 12-Apr-1988
------------------------------------------
4737217 12-Apr-1988
------------------------------------------
4737828 12-Apr-1988
------------------------------------------
<PAGE>
------------------------------------------
Patent Number Issue Date
------------------------------------------
4739387 19-Apr-1988
------------------------------------------
4741212 03-May-1988
------------------------------------------
4743952 10-May-1988
------------------------------------------
4745089 17-May-1988
------------------------------------------
4746375 24-May-1988
------------------------------------------
4750216 07-Jun-1988
------------------------------------------
4750666 14-Jun-1988
------------------------------------------
4755481 05-Jul-1988
------------------------------------------
4760557 26-Jul-1988
------------------------------------------
4764482 16-Aug-1988
------------------------------------------
4766317 23-Aug-1988
------------------------------------------
4767724 30-Aug-1988
------------------------------------------
4768016 30-Aug-1988
------------------------------------------
4769744 06-Sep-1988
------------------------------------------
4772568 20-Sep-1988
------------------------------------------
4774452 27-Sep-1988
------------------------------------------
4775641 04-Oct-1988
------------------------------------------
4775952 04-Oct-1988
------------------------------------------
4778776 18-Oct-1988
------------------------------------------
4779161 18-Oct-1988
------------------------------------------
4782249 01-Nov-1988
------------------------------------------
4782379 01-Nov-1988
------------------------------------------
4783643 08-Nov-1988
------------------------------------------
4783690 08-Nov-1988
------------------------------------------
4784936 15-Nov-1988
------------------------------------------
4786814 22-Nov-1988
------------------------------------------
4786955 22-Nov-1988
------------------------------------------
4786961 22-Nov-1988
------------------------------------------
4791464 13-Dec-1988
------------------------------------------
4794432 27-Dec-1988
------------------------------------------
4794437 27-Dec-1988
------------------------------------------
4795716 03-Jan-1989
------------------------------------------
4796070 03-Jan-1989
------------------------------------------
4799095 17-Jan-1989
------------------------------------------
4801985 31-Jan-1989
------------------------------------------
4801986 31-Jan-1989
------------------------------------------
4803528 07-Feb-1989
------------------------------------------
4803533 07-Feb-1989
------------------------------------------
4805187 14-Feb-1989
------------------------------------------
4809047 28-Feb-1989
------------------------------------------
4809135 28-Feb-1989
------------------------------------------
4810617 07-Mar-1989
------------------------------------------
4810619 07-Mar-1989
------------------------------------------
4810665 07-Mar-1989
------------------------------------------
4814283 21-Mar-1989
------------------------------------------
4816422 28-Mar-1989
------------------------------------------
4816892 28-Mar-1989
------------------------------------------
4821095 11-Apr-1989
------------------------------------------
4823176 18-Apr-1989
------------------------------------------
4824698 25-Apr-1989
------------------------------------------
4824802 25-Apr-1989
------------------------------------------
4833644 23-May-1989
------------------------------------------
4837606 06-Jun-1989
------------------------------------------
4845050 04-Jul-1989
------------------------------------------
4847671 11-Jul-1989
------------------------------------------
4849377 18-Jul-1989
------------------------------------------
4857977 15-Aug-1989
------------------------------------------
4857983 15-Aug-1989
------------------------------------------
<PAGE>
------------------------------------------
Patent Number Issue Date
------------------------------------------
4859620 22-Aug-1989
------------------------------------------
4860080 22-Aug-1989
------------------------------------------
4862242 29-Aug-1989
------------------------------------------
4864379 05-Sep-1989
------------------------------------------
4868921 19-Sep-1989
------------------------------------------
4871617 03-Oct-1989
------------------------------------------
4872039 03-Oct-1989
------------------------------------------
4872141 03-Oct-1989
------------------------------------------
4883767 28-Nov-1989
------------------------------------------
4888627 19-Dec-1989
------------------------------------------
4890143 26-Dec-1989
------------------------------------------
4895780 23-Jan-1990
------------------------------------------
4897650 30-Jan-1990
------------------------------------------
4901127 13-Feb-1990
------------------------------------------
4901135 13-Feb-1990
------------------------------------------
4903094 20-Feb-1990
------------------------------------------
4903107 20-Feb-1990
------------------------------------------
4903189 20-Feb-1990
------------------------------------------
4904609 27-Feb-1990
------------------------------------------
4908736 13-Mar-1990
------------------------------------------
4910563 20-Mar-1990
------------------------------------------
4914812 10-Apr-1990
------------------------------------------
4926236 15-May-1990
------------------------------------------
4927772 22-May-1990
------------------------------------------
4933740 12-Jun-1990
------------------------------------------
4933742 12-Jun-1990
------------------------------------------
4933904 12-Jun-1990
------------------------------------------
4933994 19-Jun-1990
------------------------------------------
4937467 26-Jun-1990
------------------------------------------
4937644 26-Jun-1990
------------------------------------------
4939101 03-Jul-1990
------------------------------------------
4941026 10-Jul-1990
------------------------------------------
4942440 17-Jul-1990
------------------------------------------
4942449 17-Jul-1990
------------------------------------------
4947221 07-Aug-1990
------------------------------------------
4951221 21-Aug-1990
------------------------------------------
4958210 18-Sep-1990
------------------------------------------
4958211 18-Sep-1990
------------------------------------------
4963951 16-Oct-1990
------------------------------------------
4964726 23-Oct-1990
------------------------------------------
4967243 30-Oct-1990
------------------------------------------
4969027 06-Nov-1990
------------------------------------------
4969028 06-Nov-1990
------------------------------------------
4980740 25-Dec-1990
------------------------------------------
4980741 25-Dec-1990
------------------------------------------
4981816 01-Jan-1991
------------------------------------------
4982258 01-Jan-1991
------------------------------------------
4983537 08-Jan-1991
------------------------------------------
4985740 15-Jan-1991
------------------------------------------
4989061 29-Jan-1991
------------------------------------------
4990995 05-Feb-1991
------------------------------------------
4994871 19-Feb-1991
------------------------------------------
4994883 19-Feb-1991
------------------------------------------
4996116 26-Feb-1991
------------------------------------------
4998151 05-Mar-1991
------------------------------------------
4998156 05-Mar-1991
------------------------------------------
4999684 12-Mar-1991
------------------------------------------
4999691 12-Mar-1991
------------------------------------------
<PAGE>
------------------------------------------
Patent Number Issue Date
------------------------------------------
5014102 07-May-1991
------------------------------------------
5015921 14-May-1991
------------------------------------------
5018002 21-May-1991
------------------------------------------
5028987 02-Jul-1991
------------------------------------------
5041896 20-Aug-1991
------------------------------------------
5082795 21-Jan-1992
------------------------------------------
5100740 31-Mar-1992
------------------------------------------
5103290 07-Apr-1992
------------------------------------------
5105536 21-Apr-1992
------------------------------------------
5135890 04-Aug-1992
------------------------------------------
5139972 18-Aug-1992
------------------------------------------
5166773 24-Nov-1992
------------------------------------------
5184206 02-Feb-1993
------------------------------------------
5206186 27-Apr-1993
------------------------------------------
5209390 11-May-1993
------------------------------------------
5293070 08-Mar-1994
------------------------------------------
5304847 19-Apr-1994
------------------------------------------
<PAGE>
ISSUED PATENTS
OWNER: HARRIS CORPORATION
RECORD OWNER IN PATENT AND TRADEMARK OFFICE:
RCA CORPORATION, GENERAL ELECTRIC SOLID STATE PATENTS, INC.,
AND HARRIS SEMICONDUCTOR PATENTS, INC.
------------------------------------------
Patent Number Issue Date
------------------------------------------
0032351 17-Feb-1987
------------------------------------------
4227411 14-Oct-1980
------------------------------------------
4230505 28-Oct-1980
------------------------------------------
4239790 16-Dec-1980
------------------------------------------
4242738 30-Dec-1980
------------------------------------------
4244001 06-Jan-1981
------------------------------------------
4250500 10-Feb-1981
------------------------------------------
4250541 10-Feb-1981
------------------------------------------
4251811 17-Feb-1981
------------------------------------------
4252574 24-Feb-1981
------------------------------------------
4253105 24-Feb-1981
------------------------------------------
4253106 24-Feb-1981
------------------------------------------
4253162 24-Feb-1981
------------------------------------------
4256052 17-Mar-1981
------------------------------------------
4256796 17-Mar-1981
------------------------------------------
4258508 31-Mar-1981
------------------------------------------
4260886 07-Apr-1981
------------------------------------------
4262073 14-Apr-1981
------------------------------------------
4262083 14-Apr-1981
------------------------------------------
4263057 21-Apr-1981
------------------------------------------
4263872 28-Apr-1981
------------------------------------------
4267519 12-May-1981
------------------------------------------
4268537 19-May-1981
------------------------------------------
4270190 26-May-1981
------------------------------------------
4272728 09-Jun-1981
------------------------------------------
4272882 16-Jun-1981
------------------------------------------
4275282 23-Jun-1981
------------------------------------------
4276688 07-Jul-1981
------------------------------------------
4277884 14-Jul-1981
------------------------------------------
4278508 14-Jul-1981
------------------------------------------
4279688 21-Jul-1981
------------------------------------------
4281400 28-Jul-1981
------------------------------------------
4282266 04-Aug-1981
------------------------------------------
4282477 04-Aug-1981
------------------------------------------
4282478 04-Aug-1981
------------------------------------------
4282496 04-Aug-1981
------------------------------------------
4282537 04-Aug-1981
------------------------------------------
4284033 18-Aug-1981
------------------------------------------
4284945 18-Aug-1981
------------------------------------------
4287256 01-Sep-1981
------------------------------------------
4291324 22-Sep-1981
------------------------------------------
4294321 13-Oct-1981
------------------------------------------
4295101 13-Oct-1981
------------------------------------------
4295266 20-Oct-1981
------------------------------------------
4296370 20-Oct-1981
------------------------------------------
4297149 27-Oct-1981
------------------------------------------
4297393 27-Oct-1981
------------------------------------------
4297644 27-Oct-1981
------------------------------------------
4299910 10-Nov-1981
------------------------------------------
4300091 10-Nov-1981
------------------------------------------
4302273 24-Nov-1981
------------------------------------------
<PAGE>
------------------------------------------
Patent Number Issue Date
------------------------------------------
4302498 24-Nov-1981
------------------------------------------
4302718 24-Nov-1981
------------------------------------------
4303341 01-Dec-1981
------------------------------------------
4303907 01-Dec-1981
------------------------------------------
4304983 08-Dec-1981
------------------------------------------
4305044 08-Dec-1981
------------------------------------------
4305086 08-Dec-1981
------------------------------------------
4305725 15-Dec-1981
------------------------------------------
4311967 19-Jan-1982
------------------------------------------
4312680 26-Jan-1982
------------------------------------------
4313106 26-Jan-1982
------------------------------------------
4313782 02-Feb-1982
------------------------------------------
4313809 02-Feb-1982
------------------------------------------
4314166 02-Feb-1982
------------------------------------------
4315782 16-Feb-1982
------------------------------------------
4317110 23-Feb-1982
------------------------------------------
4318087 02-Mar-1982
------------------------------------------
4318216 09-Mar-1982
------------------------------------------
4318749 09-Mar-1982
------------------------------------------
4319187 09-Mar-1982
------------------------------------------
4320373 16-Mar-1982
------------------------------------------
4321470 23-Mar-1982
------------------------------------------
4321492 23-Mar-1982
------------------------------------------
4321543 23-Mar-1982
------------------------------------------
4321648 23-Mar-1982
------------------------------------------
4322592 30-Mar-1982
------------------------------------------
4322691 30-Mar-1982
------------------------------------------
4324814 13-Apr-1982
------------------------------------------
4325017 13-Apr-1982
------------------------------------------
4325018 13-Apr-1982
------------------------------------------
4326494 27-Apr-1982
------------------------------------------
4326553 27-Apr-1982
------------------------------------------
4327325 27-Apr-1982
------------------------------------------
4328068 04-May-1982
------------------------------------------
4328614 11-May-1982
------------------------------------------
4329600 11-May-1982
------------------------------------------
4330671 18-May-1982
------------------------------------------
4332077 01-Jun-1982
------------------------------------------
4333051 01-Jun-1982
------------------------------------------
4333057 01-Jun-1982
------------------------------------------
4333058 01-Jun-1982
------------------------------------------
4333099 01-Jun-1982
------------------------------------------
4334196 08-Jun-1982
------------------------------------------
4334198 08-Jun-1982
------------------------------------------
4334347 15-Jun-1982
------------------------------------------
4335360 15-Jun-1982
------------------------------------------
4336550 22-Jun-1982
------------------------------------------
4337423 29-Jun-1982
------------------------------------------
4337522 29-Jun-1982
------------------------------------------
4339285 13-Jul-1982
------------------------------------------
4339645 13-Jul-1982
------------------------------------------
4339809 13-Jul-1982
------------------------------------------
4341861 27-Jul-1982
------------------------------------------
4344383 17-Aug-1982
------------------------------------------
4344985 17-Aug-1982
------------------------------------------
4345213 17-Aug-1982
------------------------------------------
4345216 17-Aug-1982
------------------------------------------
4348105 07-Sep-1982
------------------------------------------
4348365 07-Sep-1982
------------------------------------------
4348596 07-Sep-1982
------------------------------------------
<PAGE>
------------------------------------------
Patent Number Issue Date
------------------------------------------
4348886 14-Sep-1982
------------------------------------------
4349408 14-Sep-1982
------------------------------------------
4350906 21-Sep-1982
------------------------------------------
4352016 28-Sep-1982
------------------------------------------
4352017 28-Sep-1982
------------------------------------------
4352031 28-Sep-1982
------------------------------------------
4353036 05-Oct-1982
------------------------------------------
4353159 12-Oct-1982
------------------------------------------
4354255 12-Oct-1982
------------------------------------------
4355094 19-Oct-1982
------------------------------------------
4355114 19-Oct-1982
------------------------------------------
4355115 19-Oct-1982
------------------------------------------
4355283 19-Oct-1982
------------------------------------------
4355287 19-Oct-1982
------------------------------------------
4355341 19-Oct-1982
------------------------------------------
4355457 26-Oct-1982
------------------------------------------
4355903 26-Oct-1982
------------------------------------------
4356152 26-Oct-1982
------------------------------------------
4357203 02-Nov-1982
------------------------------------------
4357369 02-Nov-1982
------------------------------------------
4360785 23-Nov-1982
------------------------------------------
4361762 30-Nov-1982
------------------------------------------
4361815 30-Nov-1982
------------------------------------------
4361816 30-Nov-1982
------------------------------------------
4363830 14-Dec-1982
------------------------------------------
4364073 14-Dec-1982
------------------------------------------
4365174 21-Dec-1982
------------------------------------------
4365202 21-Dec-1982
------------------------------------------
4365212 21-Dec-1982
------------------------------------------
4366444 28-Dec-1982
------------------------------------------
4366495 28-Dec-1982
------------------------------------------
4369220 18-Jan-1983
------------------------------------------
4369254 18-Jan-1983
------------------------------------------
4369378 18-Jan-1983
------------------------------------------
4370196 25-Jan-1983
------------------------------------------
4370561 25-Jan-1983
------------------------------------------
4372807 08-Feb-1983
------------------------------------------
4374455 22-Feb-1983
------------------------------------------
4375209 01-Mar-1983
------------------------------------------
4375385 01-Mar-1983
------------------------------------------
4376031 08-Mar-1983
------------------------------------------
4376725 15-Mar-1983
------------------------------------------
4377642 22-Mar-1983
------------------------------------------
4377789 22-Mar-1983
------------------------------------------
4378583 29-Mar-1983
------------------------------------------
4379195 05-Apr-1983
------------------------------------------
4380740 19-Apr-1983
------------------------------------------
4380741 19-Apr-1983
------------------------------------------
4380750 19-Apr-1983
------------------------------------------
4380773 19-Apr-1983
------------------------------------------
4382192 03-May-1983
------------------------------------------
4383268 10-May-1983
------------------------------------------
4383869 17-May-1983
------------------------------------------
4386284 31-May-1983
------------------------------------------
4387013 07-Jun-1983
------------------------------------------
4388634 14-Jun-1983
------------------------------------------
4393160 12-Jul-1983
------------------------------------------
4393438 12-Jul-1983
------------------------------------------
<PAGE>
------------------------------------------
Patent Number Issue Date
------------------------------------------
4393572 19-Jul-1983
------------------------------------------
4395304 26-Jul-1983
------------------------------------------
4395467 26-Jul-1983
------------------------------------------
4396702 02-Aug-1983
------------------------------------------
4397938 09-Aug-1983
------------------------------------------
4397939 09-Aug-1983
------------------------------------------
4398206 09-Aug-1983
------------------------------------------
4399194 16-Aug-1983
------------------------------------------
4399320 16-Aug-1983
------------------------------------------
4399361 16-Aug-1983
------------------------------------------
4400257 23-Aug-1983
------------------------------------------
4400711 23-Aug-1983
------------------------------------------
4401689 30-Aug-1983
------------------------------------------
4401709 30-Aug-1983
------------------------------------------
4401775 30-Aug-1983
------------------------------------------
4402128 06-Sep-1983
------------------------------------------
4404235 13-Sep-1983
------------------------------------------
4405776 20-Sep-1983
------------------------------------------
4405864 20-Sep-1983
------------------------------------------
4405933 20-Sep-1983
------------------------------------------
4405996 20-Sep-1983
------------------------------------------
4408296 04-Oct-1983
------------------------------------------
4408884 11-Oct-1983
------------------------------------------
4410857 18-Oct-1983
------------------------------------------
4411734 25-Oct-1983
------------------------------------------
4415624 15-Nov-1983
------------------------------------------
4417160 22-Nov-1983
------------------------------------------
4417240 22-Nov-1983
------------------------------------------
4420503 13-Dec-1983
------------------------------------------
4420722 13-Dec-1983
------------------------------------------
4420765 13-Dec-1983
------------------------------------------
4421593 20-Dec-1983
------------------------------------------
4429047 31-Jan-1984
------------------------------------------
4429283 31-Jan-1984
------------------------------------------
4429284 31-Jan-1984
------------------------------------------
4429285 31-Jan-1984
------------------------------------------
4433008 21-Feb-1984
------------------------------------------
4433044 21-Feb-1984
------------------------------------------
4433469 28-Feb-1984
------------------------------------------
4434381 28-Feb-1984
------------------------------------------
4436509 13-Mar-1984
------------------------------------------
4436999 13-Mar-1984
------------------------------------------
4437024 13-Mar-1984
------------------------------------------
4439245 27-Mar-1984
------------------------------------------
4440799 03-Apr-1984
------------------------------------------
4441069 03-Apr-1984
------------------------------------------
4442134 10-Apr-1984
------------------------------------------
4442409 10-Apr-1984
------------------------------------------
4445270 01-May-1984
------------------------------------------
4449118 15-May-1984
------------------------------------------
4449185 15-May-1984
------------------------------------------
4450371 22-May-1984
------------------------------------------
4450524 22-May-1984
------------------------------------------
4450562 22-May-1984
------------------------------------------
4451507 29-May-1984
------------------------------------------
4452844 05-Jun-1984
------------------------------------------
4455565 19-Jun-1984
------------------------------------------
4456837 26-Jun-1984
------------------------------------------
<PAGE>
------------------------------------------
Patent Number Issue Date
------------------------------------------
4456879 26-Jun-1984
------------------------------------------
4457259 03-Jul-1984
------------------------------------------
4457976 03-Jul-1984
------------------------------------------
4460435 17-Jul-1984
------------------------------------------
4460868 17-Jul-1984
------------------------------------------
4460913 17-Jul-1984
------------------------------------------
4462002 24-Jul-1984
------------------------------------------
4463273 31-Jul-1984
------------------------------------------
4464754 07-Aug-1984
------------------------------------------
4464755 07-Aug-1984
------------------------------------------
4467009 21-Aug-1984
------------------------------------------
4470871 11-Sep-1984
------------------------------------------
4471237 11-Sep-1984
------------------------------------------
4471243 11-Sep-1984
------------------------------------------
4472210 18-Sep-1984
------------------------------------------
4472453 18-Sep-1984
------------------------------------------
4472459 18-Sep-1984
------------------------------------------
4472805 18-Sep-1984
------------------------------------------
4476994 16-Oct-1984
------------------------------------------
4478472 23-Oct-1984
------------------------------------------
4482422 13-Nov-1984
------------------------------------------
4484244 20-Nov-1984
------------------------------------------
4484331 20-Nov-1984
------------------------------------------
4487125 11-Dec-1984
------------------------------------------
4489103 18-Dec-1984
------------------------------------------
4489422 18-Dec-1984
------------------------------------------
4491807 01-Jan-1985
------------------------------------------
4495427 22-Jan-1985
------------------------------------------
4496418 29-Jan-1985
------------------------------------------
4498772 12-Feb-1985
------------------------------------------
4498775 12-Feb-1985
------------------------------------------
4499853 19-Feb-1985
------------------------------------------
4501978 26-Feb-1985
------------------------------------------
4502014 26-Feb-1985
------------------------------------------
4502206 05-Mar-1985
------------------------------------------
4504521 12-Mar-1985
------------------------------------------
4507334 26-Mar-1985
------------------------------------------
4512073 23-Apr-1985
------------------------------------------
4513397 23-Apr-1985
------------------------------------------
4519126 28-May-1985
------------------------------------------
4521703 04-Jun-1985
------------------------------------------
4525635 25-Jun-1985
------------------------------------------
4529892 16-Jul-1985
------------------------------------------
4532436 30-Jul-1985
------------------------------------------
4532534 30-Jul-1985
------------------------------------------
4534105 13-Aug-1985
------------------------------------------
4546016 08-Oct-1985
------------------------------------------
4546487 08-Oct-1985
------------------------------------------
4547261 15-Oct-1985
------------------------------------------
4549926 29-Oct-1985
------------------------------------------
4558345 10-Dec-1985
------------------------------------------
4558435 10-Dec-1985
------------------------------------------
4560879 24-Dec-1985
------------------------------------------
4561008 24-Dec-1985
------------------------------------------
4566025 21-Jan-1986
------------------------------------------
4567381 28-Jan-1986
------------------------------------------
4567387 28-Jan-1986
------------------------------------------
4567431 28-Jan-1986
------------------------------------------
<PAGE>
------------------------------------------
Patent Number Issue Date
------------------------------------------
4575636 11-Mar-1986
------------------------------------------
4575746 11-Mar-1986
------------------------------------------
4576829 18-Mar-1986
------------------------------------------
4578142 25-Mar-1986
------------------------------------------
4579454 01-Apr-1986
------------------------------------------
4582745 15-Apr-1986
------------------------------------------
4584026 22-Apr-1986
------------------------------------------
4584028 22-Apr-1986
------------------------------------------
4585515 29-Apr-1986
------------------------------------------
4586240 06-May-1986
------------------------------------------
4586375 06-May-1986
------------------------------------------
4587713 13-May-1986
------------------------------------------
4589002 13-May-1986
------------------------------------------
4589008 13-May-1986
------------------------------------------
4592792 03-Jun-1986
------------------------------------------
4594517 10-Jun-1986
------------------------------------------
4594518 10-Jun-1986
------------------------------------------
4594560 10-Jun-1986
------------------------------------------
4595837 17-Jun-1986
------------------------------------------
4595941 17-Jun-1986
------------------------------------------
4596938 24-Jun-1986
------------------------------------------
4598249 01-Jul-1986
------------------------------------------
4598462 08-Jul-1986
------------------------------------------
4603082 29-Jul-1986
------------------------------------------
4605479 12-Aug-1986
------------------------------------------
4605948 12-Aug-1986
------------------------------------------
4608118 26-Aug-1986
------------------------------------------
4608591 26-Aug-1986
------------------------------------------
4609614 02-Sep-1986
------------------------------------------
4612211 16-Sep-1986
------------------------------------------
4612270 16-Sep-1986
------------------------------------------
4612466 16-Sep-1986
------------------------------------------
4613829 23-Sep-1986
------------------------------------------
4614294 30-Sep-1986
------------------------------------------
4614897 30-Sep-1986
------------------------------------------
4615762 07-Oct-1986
------------------------------------------
4617550 14-Oct-1986
------------------------------------------
4618565 21-Oct-1986
------------------------------------------
4618849 21-Oct-1986
------------------------------------------
4618876 21-Oct-1986
------------------------------------------
4620366 04-Nov-1986
------------------------------------------
4621042 04-Nov-1986
------------------------------------------
4625120 25-Nov-1986
------------------------------------------
4631422 23-Dec-1986
------------------------------------------
4631562 23-Dec-1986
------------------------------------------
4631564 23-Dec-1986
------------------------------------------
4633283 30-Dec-1986
------------------------------------------
4634473 06-Jan-1987
------------------------------------------
4637836 20-Jan-1987
------------------------------------------
4638498 20-Jan-1987
------------------------------------------
4639752 27-Jan-1987
------------------------------------------
4639754 27-Jan-1987
------------------------------------------
4639762 27-Jan-1987
------------------------------------------
4639859 27-Jan-1987
------------------------------------------
4639897 27-Jan-1987
------------------------------------------
4639898 27-Jan-1987
------------------------------------------
4641130 03-Feb-1987
------------------------------------------
4641164 03-Feb-1987
------------------------------------------
<PAGE>
------------------------------------------
Patent Number Issue Date
------------------------------------------
4641261 03-Feb-1987
------------------------------------------
4642772 10-Feb-1987
------------------------------------------
4643385 17-Feb-1987
------------------------------------------
4648074 03-Mar-1987
------------------------------------------
4651178 17-Mar-1987
------------------------------------------
4652773 24-Mar-1987
------------------------------------------
4654545 31-Mar-1987
------------------------------------------
4656373 07-Apr-1987
------------------------------------------
4660276 28-Apr-1987
------------------------------------------
4661199 28-Apr-1987
------------------------------------------
4662059 05-May-1987
------------------------------------------
4662064 05-May-1987
------------------------------------------
4668080 26-May-1987
------------------------------------------
4668973 26-May-1987
------------------------------------------
4672314 09-Jun-1987
------------------------------------------
4675978 30-Jun-1987
------------------------------------------
4680483 14-Jul-1987
------------------------------------------
4682055 21-Jul-1987
------------------------------------------
4682195 21-Jul-1987
------------------------------------------
4684413 04-Aug-1987
------------------------------------------
4684970 04-Aug-1987
------------------------------------------
4685199 11-Aug-1987
------------------------------------------
4686112 11-Aug-1987
------------------------------------------
4687537 18-Aug-1987
------------------------------------------
4687730 18-Aug-1987
------------------------------------------
4689575 25-Aug-1987
------------------------------------------
4691109 01-Sep-1987
------------------------------------------
4692992 15-Sep-1987
------------------------------------------
4695744 22-Sep-1987
------------------------------------------
4695922 22-Sep-1987
------------------------------------------
4697085 29-Sep-1987
------------------------------------------
4698132 06-Oct-1987
------------------------------------------
4698316 06-Oct-1987
------------------------------------------
4700460 20-Oct-1987
------------------------------------------
4702993 27-Oct-1987
------------------------------------------
4704186 03-Nov-1987
------------------------------------------
4707623 17-Nov-1987
------------------------------------------
4710261 01-Dec-1987
------------------------------------------
4710440 01-Dec-1987
------------------------------------------
4716451 29-Dec-1987
------------------------------------------
4724530 09-Feb-1988
------------------------------------------
4731589 15-Mar-1988
------------------------------------------
4741926 03-May-1988
------------------------------------------
4751554 14-Jun-1988
------------------------------------------
4751561 14-Jun-1988
------------------------------------------
4758744 19-Jul-1988
------------------------------------------
4785339 15-Nov-1988
------------------------------------------
4789889 06-Dec-1988
------------------------------------------
4792837 20-Dec-1988
------------------------------------------
4809045 28-Feb-1989
------------------------------------------
4833473 23-May-1989
------------------------------------------
4847518 11-Jul-1989
------------------------------------------
4853610 01-Aug-1989
------------------------------------------
4881010 14-Nov-1989
------------------------------------------
4882749 21-Nov-1989
------------------------------------------
4897655 30-Jan-1990
------------------------------------------
4924113 08-May-1990
------------------------------------------
4924225 08-May-1990
------------------------------------------
<PAGE>
------------------------------------------
Patent Number Issue Date
------------------------------------------
4947362 07-Aug-1990
------------------------------------------
4967388 30-Oct-1990
------------------------------------------
4968989 06-Nov-1990
------------------------------------------
4998288 05-Mar-1991
------------------------------------------
5003615 26-Mar-1991
------------------------------------------
5021747 04-Jun-1991
------------------------------------------
5023613 11-Jun-1991
------------------------------------------
5023692 11-Jun-1991
------------------------------------------
5038197 06-Aug-1991
------------------------------------------
5049973 17-Sep-1991
------------------------------------------
5148264 15-Sep-1992
------------------------------------------
REO31263 31-May-1983
------------------------------------------
<PAGE>
ISSUED PATENTS
OWNER: HARRIS CORPORATION
RECORD OWNER IN PATENT AND TRADEMARK OFFICE:
INTERSIL, INC. AND HARRIS /INTERSIL, INC.
------------------------------------------
Patent Number Issue Date
------------------------------------------
4290100 15-Sep-1981
------------------------------------------
4336526 22-Jun-1982
------------------------------------------
4352839 05-Oct-1982
------------------------------------------
4361600 30-Nov-1982
------------------------------------------
4362598 07-Dec-1982
------------------------------------------
4395701 26-Jul-1983
------------------------------------------
4423385 27-Dec-1983
------------------------------------------
4433282 21-Feb-1984
------------------------------------------
4441117 03-Apr-1984
------------------------------------------
4465996 14-Aug-1984
------------------------------------------
4473757 25-Sep-1984
------------------------------------------
4486670 04-Dec-1984
------------------------------------------
4535410 13-Aug-1985
------------------------------------------
4546324 08-Oct-1985
------------------------------------------
4547683 15-Oct-1985
------------------------------------------
4552783 12-Nov-1985
------------------------------------------
4568913 04-Feb-1986
------------------------------------------
4595906 17-Jun-1986
------------------------------------------
4617473 14-Oct-1986
------------------------------------------
4633221 30-Dec-1986
------------------------------------------
4639715 27-Jan-1987
------------------------------------------
4641129 03-Feb-1987
------------------------------------------
4644353 17-Feb-1987
------------------------------------------
4646331 24-Feb-1987
------------------------------------------
4652808 24-Mar-1987
------------------------------------------
4656459 07-Apr-1987
------------------------------------------
4661764 28-Apr-1987
------------------------------------------
4667164 19-May-1987
------------------------------------------
4677452 30-Jun-1987
------------------------------------------
4683528 28-Jul-1987
------------------------------------------
4703199 27-Oct-1987
------------------------------------------
4749886 07-Jun-1988
------------------------------------------
4754160 28-Jun-1988
------------------------------------------
4787047 22-Nov-1988
------------------------------------------
4789959 06-Dec-1988
------------------------------------------
4831577 16-May-1989
------------------------------------------
4855722 08-Aug-1989
------------------------------------------
5159204 27-Oct-1992
------------------------------------------
<PAGE>
ISSUED PATENTS
OWNER: HARRIS CORPORATION
RECORD OWNER IN PATENT AND TRADEMARK OFFICE:
HARRIS/MOTOROLA
------------------------------------------
Patent Number Issue Date
------------------------------------------
5744984 28-Apr-1998
------------------------------------------
<PAGE>
ISSUED PATENTS
OWNER: HARRIS CORPORATION
RECORD OWNER IN PATENT AND TRADEMARK OFFICE:
HARRIS/CELESTICA
------------------------------------------
Patent Number Issue Date
------------------------------------------
5610503 11-Mar-1997
------------------------------------------
<PAGE>
ISSUED PATENTS
OWNER: HARRIS CORPORATION
RECORD OWNER IN PATENT AND TRADEMARK OFFICE:
RCA/TIMEX
------------------------------------------
Patent Number Issue Date
------------------------------------------
4475795 09-Oct-1984
------------------------------------------
<PAGE>
PENDING PATENT APPLICATIONS
APPLICANT: HARRIS CORPORATION
RECORD APPLICANT IN PATENT AND TRADEMARK OFFICE:
RCA CORPORATION, GENERAL ELECTRIC SOLID STATE PATENTS, INC.,
AND HARRIS SEMICONDUCTOR PATENTS, INC.
------------------------------------------
Application Number Filing Date
------------------------------------------
441372 12-Nov-1982
------------------------------------------
461759 28-Jan-1983
------------------------------------------
619372 11-Jun-1984
------------------------------------------
730444 06-May-1985
------------------------------------------
791396 25-Oct-1985
------------------------------------------
843505 26-Mar-1986
------------------------------------------
889941 28-Jul-1986
------------------------------------------
901570 29-Aug-1986
------------------------------------------
923648 27-Oct-1986
------------------------------------------
944526 22-Dec-1986
------------------------------------------
003170 14-Jan-1987
------------------------------------------
019015 26-Feb-1987
------------------------------------------
019456 26-Feb-1987
------------------------------------------
045767 28-Apr-1987
------------------------------------------
048706 12-May-1987
------------------------------------------
109767 19-Oct-1987
------------------------------------------
344084 22-Feb-1989
------------------------------------------
08/975472 21-Nov-1997
------------------------------------------
<PAGE>
PENDING PATENT APPLICATIONS
APPLICANT: HARRIS CORPORATION
RECORD APPLICANT IN PATENT AND TRADEMARK OFFICE:
GENERAL ELECTRIC COMPANY
------------------------------------------
Application Number Filing Date
------------------------------------------
261584 07-May-1981
------------------------------------------
396172 07-Jul-1982
------------------------------------------
514752 29-Aug-1983
------------------------------------------
714739 22-Mar-1985
------------------------------------------
07/778660 23-Sep-1985
------------------------------------------
860959 08-May-1986
------------------------------------------
900049 25-Aug-1986
------------------------------------------
909818 22-Sep-1986
------------------------------------------
911850 26-Sep-1986
------------------------------------------
912865 29-Sep-1986
------------------------------------------
937644 03-Dec-1986
------------------------------------------
941117 12-Dec-1986
------------------------------------------
032368 31-Mar-1987
------------------------------------------
049280 13-May-1987
------------------------------------------
049744 13-May-1987
------------------------------------------
054835 27-May-1987
------------------------------------------
060491 11-Jun-1987
------------------------------------------
063418 18-Jun-1987
------------------------------------------
084520 12-Aug-1987
------------------------------------------
165439 29-Feb-1988
------------------------------------------
08/310041 22-Sep-1994
------------------------------------------
<PAGE>
TRADEMARKS
OWNER: HARRIS CORPORATION
RECORD OWNER IN PATENT AND TRADEMARK OFFICE:
HARRIS/INTERSIL, INC.
<TABLE>
<CAPTION>
- - ------------------------------------------------------------------------------------------------------
Trademark Status Application # Filing Date Registration # Registration Date
- - ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
INTERSIL Registered 16741 22-Mar-1974 1014040 24-Jun-1975
- - ------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
SCHEDULE 3.07(C)
CONDEMNATION PROCEEDINGS
None.
<PAGE>
SCHEDULE 3.08
SUBSIDIARIES
<TABLE>
<CAPTION>
- - ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Stockholder Entity Entity Shares Authorized and Number of shares Percentage
Issued held held
- - ----------------------------------------------------------------------------------------------------------------------------
Intersil Corporation Choice Microsystems, Inc. 100,000 authorized; 80,000 80,000 shares 100%
issued
Intersil Corporation Harris KK (Japan) 8,000 authorized; 6,000 issued 6,000 shares 100%
- - ----------------------------------------------------------------------------------------------------------------------------
Intersil Corporation Harris Semiconducteurs SARL 25,740 authorized; 25,740 25,740 shares 100%
(France) issued
- - ----------------------------------------------------------------------------------------------------------------------------
Intersil Corporation Harris Semiconductor 100 authorized; 1 issued 1 share 100%
(Ohio), LLC
- - ----------------------------------------------------------------------------------------------------------------------------
Intersil Corporation Harris Semiconductor 100 authorized; 1 issued 1 share 100%
(Pennsylvania), LLC
- - ----------------------------------------------------------------------------------------------------------------------------
Intersil Corporation Harris Semiconductor Shares: 2,210,000 authorized; 49,994 common 99.988%
(Taiwan) Ltd. 50,000 issued shares
- - ----------------------------------------------------------------------------------------------------------------------------
Intersil Corporation Harris Semiconductor China 100 authorized; 2 issued 2 shares (1 share 100%
Ltd. (Hong Kong) held by Intersil
Corporation and 1
share held by
Leonatum
(Nominees) Ltd. in
Trust for Intersil
Corporation)
- - ----------------------------------------------------------------------------------------------------------------------------
Intersil Corporation Harris Semiconductor S.r.l. Shares: 20,000 authorized; 18,000 shares 90%
(Italy) 20,000 issued
- - ----------------------------------------------------------------------------------------------------------------------------
Intersil Corporation Harris Semiconductor, LLC 1,000 authorized; 300 issued 300 shares 100%
- - ----------------------------------------------------------------------------------------------------------------------------
Intersil Corporation Harris Semiconductor, Y.H. 8,325 authorized; 8,325 issued 8,325 shares 100%
(Korea)
- - ----------------------------------------------------------------------------------------------------------------------------
Intersil Corporation Intersil (Cayman) 50,000 authorized; 100 issued 100 shares 100%
Corporation
- - ----------------------------------------------------------------------------------------------------------------------------
Intersil Corporation Intersil Advanced 13,000 authorized; 100 issued 100 shares 100%
Technology (Labuan) Ltd.
- - ----------------------------------------------------------------------------------------------------------------------------
Intersil Holding Harris Semiconductor S.r.l. Shares: 20,000 authorized; 2,000 10%
Corporation (Italy) 20,000 issued
- - ----------------------------------------------------------------------------------------------------------------------------
Intersil Holding Intersil Corporation 1,000 authorized, 100 issued 100 shares 100%
Corporation
- - ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
SCHEDULE 3.09
LITIGATION
None.
<PAGE>
Schedule 3.17
ENVIRONMENTAL MATTERS
Holdings, the Borrower and the Subsidiaries disclose the following:
Findlay, Ohio
1. The facility has been cited for violating the Resource Conservation
Recovery Act ("RCRA") for operating a wastewater impoundment (Pond 1)
without a RCRA permit. The facility is in the process of completing closure
of this pond in accordance with an Ohio Environmental Protection Agency
("OEPA") approved closure plan dated November, 1998. The on-site closure
activities have been completed and the facility is in the process of
developing final closure documentation for submission to OEPA. Although
OEPA will likely approve the closure, it may require additional
investigation or remediation, including investigation to confirm and
delineate the presence or absence of perched groundwater underlying the
pond and whether it is impacted.
2. During the July 1999, environmental assessment conducted by Environ, a
discharge of unknown substances was identified through Outfall 001 to the
ditch. It appears that this discharge was through a valve and underground
piping associated with the Hazardous Waste Storage Area because the valves
were inadvertently left open. This discharge could require reporting under,
and constitute a violation of, the facility's NPDES permit.
3. The facility was previously a RCRA interim status facility. Consequently,
EPA Region V investigated the facility through its Environmental Priorities
Initiative in March 1993 and identified nine (9) Solid Waste Management
Units ("SWMUs"), four (4) of which are located outside of the building and
have had documented releases. (There were no documented releases from the
SWMUs inside the building.) These include SWMU 1 (the container storage
unit), SWMU 6 (former post-reaction lagoon), SWMU 8 (former transistor
landfill), and SWMU 6 (the Primary Lagoon-consisting of Ponds 1 and 2
discussed above). SWMU 1 underwent remediation in December 1996. SWMU 6 was
closed in 1966 and investigated in 1988, during which no contaminants were
identified. SWMU 8 was investigated in January and December 1989 and no
contaminants were identified accept for thallium and tin above background
levels in one sample. After USEPA conducted a Preliminary Assessment/Visual
Site Inspection ("PA/VSI") in March of 1993, the facility was assigned a
low priority in the RCRA Corrective Action Program (CORRACTS) database and
assigned a No Further Remedial Action Planned designation in the
CERCLIS/NFRAP database.
4. The facility is operating under several expired air permits. The facility
submitted 39 renewal applications in 1995 under the Federally Enforceable
State Operating Permit ("ESOP") program to entitle the facility to be
considered a synthetic minor under the 1990 Amendments to the Clean Air
Act. These applications are still under state review.
<PAGE>
Palm Bay, Florida
1. The facility is currently listed on the National Priorities List ("NPL")
under CERCLA for groundwater contamination. The facility is currently
conducting groundwater treatment and monitoring, the cost of which is
approximately $50,000 per year. This remediation is expected to continue
for several years.
2. The facility operates two injection wells covered under an Underground
Injection Control permit issued by the State of Florida. The permits
require the facility to monitor shallow and deep groundwater. In the event
chloride or total dissolved solids ("TDS") fall below certain levels for
three consecutive months, a meeting must be held with the State to discuss
the situation. Based on the recent results of the deep groundwater zone
over the past year, the TDS levels have fallen below the minimum levels
several times though not on consecutive months. The agency is aware of this
situation but has not take any action. The deep zone has shown a freshing
trend since monitoring began in 1986, but the levels are gradually
approaching a steady concentration above the regulatory limit. The facility
believes that the TDS levels are generally stabilizing, and that the few
exclusions are the result of laboratory and sampling errors.
3. The Florida Department of Environmental Protection ("FDEP") conducted an
unannounced RCRA compliance inspection on March 30, 1999. Harris has not
received a Notice of Violation, but FDEP identified some issues in the
closing meeting related to FDEP's paperwork review and physical inspection.
Harris has already resolved several items noted by FDEP and is preparing
aggressive plans to address the remaining items.
Mountaintop, Pennsylvania
1. The shallow and deep groundwater aquifers beneath the facility contain
elevated levels of Volatile Organic Compounds ("VOCs"). Harris believes
these impacts are a result of activities conducted by its predecessor. Some
of these conditions were identified in connection with facility's 1991
closure of an underground storage tank. Even though Harris developed
evidence that the groundwater conditions were not caused by the operation
or failure of the tank which was removed, the state has denied final
closure of the tank. Accordingly, the facility may elect to pursue final
closure through the Commonwealth's voluntary clean-up program ("Act 2"),
and additional investigation and possibly remediation may be required to
effect such closure.
2. In 1986, the facility discovered fluoride impacts to soil associated with
the former operation of on-site wastewater lagoons. Although the
Commonwealth does not have clean-up standards for fluoride, the facility
may pursue final closure through Act 2 and incur expenses for the
completion of remediation of the lagoons in the future.
3. The facility has been unable to maintain compliance with the fluoride
limits set forth in its discharge permit to the local sewer system, and the
facility believes that a detailed engineering evaluation and possible
modifications to the wastewater treatment system could be required. Costs
for these activities could be in the range of $1,000,000 to $3,000,000. The
facility believes some or all of these costs may be borne by the vendor of
the wastewater treatment system.
<PAGE>
4. The facility excavated and removed a underground storage tank containing
heating oil in 1996. No further work is expected to be required with regard
to this condition. The facility may pursue closure under Act 2 which may
involve, among other things, additional submittals to obtain closure.
5. Wastewater from the onsite wastewater treatment plant has occasionally
(less than 3 hours during 1998) been below the facility's permanent pH
range. According to facility personnel, the local sewer authority has
indicated that construction of post-treatment storage capacity may be
required to eliminate future permit violations, which could result in
expenses being incurred.
6. The facility operates a groundwater production well which was installed in
1986 for non-contact cooling water. This well extends to 400 feet below the
ground surface and the groundwater from this well is impacted VOCs
(specifically, trichlorothene, or TCE). The facility is required to treat
the water before using it as non contact cooling water through an air
stripper which was installed on the production well. While facility
personnel have no information regarding the possible sources of the TCE,
TCE was used in plant operations in the 1960s and 1970s.
7. As a result of a 1993 geotechnical study, the facility discovered the
presence of buried sludge on the north side of the plant. This condition is
reportedly from the onsite disposal of wastewater treatment sludge disposed
during the mid 1960s or early 1970s. The sludge was reportedly disposed in
an area approximately thirty feet wide. Subsequent analysis confirm the
materials are not hazardous; however, if the facility were required to
excavate and dispose of this sludge, such as for plant expansion, expenses
would be incurred for that activity.
8. Off-specification semiconductor devices were formally disposed of onsite in
the 1960s when RCA operated the facility. The disposal area is presently
under a building and, accordingly, no leaching of materials is expected.
However, no ground water sampling has been conducted in this area.
Kuala Lumpur, Malaysia
1. The Malaysia facility was recently inspected by the Department of
Environment ("DOE") and the department determined that authorizations to
install the presently operating wastewater treatment plant and air
pollution control equipment is required. The DOE requested that such
paperwork be submitted within a certain timeframe. The facility hired a
consultant who is currently preparing the submissions. The facility expects
to submit the documentation within the required timeframe.
Miscellaneous
1. According to a letter dated November, 1998 from a law firm, the facility
has been identified as a Potentially Responsible Party ("PRP") at the
Southdown Environmental Treatment Systems, Inc. Site. Harris has not
completed its investigation of its waste shipments to this site, and
accordingly it cannot estimate the potentially liability of that site. The
facility no longer sends waste to that site.
2. On December 31, 1998, the Four County Landfill PRP Group, a group of
potentially responsible parties ("PRPs") at the Four County Landfill Site
(the "Site") in Delong, Indiana
<PAGE>
(the "Four County Group"), sent a letter to approximately 1,500 former
customers of Chem-Met, which has trans-shipped waste to the Site, proposing
de minimis settlements for each customer, regarding the Remedial
Action/Feasibility Study for the entire Site and Remedial Design/Remedial
Action for Operating Unit #1 of the Site. Harris Semiconductor paid its
$3,000 de minimis settlement amount in February 1999.
3. Harris Corporate, Harris Semiconductor and Harris Electronic Systems Sector
each sent hazardous materials to the Woodco Facility, a recycling and
transfer facility near Orlando. The Florida Department of Environmental
Protection ("FDEP") filed suit against Woodco and fourteen generators,
including Harris, requesting that the defendants be ordered to initiate an
investigation and remediation program at the site. Harris has agreed to pay
29.4% (its percentage of the waste-in volume) of up to $1.6 million in
cleanup costs. The PRP Group has negotiated a Settlement Agreement in this
matter, which was signed by all PRP's and adopted by FDEP on or about
September 19, 1994. The Settlement Agreement calls for continued remedial
actions at the site.
4. The U.S. Environmental Protection Agency has alleged that there is a
contamination problem at the former Solvents Recovery Service of New
England, Inc., waste treatment and disposal facility in Southington, CT,
which needs to be addressed. The former Harris Semiconductor Poughkeepsie,
NY facility has been identified, along with 13,00 other parties, as having
shipped waste solvents to the site.
5. Harris Semiconductor's former Poughkeepsie, NY facility is the subject of a
cleanup being done under the supervision of the New York State Department
of Environmental Conservation.
<PAGE>
SCHEDULE 3.18
INSURANCE
BORROWER AND SUBSIDIARIES OF BORROWER
<TABLE>
<CAPTION>
CORE COVERAGE MINIMUM AMOUNT DEDUCTIBLE
REQUIRED TO BE
MAINTAINED
<S> <C> <C>
Property 2 Billion $100,000
$2,500,000 (Windstorm)
2.5MM
Windstorm Ded. $500,000
10MM
Cargo $25,000
1MM
General Liability None
200MM
Umbrella $10,000
1MM
Auto Liability None
Statutory
Workers Compensation $250,000
200MM
Aircraft Products None
5MM
Non-Owned Avaition Liability None
1MM
Foreign Voluntary WC None
10MM
Directors & Officers Liability $150,000
Incl. In D&O Limit
Employment Practices Liab. $50,000
Incl. In D&O Limit
Fiduciary $10,000
5MM
Crime $5,000
3MM
Kidnap & Ransom None
</TABLE>
<PAGE>
SCHEDULE 3.19(d)
MORTGAGE FILING OFFICES
<TABLE>
<CAPTION>
- - --------------------------------------------------------------------------------------------------------
Property Address Filing Office
- - --------------------------------------------------------------------------------------------------------
<S> <C>
2401 Palm Bay Road NE, Palm Bay, Brevard Brevard County, Florida land records
County, Florida 32905
- - --------------------------------------------------------------------------------------------------------
1700 Fostoria Road, Findlay, Hancock County, Hancock County, Ohio land records
Ohio 45840-6287
- - --------------------------------------------------------------------------------------------------------
125 Crestwood Industrial Park, Mountaintop, Luzerne County, Pennsylvania land records
Luzerne County, Pennsylvania
- - --------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
SCHEDULE 3.20(a)
REAL PROPERTY OWNED IN FEE
<TABLE>
<CAPTION>
- - -------------------------------------------------------------------------------------------------------
Owner Property Address
- - -------------------------------------------------------------------------------------------------------
<S> <C>
2401 Palm Bay Road NE, Palm Bay, Brevard
Intersil Corporation County, Florida 32905
- - -------------------------------------------------------------------------------------------------------
Harris Semiconductor (Ohio), LLC 1700 Fostoria Road, Findlay, Hancock County,
Ohio 45840-6287
- - -------------------------------------------------------------------------------------------------------
Harris Semiconductor (Pennsylvania), LLC 125 Crestwood Industrial Park, Mountaintop,
Luzerne County, Pennsylvania
(There are two (2) parcels to this site, a 38.29
+/- acre parcel and a 46.12 +/- acre parcel)
- - -------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
SCHEDULE 3.20 (b)
LEASED REAL PROPERTY
Tenant: Borrower:
AMERICAS
1. Six New England Executive Park
Burlington, MA 01803
Lessor: Trustees of Six New England Executive Park Trust
2. 11590 North Meridian St., Suite 100
Carmel, IN 46032
Lessor: Fidelity Office Building II, L.P. - Indianapolis
3. 1503 South Coast Drive
Suite 320
Costa Mesa, CA 92626
Lessor: Connecticut General Life Insurance Company - Newport Beach
4. 17000 Dallas Parkway
Suite 205
Dallas, TX 75248
Lessor: Corrigan Investments, Inc. - Dallas
5. 490 Wheeler Road, Suite 165B
Hauppauge, NY11788-4365
Lessor: Mr. Parvitz Farahzad Managed by: Concorde Management
Services, Inc. -
Plainview, NY
6. 600 Boulevard South, Suite 103
Huntsville, AL 35802
Lessor: Office Park South, Ltd., c/o Averbuch Enterprises - Huntsville
7. 65 Readington Road
Branchburg, NJ 08876
Lessor: OPC Associates, L.L.C. - New Jersey
8. 4020 Stirrup Creek Drive
Durham, NC 27705
Lessor: Highwoods/ Forsyth Realty Limited Partnership - Raleigh, NC
9. NOTE: Tenant is subsidiary, Choice Microsystems, Inc. and not Borrower
4242 Medical Drive, Suite 3100
San Antonio, TX 78229
Lessor: Austin Equity Investors, Ltd.- Amarillo, TX
10. 800 Silverado Street, Suite 325
La Jolla, CA
Lessor: Pacific Silverado LLC
<PAGE>
SCHEDULE 3.20(b)
LEASED REAL PROPERTY
11. 3031 Tisch Way, Suite 800
San Jose, CA 95128
Lessor: Pacific Gateway Properties, Inc. - New York
12. NOTE: Lessee is Harris Corporation; Borrower subleases a portion of the
space
1101 Perimeter Drive, Suite 600
Schaumburg, IL 60173
Lessor: Woodfield Executive Center, Inc. - Illinois
13. American Center Office Building
27777 Franklin Road, Suite 460
Southfield, MI 48034
Lessor: Hall American Center Associates, L.P. - Michigan
14. Plaza 1000 at Main St., Suite 104 Voorhees, NJ 08043
Lessor: Radnor-Canuso Partnership - New Jersey
15. 125 Crestwood Industrial Park
Mountaintop, PA
(38.29 +/- acre parcel)
EUROPE
16. Harris Semiconductor - European Sales Headquarters
Mercure Center
Rue de la Fusee 100
B-1130 Brussels
Belgium
Lessor: Mercure Center, S.A.
17. Harris Semiconductor - United Kingdom
Riverside Way
Watchmoor Park
Camberley
Surrey GU15 3YQ
Lessor: Britel Fund Trustees Ltd. - London
18. Harris Semiconductor- Munich
Richard- Reitzner- Allee 4
D-85540 Haar
Germany
Lessor: KG Bayerische Hausbau GmbH und Co.
19. Harris Semiconductor- Milan
Viale Fulvio Testi, 126
I-20092 Cinisello Balsamo
Lessor: Fondo Pensioni Per IL Personale Della Banca Nazionale Del
Lavoro (National Bank of Lavoro)
<PAGE>
SCHEDULE 3.20(b)
LEASED REAL PROPERTY
20. Harris Semiconducteurs SARL
34 Avenue de L'Europe
Energy IV
F-78941 Veilizy Cedex
Paris, France
Lessor: U.I.S., Union Pour Le Financement d'Immeubles de Societes
21. Harris Semiconductor - Stuttgart
Kolumbusstrasse 35/1
D- 71063 Sindelfingen
Germany
Lessor: Grundstucksgemeinschaft, Jurgen Versteeg & Alfred PaBreiter
ASIA
22. Harris Semiconductor China Ltd.- Hong Kong Unit 1801-3, 18th Floor
Guangdong Water Building 83 Austin Road Tsimshatsui, Kowloon, Hong Kong
Lessor: Guangdong Water Properties Company Ltd.
23. Harris Advanced Technology SDN. BHD.
Property leased pursuant to: (i) Certificate of Leasehold Property,
Land Office No.: 7668; (ii) State Lease, Registration No.: 7128; and
(iii) Certificate of Leasehold Property, Land Title No.: 7666; and all
property known as
73 Jalan Enggang Ulu Kelang Free Trade Zone
54200 Kuala Lumpur
Malaysia
Lessors: The Government of Malaysia or other Governmental Authorities
24. Harris Semiconductor YH
Rm# 518
Korea Air Terminal Building
159-6, Samsung- Dong,
Kang Nam-ku, Seoul
135-728
Lessor: Korean City Air Terminal Co., Ltd.
25. Harris Semiconductor Design & Sales Pte Ltd.
No 1, Tannery Road 09-01
Cencon 1 Singapore 347719
Lessor: The Central Construction Company (Private) Ltd.- Singapore
<PAGE>
SCHEDULE 3.20(b)
LEASED REAL PROPERTY
26. Harris Semiconductor - Taiwan Limited
7F-6, No. 101
Fu Hsing North Road
Taipei, Taiwan
Lessor: Quanjin Company Ltd. - Taiwan
27. Harris Semiconductor- K.K.
Nishisando Yamaki Building A
3-28-6 Yoyugi, Shibuta-ku
Tokyo, 151-0053, Japan
Lessor: K.K. Yamaki Kosan
<PAGE>
SCHEDULE 4.02(a)
OTHER LOCAL COUNSEL
Michael C. Fletcher, Esq.
Griffin & Fletcher
125 East Ninth Street
Cincinnati, Ohio 45202
Tel.: (513) 421-1313
Fax: (513) 421-1118 \ 7828
Maria Spiliopoulos, Esq.
Rudin McCloskey Smith Schuster & Russell, P.A.
200 East Broward Boulevard
Ft. Lauderdale, FL 33301
Tel.: (954) 527-2433
Fax: (954) 764-4996
<PAGE>
SCHEDULE 6.01
OUTSTANDING INDEBTEDNESS ON CLOSING DATE
1. Guaranty by Borrower of all of the obligations and liabilities of Choice
Microsystems, Inc. (one of the Subsidiaries) under and pursuant to that certain
Office Lease dated as of October 7, 1998 between Austin Equity Investors, Ltd.,
as lessor, and Choice Microsystems, Inc., as lessee.
2. Loans made by agencies of the Commonwealth of Pennsylvania to Harris in an
aggregate amount not to exceed $4.6 million.
<PAGE>
SCHEDULE 6.05(h)
PERMITTED OPTION GRANT
Under an agreement with respect to certain assets related to the
PRISM(R) product business, Borrower will grant to Intersil Prism, LLC an option
to purchase such assets for the price paid for such assets under the Master
Transaction Agreement plus certain adjustments; however, the option may not be
exercised while any Borrowings are outstanding under the Agreement unless the
Borrower obtains the consent of the Required Lenders.
<PAGE>
SCHEDULE 6.02
LIEN EXISTING ON CLOSING DATE
(a) SEE ATTACHED LIEN SEARCH RESULTS
(b) Liens and other matters referred to in Schedules B to the title
insurance policies being issued to insure the liens of the mortgages.
(c) Lease Agreement between Borrower (as assignee of Harris Corporation,
acting through its Semiconductor Business Unit) and Align-Ritz, Inc. dated as of
July 2, 1999 with respect to Building 60 and a portion of Building 56 at
Mortgaged Property located in Palm Bay, Florida, together with Sitz Services
Agreement between Borrower (as assignee of Harris Corporation, acting through
its Semiconductor Business Unit) dated as of July 2, 1999.
(d) Lease Agreement between Borrower and Harris Corporation, acting through
its Government Communications Systems Division, dated of even or near date
herewith covering Building 63 at the Mortgaged Property located in Palm Bay,
Florida.
(e) Commercial Lease dated as of April 7, 1998 between Harris Semiconductor
(Pennsylvania), Inc. and Borrower (as assignee of Harris Corporation, acting
through its Semiconductor Sector) with respect to some or all of the Mortgaged
Property located in Mountain Top, Pennsylvania.
<PAGE>
EXHIBIT A
[Form of]
INTERSIL CORPORATION
ADMINISTRATIVE QUESTIONNAIRE
Please accurately complete the following information and return via fax to the
attention of Yvette McQueen or John Williams at Credit Suisse First Boston,
Agency Administration, as soon as possible, at Fax No. (212) 325-8304.
- - ------------------------------------------------------------------------------
LENDER LEGAL NAME TO APPEAR IN DOCUMENTATION:
GENERAL INFORMATION - DOMESTIC LENDING OFFICE:
Institution Name: ______________________________________________________________
Street Address: ________________________________________________________________
City, State, Zip Code: _________________________________________________________
GENERAL INFORMATION - EURODOLLAR LENDING OFFICE:
Institution Name: ______________________________________________________________
Street Address: ________________________________________________________________
City, State, Zip Code: _________________________________________________________
POST-CLOSING, ONGOING CREDIT CONTACTS/NOTIFICATION METHODS:
CREDIT CONTACTS: _______________________________________________________________
Primary Contact: _______________________________________________________________
Street Address: ________________________________________________________________
City, State, Zip Code: _________________________________________________________
Phone Number: __________________________________________________________________
Fax Number: ____________________________________________________________________
Backup Contact: ________________________________________________________________
Street Address: ________________________________________________________________
City, State, Zip Code: _________________________________________________________
Phone Number: __________________________________________________________________
Fax Number: ____________________________________________________________________
TAX WITHHOLDING:
Nonresident Alien ___ Y* ___ N
* Form 4224 Enclosed
Tax ID Number _________________________
<PAGE>
2
POST-CLOSING, ONGOING ADMIN. CONTACTS / NOTIFICATION METHODS:
ADMINISTRATIVE CONTACTS - BORROWINGS, PAYDOWNS, FEES, ETC.
Contact: _______________________________________________________________________
Street Address: ________________________________________________________________
City, State, Zip Code: _________________________________________________________
Phone Number: __________________________________________________________________
Fax Number: ____________________________________________________________________
PAYMENT INSTRUCTIONS:
Name of Bank to which funds are to be transferred: _____________________________
________________________________________________________________________________
Routing Transit/ABA number of Bank to which funds are to be transferred: _______
Name of Account, if applicable: ________________________________________________
Account Number: ________________________________________________________________
Additional information: ________________________________________________________
________________________________________________________________________________
MAILINGS:
Please specify the person to whom the Borrower should send financial and
compliance information received subsequent to the closing (if different from
primary credit contact):
Name: __________________________________________________________________________
Street Address: ________________________________________________________________
City, State, Zip Code: _________________________________________________________
It is very important that all the above information be accurately completed and
that this questionnaire be returned to the person specified in the introductory
paragraph of this questionnaire as soon as possible. If there is someone other
than yourself who should receive this questionnaire, please notify us of that
person's name and fax number and we will fax a copy of the questionnaire. If you
have any questions about this form, please call Yvette McQueen at (212)
325-9934.
<PAGE>
EXHIBIT B
[Form of]
ASSIGNMENT AND ACCEPTANCE
Reference is made to the Credit Agreement dated as of August 13, 1999
(as amended, supplemented or otherwise modified from time to time, the "Credit
Agreement"), among Intersil Corporation, a Delaware corporation (the
"Borrower"), Intersil Holding Corporation, a Delaware corporation, the lenders
from time to time party thereto (the "Lenders"), Credit Suisse First Boston, a
bank organized under the laws of Switzerland, acting through its New York
branch, as administrative agent for the Lenders (in such capacity, the
"Administrative Agent"), and as collateral agent, swingline lender and an
issuing bank, Salomon Smith Barney Inc., as syndication agent, and Morgan
Guaranty Trust Company of New York, as documentation agent. Terms defined in the
Credit Agreement are used herein with the same meanings.
1. The Assignor hereby sells and assigns, without recourse, to the
Assignee, and the Assignee hereby purchases and assumes, without recourse, from
the Assignor, effective as of the Effective Date set forth below (but not prior
to the registration of the information contained herein in the Register pursuant
to Section 9.04(e) of the Credit Agreement), the interests set forth below (the
"Assigned Interest") in the Assignor's rights and obligations under the Credit
Agreement and the other Loan Documents, including, without limitation, the
amounts and percentages set forth below of (i) the Commitments of the Assignor
on the Effective Date set forth below (the "Effective Date"), (ii) the Loans
owing to the Assignor which are outstanding on the Effective Date and (iii)
participations in Letters of Credit and Swingline Loans which are outstanding on
the Effective Date. Each of the Assignor and the Assignee hereby makes and
agrees to be bound by all the representations, warranties and agreements set
forth in Section 9.04(c) of the Credit Agreement, a copy of which has been
received by each such party. From and after the Effective Date (i) the Assignee
shall be a party to and be bound by the provisions of the Credit Agreement and,
to the extent of the interests assigned by this Assignment and Acceptance, have
the rights and obligations of a Lender thereunder and under the Loan Documents
and (ii) the Assignor shall, to the extent of the interests assigned by this
Assignment and Acceptance, relinquish its rights and be released from its
obligations under the Credit Agreement.
2. This Assignment and Acceptance is being delivered to the
Administrative Agent together with (i) if the Assignee is organized under the
laws of a jurisdiction outside the United States, any forms referred to in
Section 2.20(e) of the Credit Agreement, duly completed and executed by such
Assignee, (ii) if the Assignee is not already a Lender under the Credit
Agreement, an Administrative Questionnaire in the form of Exhibit A to the
Credit Agreement and (iii) a processing and recordation fee of $3,500.
3. This Assignment and Acceptance shall be governed by and construed in
accordance with the laws of the State of New York.
Date of Assignment: ____________________________________________________________
Legal Name of Assignor: ________________________________________________________
Legal Name of Assignee: ________________________________________________________
Assignee's Address for Notices: ________________________________________________
________________________________________________
Effective Date of Assignment: __________________________________________________
<PAGE>
2
Percentage Assigned of
Applicable Facility/Commitment
(set forth, to at least 8
decimals, as a percentage of
the Facility and the aggregate
Commitments of all Lenders
Principal Amount Assigned thereunder)
---------------------------------------------------------
Facility/Commitment
Revolving Credit $ %
Term Loans $ %
The terms set forth above are
hereby agreed to: Accepted */
_________________, as Assignor * CREDIT SUISSE FIRST BOSTON,
as Administrative Agent
by:___________________________ by:___________________________
Name: Name:
Title: Title:
by:___________________________
Name:
Title:
________________, as Assignee
* INTERSIL CORPORATION,
by:___________________________ by:___________________________
Name: Name:
Title: Title:
Accepted */
* [Issuing Bank] * CREDIT SUISSE FIRST BOSTON, as
Swingline Lender,
by:___________________________
Name: by:___________________________
Title: Name:
Title:
by:___________________________
Name: by:___________________________
Title: Name:
Title:
- - -------------------------
*/ To be completed to the extent consents are required under Section 9.04(b)
of the Credit Agreement.
<PAGE>
EXHIBIT C
FORM OF BORROWING REQUEST
Credit Suisse First Boston, as Administrative Agent for
the Lenders referred to below,
Eleven Madison Avenue
New York, New York 10020
Attention of John Williams
[Date]
Ladies and Gentlemen:
The undersigned, Intersil Corporation (the "Company"), refers to the Credit
Agreement dated as of August 13, 1999 (as amended, supplemented or otherwise
modified from time to time, the "Credit Agreement"), among the Company, Intersil
Holding Corporation, the lenders from time to time party thereto (the
"Lenders"), Credit Suisse First Boston, as administrative agent for the Lenders
(in such capacity, the "Agent"), collateral agent, swingline lender and an
issuing bank, Salomon Smith Barney Inc., as syndication agent, and Morgan
Guaranty Trust Company of New York, as documentation agent. Capitalized terms
used herein and not otherwise defined herein shall have the meanings assigned to
such terms in the Credit Agreement. The Company hereby gives you notice pursuant
to Section 2.03 of the Credit Agreement that it requests a Borrowing under the
Credit Agreement, and in that connection sets forth below the terms on which
such Borrowing is requested to be made:
(A) Date of Borrowing
(which is a Business Day) ______________________
(B) Principal Amount of
Borrowing 1/ ______________________
- - ---------------------
1/ Not less than $5,000,000 and in an integral multiple of $1,000,000, but in
any event not exceeding, as applicable, the available Total Revolving Credit
Commitment or the aggregate amount of the Term Loan Commitments available at
such time.
<PAGE>
2
(C) Interest rate basis 2/ ______________________
(D) Interest Period and the last
day thereof 3/ ______________________
(E) Funds are requested to be disbursed to the Company's account with
Credit Suisse First Boston (Account No. ).
Upon acceptance of any or all of the Loans offered by the Lenders in response
to this request, the Company shall be deemed to have represented and warranted
that the conditions to lending specified in Sections 4.01(b) and (c) of the
Credit Agreement have been satisfied.
INTERSIL CORPORATION,
by: _____________________________
Name:
Title: [Responsible Officer]
- - ---------------------
2/ Specify (a) Term Borrowing or Revolving Credit Borrowing and (b)
Eurodollar Borrowing or ABR Borrowing.
3/ Which shall be subject to the definition of "Interest Period" and end not
later than the Maturity Date (applicable only for Eurodollar Borrowings only).
<PAGE>
EXHIBIT D
[Form of]
INDEMNITY, SUBROGATION and CONTRIBUTION
AGREEMENT dated as of August 13, 1999, among INTERSIL
CORPORATION, a Delaware corporation (the "Borrower"),
each Subsidiary of the Borrower listed on Schedule I
hereto (the "Guarantors") and CREDIT SUISSE FIRST
BOSTON, a bank organized under the laws of
Switzerland, acting through its New York branch
("CSFB"), as collateral agent (in such capacity, the
"Collateral Agent") for the Secured Parties (as
defined in the Credit Agreement referred to below).
Reference is made to (a) the Credit Agreement dated as of August 13,
1999 (as amended, supplemented or otherwise modified from time to time, the
"Credit Agreement"), among the Borrower, Intersil Holding Corporation, a
Delaware corporation, the lenders from time to time party thereto (the
"Lenders"), CSFB, as administrative agent for the Lenders (in such capacity, the
"Administrative Agent"), and as Collateral Agent, swingline lender and an
issuing bank, Salomon Smith Barney Inc., as syndication agent, and Morgan
Guaranty Trust Company of New York, as documentation agent, and (b) the
Subsidiary Guarantee Agreement dated as of August 13, 1999, among the Guarantors
and the Collateral Agent (the "Subsidiary Guarantee Agreement"). Capitalized
terms used herein and not defined herein shall have the meanings assigned to
such terms in the Credit Agreement.
The Lenders have agreed to make Loans to the Borrower, and the Issuing
Bank has agreed to issue Letters of Credit for the account of the Borrower,
pursuant to, and upon the terms and subject to the conditions specified in, the
Credit Agreement. The Guarantors have guaranteed such Loans and the other
Obligations (as defined in the Subsidiary Guarantee Agreement) of the Borrower
under the Credit Agreement pursuant to the Subsidiary Guarantee Agreement;
certain Guarantors have granted Liens on and security interests in certain of
their assets to secure such guarantees. The obligations of the Lenders to make
Loans and of the Issuing Bank to issue Letters of Credit are conditioned on,
among other things, the execution and delivery by the Borrower and the
Guarantors of an agreement in the form hereof.
Accordingly, the Borrower, each Guarantor and the Collateral Agent
agree as follows:
SECTION 1. Indemnity and Subrogation. In addition to all such rights of
indemnity and subrogation as the Guarantors may have under applicable law (but
subject to Section 3), the Borrower agrees that (a) in the event a payment shall
be made by any Guarantor under the Subsidiary Guarantee Agreement, the Borrower
shall indemnify such Guarantor for the full amount of such payment and such
Guarantor shall be subrogated to the rights of the person to whom such payment
shall have been made to the extent of such payment and (b) in the event any
assets of any Guarantor shall be sold pursuant to any Security Document to
satisfy a claim of any Secured Party, the Borrower shall indemnify such
Guarantor in an amount equal to the greater of the book value or the fair market
value of the assets so sold.
SECTION 2. Contribution and Subrogation. Each Guarantor (a
"Contributing Guarantor") agrees (subject to Section 3) that, in the event a
payment shall be made by any other Guarantor under the Subsidiary Guarantee
Agreement or assets of any other Guarantor shall be sold pursuant to any
Security Document to satisfy a claim of any Secured Party and such other
Guarantor (the "Claiming Guarantor") shall not have been fully indemnified by
the Borrower as provided in Section 1, the Contributing Guarantor shall
indemnify the
<PAGE>
2
Claiming Guarantor in an amount equal to the amount of such payment or the
greater of the book value or the fair market value of such assets, as the case
may be, in each case multiplied by a fraction of which the numerator shall be
the net worth of the Contributing Guarantor on the date hereof (or, in the case
of any Guarantor becoming a party hereto pursuant to Section 12, the date of the
Supplement hereto executed and delivered by such Guarantor) and the denominator
shall be the aggregate net worth of all the Guarantors on the date hereof (or,
in the case of any Guarantor becoming a party hereto pursuant to Section 12, the
date of the Supplement hereto executed and delivered by such Guarantor). Any
Contributing Guarantor making any payment to a Claiming Guarantor pursuant to
this Section 2 shall be subrogated to the rights of such Claiming Guarantor
under Section 1 to the extent of such payment.
SECTION 3. Subordination. Notwithstanding any provision of this
Agreement to the contrary, all rights of the Guarantors under Sections 1 and 2
and all other rights of indemnity, contribution or subrogation under applicable
law or otherwise shall be fully subordinated to the indefeasible payment in full
in cash of the Obligations. No failure on the part of the Borrower or any
Guarantor to make the payments required by Sections 1 and 2 (or any other
payments required under applicable law or otherwise) shall in any respect limit
the obligations and liabilities of any Guarantor with respect to its obligations
hereunder, and each Guarantor shall remain liable for the full amount of the
obligations of such Guarantor hereunder.
SECTION 4. Termination. This Agreement shall survive and be in full
force and effect so long as any Obligation is outstanding and has not been
indefeasibly paid in full in cash, and so long as the L/C Exposure has not been
reduced to zero or any of the Commit ments under the Credit Agreement have not
been terminated, and shall continue to be effective or be reinstated, as the
case may be, if at any time payment, or any part thereof, of any Obligation is
rescinded or must otherwise be restored by any Secured Party or any Guarantor
upon the bankruptcy or reorganization of the Borrower, any Guarantor or other
wise.
SECTION 5. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 6. No Waiver; Amendment. (a) No failure on the part of the
Collateral Agent or any Guarantor to exercise, and no delay in exercising, any
right, power or remedy hereunder shall operate as a waiver thereof, nor shall
any single or partial exercise of any such right, power or remedy by the
Collateral Agent or any Guarantor preclude any other or further exercise thereof
or the exercise of any other right, power or remedy. All remedies hereunder are
cumulative and are not exclusive of any other remedies provided by law. None of
the Collateral Agent and the Guarantors shall be deemed to have waived any
rights here under unless such waiver shall be in writing and signed by such
parties.
(b) Neither this Agreement nor any provision hereof may be waived,
amended or modified except pursuant to a written agreement entered into between
the Borrower, the Guarantors and the Collateral Agent, with the prior written
consent of the Required Lenders (except as otherwise provided in the Credit
Agreement).
SECTION 7. Notices. All communications and notices hereunder shall be
in writing and given as provided in the Subsidiary Guarantee Agreement and
addressed as specified therein.
<PAGE>
3
SECTION 8. Binding Agreement; Assignments. Whenever in this Agreement
any of the parties hereto is referred to, such reference shall be deemed to
include the successors and assigns of such party; and all covenants, promises
and agreements by or on behalf of the parties that are contained in this
Agreement shall bind and inure to the benefit of their respective successors and
assigns. Neither the Borrower nor any Guarantor may assign or transfer any of
its rights or obligations hereunder (and any such attempted assignment or
transfer shall be void) without the prior written consent of the Required
Lenders. Notwithstanding the foregoing, at the time any Guarantor is released
from its obligations under the Subsidiary Guarantee Agreement in accordance with
such Subsidiary Guarantee Agreement and the Credit Agreement, such Guarantor
will cease to have any rights or obligations under this Agreement.
SECTION 9. Survival of Agreement; Severability. (a) All covenants and
agreements made by the Borrower and each Guarantor herein and in the
certificates or other instruments prepared or delivered in connection with this
Agreement or the other Loan Documents shall be considered to have been relied
upon by the Collateral Agent, the other Secured Parties and each Guarantor and
shall survive the making by the Lenders of the Loans and the issuance of the
Letters of Credit by the Issuing Bank, and shall continue in full force and
effect as long as the principal of or any accrued interest on any Loans or any
other fee or amount payable under the Credit Agreement or this Agreement or
under any of the other Loan Documents is outstanding and unpaid or the L/C
Exposure does not equal zero and as long as the Commitments have not been
terminated.
(b) In case any one or more of the provisions contained in this
Agreement should be held invalid, illegal or unenforceable in any respect, no
party hereto shall be required to comply with such provision for so long as such
provision is held to be invalid, illegal or unenforceable, but the validity,
legality and enforceability of the remaining provisions contained herein shall
not in any way be affected or impaired thereby. The parties shall endeavor in
good-faith negotiations to replace the invalid, illegal or unenforceable
provisions with valid provisions the economic effect of which comes as close as
possible to that of the invalid, illegal or unenforceable provisions.
SECTION 10. Counterparts. This Agreement may be executed in
counterparts (and by different parties hereto on different counterparts), each
of which shall constitute an original, but all of which when taken together
shall constitute a single contract. This Agree ment shall be effective with
respect to any Guarantor when a counterpart bearing the signature of such
Guarantor shall have been delivered to the Collateral Agent. Delivery of an
executed signature page to this Agreement by facsimile transmission shall be as
effective as delivery of a manually signed counterpart of this Agreement.
SECTION 11. Rules of Interpretation. The rules of interpretation
specified in Section 1.02 of the Credit Agreement shall be applicable to this
Agreement.
SECTION 12. Additional Guarantors. Pursuant to Section 5.11 of the
Credit Agreement, each Domestic Subsidiary of the Borrower that was not in
existence or not such a Subsidiary on the date of the Credit Agreement is
required to enter into the Subsidiary Guarantee Agreement as a Guarantor upon
becoming such a Subsidiary. Upon execution and delivery, after the date hereof,
by the Collateral Agent and such a Subsidiary of an instrument in the form of
Annex 1 hereto, such Subsidiary shall become a Guarantor hereunder with the same
force and effect as if originally named as a Guarantor hereunder. The execution
and delivery of any instrument adding an additional Guarantor as a party to this
Agreement shall
<PAGE>
4
not require the consent of any Guarantor hereunder. The rights and obligations
of each Guarantor hereunder shall remain in full force and effect
notwithstanding the addition of any new Guarantor as a party to this Agreement.
<PAGE>
5
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers as of the date first appearing above.
INTERSIL CORPORATION,
by:________________________
Name:
Title:
HARRIS SEMICONDUCTOR
(PENNSYLVANIA), LLC,
by:________________________
Name:
Title:
HARRIS SEMICONDUCTOR (OHIO),
LLC,
by:________________________
Name:
Title:
HARRIS SEMICONDUCTOR, LLC,
by:________________________
Name:
Title:
CHOICE MICROSYSTEMS, INC.,
by:________________________
Name:
Title:
<PAGE>
6
CREDIT SUISSE FIRST BOSTON, as
Collateral Agent,
by:________________________
Name:
Title:
by:________________________
Name:
Title:
<PAGE>
SCHEDULE I
to the Indemnity, Subrogation
and Contribution Agreement
Guarantors
Name Address
- - ---- -------
<PAGE>
Annex 1 to
the Indemnity, Subrogation and
Contribution Agreement
SUPPLEMENT NO. ___ dated as of [ ], to the
Indemnity, Subrogation and Contribution Agreement
dated as of August 13, 1999 (as the same may be
amended, supplemented or otherwise modified from time
to time, the "Indemnity, Subrogation and Contribution
Agreement"), among INTERSIL CORPORATION, a Delaware
corporation (the "Borrower"), each Subsidiary of the
Borrower listed on Schedule I thereto (the
"Guarantors") and CREDIT SUISSE FIRST BOSTON, a bank
organized under the laws of Switzerland, acting
through its New York branch ("CSFB"), as collateral
agent (the "Collateral Agent") for the Secured
Parties (as defined in the Credit Agreement referred
to below).
A. Reference is made to (a) the Credit Agreement dated as of August 13,
1999 (as amended, supplemented or otherwise modified from time to time, the
"Credit Agreement"), among the Borrower, Intersil Holding Corporation, a
Delaware corporation, the lenders from time to time party thereto (the
"Lenders"), CSFB, as administrative agent for the Lenders (in such capacity, the
"Administrative Agent"), and as Collateral Agent, swingline lender and an
issuing bank, Salomon Smith Barney Inc., as syndication agent, and Morgan
Guaranty Trust Company of New York, as documentation agent, and (b) the
Subsidiary Guarantee Agreement dated as of August 13, 1999, among the Guarantors
and the Collateral Agent (the "Subsidiary Guarantee Agreement").
B. Capitalized terms used herein and not otherwise defined herein shall
have the meanings assigned to such terms in the Indemnity, Subrogation and
Contribution Agreement and the Credit Agreement.
C. The Borrower and the Guarantors have entered into the Indemnity,
Subrogation and Contribution Agreement in order to induce the Lenders to make
Loans and the Issuing Bank to issue Letters of Credit. Pursuant to Section 5.11
of the Credit Agreement, each Domestic Subsidiary of the Borrower that was not
in existence or not such a Subsidiary on the date of the Credit Agreement is
required to enter into the Subsidiary Guarantee Agreement as a Guarantor upon
becoming a Subsidiary. Section 12 of the Indemnity, Subrogation and Contribution
Agreement provides that additional Subsidiaries of the Borrower may become
Guarantors under the Indemnity, Subrogation and Contribution Agreement by
execution and delivery of an instrument in the form of this Supplement. The
undersigned Subsidiary of the Borrower (the "New Guarantor") is executing this
Supplement in accordance with the requirements of the Credit Agreement to become
a Guarantor under the Indemnity, Subrogation and Contribution Agreement in order
to induce the Lenders to make additional Loans and the Issuing Bank to issue
additional Letters of Credit and as consideration for Loans previously made and
Letters of Credit previously issued.
Accordingly, the Collateral Agent and the New Guarantor agree as
follows:
SECTION 1. In accordance with Section 12 of the Indemnity, Subrogation
and Contribution Agreement, the New Guarantor by its signature below becomes a
Guarantor under the Indemnity, Subrogation and Contribution Agreement with the
same force and effect as if originally named therein as a Guarantor and the New
Guarantor hereby agrees to all the terms and provisions of the Indemnity,
Subrogation and Contribution Agreement applicable to it as a Guarantor
thereunder. Each reference to a "Guarantor" in the Indemnity, Subrogation and
<PAGE>
2
Contribution Agreement shall be deemed to include the New Guarantor. The
Indemnity, Subrogation and Contribution Agreement is hereby incorporated herein
by reference.
SECTION 2. The New Guarantor represents and warrants to the Collateral
Agent and the other Secured Parties that this Supplement has been duly
authorized, executed and delivered by it and constitutes its legal, valid and
binding obligation, enforceable against it in accordance with its terms.
SECTION 3. This Supplement may be executed in counterparts (and by
different parties hereto on different counterparts), each of which shall
constitute an original, but all of which when taken together shall constitute a
single contract. This Supplement shall become effective when the Collateral
Agent shall have received counterparts of this Supplement that, when taken
together, bear the signatures of the New Guarantor and the Collateral Agent.
Delivery of an executed signature page to this Supplement by facsimile
transmission shall be as effective as delivery of a manually signed counterpart
of this Supplement.
SECTION 4. Except as expressly supplemented hereby, the Indemnity,
Subrogation and Contribution Agreement shall remain in full force and effect.
SECTION 5. THIS SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 6. In case any one or more of the provisions contained in this
Supplement should be held invalid, illegal or unenforceable in any respect,
neither party hereto shall be required to comply with such provision for so long
as such provision is held to be invalid, illegal or unenforceable, but the
validity, legality and enforceability of the remaining provisions contained
herein and in the Indemnity, Subrogation and Contribution Agreement shall not in
any way be affected or impaired. The parties hereto shall endeavor in good-faith
negotiations to replace the invalid, illegal or unenforceable provisions with
valid provisions the economic effect of which comes as close as possible to that
of the invalid, illegal or unenforceable provisions.
SECTION 7. All communications and notices hereunder shall be in writing
and given as provided in Section 7 of the Indemnity, Subrogation and
Contribution Agreement. All communications and notices hereunder to the New
Guarantor shall be given to it at the address set forth under its signature.
SECTION 8. The New Guarantor agrees to reimburse the Collateral Agent
for its reasonable out-of-pocket expenses in connection with this Supplement,
including the reasonable fees, other charges and disbursements of counsel for
the Collateral Agent.
<PAGE>
3
IN WITNESS WHEREOF, the New Guarantor and the Collateral Agent have
duly executed this Supplement to the Indemnity, Subrogation and Contribution
Agreement as of the day and year first above written.
[Name Of New Guarantor],
by:___________________________
Name:
Title:
Address:
CREDIT SUISSE FIRST BOSTON, as
Collateral Agent,
by:___________________________
Name:
Title:
by:___________________________
Name:
Title:
<PAGE>
SCHEDULE I
to Supplement No.___ to the Indemnity,
Subrogation and Contribution Agreement
Guarantors
Name Address
- - ---- -------
<PAGE>
EXHIBIT E-1
[FORM OF] MORTGAGE, ASSIGNMENT OF LEASES AND RENTS,
SECURITY AGREEMENT AND FINANCING STATEMENT
THIS MORTGAGE, ASSIGNMENT OF LEASES AND RENTS,
SECURITY AGREEMENT AND FINANCING STATEMENT dated as of August
13, 1999 (this "Mortgage"), by INTERSIL CORPORATION, a
Delaware corporation, having an office at 2401 Palm Bay Road
NE, Palm Bay, Florida 32905 (the "Mortgagor"), to CREDIT
SUISSE FIRST BOSTON, a bank organized under the laws of
Switzerland, acting through its New York branch, having an
office at Eleven Madison Avenue, New York, New York 10010
("CSFB"), as collateral agent (in such capacity, the
"Collateral Agent") for the benefit of the Secured Parties (as
defined below) (the "Mortgagee");
WITNESSETH THAT:
A. Reference is made to the Credit Agreement dated as of August 13,
1999 (as amended, supplemented or otherwise modified from time to time, the
"Credit Agreement"), among Mortgagor (the "Borrower"), Intersil Holding
Corporation, a Delaware corporation, the financial institutions party thereto as
lenders (together with the Swingline Lender (as defined below), the "Lenders"),
CSFB, as administrative agent (in such capacity, the "Agent"), and as Collateral
Agent, swingline lender (in such capacity, the "Swingline Lender") and an
Issuing Bank (as defined therein), Salomon Smith Barney Inc., as syndication
agent, and Morgan Guaranty Trust Company of New York, as documentation agent.
Each capitalized term used herein but not defined herein shall have the meaning
assigned to such term in the Credit Agreement. As used herein, the term "Secured
Parties" shall mean (i) the Lenders, (ii) the Collateral Agent, (iii) the Agent,
(iii) the Issuing Bank, (iv) each counterparty to an Interest Rate Protection
Agreement entered into with the Borrower if such counterparty was a Lender at
the time the Interest Rate Protection Agreement was entered into, (v) the
beneficiaries of each indemnification obligation undertaken by the Borrower
under any Loan Document and (vi) the successors and permitted assigns of each of
the foregoing. Pursuant to the Credit Agreement, (i) the Lenders have lent or
agreed to lend to the Borrower (a) on a term basis, Term Loans in an aggregate
principal amount not in excess of $205,000,000, and (b) on a revolving basis,
Revolving Loans, at any time and from time to time prior to the Revolving Credit
Maturity Date, in an aggregate principal amount at any time outstanding not in
excess of $70,000,000, (ii) the Swingline Lender has agreed to lend, on a
revolving basis, Swingline Loans, at any time and from time to time prior to the
Revolving Credit Maturity Date applicable thereto, in an aggregate principal
amount at any time outstanding not in excess of $10,000,000 and (iii) the
Issuing Bank has issued or has agreed to issue Letters of Credit in an aggregate
face amount at any time outstanding not in excess of $20,000,000 in each case on
the terms and subject to the conditions of the Credit Agreement. The Revolving
Loans, the Term Loans and the Swingline Loans are hereinafter collectively
referred to as the "Loans".
B. In order to induce the Lenders to make Loans and the Issuing Bank to
issue Letters of Credit, the Subsidiaries have agreed to guarantee pursuant to
the Subsidiary Guarantee Agreement the due and punctual payment and performance
of Obligations (as defined in paragraph C below).
C. The obligations of the Lenders to make Loans and of the Issuing Bank
to issue Letters of Credit under the Credit Agreement are conditioned upon,
among other things, the execution and delivery by Mortgagor of this Mortgage in
the form hereof, to secure (a) the due
<PAGE>
2
and punctual payment by the Borrower of (i) the principal of and premium, if
any, and interest (including interest accruing during the pendency of any
bankruptcy, insolvency, receivership or other similar proceeding, regardless of
whether allowed or allowable in such proceeding) on the Loans when and as due,
whether at maturity, by acceleration, upon one or more dates set for prepayment
or otherwise, (ii) each payment required to be made by the Borrower under the
Credit Agreement in respect of any Letter of Credit, when and as due, including
payments in respect of reimbursement of disbursements, interest thereon and
obligations to provide cash collateral, and (iii) all other monetary
obligations, including fees, costs, expenses and indemnities, whether primary,
secondary, direct, contingent, fixed or otherwise (including monetary
obligations incurred during the pendency of any bankruptcy, insolvency,
receivership or other similar proceeding, regardless of whether allowed or
allowable in such proceeding), of Mortgagor and the Borrower to the Secured
Parties under the Credit Agreement, this Mortgage and the other Loan Documents
to which Mortgagor or the Borrower is or is to be a party, (b) the due and
punctual performance of all covenants, agreements, obligations and liabilities
of Mortgagor and the Borrower under or pursuant to the Credit Agreement, this
Mortgage and the other Loan Documents, (c) the due and punctual payment and
performance of all the covenants, agreements, obligations and liabilities of
each Loan Party under or pursuant to the Guarantee Agreements and the other Loan
Documents and (d) the due and punctual payment and performance of all
obligations of the Borrower under each Interest Rate Protection Agreement
entered into with a counterparty that was a Lender (or an Affiliate of a Lender)
at the time such Interest Rate Protection Agreement was entered into (all the
obligations referred to in this paragraph C being referred to collectively, as
the "Obligations").
D. Pursuant to the requirements of the Credit Agreement, Mortgagor is
entering into this Mortgage to create a security interest in the Mortgaged
Property (as defined herein) to secure the performance and payment by Mortgagor
and the Borrower of the Obligations. The Credit Agreement also requires the
granting by other Loan Parties of Mortgages or Deeds of Trust (the "Other
Mortgages") that create security interests in certain Mortgaged Properties other
than the Mortgaged Property to secure the performance of the Obligations.
Granting Clauses
NOW THEREFORE, IN CONSIDERATION OF the foregoing and in order to secure
(A) the due and punctual payment and performance of the Obligations, (B) the due
and punctual payment by Mortgagor of all taxes and insurance premiums relating
to the Mortgaged Property (hereinafter defined) and (C) all disbursements made
by Mortgagee for the payment of taxes, common area charges or insurance
premiums, all fees, expenses or advances in connection with or relating to the
Mortgaged Property, and interest on such disbursements and other amounts not
timely paid in accordance with the terms of the Credit Agreement, this Mortgage
and the other Loan Documents, Mortgagor hereby grants, bargains, sells, conveys,
mortgages, assigns, transfers and pledges to Mortgagee (for the ratable benefit
of the Secured Parties), a security interest in all the following described
property (the "Mortgaged Property") whether now owned or held or hereafter
acquired:
(1) all Mortgagor's right, title and interest in all the fee
estate in the land more particularly described on Exhibit A hereto (the
"Land"), together with all rights appurtenant thereto, including any
easements over any adjoining land granted by any easement agreements,
covenant or restrictive agreements and all air rights, mineral rights,
water rights, oil and gas rights and development rights, if any,
relating thereto, and also together with all of the other easements,
rights, privileges, interests, hereditaments and
<PAGE>
3
appurtenances thereunto belonging or in any way appertaining and all of
the estate, right, title, interest, claim or demand whatsoever of
Mortgagor therein and in the streets and ways adjacent thereto, either
in law or in equity, in possession or expectancy, now or hereafter
acquired (the "Premises");
(2) all Mortgagor's right, title and interest in all
buildings, improvements, structures, paving, parking areas, walkways
and landscaping now or hereafter erected or located upon the Land, and
all fixtures of every kind and type affixed to the Premises or attached
to or forming part of any structures, buildings or improvements and
replacements thereof now or hereafter erected or located upon the Land
(the "Improve ments");
(3) all Mortgagor's right, title and interest in all
apparatus, movable appliances, building materials, equipment, fittings,
furnishings, furniture, machinery and other articles of tangible
personal property of every kind and nature, and replacements thereof,
now or at any time hereafter placed upon or used in any way in
connection with the use, enjoyment, occupancy or operation of the
Improvements or the Premises, including all of Mortgagor's books and
records relating thereto and including all pumps, tanks, goods,
machinery, tools, equipment (including fire sprinklers and alarm
systems, fire prevention or control systems, cleaning rigs, air
conditioning, heating, boilers, refrigerating, elec tronic monitoring,
water, loading, unloading, lighting, power, sanitation, waste removal,
entertainment, communications, computers, recreational, window or
structural, maintenance, truck or car repair and all other equipment of
every kind), lifts, restaurant, bar and all other indoor or outdoor
furniture (including tables, chairs, booths, serving stands, planters,
desks, sofas, racks, shelves, lockers and cabinets), bar equipment,
glasses, cutlery, uniforms, linens, memorabilia and other decorative
items, furnishings, appliances, supplies, inventory, rugs, carpets and
other floor coverings, draperies, drapery rods and brackets, awnings,
venetian blinds, partitions, chandeliers and other lighting fixtures,
freezers, refrigerators, walk-in coolers, signs (indoor and outdoor),
computer systems, cash registers and inventory control systems, and all
other apparatus, equipment, furniture, furnishings, and articles used
in connection with the use or operation of the Improvements or the
Premises, it being understood that the enumeration of any specific
articles of property shall in no way result in or be held to exclude
any items of property not specifically mentioned (the property referred
to in this subparagraph (3), the "Personal Property");
(4) all Mortgagor's right, title and interest in all general
intangibles relating to design, development, operation, management and
use of the Premises or the Improvements, all certificates of occupancy,
zoning variances, building, use or other permits, approvals,
authorizations and consents obtained from and all materials prepared
for filing or filed with any governmental agency in connection with the
development, use, operation or management of the Premises and
Improvements, all construction, service, engineering, consulting,
leasing, architectural and other similar contracts concerning the
design, construction, management, operation, occupancy and/or use of
the Premises and Improvements, all architectural drawings, plans,
specifications, soil tests, feasibility studies, appraisals,
environmental studies, engineering reports and similar materials
relating to any portion of or all of the Premises and Improvements, and
all payment and performance bonds or warranties or guarantees relating
to the Premises or the Improve ments, all to the extent assignable (the
"Permits, Plans and Warranties");
<PAGE>
4
(5) Mortgagor's interest in and rights under any and all now
or hereafter existing leases or licenses (under which Mortgagor is
landlord or licensor) and subleases (under which Mortgagor is
sublandlord), concession, management, mineral or other agreements of a
similar kind that permit the use or occupancy of the Premises or the
Improvements for any purpose in return for any payment, or the
extraction or taking of any gas, oil, water or other minerals from the
Premises in return for payment of any fee, rent or royalty
(collectively, "Leases"), and all agreements or contracts for the sale
or other disposition of all or any part of the Premises or the
Improvements, now or hereafter entered into by Mortgagor, together with
all charges, fees, income, issues, profits, receipts, rents, revenues
or royalties payable thereunder ("Rents");
(6) all Mortgagor's right, title and interest in and to all
real estate tax refunds and all proceeds of the conversion, voluntary
or involuntary, of any of the Mortgaged Property into cash or
liquidated claims ("Proceeds"), including Proceeds of insurance
maintained by Mortgagor and condemnation awards, any awards that may
become due by reason of the taking by eminent domain or any transfer in
lieu thereof of the whole or any part of the Premises or Improvements
or any rights appurtenant thereto, and any awards for change of grade
of streets, together with any and all moneys now or hereafter on
deposit for the payment of real estate taxes, assessments or common
area charges levied against the Mortgaged Property, unearned premiums
on policies of fire and other insurance maintained by Mortgagor
covering any interest in the Mortgaged Property or required by the
Credit Agreement; and
(7) all Mortgagor's right, title and interest in and to all
extensions, improvements, betterments, renewals, substitutes and
replacements of and all additions and appurtenances to, the Land, the
Premises, the Improvements, the Personal Property, the Permits, Plans
and Warranties and the Leases, hereinafter acquired by or released to
Mortgagor or constructed, assembled or placed by Mortgagor on the Land,
the Premises or the Improvements, and all conversions of the security
constituted thereby, immediately upon such acquisition, release,
construction, assembling, placement or conversion, as the case may be,
and in each such case, without any further mortgage, deed of trust,
conveyance, assignment or other act by Mortgagor, all of which shall
become subject to the lien of this Mortgage as fully and completely,
and with the same effect, as though now owned by Mortgagor and
specifically described herein.
TO HAVE AND TO HOLD the Mortgaged Property unto Mortgagee, its
successors and assigns, for the ratable benefit of the Secured Parties, forever,
subject only to the Permitted Encumbrances (as hereinafter defined) and to
satisfaction and cancelation as provided in Section 3.04.
ARTICLE I
Representations, Warranties and Covenants of Mortgagor
Mortgagor agrees, covenants, represents and/or warrants as follows:
SECTION 1.01. Title. (a) Mortgagor has good and marketable title to an
indefeasible fee estate in the Land and Improvements subject to no lien, charge
or encumbrance, and this Mortgage is and will remain a valid and enforceable
first and prior lien on the Premises, Improvements and the Rents subject only
to, in each case, Liens permitted by Section 6.02 of the
<PAGE>
5
Credit Agreement, the exceptions and encumbrances referred to in Schedule B to
the title insurance policy being issued to insure the lien of this Mortgage and
matters permitted by Section 1.09 hereof whether now existing or hereafter
arising (collectively, the "Permitted Encumbrances"). The Permitted Encumbrances
do not materially interfere with the current use, enjoyment or operation of the
Mortgaged Property.
(b) Mortgagor has good and marketable title to all the Personal
Property subject to no lien, charge or encumbrance other than this Mortgage and
the Permitted Encumbrances. Except as permitted under the Credit Agreement, the
Personal Property is not and will not become the subject matter of any lease or
other arrangement that is not a Permitted Encumbrance whereby the ownership of
any Personal Property will be held by any person or entity other than Mortgagor;
except as permitted under the Credit Agreement, none of the Personal Property
will be removed from the Premises or the Improvements unless the same is no
longer needed for the continued operation of the Premises and the Improvements
as currently operated (or as then operated, to the extent that any change from
the current manner of operation was permitted by the Credit Agreement) or is
replaced by other Personal Property of substantially equal or greater utility
and value; and Mortgagor will not create or cause to be created (other than
Permitted Encumbrances) any security interest covering any of the Personal
Property other than the security interest in the Personal Property created in
favor of Mortgagee by this Mortgage or any other agreement collateral hereto.
The Mortgaged Property is served by water, gas, electric, septic, storm and
sanitary sewage facilities, and such utilities serving the Premises and the
Improvements are located in and in the future will be located fully within the
Premises. There is vehicular access to the Premises and the Improvements which
is provided by either a public right-of-way abutting and contiguous with the
Land or valid recorded unsubordinated easements.
(c) Except as set forth on Schedule A hereto, there are no leases
affecting a material portion of the Mortgaged Property. Each Lease is in full
force and effect, and, except as set forth on Schedule A hereto, Mortgagor has
not given, nor to Mortgagor's knowledge has it received, any uncured or unwaived
notice of default with respect to any material obligation under any Lease. Each
Lease is subject to no lien, charge or encumbrance other than this Mortgage and
the Permitted Encumbrances. Mortgagor has not received any written notice of,
nor does it have any actual knowledge of, any pending or contemplated
condemnation proceeding affecting the Mortgaged Property or any sale or
disposition thereof in lieu of condemnation. Mortgagor is not obligated under
any right of first refusal, option or other contractual right to sell, assign or
otherwise dispose of any Mortgaged Property or any interest therein.
(d) All easement agreements, covenant or restrictive agreements,
supplemental agree ments and any other instruments hereinabove referred to and
mortgaged hereby (collectively, the "Agreements") are and will remain valid,
subsisting and in full force and effect, unless the failure to remain valid,
subsisting and in full force and effect, individually or in the aggregate, could
not reasonably be expected to have a Material Adverse Effect on the Mortgaged
Property, and Mortgagor is not in default thereunder and has fully performed the
material terms thereof requi red to be performed through the date hereof, and
has no actual knowledge of any default thereunder or failure to fully perform
the terms thereof by any other party, nor of the occurrence of any event that
after notice or the passage of time or both will constitute a default
thereunder. Mortgagor is in compliance, and shall comply, with all agreements
and legal requirements (including land use and zoning ordinances, regulations
and restrictions) affecting the Mortgaged Property, except for any agreements
and legal requirements, the failure to comply with which could not reasonably be
expected to have a Material Adverse Effect on the Mortgaged Property.
<PAGE>
6
(e) Mortgagor has good and lawful right and full power and authority to
mortgage the Mortgaged Property and will forever warrant and defend its title to
the Mortgaged Property, the rights of Mortgagee therein under this Mortgage and
the validity and priority of the lien of this Mortgage thereon against the
claims of all persons and parties except those having rights under Permitted
Encumbrances to the extent of those rights.
(f) This Mortgage, when duly recorded in the appropriate public records
and when financing statements are duly filed in the appropriate public records,
will create a valid, perfected and enforceable lien upon and security interest
in all the Mortgaged Property and there will be no defenses or offsets to this
Mortgage that will be asserted by Mortgagor or its Affiliates (or any third
party defense or offset now known to Mortgagor or its Affiliates) or to any of
the Obligations secured hereby for so long as any portion of the Obligations is
outstanding.
SECTION 1.02. Credit Agreement; Certain Amounts. (a) This Mortgage is
given pursuant to the Credit Agreement. Each and every term and provision of the
Credit Agreement (excluding the governing law provisions thereof), including the
rights, remedies, obligations, covenants, conditions, agreements, indemnities,
representations and warranties of the parties thereto shall be considered as if
a part of this Mortgage.
(b) To the extent there is a conflict between the terms of this
Mortgage and the terms of the Credit Agreement (except with respect to Section
1.01 hereof), the terms of the Credit Agreement shall control.
(c) If any remedy or right of Mortgagee pursuant hereto is acted upon
by Mortgagee or if any actions or proceedings (including any bankruptcy,
insolvency or reorganization proceedings) are commenced in which Mortgagee is
made a party and is obliged to defend or uphold or enforce this Mortgage or the
rights of Mortgagee hereunder or the terms of any Lease, or if a condemnation
proceeding is instituted affecting the Mortgaged Property, Mortgagor will pay
all reasonable sums, including reasonable attorneys' fees and disbursements,
incurred by Mortgagee related to the exercise of any remedy or right of
Mortgagee pursuant hereto or for the reasonable expense of any such action or
proceeding together with all statutory or other costs, disbursements and
allowances, interest thereon from the date of demand for payment thereof at the
rate specified in clause (b) of Section 2.07 of the Credit Agreement (the
"Default Interest Rate"), and such sums and the interest thereon shall, to the
extent permissible by law, be a lien on the Mortgaged Property prior to any
right, title to, interest in or claim upon the Mortgaged Property attaching or
accruing subsequent to the recording of this Mortgage and shall be secured by
this Mortgage to the extent permitted by law. Any payment of amounts due under
this Mort gage not made on or before the due date for such payments shall accrue
interest daily without notice from the due date until paid at the Default
Interest Rate, and such interest at the Default Interest Rate shall be
immediately due upon demand by Mortgagee.
SECTION 1.03. Payment of Taxes, Liens and Charges. (a) Except as may be
permitted by the Credit Agreement, Mortgagor will pay and discharge from time to
time prior to the time when the same shall become delinquent, and before any
interest or penalty accrues thereon or attaches thereto, all taxes of every kind
and nature, all general and special assessments, levies, permits, inspection and
license fees, all water and sewer rents, all vault charges, and all other public
charges, and all service charges, common area charges, private maintenance
charges, utility charges and all other private charges, whether of a like or
different nature, imposed upon or assessed against the Mortgaged Property or any
part thereof or upon the Rents from the Mortgaged Property or arising in respect
of the occupancy, use or possession thereof.
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(b) In the event of the passage of any state, Federal, municipal or
other governmental law, order, rule or regulation subsequent to the date hereof
(i) deducting from the value of real property for the purpose of taxation any
lien or encumbrance thereon or in any manner changing or modifying the laws now
in force governing the taxation of this Mortgage or debts secured by mortgages
or deeds of trust (other than laws governing income, franchise and similar taxes
generally) or the manner of collecting taxes thereon and (ii) imposing a tax to
be paid by Mortgagee, either directly or indirectly, on this Mortgage or any of
the Loan Documents or to require an amount of taxes to be withheld or deducted
therefrom, Mortgagor will promptly notify Mortgagee of such event. In such event
Mortgagor shall (i) agree to enter into such further instruments as may be
reasonably necessary or desirable to obligate Mortgagor to make any applicable
additional payments and (ii) Mortgagor shall make such additional payments.
(c) At any time that an Event of Default shall occur hereunder and be
continuing, or if required by any law applicable to Mortgagor or to Mortgagee,
Mortgagee shall have the right to direct Mortgagor to make an initial deposit on
account of real estate taxes and assessments, insurance premiums and common area
charges, levied against or payable in respect of the Mort gaged Property in
advance and thereafter semi-annually, each such deposit to be equal to one-half
of any such annual charges estimated in a reasonable manner by Mortgagee in
order to accumulate with Mortgagee sufficient funds to pay such taxes,
assessments, insurance premiums and charges.
SECTION 1.04. Payment of Closing Costs. Mortgagor shall pay all costs
in connection with, relating to or arising out of the preparation, execution and
recording of this Mortgage, including title company premiums and charges,
inspection costs, survey costs, recording fees and taxes, reasonable attorneys',
engineers', appraisers' and consultants' fees and disbursements and all other
similar reasonable expenses of every kind.
SECTION 1.05. Alterations and Waste; Plans. (a) Except as may be
permitted by the Credit Agreement, no Improvements will be materially altered or
demolished or removed in whole or in part by Mortgagor. Mortgagor will not erect
any additions to the existing Improvements or other structures on the Premises
which will materially interfere with the operation conducted thereon on the date
hereof, without the written consent of Mortgagee. Mortgagor will not commit any
waste on the Mortgaged Property or make any alteration to, or change in the use
of, the Mortgaged Property that will materially diminish the utility thereof for
the operation of the business except as may be permitted under the Credit
Agreement or materially increase any ordinary fire or other hazard arising out
of construction or operation, but in no event shall any such alteration or
change be contrary to the terms of any insurance policy required to be kept
pursuant to Section 1.06 (but such policy may be endorsed to permit the same).
Mortgagor will maintain and operate the Improvements and Personal Property in
good repair, working order and condition, reasonable wear and tear excepted.
(b) To the extent the same exist on the date hereof or are obtained in
connection with future permitted alterations, Mortgagor shall maintain a
complete set of final plans, specifications, blueprints and drawings for the
Mortgaged Property either at the Mortgaged Property or in a particular office at
the headquarters of Mortgagor to which Mortgagee shall have access upon
reasonable advance notice and at reasonable times.
SECTION 1.06. Insurance. Mortgagor will keep or cause to be kept the
Improvements and Personal Property insured against such risks, and in the
manner, required by Section 5.02 of the Credit Agreement.
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8
SECTION 1.07. Casualty and Condemnation. (a) Notwithstanding any other
provision of this Mortgage or the Credit Agreement, Mortgagee is authorized, at
its option (for the benefit of the Secured Parties), to collect and receive, to
the extent payable to any Loan Party, all insurance proceeds, damages, claims
and rights of action under any insurance policies with respect to any casualty
or other insured damage ("Casualty") to any portion of the Mortgaged Property
(collectively, "Casualty Proceeds"), unless the amount of the related Casualty
Proceeds is less than $2,500,000 and an Event of Default shall not have occurred
and be continuing, in which event Mortgagor may retain such Casualty Proceeds
for application in accordance with this Section 1.07 to the extent that
Mortgagor has delivered a certificate to Mortgagee within 10 days of such
Casualty, stating that such Casualty Proceeds shall be applied, or shall be
committed to be applied, within 180 days of such Casualty, in accordance with
this Section 1.07; provided that to the extent such Casualty Proceeds are (i)
not so applied, or committed to be so applied, within 180 days of any such
Casualty or (ii) if committed to be so applied within 180 days of any such
Casualty, not so applied within one year of such Casualty, Mortgagor shall
promptly remit such Casualty Proceeds to Mortgagee to prepay the outstanding
Term Loans as provided in Section 2.13(f) of the Credit Agreement. Mortgagor
shall notify Mortgagee, in writing, promptly after Mortgagor obtains notice or
knowledge of any Casualty which Mortgagor reasonably believes will cost more
than $500,000 to repair, which notice shall set forth a description of such
Casualty and Mortgagor's good faith estimate of the amount of related damages.
Subject to the foregoing limitations, Mortgagor shall endorse and transfer or
cause to be endorsed or transferred any Casualty Proceeds received by it or any
other Loan Party to Mortgagee.
(b) Mortgagor will notify Mortgagee immediately upon obtaining
knowledge of the institution of any action or proceeding for the taking of the
Mortgaged Property, or any part thereof or interest therein, for public or
quasi-public use under the power of eminent domain, by reason of any public
improvement or condemnation proceeding, or in any other manner (a
"Condemnation"). No settlement or compromise of any claim in excess of $500,000
in connection with any such action or proceeding shall be made without the
consent of Mortgagee, which consent shall not be unreasonably withheld.
Mortgagee is authorized, at its option (for the benefit of the Secured Parties),
to collect and receive all proceeds of any such Condemnation (in each case, the
"Condemnation Proceeds") unless the amount of such Condemnation Proceeds is less
than $2,500,000 and an Event of Default shall not have occurred and be
continuing, in which event Mortgagor may retain such Condemnation Proceeds for
application in accordance with this Section 1.07 to the extent that Mortgagor
has delivered a certificate to Mortgagee within 10 days of such Condemnation,
stating that such Condemnation Proceeds shall be applied, or shall be committed
to be applied, within 180 days of such Condemnation, in accordance with this
Section 1.07; provided that to the extent such Condemnation Proceeds are (i) not
so applied, or committed to be so applied, within 180 days of any such
Condemnation or (ii) if committed to be so applied within 180 days of any such
Condemnation, not so applied within one year of such Condemnation, Mortgagor
shall promptly remit such Condemnation Proceeds to Mortgagee to prepay the
outstanding Term Loans as provided in Section 2.13(f) of the Credit Agreement.
Subject to the foregoing limitations, Mortgagor shall execute or cause to be
executed such further assignments of any Condemnation Proceeds as Mortgagee may
reasonably require.
(c) In the event of a Condemnation of all or "substantially all" of the
Mortgaged Property (a "substantially all" Condemnation) (which determination
shall be made by Mortgagee in its reasonable discretion), unless Mortgagor shall
have notified Mortgagee in writing promptly after such Condemnation that it
intends to replace the Mortgaged Property (and no Default or Event of Default
shall have occurred and be continuing at the time of such election), Mortgagee
or Mortgagor, as applicable, shall apply the Condemnation Proceeds received as a
result of such Condemnation (less the reasonable costs, if any, incurred by
Mortgagee or Mortgagor in the
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9
recovery of such Condemnation Proceeds, including reasonable attorneys' fees,
other charges and disbursements) to prepay the outstanding Term Loans as
provided in Section 2.13(f) of the Credit Agreement, with any remaining
Condemnation Proceeds being returned to or retained by Mortgagor. If Mortgagor
shall elect to replace the Mortgaged Property as contemplated above, (i) the
replacement property shall be of utility or value comparable to that of the
replaced Mortgaged Property and (ii) the insufficiency of any Condemnation
Proceeds to defray the entire expense of the related location, acquisition and
replacement of such replacement property shall in no way relieve Mortgagor of
its obligation to complete the construction of any replacement property if
Mortgagor shall have made such election and shall have acquired the related real
property.
(d) In the event of any Condemnation of the Mortgaged Property, or any
part thereof (other than a Condemnation described in paragraph (c) above (unless
Mortgagor shall be permitted and shall have elected to replace the Mortgaged
Property, as provided in paragraph (c) above) and subject to the provisions of
paragraph (f) below), Mortgagee or Mortgagor, as applicable, shall apply the
Condemnation Proceeds first, in the case of a partial Condemnation, to the
repair or restoration of any integrated structure subject to such Condemnation
or, in the case of a Condemnation of all, or substantially all, of the Mortgaged
Property, to the location of a replacement property, acquisition of such
replacement property and construction of the replacement structures, and second,
if the remainder of the Condemnation Proceeds is less than $1,000,000, such
Condemnation Proceeds (less the reasonable costs, if any, incurred by Mortgagee
or Mortgagor in the recovery of such Condemnation Proceeds) shall be returned to
or retained by (as applicable) Mortgagor, or if the remainder of the
Condemnation Proceeds is $1,000,000 or greater, such Condemnation Proceeds (less
the reasonable costs, if any, incurred by Mortgagee or Mortgagor in the recovery
of such Condemnation Proceeds) shall be used to prepay the outstanding Term
Loans as provided in Section 2.13(f) of the Credit Agreement, with any remaining
Condemnation Proceeds being returned to or retained by (as applicable)
Mortgagor.
(e) In the event of any Casualty, Mortgagor shall, subject to the
conditions contained in paragraph (f), rebuild or restore the Mortgaged Property
to substantially its same condition immediately prior to such Casualty or to a
condition better suited, in Mortgagor's judgment, to the then current and
contemplated operation of the Mortgagor's business. If Mortgagor shall be
required to restore the Mortgaged Property, the insufficiency of any Casualty
Proceeds to defray the entire expense of such restoration shall in no way
relieve Mortgagor of such obligation so to restore. In the event Mortgagor shall
be required to restore, Mortgagor shall diligently and continuously prosecute
the restoration of the Mortgaged Property to completion. In addition, there
shall first be allowed to Mortgagor out of the related Casualty Proceeds an
amount sufficient to, and Mortgagor shall be obligated to, place the remaining
portion, if any, of the Mortgaged Property in a safe condition that is otherwise
in compliance with the provisions of this Mortgage and the Credit Agreement.
(f) Except as otherwise specifically provided in this Section 1.07 with
respect to Casualty Proceeds and Condemnation Proceeds which may be retained by
Mortgagor, all Casualty Proceeds and all Condemnation Proceeds recovered by
Mortgagee (i) are to be applied to the restoration or replacement of the
Mortgaged Property (less the reasonable cost, if any, to Mortgagee or Mortgagor
of such recovery and of paying out such proceeds, including reasonable
attorneys' fees, other charges and disbursements and costs allocable to
inspecting the Work (as defined below)) and (ii) shall be applied by Mortgagee
to the payment of the cost of restoring or replacing the Mortgaged Property so
damaged, destroyed or taken or of the portion or portions of the Mortgaged
Property not so taken (the "Work") and (C) shall be paid out from time to time
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to Mortgagor as and to the extent the Work (or the location and acquisition of
any replacement of the Mortgaged Property) progresses for the payment thereof,
but subject to each of the following conditions:
(i) Mortgagor must promptly commence the restoration or
rebuilding process or the location, acquisition and replacement process
(in the case of a total or "substantially all" Condemnation) in
connection with the Mortgaged Property;
(ii) the Work shall be in the charge of an independent
architect or engineer and before Mortgagor commences any Work, other
than temporary work to protect property or prevent interference with
business, Mortgagee shall have received the plans and specifications
and the general contract for the Work from Mortgagor. The plans and
specifications shall provide for such Work that, upon completion
thereof, the improvements shall (A) be in compliance with all
requirements of applicable Governmental Authorities such that all
representations and warranties of Mortgagor relating to the compliance
of such the Mortgaged Property with applicable laws, rules or
regulations in this Mortgage and the Credit Agreement will be correct
in all respects and (B) be at least equal in value and general utility
to the improvements that were on the Mortgaged Property (or that were
on the Mortgaged Property that has been replaced, if applicable) prior
to the Casualty or Condemnation, and in the case of a Condemnation,
subject to the effect of such Condemnation;
(iii) except as provided in (iv) below, each request for
payment shall be made on seven days' prior notice to Mortgagee and
shall be accompanied by a certificate to be made by such architect or
engineer, stating (A) that all the Work completed has been done in
substantial compliance with the plans and specifications, (B) that the
sum requested is justly required to reimburse Mortgagor for payments by
Mortgagor to, or is justly due to, the contractor, subcontractors,
materialmen, laborers, engineers, architects or other persons rendering
services or materials for the Work (giving a brief description of such
services and materials);
(iv) each request for payment in connection with the
acquisition of a replacement Mortgaged Property (in the case of a total
or "substantially all" Condemnation) shall be made on 30 days' prior
notice to Mortgagee and, in connection therewith, (A) each such request
shall be accompanied by a copy of the sales contract or other document
governing the acquisition of the replacement property by Mortgagor and
a certificate of Mortgagor stating that the sum requested represents
the sales price under such contract or document and the related
reasonable transaction fees and expenses (including brokerage fees) and
setting forth in sufficient detail the various components of such
requested sum and (B) Mortgagor shall (I) in addition to any other
items required to be delivered under this Section 1.07, provide
Mortgagee with such opinions, documents, certificates, title insurance
policies, surveys and other insurance policies as it may reasonably
request and (II) take such other actions as Mortgagee may reasonably
deem necessary or appropriate (including actions with respect to the
delivery to Mortgagee of a first priority Mortgage with respect to such
real property for the ratable benefit of the Secured Parties, which
opinions, documents, certificates, title insurance policies, surveys,
other insurance policies and mortgage shall be substantially comparable
to similar documents executed and/or delivered in connection with the
Closing Date under the Credit Agreement;
(v) if required by Mortgagee, each request for payment shall
be accompanied by a search prepared by a title company or licensed
abstractor or by other evidence
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11
satisfactory to Mortgagee, that there has not been filed with respect
to the Mortgaged Property any mechanics' or other lien or instrument
for the retention of title in respect of any part of the Work not
discharged of record or bonded to the reasonable satisfaction of
Mortgagee;
(vi) there shall be no Default or Event of Default that has
occurred and is continuing;
(vii) the request for any payment after the Work has been
completed shall be accompanied by a copy of any certificate or
certificates required by law to render occupancy of the improvements
being rebuilt, repaired or restored legal; and
(viii) after commencing the Work, Mortgagor shall continue to
perform the Work diligently and in good faith to completion in
accordance with the approved plans and specifications.
Upon completion of the Work and payment in full therefor, the amount of any
Casualty Proceeds or Condemnation Proceeds then or thereafter in the hands of
Mortgagee on account of the Casualty or Condemnation that necessitated such Work
will be applied as follows: (x) with respect to Casualty Proceeds, returned to
Mortgagor, (y) with respect to amounts then held for Condemnation Proceeds which
are less than $500,000, returned to Mortgagor and (z) with respect to amounts
then held for Condemnation Proceeds of $500,000 or more, to prepay the
outstanding Term Loans as provided in Section 2.13 of the Credit Agreement, with
any excess being returned to Mortgagor.
(g) Notwithstanding any other provisions of this Section 1.07, if
Mortgagor shall have elected to replace the Mortgaged Property in connection
with a total or "substantially all" Condemnation as contemplated in paragraph
(c) above, all Condemnation Proceeds held by Mortgagee in connection therewith
shall be applied to prepay the Term Loans as provided in Section 2.13 of the
Credit Agreement if (i) Mortgagor notifies Mortgagee that it does not intend to
replace the Mortgaged Property, (ii) Mortgagor shall not have notified Mortgagor
in writing that Mortgagor has acquired or has entered into a contract to acquire
the replacement property within six months after the related Condemnation or
(iii) Mortgagor shall have not notified Mortgagee in writing that it has begun
construction of the replacement structures within one year after the related
Condemnation.
(h) Nothing in this Section 1.07 shall prevent Mortgagee from applying
at any time all or any part of the Casualty Proceeds or Condemnation Proceeds to
(i) the curing of any Event of Default under the Credit Agreement or (ii) the
payment of any of the Obligations after the occurrence and during the
continuance of an Event of Default.
SECTION 1.08. Assignment of Leases and Rents. (a) Mortgagor hereby
irrevocably and absolutely grants, transfers and assigns all of its right, title
and interest in all Leases, together with any and all extensions and renewals
thereof for purposes of securing and discharging the performance by Mortgagor of
the Obligations. Mortgagor has not (except for Permitted Encumbrances) assigned
or executed any assignment of, and will not assign or execute any assignment of,
any other Lease or their respective Rents to anyone other than Mortgagee.
(b) Without Mortgagee's prior written consent, Mortgagor will not (i)
modify, amend, terminate or consent to the cancelation or surrender of any Lease
if such modification, amendment, termination or consent would, in the reasonable
judgment of Mortgagee, be adverse
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12
in any material respect to the interests of the Lenders, the value of the
Mortgaged Property or the lien created by this Mortgage or (ii) consent to an
assignment of any tenant's interest in any Lease or to a subletting thereof
covering a material portion of the Mortgaged Property.
(c) Subject to Section 1.08(d) and to the Permitted Encumbrances,
Mortgagor has assigned and transferred to Mortgagee all of Mortgagor's right,
title and interest in and to the Rents now or hereafter arising from each Lease
heretofore or hereafter made or agreed to by Mortgagor, it being intended that
this assignment establish, subject to Section 1.08(d), an absolute transfer and
assignment of all Rents and all Leases to Mortgagee and not merely to grant a
security interest therein. Subject to Section 1.08(d), Mortgagee may in
Mortgagor's name and stead (with or without first taking possession of any of
the Mortgaged Property personally or by receiver as provided herein) operate the
Mortgaged Property and rent, lease or let all or any portion of any of the
Mortgaged Property to any party or parties at such rental and upon such terms as
Mortgagee shall, in its sole discretion, determine, and may collect and have the
benefit of all of said Rents arising from or accruing at any time thereafter or
that may thereafter become due under any Lease.
(d) So long as an Event of Default shall not have occurred and be
continuing, Mortgagee will not exercise any of its rights under Section 1.08(c),
and Mortgagor shall receive and collect the Rents accruing under any Lease;
provided, however, that after the happening and during the continuance of any
Event of Default, Mortgagee may, at its option, receive and collect all Rents
and enter upon the Premises and Improvements through its officers, agents,
employees or attorneys for such purpose and for the operation and maintenance
thereof. Mortgagor hereby irrevocably authorizes and directs each tenant, if
any, and each successor, if any, to the interest of any tenant under any Lease,
respectively, to rely upon any notice of a claimed Event of Default sent by
Mortgagee to any such tenant or any of such tenant's successors in interest, and
thereafter to pay Rents to Mortgagee without any obligation or right to inquire
as to whether an Event of Default actually exists and even if some notice to the
contrary is received from Mortgagor, who shall have no right or claim against
any such tenant or successor in interest for any such Rents so paid to
Mortgagee. Each tenant or any of such tenant's successors in interest from whom
Mortgagee or any officer, agent, attorney or employee of Mortgagee shall have
collected any Rents, shall be authorized to pay Rents to Mortgagor only after
such tenant or any of their successors in interest shall have received written
notice from Mortgagee that the Event of Default is no longer continuing, unless
and until a further notice of an Event of Default is given by Mortgagee to such
tenant or any of its successors in interest.
(e) Mortgagee will not become a mortgagee in possession so long as it
does not enter or take actual possession of the Mortgaged Property. In addition,
Mortgagee shall not be responsible or liable for performing any of the
obligations of the landlord under any Lease, for any waste by any tenant, or
others, for any dangerous or defective conditions of any of the Mortgaged
Property, for negligence in the management, upkeep, repair or control of any of
the Mortgaged Property or any other act or omission by any other person.
(f) Mortgagor shall furnish to Mortgagee, within 30 days after a
request by Mortgagee to do so, a written statement containing the names of all
tenants, subtenants and concessionaires of the Premises or Improvements, the
terms of any Lease, the space occupied and the rentals or license fees payable
thereunder.
SECTION 1.09. Restrictions on Transfers and Encumbrances. Except as
permitted by the Credit Agreement, Mortgagor shall not directly or indirectly
sell, convey, alienate, assign, lease, sublease, license, mortgage, pledge,
encumber or otherwise transfer, create, consent to or
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13
suffer the creation of any lien, charges or any form of encumbrance upon any
interest in or any part of the Mortgaged Property, or be divested of its title
to the Mortgaged Property or any interest therein in any manner or way, whether
voluntarily or involuntarily (other than resulting from a Condemnation), or
engage in any common, cooperative, joint, time-sharing or other congregate
ownership of all or part thereof; provided, however, that Mortgagor may in the
ordinary course of business within reasonable commercial standards, enter into
easement or covenant agreements that relate to and/or benefit the operation of
the Mortgaged Property and that do not materially or adversely affect the use
and operation of the same (except for customary utility easements that service
the Mortgaged Property, which are permitted).
SECTION 1.10. Security Agreement. This Mortgage is both a mortgage of
real property and a grant of a security interest in personal property, and shall
constitute and serve as a "Security Agreement" within the meaning of the uniform
commercial code as adopted in the state wherein the Premises are located
("UCC"). Mortgagor has hereby granted unto Mortgagee a security interest in and
to all the Mortgaged Property described in this Mortgage that is not real
property, and simultaneously with the recording of this Mortgage, Mortgagor has
filed or will file UCC financing statements, and will file continuation
statements prior to the lapse thereof, at the appropriate offices in the state
in which the Premises are located to perfect the security interest granted by
this Mortgage in all the Mortgaged Property that is not real property. Mortgagor
hereby appoints Mortgagee as its true and lawful attorney-in-fact and agent, for
Mortgagor and in its name, place and stead, in any and all capacities, to
execute any document and to file the same in the appropriate offices (to the
extent it may lawfully do so), and to perform each and every act and thing
reasonably requisite and necessary to be done to perfect the security interest
contemplated by the preceding sentence. Mortgagee shall have all rights with
respect to the part of the Mortgaged Property that is the subject of a security
interest afforded by the UCC in addition to, but not in limitation of, the other
rights afforded Mortgagee hereunder and under the Security Agreement.
SECTION 1.11. Filing and Recording. Mortgagor will cause this Mortgage,
any other security instrument creating a security interest in or evidencing the
lien hereof upon the Mortgaged Property and each instrument of further assurance
to be filed, registered or recorded in such manner and in such places as may be
required by any present or future law in order to publish notice of and fully to
protect the lien hereof upon, and the security interest of Mortgagee in, the
Mortgaged Property. Mortgagor will pay all filing, registration or recording
fees, and all reasonable expenses incidental to the execution and acknowledgment
of this Mortgage, any mortgage supplemental hereto, any security instrument with
respect to the Personal Property, and any instrument of further assurance and
all Federal, state, county and municipal recording, documentary or intangible
taxes and other taxes, duties, imposts, assessments and charges arising out of
or in connection with the execution, delivery and recording of this Mortgage,
any mortgage supplemental hereto, any security instrument with respect to the
Personal Property or any instrument of further assurance.
SECTION 1.12. Further Assurances. Upon demand by Mortgagee, Mortgagor
will, at the cost of Mortgagor and without expense to Mortgagee, do, execute,
acknowledge and deliver all such further acts, deeds, conveyances, mortgages,
assignments, notices of assignment, transfers and assurances as Mortgagee shall
from time to time reasonably require for better assuring, conveying, assigning,
transferring and confirming unto Mortgagee the property and rights hereby
conveyed or assigned or intended now or hereafter so to be, or which Mortgagor
may be or may hereafter become bound to convey or assign to Mortgagee, or for
carrying out the intention or facilitating the performance of the terms of this
Mortgage, or for filing, registering or recording this Mortgage, and on demand,
Mortgagor will also execute and deliver and hereby
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14
appoints Mortgagee as its true and lawful attorney-in-fact and agent, for
Mortgagor and in its name, place and stead, in any and all capacities, to
execute and file to the extent it may lawfully do so, one or more financing
statements, chattel mortgages or comparable security instruments reasonably
requested by Mortgagee to evidence more effectively the lien hereof upon the
Personal Property and to perform each and every act and thing requisite and
necessary to be done to accomplish the same.
SECTION 1.13. Additions to Mortgaged Property. All right, title and
interest of Mortgagor in and to all extensions, improvements, betterments,
renewals, substitutes and replacements of, and all additions and appurtenances
to, the Mortgaged Property hereafter acquired by or released to Mortgagor or
constructed, assembled or placed by Mortgagor upon the Premises or the
Improvements, and all conversions of the security constituted thereby,
immediately upon such acquisition, release, construction, assembling, placement
or conversion, as the case may be, and in each such case without any further
mortgage, conveyance, assignment or other act by Mortgagor, shall become subject
to the lien and security interest of this Mortgage as fully and completely and
with the same effect as though now owned by Mortgagor and specif ically
described in the grant of the Mortgaged Property above, but at any and all times
Mortgagor will execute and deliver to Mortgagee any and all such further
assurances, mortgages, conveyances or assignments thereof as Mortgagee may
reasonably require for the purpose of expressly and specifically subjecting the
same to the lien and security interest of this Mortgage.
SECTION 1.14. No Claims Against Mortgagee. Nothing contained in this
Mortgage shall constitute any consent or request by Mortgagee, express or
implied, for the performance of any labor or services or the furnishing of any
materials or other property in respect of the Mortgaged Property or any part
thereof, nor as giving Mortgagor any right, power or authority to contract for
or permit the performance of any labor or services or the furnishing of any
materials or other property in such fashion as would permit the making of any
claim against Mortgagee in respect thereof.
SECTION 1.15. Fixture Filing. Certain of the Mortgaged Property is or
will become "fixtures" (as that term is defined in the UCC) on the Land, and
this Mortgage upon being filed for record in the real estate records of the
county wherein such fixtures are situated shall operate also as a financing
statement filed as a fixture filing in accordance with the applicable provisions
of said UCC upon such of the Mortgaged Property that is or may become fixtures.
ARTICLE II
Defaults and Remedies
SECTION 2.01. Events of Default. Any Event of Default under the Credit
Agreement (as such term is defined therein) shall constitute an Event of Default
under this Mortgage.
SECTION 2.02. Demand for Payment. If an Event of Default shall occur
and be continuing, then, upon written demand of Mortgagee, Mortgagor will pay to
Mortgagee all amounts due hereunder and such further amount as shall be
sufficient to cover the costs and expenses of collection, including attorneys'
fees, disbursements and expenses incurred by Mortgagee and Mortgagee shall be
entitled and empowered to institute an action or proceedings at law or in equity
for the collection of the sums so due and unpaid, to prosecute any such action
or proceedings to judgment or final decree, to enforce any such judgment or
final decree against
<PAGE>
15
Mortgagor and to collect, in any manner provided by law, all moneys adjudged or
decreed to be payable.
SECTION 2.03. Rights To Take Possession, Operate and Apply Revenues.
(a) If an Event of Default shall occur and be continuing, Mortgagor shall, upon
demand of Mortgagee, forthwith surrender to Mortgagee actual possession of the
Mortgaged Property and, if and to the extent not prohibited by applicable law,
Mortgagee itself, or by such officers or agents as it may appoint, may then
enter and take possession of all the Mortgaged Property without the appointment
of a receiver or an application therefor, exclude Mortgagor and its agents and
employees wholly therefrom, and have access to the books, papers and accounts of
Mortgagor.
(b) If Mortgagor shall for any reason fail to surrender or deliver the
Mortgaged Property or any part thereof after such demand by Mortgagee, Mortgagee
may to the extent not prohibited by applicable law, obtain a judgment or decree
conferring upon Mortgagee the right to immediate possession or requiring
Mortgagor to deliver immediate possession of the Mortgaged Property to
Mortgagee, to the entry of which judgment or decree Mortgagor hereby
specifically consents. Mortgagor will pay to Mortgagee, upon demand, all
reasonable expenses of obtaining such judgment or decree, including reasonable
compensation to Mortgagee's attorneys and agents with interest thereon at the
Default Interest Rate; and all such expenses and compensation shall, until paid,
be secured by this Mortgage.
(c) Upon every such entry or taking of possession, Mortgagee may, to
the extent not prohibited by applicable law, hold, store, use, operate, manage
and control the Mortgaged Property, conduct the business thereof in a
commercially reasonable manner and, from time to time, (i) make all necessary
and proper maintenance, repairs, renewals, replacements, additions, betterments
and improvements thereto and thereon, (ii) purchase or otherwise acquire
additional fixtures, personalty and other property, (iii) insure or keep the
Mortgaged Property insured, (iv) manage and operate the Mortgaged Property and
exercise all the rights and powers of Mortgagor to the same extent as Mortgagor
could in its own name or otherwise with respect to the same, or (v) enter into
any and all agreements with respect to the exercise by others of any of the
powers herein granted Mortgagee, all as may from time to time be directed or
determined by Mortgagee to be in its best interest and Mortgagor hereby appoints
Mortgagee as its true and lawful attorney-in-fact and agent, for Mortgagor and
in its name, place and stead, in any and all capacities, to perform any of the
foregoing acts. Mortgagee may collect and receive all the Rents, issues, profits
and revenues from the Mortgaged Property, including those past due as well as
those accruing thereafter, and, after deducting (i) all expenses of taking,
holding, managing and operating the Mortgaged Property (including compensation
for the services of all persons employed for such purposes), (ii) the costs of
all such maintenance, repairs, renewals, replacements, additions, betterments,
improvements, purchases and acquisitions, (iii) the costs of insurance, (iv)
such taxes, assessments and other similar charges as Mortgagee may at its option
pay, (v) other proper charges upon the Mortgaged Property or any part thereof
and (vi) the compensation, expenses and disbursements of the attorneys and
agents of Mortgagee, Mortgagee shall apply the remainder of the moneys and
proceeds so received first to the payment of Mortgagee for the satisfaction of
the Obligations, and second, if there is any surplus, to Mortgagor, subject to
the entitlement of others thereto under applicable law.
(d) Whenever, before any sale of the Mortgaged Property under Section
2.06, all Obligations that are then due shall have been paid and all Events of
Default fully cured, Mortgagee will surrender possession of the Mortgaged
Property back to Mortgagor, its successors or assigns. The same right of taking
possession shall, however, arise again if any subsequent Event of Default shall
occur and be continuing.
<PAGE>
16
SECTION 2.04. Right To Cure Mortgagor's Failure to Perform. Should
Mortgagor fail in the payment, performance or observance of any term, covenant
or condition required by this Mortgage or the Credit Agreement (with respect to
the Mortgaged Property), Mortgagee may pay, perform or observe the same, and all
payments made or costs or expenses incurred by Mortgagee in connection therewith
shall be secured hereby and shall be, without demand, immediately repaid by
Mortgagor to Mortgagee with interest thereon at the Default Interest Rate.
Mortgagee shall be the judge using reasonable discretion of the necessity for
any such actions and of the amounts to be paid. Mortgagee is hereby empowered to
enter and to authorize others to enter upon the Premises or the Improvements or
any part thereof for the purpose of performing or observing any such defaulted
term, covenant or condition without having any obligation to so perform or
observe and without thereby becoming liable to Mortgagor, to any person in
possession holding under Mortgagor or to any other person.
SECTION 2.05. Right to a Receiver. If an Event of Default shall occur
and be continuing, Mortgagee, upon application to a court of competent
jurisdiction, shall be entitled as a matter of right to the appointment of a
receiver to take possession of and to operate the Mortgaged Property and to
collect and apply the Rents. The receiver shall have all of the rights and
powers permitted under the laws of the state wherein the Mortgaged Property is
located. Mortgagor shall pay to Mortgagee upon demand all reasonable expenses,
including receiver's fees, reasonable attorneys' fees and disbursements, costs
and agent's compensation incurred pursuant to the provisions of this Section
2.05; and all such expenses shall be secured by this Mortgage and shall be,
without demand, immediately repaid by Mortgagor to Mortgagee with interest
thereon at the Default Interest Rate.
SECTION 2.06. Foreclosure and Sale. (a) If an Event of Default shall
occur and be continuing, Mortgagee may elect to sell the Mortgaged Property or
any part of the Mortgaged Property by exercise of the power of foreclosure or of
sale granted to Mortgagee by applicable law or this Mortgage. In such case,
Mortgagee may commence a civil action to foreclose this Mortgage, or it may
proceed and sell the Mortgaged Property to satisfy any Obligation. Mortgagee or
an officer appointed by a judgment of foreclosure to sell the Mortgaged
Property, may sell all or such parts of the Mortgaged Property as may be chosen
by Mortgagee at the time and place of sale fixed by it in a notice of sale,
either as a whole or in separate lots, parcels or items as Mortgagee shall deem
expedient, and in such order as it may determine, at public auction to the
highest bidder. Mortgagee or an officer appointed by a judgment of foreclosure
to sell the Mortgaged Property may postpone any foreclosure or other sale of all
or any portion of the Mortgaged Property by public announcement at such time and
place of sale, and from time to time thereafter may postpone such sale by public
announcement or subsequently noticed sale. Without further notice, Mortgagee or
an officer appointed to sell the Mortgaged Property may make such sale at the
time fixed by the last postponement, or may, in its discretion, give a new
notice of sale. Any person, including Mortgagor or Mortgagee or any designee or
affiliate thereof, may purchase at such sale.
(b) The Mortgaged Property may be sold subject to unpaid taxes and
Permitted Encumbrances, and, after deducting all costs, fees and expenses of
Mortgagee (including costs of evidence of title in connection with the sale),
Mortgagee or an officer that makes any sale shall apply the proceeds of sale in
the manner set forth in Section 2.08.
(c) Any foreclosure or other sale of less than the whole of the
Mortgaged Property or any defective or irregular sale made hereunder shall not
exhaust the power of foreclosure or of sale provided for herein; and subsequent
sales may be made hereunder until the Obligations have been satisfied, or the
entirety of the Mortgaged Property has been sold.
<PAGE>
17
(d) If an Event of Default shall occur and be continuing, Mortgagee may
instead of, or in addition to, exercising the rights described in Section
2.06(a) above and either with or without entry or taking possession as herein
permitted, proceed by a suit or suits in law or in equity or by any other
appropriate proceeding or remedy (i) to specifically enforce payment of some or
all of the Obligations, or the performance of any term, covenant, condition or
agreement of this Mortgage or any other Loan Document or any other right, or
(ii) to pursue any other remedy available to Mortgagee, all as Mortgagee shall
determine most effectual for such purposes.
SECTION 2.07. Other Remedies. (a) In case an Event of Default shall
occur and be continuing, Mortgagee may also exercise, to the extent not
prohibited by law, any or all of the remedies available to a secured party under
the uniform commercial code of the state wherein the Mortgaged Property is
located.
(b) In connection with a sale of the Mortgaged Property or any Personal
Property and the application of the proceeds of sale as provided in Section
2.08, Mortgagee shall be entitled to enforce payment of and to receive up to the
principal amount of the Obligations, plus all other charges, payments and costs
due under this Mortgage, and to recover a deficiency judgment for any portion of
the aggregate principal amount of the Obligations remaining unpaid, with
interest.
SECTION 2.08. Application of Sale Proceeds and Rents. After any
foreclosure sale of all or any of the Mortgaged Property, Mortgagee shall
receive the proceeds of sale, no purchaser shall be required to see to the
application of the proceeds and Mortgagee shall apply the proceeds of the sale
together with any Rents that may have been collected and any other sums that
then may be held by Mortgagee under this Mortgage as follows:
FIRST, to the payment of the costs and expenses of such sale,
including compensation to Mortgagee's attorneys and agents, and of any
judicial proceedings wherein the same may be made, and of all expenses,
liabilities and advances made or incurred by Mortgagee under this
Mortgage, together with interest at the Default Interest Rate on all
advances made by Mortgagee, including all taxes or assessments (except
any taxes, assessments or other charges subject to which the Mortgaged
Property shall have been sold) and the cost of removing any Permitted
Encumbrance (except any Permitted Encumbrance subject to which the
Mortgaged Property was sold);
SECOND, to Mortgagee for the distribution to the Secured
Parties for the satisfaction of the Obligations owed to the Secured
Parties; and
THIRD, to Mortgagor, its successors or assigns, or as a court
of competent jurisdiction may otherwise direct.
Mortgagee shall have absolute discretion as to the time of application of any
such proceeds, moneys or balances in accordance with this Mortgage. Upon any
sale of the Mortgaged Property by Mortgagee (including pursuant to a power of
sale granted by statute or under a judicial proceeding), the receipt of
Mortgagee or of the officer making the sale shall be a sufficient discharge to
the purchaser or purchasers of the Mortgaged Property so sold and such purchaser
or purchasers shall not be obligated to see to the application of any part of
the purchase money paid over to Mortgagee or such officer or be answerable in
any way for the misapplication thereof.
SECTION 2.09. Mortgagor as Tenant Holding Over. If Mortgagor remains
in possession of any of the Mortgaged Property after any foreclosure sale by
Mortgagee, at
<PAGE>
18
Mortgagee's election Mortgagor shall be deemed a tenant holding over and shall
forthwith surrender possession to the purchaser or purchasers at such sale or be
summarily dispossessed or evicted according to provisions of law applicable to
tenants holding over.
SECTION 2.10. Waiver of Appraisement, Valuation, Stay, Extension and
Redemption Laws. Mortgagor waives, to the extent not prohibited by law, (i) the
benefit of all laws now existing or that hereafter may be enacted providing for
any appraisement of any portion of the Mortgaged Property, (ii) the benefit of
all laws now existing or that may be hereafter enacted in any way extending the
time for the enforcement or the collection of amounts due under any of the
Obligations or creating or extending a period of redemption from any sale made
in collecting said debt or any other amounts due Mortgagee, (iii) any right to
at any time insist upon, plead, claim or take the benefit or advantage of any
law now or hereafter in force providing for any appraisement, homestead
exemption, valuation, stay, statute of limitations, extension or redemption, or
sale of the Mortgaged Property as separate tracts, units or estates or as a
single parcel in the event of foreclosure or notice of deficiency, and (iv) all
rights of redemption, valuation, appraisement, stay of execution, notice of
election to mature or declare due the whole of or each of the Obligations and
marshaling in the event of foreclosure of this Mortgage.
SECTION 2.11. Discontinuance of Proceedings. In case Mortgagee shall
proceed to enforce any right, power or remedy under this Mortgage by
foreclosure, entry or otherwise, and such proceedings shall be discontinued or
abandoned for any reason, or shall be determined adversely to Mortgagee, then
and in every such case Mortgagor and Mortgagee shall be restored to their former
positions and rights hereunder, and all rights, powers and remedies of Mortgagee
shall continue as if no such proceeding had been taken.
SECTION 2.12. Suits To Protect the Mortgaged Property. Mortgagee shall
have power (a) to institute and maintain suits and proceedings to prevent any
impairment of the Mortgaged Property by any acts that may be unlawful or in
violation of this Mortgage, (b) to preserve or protect its interest in the
Mortgaged Property and in the Rents arising therefrom and (c) to restrain the
enforcement of or compliance with any legislation or other governmental
enactment, rule or order that may be unconstitutional or otherwise invalid if
the enforcement of or compliance with such enactment, rule or order would impair
the security or be prejudicial to the interest of Mortgagee hereunder.
SECTION 2.13. Filing Proofs of Claim. In case of any receivership,
insolvency, bankruptcy, reorganization, arrangement, adjustment, composition or
other proceedings affecting Mortgagor, Mortgagee shall, to the extent permitted
by law, be entitled to file such proofs of claim and other documents as may be
necessary or advisable in order to have the claims of Mortgagee allowed in such
proceedings for the Obligations secured by this Mortgage at the date of the
institution of such proceedings and for any interest accrued, late charges and
additional interest or other amounts due or that may become due and payable
hereunder after such date.
SECTION 2.14. Possession by Mortgagee. Notwithstanding the appointment
of any receiver, liquidator or trustee of Mortgagor, any of its property or the
Mortgaged Property, Mortgagee shall be entitled, to the extent not prohibited by
law, to remain in possession and control of all parts of the Mortgaged Property
now or hereafter granted under this Mortgage to Mortgagee in accordance with the
terms hereof and applicable law.
SECTION 2.15. Waiver. (a) No delay or failure by Mortgagee to exercise
any right, power or remedy accruing upon any breach or Event of Default shall
exhaust or impair any such right, power or remedy or be construed to be a waiver
of any such breach or Event of Default or
<PAGE>
19
acquiescence therein; and every right, power and remedy given by this Mortgage
to Mortgagee may be exercised from time to time and as often as may be deemed
expedient by Mortgagee. No consent or waiver by Mortgagee to or of any breach or
default by Mortgagor in the performance of the Obligations shall be deemed or
construed to be a consent or waiver to or of any other breach or Event of
Default in the performance of the same or any other Obligations by Mortgagor
hereunder. No failure on the part of Mortgagee to complain of any act or failure
to act or to declare an Event of Default, irrespective of how long such failure
continues, shall constitute a waiver by Mortgagee of its rights hereunder or
impair any rights, powers or remedies consequent on any future Event of Default
by Mortgagor.
(b) Even if Mortgagee (i) grants some forbearance or an extension of
time for the payment of any sums secured hereby, (ii) takes other or additional
security for the payment of any sums secured hereby, (iii) waives or does not
exercise some right granted herein or under the Loan Documents, (iv) releases a
part of the Mortgaged Property from this Mortgage, (v) agrees to change some of
the terms, covenants, conditions or agreements of any of the Loan Documents,
(vi) consents to the filing of a map, plat or replat affecting the Premises,
(vii) consents to the granting of an easement or other right affecting the
Premises to which its consent is required or (viii) makes or consents to an
agreement subordinating Mortgagee's lien on the Mortgaged Property hereunder, no
such act or omission shall preclude Mortgagee from exercising any other right,
power or privilege herein granted or intended to be granted in the event of any
breach or Event of Default then made or of any subsequent default; nor, except
as otherwise expressly provided in an instrument executed by Mortgagee, shall
this Mortgage be altered thereby. In the event of the sale or transfer by
operation of law or otherwise of all or part of the Mortgaged Property,
Mortgagee is hereby authorized and empowered to deal with any vendee or
transferee with reference to the Mortgaged Property secured hereby, or with
reference to any of the terms, covenants, conditions or agreements hereof, as
fully and to the same extent as it might deal with the original parties hereto
and without in any way releasing or discharging any liabilities, obliga tions or
undertakings.
SECTION 2.16. Remedies Cumulative. No right, power or remedy conferred
upon or reserved to Mortgagee by this Mortgage is intended to be exclusive of
any other right, power or remedy, and each and every such right, power and
remedy shall be cumulative and concurrent and in addition to any other right,
power and remedy given hereunder or now or hereafter existing at law or in
equity or by statute.
ARTICLE III
Miscellaneous
SECTION 3.01. Partial Invalidity. In the event any one or more of the
provisions contained in this Mortgage shall for any reason be held to be
invalid, illegal or unenforceable in any respect, such validity, illegality or
unenforceability shall, at the option of Mortgagee, not affect any other
provision of this Mortgage, and this Mortgage shall be construed as if such
invalid, illegal or unenforceable provision had never been contained herein or
therein.
SECTION 3.02. Notices. All notices and communications hereunder shall
be in writing and given to Mortgagor in accordance with the terms of the Credit
Agreement at the address set forth on the first page of this Mortgage, with a
copy to it at its notice address provided in the Credit Agreement (if different)
and all copies provided for therein, and to the Agent or any Lender as provided
in the Credit Agreement.
<PAGE>
20
SECTION 3.03. Successors and Assigns. All of the grants, covenants,
terms, provisions and conditions herein shall run with the Premises and the
Improvements and shall apply to, bind and inure to, the benefit of the permitted
successors and assigns of Mortgagor and the successors and assigns of Mortgagee.
SECTION 3.04. Satisfaction and Cancelation. (a) The conveyance to
Mortgagee of the Mortgaged Property as security, created and consummated by this
Mortgage shall be null and void when all the Obligations have been indefeasibly
paid in full in accordance with the terms of the Loan Documents and the Lenders
have no further commitment to make Loans under the Credit Agreement, no Letters
of Credit are outstanding and the Issuing Bank has no further obligation to
issue Letters of Credit under the Credit Agreement.
(b) Upon a sale or financing by Mortgagor of all or any portion of the
Mortgaged Property that is permitted under the Credit Agreement and the
application of the Net Cash Proceeds of such sale or financing in accordance
with the Credit Agreement, the lien of this Mortgage shall be released from the
applicable portion of the Mortgaged Property. Mortgagor shall give Mortgagee
reasonable written notice of any sale or financing of the Mortgaged Property
prior to the closing of such sale or financing.
(c) In connection with any termination or release pursuant to paragraph
(a), the Mortgage shall be marked "satisfied" by Mortgagee, and this Mortgage
and any related UCC-1 financing statements (if applicable) shall be canceled of
record at the request and at the expense of Mortgagor. Mortgagee shall execute
any documents reasonably requested by Mortgagor to accomplish the foregoing or
to accomplish any release contemplated by paragraph (a) and Mortgagor will pay
all costs and expenses, including reasonable attorneys' fees, disbursements and
other charges, incurred by Mortgagee in connection with the preparation and
execution of such documents.
SECTION 3.05. Definitions. As used in this Mortgage, the singular shall
include the plural as the context requires and the following words and phrases
shall have the following meanings: (a) "including" shall mean "including but not
limited to"; (b) "provisions" shall mean "provisions, terms, covenants and/or
conditions"; (c) "lien" shall mean "lien, charge, encumbrance, security
interest, mortgage or deed of trust"; (d) "obligation" shall mean "obligation,
duty, covenant and/or condition"; and (e) "any of the Mortgaged Property" shall
mean "the Mortgaged Property or any part thereof or interest therein". Any act
that Mortgagee is permitted to perform hereunder may be performed at any time
and from time to time by Mortgagee or any person or entity designated by
Mortgagee. Any act that is prohibited to Mortgagor hereunder is also prohibited
to all lessees of any of the Mortgaged Property. Each ap pointment of Mortgagee
as attorney-in-fact for Mortgagor under the Mortgage is irrevocable, with power
of substitution and coupled with an interest. Subject to the applicable
provisions hereof, Mortgagee has the right to refuse to grant its consent,
approval or acceptance or to indicate its satisfaction, in its sole discretion,
whenever such consent, approval, acceptance or satisfaction is required
hereunder.
SECTION 3.06. Multisite Real Estate Transaction. Mortgagor acknowledges
that this Mortgage is one of a number of Mortgages and Security Documents that
secure the Obligations. Mortgagor agrees that the lien of this Mortgage shall be
absolute and unconditional and shall not in any manner be affected or impaired
by any acts or omissions whatsoever of Mortgagee and without limiting the
generality of the foregoing, the lien hereof shall not be impaired by any
acceptance by Mortgagee of any security for or guarantees of any of the
Obligations hereby secured, or by any failure, neglect or omission on the part
of Mortgagee to realize upon or protect
<PAGE>
21
any Obligation or indebtedness hereby secured or any collateral security
therefor including the Other Mortgages and other Security Documents. The lien
hereof shall not in any manner be impaired or affected by any release (except as
to the property released), sale, pledge, surrender, compromise, settlement,
renewal, extension, indulgence, alteration, changing, modification or
disposition of any of the Obligations secured or of any of the collateral
security therefor, including the Other Mortgages and other Security Documents or
of any guarantee thereof, and Mortgagee may at its discretion foreclose,
exercise any power of sale, or exercise any other remedy available to it under
any or all of the Other Mortgages and other Security Documents without first
exercising or enforcing any of its rights and remedies hereunder. Such exercise
of Mortgagee's rights and remedies under any or all of the Other Mortgages and
other Security Documents shall not in any manner impair the indebtedness hereby
secured or the lien of this Mortgage and any exercise of the rights or remedies
of Mortgagee hereunder shall not impair the lien of any of the Other Mortgages
and other Security Documents or any of Mortgagee's rights and remedies
thereunder. Mortgagor specifically consents and agrees that Mortgagee may
exercise its rights and remedies hereunder and under the Other Mortgages and
other Security Documents separately or concurrently and in any order that it may
deem appropriate and waives any rights of subrogation, except as provided in the
Indemnity, Subrogation and Contribution Agreement among Borrower, the Guarantors
(as defined therein) and the Collateral Agent for the Secured Parties dated of
even date herewith.
ARTICLE IV
Particular Provisions
This Mortgage is subject to the following provisions relating to the
particular laws of the state wherein the Premises are located:
SECTION 4.01. Applicable Law; Certain Particular Provisions. This
Mortgage shall be governed by and construed in accordance with the internal law
of the State of New York; provided, however, that the provisions of this
Mortgage relating to the creation, perfection and enforcement of the lien and
security interest created by this Mortgage in respect of the Mortgaged Property
and the exercise of each remedy provided hereby, including the power of
foreclosure or power of sale procedures set forth in this Mortgage, shall be
governed by and construed in accordance with the internal law of the state where
the Mortgaged Property is located, and Mortgagor and Mortgagee agree to submit
to jurisdiction and the laying of venue for any suit on this Mortgage in such
state. The terms and provisions set forth in Appendix A attached hereto are
hereby incorporated by reference as though fully set forth herein. In the event
of any conflict between the terms and provisions contained in the body of this
Mortgage and the terms and provisions set forth in Appendix A, the terms and
provisions set forth in Appendix A shall govern and control.
IN WITNESS WHEREOF, this Mortgage has been duly executed and delivered
to Mortgagee by Mortgagor on the date of the acknowledgment attached hereto.
INTERSIL CORPORATION, a Delaware
corporation,
by:
___________________________
Name:
<PAGE>
22
Title:
Attest:
by:
____________________________
Name:
Title:
[Corporate Seal]
<PAGE>
23
STATE OF........................)
) SS:
COUNTY OF.......................)
I HEREBY CERTIFY that on this day, before me, an officer duly
authorized in the State aforesaid and in the County aforesaid to take
acknowledgments, the foregoing instrument was acknowledged before me by
_______________________________, the _____________________________ of INTERSIL
CORPORATION, a Delaware corporation, freely and voluntarily under authority duly
vested in him/her by said corporation and that the seal affixed thereto is the
true corporate seal of said corporation. He/she is personally known to me or who
has produced as ___________ identification.
WITNESS my hand and official seal in the County and State last
aforesaid this ___ day of ________________ , 1999.
________________________________________________
Notary Public
________________________________________________
Typed, printed or stamped name of Notary Public
My Commission Expires:
<PAGE>
Exhibit A
to Mortgage
Legal Description
<PAGE>
Schedule A
to Mortgage
Leases of Mortgaged Property
<PAGE>
Appendix A
to Mortgage
Local Law Provisions
<PAGE>
EXHIBIT E-2
[FORM OF] DEED OF TRUST, ASSIGNMENT OF LEASES AND RENTS,
SECURITY AGREEMENT AND FINANCING STATEMENT
THIS DEED OF TRUST, ASSIGNMENT OF LEASES AND RENTS,
SECURITY AGREEMENT AND FINANCING STATEMENT dated as of August
13, 1999 (this "Deed of Trust"), by INTERSIL CORPORATION, a
Delaware corporation, having an office at 2401 Palm Bay Road
NE, Palm Bay, Florida 32905 (the "Grantor"), to ___, having an
office at __), as trustee ("Trustee") for the benefit of CREDIT
SUISSE FIRST BOSTON, a bank organized under the laws of
Switzerland, acting through its New York branch, having an
office at Eleven Madison Avenue, New York, New York 10010
("CSFB"), as collateral agent (in such capacity, the "
Collateral Agent") for the benefit of the Secured Parties (as
defined below) (the "Beneficiary");
WITNESSETH THAT:
A. Reference is made to the Credit Agreement dated as of August 13,
1999 (as amended, supplemented or otherwise modified from time to time, the
"Credit Agreement"), among Grantor (the "Borrower"), Intersil Holding
Corporation, a Delaware corporation, the financial institutions party thereto as
lenders (together with the Swingline Lender (as defined below), the "Lenders"),
CSFB, as administrative agent (in such capacity, the "Agent"), and as Collateral
Agent, swingline lender (in such capacity, the "Swingline Lender") and an
Issuing Bank (as defined therein), Salomon Smith Barney Inc., as syndication
agent, and Morgan Guaranty Trust Company of New York, as documentation agent.
Each capitalized term used herein but not defined herein shall have the meaning
assigned to such term in the Credit Agreement. As used herein, the term "Secured
Parties" shall mean (i) the Lenders, (ii) the Collateral Agent, (iii) the Agent,
(iii) the Issuing Bank, (iv) each counterparty to an Interest Rate Protection
Agreement entered into with the Borrower if such counterparty was a Lender at
the time the Interest Rate Protection Agreement was entered into, (v) the
beneficiaries of each indemnification obligation undertaken by the Borrower
under any Loan Document and (vi) the successors and permitted assigns of each of
the foregoing. Pursuant to the Credit Agreement, (i) the Lenders have lent or
agreed to lend to the Borrower (a) on a term basis, Term Loans in an aggregate
principal amount not in excess of $205,000,000, and (b) on a revolving basis,
Revolving Loans, at any time and from time to time prior to the Revolving Credit
Maturity Date, in an aggregate principal amount at any time outstanding not in
excess of $70,000,000, (ii) the Swingline Lender has agreed to lend, on a
revolving basis, Swingline Loans, at any time and from time to time prior to the
Revolving Credit Maturity Date applicable thereto, in an aggregate principal
amount at any time outstanding not in excess of $10,000,000 and (iii) the
Issuing Bank has issued or has agreed to issue Letters of Credit in an aggregate
face amount at any time outstanding not in excess of $20,000,000 in each case on
the terms and subject to the conditions of the Credit Agreement. The Revolving
Loans, the Term Loans and the Swingline Loans are hereinafter collectively
referred to as the "Loans".
B. In order to induce the Lenders to make Loans and the Issuing Bank to
issue Letters of Credit, the Subsidiaries have agreed to guarantee pursuant to
the Subsidiary Guarantee Agreement the due and punctual payment and performance
of Obligations (as defined in paragraph C below).
C. The obligations of the Lenders to make Loans and of the Issuing Bank
to issue Letters of Credit under the Credit Agreement are conditioned upon,
among other things, the
<PAGE>
execution and delivery by Grantor of this Deed of Trust in the form hereof, to
secure (a) the due and punctual payment by the Borrower of (i) the principal of
and premium, if any, and interest (including interest accruing during the
pendency of any bankruptcy, insolvency, receivership or other similar
proceeding, regardless of whether allowed or allowable in such proceeding) on
the Loans when and as due, whether at maturity, by acceleration, upon one or
more dates set for prepayment or otherwise, (ii) each payment required to be
made by the Borrower under the Credit Agreement in respect of any Letter of
Credit, when and as due, including payments in respect of reimbursement of
disbursements, interest thereon and obligations to provide cash collateral, and
(iii) all other monetary obligations, including fees, costs, expenses and
indemnities, whether primary, secondary, direct, contingent, fixed or otherwise
(including monetary obligations incurred during the pendency of any bankruptcy,
insolvency, receivership or other similar proceeding, regardless of whether
allowed or allowable in such proceeding), of Grantor and the Borrower to the
Secured Parties under the Credit Agreement, this Deed of Trust and the other
Loan Documents to which Grantor or the Borrower is or is to be a party, (b) the
due and punctual performance of all covenants, agreements, obligations and
liabilities of Grantor and the Borrower under or pursuant to the Credit
Agreement, this Deed of Trust and the other Loan Documents, (c) the due and
punctual payment and performance of all the covenants, agreements, obligations
and liabilities of each Loan Party under or pursuant to the Guarantee Agreements
and the other Loan Documents and (d) the due and punctual payment and
performance of all obligations of the Borrower under each Interest Rate
Protection Agreement entered into with a counterparty that was a Lender (or an
Affiliate of a Lender) at the time such Interest Rate Protection Agreement was
entered into (all the obligations referred to in this paragraph C being referred
to collectively, as the "Obligations").
D. Pursuant to the requirements of the Credit Agreement, Grantor is
entering into this Deed of Trust to create a security interest in the Trust
Property (as defined herein) to secure the performance and payment by Grantor
and the Borrower of the Obligations. The Credit Agreement also requires the
granting by other Loan Parties of Mortgages or Deeds of Trust (the "Other
Mortgages") that create security interests in certain Mortgaged Properties other
than the Trust Property to secure the performance of the Obligations.
Granting Clauses
NOW, THEREFORE, IN CONSIDERATION OF the foregoing and in order to
secure (A) the due and punctual payment and performance of the Obligations, (B)
the due and punctual payment by Grantor of all taxes and insurance premiums
relating to the Trust Property (hereinafter defined) and (C) all disbursements
made by Beneficiary for the payment of taxes, common area charges or insurance
premiums, all fees, expenses or advances in connection with or relating to the
Trust Property, and interest on such disbursements and other amounts not timely
paid in accordance with the terms of the Credit Agreement, this Deed of Trust
and the other Loan Documents, Grantor hereby grants, bargains, sells, conveys,
mortgages, assigns, transfers and pledges to Trustee, IN TRUST FOREVER, with
power of sale, for the benefit of Beneficiary (for the ratable benefit of the
Secured Parties), a security
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interest in all the following described property (the "Trust Property") whether
now owned or held or hereafter acquired:
(1) all Grantor's right, title and interest in all the fee
estate in the land more particularly described on Exhibit A hereto (the
"Land"), together with all rights appurtenant thereto, including any
easements over any adjoining land granted by any easement agreements,
covenant or restrictive agreements and all air rights, mineral rights,
water rights, oil and gas rights and development rights, if any,
relating thereto, and also together with all of the other easements,
rights, privileges, interests, hereditaments and appurtenances
thereunto belonging or in any way appertaining and all of the estate,
right, title, interest, claim or demand whatsoever of Grantor therein
and in the streets and ways adjacent thereto, either in law or in
equity, in possession or expectancy, now or hereafter acquired (the
"Premises");
(2) all Grantor's right, title and interest in all buildings,
improvements, structures, paving, parking areas, walkways and
landscaping now or hereafter erected or located upon the Land, and all
fixtures of every kind and type affixed to the Premises or attached to
or forming part of any structures, buildings or improvements and
replacements thereof now or hereafter erected or located upon the Land
(the "Improvements");
(3) all Grantor's right, title and interest in all apparatus,
movable appliances, building materials, equipment, fittings,
furnishings, furniture, machinery and other articles of tangible
personal property of every kind and nature, and replacements thereof,
now or at any time hereafter placed upon or used in any way in
connection with the use, enjoyment, occupancy or operation of the
Improvements or the Premises, including all of Grantor's books and
records relating thereto and including all pumps, tanks, goods,
machinery, tools, equipment (including fire sprinklers and alarm
systems, fire prevention or control systems, cleaning rigs, air
conditioning, heating, boilers, refrigerating, electronic monitoring,
water, loading, unloading, lighting, power, sanitation, waste removal,
entertainment, communications, computers, recreational, window or
structural, maintenance, truck or car repair and all other equipment of
every kind), lifts, restaurant, bar and all other indoor or outdoor
furniture (including tables, chairs, booths, serving stands, planters,
desks, sofas, racks, shelves, lockers and cabinets), bar equipment,
glasses, cutlery, uniforms, linens, memorabilia and other decorative
items, furnishings, appliances, supplies, inventory, rugs, carpets and
other floor coverings, draperies, drapery rods and brackets, awnings,
venetian blinds, partitions, chandeliers and other lighting fixtures,
freezers, refrigerators, walk-in coolers, signs (indoor and outdoor),
computer systems, cash registers and inventory control systems, and all
other apparatus, equipment, furniture, furnishings, and articles used
in connection with the use or operation of the Improve ments or the
Premises, it being understood that the enumeration of any specific
articles of property shall in no way result in or be held to exclude
any items of property not specifically mentioned (the property referred
to in this subparagraph (3), the "Personal Property");
(4) all Grantor's right, title and interest in all general
intangibles relating to design, development, operation, management and
use of the Premises or the Improvements, all certificates of occupancy,
zoning variances, building, use or other
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permits, approvals, authorizations and consents obtained from and all
materials prepared for filing or filed with any governmental agency in
connection with the development, use, operation or management of the
Premises and Improvements, all construction, service, engineering,
consulting, leasing, architectural and other similar contracts
concerning the design, construction, management, operation, occupancy
and/or use of the Premises and Improvements, all architectural
drawings, plans, specifications, soil tests, feasibility studies,
appraisals, environmental studies, engi neering reports and similar
materials relating to any portion of or all of the Premises and
Improvements, and all payment and performance bonds or warranties or
guarantees relating to the Premises or the Improvements, all to the
extent assignable (the "Permits, Plans and Warranties");
(5) Grantor's interest in and rights under any and all now or
hereafter existing leases or licenses (under which Grantor is landlord
or licensor) and subleases (under which Grantor is sublandlord),
concession, management, mineral or other agreements of a similar kind
that permit the use or occupancy of the Premises or the Improvements
for any purpose in return for any payment, or the extraction or taking
of any gas, oil, water or other minerals from the Premises in return
for payment of any fee, rent or royalty (collectively, "Leases"), and
all agreements or contracts for the sale or other disposition of all or
any part of the Premises or the Improvements, now or hereafter entered
into by Grantor, together with all charges, fees, income, issues,
profits, receipts, rents, revenues or royalties payable thereunder
("Rents");
(6) all Grantor's right, title and interest in and to all real
estate tax refunds and all proceeds of the conversion, voluntary or
involuntary, of any of the Trust Property into cash or liquidated
claims ("Proceeds"), including Proceeds of insurance maintained by
Grantor and condemnation awards, any awards that may become due by
reason of the taking by eminent domain or any transfer in lieu thereof
of the whole or any part of the Premises or Improvements or any rights
appurtenant thereto, and any awards for change of grade of streets,
together with any and all moneys now or hereafter on deposit for the
payment of real estate taxes, assessments or common area charges levied
against the Trust Property, unearned premiums on policies of fire and
other insurance maintained by Grantor covering any interest in the
Trust Property or required by the Credit Agreement; and
(7) all Grantor's right, title and interest in and to all
extensions, improvements, betterments, renewals, substitutes and
replacements of and all additions and appurtenances to, the Land, the
Premises, the Improvements, the Personal Property, the Permits, Plans
and Warranties and the Leases, hereinafter acquired by or released to
Grantor or constructed, assembled or placed by Grantor on the Land, the
Premises or the Improvements, and all conversions of the security
constituted thereby, immediately upon such acquisition, release,
construction, assembling, placement or conversion, as the case may be,
and in each such case, without any further mortgage, deed of trust,
conveyance, assignment or other act by Grantor, all of which shall
become subject to the lien of this Deed of Trust as fully and
completely, and with the same effect, as though now owned by Grantor
and specifically described herein.
TO HAVE AND TO HOLD the Trust Property unto Trustee, its successors and
assigns, for the benefit of Beneficiary (for the ratable benefit of the Secured
Parties), forever,
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subject only to the Permitted Encumbrances (as hereinafter defined) and to
satisfaction and cancelation as provided in Section 3.04. IN TRUST NEVERTHELESS,
upon the terms and trust herein set forth for the benefit and security of
Beneficiary.
ARTICLE I
Representations, Warranties and Covenants of Grantor
Grantor agrees, covenants, represents and/or warrants as follows:
SECTION 1.01. Title. (a) Grantor has good and marketable title to an
indefeasible fee estate in the Land and Improvements subject to no lien, charge
or encumbrance, and this Deed of Trust is and will remain a valid and
enforceable first and prior lien on the Premises, Improvements and the Rents
subject only to, in each case, Liens permitted by Section 6.02 of the Credit
Agreement, the exceptions and encumbrances referred to in Schedule B to the
title insurance policy being issued to insure the lien of this Deed of Trust and
matters permitted by Section 1.09 hereof whether now existing or hereafter
arising (collectively, the "Permitted Encumbrances"). The Permitted Encumbrances
do not materially interfere with the current use, enjoyment or operation of the
Trust Property.
(b) Grantor has good and marketable title to all the Personal Property
subject to no lien, charge or encumbrance other than this Deed of Trust and the
Permitted Encumbrances. Except as permitted under the Credit Agreement, the
Personal Property is not and will not become the subject matter of any lease or
other arrangement that is not a Permitted Encumbrance whereby the ownership of
any Personal Property will be held by any person or entity other than Grantor;
except as permitted under the Credit Agreement, none of the Personal Property
will be removed from the Premises or the Improvements unless the same is no
longer needed for the continued operation of the Premises and the Improvements
as currently operated (or as then operated, to the extent that any change from
the current manner of operation was permitted by the Credit Agreement) or is
replaced by other Personal Property of substantially equal or greater utility
and value; and Grantor will not create or cause to be created (other than
Permitted Encumbrances) any security interest covering any of the Personal
Property other than the security interest in the Personal Property created in
favor of Beneficiary by this Deed of Trust or any other agreement collateral
hereto. The Trust Property is served by water, gas, electric, septic, storm and
sanitary sewage facilities, and such utilities serving the Premises and the
Improvements are located in and in the future will be located fully within the
Premises. There is vehicular access to the Premises and the Improvements which
is provided by either a public right-of-way abutting and contiguous with the
Land or valid recorded unsubordinated easements.
(c) Except as set forth on Schedule A hereto, there are no leases
affecting a material portion of the Trust Property. Each Lease is in full force
and effect, and, except as set forth on Schedule A hereto, Grantor has not
given, nor to Grantor's knowledge has it received, any uncured or unwaived
notice of default with respect to any material obligation under any Lease. Each
Lease is subject to no lien, charge or encumbrance other than this Deed of Trust
and the Permitted Encumbrances. Grantor has not received any written notice of,
nor does it have any actual knowledge of, any pending or contemplated
condemnation proceeding affecting the Trust Property or any sale or disposition
thereof in lieu of condemnation.
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Grantor is not obligated under any right of first refusal, option or other
contractual right to sell, assign or otherwise dispose of any Trust Property or
any interest therein.
(d) All easement agreements, covenant or restrictive agreements,
supplemental agree ments and any other instruments hereinabove referred to and
mortgaged hereby (collectively, the "Agreements") are and will remain valid,
subsisting and in full force and effect, unless the failure to remain valid,
subsisting and in full force and effect, individually or in the aggregate, could
not reasonably be expected to have a Material Adverse Effect on the Trust
Property, and Grantor is not in default thereunder and has fully performed the
material terms thereof required to be performed through the date hereof, and has
no actual knowledge of any default thereunder or failure to fully perform the
terms thereof by any other party, nor of the occurrence of any event that after
notice or the passage of time or both will constitute a default thereunder.
Grantor is in compliance, and shall comply, with all agreements and legal
requirements (including land use and zoning ordinances, regulations and
restrictions) affecting the Trust Property, except for any agreements and legal
requirements, the failure to comply with which could not reasonably be expected
to have a Material Adverse Effect on the Trust Property.
(e) Grantor has good and lawful right and full power and authority to
mortgage the Trust Property and will forever warrant and defend its title to the
Trust Property, the rights of Beneficiary therein under this Deed of Trust and
the validity and priority of the lien of this Deed of Trust thereon against the
claims of all persons and parties except those having rights under Permitted
Encumbrances to the extent of those rights.
(f) This Deed of Trust, when duly recorded in the appropriate public
records and when financing statements are duly filed in the appropriate public
records, will create a valid, perfected and enforceable lien upon and security
interest in all the Trust Property and there will be no defenses or offsets to
this Deed of Trust that will be asserted by Grantor or its Affiliates (or any
third party defense or offset now known to Grantor or its Affiliates) or to any
of the Obligations secured hereby for so long as any portion of the Obligations
is outstanding.
SECTION 1.02. Credit Agreement; Certain Amounts. (a) This Deed of Trust
is given pursuant to the Credit Agreement. Each and every term and provision of
the Credit Agreement (excluding the governing law provisions thereof), including
the rights, remedies, obligations, covenants, conditions, agreements,
indemnities, representations and warranties of the parties thereto shall be
considered as if a part of this Deed of Trust.
(b) To the extent there is a conflict between the terms of this Deed of
Trust and the terms of the Credit Agreement (except with respect to Section 1.01
hereof), the terms of the Credit Agreement shall control.
(c) If any remedy or right of Trustee or Beneficiary pursuant hereto is
acted upon by Trustee or Beneficiary or if any actions or proceedings (including
any bankruptcy, insolvency or reorganization proceedings) are commenced in which
Trustee or Beneficiary is made a party and is obliged to defend or uphold or
enforce this Deed of Trust or the rights of Trustee or Beneficiary hereunder or
the terms of any Lease, or if a condemnation proceeding is instituted affecting
the Trust Property, Grantor will pay all reasonable sums, including reasonable
attorneys' fees and disbursements, incurred by Trustee or Beneficiary related to
the
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exercise of any remedy or right of Trustee or Beneficiary pursuant hereto or for
the reasonable expense of any such action or proceeding together with all
statutory or other costs, disbursements and allowances, interest thereon from
the date of demand for payment thereof at the rate specified in clause (b) of
Section 2.07 of the Credit Agreement (the "Default Interest Rate"), and such
sums and the interest thereon shall, to the extent permissible by law, be a lien
on the Trust Property prior to any right, title to, interest in or claim upon
the Trust Property attaching or accruing subsequent to the recording of this
Deed of Trust and shall be secured by this Deed of Trust to the extent permitted
by law. Any payment of amounts due under this Deed of Trust not made on or
before the due date for such payments shall accrue interest daily without notice
from the due date until paid at the Default Interest Rate, and such interest at
the Default Interest Rate shall be immediately due upon demand by Trustee or
Beneficiary.
SECTION 1.03. Payment of Taxes, Liens and Charges. (a) Except as may be
permitted by the Credit Agreement, Grantor will pay and discharge from time to
time prior to the time when the same shall become delinquent, and before any
interest or penalty accrues thereon or attaches thereto, all taxes of every kind
and nature, all general and special assessments, levies, permits, inspection and
license fees, all water and sewer rents, all vault charges, and all other public
charges, and all service charges, common area charges, private maintenance
charges, utility charges and all other private charges, whether of a like or
differ ent nature, imposed upon or assessed against the Trust Property or any
part thereof or upon the Rents from the Trust Property or arising in respect of
the occupancy, use or possession thereof.
(b) In the event of the passage of any state, Federal, municipal or
other governmental law, order, rule or regulation subsequent to the date hereof
(i) deducting from the value of real property for the purpose of taxation any
lien or encumbrance thereon or in any manner changing or modifying the laws now
in force governing the taxation of this Deed of Trust or debts secured by
mortgages or deeds of trust (other than laws governing income, franchise and
similar taxes generally) or the manner of collecting taxes thereon and (ii)
imposing a tax to be paid by Beneficiary, either directly or indirectly, on this
Deed of Trust or any of the Loan Documents or to require an amount of taxes to
be withheld or deducted therefrom, Grantor will promptly notify Beneficiary of
such event. In such event Grantor shall (i) agree to enter into such further
instruments as may be reasonably necessary or desirable to obligate Grantor to
make any applicable additional payments and (ii) Grantor shall make such
additional payments.
(c) At any time that an Event of Default shall occur hereunder and be
continuing, or if required by any law applicable to Grantor or to Beneficiary,
Beneficiary shall have the right to direct Grantor to make an initial deposit on
account of real estate taxes and assessments, insurance premiums and common area
charges, levied against or payable in respect of the Trust Property in advance
and thereafter semi-annually, each such deposit to be equal to one-half of any
such annual charges estimated in a reasonable manner by Beneficiary in order to
accumulate with Beneficiary sufficient funds to pay such taxes, assessments,
insurance premiums and charges.
SECTION 1.04. Payment of Closing Costs. Grantor shall pay all costs in
connection with, relating to or arising out of the preparation, execution and
recording of this Deed of Trust, including title company premiums and charges,
inspection costs, survey costs,
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recording fees and taxes, reasonable attorneys', engineers', appraisers' and
consultants' fees and disbursements and all other similar reasonable expenses of
every kind.
SECTION 1.05. Alterations and Waste; Plans. (a) Except as may be
permitted by the Credit Agreement, no Improvements will be materially altered or
demolished or removed in whole or in part by Grantor. Grantor will not erect any
additions to the existing Improvements or other structures on the Premises which
will materially interfere with the operation conducted thereon on the date
hereof, without the written consent of Beneficiary. Grantor will not commit any
waste on the Trust Property or make any alteration to, or change in the use of,
the Trust Property that will materially diminish the utility thereof for the
operation of the business except as may be permitted under the Credit Agreement
or materially increase any ordinary fire or other hazard arising out of
construction or operation, but in no event shall any such alteration or change
be contrary to the terms of any insurance policy required to be kept pursuant to
Section 1.06 (but such policy may be endorsed to permit the same). Grantor will
maintain and operate the Improvements and Personal Property in good repair,
working order and condition, reasonable wear and tear excepted.
(b) To the extent the same exist on the date hereof or are obtained in
connection with future permitted alterations, Grantor shall maintain a complete
set of final plans, specifications, blueprints and drawings for the Trust
Property either at the Trust Property or in a particular office at the
headquarters of Grantor to which Beneficiary shall have access upon reasonable
advance notice and at reasonable times.
SECTION 1.06. Insurance. Grantor will keep or cause to be kept the
Improvements and Personal Property insured against such risks, and in the
manner, required by Section 5.02 of the Credit Agreement.
SECTION 1.07. Casualty and Condemnation. (a) Notwithstanding any other
provision of this Deed of Trust or the Credit Agreement, Beneficiary is
authorized, at its option (for the benefit of the Secured Parties), to collect
and receive, to the extent payable to any Loan Party, all insurance proceeds,
damages, claims and rights of action under any insurance policies with respect
to any casualty or other insured damage ("Casualty") to any portion of the Trust
Property (collectively, "Casualty Proceeds"), unless the amount of the related
Casualty Proceeds is less than $2,500,000 and an Event of Default shall not have
occurred and be continuing, in which event Grantor may retain such Casualty
Proceeds for application in accordance with this Section 1.07; provided that to
the extent such Casualty Proceeds are (i) not so applied, or committed to be so
applied, within 180 days of any such Casualty or (ii) if committed to be so
applied within 180 days of any such Casualty, not so applied within one year of
such Casualty, Grantor shall promptly remit such Casualty Proceeds to
Beneficiary to prepay the outstanding Term Loans as provided in Section 2.13(f)
of the Credit Agreement. Grantor shall notify Beneficiary, in writing, promptly
after Grantor obtains notice or knowledge of any Casualty which Grantor
reasonably believes will cost more than $500,000 to repair, which notice shall
set forth a description of such Casualty and Grantor's good faith estimate of
the amount of related damages. Subject to the foregoing limitations, Grantor
shall endorse and transfer or cause to be endorsed or transferred any Casualty
Proceeds received by it or any other Loan Party to Beneficiary.
(b) Grantor will notify Beneficiary immediately upon obtaining
knowledge of the institution of any action or proceeding for the taking of the
Trust Property, or any part thereof
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or interest therein, for public or quasi-public use under the power of eminent
domain, by reason of any public improvement or condemnation proceeding, or in
any other manner (a "Condemnation"). No settlement or compromise of any claim in
excess of $500,000 in connection with any such action or proceeding shall be
made without the consent of Beneficiary, which consent shall not be unreasonably
withheld. Beneficiary is authorized, at its option (for the benefit of the
Secured Parties), to collect and receive all proceeds of any such Condemnation
(in each case, the "Condemnation Proceeds") unless the amount of such
Condemnation Proceeds is less than $2,500,000 and an Event of Default shall not
have occurred and be continuing, in which event Grantor may retain such
Condemnation Proceeds for application in accordance with this Section 1.07;
provided that to the extent such Condemnation Proceeds are (i) not so applied,
or committed to be so applied, within 180 days of any such Condemnation or (ii)
if committed to be so applied within 180 days of any such Condemnation, not so
applied within one year of such Condemnation, Grantor shall promptly remit such
Condemnation Proceeds to Beneficiary to prepay the outstanding Term Loans as
provided in Section 2.13(f) of the Credit Agreement. Subject to the foregoing
limitations, Grantor shall execute or cause to be executed such further
assignments of any Condemnation Proceeds as Beneficiary may reasonably require.
(c) In the event of a Condemnation of all or "substantially all" of the
Trust Property (a "substantially all" Condemnation) (which determination shall
be made by Beneficiary in its reasonable discretion), unless Grantor shall have
notified Beneficiary in writing promptly after such Condemnation that it intends
to replace the Trust Property (and no Default or Event of Default shall have
occurred and be continuing at the time of such election), Beneficiary or
Grantor, as applicable, shall apply the Condemnation Proceeds received as a
result of such Condemnation (less the reasonable costs, if any, incurred by
Beneficiary or Grantor in the recovery of such Condemnation Proceeds, including
reasonable attorneys' fees, other charges and disbursements) to prepay the
outstanding Term Loans as provided in Section 2.13(f) of the Credit Agreement,
with any remaining Condemnation Proceeds being returned to or retained by
Grantor. If Grantor shall elect to replace the Trust Property as contemplated
above, (i) the replacement property shall be of utility or value comparable to
that of the replaced Trust Property and (ii) the insufficiency of any
Condemnation Proceeds to defray the entire expense of the related location,
acquisition and replacement of such replacement property shall in no way relieve
Grantor of its obligation to complete the construction of any replacement
property if Grantor shall have made such election and shall have acquired the
related real property.
(d) In the event of any Condemnation of the Trust Property, or any part
thereof (other than a Condemnation described in paragraph (c) above (unless
Grantor shall be permitted and shall have elected to replace the Trust Property,
as provided in paragraph (c) above) and subject to the provisions of paragraph
(f) below), Beneficiary or Grantor, as applicable, shall apply the Condemnation
Proceeds first, in the case of a partial Condemnation, to the repair or
restoration of any integrated structure subject to such Condemnation or, in the
case of a Condemnation of all, or substantially all, of the Trust Property, to
the location of a replacement property, acquisition of such replacement property
and construction of the replacement structures, and second, if the remainder of
the Condemnation Proceeds is less than $1,000,000, such Condemnation Proceeds
(less the reasonable costs, if any, incurred by Beneficiary or Grantor in the
recovery of such Condemnation Proceeds) shall be returned to or retained by (as
applicable) Grantor, or if the remainder of the Condemnation Proceeds is
$1,000,000 or greater, such Condemnation Proceeds (less the reasonable costs, if
any,
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incurred by Beneficiary or Grantor in the recovery of such Condemnation
Proceeds) shall be used to prepay the outstanding Term Loans as provided in
Section 2.13(f) of the Credit Agreement, with any remaining Condemnation
Proceeds being returned to or retained by (as applicable) Grantor.
(e) In the event of any Casualty, Grantor shall, subject to the
conditions contained in paragraph (f), rebuild or restore the Trust Property to
substantially its same condition immediately prior to such Casualty or to a
condition better suited, in Mortgagor's judgment, to the then current and
contemplated operation of the Mortgagor's business. If Grantor shall be required
to restore the Trust Property, the insufficiency of any Casualty Proceeds to
defray the entire expense of such restoration shall in no way relieve Grantor of
such obligation so to restore. In the event Grantor shall be required to
restore, Grantor shall diligently and continuously prosecute the restoration of
the Trust Property to completion. In addition, there shall first be allowed to
Grantor out of the related Casualty Proceeds an amount sufficient to, and
Grantor shall be obligated to, place the remaining portion, if any, of the Trust
Property in a safe condition that is otherwise in compliance with the provisions
of this Deed of Trust and the Credit Agreement.
(f) Except as otherwise specifically provided in this Section 1.07 with
respect to Casualty Proceeds and Condemnation Proceeds which may be retained by
Grantor, all Casualty Proceeds and all Condemnation Proceeds recovered by
Beneficiary (i) are to be applied to the restoration or replacement of the Trust
Property (less the reasonable cost, if any, to Beneficiary or Grantor of such
recovery and of paying out such proceeds, including reasonable attorneys' fees,
other charges and disbursements and costs allocable to inspecting the Work (as
defined below)) and (ii) shall be applied by Beneficiary to the payment of the
cost of restoring or replacing the Trust Property so damaged, destroyed or taken
or of the portion or portions of the Trust Property not so taken (the "Work")
and (C) shall be paid out from time to time to Grantor as and to the extent the
Work (or the location and acquisition of any replacement of the Trust Property)
progresses for the payment thereof, but subject to each of the following
conditions:
(i) Grantor must promptly commence the restoration or
rebuilding process or the location, acquisition and replacement process
(in the case of a total or "substantially all" Condemnation) in
connection with the Trust Property;
(ii) the Work shall be in the charge of an independent
architect or engineer and before Grantor commences any Work, other than
temporary work to protect property or prevent interference with
business, Beneficiary shall have received the plans and specifications
and the general contract for the Work from Grantor. The plans and
specifications shall provide for such Work that, upon completion
thereof, the improvements shall (A) be in compliance with all
requirements of applicable Governmental Authorities such that all
representations and warranties of Grantor relating to the compliance of
such the Trust Property with applicable laws, rules or regulations in
this Deed of Trust and the Credit Agreement will be correct in all
respects and (B) be at least equal in value and general utility to the
improvements that were on the Trust Property (or that were on the Trust
Property that has been replaced, if applicable) prior to the Casualty
or Condemnation, and in the case of a Condemnation, subject to the
effect of such Condemnation;
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(iii) except as provided in (iv) below, each request for
payment shall be made on seven days' prior notice to Beneficiary and
shall be accompanied by a certificate to be made by such architect or
engineer, stating (A) that all the Work completed has been done in
substantial compliance with the plans and specifications, (B) that the
sum requested is justly required to reimburse Grantor for payments by
Grantor to, or is justly due to, the contractor, subcontractors,
materialmen, laborers, engineers, architects or other persons rendering
services or materials for the Work (giving a brief description of such
services and materials);
(iv) each request for payment in connection with the
acquisition of a replacement Trust Property (in the case of a total or
"substantially all" Condemnation) shall be made on 30 days' prior
notice to Beneficiary and, in connection therewith, (A) each such
request shall be accompanied by a copy of the sales contract or other
document governing the acquisition of the replacement property by
Grantor and a certificate of Grantor stating that the sum requested
represents the sales price under such contract or document and the
related reasonable transaction fees and expenses (including brokerage
fees) and setting forth in sufficient detail the various components of
such requested sum and (B) Grantor shall (I) in addition to any other
items required to be delivered under this Section 1.07, provide
Beneficiary with such opinions, documents, certificates, title
insurance policies, surveys and other insurance policies as it may
reasonably request and (II) take such other actions as Beneficiary may
reasonably deem necessary or appropriate (including actions with
respect to the delivery to Beneficiary of a first priority Deed of
Trust with respect to such real property for the ratable benefit of the
Secured Parties, which opinions, documents, certificates, title
insurance policies, surveys, other insurance policies and mortgage
shall be substantially comparable to similar documents executed and/or
delivered in connection with the Closing Date under the Credit
Agreement;
(v) if required by Beneficiary, each request for payment shall
be accompanied by a search prepared by a title company or licensed
abstractor or by other evidence satisfactory to Beneficiary, that there
has not been filed with respect to the Trust Property any mechanics' or
other lien or instrument for the retention of title in respect of any
part of the Work not discharged of record or bonded to the reasonable
satisfaction of Beneficiary;
(vi) there shall be no Default or Event of Default that has
occurred and is continuing;
(vii) the request for any payment after the Work has been
completed shall be accompanied by a copy of any certificate or
certificates required by law to render occupancy of the improvements
being rebuilt, repaired or restored legal; and
(viii) after commencing the Work, Grantor shall continue to
perform the Work diligently and in good faith to completion in
accordance with the approved plans and specifications.
Upon completion of the Work and payment in full therefor, the amount of any
Casualty Proceeds or Condemnation Proceeds then or thereafter in the hands of
Beneficiary on account of the Casualty or Condemnation that necessitated such
Work will be applied as follows:
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(x) with respect to Casualty Proceeds, returned to Grantor, (y) with respect to
amounts then held for Condemnation Proceeds which are less than $500,000,
returned to Grantor and (z) with respect to amounts then held for Condemnation
Proceeds of $500,000 or more, to prepay the outstanding Term Loans as provided
in Section 2.13 of the Credit Agreement, with any excess being returned to
Grantor.
(g) Notwithstanding any other provisions of this Section 1.07, if
Grantor shall have elected to replace the Trust Property in connection with a
total or "substantially all" Condemnation as contemplated in paragraph (c)
above, all Condemnation Proceeds held by Beneficiary in connection therewith
shall be applied to prepay the Term Loans as provided in Section 2.13 of the
Credit Agreement if (i) Grantor notifies Beneficiary that it does not intend to
replace the Trust Property, (ii) Grantor shall not have notified Grantor in
writing that Grantor has acquired or has entered into a contract to acquire the
replacement property within six months after the related Condemnation or (iii)
Grantor shall have not notified Beneficiary in writing that it has begun
construction of the replacement structures within one year after the related
Condemnation.
(h) Nothing in this Section 1.07 shall prevent Beneficiary from
applying at any time all or any part of the Casualty Proceeds or Condemnation
Proceeds to (i) the curing of any Event of Default under the Credit Agreement or
(ii) the payment of any of the Obligations after the occurrence and during the
continuance of an Event of Default.
SECTION 1.08. Assignment of Leases and Rents. (a) Grantor hereby
irrevocably and absolutely grants, transfers and assigns to Trustee for the
benefit of Beneficiary all of its right, title and interest in all Leases,
together with any and all extensions and renewals thereof for purposes of
securing and discharging the performance by Grantor of the Obligations. Grantor
has not (except for Permitted Encumbrances) assigned or executed any assignment
of, and will not assign or execute any assignment of, any other Lease or their
respective Rents to anyone other than to Trustee for the benefit of Beneficiary.
(b) Without Beneficiary's prior written consent, Grantor will not (i)
modify, amend, terminate or consent to the cancelation or surrender of any Lease
if such modification, amendment, termination or consent to Trustee for the
benefit of Beneficiary would, in the reasonable judgment of Beneficiary, be
adverse in any material respect to the interests of the Lenders, the value of
the Trust Property or the lien created by this Deed of Trust or (ii) consent to
an assignment of any tenant's interest in any Lease or to a subletting thereof
covering a material portion of the Trust Property.
(c) Subject to Section 1.08(d) and to the Permitted Encumbrances,
Grantor has assigned and transferred to Trustee for the benefit of Beneficiary
all of Grantor's right, title and interest in and to the Rents now or hereafter
arising from each Lease heretofore or hereafter made or agreed to by Grantor, it
being intended that this assignment establish, subject to Section 1.08(d), an
absolute transfer and assignment of all Rents and all Leases to Beneficiary and
not merely to grant a security interest therein. Subject to Section 1.08(d),
Beneficiary may in Grantor's name and stead (with or without first taking
possession of any of the Trust Property personally or by receiver as provided
herein) operate the Trust Property and rent, lease or let all or any portion of
any of the Trust Property to any party or parties at such rental and upon such
terms as Beneficiary shall, in its sole discretion, determine, and
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may collect and have the benefit of all of said Rents arising from or accruing
at any time thereafter or that may thereafter become due under any Lease.
(d) So long as an Event of Default shall not have occurred and be
continuing, Beneficiary will not exercise any of its rights under Section
1.08(c), and Grantor shall receive and collect the Rents accruing under any
Lease; provided, however, that after the happening and during the continuance of
any Event of Default, Beneficiary may, at its option, receive and collect all
Rents and enter upon the Premises and Improvements through its officers, agents,
employees or attorneys for such purpose and for the operation and maintenance
thereof. Grantor hereby irrevocably authorizes and directs each tenant, if any,
and each successor, if any, to the interest of any tenant under any Lease,
respectively, to rely upon any notice of a claimed Event of Default sent by
Beneficiary to any such tenant or any of such tenant's successors in interest,
and thereafter to pay Rents to Beneficiary without any obligation or right to
inquire as to whether an Event of Default actually exists and even if some
notice to the contrary is received from Grantor, who shall have no right or
claim against any such tenant or successor in interest for any such Rents so
paid to Beneficiary. Each tenant or any of such tenant's successors in interest
from whom Beneficiary or any officer, agent, attorney or employee of Beneficiary
shall have collected any Rents, shall be authorized to pay Rents to Grantor only
after such tenant or any of their successors in interest shall have received
written notice from Beneficiary that the Event of Default is no longer
continuing, unless and until a further notice of an Event of Default is given by
Beneficiary to such tenant or any of its successors in interest.
(e) Beneficiary will not become a mortgagee in possession so long as it
does not enter or take actual possession of the Trust Property. In addition,
Beneficiary shall not be responsible or liable for performing any of the
obligations of the landlord under any Lease, for any waste by any tenant, or
others, for any dangerous or defective conditions of any of the Trust Property,
for negligence in the management, upkeep, repair or control of any of the Trust
Property or any other act or omission by any other person.
(f) Grantor shall furnish to Beneficiary, within 30 days after a
request by Beneficiary to do so, a written statement containing the names of all
tenants, subtenants and concessionaires of the Premises or Improvements, the
terms of any Lease, the space occupied and the rentals or license fees payable
thereunder.
SECTION 1.09. Restrictions on Transfers and Encumbrances. Except as
permitted by the Credit Agreement, Grantor shall not directly or indirectly
sell, convey, alienate, assign, lease, sublease, license, mortgage, pledge,
encumber or otherwise transfer, create, consent to or suffer the creation of any
lien, charges or any form of encumbrance upon any interest in or any part of the
Trust Property, or be divested of its title to the Trust Property or any
interest therein in any manner or way, whether voluntarily or involuntarily
(other than resulting from a Condemnation), or engage in any common,
cooperative, joint, time-sharing or other congregate ownership of all or part
thereof; provided, however, that Grantor may in the ordinary course of business
within reasonable commercial standards, enter into easement or covenant
agreements that relate to and/or benefit the operation of the Trust Property and
that do not materially or adversely affect the use and operation of the same
(except for customary utility easements that service the Trust Property, which
are permitted).
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SECTION 1.10. Security Agreement. This Deed of Trust is both a mortgage
of real property and a grant of a security interest in personal property, and
shall constitute and serve as a "Security Agreement" within the meaning of the
uniform commercial code as adopted in the state wherein the Premises are located
("UCC"). Grantor has hereby granted unto Beneficiary a security interest in and
to all the Trust Property described in this Deed of Trust that is not real
property, and simultaneously with the recording of this Deed of Trust, Grantor
has filed or will file UCC financing statements, and will file continuation
statements prior to the lapse thereof, at the appropriate offices in the state
in which the Premises are located to perfect the security interest granted by
this Deed of Trust in all the Trust Property that is not real property. Grantor
hereby appoints Beneficiary as its true and lawful attorney-in-fact and agent,
for Grantor and in its name, place and stead, in any and all capacities, to
execute any document and to file the same in the appropriate offices (to the
extent it may lawfully do so), and to perform each and every act and thing
reasonably requisite and necessary to be done to perfect the security interest
contemplated by the preceding sentence. Beneficiary shall have all rights with
respect to the part of the Trust Property that is the subject of a security
interest afforded by the UCC in addition to, but not in limitation of, the other
rights afforded Beneficiary hereunder and under the Security Agreement.
SECTION 1.11. Filing and Recording. Grantor will cause this Deed of
Trust, any other security instrument creating a security interest in or
evidencing the lien hereof upon the Trust Property and each instrument of
further assurance to be filed, registered or recorded in such manner and in such
places as may be required by any present or future law in order to publish
notice of and fully to protect the lien hereof upon, and the security interest
of Beneficiary in, the Trust Property. Grantor will pay all filing, registration
or recording fees, and all reasonable expenses incidental to the execution and
acknowledgment of this Deed of Trust, any mortgage supplemental hereto, any
security instrument with respect to the Personal Property, and any instrument of
further assurance and all Federal, state, county and municipal recording,
documentary or intangible taxes and other taxes, duties, imposts, assessments
and charges arising out of or in connection with the execution, delivery and
recording of this Deed of Trust, any mortgage supplemental hereto, any security
instrument with respect to the Personal Property or any instrument of further
assurance.
SECTION 1.12. Further Assurances. Upon demand by Beneficiary, Grantor
will, at the cost of Grantor and without expense to Trustee or Beneficiary, do,
execute, acknowledge and deliver all such further acts, deeds, conveyances,
mortgages, assignments, notices of assignment, transfers and assurances as
Beneficiary shall from time to time reasonably require for better assuring,
conveying, assigning, transferring and confirming unto Beneficiary the property
and rights hereby conveyed or assigned or intended now or hereafter so to be, or
which Grantor may be or may hereafter become bound to convey or assign to
Beneficiary, or for carrying out the intention or facilitating the performance
of the terms of this Deed of Trust, or for filing, registering or recording this
Deed of Trust, and on demand, Grantor will also execute and deliver and hereby
appoints Beneficiary as its true and lawful attorney-in-fact and agent, for
Grantor and in its name, place and stead, in any and all capacities, to execute
and file to the extent it may lawfully do so, one or more financing statements,
chattel mortgages or comparable security instruments reasonably requested by
Beneficiary to evidence more effectively the lien hereof upon the Personal
Property and to perform each and every act and thing requisite and necessary to
be done to accomplish the same.
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SECTION 1.13. Additions to Trust Property. All right, title and
interest of Grantor in and to all extensions, improvements, betterments,
renewals, substitutes and replacements of, and all additions and appurtenances
to, the Trust Property hereafter acquired by or released to Grantor or
constructed, assembled or placed by Grantor upon the Premises or the
Improvements, and all conversions of the security constituted thereby,
immediately upon such acquisition, release, construction, assembling, placement
or conversion, as the case may be, and in each such case without any further
mortgage, conveyance, assignment or other act by Grantor, shall become subject
to the lien and security interest of this Deed of Trust as fully and completely
and with the same effect as though now owned by Grantor and specifically
described in the grant of the Trust Property above, but at any and all times
Grantor will execute and deliver to Beneficiary any and all such further
assurances, mortgages, conveyances or assignments thereof as Beneficiary may
reasonably require for the purpose of expressly and specifically subjecting the
same to the lien and security interest of this Deed of Trust.
SECTION 1.14. No Claims Against Trustee or Beneficiary. Nothing
contained in this Deed of Trust shall constitute any consent or request by
Trustee or Beneficiary, express or implied, for the performance of any labor or
services or the furnishing of any materials or other property in respect of the
Trust Property or any part thereof, nor as giving Grantor any right, power or
authority to contract for or permit the performance of any labor or services or
the furnishing of any materials or other property in such fashion as would
permit the making of any claim against Trustee or Beneficiary in respect
thereof.
SECTION 1.15. Fixture Filing. Certain of the Trust Property is or will
become "fixtures" (as that term is defined in the UCC) on the Land, and this
Deed of Trust upon being filed for record in the real estate records of the
county wherein such fixtures are situated shall operate also as a financing
statement filed as a fixture filing in accordance with the applicable provisions
of said UCC upon such of the Trust Property that is or may become fixtures.
ARTICLE II
Defaults and Remedies
SECTION 2.01. Events of Default. Any Event of Default under the Credit
Agreement (as such term is defined therein) shall constitute an Event of Default
under this Deed of Trust.
SECTION 2.02. Demand for Payment. If an Event of Default shall occur
and be continuing, then, upon written demand of Beneficiary, Grantor will pay to
Beneficiary all amounts due hereunder and such further amount as shall be
sufficient to cover the costs and expenses of collection, including attorneys'
fees, disbursements and expenses incurred by Trustee or Beneficiary and Trustee
or Beneficiary shall be entitled and empowered to institute an action or
proceedings at law or in equity for the collection of the sums so due and
unpaid, to prosecute any such action or proceedings to judgment or final decree,
to enforce any such judgment or final decree against Grantor and to collect, in
any manner provided by law, all moneys adjudged or decreed to be payable.
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SECTION 2.03. Rights To Take Possession, Operate and Apply Revenues.
(a) If an Event of Default shall occur and be continuing, Grantor shall, upon
demand of Beneficiary, forthwith surrender to Beneficiary actual possession of
the Trust Property and, if and to the extent not prohibited by applicable law,
Beneficiary itself, or by such officers or agents as it may appoint, may then
enter and take possession of all the Trust Property without the appointment of a
receiver or an application therefor, exclude Grantor and its agents and
employees wholly therefrom, and have access to the books, papers and accounts of
Grantor.
(b) If Grantor shall for any reason fail to surrender or deliver the
Trust Property or any part thereof after such demand by Beneficiary, Beneficiary
may to the extent not prohibited by applicable law, obtain a judgment or decree
conferring upon Beneficiary the right to immediate possession or requiring
Grantor to deliver immediate possession of the Trust Property to Beneficiary, to
the entry of which judgment or decree Grantor hereby specifically consents.
Grantor will pay to Beneficiary, upon demand, all reasonable expenses of
obtaining such judgment or decree, including reasonable compensation to
Beneficiary's attorneys and agents with interest thereon at the Default Interest
Rate; and all such expenses and compensation shall, until paid, be secured by
this Deed of Trust.
(c) Upon every such entry or taking of possession, Beneficiary may, to
the extent not prohibited by applicable law, hold, store, use, operate, manage
and control the Trust Property, conduct the business thereof in a commercially
reasonable manner and, from time to time, (i) make all necessary and proper
maintenance, repairs, renewals, replacements, additions, betterments and
improvements thereto and thereon, (ii) purchase or otherwise acquire additional
fixtures, personalty and other property, (iii) insure or keep the Trust Property
insured, (iv) manage and operate the Trust Property and exercise all the rights
and powers of Grantor to the same extent as Grantor could in its own name or
otherwise with respect to the same, or (v) enter into any and all agreements
with respect to the exercise by others of any of the powers herein granted
Beneficiary, all as may from time to time be directed or determined by
Beneficiary to be in its best interest and Grantor hereby appoints Beneficiary
as its true and lawful attorney-in-fact and agent, for Grantor and in its name,
place and stead, in any and all capacities, to perform any of the foregoing
acts. Beneficiary may collect and receive all the Rents, issues, profits and
revenues from the Trust Property, including those past due as well as those
accruing thereafter, and, after deducting (i) all expenses of taking, holding,
managing and operating the Trust Property (including compensation for the
services of all persons employed for such purposes), (ii) the costs of all such
maintenance, repairs, renewals, replacements, additions, betterments,
improvements, purchases and acquisitions, (iii) the costs of insurance, (iv)
such taxes, assessments and other similar charges as Beneficiary may at its
option pay, (v) other proper charges upon the Trust Property or any part thereof
and (vi) the compensation, expenses and disbursements of the attorneys and
agents of Beneficiary, Beneficiary shall apply the remainder of the moneys and
proceeds so received first to the payment of Beneficiary for the satisfaction of
the Obligations, and second, if there is any surplus, to Grantor, subject to the
entitlement of others thereto under applicable law.
(d) Whenever, before any sale of the Trust Property under Section 2.06,
all Obligations that are then due shall have been paid and all Events of Default
fully cured, Beneficiary will surrender possession of the Trust Property back to
Grantor, its successors or assigns. The same right of taking possession shall,
however, arise again if any subsequent Event of Default shall occur and be
continuing.
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SECTION 2.04. Right To Cure Grantor's Failure to Perform. Should
Grantor fail in the payment, performance or observance of any term, covenant or
condition required by this Deed of Trust or the Credit Agreement (with respect
to the Trust Property), Beneficiary may pay, perform or observe the same, and
all payments made or costs or expenses incurred by Beneficiary in connection
therewith shall be secured hereby and shall be, without demand, immediately
repaid by Grantor to Beneficiary with interest thereon at the Default Interest
Rate. Beneficiary shall be the judge using reasonable discretion of the
necessity for any such actions and of the amounts to be paid. Beneficiary is
hereby empowered to enter and to authorize others to enter upon the Premises or
the Improvements or any part thereof for the purpose of performing or observing
any such defaulted term, covenant or condition without having any obligation to
so perform or observe and without thereby becoming liable to Grantor, to any
person in possession holding under Grantor or to any other person.
SECTION 2.05. Right to a Receiver. If an Event of Default shall occur
and be continuing, Beneficiary, upon application to a court of competent
jurisdiction, shall be entitled as a matter of right to the appointment of a
receiver to take possession of and to operate the Trust Property and to collect
and apply the Rents. The receiver shall have all of the rights and powers
permitted under the laws of the state wherein the Trust Property is loca ted.
Grantor shall pay to Beneficiary upon demand all reasonable expenses, including
receiver's fees, reasonable attorneys' fees and disbursements, costs and agent's
compensation incurred pursuant to the provisions of this Section 2.05; and all
such expenses shall be secured by this Deed of Trust and shall be, without
demand, immediately repaid by Grantor to Beneficiary with interest thereon at
the Default Interest Rate.
SECTION 2.06. Foreclosure and Sale. (a) If an Event of Default shall
occur and be continuing, Beneficiary may elect to sell or to cause and direct
Trustee to sell the Trust Property or any part of the Trust Property by exercise
of the power of foreclosure or of sale granted to Trustee and/or Beneficiary by
applicable law or this Deed of Trust. In such case, Trustee or Beneficiary may
commence a civil action to foreclose this Deed of Trust, or Trustee may proceed
and sell the Trust Property to satisfy any Obligation. Trustee or Beneficiary or
an officer appointed by a judgment of foreclosure to sell the Trust Property,
may sell all or such parts of the Trust Property as may be chosen by Trustee or
Beneficiary at the time and place of sale fixed by it in a notice of sale,
either as a whole or in separate lots, parcels or items as Trustee or
Beneficiary shall deem expedient, and in such order as it may determine, at
public auction to the highest bidder. Trustee or Beneficiary or an officer
appointed by a judgment of foreclosure to sell the Trust Property may postpone
any fore closure or other sale of all or any portion of the Trust Property by
public announcement at such time and place of sale, and from time to time
thereafter may postpone such sale by public announcement or subsequently noticed
sale. Without further notice, Trustee or Beneficiary or an officer appointed to
sell the Trust Property may make such sale at the time fixed by the last
postponement, or may, in its discretion, give a new notice of sale. Any person,
including Grantor or Beneficiary or any designee or affiliate thereof, may
purchase at such sale.
(b) The Trust Property may be sold subject to unpaid taxes and
Permitted Encumbrances, and, after deducting all costs, fees and expenses of
Trustee and Beneficiary (including costs of evidence of title in connection with
the sale), Trustee or Beneficiary or an officer that makes any sale shall apply
the proceeds of sale in the manner set forth in Section 2.08.
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(c) Any foreclosure or other sale of less than the whole of the Trust
Property or any defective or irregular sale made hereunder shall not exhaust the
power of foreclosure or of sale provided for herein; and subsequent sales may be
made hereunder until the Obligations have been satisfied, or the entirety of the
Trust Property has been sold.
(d) If an Event of Default shall occur and be continuing, Trustee or
Beneficiary may instead of, or in addition to, exercising the rights described
in Section 2.06(a) above and either with or without entry or taking possession
as herein permitted, proceed by a suit or suits in law or in equity or by any
other appropriate proceeding or remedy (i) to specifically enforce payment of
some or all of the Obligations, or the performance of any term, covenant,
condition or agreement of this Deed of Trust or any other Loan Document or any
other right, or (ii) to pursue any other remedy available to Trustee or
Beneficiary, all as Trustee or Beneficiary shall determine most effectual for
such purposes.
SECTION 2.07. Other Remedies. (a) In case an Event of Default shall
occur and be continuing, Beneficiary may also exercise, to the extent not
prohibited by law, any or all of the remedies available to a secured party under
the uniform commercial code of the state wherein the Trust Property is located.
(b) In connection with a sale of the Trust Property or any Personal
Property and the application of the proceeds of sale as provided in Section
2.08, Beneficiary shall be entitled to enforce payment of and to receive up to
the principal amount of the Obligations, plus all other charges, payments and
costs due under this Deed of Trust, and to recover a deficiency judgment for any
portion of the aggregate principal amount of the Obligations remaining unpaid,
with interest.
SECTION 2.08. Application of Sale Proceeds and Rents. After any
foreclosure sale of all or any of the Trust Property, Trustee or Beneficiary
shall receive the proceeds of sale, no purchaser shall be required to see to the
application of the proceeds and Trustee or Beneficiary shall apply the proceeds
of the sale together with any Rents that may have been collected and any other
sums that then may be held by Trustee or Beneficiary under this Deed of Trust as
follows:
FIRST, to the payment of the costs and expenses of such sale,
including compensation to Trustee or to Beneficiary's attorneys and
agents, and of any judicial proceedings wherein the same may be made,
and of all expenses, liabilities and advances made or incurred by
Beneficiary under this Deed of Trust, together with interest at the
Default Interest Rate on all advances made by Beneficiary, including
all taxes or assessments (except any taxes, assessments or other
charges subject to which the Trust Property shall have been sold) and
the cost of removing any Permitted Encumbrance (except any Permitted
Encumbrance subject to which the Trust Property was sold);
SECOND, to Beneficiary for the distribution to the Secured
Parties for the satisfaction of the Obligations owed to the Secured
Parties; and
THIRD, to Grantor, its successors or assigns, or as a court of
competent jurisdiction may otherwise direct.
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Beneficiary shall have absolute discretion as to the time of application of any
such proceeds, moneys or balances in accordance with this Deed of Trust. Upon
any sale of the Trust Property by Trustee or Beneficiary (including pursuant to
a power of sale granted by statute or under a judicial proceeding), the receipt
of Trustee or Beneficiary or of the officer making the sale shall be a
sufficient discharge to the purchaser or purchasers of the Trust Property so
sold and such purchaser or purchasers shall not be obligated to see to the
application of any part of the purchase money paid over to Trustee or
Beneficiary or such officer or be answerable in any way for the misapplication
thereof.
SECTION 2.09. Grantor as Tenant Holding Over. If Grantor remains in
possession of any of the Trust Property after any foreclosure sale by Trustee or
Beneficiary, at Beneficiary's election Grantor shall be deemed a tenant holding
over and shall forthwith surrender possession to the purchaser or purchasers at
such sale or be summarily dispossessed or evicted according to provisions of law
applicable to tenants holding over.
SECTION 2.10. Waiver of Appraisement, Valuation, Stay, Extension and
Redemption Laws. Grantor waives, to the extent not prohibited by law, (i) the
benefit of all laws now existing or that hereafter may be enacted providing for
any appraisement of any portion of the Trust Property, (ii) the benefit of all
laws now existing or that may be hereafter enacted in any way extending the time
for the enforcement or the collection of amounts due under any of the
Obligations or creating or extending a period of redemption from any sale made
in collecting said debt or any other amounts due Beneficiary, (iii) any right to
at any time insist upon, plead, claim or take the benefit or advantage of any
law now or hereafter in force providing for any appraisement, homestead
exemption, valuation, stay, statute of limitations, extension or redemption, or
sale of the Trust Property as separate tracts, units or estates or as a single
parcel in the event of foreclosure or notice of deficiency, and (iv) all rights
of redemption, valuation, appraisement, stay of execution, notice of election to
mature or declare due the whole of or each of the Obligations and marshaling in
the event of foreclosure of this Deed of Trust.
SECTION 2.11. Discontinuance of Proceedings. In case Trustee or
Beneficiary shall proceed to enforce any right, power or remedy under this Deed
of Trust by foreclosure, entry or otherwise, and such proceedings shall be
discontinued or abandoned for any reason, or shall be determined adversely to
Trustee or Beneficiary, then and in every such case Grantor, Trustee and
Beneficiary shall be restored to their former positions and rights hereunder,
and all rights, powers and remedies of Trustee or Beneficiary shall continue as
if no such proceeding had been taken.
SECTION 2.12. Suits To Protect the Trust Property. Trustee and/or
Beneficiary shall have power (a) to institute and maintain suits and proceedings
to prevent any impairment of the Trust Property by any acts that may be unlawful
or in violation of this Deed of Trust, (b) to preserve or protect its interest
in the Trust Property and in the Rents arising therefrom and (c) to restrain the
enforcement of or compliance with any legislation or other governmental
enactment, rule or order that may be unconstitutional or otherwise invalid if
the enforcement of or compliance with such enactment, rule or order would impair
the security or be prejudicial to the interest of Trustee or Beneficiary
hereunder.
SECTION 2.13. Filing Proofs of Claim. In case of any receivership,
insolvency, bankruptcy, reorganization, arrangement, adjustment, composition or
other proceedings
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affecting Grantor, Beneficiary shall, to the extent permitted by law, be
entitled to file such proofs of claim and other documents as may be necessary or
advisable in order to have the claims of Beneficiary allowed in such proceedings
for the Obligations secured by this Deed of Trust at the date of the institution
of such proceedings and for any interest accrued, late charges and additional
interest or other amounts due or that may become due and payable hereunder after
such date.
SECTION 2.14. Possession by Beneficiary. Notwithstanding the
appointment of any receiver, liquidator or trustee of Grantor, any of its
property or the Trust Property, Beneficiary shall be entitled, to the extent not
prohibited by law, to remain in possession and control of all parts of the Trust
Property now or hereafter granted under this Deed of Trust to Beneficiary in
accordance with the terms hereof and applicable law.
SECTION 2.15. Waiver. (a) No delay or failure by Trustee or Beneficiary
to exercise any right, power or remedy accruing upon any breach or Event of
Default shall exhaust or impair any such right, power or remedy or be construed
to be a waiver of any such breach or Event of Default or acquiescence therein;
and every right, power and remedy given by this Deed of Trust to Trustee or
Beneficiary may be exercised from time to time and as often as may be deemed
expedient by Trustee or Beneficiary. No consent or waiver by Beneficiary to or
of any breach or default by Grantor in the performance of the Obligations shall
be deemed or construed to be a consent or waiver to or of any other breach or
Event of Default in the performance of the same or any other Obligations by
Grantor hereunder. No failure on the part of Beneficiary to complain of any act
or failure to act or to declare an Event of Default, irrespective of how long
such failure continues, shall constitute a waiver by Beneficiary of its rights
hereunder or impair any rights, powers or remedies consequent on any future
Event of Default by Grantor.
(b) Even if Beneficiary (i) grants some forbearance or an extension of
time for the payment of any sums secured hereby, (ii) takes other or additional
security for the payment of any sums secured hereby, (iii) waives or does not
exercise some right granted herein or under the Loan Documents, (iv) releases a
part of the Trust Property from this Deed of Trust, (v) agrees to change some of
the terms, covenants, conditions or agreements of any of the Loan Documents,
(vi) consents to the filing of a map, plat or replat affecting the Premises,
(vii) consents to the granting of an easement or other right affecting the
Premises to which its consent is required or (viii) makes or consents to an
agreement subordinating Beneficiary's lien on the Trust Property hereunder, no
such act or omission shall preclude Beneficiary from exercising any other right,
power or privilege herein granted or intended to be granted in the event of any
breach or Event of Default then made or of any subsequent default; nor, except
as otherwise expressly provided in an instrument executed by Trustee and
Beneficiary, shall this Deed of Trust be altered thereby. In the event of the
sale or transfer by operation of law or otherwise of all or part of the Trust
Property, Beneficiary is hereby authorized and empowered to deal with any vendee
or transferee with reference to the Trust Property secured hereby, or with
reference to any of the terms, covenants, conditions or agreements hereof, as
fully and to the same extent as it might deal with the original parties hereto
and without in any way releasing or discharging any liabilities, obligations or
undertakings.
SECTION 2.16. Remedies Cumulative. No right, power or remedy conferred
upon or reserved to Trustee or Beneficiary by this Deed of Trust is intended to
be exclusive of any other right, power or remedy, and each and every such right,
power and remedy shall be
20
<PAGE>
cumulative and concurrent and in addition to any other right, power and remedy
given hereunder or now or hereafter existing at law or in equity or by statute.
ARTICLE III
Miscellaneous
SECTION 3.01. Partial Invalidity. In the event any one or more of the
provisions contained in this Deed of Trust shall for any reason be held to be
invalid, illegal or unenforceable in any respect, such validity, illegality or
unenforceability shall, at the option of Beneficiary, not affect any other
provision of this Deed of Trust, and this Deed of Trust shall be construed as if
such invalid, illegal or unenforceable provision had never been contained herein
or therein.
SECTION 3.02. Notices. All notices and communications hereunder shall
be in writing and given to Grantor and Trustee in accordance with the terms of
the Credit Agreement at the address set forth on the first page of this Deed of
Trust, with a copy to it at its notice address provided in the Credit Agreement
(if different) and all copies provided for therein, and to the Agent or any
Lender as provided in the Credit Agreement.
SECTION 3.03. Successors and Assigns. All of the grants, covenants,
terms, provisions and conditions herein shall run with the Premises and the
Improvements and shall apply to, bind and inure to, the benefit of the permitted
successors and assigns of Grantor and the successors and assigns of Beneficiary.
SECTION 3.04. Satisfaction and Cancelation. (a) The conveyance to
Trustee of the Trust Property as security and for the benefit of Beneficiary,
created and consummated by this Deed of Trust shall be null and void when all
the Obligations have been indefeasibly paid in full in accordance with the terms
of the Loan Documents and the Lenders have no further commitment to make Loans
under the Credit Agreement, no Letters of Credit are outstanding and the Issuing
Bank has no further obligation to issue Letters of Credit under the Credit
Agreement.
(b) Upon a sale or financing by Grantor of all or any portion of the
Trust Property that is permitted under the Credit Agreement and the application
of the Net Cash Proceeds of such sale or financing in accordance with the Credit
Agreement, the lien of this Deed of Trust shall be released from the applicable
portion of the Trust Property. Grantor shall give Beneficiary reasonable written
notice of any sale or financing of the Trust Property prior to the closing of
such sale or financing.
(c) In connection with any termination or release pursuant to paragraph
(a), the Deed of Trust shall be marked "satisfied" by Beneficiary and/or
Trustee, and this Deed of Trust and any related UCC-1 financing statements (if
applicable) shall be canceled of record at the request and at the expense of
Grantor. Beneficiary and Trustee shall execute any documents reasonably
requested by Grantor to accomplish the foregoing or to accomplish any release
contemplated by paragraph (a) and Grantor will pay all costs and expenses,
including reasonable attorneys' fees, disbursements and other charges, incurred
by Beneficiary and Trustee in connection with the preparation and execution of
such documents.
21
<PAGE>
SECTION 3.05. Definitions. As used in this Deed of Trust, the singular
shall include the plural as the context requires and the following words and
phrases shall have the following meanings: (a) "including" shall mean "including
but not limited to"; (b) "provisions" shall mean "provisions, terms, covenants
and/or conditions"; (c) "lien" shall mean "lien, charge, encumbrance, security
interest, mortgage or deed of trust"; (d) "obligation" shall mean "obligation,
duty, covenant and/or condition"; and (e) "any of the Trust Property" shall mean
"the Trust Property or any part thereof or interest therein". Any act that
Trustee or Beneficiary is permitted to perform hereunder may be performed at any
time and from time to time by Trustee or Beneficiary or any person or entity
designated by Trustee or Beneficiary. Any act that is prohibited to Grantor
hereunder is also prohibited to all lessees of any of the Trust Property. Each
appointment of Trustee or Beneficiary as attorney-in-fact for Grantor under the
Deed of Trust is irrevocable, with power of substitution and coupled with an
interest. Subject to the applicable provisions hereof, Beneficiary has the right
to refuse to grant its consent, approval or acceptance or to indicate its
satisfaction, in its sole discretion, whenever such consent, approval,
acceptance or satisfaction is required hereunder.
SECTION 3.06. Multisite Real Estate Transaction. Grantor acknowledges
that this Deed of Trust is one of a number of Mortgages and Security Documents
that secure the Obligations. Grantor agrees that the lien of this Deed of Trust
shall be absolute and unconditional and shall not in any manner be affected or
impaired by any acts or omissions whatsoever of Trustee or Beneficiary and
without limiting the generality of the foregoing, the lien hereof shall not be
impaired by any acceptance by Trustee or Beneficiary of any security for or
guarantees of any of the Obligations hereby secured, or by any failure, neglect
or omission on the part of Trustee or Beneficiary to realize upon or protect any
Obligation or indebtedness hereby secured or any collateral security therefor
including the Other Mortgages and other Security Documents. The lien hereof
shall not in any manner be impaired or affected by any release (except as to the
property released), sale, pledge, surrender, compromise, settlement, renewal,
extension, indulgence, alteration, changing, modification or disposition of any
of the Obligations secured or of any of the collateral security therefor,
including the Other Mortgages and other Security Documents or of any guarantee
thereof, and Trustee or Beneficiary may at its discretion foreclose, exercise
any power of sale, or exercise any other remedy available to it under any or all
of the Other Mortgages and other Security Documents without first exercising or
enforcing any of its rights and remedies hereunder. Such exercise of Trustee's
or Beneficiary's rights and remedies under any or all of the Other Mortgages and
other Security Documents shall not in any manner impair the indebtedness hereby
secured or the lien of this Deed of Trust and any exercise of the rights or
remedies of Trustee or Beneficiary hereunder shall not impair the lien of any of
the Other Mortgages and other Security Documents or any of Trustee or
Beneficiary's rights and remedies thereunder. Grantor specifically consents and
agrees that Trustee or Beneficiary may exercise its rights and remedies
hereunder and under the Other Mortgages and other Security Documents separately
or concurrently and in any order that it may deem appropriate and waives any
rights of subrogation, except as provided in the Indemnity, Subrogation and
Contribution Agreement among Borrower, the Guarantors (as defined therein) and
the Collateral Agent for the Secured Parties dated of even date herewith.
22
<PAGE>
ARTICLE IV
Particular Provisions
This Deed of Trust is subject to the following provisions relating to
the particular laws of the state wherein the Premises are located:
SECTION 4.01. Applicable Law; Certain Particular Provisions. This Deed
of Trust shall be governed by and construed in accordance with the internal law
of the State of New York; provided, however, that the provisions of this Deed of
Trust relating to the creation, perfection and enforcement of the lien and
security interest created by this Deed of Trust in respect of the Trust Property
and the exercise of each remedy provided hereby, including the power of
foreclosure or power of sale procedures set forth in this Deed of Trust, shall
be governed by and construed in accordance with the internal law of the state
where the Trust Property is located, and Grantor and Beneficiary agree to submit
to jurisdiction and the laying of venue for any suit on this Deed of Trust in
such state. The terms and provisions set forth in Appendix A attached hereto are
hereby incorporated by reference as though fully set forth herein. In the event
of any conflict between the terms and provisions contained in the body of this
Deed of Trust and the terms and provisions set forth in Appendix A, the terms
and provisions set forth in Appendix A shall govern and control.
SECTION 4.02. Trustee's Powers and Liabilities. (a) Trustee, by
acceptance hereof, covenants faithfully to perform and fulfill the trusts herein
created, being liable, however, only for gross negligence, bad faith or wilful
misconduct, and hereby waives any statutory fee and agrees to accept reasonable
compensation, in lieu thereof, for any services rendered by it in accordance
with the terms hereof. All authorities, powers and discretions given in this
Deed of Trust to Trustee and/or Beneficiary may be exercised by either, without
the other, with the same effect as if exercised jointly.
(b) Trustee may resign at any time upon giving 30 days' notice in
writing to Grantor and to Beneficiary.
(c) Beneficiary may remove Trustee at any time or from time to time and
select a successor trustee. In the event of the death, removal, resignation,
refusal to act, inability to act or absence of Trustee from the state in which
the premises are located, or in its sole discretion for any reason whatsoever,
Beneficiary may, upon notice to Grantor and without specifying the reason
therefor and without applying to any court, select and appoint a successor
trustee, and all powers, rights, duties and authority of the former Trustee, as
aforesaid, shall thereupon become vested in such successor. Such substitute
trustee shall not be required to give bond for the faithful performance of his
duties unless required by Beneficiary. Such substitute trustee shall be
appointed by written instrument duly recorded in the county where the Land is
located. Grantor hereby ratifies and confirms any and all acts that the herein
named Trustee, or his successor or successors in this trust, shall do lawfully
by virtue hereof. Grantor hereby agrees, on behalf of itself and its heirs,
executors, administrators and assigns, that the recitals contained in any deed
or deeds executed in due form by any Trustee or substitute trustee, acting under
the provisions of this instrument, shall be prima facie evidence of the facts
recited, and that it shall not be necessary to prove in any court, otherwise
than by such recitals, the existence of the facts essential to authorize the
execution and delivery of such deed or deeds and the passing of title thereby.
23
<PAGE>
(d) Trustee shall not be required to see that this Deed of Trust is
recorded, nor liable for its validity or its priority as a first deed of trust,
or otherwise, nor shall Trustee be answerable or responsible for performance or
observance of the covenants and agreements imposed upon Grantor or Beneficiary
by this Deed of Trust or any other agreement. Trustee, as well as Beneficiary,
shall have authority in their respective discretion to employ agents and
attorneys in the execution of this trust and to protect the interest of
Beneficiary hereunder, and to the extent permitted by law they shall be
compensated and all expenses relating to the employment of such agents and/or
attorneys, including expenses of litigations, shall be paid out of the proceeds
of the sale of the Trust Property conveyed hereby should a sale be had, but if
no such sale be had, all sums so paid out shall be recoverable to the extent
permitted by law by all remedies at law or in equity.
(e) At any time, or from time to time, without liability therefor and
with 10 days' prior written notice to Grantor, upon written request of
Beneficiary and without affecting the effect of this Deed of Trust upon the
remainder of the Trust Property, Trustee may (i) reconvey any part of the Trust
Property, (ii) consent in writing to the making of any map or plat thereof, so
long as Grantor has consented thereto, (iii) join in granting any easement
thereon, so long as Grantor has consented thereto, or (iv) join in any extension
agreement or any agreement subordinating the lien or charge hereof.
IN WITNESS WHEREOF, this Deed of Trust has been duly executed and
delivered to Trustee and Beneficiary by Grantor on the date of the
acknowledgment attached hereto.
INTERSIL CORPORATION, a Delaware
corporation,
by:
--------------------------
Name:
Title:
Attest:
by
----------------------------
Name:
Title:
[Corporate Seal]
24
<PAGE>
STATE OF........................)
) SS:
COUNTY OF.......................)
I HEREBY CERTIFY that on this day, before me, an officer duly
authorized in the State aforesaid and in the County aforesaid to take
acknowledgments, the foregoing instrument was acknowledged before me by _______,
the of INTERSIL CORPORATION, a Delaware corporation, freely and voluntarily
under authority duly vested in him/her by said corporation and that the seal
affixed thereto is the true corporate seal of said corporation. He/she is
personally known to me or who has produced ____________ as identification.
WITNESS my hand and official seal in the County and State last
aforesaid this ___ day of _______________, 1999.
----------------------------------------------
Notary Public
----------------------------------------------
Typed, printed or stamped name of Notary Public
My Commission Expires:
25
<PAGE>
Exhibit A
to Deed of Trust
Legal Description
<PAGE>
Schedule A
to Deed of Trust
Leases of Trust Property
<PAGE>
Appendix A
to Deed of Trust
Local Law Provisions
<PAGE>
EXHIBIT F
[Form of]
PARENT GUARANTEE AGREEMENT dated as of August 13,
1999, between INTERSIL HOLDING CORPORATION, a Delaware corporation
(the "Guarantor"), and CREDIT SUISSE FIRST BOSTON, a bank organized
under the laws of Switzerland, acting through its New York branch
("CSFB"), as collateral agent (the "Collateral Agent") for the
Secured Parties (as defined in the Credit Agreement referred to
below).
Reference is made to the Credit Agreement dated as of August 13, 1999
(as amended, supplemented or otherwise modified from time to time, the "Credit
Agreement"), among Intersil Corporation, a Delaware corporation (the
"Borrower"), the Guarantor, the lenders from time to time party thereto (the
"Lenders"), CSFB, as administrative agent for the Lenders (in such capacity, the
"Administrative Agent"), and as Collateral Agent, swingline lender and an
issuing bank, Salomon Smith Barney Inc., as syndication agent, and Morgan
Guaranty Trust Company of New York, as documentation agent. Capitalized terms
used herein and not defined herein shall have the meanings assigned to such
terms in the Credit Agreement.
The Lenders have agreed to make Loans to the Borrower, and the Issuing
Bank has agreed to issue Letters of Credit for the account of the Borrower,
pursuant to, and upon the terms and subject to the conditions specified in, the
Credit Agreement. As the owner of all the issued and outstanding capital stock
of the Borrower, the Guarantor acknowledges that it will derive substantial
benefit from the making of the Loans by the Lenders and the issuance of the
Letters of Credit by the Issuing Bank. The obligations of the Lenders to make
Loans and of the Issuing Bank to issue Letters of Credit are conditioned on,
among other things, the execution and delivery by the Guarantor of a Guarantee
Agreement in the form hereof. As consideration therefor and in order to induce
the Lenders to make Loans and the Issuing Bank to issue Letters of Credit, the
Guarantor is willing to execute this Agreement.
Accordingly, the parties hereto agree as follows:
SECTION 1. Guarantee. The Guarantor unconditionally guarantees, as a
primary obligor and not merely as a surety, (a) the due and punctual payment by
the Borrower of (i) the principal of and premium, if any, and interest
(including interest accruing during the pendency of any bankruptcy, insolvency,
receivership or other similar proceeding, regardless of whether allowed or
allowable in such proceeding) on the Loans, when and as due, whether at
maturity, by acceleration, upon one or more dates set for prepayment or
otherwise, (ii) each payment required to be made by the Borrower under the
Credit Agreement in respect of any Letter of Credit, when and as due, including
payments in respect of reimbursement of disbursements, interest thereon and
obligations to provide cash collateral and (iii) all other monetary obligations,
including fees, costs, expenses and indemnities, whether primary, secondary,
direct, contingent, fixed or otherwise (including monetary obligations incurred
during the pendency of any bankruptcy, insolvency, receivership or other similar
proceeding, regardless of whether allowed or allowable in such proceeding), of
the Loan Parties to the Secured Parties under the Credit Agreement and the other
Loan Documents, (b) the due and punctual performance of all covenants,
agreements, obligations and liabilities of the Borrower under or pursuant to the
Credit Agreement and the other Loan Documents, (c) the due and punctual payment
and performance of all the covenants, agreements, obligations and liabilities of
each Loan Party under or pursuant to the Guarantee Agreements and the other Loan
Documents and (d) the due and punctual payment and performance of all
obligations of the Borrower under each Interest Rate Protection Agreement
entered into with a counterparty that was a Lender (or an Affiliate of a Lender)
at the time such Interest Rate Protection Agreement was entered into (all the
monetary and other obligations referred to in the preceding lettered clauses
being collectively referred to as the "Obligations"). The Guarantor further
agrees that the Obligations may be extended or renewed, in whole or in part,
without notice to or further assent from it, and that it will remain bound upon
its guarantee notwithstanding any extension or renewal of any Obligation.
SECTION 2. Obligations Not Waived. To the fullest extent permitted by
applicable law, the Guarantor waives presentment to, demand of payment from and
protest to the Borrower of any of the Obligations, and also waives notice of
acceptance of its guarantee and notice of protest for nonpayment.
<PAGE>
2
To the fullest extent permitted by applicable law, the obligations of the
Guarantor hereunder shall not be affected by (a) the failure of the Collateral
Agent or any other Secured Party to assert any claim or demand or to enforce or
exercise any right or remedy against the Borrower or any other Guarantor of the
Obligations under the provisions of the Credit Agreement, any other Loan
Document or otherwise, (b) any rescission, waiver, amendment or modification of,
or any release from any of the terms or provisions of this Agreement, any other
Loan Document, any Guarantee or any other agreement, including with respect to
any other Guarantor of the Obligations or (c) the failure to perfect any
security interest in, or the release of, any of the security held by or on
behalf of the Collateral Agent or any other Secured Party.
SECTION 3. Security. The Guarantor authorizes the Collateral Agent and
each of the other Secured Parties to (a) take and hold security for the payment
of this Guarantee and the Obligations and exchange, enforce, waive and release
any such security, (b) apply such security and direct the order or manner of
sale thereof as they in their sole discretion may determine and (c) release or
substitute any one or more endorsees, other guarantors or other obligors.
SECTION 4. Guarantee of Payment. The Guarantor further agrees that its
guarantee constitutes a guarantee of payment when due and not of collection, and
waives any right to require that any resort be had by the Collateral Agent or
any other Secured Party to any of the security held for payment of the
Obligations or to any balance of any deposit account or credit on the books of
the Collateral Agent or any other Secured Party in favor of the Borrower or any
other person.
SECTION 5. No Discharge or Diminishment of Guarantee. The obligations
of the Guarantor hereunder shall not be subject to any reduction, limitation,
impairment or termination for any reason (other than the indefeasible payment in
full in cash of the Obligations), including any claim of waiver, release,
surrender, alteration or compromise of any of the Obligations, and shall not be
subject to any defense or setoff, counterclaim, recoupment or termination
whatsoever by reason of the invalidity, illegality or unenforceability of the
Obligations or otherwise. Without limiting the generality of the foregoing, the
obligations of the Guarantor hereunder shall not be discharged or impaired or
otherwise affected by the failure of the Collateral Agent or any other Secured
Party to assert any claim or demand or to enforce any remedy under the Credit
Agreement, any other Loan Document or any other agreement, by any waiver or
modification of any provision of any thereof, by any default, failure or delay,
wilful or otherwise, in the performance of the Obligations, or by any other act
or omission that may or might in any manner or to any extent vary the risk of
the Guarantor or that would otherwise operate as a discharge of the Guarantor as
a matter of law or equity (other than the indefeasible payment in full in cash
of all the Obligations).
SECTION 6. Defenses of Borrower Waived. To the fullest extent permitted
by applicable law, the Guarantor waives any defense based on or arising out of
any defense of the Borrower or the unenforceability of the Obligations or any
part thereof from any cause, or the cessation from any cause of the liability of
the Borrower, other than the final and indefeasible payment in full in cash of
the Obligations. The Collateral Agent and the other Secured Parties may, at
their election, foreclose on any security held by one or more of them by one or
more judicial or nonjudicial sales, accept an assignment of any such security in
lieu of foreclosure, compromise or adjust any part of the Obligations, make any
other accommodation with the Borrower or any other guarantor or exercise any
other right or remedy available to them against the Borrower or any other
guarantor, without affecting or impairing in any way the liability of the
Guarantor hereunder except to the extent the Obligations have been fully,
finally and indefeasibly paid in cash. To the fullest extent permitted by
applicable law, the Guarantor waives any defense arising out of any such
election even though such election operates, pursuant to applicable law, to
impair or to extinguish any right of reimbursement or subrogation or other right
or remedy of the Guarantor against the Borrower or any other guarantor, as the
case may be, or any security.
SECTION 7. Agreement to Pay; Subrogation. In furtherance of the
foregoing and not in limitation of any other right that the Collateral Agent or
any other Secured Party has at law or in equity against the Guarantor by virtue
hereof, upon the failure of the Borrower or any other Loan Party to pay any
Obligation when and as the same shall become due, whether at maturity, by
acceleration, after notice of prepayment or otherwise, the Guarantor hereby
promises to and will forthwith pay, or cause to be paid, to the Collateral Agent
or such other Secured Party as designated thereby in cash the amount of
<PAGE>
3
such unpaid Obligations. Upon payment by the Guarantor of any sums to the
Collateral Agent or any Secured Party as provided above, all rights of the
Guarantor against the Borrower arising as a result thereof by way of right of
subrogation, contribution, reimbursement, indemnity or otherwise shall in all
respects be subordinate and junior in right of payment to the prior indefeasible
payment in full in cash of all the Obligations. In addition, any indebtedness of
the Borrower now or hereafter held by the Guarantor is hereby subordinated in
right of payment to the prior payment in full of the Obligations. If any amount
shall erroneously be paid to the Guarantor on account of (i) such subrogation,
contribution, reimbursement, indemnity or similar right or (ii) any such
indebtedness of the Borrower, such amount shall be held in trust for the benefit
of the Secured Parties and shall forthwith be paid to the Collateral Agent to be
credited against the payment of the Obligations, whether matured or unmatured,
in accordance with the terms of the Loan Documents.
SECTION 8. Information. The Guarantor assumes all responsibility for
being and keeping itself informed of the Borrower's financial condition and
assets, and of all other circumstances bearing upon the risk of nonpayment of
the Obligations and the nature, scope and extent of the risks that the Guarantor
assumes and incurs hereunder, and agrees that none of the Collateral Agent or
the other Secured Parties will have any duty to advise the Guarantor of
information known to it or any of them regarding such circumstances or risks.
SECTION 9. Termination. The Guarantee made hereunder (a) shall
terminate when all the Obligations have been indefeasibly paid in full and the
Lenders have no further commitment to lend under the Credit Agreement, the L/C
Exposure has been reduced to zero and the Issuing Bank has no further obligation
to issue Letters of Credit under the Credit Agreement and (b) shall continue to
be effective or be reinstated, as the case may be, if at any time payment, or
any part thereof, of any Obligation is rescinded or must otherwise be restored
by any Secured Party or the Guarantor upon the bankruptcy or reorganization of
the Borrower, the Guarantor or otherwise.
SECTION 10. Binding Agreement; Assignments. Whenever in this Agreement
any of the parties hereto is referred to, such reference shall be deemed to
include the successors and assigns of such party; and all covenants, promises
and agreements by or on behalf of the Guarantor that are contained in this
Agreement shall bind and inure to the benefit of each party hereto and their
respective successors and assigns. This Agreement shall become effective when a
counterpart hereof executed on behalf of the Guarantor shall have been delivered
to the Collateral Agent and a counterpart hereof shall have been executed on
behalf of the Collateral Agent, and thereafter shall be binding upon the
Guarantor and the Collateral Agent and their respective successors and assigns,
and shall inure to the benefit of the Guarantor, the Collateral Agent and the
other Secured Parties, and their respective successors and assigns, except that
the Guarantor shall not have the right to assign its rights or obligations
hereunder or any interest herein (and any such attempted assignment shall be
void).
SECTION 11. Waivers; Amendment. (a) No failure or delay of the
Collateral Agent in exercising any power or right hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right or
power, or any abandonment or discontinuance of steps to enforce such a right or
power, preclude any other or further exercise thereof or the exercise of any
other right or power. The rights and remedies of the Collateral Agent hereunder
and of the other Secured Parties under the other Loan Documents are cumulative
and are not exclusive of any rights or remedies that they would otherwise have.
No waiver of any provision of this Agreement or consent to any departure by the
Guarantor therefrom shall in any event be effective unless the same shall be
permitted by paragraph (b) below, and then such waiver or consent shall be
effective only in the specific instance and for the purpose for which given. No
notice or demand on the Guarantor in any case shall entitle the Guarantor to any
other or further notice or demand in similar or other circumstances.
(b) Neither this Agreement nor any provision hereof may be waived,
amended or modified except pursuant to a written agreement entered into between
the Guarantor and the Collateral Agent, with the prior written consent of the
Required Lenders (except as otherwise provided in the Credit Agreement).
SECTION 12. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
<PAGE>
4
SECTION 13. Notices. All communications and notices hereunder shall be
in writing and given as provided in Section 9.01 of the Credit Agreement. All
communications and notices hereunder to the Guarantor shall be given to it at
1209 Orange Street, Wilmington, Delaware 19801.
SECTION 14. Survival of Agreement. All covenants, agreements,
representations and warranties made by the Guarantor herein and in the
certificates or other instruments prepared or delivered in connection with or
pursuant to this Agreement or any other Loan Document shall be considered to
have been relied upon by the Collateral Agent and the other Secured Parties and
shall survive the making by the Lenders of the Loans and the issuance of the
Letters of Credit by the Issuing Bank regardless of any investigation made by
the Secured Parties or on their behalf, and shall continue in full force and
effect as long as the principal of or any accrued interest on any Loan or any
other fee or amount payable under this Agreement or any other Loan Document is
outstanding and unpaid or the L/C Exposure does not equal zero and as long as
the Commitments and the L/C Commitment have not been terminated.
SECTION 15. Counterparts. This Agreement may be executed in
counterparts, each of which shall constitute an original, but all of which when
taken together shall constitute a single contract, and shall become effective as
provided in Section 10. Delivery of an executed signature page to this Agreement
by facsimile transmission shall be as effective as delivery of a manually
executed counterpart of this Agreement.
SECTION 16. Rules of Interpretation. The rules of interpretation
specified in Section 1.02 of the Credit Agreement shall be applicable to this
Agreement.
<PAGE>
5
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
INTERSIL HOLDING CORPORATION, as
Guarantor,
by:
-----------------------------------
Name:
Title:
CREDIT SUISSE FIRST BOSTON, as Collateral
Agent,
by:
-----------------------------------
Name:
Title:
by:
-----------------------------------
Name:
Title:
<PAGE>
EXHIBIT G
[Form of]
PLEDGE AGREEMENT dated as of August 13, 1999, among
INTERSIL CORPORATION, a Delaware corporation (the "Borrower"),
INTERSIL HOLDING CORPORATION, a Delaware corporation ("Holdings"),
each Subsidiary of the Borrower listed on Schedule I hereto (each
such Subsidiary individually a "Subsidiary Pledgor" and
collectively, the "Subsidiary Pledgors"; the Borrower, Holdings and
the Subsidiary Pledgors are referred to collectively herein as the
"Pledgors") and CREDIT SUISSE FIRST BOSTON, a bank organized under
the laws of Switzerland, acting through its New York branch
("CSFB"), as collateral agent (in such capacity, the "Collateral
Agent") for the Secured Parties (as defined in the Credit Agreement
referred to below).
Reference is made to (a) the Credit Agreement dated as of August 13,
1999 (as amended, supplemented or otherwise modified from time to time, the
"Credit Agreement"), among the Borrower, Holdings, the lenders from time to time
party thereto (the "Lenders"), CSFB, as administrative agent for the Lenders,
and as Collateral Agent, swingline lender and an issuing bank, Salomon Smith
Barney Inc., as syndication agent, and Morgan Guaranty Trust Company of New
York, as documentation agent, (b) the Parent Guarantee Agreement dated as of
August 13, 1999 (as amended, supplemented or otherwise modified from time to
time, the "Parent Guarantee Agreement"), between Holdings and the Collateral
Agent and (c) the Subsidiary Guarantee Agreement dated as of August 13, 1999 (as
amended, supplemented or otherwise modified from time to time, the "Subsidiary
Guarantee Agreement"; and, collectively with the Parent Guarantee Agreement, the
"Guarantee Agreements") among the Subsidiary Pledgors and the Collateral Agent.
Capitalized terms used herein and not defined herein shall have meanings
assigned to such terms in the Credit Agreement.
The Lenders have agreed to make Loans to the Borrower and the Issuing
Bank has agreed to issue Letters of Credit for the account of the Borrower,
pursuant to, and upon the terms and subject to the conditions specified in, the
Credit Agreement. Holdings and the Subsidiary Guarantors have agreed to
guarantee, among other things, all the obligations of the Borrower under the
Credit Agreement. The obligations of the Lenders to make Loans and of the
Issuing Bank to issue Letters of Credit are conditioned upon, among other
things, the execution and delivery by the Pledgors of a Pledge Agreement in the
form hereof to secure (a) the due and punctual payment by the Borrower of (i)
the principal of and premium, if any, and interest (including interest accruing
during the pendency of any bankruptcy, insolvency, receivership or other similar
proceeding, regardless of whether allowed or allowable in such proceeding) on
the Loans, when and as due, whether at maturity, by acceleration, upon one or
more dates set for prepayment or otherwise, (ii) each payment required to be
made by the Borrower under the Credit Agreement in respect of any Letter of
Credit, when and as due, including payments in respect of reimbursement of
disbursements, interest thereon and obligations to provide cash collateral and
(iii) all other monetary obligations, including fees, costs, expenses and
indemnities, whether primary, secondary, direct, contingent, fixed or otherwise
(including monetary obligations incurred during the pendency of any bankruptcy,
insolvency, receivership or other similar proceeding, regardless of whether
allowed or allowable in such proceeding), of the Borrower to the Secured Parties
under the Credit Agreement and the other Loan Documents, (b) the due and
punctual performance of all covenants, agreements, obligations and liabilities
of the Borrower under or pursuant to the Credit Agreement and the other Loan
Documents, (c) the due and punctual payment and performance of all the
covenants, agreements, obligations and liabilities of each Loan Party under or
pursuant to the Guarantee Agreements and the other Loan Documents and (d) the
due and punctual payment and performance of all obligations of the Borrower
under each Interest Rate Protection Agreement entered into with any counterparty
that
<PAGE>
2
was a Lender (or an Affiliate of a Lender) at the time such Interest Rate
Protection Agreement was entered into (all the monetary and other obligations
referred to in the preceding lettered clauses of this paragraph being referred
to collectively as the "Obligations").
Accordingly, the Pledgors and the Collateral Agent, on behalf of itself
and each Secured Party (and each of their respective successors or assigns),
hereby agree as follows:
SECTION 1. Pledge. As security for the payment and performance, as the
case may be, in full of the Obligations, each Pledgor hereby transfers, grants,
bargains, sells, conveys, hypothecates, pledges, sets over, assigns as security
and delivers unto the Collateral Agent, its successors and assigns, and hereby
grants to the Collateral Agent, its successors and assigns, for the ratable
benefit of the Secured Parties, a security interest in all of the Pledgor's
right, title and interest in, to and under (a) the Equity Interests owned by it
and listed on Schedule II hereto and any Equity Interests of the Borrower or any
Subsidiary obtained in the future by the Pledgor and the certificates
representing all such Equity Interests (the "Pledged Stock"); provided that the
Pledged Stock shall not include (i) more than 65% of the issued and outstanding
shares of voting stock (but shall include 100% of the issued and outstanding
shares of non-voting stock) of any Foreign Subsidiary or (ii) to the extent that
applicable law requires that a Subsidiary of the Pledgor issue directors'
qualifying shares, such qualifying shares; (b)(i) the debt securities listed
opposite the name of the Pledgor on Schedule II hereto, (ii) any debt securities
in the future issued to the Pledgor and (iii) the promissory notes and any other
instruments evidencing such debt securities (the "Pledged Debt Securities"); (c)
all other property that may be delivered to and held by the Collateral Agent
pursuant to the terms hereof; (d) subject to Section 5, all payments of
principal or interest, dividends, cash, instruments and other property from time
to time received, receivable or otherwise distributed, in respect of, in
exchange for or upon the conversion of the securities referred to in clauses (a)
and (b) above; (e) subject to Section 5, all rights and privileges of the
Pledgor with respect to the securities and other property referred to in clauses
(a), (b), (c) and (d) above; and (f) all proceeds of any of the foregoing (the
items referred to in clauses (a) through (f) above being collectively referred
to as the "Collateral"). Upon delivery to the Collateral Agent, (a) any stock
certificates, notes or other securities now or hereafter included in the
Collateral (the "Pledged Securities") shall be accompanied by stock powers duly
executed in blank or other instruments of transfer satisfactory to the
Collateral Agent and by such other indorsements, instruments and documents as
the Collateral Agent may reasonably request and (b) all other property
comprising part of the Collateral shall be accompanied by proper instruments of
assignment duly executed by the applicable Pledgor and such other indorsements,
instruments or documents as the Collateral Agent may reasonably request. Each
delivery of Pledged Securities shall be accompanied by a schedule describing the
securities theretofore and then being pledged hereunder, which schedule shall be
attached hereto as Schedule II and made a part hereof. Each schedule so
delivered shall supersede any prior schedules so delivered.
TO HAVE AND TO HOLD the Collateral, together with all right, title,
interest, powers, privileges and preferences pertaining or incidental thereto,
unto the Collateral Agent, its successors and assigns, for the ratable benefit
of the Secured Parties, forever; subject, however, to the terms, covenants and
conditions hereinafter set forth.
SECTION 2. Delivery of the Collateral. (a) Each Pledgor agrees promptly
to deliver or cause to be delivered to the Collateral Agent any and all Pledged
Securities, and any and all certificates or other instruments or documents
representing the Collateral.
(b) Each Pledgor will cause any Indebtedness for borrowed money owed to
the Pledgor by any person to be evidenced by a duly executed promissory note
that is pledged and delivered to the Collateral Agent pursuant to the terms
thereof.
<PAGE>
3
SECTION 3. Representations, Warranties and Covenants. Each Pledgor
hereby represents, warrants and covenants, as to itself and the Collateral
pledged by it hereunder, to and with the Collateral Agent that:
(a) the Pledged Stock represents that percentage as set forth
on Schedule II of the issued and outstanding Equity Interests of the
issuer with respect thereto;
(b) except for the security interest granted hereunder, the
Pledgor (i) is and will at all times continue to be the direct owner,
beneficially and of record, of the Pledged Securities indicated on
Schedule II, (ii) holds the same free and clear of all Liens except
those permitted by the Credit Agreement or any other Loan Document,
(iii) will make no assignment, pledge, hypothecation or transfer of, or
create or permit to exist any security interest in or other Lien on,
the Collateral, other than pursuant hereto, or as permitted by the
Credit Agreement or any other Loan Document and (iv) subject to Section
5, will cause any and all Collateral, whether for value paid by the
Pledgor or otherwise, to be forthwith deposited with the Collateral
Agent and pledged or assigned hereunder;
(c) the Pledgor (i) has the power and authority to pledge the
Collateral in the manner hereby done or contemplated and (ii) will
defend its title or interest thereto or therein against any and all
Liens (other than the Liens created by this Agreement or permitted by
the Credit Agreement or any other Loan Document), however arising, of
all persons whomsoever;
(d) no consent of any other person (including stockholders or
creditors of any Pledgor) and no consent or approval of any
Governmental Authority or any securities exchange was or is necessary
to the validity of the pledge effected hereby;
(e) by virtue of the execution and delivery by the Pledgors of
this Agreement, when the Pledged Securities, certificates or other
documents representing or evidencing the Collateral are delivered to
the Collateral Agent in accordance with this Agreement or, if a
security interest in any of such Collateral may not under applicable
law be perfected by possession, then upon the filing of appropriate
financing statements, the Collateral Agent will obtain a valid and
perfected first lien upon and security interest in such Pledged
Securities as security for the payment and performance of the
Obligations;
(f) the pledge effected hereby is effective to vest in the
Collateral Agent, on behalf of the Secured Parties, the rights of the
Collateral Agent in the Collateral as set forth herein;
(g) all of the Pledged Stock has been duly authorized and
validly issued and is fully paid and nonassessable and is in
certificated form;
(h) all information set forth herein relating to the Pledged
Stock is accurate and complete in all material respects as of the date
hereof;
(i) the pledge of the Pledged Stock pursuant to this Agreement
does not violate Regulation T, U or X of the Federal Reserve Board or
any successor thereto as of the date hereof;
(j) the Collateral shall not be represented by any
certificates, notes, securities, documents or other instruments other
than those delivered hereunder; and
<PAGE>
4
(k) the terms of the governing documentation for the capital
stock or interests of each partnership or limited liability company
whose capital stock or interests are pledged under Section 1 above will
at all times expressly provide that the capital stock or interests of
such partnership or limited liability company are securities governed
by Article 8 of the Uniform Commercial Code as in effect in New York
and that such capital stock or interests will at all times be
represented by a certificate or certificates duly delivered to the
Collateral Agent under Section 1 above.
SECTION 4. Registration in Nominee Name; Denominations. The Collateral
Agent, on behalf of the Secured Parties, shall have the right following an Event
of Default which is continuing (in its sole and absolute discretion) to hold the
Pledged Securities in its own name as pledgee, the name of its nominee (as
pledgee or as sub-agent) or the name of the Pledgors, endorsed or assigned in
blank or in favor of the Collateral Agent. Each Pledgor will promptly give to
the Collateral Agent copies of any notices or other communications received by
it with respect to Pledged Securities registered in the name of such Pledgor.
The Collateral Agent shall at all times following an Event of Default which is
continuing have the right to exchange the certificates representing Pledged
Securities for certificates of smaller or larger denominations for any purpose
consistent with this Agreement.
SECTION 5. Voting Rights; Dividends and Interest, etc. (a) Unless and
until an Event of Default shall have occurred and be continuing:
(i) Each Pledgor shall be entitled to exercise any and all
voting and/or other consensual rights and powers inuring to an owner of
Pledged Securities or any part thereof for any purpose consistent with
the terms of this Agreement, the Credit Agreement and the other Loan
Documents; provided, however, that such Pledgor will not be entitled to
exercise any such right if the result thereof could materially and
adversely affect the rights inuring to a holder of the Pledged
Securities or the rights and remedies of any of the Secured Parties
under this Agreement or the Credit Agreement or any other Loan Document
or the ability of the Secured Parties to exercise the same.
(ii) The Collateral Agent shall execute and deliver to each
Pledgor, or cause to be executed and delivered to each Pledgor, all
such proxies, powers of attorney and other indorsement instruments as
such Pledgor may reasonably request for the purpose of enabling such
Pledgor to exercise the voting and/or consensual rights and powers it
is entitled to exercise pursuant to subparagraph (i) above and to
receive the cash dividends it is entitled to receive pursuant to
subparagraph (iii) below.
(iii) Each Pledgor shall be entitled to receive and retain any
and all cash dividends, distributions, interest and principal paid on
the Pledged Securities to the extent and only to the extent that such
cash dividends, distributions, interest and principal are permitted by,
and otherwise paid in accordance with, the terms and conditions of the
Credit Agreement, the other Loan Documents and applicable laws. All
noncash dividends, distributions, interest and principal, and all
dividends, distributions, interest and principal paid or payable in
cash or otherwise in connection with a partial or total liquidation or
dissolution, return of capital, capital surplus or paid-in surplus, and
all other distributions (other than distributions referred to in the
preceding sentence) made on or in respect of the Pledged Securities,
whether paid or payable in cash or otherwise, whether resulting from a
subdivision, combination or reclassification of the outstanding capital
stock of the issuer of any Pledged Securities or received in exchange
for Pledged Securities or any part thereof, or in redemption thereof,
or as a result of any merger, consolidation, acquisition or other
exchange of assets to which such issuer may be a party or otherwise,
shall be and become part of the Collateral, and, if received by any
Pledgor, shall not be
<PAGE>
5
commingled by such Pledgor with any of its other funds or property but
shall be held separate and apart therefrom, shall be held in trust for
the benefit of the Collateral Agent and shall be forthwith delivered to
the Collateral Agent in the same form as so received (with any
necessary endorsement).
(b) Upon the occurrence and during the continuance of an Event of
Default, all rights of any Pledgor to dividends, distributions, interest or
principal that such Pledgor is authorized to receive pursuant to paragraph
(a)(iii) above shall cease, and all such rights shall thereupon become vested in
the Collateral Agent, which shall have the sole and exclusive right and
authority to receive and retain such dividends, distributions, interest or
principal. All dividends, distributions, interest or principal received by the
Pledgor contrary to the provisions of this Section 5 shall be held in trust for
the benefit of the Collateral Agent, shall be segregated from other property or
funds of such Pledgor and shall be forthwith delivered to the Collateral Agent
upon demand in the same form as so received (with any necessary endorsement).
Any and all money and other property paid over to or received by the Collateral
Agent pursuant to the provisions of this paragraph (b) shall be retained by the
Collateral Agent in an account to be established by the Collateral Agent upon
receipt of such money or other property and shall be applied in accordance with
the provisions of Section 7. After all Events of Default have been cured or
waived, the Collateral Agent shall, within five Business Days after all such
Events of Default have been cured or waived, repay to each Pledgor all cash
dividends, distributions, interest or principal (without interest), that such
Pledgor would otherwise be permitted to retain pursuant to the terms of
paragraph (a)(iii) above and which remain in such account.
(c) Upon the occurrence and during the continuance of an Event of
Default, all rights of any Pledgor to exercise the voting and consensual rights
and powers it is entitled to exercise pursuant to paragraph (a)(i) of this
Section 5, and the obligations of the Collateral Agent under paragraph (a)(ii)
of this Section 5, shall cease, and all such rights shall thereupon become
vested in the Collateral Agent, which shall have the sole and exclusive right
and authority to exercise such voting and consensual rights and powers, provided
that, unless otherwise directed by the Required Lenders, the Collateral Agent
shall have the right from time to time following and during the continuance of
an Event of Default to permit the Pledgors to exercise such rights. After all
Events of Default have been cured or waived, such Pledgor will have the right to
exercise the voting and consensual rights and powers that it would otherwise be
entitled to exercise pursuant to the terms of paragraph (a)(i) above.
SECTION 6. Remedies upon Default. Upon the occurrence and during the
continuance of an Event of Default, subject to applicable regulatory and legal
requirements, the Collateral Agent may sell the Collateral, or any part thereof,
at public or private sale or at any broker's board or on any securities
exchange, for cash, upon credit or for future delivery as the Collateral Agent
shall deem appropriate. The Collateral Agent shall be authorized at any such
sale (if it deems it advisable to do so) to restrict the prospective bidders or
purchasers to persons who will represent and agree that they are purchasing the
Collateral for their own account for investment and not with a view to the
distribution or sale thereof or to impose other restrictions necessary in its
judgment to ensure compliance with applicable securities laws, as more fully set
forth in Section 11, and upon consummation of any such sale the Collateral Agent
shall have the right to assign, transfer and deliver to the purchaser or
purchasers thereof the Collateral so sold. Each such purchaser at any such sale
shall hold the property sold absolutely free from any claim or right on the part
of any Pledgor, and, to the extent permitted by applicable law, the Pledgors
hereby waive all rights of redemption, stay, valuation and appraisal any Pledgor
now has or may at any time in the future have under any rule of law or statute
now existing or hereafter enacted.
The Collateral Agent shall give a Pledgor 10 days' prior written notice
(which each Pledgor agrees is reasonable notice within the meaning of Section
9-504(3) of the Uniform
<PAGE>
6
Commercial Code as in effect in the State of New York or its equivalent in other
jurisdictions) of the Collateral Agent's intention to make any sale of such
Pledgor's Collateral. Such notice, in the case of a public sale, shall state the
time and place for such sale and, in the case of a sale at a broker's board or
on a securities exchange, shall state the board or exchange at which such sale
is to be made and the day on which the Collateral, or portion thereof, will
first be offered for sale at such board or exchange. Any such public sale shall
be held at such time or times within ordinary business hours and at such place
or places as the Collateral Agent may fix and state in the notice of such sale.
At any such sale, the Collateral, or portion thereof, to be sold may be sold in
one lot as an entirety or in separate parcels, as the Collateral Agent may (in
its sole and absolute discretion) determine. The Collateral Agent shall not be
obligated to make any sale of any Collateral if it shall determine not to do so,
regardless of the fact that notice of sale of such Collateral shall have been
given. The Collateral Agent may, without notice or publication, adjourn any
public or private sale or cause the same to be adjourned from time to time by
announcement at the time and place fixed for sale, and such sale may, without
further notice, be made at the time and place to which the same was so
adjourned. In case any sale of all or any part of the Collateral is made on
credit or for future delivery, the Collateral so sold may be retained by the
Collateral Agent until the sale price is paid in full by the purchaser or
purchasers thereof, but the Collateral Agent shall not incur any liability in
case any such pur chaser or purchasers shall fail to take up and pay for the
Collateral so sold and, in case of any such failure, such Collateral may be sold
again upon like notice. At any public (or, to the extent permitted by applicable
law, private) sale made pursuant to this Section 6, any Secured Party may bid
for or purchase, free from any right of redemption, stay or appraisal on the
part of any Pledgor (all said rights being also hereby waived and released), the
Collateral or any part thereof offered for sale and may make payment on account
thereof by using any claim then due and payable to it from such Pledgor as a
credit against the purchase price, and it may, upon compliance with the terms of
sale, hold, retain and dispose of such property without further accountability
to such Pledgor therefor. For purposes hereof, (a) a written agreement to
purchase the Collateral or any portion thereof shall be treated as a sale
thereof, (b) the Collateral Agent shall be free to carry out such sale pursuant
to such agreement and (c) such Pledgor shall not be entitled to the return of
the Collateral or any portion thereof subject thereto, notwithstanding the fact
that after the Collateral Agent shall have entered into such an agreement all
Events of Default shall have been remedied and the Obligations paid in full. As
an alternative to exercising the power of sale herein conferred upon it, the
Collateral Agent may proceed by a suit or suits at law or in equity to foreclose
upon the Collateral and to sell the Collateral or any portion thereof pursuant
to a judgment or decree of a court or courts having competent jurisdiction or
pursuant to a proceeding by a court-appointed receiver. Any sale pursuant to the
provisions of this Section 6 shall be deemed to conform to the commercially
reasonable standards as provided in Section 9-504(3) of the Uniform Commercial
Code as in effect in the State of New York or its equivalent in other
jurisdictions.
SECTION 7. Application of Proceeds of Sale. The proceeds of any sale of
Collateral pursuant to Section 6, as well as any Collateral consisting of cash,
shall be applied by the Collateral Agent as follows:
FIRST, to the payment of all costs and expenses incurred by
the Collateral Agent in connection with such sale or otherwise in
connection with this Agreement, any other Loan Document or any of the
Obligations, including all court costs and the reasonable fees and
expenses of its agents and legal counsel, the repayment of all advances
made by the Collateral Agent hereunder or under any other Loan Document
on behalf of any Pledgor and any other costs or expenses incurred in
connection with the exercise of any right or remedy hereunder or under
any other Loan Document;
<PAGE>
7
SECOND, to the payment in full of the Obligations (the amounts
so applied to be distributed among the Secured Parties pro rata in
accordance with the amounts of the Obligations owed to them on the date
of any such distribution); and
THIRD, to the Pledgors, their successors or assigns, or as a
court of competent jurisdiction may otherwise direct.
Subject to the foregoing, the Collateral Agent shall have absolute
discretion as to the time of application of any such proceeds, moneys or
balances in accordance with this Agreement. Upon any sale of the Collateral by
the Collateral Agent (including pursuant to a power of sale granted by statute
or under a judicial proceeding), the receipt of the purchase money by the
Collateral Agent or of the officer making the sale shall be a sufficient
discharge to the purchaser or purchasers of the Collateral so sold and such
purchaser or purchasers shall not be obligated to see to the application of any
part of the purchase money paid over to the Collateral Agent or such officer or
be answerable in any way for the misapplication thereof.
SECTION 8. Reimbursement of Collateral Agent. (a) Each Pledgor agrees
to pay upon demand to the Collateral Agent the amount of any and all reasonable
expenses, including the reasonable fees, other charges and disbursements of its
counsel and of any experts or agents, that the Collateral Agent may incur in
connection with (i) the administration of this Agreement, (ii) the custody or
preservation of, or the sale of, collection from, or other realization upon, any
of the Collateral, (iii) the exercise or enforcement of any of the rights of the
Collateral Agent hereunder or (iv) the failure by such Pledgor to perform or
observe any of the provisions hereof.
(b) Without limitation of its indemnification obligations under the
other Loan Documents, each Pledgor agrees to indemnify the Collateral Agent and
the Indemnitees (as defined in Section 9.05 of the Credit Agreement) against,
and hold each Indemnitee harmless from, any and all losses, claims, damages,
liabilities and related expenses, including reasonable counsel fees, other
charges and disbursements, incurred by or asserted against any Indemnitee
arising out of, in any way connected with, or as a result of (i) the execution
or delivery of this Agreement or any other Loan Document or any agreement or
instrument contemplated hereby or thereby, the performance by the parties hereto
of their respective obligations thereunder or the consummation of the
Transactions and the other transactions contemplated thereby or (ii) any claim,
litigation, investigation or proceeding relating to any of the foregoing,
whether or not any Indemnitee is a party thereto, provided that such indemnity
shall not, as to any Indemnitee, be available to the extent that such losses,
claims, damages, liabilities or related expenses are determined by a court of
competent jurisdiction by final and nonappealable judgment to have resulted from
the gross negligence or wilful misconduct of such Indemnitee.
(c) Any amounts payable as provided hereunder shall be additional
Obligations secured hereby and by the other Security Documents. The provisions
of this Section 8 shall remain operative and in full force and effect regardless
of the termination of this Agreement or any other Loan Document, the
consummation of the transactions contemplated hereby, the repayment of any of
the Obligations, the invalidity or unenforceability of any term or provision of
this Agreement or any other Loan Document or any investigation made by or on
behalf of the Collateral Agent or any other Secured Party. All amounts due under
this Section 8 shall be payable on written demand therefor and shall bear
interest at the rate specified in Section 2.06(a) of the Credit Agreement.
SECTION 9. Collateral Agent Appointed Attorney-in-Fact. Each Pledgor
hereby appoints the Collateral Agent the attorney-in-fact of such Pledgor
following an Event of Default which is continuing for the purpose of carrying
out the provisions of this Agreement and taking any action and executing any
instrument that the Collateral Agent may deem necessary or
<PAGE>
8
advisable to accomplish the purposes hereof, which appointment is irrevocable
and coupled with an interest. Without limiting the generality of the foregoing,
the Collateral Agent shall have the right, upon the occurrence and during the
continuance of an Event of Default, with full power of substitution either in
the Collateral Agent's name or in the name of such Pledgor, to ask for, demand,
sue for, collect, receive and give acquittance for any and all moneys due or to
become due under and by virtue of any Collateral, to endorse checks, drafts,
orders and other instruments for the payment of money payable to the Pledgor
representing any interest or dividend or other distribution payable in respect
of the Collateral or any part thereof or on account thereof and to give full
discharge for the same, to settle, compromise, prosecute or defend any action,
claim or proceeding with respect thereto, and to sell, assign, endorse, pledge,
transfer and to make any agreement respecting, or otherwise deal with, the same;
provided, however, that nothing herein contained shall be construed as requiring
or obligating the Collateral Agent to make any commitment or to make any inquiry
as to the nature or sufficiency of any payment received by the Collateral Agent,
or to present or file any claim or notice, or to take any action with respect to
the Collateral or any part thereof or the moneys due or to become due in respect
thereof or any property covered thereby. The Collateral Agent and the other
Secured Parties shall be accountable only for amounts actually received as a
result of the exercise of the powers granted to them herein, and neither they
nor their officers, directors, employees or agents shall be responsible to any
Pledgor for any act or failure to act hereunder, except for their own gross
negligence or wilful misconduct.
SECTION 10. Waivers; Amendment. (a) No failure or delay of the
Collateral Agent in exercising any power or right hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right or
power, or any abandonment or discontinuance of steps to enforce such a right or
power, preclude any other or further exercise thereof or the exercise of any
other right or power. The rights and remedies of the Collateral Agent hereunder
and of the other Secured Parties under the other Loan Documents are cumulative
and are not exclusive of any rights or remedies that they would otherwise have.
No waiver of any provisions of this Agreement or consent to any departure by any
Pledgor therefrom shall in any event be effective unless the same shall be
permitted by paragraph (b) below, and then such waiver or consent shall be
effective only in the specific instance and for the purpose for which given. No
notice or demand on any Pledgor in any case shall entitle such Pledgor to any
other or further notice or demand in similar or other circumstances.
(b) Neither this Agreement nor any provision hereof may be waived,
amended or modified except pursuant to a written agreement entered into between
the Collateral Agent and the Pledgor or Pledgors with respect to which such
waiver, amendment or modification is to apply, subject to any consent required
in accordance with Section 9.08 of the Credit Agreement.
SECTION 11. Securities Act, etc. In view of the position of the
Pledgors in relation to the Pledged Securities, or because of other current or
future circumstances, a question may arise under the Securities Act of 1933, as
now or hereafter in effect, or any similar statute hereafter enacted analogous
in purpose or effect (such Act and any such similar statute as from time to time
in effect being called the "Federal Securities Laws") with respect to any
disposition of the Pledged Securities permitted hereunder. Each Pledgor
understands that compliance with the Federal Securities Laws might very strictly
limit the course of conduct of the Collateral Agent if the Collateral Agent were
to attempt to dispose of all or any part of the Pledged Securities, and might
also limit the extent to which or the manner in which any subsequent transferee
of any Pledged Securities could dispose of the same. Similarly, there may be
other legal restrictions or limitations affecting the Collateral Agent in any
attempt to dispose of all or part of the Pledged Securities under applicable
Blue Sky or other state securities laws or similar laws analogous in purpose or
effect. Each Pledgor recognizes that in light of such restrictions and
limitations the Collateral Agent may, with respect to any sale of the Pledged
Securities, limit the purchasers to
<PAGE>
9
those who will agree, among other things, to acquire such Pledged Securities for
their own account, for investment, and not with a view to the distribution or
resale thereof. Each Pledgor acknowledges and agrees that in light of such
restrictions and limitations, the Collateral Agent, in its sole and absolute
discretion, (a) may proceed to make such a sale whether or not a registration
statement for the purpose of registering such Pledged Securities or part thereof
shall have been filed under the Federal Securities Laws and (b) may approach and
negotiate with a single potential purchaser to effect such sale. Each Pledgor
acknowledges and agrees that any such sale might result in prices and other
terms less favorable to the seller than if such sale were a public sale without
such restrictions. In the event of any such sale, the Collateral Agent shall
incur no responsibility or liability for selling all or any part of the Pledged
Securities at a price that the Collateral Agent, in its sole and absolute
discretion, may in good faith deem reasonable under the circumstances,
notwithstanding the possibility that a substantially higher price might have
been realized if the sale were deferred until after registration as aforesaid or
if more than a single purchaser were approached. The provisions of this Section
11 will apply notwithstanding the existence of a public or private market upon
which the quotations or sales prices may exceed substantially the price at which
the Collateral Agent sells.
SECTION 12. Registration, etc. Each Pledgor agrees that, upon the
occurrence and during the continuance of an Event of Default hereunder, if for
any reason the Collateral Agent desires to sell any of the Pledged Securities of
the Borrower at a public sale, it will, at any time and from time to time, upon
the written request of the Collateral Agent, use its best efforts to take or to
cause the issuer of such Pledged Securities to take such action and prepare,
distribute and/or file such documents, as are required or advisable in the
reasonable opinion of counsel for the Collateral Agent to permit the public sale
of such Pledged Securities. Each Pledgor further agrees to indemnify, defend and
hold harmless the Collateral Agent, each other Secured Party, any underwriter
and their respective officers, directors, affiliates and controlling persons
from and against all loss, liability, expenses, costs of counsel (including,
without limitation, reasonable fees and expenses to the Collateral Agent of
legal counsel), and claims (including the costs of investigation) that they may
incur insofar as such loss, liability, expense or claim arises out of or is
based upon any alleged untrue statement of a material fact contained in any
prospectus (or any amendment or supplement thereto) or in any notification or
offering circular, or arises out of or is based upon any alleged omission to
state a material fact required to be stated therein or necessary to make the
statements in any thereof not misleading, except insofar as the same may have
been caused by any untrue statement or omission based upon information furnished
in writing to such Pledgor or the issuer of such Pledged Securities by the
Collateral Agent or any other Secured Party expressly for use therein. Each
Pledgor further agrees, upon such written request referred to above, to use its
best efforts to qualify, file or register, or cause the issuer of such Pledged
Securities to qualify, file or register, any of the Pledged Securities under the
Blue Sky or other securities laws of such states as may be requested by the
Collateral Agent and keep effective, or cause to be kept effective, all such
qualifications, filings or regis trations. Each Pledgor will bear all costs and
expenses of carrying out its obligations under this Section 12. Each Pledgor
acknowledges that there is no adequate remedy at law for failure by it to comply
with the provisions of this Section 12 and that such failure would not be
adequately compensable in damages, and therefore agrees that its agreements
contained in this Section 12 may be specifically enforced.
SECTION 13. Security Interest Absolute. All rights of the Collateral
Agent hereunder, the grant of a security interest in the Collateral and all
obligations of each Pledgor hereunder, shall be absolute and unconditional
irrespective of (a) any lack of validity or enforceability of the Credit
Agreement, any other Loan Document, any agreement with respect to any of the
Obligations or any other agreement or instrument relating to any of the
foregoing, (b) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Obligations, or any other amendment or waiver
of or any consent to any departure from the Credit Agreement,
<PAGE>
10
any other Loan Document or any other agreement or instrument relating to any of
the foregoing, (c) any exchange, release or nonperfection of any other
collateral, or any release or amendment or waiver of or consent to or departure
from any guaranty, for all or any of the Obligations or (d) any other
circumstance that might otherwise constitute a defense available to, or a
discharge of, any Pledgor in respect of the Obligations or in respect of this
Agreement (other than the indefeasible payment in full of all the Obligations).
SECTION 14. Termination or Release. (a) This Agreement and the security
interests granted hereby shall terminate when all the Obligations (other than
wholly contingent indemnification obligations) then due and owing have been
indefeasibly paid in full and the Lenders have no further commitment to lend
under the Credit Agreement, the L/C Exposure has been reduced to zero and the
Issuing Bank has no further obligation to issue Letters of Credit under the
Credit Agreement.
(b) Upon any sale or other transfer by any Pledgor of any Collateral
that is permitted under the Credit Agreement to any person that is not a
Pledgor, or, upon the effectiveness of any written consent to the release of the
security interest granted hereby in any Collateral pursuant to Section 9.08(b)
of the Credit Agreement, the security interest in such Collateral shall be
automatically released.
(c) Upon a distribution from Intersil (Cayman) Corporation of all or a
portion of a Cayman Loan to the Borrower pursuant to Section 6.04(h) of the
Credit Agreement, (i) the security interest in the Collateral represented by
such Cayman Loan shall be automatically released up to the amount of such
distribution and (ii) the portion of such Cayman Loan not so distributed, if
any, shall not be released and shall continue to constitute part of the
Collateral.
(d) In connection with any termination or release pursuant to paragraph
(a), (b) or (c), the Collateral Agent shall execute and deliver to any Pledgor,
at such Pledgor's expense, all documents that such Pledgor shall reasonably
request to evidence such termination or release. Any execution and delivery of
documents pursuant to this Section 14 shall be without recourse to or warranty
by the Collateral Agent.
SECTION 15. Notices. All communications and notices hereunder shall be
in writing and given as provided in Section 9.01 of the Credit Agreement. All
communications and notices hereunder to any Subsidiary Pledgor shall be given to
it in care of the Borrower.
SECTION 16. Further Assurances. Each Pledgor agrees to do such further
acts and things, and to execute and deliver such additional conveyances,
assignments, agreements, indorsement and instruments, as the Collateral Agent
may at any time reasonably request in connection with the administration and
enforcement of this Agreement or with respect to the Collateral or any part
thereof or in order better to assure and confirm unto the Collateral Agent its
rights and remedies hereunder.
SECTION 17. Binding Effect; Several Agreement; Assignments. Whenever in
this Agreement any of the parties hereto is referred to, such reference shall be
deemed to include the successors and assigns of such party; and all covenants,
promises and agreements by or on behalf of any Pledgor that are contained in
this Agreement shall bind and inure to the benefit of its successors and
assigns. This Agreement shall become effective as to any Pledgor when a
counterpart hereof executed on behalf of such Pledgor shall have been delivered
to the Collateral Agent and a counterpart hereof shall have been executed on
behalf of the Collateral Agent, and thereafter shall be binding upon such
Pledgor and the Collateral Agent and their respective successors and assigns,
and shall inure to the benefit of such Pledgor, the Collateral Agent and the
other Secured Parties, and their respective successors and assigns, except that
no Pledgor
<PAGE>
11
shall have the right to assign its rights hereunder or any interest herein or in
the Collateral (and any such attempted assignment shall be void), except as
expressly contemplated by this Agreement or the other Loan Documents. If all the
Equity Interests of a Pledgor is sold, transferred or otherwise disposed of to a
person that is not an Affiliate of the Borrower pursuant to a transaction
permitted by Section 6.05 of the Credit Agreement, such Pledgor shall be
released from its obligations under this Agreement without further action. This
Agreement shall be construed as a separate agreement with respect to each
Pledgor and may be amended, modified, supplemented, waived or released with
respect to any Pledgor without the approval of any other Pledgor and without
affecting the obligations of any other Pledgor hereunder
SECTION 18. Survival of Agreement; Severability. (a) All covenants,
agreements, representations and warranties made by each Pledgor herein and in
the certificates or other instruments prepared or delivered in connection with
or pursuant to this Agreement or any other Loan Document shall be considered to
have been relied upon by the Collateral Agent and the other Secured Parties and
shall survive the making by the Lenders of the Loans and the issuance of the
Letters of Credit by the Issuing Bank, regardless of any investigation made by
the Secured Parties or on their behalf, and shall continue in full force and
effect as long as the principal of or any accrued interest on any Loan or any
other fee or amount payable under this Agreement or any other Loan Document is
outstanding and unpaid or the L/C Exposure does not equal zero and as long as
the Commitments and the L/C Commitments have not been terminated.
(b) In the event any one or more of the provisions contained in this
Agreement should be held invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby (it being understood
that the invalidity of a particular provision in a particular jurisdiction shall
not in and of itself affect the validity of such provision in any other
jurisdiction). The parties shall endeavor in good-faith negotiations to replace
the invalid, illegal or unenforceable provisions with valid provisions the
economic effect of which comes as close as possible to that of the invalid,
illegal or unenforceable provisions.
SECTION 19. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 20. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original, but all of which, when
taken together, shall constitute a single contract, and shall become effective
as provided in Section 17. Delivery of an executed counterpart of a signature
page to this Agreement by facsimile transmission shall be as effective as
delivery of a manually executed counterpart of this Agreement.
SECTION 21. Rules of Interpretation. The rules of interpretation
specified in Section 1.02 of the Credit Agreement shall be applicable to this
Agreement. Section headings used herein are for convenience of reference only,
are not part of this Agreement and are not to affect the construction of, or to
be taken into consideration in interpreting this Agreement.
SECTION 22. Jurisdiction; Consent to Service of Process. (a) Each
Pledgor hereby irrevocably and unconditionally submits, for itself and its
property, to the nonexclusive jurisdiction of any New York State court or
Federal court of the United States of America sitting in New York City, and any
appellate court from any thereof, in any action or proceeding arising out of or
relating to this Agreement or the other Loan Documents, or for recognition or
enforcement of any judgment, and each of the parties hereto hereby irrevocably
and unconditionally agrees that, to the extent permitted by applicable law, all
claims in respect of any such action or proceeding may be heard and determined
in such New York State or, to the extent
<PAGE>
12
permitted by law, in such Federal court. Each of the parties hereto agrees that
a final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law. Nothing in this Agreement shall affect any right that the
Collateral Agent or any other Secured Party may otherwise have to bring any
action or proceeding relating to this Agreement or the other Loan Documents
against any Pledgor or its properties in the courts of any jurisdiction.
(b) Each Pledgor hereby irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any objection that it may
now or hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Agreement or the other Loan Documents in any
New York State or Federal court. Each of the parties hereto hereby irrevocably
waives, to the fullest extent permitted by law, the defense of an inconvenient
forum to the maintenance of such action or proceeding in any such court.
(c) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 15. Nothing in this
Agreement will affect the right of any party to this Agreement to serve process
in any other manner permitted by law.
SECTION 23. Waiver Of Jury Trial. EACH PARTY HERETO HEREBY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL
BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF,
UNDER OR IN CONNECTION WITH THIS AGREEMENT. EACH PARTY HERETO (A) CERTIFIES THAT
NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT
AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY,
AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
SECTION 24. Additional Pledgors. Pursuant to Section 5.11 of the Credit
Agreement, each Subsidiary of the Borrower that was not in existence or not a
Subsidiary on the date of the Credit Agreement is required to enter in this
Agreement as a Subsidiary Pledgor upon becoming a Subsidiary if such Subsidiary
owns or possesses property of a type that would be considered Collateral
hereunder. Upon execution and delivery by the Collateral Agent and a Subsidiary
of an instrument in the form of Annex 1, such Subsidiary shall become a
Subsidiary Pledgor hereunder with the same force and effect as if originally
named as a Subsidiary Pledgor herein. The execution and delivery of such
instrument shall not require the consent of any Pledgor hereunder. The rights
and obligations of each Pledgor hereunder shall remain in full force and effect
notwithstanding the addition of any new Subsidiary Pledgor as a party to this
Agreement.
SECTION 25. Execution of Financing Statements. To the extent permitted
by applicable law, pursuant to Section 9-402 of the Uniform Commercial Code as
in effect in the State of New York or its equivalent in other jurisdictions,
each Pledgor authorizes the Collateral Agent to file financing statements with
respect to the Collateral owned by it without the signature of such Pledgor in
such form and in such filing offices as the Collateral Agent reasonably
determines appropriate to perfect the security interests of the Collateral Agent
under this Agreement. To the exent permitted by applicable law, a carbon,
photographic or other reproduction of this Agreement shall be sufficient as a
financing statement for filing in any jurisdiction.
<PAGE>
13
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
INTERSIL CORPORATION,
by:
--------------------------------
Name:
Title:
INTERSIL HOLDING CORPORATION,
by:
--------------------------------
Name:
Title:
INTERSIL (CAYMAN) CORPORATION,
by:
--------------------------------
Name:
Title:
HARRIS SEMICONDUCTOR (PENNSYLVANIA),
LLC,
by:
--------------------------------
Name:
Title:
HARRIS SEMICONDUCTOR (OHIO), LLC,
by:
--------------------------------
Name:
Title:
HARRIS SEMICONDUCTOR, LLC,
by:
--------------------------------
Name:
Title:
CHOICE MICROSYSTEMS, INC.,
by:
--------------------------------
Name:
Title:
<PAGE>
14
CREDIT SUISSE FIRST BOSTON, as Collateral Agent,
by:
--------------------------------
Name:
Title:
by:
--------------------------------
Name:
Title:
<PAGE>
Schedule I to the
Pledge Agreement
SUBSIDIARY PLEDGORS
Name [Address]
- - ---- ---------
<PAGE>
Schedule II to the
Pledge Agreement
EQUITY INTERESTS
Number and
Number of Registered Class Percentage of
Issuer Certificate Owner of Shares Shares
- - ------ ----------- ---------- ---------- ------
DEBT SECURITIES
Principal
Issuer Amount Date of Note Maturity Date
- - ------ --------- ------------ -------------
<PAGE>
Annex 1 to the
Pledge Agreement
SUPPLEMENT NO. dated as of , to the PLEDGE
AGREEMENT dated as of August 13, 1999, among INTERSIL CORPORATION, a
Delaware corporation (the "Borrower"), INTERSIL HOLDING CORPORATION,
a Delaware corporation ("Holdings"), and each subsidiary of the
Borrower listed on Schedule I thereto (each such subsidiary
individually a "Subsidiary Pledgor" and collectively, the "Subsidiary
Pledgors"; the Borrower, Holdings and Subsidiary Pledgors are
referred to collectively herein as the "Pledgors") and CREDIT SUISSE
FIRST BOSTON, a bank organized under the laws of Switzerland, acting
through its New York branch ("CSFB"), as collateral agent (in such
capacity, the "Collateral Agent") for the Secured Parties (as defined
in the Credit Agreement referred to below).
A. Reference is made to (a) the Credit Agreement dated as of August 13,
1999 (as amended, supplemented or otherwise modified from time to time, the
"Credit Agreement"), among the Borrower, Holdings, the lenders from time to time
party thereto (the "Lenders"), CSFB, as administrative agent for the Lenders,
and as Collateral Agent, swingline lender and an issuing bank, Salomon Smith
Barney Inc., as syndication agent, and Morgan Guaranty Trust Company of New
York, as documentation agent, (b) the Parent Guarantee Agreement dated as of
August 13, 1999 (as amended, supplemented or otherwise modified from time to
time, the "Parent Guarantee Agreement"), between Holdings and the Collateral
Agent and (c) the Subsidiary Guarantee Agreement dated as of August 13, 1999 (as
amended, supplemented or otherwise modified from time to time, the "Subsidiary
Guarantee Agreement"; and, collectively with the Parent Guarantee Agreement, the
"Guarantee Agreements") among the Subsidiary Pledgors and the Collateral Agent.
B. Capitalized terms used herein and not otherwise defined herein shall
have the meanings assigned to such terms in the Credit Agreement.
C. The Pledgors have entered into the Pledge Agreement in order to
induce the Lenders to make Loans and the Issuing Bank to issue Letters of
Credit. Pursuant to Section 5.11 of the Credit Agreement, each Subsidiary of the
Borrower that was not in existence or not a Subsidiary on the date of the Credit
Agreement is required to enter into the Pledge Agreement as a Subsidiary Pledgor
upon becoming a Subsidiary if such Subsidiary owns or possesses property of a
type that would be considered Collateral under the Pledge Agreement. Section 24
of the Pledge Agreement provides that such Subsidiaries may become Subsidiary
Pledgors under the Pledge Agreement by execution and delivery of an instrument
in the form of this Supplement. The undersigned Subsidiary (the "New Pledgor")
is executing this Supplement in accordance with the requirements of the Credit
Agreement to become a Subsidiary Pledgor under the Pledge Agreement in order to
induce the Lenders to make additional Loans and the Issuing Bank to issue
additional Letters of Credit and as consideration for Loans previously made and
Letters of Credit previously issued.
Accordingly, the Collateral Agent and the New Pledgor agree as follows:
SECTION 1. In accordance with Section 24 of the Pledge Agreement, the
New Pledgor by its signature below becomes a Pledgor under the Pledge Agreement
with the same force and effect as if originally named therein as a Pledgor and
the New Pledgor hereby agrees (a) to all the terms and provisions of the Pledge
Agreement applicable to it as a Pledgor thereunder and (b) represents and
warrants that the representations and warranties made by it as a Pledgor
thereunder are true and correct on and as of the date hereof. In furtherance of
the foregoing, the New Pledgor, as security for the payment and performance in
full of the Obligations (as defined in the Pledge Agreement), does hereby create
and grant to the Collateral Agent, its successors and assigns, for the benefit
of the Secured Parties, their successors and assigns, a security interest in and
lien on all of the New Pledgor's right, title and interest in and to the
Collateral (as defined in the Pledge Agreement) of the New Pledgor. Each
reference to a "Subsidiary Pledgor" or a "Pledgor" in the Pledge Agreement shall
be deemed to include the New Pledgor. The Pledge Agreement is hereby
incorporated herein by reference.
<PAGE>
2
SECTION 2. The New Pledgor represents and warrants to the Collateral
Agent and the other Secured Parties that this Supplement has been duly
authorized, executed and delivered by it and constitutes its legal, valid and
binding obligation, enforceable against it in accordance with its terms.
SECTION 3. This Supplement may be executed in counterparts, each of
which shall constitute an original, but all of which when taken together shall
constitute a single contract. This Supplement shall become effective when the
Collateral Agent shall have received counterparts of this Supplement that, when
taken together, bear the signatures of the New Pledgor and the Collateral Agent.
Delivery of an executed signature page to this Supplement by facsimile
transmission shall be as effective as delivery of a manually signed counterpart
of this Supplement.
SECTION 4. The New Pledgor hereby represents and warrants that set
forth on Schedule I attached hereto is a true and correct schedule of all its
Pledged Securities.
SECTION 5. Except as expressly supplemented hereby, the Pledge
Agreement shall remain in full force and effect.
SECTION 6. THIS SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 7. In case any one or more of the provisions contained in this
Supplement should be held invalid, illegal or unenforceable in any respect,
neither party hereto shall be required to comply with such provision for so long
as such provision is held to be invalid, illegal or unenforce able, but the
validity, legality and enforceability of the remaining provisions contained
herein and in the Pledge Agreement shall not in any way be affected or impaired.
The parties hereto shall endeavor in good-faith negotiations to replace the
invalid, illegal or unenforceable provisions with valid provisions the economic
effect of which comes as close as possible to that of the invalid, illegal or
unenforceable provisions.
SECTION 8. All communications and notices hereunder shall be in writing
and given as provided in Section 15 of the Pledge Agreement. All communications
and notices hereunder to the New Pledgor shall be given to it in care of the
Borrower.
SECTION 9. The New Pledgor agrees to reimburse the Collateral Agent for
its reasonable out-of-pocket expenses in connection with this Supplement,
including the reasonable fees, other charges and disbursements of counsel for
the Collateral Agent.
<PAGE>
3
IN WITNESS WHEREOF, the New Pledgor and the Collateral Agent have duly
executed this Supplement to the Pledge Agreement as of the day and year first
above written.
[Name of New Pledgor],
by:
---------------------------------
Name:
Title:
Address:
CREDIT SUISSE FIRST BOSTON, as
Collateral Agent,
by:
---------------------------------
Name:
Title:
by:
---------------------------------
Name:
Title:
<PAGE>
Schedule I to
Supplement No.
to the Pledge Agreement
Pledged Securities of the New Pledgor
EQUITY INTERESTS
Number and
Number of Registered Class Percentage of
Issuer Certificate Owner of Shares Shares
- - ------ ----------- ---------- ---------- ------
DEBT SECURITIES
Principal
Issuer Amount Date of Note Maturity Date
- - ------ --------- ------------ -------------
<PAGE>
EXHIBIT H
[Form of]
SECURITY AGREEMENT dated as of August 13, 1999, among INTERSIL
CORPORATION, a Delaware corporation (the "Borrower"), each
subsidiary of the Borrower listed on Schedule I hereto (each such
subsidiary individually a "Subsidiary Guarantor" and collectively,
the "Subsidiary Guarantors"; the Subsidiary Guarantors and the
Borrower are referred to collectively herein as the "Grantors") and
CREDIT SUISSE FIRST BOSTON, a bank organized under the laws of
Switzerland, acting through its New York branch ("CSFB"), as
collateral agent (in such capacity, the "Collateral Agent") for the
Secured Parties (as defined herein).
Reference is made to (a) the Credit Agreement dated as of August 13,
1999 (as amended, supplemented or otherwise modified from time to time, the
"Credit Agreement"), among the Borrower, Intersil Holding Corporation, a
Delaware corporation, the lenders from time to time party thereto (the
"Lenders"), CSFB, as administrative agent for the Lenders (in such capacity, the
"Administrative Agent"), and as Collateral Agent, swingline lender and an
issuing bank, Salomon Smith Barney Inc., as syndication agent, and Morgan
Guaranty Trust Company of New York, as documentation agent, and (b) the
Subsidiary Guarantee Agreement dated as of August 13, 1999 (as amended,
supplemented or otherwise modified from time to time, the "Subsidiary Guarantee
Agreement"), among the Subsidiary Guarantors and the Collateral Agent.
The Lenders have agreed to make Loans to the Borrower, and the Issuing
Bank has agreed to issue Letters of Credit for the account of the Borrower,
pursuant to, and upon the terms and subject to the conditions specified in, the
Credit Agreement. Each of the Subsidiary Guarantors has agreed to guarantee,
among other things, all the obligations of the Borrower under the Credit
Agreement. The obligations of the Lenders to make Loans and of the Issuing Bank
to issue Letters of Credit are conditioned upon, among other things, the
execution and delivery by the Grantors of an agreement in the form hereof to
secure (a) the due and punctual payment by the Borrower of (i) the principal of
and premium, if any, and interest (including interest accruing during the
pendency of any bankruptcy, insolvency, receivership or other similar
proceeding, regardless of whether allowed or allowable in such proceeding) on
the Loans, when and as due, whether at maturity, by acceleration, upon one or
more dates set for prepayment or otherwise, (ii) each payment required to be
made by the Borrower under the Credit Agreement in respect of any Letter of
Credit, when and as due, including payments in respect of reimbursement of
disbursements, interest thereon and obligations to provide cash collateral and
(iii) all other monetary obligations, including fees, costs, expenses and
indemnities, whether primary, secondary, direct, contingent, fixed or otherwise
(including monetary obligations incurred during the pendency of any bankruptcy,
insolvency, receivership or other similar proceeding, regardless of whether
allowed or allowable in such proceeding), of the Borrower to the Secured Parties
under the Credit Agreement and the other Loan Documents, (b) the due and
punctual performance of all covenants, agreements, obligations and liabilities
of the Borrower under or pursuant to the Credit Agreement and the other Loan
Documents, (c) the due and punctual payment and performance of all the
covenants, agreements, obligations and liabilities of each Loan Party under or
pursuant to this Agreement and the other Loan Documents and (d) the due and
punctual payment and performance of all obligations of the Borrower under each
Interest Rate Protection Agreement entered into with any counterparty that was a
Lender (or an Affiliate of a Lender) at the time such Interest Rate Protection
Agreement was entered into (all the monetary and other obligations described in
the preceding letter clauses being referred to collectively as the
"Obligations").
Accordingly, the Grantors and the Collateral Agent, on behalf of itself
and each Secured Party (and each of their respective successors or assigns),
hereby agree as follows:
ARTICLE I
Definitions
SECTION 1.01. Definition of Terms Used Herein. Unless the context
otherwise requires, all capitalized terms used but not defined herein shall have
the meanings set forth in the Credit
<PAGE>
2
Agreement and all references to the Uniform Commercial Code shall mean the
Uniform Commercial Code in effect in the State of New York on the date hereof.
SECTION 1.02. Definition of Certain Terms Used Herein. As used herein,
the following terms shall have the following meanings:
"Account Debtor" shall mean any person who is or who may become
obligated to any Grantor under, with respect to or on account of an Account.
"Accounts" shall mean any and all right, title and interest of any
Grantor to payment for goods and services sold or leased, including any such
right evidenced by chattel paper, whether due or to become due, whether or not
it has been earned by performance, and whether now or hereafter acquired or
arising in the future, including accounts receivable from Affiliates of the
Grantors.
"Accounts Receivable" shall mean all Accounts and all right, title and
interest in any returned goods, together with all rights, titles, securities and
guarantees with respect thereto, including any rights to stoppage in transit,
replevin, reclamation and resales, and all related security interests, liens and
pledges, whether voluntary or involuntary, in each case whether now existing or
owned or hereafter arising or acquired.
"Chattel Paper" shall mean (a) a writing or writings which evidence
both a monetary obligation and a security interest in or a lease of specific
Equipment and (b) all other property now or hereafter constituting "chattel
paper" under the Uniform Commercial Code as in effect in the State of New York
or its equivalent in other jurisdictions, in each case that are now or hereafter
owned by any Grantor.
"Collateral" shall mean all (a) Accounts Receivable, (b) Documents, (c)
Chattel Paper, (d) Equipment, (e) General Intangibles, (f) Inventory, (g) cash
and cash accounts, (h) Investment Property and (i) Proceeds except where (i) any
Equipment is subject to a purchase money lien permitted under the Credit
Agreement in favor of any person (other than the Collateral Agent) if the
documents relating to such lien do not permit other liens, or (ii) any General
Intangible is the subject of a written agreement which specifically prohibits
assignment thereof but only to the extent of such prohibition, and only to the
extent that the terms and provisions of a such written agreement, document or
instrument creating or evidencing such property or any rights relating thereto
expressly prohibit the granting of a security interest therein or condition the
granting of a security interest therein on the consent of a third party whose
consent has not been obtained or would cause, or allow a third party to cause,
forfeiture of such property upon the granting of a security interest therein or
a breach under any written agreement relating thereto.
"Commodity Account" shall mean an account maintained by a Commodity
Intermediary in which a Commodity Contract is carried out for a Commodity
Customer.
"Commodity Contract" shall mean a commodity futures contract, an option
on a commodity futures contract, a commodity option or any other contract that,
in each case, is (a) traded on or subject to the rules of a board of trade that
has been designated as a contract market for such a contract pursuant to the
federal commodities laws or (b) traded on a foreign commodity board of trade,
exchange or market, and is carried on the books of a Commodity Intermediary for
a Commodity Customer.
"Commodity Customer" shall mean a person for whom a Commodity
Intermediary carries a Commodity Contract on its books.
"Commodity Intermediary" shall mean (a) a person who is registered as a
futures commission merchant under the federal commodities laws or (b) a person
who in the ordinary course of its business provides clearance or settlement
services for a board of trade that has been designated as a contract market
pursuant to federal commodities laws.
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3
"Copyright License" shall mean any written agreement, now or hereafter
in effect, granting any right to any third party under any Copyright now or
hereafter owned by any Grantor or which such Grantor otherwise has the right to
license, or granting any right to such Grantor under any Copyright now or
hereafter owned by any third party, and all rights of such Grantor under any
such agreement.
"Copyrights" shall mean all of the following now owned or hereafter
acquired by any Grantor: (a) all copyright rights in any work subject to the
copyright laws of the United States or any other country, whether as author,
assignee, transferee or otherwise, and (b) all registrations and applications
for registration of any such copyright in the United States or any other
country, including registrations, recordings, supplemental registrations and
pending applications for registration in the United States Copyright Office,
including those listed on Schedule II.
"Credit Agreement" shall have the meaning assigned to such term in the
preliminary statement of this Agreement.
"Documents" shall mean all instruments, files, records, ledger sheets
and documents covering or relating to any of the Collateral.
"Entitlement Holder" shall mean a person identified in the records of a
Securities Intermediary as the person having a Security Entitlement against the
Securities Intermediary. If a person acquires a Security Entitlement by virtue
of Section 8-501(b)(2) or (3) of the Uniform Commercial Code, such person is the
Entitlement Holder.
"Equipment" shall mean all equipment, furniture and furnishings, and
all tangible personal property similar to any of the foregoing, including tools,
parts and supplies of every kind and description, and all improvements,
accessions or appurtenances thereto, that are now or hereafter owned by any
Grantor. The term Equipment shall include Fixtures.
"Equity Interest" shall mean shares of capital stock, partnership
interests, membership interests in a limited liability company or beneficial
interests in a trust or other equity ownership interests in a person.
"Financial Asset" shall mean (a) a Security, (b) an obligation of a
person or a share, participation or other interest in a person or in property or
an enterprise of a person, which is, or is of a type, dealt with in or traded on
financial markets, or which is recognized in any area in which it is issued or
dealt in as a medium for investment or (c) any property that is held by a
Securities Intermediary for another person in a Securities Account if the
Securities Intermediary has expressly agreed with the other person that the
property is to be treated as a Financial Asset under Article 8 of the Uniform
Commercial Code. As the context requires, the term Financial Asset shall mean
either the interest itself or the means by which a person's claim to it is
evidenced, including a certificated or uncertificated Security, a certificate
representing a Security or a Security Entitlement.
"Fixtures" shall mean all items of Equipment, whether now owned or
hereafter acquired, of any Grantor that become so related to particular real
estate that an interest in them arises under any real estate law applicable
thereto.
"General Intangibles" shall mean all chooses in action and causes of
action and all other assignable intangible personal property of any Grantor of
every kind and nature (other than Accounts Receivable) now owned or hereafter
acquired by any Grantor, including all rights and interests in partnerships,
limited partnerships, limited liability companies and other unincorporated
entities, corporate or other business records, indemnification claims, contract
rights (including rights under leases, whether entered into as lessor or lessee,
Interest Rate Protection Agreements and other agreements), Intellectual
Property, goodwill, registrations, franchises, tax refund claims and any letter
of credit, guarantee, claim, security interest or other security held by or
granted to any Grantor to secure payment by an Account Debtor of any of the
Accounts Receivable.
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4
"Intellectual Property" shall mean all intellectual and similar
property of any Grantor of every kind and nature now owned or hereafter acquired
by any Grantor, including inventions, designs, Patents, Copyrights, Licenses,
Trademarks, trade secrets, confidential or proprietary technical and business
information, know-how, show-how or other data or information, software and
databases and all embodiments or fixations thereof and related documentation,
registrations and franchises, and all additions, improvements and accessions to,
and books and records describing or used in connection with, any of the
foregoing.
"Inventory" shall mean all goods of any Grantor, whether now owned or
hereafter acquired, held for sale or lease, or furnished or to be furnished by
any Grantor under contracts of service, or consumed in any Grantor's business,
including raw materials, intermediates, work in process, packaging materials,
finished goods, semi-finished inventory, scrap inventory, manufacturing supplies
and spare parts, and all such goods that have been returned to or repossessed by
or on behalf of any Grantor.
"Investment Property" shall mean all Securities (whether certificated
or uncertificated), Security Entitlements, Securities Accounts, Commodity
Contracts, Commodity Accounts and Equity Interests of any Grantor, whether now
owned or hereafter acquired by any Grantor.
"License" shall mean any Patent License, Trademark License, Copyright
License or other license or sublicense to which any Grantor is a party,
including those listed on Schedule III (other than those (i) license agreements
in existence on the date hereof and listed on Schedule III and (ii) those
license agreements entered into after the date hereof, which, in either case, by
their terms prohibit assignment or a grant of a security interest by such
Grantor as licensee thereunder).
"Obligations" shall have the meaning assigned to such term in the
preliminary statement of this Agreement.
"Patent License" shall mean any written agreement, now or hereafter in
effect, granting to any third party any right to make, use or sell any invention
on which a Patent, now or hereafter owned by any Grantor or which any Grantor
otherwise has the right to license, is in existence, or granting to any Grantor
any right to make, use or sell any invention on which a Patent, now or hereafter
owned by any third party, is in existence, and all rights of any Grantor under
any such agreement.
"Patents" shall mean all of the following now owned or hereafter
acquired by any Grantor: (a) all letters patent of the United States or any
other country, all registrations and recordings thereof, and all applications
for letters patent of the United States or any other country, including
registrations, recordings and pending applications in the United States Patent
and Trademark Office or any similar offices in any other country, including
those listed on Schedule IV, and (b) all reissues, continuations, divisions,
continuations-in-part, renewals or extensions thereof, and the inventions
disclosed or claimed therein, including the right to make, use and/or sell the
inventions disclosed or claimed therein.
"Perfection Certificate" shall mean a certificate substantially in the
form of Annex 1 hereto, completed and supplemented with the schedules and
attachments contemplated thereby, and duly executed by a Financial Officer and
the chief legal officer of the Borrower.
"Proceeds" shall mean any consideration received from the sale,
exchange, license, lease or other disposition of any asset or property that
constitutes Collateral, any value received as a consequence of the possession of
any Collateral and any payment received from any insurer or other person or
entity as a result of the destruction, loss, theft, damage or other involuntary
conversion of whatever nature of any asset or property which constitutes
Collateral, and shall include , (a) any claim of any Grantor against any third
party for (and the right to sue and recover for and the rights to damages or
profits due or accrued arising out of or in connection with) (i) past, present
or future infringement of any Patent now or hereafter owned by any Grantor, or
licensed under a Patent License, (ii) past, present or future infringement or
dilution of any Trademark now or hereafter owned by any Grantor or licensed
under a Trademark License or injury to the goodwill associated
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5
with or symbolized by any Trademark now or hereafter owned by any Grantor, (iii)
past, present or future breach of any License and (iv) past, present or future
infringement of any Copyright now or hereafter owned by any Grantor or licensed
under a Copyright License and (b) any and all other amounts from time to time
paid or payable under or in connection with any of the Collateral.
"Secured Parties" shall mean (a) the Lenders, (b) the Administrative
Agent, (c) the Collateral Agent, (d) the Issuing Bank, (e) each counterparty to
an Interest Rate Protection Agreement entered into with the Borrower if such
counterparty was a Lender at the time the Interest Rate Protection Agreement was
entered into, (f) the beneficiaries of each indemnification obligation
undertaken by any Grantor under any Loan Document and (g) the successors and
assigns of each of the foregoing.
"Securities" shall mean any obligations of an issuer or any shares,
participations or other interests in an issuer or in property or an enterprise
of an issuer which (a) are represented by a certificate representing a security
in bearer or registered form, or the transfer of which may be registered upon
books maintained for that purpose by or on behalf of the issuer, (b) are one of
a class or series or by its terms is divisible into a class or series of shares,
participations, interests or obligations and (c) (i) are, or are of a type,
dealt with or traded on securities exchanges or securities markets or (ii) are a
medium for investment and by their terms expressly provide that they are a
security governed by Article 8 of the Uniform Commercial Code.
"Securities Account" shall mean an account to which a Financial Asset
is or may be credited in accordance with an agreement under which the person
maintaining the account undertakes to treat the person for whom the account is
maintained as entitled to exercise rights that comprise the Financial Asset.
"Securities Intermediary" shall mean (a) a clearing corporation or (b)
a person, including a bank or broker, that in the ordinary course of its
business maintains Securities Accounts for others and is acting in that
capacity.
"Security Entitlements" shall mean the rights and property interests of
an Entitlement Holder with respect to a Financial Asset.
"Security Interest" shall have the meaning assigned to such term in
Section 2.01.
"Trademark License" shall mean any written agreement, now or hereafter
in effect, granting to any third party any right to use any Trademark now or
hereafter owned by any Grantor or which any Grantor otherwise has the right to
license, or granting to any Grantor any right to use any Trademark now or
hereafter owned by any third party, and all rights of any Grantor under any such
agreement.
"Trademarks" shall mean all of the following now owned or hereafter
acquired by any Grantor: (a) all trademarks, service marks, trade names,
corporate names, company names, business names, fictitious business names, trade
styles, trade dress, logos, other source or business identifiers, designs and
general intangibles of like nature, now existing or hereafter adopted or
acquired, all registrations and recordings thereof, and all registration and
recording applications filed in connection therewith, including registrations
and registration applications in the United States Patent and Trademark Office,
any State of the United States or any similar offices in any other country or
any political subdivision thereof, and all extensions or renewals thereof,
including those listed on Schedule V, (b) all goodwill associated therewith or
symbolized thereby and (c) all other assets, rights and interests that uniquely
reflect or embody such goodwill.
SECTION 1.03. Rules of Interpretation. The rules of interpretation
specified in Section 1.02 of the Credit Agreement shall be applicable to this
Agreement.
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6
ARTICLE II
Security Interest
SECTION 2.01. Security Interest. As security for the payment or
performance, as the case may be, in full of the Obligations, and any extensions,
renewals, modifications or refinancings of the Obligations, each Grantor hereby
bargains, sells, conveys, assigns, sets over, mortgages, pledges, hypothecates
and transfers to the Collateral Agent, its successors and assigns, for the
ratable benefit of the Secured Parties, and hereby grants to the Collateral
Agent, its successors and assigns, for the ratable benefit of the Secured
Parties, a security interest in, all of such Grantor's right, title and interest
in, to and under the Collateral (the "Security Interest"). Without limiting the
foregoing, the Collateral Agent is hereby authorized to file one or more
financing statements (including fixture filings), continuation statements,
filings with the United States Patent and Trademark Office or United States
Copyright Office (or any successor office or any similar office in any other
country) or other documents for the purpose of perfecting, confirming,
continuing, enforcing or protecting the Security Interest granted by each
Grantor, without the signature of any Grantor, and naming any Grantor or the
Grantors as debtors and the Collateral Agent as secured party.
SECTION 2.02. No Assumption of Liability. The Security Interest is
granted as security only and shall not subject the Collateral Agent or any other
Secured Party to, or in any way alter or modify, any obligation or liability of
any Grantor with respect to or arising out of the Collateral.
ARTICLE III
Representations and Warranties
The Grantors jointly and severally represent and warrant to the
Collateral Agent and the Secured Parties that:
SECTION 3.01. Title and Authority. Each Grantor has good and valid
rights in and title to the Collateral, subject only to permitted Encumbrances,
with respect to which it has purported to grant a Security Interest hereunder
and has full power and authority to grant to the Collateral Agent the Security
Interest in such Collateral pursuant hereto and to execute, deliver and perform
its obligations in accordance with the terms of this Agreement, without the
consent or approval of any other person other than any consent or approval which
has been obtained.
SECTION 3.02. Filings. (a) The Perfection Certificate has been duly
prepared, completed and executed and the information set forth therein is
correct and complete as of the date hereof. Fully executed Uniform Commercial
Code financing statements (including fixture filings, as applicable) or other
appropriate filings, recordings or registrations containing a description of the
Collateral have been delivered to the Collateral Agent for filing in each
governmental, municipal or other office specified in Schedule 6 to the
Perfection Certificate, which are all the filings, recordings and registrations
(other than filings required to be made in the United States Patent and
Trademark Office and the United States Copyright Office in order to perfect the
Security Interest in Collateral consisting of United States Patents, Trademarks
and Copyrights) that are necessary to publish notice of and protect the validity
of and to establish a legal, valid and perfected security interest in favor of
the Collateral Agent (for the ratable benefit of the Secured Parties) in respect
of all Collateral in which the Security Interest may be perfected by filing,
recording or registration in the United States (or any political subdivision
thereof) and its territories and possessions, and no further or subsequent
filing, refiling, recording, rerecording, registration or reregistration is
necessary in any such jurisdiction, except as provided under applicable law with
respect to the filing of continuation statements or with respect to the filing
of amendments or new filings to reflect the change of any Grantor's name,
location, identity or corporate structure.
(b) Each Grantor shall ensure that fully executed security agreements
in the form hereof and containing a description of all Collateral consisting of
Intellectual Property shall have been received and recorded within three months
after the execution of this Agreement with respect to United States
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7
Patents and United States registered Trademarks (and Trademarks for which United
States registration applications are pending) and within one month after the
execution of this Agreement with respect to United Sates registered Copyrights
by the United States Patent and Trademark Office and the United States Copyright
Office pursuant to 35 U.S.C. ss. 261, 15 U.S.C. ss. 1060 or 17 U.S.C. ss. 205
and the regulations thereunder, as applicable, and otherwise as may be required
pursuant to the laws of any other necessary jurisdiction, to protect the
validity of and to establish a legal, valid and perfected security interest in
favor of the Collateral Agent (for the ratable benefit of the Secured Parties)
in respect of all Collateral consisting of Patents, Trademarks and Copyrights in
which a security interest may be perfected by filing, recording or registration
in the United States (or any political subdivision thereof) and its territories
and possessions, or in any other necessary jurisdiction, and no further or
subsequent filing, refiling, recording, rerecording, registration or
reregistration is necessary (other than such actions as are necessary to perfect
the Security Interest with respect to any Collateral consisting of Patents,
Trademarks and Copyrights (or registration or application for registration
thereof) acquired or developed after the date hereof).
SECTION 3.03. Validity of Security Interest. The Security Interest
constitutes (a) a legal and valid security interest in all the Collateral
securing the payment and performance of the Obligations, (b) subject to the
filings described in Section 3.02 above, a perfected security interest in all
Collateral in which a security interest may be perfected by filing, recording or
registering a financing statement or analogous document in the United States (or
any political subdivision thereof) and its territories and possessions pursuant
to the Uniform Commercial Code or other applicable law in such jurisdictions and
(c) a security interest that shall be perfected in all Collateral in which a
security interest may be perfected upon the receipt and recording of this
Agreement with the United States Patent and Trademark Office and the United
States Copyright Office, as applicable, within the three month period
(commencing as of the date hereof) pursuant to 35 U.S.C. ss. 261 or 15 U.S.C.
ss. 1060 or the one month period (commencing as of the date hereof) pursuant to
17 U.S.C. ss. 205 and otherwise as may be required pursuant to the laws of any
other necessary jurisdiction. The Security Interest is and shall be prior to any
other Lien on any of the Collateral, other than Liens expressly permitted to be
prior to the Security Interest pursuant to Section 6.02 of the Credit Agreement.
SECTION 3.04. Absence of Other Liens. The Collateral is owned by the
Grantors free and clear of any Lien, except for Liens expressly permitted
pursuant to Section 6.02 of the Credit Agreement. The Grantor has not filed or
consented to the filing of (a) any financing statement or analogous document
under the Uniform Commercial Code or any other applicable laws covering any
Collateral, (b) any assignment in which any Grantor assigns any Collateral or
any security agreement or similar instrument covering any Collateral with the
United States Patent and Trademark Office or the United States Copyright Office
or (c) any assignment in which any Grantor assigns any Collateral or any
security agreement or similar instrument covering any Collateral with any
foreign governmental, municipal or other office, which financing statement or
analogous document, assignment, security agreement or similar instrument is
still in effect, except, in each case, for Liens expressly permitted pursuant to
Section 6.02 of the Credit Agreement.
ARTICLE IV
Covenants
SECTION 4.01. Change of Name; Location of Collateral; Records; Place of
Business. (a) Each Grantor agrees promptly to notify the Collateral Agent in
writing of any change (i) in its corporate name or in any trade name used to
identify it in the conduct of its business or in the ownership of its
properties, (ii) in the location of its chief executive office, its principal
place of business, any office in which it maintains books or records relating to
Collateral owned by it or any office or facility at which Collateral owned by it
is located (including the establishment of any such new office or facility),
(iii) in its identity or corporate structure or (iv) in its Federal Taxpayer
Identification Number. Each Grantor agrees not to effect or permit any change
referred to in the preceding sentence unless all filings have been made under
the Uniform Commercial Code or otherwise that are required in order for the
Collateral Agent to continue at all times following such change to have a valid,
legal and perfected first priority security interest in all the Collateral. Each
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8
Grantor agrees promptly to notify the Collateral Agent if any material portion
of the Collateral owned or held by such Grantor is damaged or destroyed.
(b) Each Grantor agrees to maintain, at its own cost and expense, such
complete and accurate records with respect to the Collateral owned by it as is
consistent with its current practices and in accordance with such prudent and
standard practices used in industries that are the same as or similar to those
in which such Grantor is engaged, but in any event to include complete
accounting records indicating all payments and proceeds received with respect to
any part of the Collateral, and, at such time or times as the Collateral Agent
may reasonably request, promptly to prepare and deliver to the Collateral Agent
a duly certified schedule or schedules in form and detail reasonably
satisfactory to the Collateral Agent showing the identity, amount and location
of any and all Collateral.
SECTION 4.02. Periodic Certification. Each year, at the time of
delivery of annual financial statements with respect to the preceding fiscal
year pursuant to Section 5.04 of the Credit Agreement, the Borrower shall
deliver to the Collateral Agent a certificate executed by a Financial Officer
and the chief legal officer of the Borrower (a) setting forth the information
required pursuant to Section 2 of the Perfection Certificate or confirming that
there has been no change in such information since the date of such certificate
or the date of the most recent certificate delivered pursuant to Section 4.02
and (b) certifying that all Uniform Commercial Code financing statements
(including fixture filings, as applicable) or other appropriate filings,
recordings or registrations, including all refilings, rerecordings and
reregistrations, containing a description of the Collateral have been filed of
record in each governmental, municipal or other appropriate office in each
jurisdiction identified pursuant to clause (a) above to the extent necessary to
protect and perfect the Security Interest for a period of not less than 18
months after the date of such certificate (except as noted therein with respect
to any continuation statements to be filed within such period). Each certificate
delivered pursuant to this Section 4.02 shall identify in the format of Schedule
II, III, IV or V, as applicable, all Intellectual Property of any Grantor in
existence on the date thereof and not then listed on such Schedules or
previously so identified to the Collateral Agent.
SECTION 4.03. Protection of Security. Each Grantor shall, at its own
cost and expense, take any and all actions necessary to defend title to the
Collateral against all persons and to defend the Security Interest of the
Collateral Agent in the Collateral and the priority thereof against any Lien not
expressly permitted pursuant to Section 6.02 of the Credit Agreement.
SECTION 4.04. Further Assurances. Each Grantor agrees, at its own
expense, to execute, acknowledge, deliver and cause to be duly filed all such
further instruments and documents and take all such actions as the Collateral
Agent may from time to time reasonably request to better assure, preserve,
protect and perfect the Security Interest and the rights and remedies created
hereby, including the payment of any fees and taxes required in connection with
the execution and delivery of this Agreement, the granting of the Security
Interest and the filing of any financing statements (including fixture filings)
or other documents in connection herewith or therewith. If any amount payable
under or in connection with any of the Collateral shall be or become evidenced
by any promissory note or other instrument, such note or instrument shall be
immediately pledged and delivered to the Collateral Agent, duly endorsed in a
manner satisfactory to the Collateral Agent.
Without limiting the generality of the foregoing, each Grantor hereby
authorizes the Collateral Agent, with prompt notice thereof to the Grantors, to
supplement this Agreement by supplementing Schedule II, III, IV or V hereto or
adding additional schedules hereto to specifically identify any asset or item
that may constitute Copyrights, Licenses, Patents or Trademarks; provided,
however, that any Grantor shall have the right, exercisable within 10 days after
it has been notified by the Collateral Agent of the specific identification of
such Collateral, to advise the Collateral Agent in writing of any inaccuracy of
the representations and warranties made by such Grantor hereunder with respect
to such Collateral. Each Grantor agrees that it will use its best efforts to
take such action as shall be necessary in order that all representations and
warranties hereunder shall be true and correct with respect to such Collateral
within 30 days after the date it has been notified by the Collateral Agent of
the specific identification of such Collateral.
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9
SECTION 4.05. Inspection and Verification. The Collateral Agent and
such persons as the Collateral Agent may reasonably designate shall at
reasonable intervals and upon reasonable prior notice have the right, at the
Grantors' own cost and expense, to inspect the Collateral, all records related
thereto (and to make extracts and copies from such records) and the premises
upon which any of the Collateral is located, to discuss the Grantors' affairs
with the officers of the Grantors and their independent accountants and to
verify under reasonable procedures the validity, amount, quality, quantity,
value, condition and status of, or any other matter relating to, the Collateral,
including, in the case of Accounts or Collateral in the possession of any third
person, by contacting Account Debtors or the third person possessing such
Collateral for the purpose of making such a verification. The Collateral Agent
shall have the absolute right to share any information it gains from such
inspection or verification with any Secured Party (it being understood that any
such information shall be deemed to be "Information" subject to the provisions
of Section 9.17).
SECTION 4.06. Taxes; Encumbrances. At its option, upon prior written
notice to the applicable Grantor, the Collateral Agent may discharge past due
taxes, assessments, charges, fees, Liens, security interests or other
encumbrances at any time levied or placed on the Collateral and not permitted
pursuant to Section 6.02 of the Credit Agreement, and may pay for the
maintenance and preservation of the Collateral to the extent any Grantor fails
to do so as required by the Credit Agreement or this Agreement, and each Grantor
jointly and severally agrees to reimburse the Collateral Agent on demand for any
payment made or any expense incurred by the Collateral Agent pursuant to the
foregoing authorization; provided, however, that nothing in this Section 4.06
shall be interpreted as excusing any Grantor from the performance of, or
imposing any obligation on the Collateral Agent or any Secured Party to cure or
perform, any covenants or other promises of any Grantor with respect to taxes,
assessments, charges, fees, liens, security interests or other encumbrances and
maintenance as set forth herein or in the other Loan Documents.
SECTION 4.07. Assignment of Security Interest. If at any time any
Grantor shall take a security interest in any property of an Account Debtor or
any other person to secure payment and performance of an Account, such Grantor
shall promptly assign such security interest to the Collateral Agent. Such
assignment need not be filed of public record unless necessary to continue the
perfected status of the security interest against creditors of and transferees
from the Account Debtor or other person granting the security interest.
SECTION 4.08. Continuing Obligations of the Grantors. Each Grantor
shall remain liable to observe and perform all the conditions and obligations to
be observed and performed by it under each contract, agreement or instrument
relating to the Collateral, all in accordance with the terms and conditions
thereof, and each Grantor jointly and severally agrees to indemnify and hold
harmless the Collateral Agent and the Secured Parties from and against any and
all liability for such performance.
SECTION 4.09. Use and Disposition of Collateral. None of the Grantors
shall make or permit to be made an assignment, pledge or hypothecation of the
Collateral or shall grant any other Lien in respect of the Collateral, except as
expressly permitted by Section 6.02 of the Credit Agreement. None of the
Grantors shall make or permit to be made any transfer of the Collateral and each
Grantor shall remain at all times in possession (which possession shall include
(a) in the case of Investment Property, possession through one or more
Securities Intermediaries and (b) in the case of Inventory located on the
premises of any property leased and used by the Borrower or any Subsidiary in
the ordinary course of business, storage of Inventory on such property in the
ordinary course of business) of the Collateral owned by it, except that (a)
Inventory may be sold in the ordinary course of business and (b) unless and
until the Collateral Agent shall notify the Grantors that an Event of Default
shall have occurred and be continuing and that during the continuance thereof
the Grantors shall not sell, convey, lease, assign, transfer or otherwise
dispose of any Collateral (which notice may be given by telephone if promptly
confirmed in writing), the Grantors may use and dispose of the Collateral in any
lawful manner not inconsistent with the provisions of this Agreement, the Credit
Agreement or any other Loan Document. Without limiting the generality of the
foregoing, each Grantor agrees that it shall not permit any Inventory to be in
the possession or control of any warehouseman, bailee, agent or processor at any
time unless such warehouseman, bailee, agent or processor shall have been
notified of the Security Interest and shall have agreed in
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10
writing to hold the Inventory subject to the Security Interest and the
instructions of the Collateral Agent and to waive and release any Lien held by
it with respect to such Inventory, whether arising by operation of law or
otherwise.
SECTION 4.10. Limitation on Modification of Accounts. None of the
Grantors will, without the Collateral Agent's prior written consent, grant any
extension of the time of payment of any of the Accounts Receivable, compromise,
compound or settle the same for less than the full amount thereof, release,
wholly or partly, any person liable for the payment thereof or allow any credit
or discount whatsoever thereon, other than extensions, credits, discounts,
compromises or settlements granted or made in the ordinary course of business
and consistent with its current practices and in accordance with such prudent
and standard practices used in industries that are the same as or similar to
those in which such Grantor is engaged.
SECTION 4.11. Insurance. The Grantors, at their own expense, shall
maintain or cause to be maintained insurance covering physical loss or damage to
the Inventory and Equipment in accor dance with Section 5.02 of the Credit
Agreement. Each Grantor irrevocably makes, constitutes and appoints the
Collateral Agent (and all officers, employees or agents designated by the
Collateral Agent) as such Grantor's true and lawful agent (and attorney-in-fact)
for the purpose, during the continuance of an Event of Default, of making,
settling and adjusting claims in respect of Collateral under policies of
insurance, endorsing the name of such Grantor on any check, draft, instrument or
other item of payment for the proceeds of such policies of insurance and for
making all determinations and decisions with respect thereto. In the event that
any Grantor at any time or times shall fail to obtain or maintain any of the
policies of insurance required hereby or to pay any premium in whole or part
relating thereto, the Collateral Agent may, following written notice to the
Grantors, without waiving or releasing any obligation or liability of the
Grantors hereunder or any Event of Default, in its sole discretion, obtain and
maintain such policies of insurance and pay such premium and take any other
actions with respect thereto as the Collateral Agent deems advisable. All sums
disbursed by the Collateral Agent in connection with this Section 4.11,
including reasonable attorneys' fees, court costs, expenses and other charges
relating thereto, shall be payable, upon demand, by the Grantors to the
Collateral Agent and shall be additional Obligations secured hereby.
SECTION 4.12. Legend. Each Grantor shall legend, in form and manner
satisfactory to the Collateral Agent, its Accounts Receivable and its books,
records and documents evidencing or pertaining thereto with an appropriate
reference to the fact that such Accounts Receivable have been assigned to the
Collateral Agent for the benefit of the Secured Parties and that the Collateral
Agent has a security interest therein.
SECTION 4.13. Covenants Regarding Patent, Trademark and Copyright
Collateral. (a) Each Grantor agrees that it will not, nor will it permit any of
its licensees to, do any act, or omit to do any act, whereby any Patent which is
material to the conduct of such Grantor's business may become invalidated or
dedicated to the public, and agrees that it shall continue to mark any products
covered by a Patent with the relevant patent number as necessary and sufficient
to establish and preserve its maximum rights under applicable patent laws.
(b) Each Grantor (either itself or through its licensees or its
sublicensees) will, for each Trademark material to the conduct of such Grantor's
business, (i) maintain such Trademark in full force free from any claim of
abandonment or invalidity for non-use, (ii) maintain the quality of products and
services offered under such Trademark, (iii) display such Trademark with notice
of Federal or foreign registration to the extent necessary and sufficient to
establish and preserve its maximum rights under applicable law and (iv) not
knowingly use or knowingly permit the use of such Trademark in violation of any
third party rights.
(c) Each Grantor (either itself or through licensees) will, for each
work covered by a material Copyright, continue to publish, reproduce, display,
adopt and distribute the work with appropriate copyright notice as necessary and
sufficient to establish and preserve its maximum rights under applicable
copyright laws.
<PAGE>
11
(d) Each Grantor shall notify the Collateral Agent immediately if it
knows or has reason to know that any Patent, Trademark or Copyright material to
the conduct of its business may become abandoned, lost or dedicated to the
public, or of any adverse determination or development (including the
institution of, or any such determination or development in, any proceeding in
the United States Patent and Trademark Office, United States Copyright Office or
any court or similar office of any country) regarding such Grantor's ownership
of any Patent, Trademark or Copyright, its right to register the same, or to
keep and maintain the same.
(e) Each Grantor shall, within ten days after the end of each calendar
month, inform the Collateral Agent of each application for any Patent, Trademark
or Copyright (or for the registration of any Trademark or Copyright) with the
United States Patent and Trademark Office, United States Copyright Office or any
office or agency in any political subdivision of the United States or in any
other country or any political subdivision thereof filed during such calendar
month by such Grantor, either itself or through any agent, employee, licensee or
designee and, upon request of the Collateral Agent, each Grantor shall execute
and deliver any and all agreements, instruments, documents and papers as the
Collateral Agent may request to evidence the Collateral Agent's security
interest in such Patent, Trademark or Copyright, and each Grantor hereby
appoints the Collateral Agent as its attorney-in-fact to execute and file such
writings for the foregoing purposes, all acts of such attorney being hereby
ratified and confirmed; such power, being coupled with an interest, is
irrevocable.
(f) Each Grantor will take all necessary steps that are consistent with
the practice in any proceeding before the United States Patent and Trademark
Office, United States Copyright Office or any office or agency in any political
subdivision of the United States or in any other country or any political
subdivision thereof, to maintain and pursue each material application relating
to the Patents, Trademarks and/or Copyrights (and to obtain the relevant grant
or registration) and to maintain each issued Patent and each registration of the
Trademarks and Copyrights that is material to the conduct of any Grantor's
business, including timely filings of applications for renewal, affidavits of
use, affidavits of incontestability and payment of maintenance fees, and, if
consistent with good business judgment, to initiate opposition, interference and
cancelation proceedings against third parties.
(g) In the event that any Grantor has reason to believe that any
Collateral consisting of a Patent, Trademark or Copyright material to the
conduct of any Grantor's business has been or is about to be infringed,
misappropriated or diluted by a third party, such Grantor promptly shall notify
the Collateral Agent and shall, if consistent with good business judgment,
promptly sue for infringement, misappropriation or dilution and to recover any
and all damages for such infringement, misappropriation or dilution, and take
such other actions as are appropriate under the circumstances to protect such
Collateral.
(h) Upon and during the continuance of an Event of Default, each
Grantor shall use its best efforts to obtain all requisite consents or approvals
by the licensor of each Copyright License, Patent License or Trademark License
to effect the assignment of all of such Grantor's right, title and interest
thereunder to the Collateral Agent or its designee.
ARTICLE V
Power of Attorney
Each Grantor irrevocably makes, constitutes and appoints the Collateral
Agent (and all officers, employees or agents designated by the Collateral Agent)
as such Grantor's true and lawful agent and attorney-in-fact, and in such
capacity the Collateral Agent shall have the right, with power of substitution
for each Grantor and in each Grantor's name or otherwise, for the use and
benefit of the Collateral Agent and the Secured Parties, upon the occurrence and
during the continuance of an Event of Default (a) to receive, endorse, assign
and/or deliver any and all notes, acceptances, checks, drafts, money orders or
other evidences of payment relating to the Collateral or any part thereof; (b)
to demand, collect, receive payment of, give receipt for and give discharges and
releases of all or any of the Collateral; (c) to sign the name of any Grantor on
any invoice or bill of lading relating to any of the Collateral; (d) to send
verifications of Accounts Receivable to any Account Debtor;
<PAGE>
12
(e) to commence and prosecute any and all suits, actions or proceedings at law
or in equity in any court of competent jurisdiction to collect or otherwise
realize on all or any of the Collateral or to enforce any rights in respect of
any Collateral; (f) to settle, compromise, compound, adjust or defend any
actions, suits or proceedings relating to all or any of the Collateral; (g) to
notify, or to require any Grantor to notify, Account Debtors to make payment
directly to the Collateral Agent; and (h) to use, sell, assign, transfer,
pledge, make any agreement with respect to or otherwise deal with all or any of
the Collateral, and to do all other acts and things necessary to carry out the
purposes of this Agreement, as fully and completely as though the Collateral
Agent were the absolute owner of the Collateral for all purposes; provided,
however, that nothing herein contained shall be construed as requiring or
obligating the Collateral Agent or any Secured Party to make any commitment or
to make any inquiry as to the nature or sufficiency of any payment received by
the Collateral Agent or any Secured Party, or to present or file any claim or
notice, or to take any action with respect to the Collateral or any part thereof
or the moneys due or to become due in respect thereof or any property covered
thereby, and no action taken or omitted to be taken by the Collateral Agent or
any Secured Party with respect to the Collateral or any part thereof shall give
rise to any defense, counterclaim or offset in favor of any Grantor or to any
claim or action against the Collateral Agent or any Secured Party. It is
understood and agreed that the appointment of the Collateral Agent as the agent
and attorney-in-fact of the Grantors for the purposes set forth above is coupled
with an interest and is irrevocable. The provisions of this Section shall in no
event relieve any Grantor of any of its obligations hereunder or under any other
Loan Document with respect to the Collateral or any part thereof or impose any
obligation on the Collateral Agent or any Secured Party to proceed in any
particular manner with respect to the Collateral or any part thereof, or in any
way limit the exercise by the Collateral Agent or any Secured Party of any other
or further right which it may have on the date of this Agreement or hereafter,
whether hereunder, under any other Loan Document, by law or otherwise.
ARTICLE VI
Remedies
SECTION 6.01. Remedies upon Default. Upon the occurrence and during the
continuance of an Event of Default, each Grantor agrees to deliver each item of
Collateral to the Collateral Agent on demand, and it is agreed that the
Collateral Agent shall have the right to take any of or all the following
actions at the same or different times: (a) with respect to any Collateral
consisting of Intellectual Property, on demand, to cause the Security Interest
to become an assignment, transfer and conveyance of any of or all such
Collateral by the applicable Grantors to the Collateral Agent, or to license or
sublicense, whether general, special or otherwise, and whether on an exclusive
or non-exclusive basis, any such Collateral throughout the world on such terms
and conditions and in such manner as the Collateral Agent shall determine (other
than in violation of any then-existing licensing arrangements to the extent that
waivers cannot be obtained), and (b) with or without legal process and with or
without prior notice or demand for performance, to take possession of the Col
lateral and without liability for trespass to enter any premises where the
Collateral may be located for the purpose of taking possession of or removing
the Collateral, exercise any Grantor's right to bill and receive payment for
completed work and, generally, to exercise any and all rights afforded to a
secured party under the Uniform Commercial Code or other applicable law. Without
limiting the generality of the foregoing, each Grantor agrees that the
Collateral Agent shall have the right, subject to the mandatory requirements of
applicable law, to sell or otherwise dispose of all or any part of the
Collateral, at public or private sale or at any broker's board or on any
securities exchange, for cash, upon credit or for future delivery as the
Collateral Agent shall deem appropriate. The Collateral Agent shall be
authorized at any such sale (if it deems it advisable to do so) to restrict the
prospective bidders or purchasers to persons who will represent and agree that
they are purchasing the Collateral for their own account for investment and not
with a view to the distribution or sale thereof, and upon consummation of any
such sale the Collateral Agent shall have the right to assign, transfer and
deliver to the purchaser or purchasers thereof the Collateral so sold. Each such
purchaser at any such sale shall hold the property sold absolutely, free from
any claim or right on the part of any Grantor, and each Grantor hereby waives
(to the extent permitted by law) all rights
<PAGE>
13
of redemption, stay and appraisal which such Grantor now has or may at any time
in the future have under any rule of law or statute now existing or hereafter
enacted.
The Collateral Agent shall give the Grantors 10 days' written notice
(which each Grantor agrees is reasonable notice within the meaning of Section
9-504(3) of the Uniform Commercial Code as in effect in the State of New York or
its equivalent in other jurisdictions) of the Collateral Agent's intention to
make any sale of Collateral. Such notice, in the case of a public sale, shall
state the time and place for such sale and, in the case of a sale at a broker's
board or on a securities exchange, shall state the board or exchange at which
such sale is to be made and the day on which the Collateral, or portion thereof,
will first be offered for sale at such board or exchange. Any such public sale
shall be held at such time or times within ordinary business hours and at such
place or places as the Collateral Agent may fix and state in the notice (if any)
of such sale. At any such sale, the Collateral, or portion thereof, to be sold
may be sold in one lot as an entirety or in separate parcels, as the Collateral
Agent may (in its sole and absolute discretion) determine. The Collateral Agent
shall not be obligated to make any sale of any Collateral if it shall determine
not to do so, regardless of the fact that notice of sale of such Collateral
shall have been given. The Collateral Agent may, without notice or publication,
adjourn any public or private sale or cause the same to be adjourned from time
to time by announcement at the time and place fixed for sale, and such sale may,
without further notice, be made at the time and place to which the same was so
adjourned. In case any sale of all or any part of the Collateral is made on
credit or for future delivery, the Collateral so sold may be retained by the
Collateral Agent until the sale price is paid by the purchaser or purchasers
thereof, but the Collateral Agent shall not incur any liability in case any such
purchaser or purchasers shall fail to take up and pay for the Collateral so sold
and, in case of any such failure, such Collateral may be sold again upon like
notice. At any public (or, to the extent permitted by law, private) sale made
pursuant to this Section, any Secured Party may bid for or purchase, free (to
the extent permitted by law) from any right of redemption, stay, valuation or
appraisal on the part of any Grantor (all said rights being also hereby waived
and released to the extent permitted by law), the Collateral or any part thereof
offered for sale and may make payment on account thereof by using any claim then
due and payable to such Secured Party from any Grantor as a credit against the
purchase price, and such Secured Party may, upon compliance with the terms of
sale, hold, retain and dispose of such property without further accountability
to any Grantor therefor. For purposes hereof, a written agreement to purchase
the Collateral or any portion thereof shall be treated as a sale thereof; the
Collateral Agent shall be free to carry out such sale pursuant to such agreement
and no Grantor shall be entitled to the return of the Collateral or any portion
thereof subject thereto, notwithstanding the fact that after the Collateral
Agent shall have entered into such an agreement all Events of Default shall have
been remedied and the Obligations paid in full. As an alternative to exercising
the power of sale herein conferred upon it, the Collateral Agent may proceed by
a suit or suits at law or in equity to foreclose this Agreement and to sell the
Collateral or any portion thereof pursuant to a judgment or decree of a court or
courts having competent jurisdiction or pursuant to a proceeding by a
court-appointed receiver.
SECTION 6.02. Application of Proceeds. The Collateral Agent shall apply
the proceeds of any collection or sale of the Collateral, as well as any
Collateral consisting of cash, as follows:
FIRST, to the payment of all costs and expenses incurred by
the Administrative Agent or the Collateral Agent (in its capacity as
such hereunder or under any other Loan Document) in connection with
such collection or sale or otherwise in connection with this Agreement
or any of the Obligations, including all court costs and the fees and
expenses of its agents and legal counsel, the repayment of all advances
made by the Collateral Agent hereunder or under any other Loan Document
on behalf of any Grantor and any other costs or expenses incurred in
connection with the exercise of any right or remedy hereunder or under
any other Loan Document;
SECOND, to the payment in full of the Obligations (the amounts
so applied to be distributed among the Secured Parties pro rata in
accordance with the amounts of the Obligations owed to them on the date
of any such distribution); and
<PAGE>
14
THIRD, to the Grantors, their successors or assigns, or as a
court of competent jurisdiction may otherwise direct.
Subject to the foregoing, the Collateral Agent shall have absolute discretion as
to the time of application of any such proceeds, moneys or balances in
accordance with this Agreement. Upon any sale of the Collateral by the
Collateral Agent (including pursuant to a power of sale granted by statute or
under a judicial proceeding), the receipt of the Collateral Agent or of the
officer making the sale shall be a sufficient discharge to the purchaser or
purchasers of the Collateral so sold and such purchaser or purchasers shall not
be obligated to see to the application of any part of the purchase money paid
over to the Collateral Agent or such officer or be answerable in any way for the
misapplication thereof.
SECTION 6.03. Grant of License to Use Intellectual Property. For the
purpose of enabling the Collateral Agent to exercise rights and remedies under
this Article at such time as the Collateral Agent shall be lawfully entitled to
exercise such rights and remedies, each Grantor hereby grants to the Collateral
Agent an irrevocable, non-exclusive license (exercisable without payment of
royalty or other compensation to the Grantors) to use, license or sub-license
any of the Collateral consisting of Intellectual Property now owned or hereafter
acquired by such Grantor, to the extent granting such license or sub-license
would not violate any agreement applicable to such Intellectual Property, and
wherever the same may be located, and including in such license reasonable
access to all media in which any of the licensed items may be recorded or stored
and to all computer software and programs used for the compilation or printout
thereof. The use of such license by the Collateral Agent may be exercised, at
the option of the Collateral Agent, upon the occurrence and during the
continuation of an Event of Default; provided that any license, sub-license or
other transaction entered into by the Collateral Agent in accordance herewith
shall be binding upon the Grantors notwithstanding any subsequent cure of an
Event of Default.
ARTICLE VII
Miscellaneous
SECTION 7.01. Notices. All communications and notices hereunder shall
(except as otherwise expressly permitted herein) be in writing and given as
provided in Section 9.01 of the Credit Agreement. All communications and notices
hereunder to any Subsidiary Guarantor shall be given to it at its address or fax
number set forth on Schedule I, with a copy to the Borrower.
SECTION 7.02. Security Interest Absolute. All rights of the Collateral
Agent hereunder, the Security Interest and all obligations of the Grantors
hereunder shall be absolute and unconditional irrespective of (a) any lack of
validity or enforceability of the Credit Agreement, any other Loan Document, any
agreement with respect to any of the Obligations or any other agreement or
instrument relating to any of the foregoing, (b) any change in the time, manner
or place of payment of, or in any other term of, all or any of the Obligations,
or any other amendment or waiver of or any consent to any departure from the
Credit Agreement, any other Loan Document or any other agreement or instrument,
(c) any exchange, release or non-perfection of any Lien on other collateral, or
any release or amendment or waiver of or consent under or departure from any
guarantee, securing or guaranteeing all or any of the Obligations, or (d) any
other circumstance that might otherwise constitute a defense available to, or a
discharge of, any Grantor in respect of the Obligations or this Agreement.
SECTION 7.03. Survival of Agreement. All covenants, agreements,
representations and warranties made by any Grantor herein and in the
certificates or other instruments prepared or delivered in connection with or
pursuant to this Agreement shall be considered to have been relied upon by the
Secured Parties and shall survive the making by the Lenders of the Loans, and
the execution and delivery to the Lenders of any notes evidencing such Loans,
regardless of any investigation made by the Lenders or on their behalf, and
shall continue in full force and effect until this Agreement shall terminate.
<PAGE>
15
SECTION 7.04. Binding Effect; Several Agreement. This Agreement shall
become effective as to any Grantor when a counterpart hereof executed on behalf
of such Grantor shall have been delivered to the Collateral Agent and a
counterpart hereof shall have been executed on behalf of the Collateral Agent,
and thereafter shall be binding upon such Grantor and the Collateral Agent and
their respective successors and assigns, and shall inure to the benefit of such
Grantor, the Collateral Agent and the other Secured Parties and their respective
successors and assigns, except that no Grantor shall have the right to assign or
transfer its rights or obligations hereunder or any interest herein or in the
Collateral (and any such assignment or transfer shall be void) except as
expressly contemplated by this Agreement or the Credit Agreement. This Agreement
shall be construed as a separate agreement with respect to each Grantor and may
be amended, modified, supplemented, waived or released with respect to any
Grantor without the approval of any other Grantor and without affecting the
obligations of any other Grantor hereunder.
SECTION 7.05. Successors and Assigns. Whenever in this Agreement any of
the parties hereto is referred to, such reference shall be deemed to include the
successors and assigns of such party; and all covenants, promises and agreements
by or on behalf of any Grantor or the Collateral Agent that are contained in
this Agreement shall bind and inure to the benefit of their respective
successors and assigns.
SECTION 7.06. Collateral Agent's Fees and Expenses; Indemnification.
(a) Each Grantor jointly and severally agrees to pay upon demand to the
Collateral Agent the amount of any and all reasonable expenses, including the
reasonable fees, disbursements and other charges of its counsel and of any
experts or agents, which the Collateral Agent may incur in connection with (i)
the administration of this Agreement, (ii) the custody or preservation of, or
the sale of, collection from or other realization upon any of the Collateral,
(iii) the exercise, enforcement or protection of any of the rights of the
Collateral Agent hereunder or (iv) the failure of any Grantor to perform or
observe any of the provisions hereof.
(b) Without limitation of its indemnification obligations under the
other Loan Documents, each Grantor jointly and severally agrees to indemnify the
Collateral Agent and the other Indemnitees against, and hold each of them
harmless from, any and all losses, claims, damages, liabilities and related
expenses, including reasonable fees, disbursements and other charges of counsel,
incurred by or asserted against any of them arising out of, in any way connected
with, or as a result of, the execution, delivery or performance of this
Agreement or any claim, litigation, investigation or proceeding relating hereto
or to the Collateral, whether or not any Indemnitee is a party thereto; provided
that such indemnity shall not, as to any Indemnitee, be available to the extent
that such losses, claims, damages, liabilities or related expenses are
determined by a court of competent jurisdiction by final and nonappealable
judgment to have resulted from the gross negligence or willful misconduct of
such Indemnitee.
(c) Any such amounts payable as provided hereunder shall be additional
Obligations secured hereby and by the other Security Documents. The provisions
of this Section 7.06 shall remain operative and in full force and effect
regardless of the termination of this Agreement or any other Loan Document, the
consummation of the transactions contemplated hereby, the repayment of any of
the Loans, the invalidity or unenforceability of any term or provision of this
Agreement or any other Loan Document, or any investigation made by or on behalf
of the Collateral Agent or any Lender. All amounts due under this Section 7.06
shall be payable on written demand therefor.
SECTION 7.07. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK, EXCEPT THAT
THE LAW OF THEIR LOCATION SHALL GOVERN WITH RESPECT TO THE CREATION, PERFECTION
AND ENFORCEMENT OF SECURITY INTERESTS IN FIXTURES AND THE EXERCISE OF REMEDIES
WITH RESPECT THERETO (IF APPLICABLE).
SECTION 7.08. Waivers; Amendment. (a) No failure or delay of the
Collateral Agent in exercising any power or right hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right or
power, or any abandonment or discontinuance of steps to enforce
<PAGE>
16
such a right or power, preclude any other or further exercise thereof or the
exercise of any other right or power. The rights and remedies of the Collateral
Agent hereunder and of the Collateral Agent, the Issuing Bank, the
Administrative Agent and the Lenders under the other Loan Documents are
cumulative and are not exclusive of any rights or remedies that they would
otherwise have. No waiver of any provisions of this Agreement or any other Loan
Document or consent to any departure by any Grantor therefrom shall in any event
be effective unless the same shall be permitted by paragraph (b) below, and then
such waiver or consent shall be effective only in the specific instance and for
the purpose for which given. No notice to or demand on any Grantor in any case
shall entitle such Grantor or any other Grantor to any other or further notice
or demand in similar or other circumstances.
(b) Neither this Agreement nor any provision hereof may be waived,
amended or modified except pursuant to an agreement or agreements in writing
entered into by the Collateral Agent and the Grantor or Grantors with respect to
which such waiver, amendment or modification is to apply, subject to any consent
required in accordance with Section 9.08 of the Credit Agreement.
SECTION 7.09. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL
BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF,
UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS.
EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)
ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS APPLICABLE, BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 7.09.
SECTION 7.10. Severability. In the event any one or more of the
provisions contained in this Agreement should be held invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not in any way be affected or
impaired thereby (it being understood that the invalidity of a particular
provision in a particular jurisdiction shall not in and of itself affect the
validity of such provision in any other jurisdiction). The parties shall
endeavor in good-faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provisions.
SECTION 7.11 Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall constitute an original but all of which
when taken together shall constitute but one contract (subject to Section 7.04),
and shall become effective as provided in Section 7.04. Delivery of an executed
signature page to this Agreement by facsimile transmission shall be effective as
delivery of a manually executed counterpart hereof.
SECTION 7.12. Headings. Article and Section headings used herein are
for the purpose of reference only, are not part of this Agreement and are not to
affect the construction of, or to be taken into consideration in interpreting,
this Agreement.
SECTION 7.13. Jurisdiction; Consent to Service of Process. (a) Each
Grantor hereby irrevocably and unconditionally submits, for itself and its
property, to the nonexclusive jurisdiction of any New York State court or
Federal court of the United States of America sitting in New York City, and any
appellate court from any thereof, in any action or proceeding arising out of or
relating to this Agreement or the other Loan Documents, or for recognition or
enforcement of any judgment, and each of the parties hereto hereby irrevocably
and unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in such New York State or, to the extent
permitted by law, in such Federal court. Each of the parties hereto agrees that
a final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law. Nothing in this
<PAGE>
17
Agreement shall affect any right that the Collateral Agent, the Administrative
Agent, the Issuing Bank or any Lender may otherwise have to bring any action or
proceeding relating to this Agreement or the other Loan Documents against any
Grantor or its properties in the courts of any jurisdiction.
(b) Each Grantor hereby irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any objection which it may
now or hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Agreement or the other Loan Documents in any
New York State or Federal court. Each of the parties hereto hereby irrevocably
waives, to the fullest extent permitted by law, the defense of an inconvenient
forum to the maintenance of such action or proceeding in any such court.
(c) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 7.01. Nothing in this
Agreement will affect the right of any party to this Agreement to serve process
in any other manner permitted by law.
SECTION 7.14. Termination. This Agreement and the Security Interest
shall terminate when all the Obligations (other than wholly contingent
indemnification obligations) then due and owing have been indefeasibly paid in
full, the Lenders have no further commitment to lend, the L/C Exposure has been
reduced to zero and the Issuing Bank has no further commitment to issue Letters
of Credit under the Credit Agreement, at which time the Collateral Agent shall
execute and deliver to the Grantors, at the Grantors' expense, all Uniform
Commercial Code termination statements and similar documents which the Grantors
shall reasonably request to evidence such termination. Any execution and
delivery of termination statements or documents pursuant to this Section 7.14
shall be without recourse to or warranty by the Collateral Agent. A Subsidiary
Guarantor shall automatically be released from its obligations hereunder and the
Security Interest in the Collateral of such Subsidiary Guarantor shall be
automatically released in the event that all the capital stock of such
Subsidiary Guarantor shall be sold, transferred or otherwise disposed of to a
person that is not an Affiliate of the Borrower in accordance with the terms of
the Credit Agreement; provided that the Required Lenders shall have consented to
such sale, transfer or other disposition (to the extent required by the Credit
Agreement) and the terms of such consent did not provide otherwise.
SECTION 7.15. Additional Grantors. Upon execution and delivery by the
Collateral Agent and a Subsidiary of an instrument in the form of Annex 2
hereto, such Subsidiary shall become a Grantor hereunder with the same force and
effect as if originally named as a Grantor herein. The execution and delivery of
any such instrument shall not require the consent of any Grantor hereunder. The
rights and obligations of each Grantor hereunder shall remain in full force and
effect notwithstanding the addition of any new Grantor as a party to this
Agreement.
<PAGE>
18
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
INTERSIL CORPORATION,
by:
--------------------------------
Name:
Title:
HARRIS SEMICONDUCTOR
(PENNSYLVANIA), LLC,
by:
-----------------------------------
Name:
Title:
HARRIS SEMICONDUCTOR (OHIO), LLC,
by:
-----------------------------------
Name:
Title:
HARRIS SEMICONDUCTOR, LLC,
by:
-----------------------------------
Name:
Title:
CHOICE MICROSYSTEMS, INC.,
by:
-----------------------------------
Name:
Title:
CREDIT SUISSE FIRST BOSTON,
as Collateral Agent,
by:
-----------------------------------
Name:
Title:
by:
-----------------------------------
Name:
Title:
<PAGE>
SCHEDULE I
SUBSIDIARY GUARANTORS
Name Address/Fax Number
- - ---- ------------------
<PAGE>
SCHEDULE II
COPYRIGHTS OWNED BY [NAME OF GRANTOR]
[Make a separate Schedule II for each Grantor,
and if no copyrights owned, so state.
List in numerical order by copyright registration/application no.]
U.S. Copyright Registrations
----------------------------
Title Class Reg. Date Reg No.
----- ----- --------- -------
Pending U.S. Copyright Applications for Registration
----------------------------------------------------
Title Class Date Application Filed
----- ----- ----------------------
Non-U.S. Copyright Registrations
-------------------------------
Country Title Class Reg. Date Reg. No.
------- ----- ----- --------- --------
Non-U.S. Pending Copyright Applications for Registration
--------------------------------------------------------
Country Title Class Date Application Filed
------- ----- ----- ----------------------
<PAGE>
SCHEDULE III
LICENSES
--------
[Make a separate Schedule III for each Grantor, and if not a licensor/licensee
in a license/sublicense so state]
PART I
------
LICENSES/SUBLICENSES OF [NAME OF GRANTOR] ON DATE HEREOF
--------------------------------------------------------
A. Copyrights
-------------
[List First U.S. copyrights in numerical order by Reg. No., followed by non-U.S.
copyrights by country in alphabetical order, Reg. Nos. in numerical order.]
<TABLE>
<CAPTION>
Licensee Name and Date of License/ Title of
Address Sublicense U.S. Copyrights Class Reg. Date Reg. No.
------- ---------- -------------- ----- --------- --------
<S> <C> <C> <C> <C> <C>
Licensee Name Date of License/ Title of Non-U.S.
and Address Sublicense Copyrights Country Class Reg. Date Reg. No.
- - ------------ ---------- ----------- ------- ----- --------- --------
<S> <C> <C> <C> <C> <C>
</TABLE>
B. Patents
----------
[List first in numerical order by U.S. patent nos. followed by U.S. patent
application nos., followed in alphabetical order by country, non-U.S. patent
nos. followed by non-U.S. application nos. in numerical order.]
<TABLE>
<CAPTION>
Licensee Name and Date of License/ Application Date Application/
Address Sublicense Title of U.S. Patent Class Filed/Issue Date Patent No.
-------- ----------- ------------------- ----- ---------------- ----------
<S> <C> <C> <C> <C> <C>
Application
Licensee Name and Date of License/ Title of Non- Date Field/Issue Application/
Address Sublicense U.S. Patent Country Class Date Patent No.
------- ---------- ------------- ------- ----- ---- -----------
<S> <C> <C> <C> <C> <C>
</TABLE>
C. Trademarks
-------------
[List first in numerical order by U.S. trademark nos., followed by U.S.
trademark application nos., followed in alphabetical order by country, non-U.S.
application nos. in numerical order.]
<PAGE>
2
<TABLE>
<CAPTION>
Licensee Name Date of License/ Application Date Application/
and Address Sublicense U.S. Mark Class Filed/Reg. Date Reg. No.
----------- ----------- --------- ----- --------------- --------
<S> <C> <C> <C> <C> <C>
Application
Licensee Name Date of License/ Title of Date Filed/ Application/
and Address Sublicense Non-U.S. Mark Country Class Reg. Date Reg. No.
----------- ---------- ------------- ------- ----- --------- --------
<S> <C> <C> <C> <C> <C>
</TABLE>
D. Others
---------
<TABLE>
<CAPTION>
Date of License/
Licensee Name and Address Sublicense Subject Matter
------------------------- ---------- --------------
<S> <C> <C>
</TABLE>
PART 2
------
LICENSES/SUBLICENSES OF [NAME OF GRANTOR] AS LICENSEE ON DATE HEREOF
--------------------------------------------------------------------
A. Copyrights
--------------
[List first U.S. copyrights in numerical order by Reg. No., followed by non-U.S.
copyright by country in alphabetical order, Reg. Nos. in numerical order.]
<TABLE>
<CAPTION>
Licensor Name Date of License/ Title of
and Address Sublicense U.S. Copyright Class Reg. Date Reg. No.
----------- ---------- -------------- ----- --------- --------
<S> <C> <C> <C> <C> <C>
</TABLE>
<TABLE>
<CAPTION>
Licensor Name Date of License/ Title of Non-U.S.
and Address Sublicense Copyrights Country Class Reg. Date Reg. No.
----------- ----------- ----------- -------- ------ --------- ---------
<S> <C> <C> <C> <C> <C> <C>
</TABLE>
B. Patents
----------
[List first in numerical order by U.S. Patent nos. followed by U.S. patent
application nos., followed in alphabetical order by country, non-U.S. patent
nos. followed by non-U.S. application nos. in numerical order.]
<TABLE>
<CAPTION>
Application
Licensor Name Date of License/ Title of Date/Filed/ Application/
and Address Sublicense U.S. Patent Class Issue Date Patent No.
----------- ---------- ----------- ----- ---------- -------------
<S> <C> <C> <C> <C> <C>
</TABLE>
<PAGE>
3
<TABLE>
<CAPTION>
Application
Licensor Name Date of License/ Title of Non- Date/Filed/ Application/
and Address Sublicense U.S. Patent Country Class Issue Date Patent No.
----------- ---------- ----------- ------- ----- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
</TABLE>
C. Trademarks
-------------
[List first in numerical order by U.S. trademark nos., followed by U.S.
trademark application nos., followed in alphabetical order by country, non-U.S.
trademark nos. followed by non-U.S. application nos. in numerical order.]
<TABLE>
<CAPTION>
Licensor Name and Date of License/ Application Date Application
Address Sublicense U.S. Mark Class Filed/Reg. Date Reg. No.
------- ---------- --------- ----- --------------- --------
<S> <C> <C> <C> <C> <C>
<CAPTION>
Licensor
Name and Date of License/ Title of Application Date Application/
Address Sublicense Non-U.S. Mark Country Class Filed/Reg. Date Reg. No.
- - ------- ---------- ------------- ------- ------ --------------- --------
<S> <C> <C> <C> <C> <C> <C>
</TABLE>
D. Others
----------
<TABLE>
<CAPTION>
Date of License/
Licensor Name and Address Sublicense Subject Matter
- - ------------------------ ---------- --------------
<S> <C> <C>
</TABLE>
<PAGE>
SCHEDULE IV
PATENTS OWNED BY [NAME OF GRANTOR]
[Make a separate Schedule IV for each Grantor and if no patents owned so state.
List in numerical order by Patent No./Patent Application No.]
U.S. Patent Registrations
-------------------------
Patent Name Class Issue Date Patent No.
----------- ----- ---------- ----------
U.S. Patent Applications
------------------------
Patent Name Class Filing Date Patent Application No.
---------- ----- ----------- ----------------------
Non-U.S. Patent Registrations
-------------------------------
[List in alphabetical order by country/numerical order by Patent No.]
Country Patent Name Class Issue Date Patent No.
- - ------- ----------- ----- ---------- ----------
Non-U.S. Patent Applications
----------------------------
Country Patent Name Class Filing Date Patent Application No.
- - ------- ----------- ----- ----------- ----------------------
<PAGE>
SCHEDULE V
TRADEMARK/TRADE NAMES OWNED BY [NAME OF GRANTOR]
------------------------------------------------
[Make a separate Schedule V for each Grantor and if no trademarks/trade names
owned so state.
List in numerical order by trademark registration/application no.]
U.S. Trademark Registrations
----------------------------
Mark Class Reg. Date Reg. No.
---- ----- --------- ---------
U.S. Trademark Applications
---------------------------
Mark Class Filing Date Application No.
---- ----- ----------- ---------------
State Trademark Registrations
-----------------------------
[List in alphabetical order by State/numerical order by trademark no.]
State Mark Class Reg. Date Reg. No.
----- ---- ----- -------- --------
State Trademark Applications
----------------------------
[List in alphabetical order by trademark application no.]
State Mark Class Filing Date Application No.
----- ---- ----- ----------- ---------------
Non-U.S. Trademark Registrations
--------------------------------
[List in alphabetical order by Country/numerical order by trademark no.]
Country Mark Class Reg. Date Reg. No.
------- ---- ----- ---------- --------
Non-U.S. Trademark Applications
-------------------------------
[List in alphabetical order by Country/numerical order by application no.]
Country Mark Class Filing Date Application No.
------- ---- ----- ----------- ---------------
Trade Names
-----------
Country(s) Where Used Trade Names
--------------------- -----------
<PAGE>
Annex 1 to the
Security Agreement
[Form Of]
PERFECTION CERTIFICATE
Reference is made to (a) the Credit Agreement dated as of August 13, 1999 (as
amended, supplemented or otherwise modified from time to time, the "Credit
Agreement"), among Intersil Corporation, a Delaware corporation (the
"Borrower"), Intersil Holding Corporation, a Delaware corporation ("Holdings"),
the lenders from time to time party thereto (the "Lenders"), Credit Suisse First
Boston, a bank organized under the laws of Switzerland, acting through its New
York branch, as swingline lender (in such capacity, the "Swingline Lender"), as
an issuing bank (in such capacity, an "Issuing Bank"), as administrative agent
(in such capacity, the "Administrative Agent") and as collateral agent (in such
capacity, the "Collateral Agent") for the Lenders, Salomon Smith Barney Inc..,
as syndication agent (in such capacity, the "Syndication Agent") and Morgan
Guaranty Trust Company of New York, as documentation agent (in such capacity,
the "Documentation Agent", and (b) the Subsidiary Guarantee Agreement dated as
of August 13, 1999 (as amended, supplemented or otherwise modified from time to
time, the "Subsidiary Guarantee Agreement"), among the Subsidiary Guarantors and
the Collateral Agent. Capitalized terms used but not defined herein have the
meanings assigned in the Credit Agreement or the Security Agreement referred to
therein, as applicable.
The undersigned, a Financial Officer and the chief legal officer,
respectively, of Holdings, hereby certify to the Collateral Agent and each other
Secured Party as follows:
1. Names.
(a) The exact corporate name of each Grantor, as such name appears in its
respective certificate of incorporation, is as follows:
(b) Set forth below is each other corporate name each Grantor has had in the
past five years, together with the date of the relevant change:
(c) Except as set forth in Schedule 1 hereto, no Grantor has changed its
identity or corporate structure in any way within the past five years. Changes
in identity or corporate structure would include mergers, consolidations and
acquisitions, as well as any change in the form, nature or jurisdiction of
corporate organization. If any such change has occurred, include in Schedule 1
the information required by Sections 1 and 2 of this certificate as to each
acquiree or constituent party to a merger or consolidation.
(d) The following is a list of all other names (including trade names or
similar appellations) used by each Grantor or any of its divisions or other
business units in connection with the conduct of its business or the ownership
of its properties at any time during the past five years:
(e) Set forth below is the Federal Taxpayer Identification Number of each
Grantor:
2. Current Locations.
(a) The chief executive office of each Grantor is located at the address set
forth opposite its name below:
Grantor Mailing Address County State
- - ------- --------------- ------ -----
<PAGE>
2
(b) Set forth below opposite the name of each Grantor are all locations where
such Grantor maintains any books or records relating to any Accounts Receivable
(with each location at which chattel paper, if any, is kept being indicated by
an "*"):
Grantor Mailing Address County State
- - ------- --------------- ------ -----
(c) Set forth below opposite the name of each Grantor are all the locations
where such Grantor maintains any Collateral not identified above:
Grantor Mailing Address County State
- - ------- --------------- ------ -----
(d) Set forth below opposite the name of each Grantor are all the places of
business of such Grantor not identified in paragraph (a), (b) or (c) above:
Grantor Mailing Address County State
- - ------- --------------- ------ -----
(e) Set forth below opposite the name of each Grantor are the names and
addresses of all persons other than such Grantor that have possession of any of
the Collateral of such Grantor:
Grantor Mailing Address County State
- - ------- --------------- ------ -----
3. Unusual Transactions. All Accounts Receivable have been originated by the
Grantors and all Inventory has been acquired by the Grantors in the ordinary
course of business.
4. File Search Reports. Attached hereto as Schedule 4(A) are true copies of
file search reports from the Uniform Commercial Code filing offices where
filings described in Section 3.19 of the Credit Agreement are to be made.
Attached hereto as Schedule 4(B) is a true copy of each financing statement or
other filing identified in such file search reports.
5. UCC Filings. Duly signed financing statements on Form UCC-1 in
substantially the form of Schedule 5 hereto have been prepared for filing in the
Uniform Commercial Code filing office in each jurisdiction where a Grantor has
Collateral as identified in Section 2 hereof.
6. Schedule of Filings. Attached hereto as Schedule 6 is a schedule setting
forth, with respect to the filings described in Section 5 above, each filing and
the filing office in which such filing is to be made.
7. Filing Fees. All filing fees and taxes payable in connection with the
filings described in Section 5 above have been paid.
8. Stock Ownership and other Equity Interests. Attached hereto as Schedule 8
is a true and correct list of all the duly authorized, issued and outstanding
stock, partnership interests, limited liability company membership interests or
other equity interests of the Borrower and of each Subsidiary and the record and
beneficial owners of such stock, partnership interests, membership interests or
other equity interests. Also set forth on Schedule 8 is each equity investment
of Holdings, the Borrower and each Subsidiary that represents 50% or less of the
equity of the entity in which such investment was made.
9. Debt Instruments. Attached hereto as Schedule 9 is a true and correct list
of all promissory notes and all other evidence of indebtedness held by Holdings,
the Borrower and each Subsidiary that are
<PAGE>
3
required to be pledged under the Pledge Agreement, including all intercompany
notes between Holdings and each Subsidiary of Holdings and between each
Subsidiary of Holdings and each other such Subsidiary.
10. Advances. Attached hereto as Schedule 10 is (a) a true and correct list of
all advances made by Holdings to any Subsidiary of Holdings or made by any
Subsidiary of Holdings to Holdings or any other Subsidiary of Holdings, which
advances will be on and after the date hereof evidenced by one or more
intercompany notes pledged to the Collateral Agent under the Pledge Agreement,
and (b) a true and correct list of all unpaid intercompany transfers of goods
sold and delivered by or to Holdings or any Subsidiary of Holdings.
11. Mortgage Filings. Attached hereto as Schedule 11 is a schedule setting
forth, with respect to each Mortgaged Property, (i) the exact corporate name of
the corporation that owns such property as such name appears in its certificate
of incorporation, (ii) if different from the name identified pursuant to clause
(i), the exact name of the current record owner of such property reflected in
the records of the filing office for such property identified pursuant to the
following clause and (iii) the filing office in which a Mortgage with respect to
such property must be filed or recorded in order for the Collateral Agent to
obtain a perfected security interest therein.
12. Intellectual Property. Attached hereto as Schedule 12(A) in proper form
for filing with the United States Patent and Trademark Office is a schedule
setting forth all of each Grantor's Patents, Patent Licenses, Trademarks and
Trademark Licenses, including the name of the registered owner, the registration
number and the expiration date of each Patent, Patent License, Trademark and
Trademark License owned by any Grantor. Attached hereto as Schedule 12(B) in
proper form for filing with the United States Copyright Office is a schedule
setting forth all of each Grantor's Copyrights and Copyright Licenses, including
the name of the registered owner, the registration number and the expiration
date of each Copyright or Copyright License owned by any Grantor.
IN WITNESS WHEREOF, the undersigned have duly executed this certificate on
this [ ] day of [ ], 1999.
INTERSIL HOLDING CORPORATION,
by:
------------------------------------
Name:
Title:[Financial Officer]
by:
------------------------------------
Name:
Title: [Chief Legal Officer]
<PAGE>
Annex 2 to the
Security Agreement
SUPPLEMENT NO. __ dated as of , to the Security
Agreement dated as of August 13, 1999, among INTERSIL
CORPORATION, a Delaware corporation (the "Borrower"), each
subsidiary of the Borrower listed on Schedule I thereto (each
such subsidiary individually a "Subsidiary Guarantor" and
collectively, the "Subsidiary Guarantors"; the Subsidiary
Guarantors and the Borrower are referred to collectively
herein as the "Grantors") and CREDIT SUISSE FIRST BOSTON, a
bank organized under the laws of Switzerland, acting through
its New York branch ("CSFB"), as collateral agent (in such
capacity, the "Collateral Agent") for the Secured Parties (as
defined herein).
A. Reference is made to (a) the Credit Agreement dated as of August 13,
1999 (as amended, supplemented or otherwise modified from time to time, the
"Credit Agreement"), among the Borrower, Intersil Holding Corporation, a
Delaware corporation, the lenders from time to time party thereto (the
"Lenders"), CSFB, as administrative agent for the Lenders (in such capacity, the
"Administrative Agent"), and as Collateral Agent, swingline lender and an
issuing bank, Salomon Smith Barney Inc., as syndication agent, and Morgan
Guaranty Trust Company of New York, as documentation agent, and (b) the
Subsidiary Guarantee Agreement dated as of August 13, 1999 (as amended,
supplemented or otherwise modified from time to time, the "Subsidiary Guarantee
Agreement"), among the Subsidiary Guarantors and the Collateral Agent.
B. Capitalized terms used herein and not otherwise defined herein shall
have the meanings assigned to such terms in the Security Agreement and the
Credit Agreement.
C. The Grantors have entered into the Security Agreement in order to
induce the Lenders to make Loans and the Issuing Bank to issue Letters of
Credit. Section 7.15 of the Security Agreement provides that additional
Subsidiaries of the Borrower may become Grantors under the Security Agreement by
execution and delivery of an instrument in the form of this Supplement. The
undersigned Subsidiary (the "New Grantor") is executing this Supplement in
accordance with the requirements of the Credit Agreement to become a Grantor
under the Security Agreement in order to induce the Lenders to make additional
Loans and the Issuing Bank to issue additional Letters of Credit and as
consideration for Loans previously made and Letters of Credit previously issued.
Accordingly, the Collateral Agent and the New Grantor agree as follows:
SECTION 1. In accordance with Section 7.15 of the Security Agreement,
the New Grantor by its signature below becomes a Grantor under the Security
Agreement with the same force and effect as if originally named therein as a
Grantor and the New Grantor hereby (a) agrees to all the terms and provisions of
the Security Agreement applicable to it as a Grantor thereunder and (b)
represents and warrants that the representations and warranties made by it as a
Grantor thereunder are true and correct on and as of the date hereof. In
furtherance of the foregoing, the New Grantor, as security for the payment and
performance in full of the Obligations (as defined in the Security Agreement),
does hereby create and grant to the Collateral Agent, its successors and
assigns, for the benefit of the Secured Parties, their successors and assigns, a
security interest in and lien on all of the New Grantor's right, title and
interest in and to the Collateral (as defined in the Security Agreement) of the
New Grantor. Each reference to a "Grantor" in the Security Agreement shall be
deemed to include the New Grantor. The Security Agreement is hereby incorporated
herein by reference.
SECTION 2. The New Grantor represents and warrants to the Collateral
Agent and the other Secured Parties that this Supplement has been duly
authorized, executed and delivered by it and con stitutes its legal, valid and
binding obligation, enforceable against it in accordance with its terms.
SECTION 3. This Supplement may be executed in counterparts (and by
different parties hereto on different counterparts), each of which shall
constitute an original, but all of which when taken together shall constitute a
single contract. This Supplement shall become effective when the Collateral
Agent shall have received counterparts of this Supplement that, when taken
together, bear the signatures of the New Grantor and the Collateral Agent.
Delivery of an executed signature page to this Supplement
<PAGE>
2
by facsimile transmission shall be as effective as delivery of a manually signed
counterpart of this Supplement.
SECTION 4. The New Grantor hereby represents and warrants that (a) set
forth on Schedule I attached hereto is a true and correct schedule of the
location of any and all Collateral of the New Grantor and (b) set forth under
its signature hereto, is the true and correct location of the chief executive
office of the New Grantor.
SECTION 5. Except as expressly supplemented hereby, the Security
Agreement shall remain in full force and effect.
SECTION 6. THIS SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, EXCEPT THAT THE LAW OF THEIR
LOCATION SHALL GOVERN WITH RESPECT TO THE CREATION, PERFECTION AND ENFORCEMENT
OF SECURITY INTERESTS IN FIXTURES AND THE EXERCISE OF REMEDIES WITH RESPECT
THERETO (IF APPLICABLE).
SECTION 7. In case any one or more of the provisions contained in this
Supplement should be held invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein and in the Security Agreement shall not in any way be affected or
impaired thereby (it being understood that the invalidity of a particular
provision in a particular jurisdiction shall not in and of itself affect the
validity of such provision in any other jurisdiction). The parties hereto shall
endeavor in good-faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provisions.
SECTION 8. All communications and notices hereunder shall be in writing
and given as provided in Section 7.01 of the Security Agreement. All
communications and notices hereunder to the New Grantor shall be given to it at
the address set forth under its signature below.
SECTION 9. The New Grantor agrees to reimburse the Collateral Agent for
its reasonable out-of-pocket expenses in connection with this Supplement,
including the reasonable fees, other charges and disbursements of counsel for
the Collateral Agent.
<PAGE>
3
IN WITNESS WHEREOF, the New Grantor and the Collateral Agent have duly
executed this Supplement to the Security Agreement as of the day and year first
above written.
[Name Of New Grantor],
by:
----------------------------------
Name:
Title:
Address:
CREDIT SUISSE FIRST BOSTON,
as Collateral Agent,
by:
----------------------------------
Name:
Title:
by:
----------------------------------
Name:
Title:
<PAGE>
SCHEDULE I
to Supplement No.___ to the
Security Agreement
LOCATION OF COLLATERAL
Description Location
----------- ---------
<PAGE>
EXHIBIT I
[Form of]
SUBSIDIARY GUARANTEE AGREEMENT dated as of August 13,
1999, among each of the subsidiaries listed on Schedule I
hereto (each such subsidiary individually, a "Subsidiary
Guarantor" and collectively, the "Subsidiary Guarantors") of
INTERSIL CORPORATION, a Delaware corporation (the "Borrower"),
and CREDIT SUISSE FIRST BOSTON, a bank organized under the
laws of Switzerland, acting through its New York branch
("CSFB"), as collateral agent (the "Collateral Agent") for the
Secured Parties (as defined in the Credit Agreement referred
to below).
Reference is made to the Credit Agreement dated as of August 13, 1999
(as amended, supplemented or otherwise modified from time to time, the "Credit
Agreement"), among the Borrower, Intersil Holding Corporation, a Delaware
corporation ("Holdings"), the lenders from time to time party thereto (the
"Lenders"), CSFB, as administrative agent for the Lenders (in such capacity, the
"Administrative Agent"), and as Collateral Agent, swingline lender and an
issuing bank, Salomon Smith Barney Inc., as syndication agent, and Morgan
Guaranty Trust Company of New York, as documentation agent. Capitalized terms
used herein and not defined herein shall have the meanings assigned to such
terms in the Credit Agreement.
The Lenders have agreed to make Loans to the Borrower, and the Issuing
Bank has agreed to issue Letters of Credit for the account of the Borrower,
pursuant to, and upon the terms and subject to the conditions specified in, the
Credit Agreement. Each of the Subsidiary Guarantors is a wholly owned Subsidiary
of the Borrower and acknowledges that it will derive substantial benefit from
the making of the Loans by the Lenders, and the issuance of the Letters of
Credit by the Issuing Bank. The obligations of the Lenders to make Loans and of
the Issuing Bank to issue Letters of Credit are conditioned on, among other
things, the execution and delivery by the Subsidiary Guarantors of a Subsidiary
Guarantee Agreement in the form hereof. As consideration therefor and in order
to induce the Lenders to make Loans and the Issuing Bank to issue Letters of
Credit, the Subsidiary Guarantors are willing to execute this Agreement.
Accordingly, the parties hereto agree as follows:
SECTION 1. Guarantee. Each Subsidiary Guarantor unconditionally
guarantees, jointly with the other Subsidiary Guarantors and severally, as a
primary obligor and not merely as a surety, (a) the due and punctual payment by
the Borrower of (i) the principal of and premium, if any, and interest
(including interest accruing during the pendency of any bankruptcy, insolvency,
receivership or other similar proceeding, regardless of whether allowed or
allowable in such proceeding) on the Loans, when and as due, whether at
maturity, by acceleration, upon one or more dates set for prepayment or
otherwise, (ii) each payment required to be made by the Borrower under the
Credit Agreement in respect of any Letter of Credit, when and as due, including
payments in respect of reimbursement of disbursements, interest thereon and
obligations to provide cash collateral and (iii) all other monetary obligations,
including fees, costs, expenses and indemnities, whether primary, secondary,
direct, contingent, fixed or otherwise (including monetary obligations incurred
during the pendency of any bankruptcy, insolvency, receivership or other similar
proceeding, regardless of whether allowed or allowable in such proceeding), of
the Borrower to the Secured Parties under the Credit Agreement and the other
Loan Documents, (b) the due and punctual performance of all covenants,
agreements, obligations and liabilities of the Loan Parties under or pursuant to
the Credit Agreement and the other Loan Documents, (c) the due and punctual
payment and performance of all the covenants, agreements, obligations and
liabilities of each Loan Party under or pursuant to this Agreement and the other
Loan Documents and (d) the due and punctual payment and performance of all
obligations of the Borrower, under each Interest Rate Protection Agreement
entered into with a counterparty that was a Lender (or an Affiliate of a Lender)
at the time such Interest Rate Protection Agreement was entered into (all the
monetary and other obligations referred to in the preceding lettered clauses
being collectively referred to as the "Obligations"). Each Subsidiary Guarantor
further agrees that the Obligations may be extended or renewed, in whole or in
part, without notice to or further assent from it, and that it will remain bound
upon its guarantee notwithstanding any extension or renewal of any Obligation.
Anything contained in this Agreement to the contrary notwithstanding,
the obligations of each Subsidiary Guarantor hereunder shall be limited to a
maximum aggregate amount equal to the greatest amount that would not render such
Subsidiary Guarantor's obligations hereunder subject to avoidance
<PAGE>
2
as a fraudulent transfer or conveyance under Section 548 of Title 11 of the
United States Code or any provisions of applicable state law (collectively, the
"Fraudulent Transfer Laws"), in each case after giving effect to all other
liabilities of such Subsidiary Guarantor, contingent or otherwise, that are
relevant under the Fraudulent Transfer Laws (specifically excluding, however,
any liabilities of such Subsidiary Guarantor (a) in respect of intercompany
indebtedness to the Borrower or Affiliates of the Borrower to the extent that
such indebtedness would be discharged in an amount equal to the amount paid by
such Subsidiary Guarantor hereunder and (b) under any Guarantee of senior
unsecured indebtedness or Indebtedness subordinated in right of payment to the
Obligations which Guarantee contains a limitation as to maximum amount similar
to that set forth in this paragraph, pursuant to which the liability of such
Subsidiary Guarantor hereunder is included in the liabilities taken into account
in determining such maximum amount) and after giving effect as assets to the
value (as determined under the applicable provisions of the Fraudulent Transfer
Laws) of any rights to subrogation, contribution, reimbursement, indemnity or
similar rights of such Subsidiary Guarantor pursuant to (i) applicable law or
(ii) any agreement providing for an equitable allocation among such Subsidiary
Guarantor and other Affiliates of the Borrower of obligations arising under
Guarantees by such parties (including the Indemnity, Subrogation and
Contribution Agreement).
SECTION 2. Obligations Not Waived. To the fullest extent permitted by
applicable law, each Subsidiary Guarantor waives presentment to, demand of
payment from and protest to the Borrower of any of the Obligations, and also
waives notice of acceptance of its guarantee and notice of protest for
nonpayment. To the fullest extent permitted by applicable law, the obligations
of each Subsidiary Guarantor hereunder shall not be affected by (a) the failure
of the Collateral Agent or any other Secured Party to assert any claim or demand
or to enforce or exercise any right or remedy against the Borrower or any other
Subsidiary Guarantor under the provisions of the Credit Agreement, any other
Loan Document or otherwise, (b) any extension, renewal or increase of or in any
of the Obligations, (c) any rescission, waiver, amendment or modification of, or
any release from any of the terms or provisions of this Agreement, any other
Loan Document, any Guarantee or any other agreement or instrument, including
with respect to any other Subsidiary Guarantor under this Agreement, (d) the
failure to perfect any security interest in, or the release of, any of the
security held by or on behalf of the Collateral Agent or any other Secured Party
or (e) the failure or delay of any Secured Party to exercise any right or remedy
against any other guarantor of the Obligations.
SECTION 3. Security. Each of the Subsidiary Guarantors authorizes the
Collateral Agent and each of the other Secured Parties, to (a) take and hold
security for the payment of this Guarantee and the Obligations and exchange,
enforce, waive and release any such security, (b) apply such security and direct
the order or manner of sale thereof as they in their sole discretion may
determine and (c) release or substitute any one or more endorsees, other
guarantors of other obligors.
SECTION 4. Guarantee of Payment. Each Subsidiary Guarantor further
agrees that its guarantee constitutes a guarantee of payment when due and not of
collection, and waives any right to require that any resort be had by the
Collateral Agent or any other Secured Party to any of the security held for
payment of the Obligations or to any balance of any deposit account or credit on
the books of the Collateral Agent or any other Secured Party in favor of the
Borrower or any other person.
SECTION 5. No Discharge or Diminishment of Guarantee. The obligations
of each Subsidiary Guarantor hereunder shall not be subject to any reduction,
limitation, impairment or termination for any reason (other than the
indefeasible payment in full in cash of the Obligations), including any claim of
waiver, release, surrender, alteration or compromise of any of the Obligations,
and shall not be subject to any defense or setoff, counterclaim, recoupment or
termination whatsoever by reason of the invalidity, illegality or
unenforceability of the Obligations or otherwise. Without limiting the
generality of the foregoing, the obligations of each Subsidiary Guarantor
hereunder shall not be discharged or impaired or otherwise affected by the
failure of the Collateral Agent or any other Secured Party to assert any claim
or demand or to enforce any remedy under the Credit Agreement, any other Loan
Document, any Guarantee or any other agreement or instrument, by any waiver or
modification of any provision of any thereof, by any default, failure or delay,
wilful or otherwise, in the performance of the Obligations, or by any other act,
omission or delay to do any other act that may or might in any manner or to any
extent vary the risk of any Subsidiary Guarantor or that would otherwise operate
as a discharge of each Subsidiary Guarantor as a matter of law or equity (other
than the indefeasible payment in full in cash of
<PAGE>
3
all the Obligations) or which would impair or eliminate any right of such
Subsidiary Guarantor to subrogation.
SECTION 6. Defenses of Borrower Waived. To the fullest extent permitted
by applicable law, each of the Subsidiary Guarantors waives any defense based on
or arising out of any defense of the Borrower or the unenforceability of the
Obligations or any part thereof from any cause, or the cessation from any cause
of the liability of the Borrower, other than the final and indefeasible payment
in full in cash of the Obligations. The Collateral Agent and the other Secured
Parties may, at their election, foreclose on any security held by one or more of
them by one or more judicial or nonjudicial sales, accept an assignment of any
such security in lieu of foreclosure, compromise or adjust any part of the
Obligations, make any other accommodation with the Borrower or any other
guarantor or exercise any other right or remedy available to them against the
Borrower or any other guarantor, without affecting or impairing in any way the
liability of any Subsidiary Guarantor hereunder except to the extent the
Obligations have been fully, finally and indefeasibly paid in cash. Pursuant to
applicable law, each of the Subsidiary Guarantors waives any defense arising out
of any such election even though such election operates, pursuant to applicable
law, to impair or to extinguish any right of reimbursement or subrogation or
other right or remedy of such Subsidiary Guarantor against the Borrower or any
other Subsidiary Guarantor or guarantor, as the case may be, or any security.
SECTION 7. Agreement to Pay; Subordination. In furtherance of the
foregoing and not in limitation of any other right that the Collateral Agent or
any other Secured Party has at law or in equity against any Subsidiary Guarantor
by virtue hereof, upon the failure of the Borrower or any other Loan Party to
pay any Obligation when and as the same shall become due, whether at maturity,
by acceleration, after notice of prepayment or otherwise, each Subsidiary
Guarantor hereby promises to and will forthwith pay, or cause to be paid, to the
Collateral Agent or such other Secured Party as designated thereby in cash the
amount of such unpaid Obligations. Upon payment by any Subsidiary Guarantor of
any sums to the Collateral Agent or any Secured Party as provided above, all
rights of such Subsidiary Guarantor against the Borrower arising as a result
thereof by way of right of subrogation, contribution, reimbursement, indemnity
or otherwise shall in all respects be subordinate and junior in right of payment
to the prior indefeasible payment in full in cash of all the Obligations. In
addition, any indebtedness of the Borrower now or hereafter held by any
Subsidiary Guarantor is hereby subordinated in right of payment to the prior
payment in full of the Obligations. If any amount shall erroneously be paid to
any Subsidiary Guarantor on account of (i) such subrogation, contribution,
reimbursement, indemnity or similar right or (ii) any such indebtedness of the
Borrower, such amount shall be held in trust for the benefit of the Secured
Parties and shall forthwith be paid to the Collateral Agent to be credited
against the payment of the Obligations, whether matured or unmatured, in
accordance with the terms of the Loan Documents.
SECTION 8. Information. Each of the Subsidiary Guarantors assumes all
responsibility for being and keeping itself informed of the Borrower's financial
condition and assets, and of all other circumstances bearing upon the risk of
nonpayment of the Obligations and the nature, scope and extent of the risks that
such Subsidiary Guarantor assumes and incurs hereunder, and agrees that none of
the Collateral Agent or the other Secured Parties will have any duty to advise
any of the Subsidiary Guarantors of information known to it or any of them
regarding such circumstances or risks.
SECTION 9. Representations and Warranties. Each of the Subsidiary
Guarantors represents and warrants as to itself that all representations and
warranties relating to it contained in the Credit Agreement are true and
correct.
SECTION 10. Termination. The Guarantees made hereunder (a) shall
terminate when all the Obligations have been indefeasibly paid in full and the
Lenders have no further commitment to lend under the Credit Agreement, the L/C
Exposure has been reduced to zero and the Issuing Bank has no further obligation
to issue Letters of Credit under the Credit Agreement and (b) shall continue to
be effective or be reinstated, as the case may be, if at any time payment, or
any part thereof, of any Obligation is rescinded or must otherwise be restored
by any Secured Party or any Subsidiary Guarantor upon the bankruptcy or
reorganization of the Borrower, any Subsidiary Guarantor or otherwise.
<PAGE>
4
SECTION 11. Binding Effect; Several Agreement; Assignments. Whenever in
this Agreement any of the parties hereto is referred to, such reference shall be
deemed to include the successors and assigns of such party; and all covenants,
promises and agreements by or on behalf of the Subsidiary Guarantors that are
contained in this Agreement shall bind and inure to the benefit of each party
hereto and their respective successors and assigns. This Agreement shall become
effective as to any Subsidiary Guarantor when a counterpart hereof executed on
behalf of such Subsidiary Guarantor shall have been delivered to the Collateral
Agent, and a counterpart hereof shall have been executed on behalf of the
Collateral Agent, and thereafter shall be binding upon such Subsidiary Guarantor
and the Collateral Agent and their respective successors and assigns, and shall
inure to the benefit of such Subsidiary Guarantor, the Collateral Agent and the
other Secured Parties, and their respective successors and assigns, except that
no Subsidiary Guarantor shall have the right to assign its rights or obligations
hereunder or any interest herein (and any such attempted assignment shall be
void). If all of the capital stock of a Subsidiary Guarantor is sold,
transferred or otherwise disposed of pursuant to a transaction permitted by
Section 6.05 of the Credit Agreement, such Subsidiary Guarantor shall be
released from its obligations under this Agreement without further action. This
Agreement shall be construed as a separate agreement with respect to each
Subsidiary Guarantor and may be amended, modified, supplemented, waived or
released with respect to any Subsidiary Guarantor without the approval of any
other Subsidiary Guarantor and without affecting the obligations of any other
Subsidiary Guarantor hereunder.
SECTION 12. Waivers; Amendment. (a) No failure or delay of the
Collateral Agent in exercising any power or right hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right or
power, or any abandonment or discontinuance of steps to enforce such a right or
power, preclude any other or further exercise thereof or the exercise of any
other right or power. The rights and remedies of the Collateral Agent hereunder
and of the other Secured Parties under the other Loan Documents are cumulative
and are not exclusive of any rights or remedies that they would otherwise have.
No waiver of any provision of this Agreement or consent to any departure by any
Subsidiary Guarantor therefrom shall in any event be effective unless the same
shall be permitted by paragraph (b) below, and then such waiver or consent shall
be effective only in the specific instance and for the purpose for which given.
No notice or demand on any Subsidiary Guarantor in any case shall entitle such
Subsidiary Guarantor to any other or further notice or demand in similar or
other circumstances.
(b) Neither this Agreement nor any provision hereof may be waived,
amended or modified except pursuant to a written agreement entered into between
the Subsidiary Guarantors with respect to which such waiver, amendment or
modification relates and the Collateral Agent, with the prior written consent of
the Required Lenders (except as otherwise provided in the Credit Agreement).
SECTION 13. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 14. Notices. All communications and notices hereunder shall be
in writing and given as provided in Section 9.01 of the Credit Agreement. All
communications and notices hereunder to each Subsidiary Guarantor shall be given
to it at its address set forth in Schedule I, with a copy to the Borrower.
SECTION 15. Survival of Agreement; Severability. (a) All covenants,
agreements, representations and warranties made by the Subsidiary Guarantors
herein and in the certificates or other instruments prepared or delivered in
connection with or pursuant to this Agreement or any other Loan Document shall
be considered to have been relied upon by the Collateral Agent and the other
Secured Parties and shall survive the making by the Lenders of the Loans and the
issuance of the Letters of Credit by the Issuing Bank regardless of any
investigation made by the Secured Parties or on their behalf, and shall continue
in full force and effect as long as the principal of or any accrued interest on
any Loan or any other fee or amount payable under this Agreement or any other
Loan Document is outstanding and unpaid or the L/C Exposure does not equal zero
and as long as the Commitments and the L/C Commitment have not been terminated.
<PAGE>
5
(b) In the event any one or more of the provisions contained in this
Agreement or in any other Loan Document should be held invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein and therein shall not in any way be
affected or impaired thereby (it being understood that the invalidity of a
particular provision in a particular jurisdiction shall not in and of itself
affect the validity of such provision in any other jurisdiction). The parties
shall endeavor in good-faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provisions.
SECTION 16. Counterparts. This Agreement may be executed in
counterparts, each of which shall constitute an original, but all of which when
taken together shall constitute a single contract, and shall become effective as
provided in Section 11. Delivery of an executed signature page to this Agreement
by facsimile transmission shall be as effective as delivery of a manually
executed counterpart of this Agreement.
SECTION 17. Rules of Interpretation. The rules of interpretation
specified in Section 1.02 of the Credit Agreement shall be applicable to this
Agreement.
SECTION 18. Jurisdiction; Consent to Service of Process. (a) Each
Subsidiary Guarantor hereby irrevocably and unconditionally submits, for itself
and its property, to the nonexclusive jurisdiction of any New York State court
or Federal court of the United States of America sitting in New York City, and
any appellate court from any thereof, in any action or proceeding arising out of
or relating to this Agreement or the other Loan Documents, or for recognition or
enforcement of any judgment, and each of the parties hereto hereby irrevocably
and unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in such New York State or, to the extent
permitted by law, in such Federal court. Each of the parties hereto agrees that
a final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law. Nothing in this Agreement shall affect any right that the
Collateral Agent or any other Secured Party may otherwise have to bring any
action or proceeding relating to this Agreement or the other Loan Documents
against any Subsidiary Guarantor or its properties in the courts of any
jurisdiction.
(b) Each Subsidiary Guarantor hereby irrevocably and unconditionally
waives, to the fullest extent it may legally and effectively do so, any
objection that it may now or hereafter have to the laying of venue of any suit,
action or proceeding arising out of or relating to this Agreement or the other
Loan Documents in any New York State or Federal court. Each of the parties
hereto hereby irrevocably waives, to the fullest extent permitted by law, the
defense of an inconvenient forum to the maintenance of such action or proceeding
in any such court.
(c) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 14. Nothing in this
Agreement will affect the right of any party to this Agreement to serve process
in any other manner permitted by law.
SECTION 19. Waiver of Jury Trial. EACH PARTY HERETO HEREBY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL
BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF,
UNDER OR IN CONNECTION WITH THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS. EACH
PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)
ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS APPLICABLE, BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 19.
SECTION 20. Additional Subsidiary Guarantors. Pursuant to Section 5.11
of the Credit Agreement, each Domestic Subsidiary of the Borrower that was not
in existence on the date of the Credit
<PAGE>
6
Agreement is required to enter into this Agreement as a Subsidiary Guarantor
upon becoming a Subsidiary. Upon execution and delivery after the date hereof by
the Collateral Agent and such a Subsidiary of an instrument in the form of Annex
1, such Subsidiary shall become a Subsidiary Guarantor hereunder with the same
force and effect as if originally named as a Subsidiary Guarantor herein. The
execution and delivery of any instrument adding an additional Subsidiary
Guarantor as a party to this Agreement shall not require the consent of any
other Subsidiary Guarantor hereunder. The rights and obligations of each
Subsidiary Guarantor hereunder shall remain in full force and effect
notwithstanding the addition of any new Subsidiary Guarantor as a party to this
Agreement.
SECTION 21. Right of Setoff. If an Event of Default shall have occurred
and be continuing, each Secured Party is hereby authorized at any time and from
time to time, to the fullest extent permitted by law, to set off and apply any
and all deposits (general or special, time or demand, provisional or final) at
any time held and other Indebtedness at any time owing by such Secured Party to
or for the credit or the account of any Subsidiary Guarantor against any or all
the obligations of such Subsidiary Guarantor now or hereafter existing under
this Agreement and the other Loan Documents held by such Secured Party,
irrespective of whether or not such Secured Party shall have made any demand
under this Agreement or any other Loan Document and although such obligations
may be unmatured. The rights of each Secured Party under this Section 21 are in
addition to other rights and remedies (including other rights of setoff) which
such Secured Party may have.
<PAGE>
7
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
HARRIS SEMICONDUCTOR
(PENNSYLVANIA), LLC,
by:
---------------------------------
Name:
Title:
HARRIS SEMICONDUCTOR (OHIO), LLC,
by:
---------------------------------
Name:
Title:
HARRIS SEMICONDUCTOR, LLC,
by:
---------------------------------
Name:
Title:
CHOICE MICROSYSTEMS, INC.,
by:
---------------------------------
Name:
Title:
CREDIT SUISSE FIRST BOSTON, as Collateral
Agent,
by:
---------------------------------
Name:
Title:
by:
---------------------------------
Name:
Title:
<PAGE>
Schedule I to the
Subsidiary Guarantee Agreement
Subsidiary Guarantor [Address]
-------------------- ---------
<PAGE>
Annex 1 to the
Subsidiary Guarantee Agreement
SUPPLEMENT NO. dated as of , to the
Subsidiary Guarantee Agreement dated as of August 13, 1999,
among each of the subsidiaries listed on Schedule I thereto
(each such subsidiary individually, a "Subsidiary Guarantor"
and collectively, the "Subsidiary Guarantors") of INTERSIL
CORPORATION, a Delaware corporation (the "Borrower"), and
CREDIT SUISSE FIRST BOSTON, a bank organized under the laws of
Switzerland, acting through its New York branch ("CSFB"), as
collateral agent (the "Collateral Agent") for the Secured
Parties (as defined in the Credit Agreement referred to
below).
A. Reference is made to the Credit Agreement dated as of August 13,
1999 (as amended, supplemented or otherwise modified from time to time, the
"Credit Agreement"), among the Borrower, Intersil Holding Corporation, a
Delaware corporation ("Holdings"), the lenders from time to time party thereto
(the "Lenders"), CSFB, as administrative agent for the Lenders (in such
capacity, the "Administrative Agent"), and as Collateral Agent, swingline lender
and an issuing bank, Salomon Smith Barney Inc., as syndication agent, and Morgan
Guaranty Trust Company of New York, as documentation agent. Capitalized terms
used herein and not defined herein shall have the meanings assigned to such
terms in the Credit Agreement.
B. Capitalized terms used herein and not otherwise defined herein shall
have the meanings assigned to such terms in the Subsidiary Guarantee Agreement
and the Credit Agreement.
C. The Subsidiary Guarantors have entered into the Subsidiary Guarantee
Agreement in order to induce the Lenders to make Loans and the Issuing Bank to
issue Letters of Credit. Pursuant to Section 5.11 of the Credit Agreement, each
Domestic Subsidiary of the Borrower that was not in existence or not a
Subsidiary on the date of the Credit Agreement is required to enter into the
Subsidiary Guarantee Agreement as a Subsidiary Guarantor upon becoming a
Subsidiary. Section 20 of the Subsidiary Guarantee Agreement provides that
additional Subsidiaries of the Borrower may become Subsidiary Guarantors under
the Subsidiary Guarantee Agreement by execution and delivery of an instrument in
the form of this Supplement. The undersigned Subsidiary of the Borrower (the
"New Subsidiary Guarantor") is executing this Supplement in accordance with the
requirements of the Credit Agreement to become a Subsidiary Guarantor under the
Subsidiary Guarantee Agreement in order to induce the Lenders to make additional
Loans and the Issuing Bank to issue additional Letters of Credit and as
consideration for Loans previously made and Letters of Credit previously issued.
Accordingly, the Collateral Agent and the New Subsidiary Guarantor
agree as follows:
SECTION 1. In accordance with Section 20 of the Subsidiary Guarantee
Agreement, the New Subsidiary Guarantor by its signature below becomes a
Subsidiary Guarantor under the Subsidiary Guarantee Agreement with the same
force and effect as if originally named therein as a Subsidiary Guarantor and
the New Subsidiary Guarantor hereby (a) agrees to all the terms and provisions
of the Subsidiary Guarantee Agreement applicable to it as a Subsidiary Guarantor
thereunder and (b) represents and warrants that the representations and
warranties made by it as a Subsidiary Guarantor thereunder are true and correct
on and as of the date hereof. Each reference to a "Subsidiary Guarantor" in the
Subsidiary Guarantee Agreement shall be deemed to include the New Subsidiary
Guarantor. The Subsidiary Guarantee Agreement is hereby incorporated herein by
reference.
SECTION 2. The New Subsidiary Guarantor represents and warrants to the
Collateral Agent and the other Secured Parties that this Supplement has been
duly authorized, executed and delivered by it and constitutes its legal, valid
and binding obligation, enforceable against it in accordance with its terms.
SECTION 3. This Supplement may be executed in counterparts, each of
which shall constitute an original, but all of which when taken together shall
constitute a single contract. This Supplement shall become effective when the
Collateral Agent shall have received counterparts of this Supplement that, when
taken together, bear the signatures of the New Subsidiary Guarantor and the
Collateral Agent.
<PAGE>
2
Delivery of an executed signature page to this Supplement by facsimile
transmission shall be as effective as delivery of a manually executed
counterpart of this Supplement.
SECTION 4. Except as expressly supplemented hereby, the Subsidiary
Guarantee Agreement shall remain in full force and effect.
SECTION 5. THIS SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 6. In case any one or more of the provisions contained in this
Supplement should be held invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein and in the Subsidiary Guarantee Agreement shall not in any way be
affected or impaired thereby (it being understood that the invalidity of a
particular provision hereof in a particular jurisdiction shall not in and of
itself affect the validity of such provision in any other jurisdiction). The
parties hereto shall endeavor in good-faith negotiations to replace the invalid,
illegal or unenforceable provisions with valid provisions the economic effect of
which comes as close as possible to that of the invalid, illegal or
unenforceable provisions.
SECTION 7. All communications and notices hereunder shall be in writing
and given as provided in Section 14 of the Subsidiary Guarantee Agreement. All
communications and notices hereunder to the New Subsidiary Guarantor shall be
given to it at the address set forth under its signature below, with a copy to
the Borrower.
SECTION 8. The New Subsidiary Guarantor agrees to reimburse the
Collateral Agent for its out-of-pocket expenses in connection with this
Supplement, including the fees, disbursements and other charges of counsel for
the Collateral Agent.
IN WITNESS WHEREOF, the New Subsidiary Guarantor and the Collateral
Agent have duly executed this Supplement to the Subsidiary Guarantee Agreement
as of the day and year first above written.
[Name Of New Subsidiary Guarantor],
by:
---------------------------------
Name:
Title:
Address:
CREDIT SUISSE FIRST BOSTON, as Collateral
Agent,
by:
---------------------------------
Name:
Title:
by:
---------------------------------
Name:
Title:
<PAGE>
EXHIBIT J-1
[FORM OF]
<TABLE>
<CAPTION>
<S> <C> <C>
LAW OFFICES OF
DECHERT PRICE & RHOADS
30 Rockefeller Plaza 1775 Eye St., N.W.
New York, NY 10112-2200 4000 Bell Atlantic Tower Washington, DC 20006-2401
(212) 698-3500 (202) 261-3300
1717 Arch Street
Princeton Pike Corporate Center 65 Avenue Louise
P.O. Box 5218 Philadelphia, PA 19103-2793 1050 Brussels, Belgium
Princeton, NJ 08543-5218 (011-32-2) 535-5411
(609) 620-3200
Titmuss Sainer Dechert
Thirty North Third Street Telephone: (215) 994-4000 2 Serjeants' Inn
Harrisburg, PA 17101-1603 Fax: (215) 994-2222 London EC4Y 1LT, England
(717) 237-2000 (011-44-171) 583-5353
Ten Post Office Square o South 55 Avenue Kleber
Boston, MA 02109-4603 75116 Paris, France
(617) 728-7100 (011-33-1) 53 65 05 00
90 State House Square
Hartford, CT 06103-3702
(860) 524-3999
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
August 13, 1999
Credit Suisse First Boston Morgan Guaranty Trust of New York
as Administrative Agent, Swingline Lender, as Documentation Agent
Issuing Bank and Collateral Agent 60 Wall Street
Eleven Madison Avenue New York, New York, 10260
New York, New York, 10010
Salomon Smith Barney Inc. The Lenders party to the Credit
as Syndication Agent Agreement referred to below (all of
399 Park Avenue, 11th Floor the Addressees, collectively, the
New York, NY 10043 "Creditors")
</TABLE>
Ladies and Gentlemen:
We have acted as counsel to Intersil Corporation, a Delaware
corporation (the "Borrower"), Intersil Holding Corporation, a Delaware
corporation ("Holdings"), Harris Semiconductor (Pennsylvania), LLC, a Delaware
limited liability company ("PALLC"), Harris Semiconductor (Ohio), LLC, a
Delaware limited liability company, Harris Semiconductor, LLC, a Delaware
limited liability company, Choice Microsystems, Inc., a Kansas corporation, each
a wholly-owned subsidiary of the Borrower (each referred to herein as a
"Subsidiary Guarantor" and together as the "Subsidiary Guarantors", and together
with the Borrower and Holdings, each a "Credit Party" and together the "Credit
Parties"), in connection with the execution and delivery today of the Credit
Agreement (the "Credit Agreement"), among the Borrower, Holdings, the financial
institutions party thereto as lenders (the "Lenders"), Credit Suisse First
Boston, a bank organized under the laws of Switzerland, acting through its New
York branch, as administrative agent (in such capacity, the "Administrative
Agent"), and as Issuing Bank (in such capacity the "Issuing Bank"), swingline
lender (in such capacity, the "Swingline Lender")
<PAGE>
The Creditors under the Credit Agreement dated as of August 13, 1999
August 13, 1999
Page 2
and collateral agent (in such capacity, the "Collateral Agent"), Salomon Smith
Barney Inc., as syndication agent (in such capacity, the "Syndication Agent"),
and Morgan Guaranty Trust of New York as documentation agent (in such capacity,
the "Documentation Agent"). This opinion is delivered pursuant to Section
4.02(a)(i) of the Credit Agreement. Capitalized terms used but not defined
herein shall have the meanings assigned to such terms in the Credit Agreement.
In connection with this opinion, we have examined originals or
copies, certified or otherwise identified to our satisfaction, of each of the
documents (the "Credit Documents") listed on Schedule A. In addition, we have
examined originals or copies, certified or otherwise identified to our
satisfaction, of such records, and other corporate documents as we have deemed
necessary for the purpose of this opinion.
References in this opinion to an "Applicable UCC" shall mean:
(i) in the case of the Commonwealth of Pennsylvania, the Uniform Commercial Code
as in effect on the date hereof in the Commonwealth of Pennsylvania and (ii) in
the case of the States of Alabama, Colorado, Florida, North Carolina, New Jersey
and Ohio, the Uniform Commercial Code as in effect on the date hereof in the
States of Alabama, Colorado, Florida, North Carolina, New Jersey and Ohio,
respectively, without regard to the case law decided thereunder.
In our examination we have assumed the genuineness of all
signatures, the authenticity of all documents submitted to us as originals, the
accuracy, completeness and conformity to original documents of all documents
submitted to us as certified or photostatic copies and the authenticity of the
originals of such copies. We have assumed that each party to the Credit
Documents (other than the Credit Parties) has the legal power and authority to
enter into and perform its obligations under such Credit Documents, and that
such Credit Documents have been duly authorized, executed and delivered by such
persons, and that such Credit Documents are the legal, valid and binding
obligations of such persons, enforceable against such persons in accordance with
their terms.
Our opinions set forth herein are based on our consideration
of only those statutes, rules, regulations and judicial decisions which, in our
experience, are normally applicable to or normally relevant in connection with a
transaction of the type contemplated by the Credit Documents.
As to questions of fact we have relied upon representations of
the Credit Parties in the Credit Documents and on certificates of officers of
each Credit Party, public officials and other appropriate persons and we have
made no independent inquiry into the accuracy of such representations. Whenever
our opinion with respect to the existence or absence of facts is indicated to be
based on our knowledge or awareness, we are referring to the actual knowledge of
the Dechert Price & Rhoads' attorneys who have rendered substantive legal
services to the Credit Parties in connection with the transactions contemplated
by the Credit Documents, which knowledge has been obtained by such attorneys in
their capacity as such. Except as expressly set forth herein, we have not
undertaken any independent investigation to determine the existence or
<PAGE>
The Creditors under the Credit Agreement dated as of August 13, 1999
August 13, 1999
Page 3
absence of such facts and no inference as to our knowledge concerning such facts
should be drawn from the fact that such representation has been undertaken by
us.
Based upon the foregoing, it is our opinion that:
1. Each of the Credit Parties (a) is validly existing and in
good standing as a corporation or limited liability company, as applicable,
under the laws of the jurisdiction in which it was incorporated, (b) has the
corporate or limited liability company, as applicable, power and authority to
own its property and assets and to carry on its business as now conducted and as
proposed to be conducted and (c) has the corporate or limited liability company,
as applicable, power and authority to execute and deliver each Credit Document
to which it is a party and perform its obligations thereunder and, in the case
of the Borrower, to borrow under the Credit Agreement.
2. The execution and delivery of the Credit Documents and the
performance under each of the Credit Documents by the Credit Party party
thereto, and the creation of the security interests contemplated thereby (a)
have been duly authorized by all requisite corporate or limited liability
company, as applicable, action by such Credit Party and (b) will not (i) violate
(A) any provision of the certificate of incorporation, by-laws, certificate of
formation or limited liability company agreement of any Credit Party, as
applicable, (B) assuming the proceeds of the Borrowings will be used in
accordance with the terms of the Credit Agreement, any law, statute, rule or
regulation under the federal laws of the United States, the state of New York,
the Delaware General Corporation Law or the Delaware Limited Liability Company
Act, or, to our knowledge, any order of any Governmental Authority of the United
States or such states or (C) any provision of any indenture or other agreement
set forth on Schedule B or, (ii) result in the creation or imposition of any
Lien upon any property or assets now owned or hereafter acquired by such Credit
Party (other than any Lien created or permitted under the Credit Documents) with
respect to any agreement set forth on Schedule B, except, in the cases of Clause
2(b)(i)(B), to the extent any such violation, singly or in the aggregate with
all other such violations, would not reasonably be expected to result in a
Material Adverse Effect.
3. Each Credit Document has been duly executed and delivered
by each of the Credit Parties party thereto and each Credit Document (other than
the Mortgages for the real estate located in Ohio and Florida as to which we
express no opinion) constitutes the legal, valid and binding obligation of such
Credit Party, in each case enforceable against such Credit Party in accordance
with its terms.
4. No action, consent, approval of, registration or filing
with or exemption by any federal or New York Governmental Authority or any
Governmental Authority under the Delaware General Corporation Law or the
Delaware Limited Liability Company Act is required to authorize the execution,
delivery and performance of the Credit Documents by the Credit Parties party
thereto other than (i) the filing of any Applicable UCC filings and recordations
and filings with the United States Patent and Trademark Office and the United
States Copyright
<PAGE>
The Creditors under the Credit Agreement dated as of August 13, 1999
August 13, 1999
Page 4
Office, (ii) the recordation of the Mortgages, and (iii) such
authorizations and approvals as have already been obtained and are in full force
and effect.
5. To our knowledge there are no actions, suits or proceedings
at law or in equity or by or before any Governmental Authority now pending or
threatened against or affecting any Credit Party that involve the Credit
Documents or the Transactions.
6. Based solely on our review of the Certificates of
Incorporation, by-laws, stock record books, Certificates of Formation and
Limited Liability Company Agreements of the Borrower and each of the Subsidiary
Guarantors (a) all shares of capital stock of the Borrower and the Subsidiary
Guarantors which are corporations have been duly and validly issued, are fully
paid and non-assessable and, except as set forth on Schedule 3.08 to the Credit
Agreement, are owned by Holdings or the Borrower, as the case may be, directly
or indirectly, and (b) all membership interests of the Subsidiary Guarantors
which are limited liability companies are owned of record by the Borrower.
7. None of the Credit Parties is an "investment company" or a
company "controlled" by an "investment company", within the meaning of the
Investment Company Act of 1940, as amended.
8. None of the Credit Parties is a "holding company" or a
"subsidiary company" of a "holding company", within the meaning of the Public
Utility Holding Company Act of 1935.
9. None of the execution, delivery or performance by the
Borrower of the Credit Agreement, nor compliance by it with the terms and
provisions thereof will contravene Regulations T, U or X of the Board of
Governors of the Federal Reserve System.
10. The Security Interest created in favor of the Collateral
Agent under the Pledge Agreement for the benefit of the Secured Parties
constitutes a valid and perfected security interest in, lien on or pledge of the
Collateral (as defined in the Pledge Agreement) pledged by the Credit Parties,
subject to no prior Liens.
11. The Security Agreement creates in favor of the Collateral
Agent for the benefit of the Secured Parties a security interest in the
Collateral (as defined in the Security Agreement) pledged by the Credit Parties,
in which a security interest may be created under Article 9 of the New York
Uniform Commercial Code.
12. The recordation of the Assignment of Security Interest in
U.S. Patents and Trademarks (the "New Patent and Trademark Filings") filed in
connection with the Credit Agreement in the United States Patent and Trademark
Office along with the filings referred to in paragraphs 13 and 14 below and
those made in Florida and Ohio as described in the opinions of Florida and Ohio
counsel delivered to the Creditors on the date hereof (the "Local Filings") are
<PAGE>
The Creditors under the Credit Agreement dated as of August 13, 1999
August 13, 1999
Page 5
effective, under applicable law, to perfect the security interests granted to
the Collateral Agent in the trademarks and patents owned of record by the Credit
Parties under the Security Agreement and the filing of the Assignment of
Security Interest in U.S. Copyrights in the form attached to the Security
Agreement with the United States Copyright Office along with the filings
referred to in paragraphs 13 and 14 below and the Local Filings are effective
under federal law, to perfect the security interest granted to the Collateral
Agent in the copyrights, if any, covered by the Security Agreements.
13. The Pennsylvania and New Jersey financing statements,
copies of which are attached as Exhibit A-1 hereto (the "Financing Statements"),
(a) are in proper form for filing under the applicable laws of the Commonwealth
of Pennsylvania and the State of New Jersey, as applicable, (b) adequately
describe the Collateral described therein and to provide sufficient notice to
third parties of the security interest referenced therein and (c) in the case of
the Pennsylvania Financing Statements, are required to be filed with the
Secretary of State of the Commonwealth of Pennsylvania, the Luzerne County
Prothonotary, Luzerne County, Pennsylvania, the Luzerne County Recorder of
Deeds, Luzerne County, Pennsylvania, the Montgomery County Prothonotary,
Montgomery County, Pennsylvania, the Montgomery County Recorder of Deeds,
Montgomery County, Pennsylvania, and in the case of the New Jersey Financing
Statements, are required to be filed with the State of New Jersey, UCC Division
- - - Secretary of State and the Somerset County Clerk, Somerset County, NJ. Upon
the proper filing of the Pennsylvania and New Jersey Financing Statements, the
Collateral Agent for the benefit of the Secured Parties will have a valid and
duly perfected security interest in those items and types of Collateral pledged
by the Credit Parties as defined in the Security Agreement in which a security
interest may be perfected by filing under the Applicable UCC (the "Filing
Collateral"). The filing of the Pennsylvania and New Jersey Financing Statements
with the recorders and the offices set forth above in this paragraph 13 are the
only actions, recordings or filings necessary to perfect the security interest
in the Filing Collateral to the extent that such interest may be perfected by
filing under the Applicable UCC.
14. Upon the proper filing of properly completed financing
statements for each Credit Party in the applicable offices listed on Schedule C
hereto, assuming that the representations made by each Credit Party in the
Credit Documents are and remain true and correct, the Security Interest in favor
of the Collateral Agent for the benefit of the Secured Parties will be perfected
to the extent a security interest in the applicable collateral pledged by the
Credit Parties may be perfected by filing a financing statement under each
Applicable UCC of the States referred to on Schedule C.
15. The Pennsylvania Mortgage is in proper form under
applicable laws of the Commonwealth of Pennsylvania (a)(i) to be accepted for
recording by the Recorder of Luzerne County and (ii) to be enforceable against
PALLC in accordance with its terms, and (b)(i) to create and constitute a valid,
legal, binding and enforceable mortgage lien on the real property described
therein (the "Real Property"), and (ii) to create and constitute valid, legal,
binding and
<PAGE>
The Creditors under the Credit Agreement dated as of August 13, 1999
August 13, 1999
Page 6
enforceable perfected security interests in such of the Mortgaged Property as is
subject to the provisions of Article 9 of the UCC and constituting fixtures
("Fixtures").
16. Filing of a financing statement to be filed as a fixture
filing pursuant to the Applicable UCC for the Commonwealth of Pennsylvania, will
result in the perfection of the security interests in the Fixtures (the "Fixture
Liens"), and no other or further or subsequent filing, refiling, recording,
re-recording, registration or re-registration of the Pennsylvania Mortgage or
such Financing Statement or any other instrument will be necessary to continue
the Mortgage Liens or the perfection of the Fixture Liens other than filing of
continuation statements as required by such Applicable UCC.
We are members of the bar of the States of New York and New
Jersey and the Commonwealth of Pennsylvania and we do not hold ourselves out as
being conversant with, and express no opinion as to, the laws of any
jurisdiction other than federal laws of the United States of America, the law of
the State of New York and the General Corporation Law and Limited Liability
Company Act of the State of Delaware and for purpose of our opinion in paragraph
13 only the laws of the State of New Jersey and the Commonwealth of
Pennsylvania. In giving the opinions with respect to Choice Microsystems, Inc.
in paragraph 1 and clause (a) of paragraph 2 above, we have assumed that the
applicable corporation law of the state of Kansas is identical to the Delaware
General Corporation Law.
Our opinions expressed above are subject to the qualifications
and limitations that (i) the availability of certain rights and remedies may be
limited by bankruptcy, insolvency, fraudulent conveyance, fraudulent transfer,
reorganization, moratorium and other similar laws and decisions relating to or
affecting debtor's obligations and creditor's rights generally and by general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law); (ii) certain provisions of the Credit
Documents that permit the Lenders or others to take action or make
determinations, or to benefit from indemnities and similar undertakings, may be
subject to the requirement that such action be taken or such determination be
made, and that any action or inaction by the Lenders and others that may give
rise to a request for payment under such undertakings be taken or not taken, on
a reasonable basis and in good faith; and (iii) certain remedial provisions of
the Credit Documents may be limited by, or unenforceable under, the statutes and
judicial decisions of the courts of the United States of America and other
applicable jurisdictions, but, in our opinion, such statutes and judicial
decisions do not make the remedies set forth in the Credit Documents as to which
we have opined in Paragraph 3 inadequate for the realization of the practical
benefits of the security intended to be provided thereby, except (A) for the
economic consequence of any delay which may be imposed thereby or result
therefrom and (B) that we express no opinion as to the rights of any of the
parties to the Credit Documents to accelerate the due dates of any payment due
thereunder or to exercise other remedies available to them on the happening of a
non-material breach of any such document or agreement.
<PAGE>
The Creditors under the Credit Agreement dated as of August 13, 1999
August 13, 1999
Page 7
We have made no examination of and express no opinion with
respect to: (i) the title to, ownership of or rights in real property, personal
property or fixtures; (ii) the accuracy or sufficiency of any descriptions of
Collateral, or of any financing statements intended to perfect any security
interest in Collateral; (iii) the validity or ownership of any trademarks,
patents or licenses; (iv) the existence or absence of any liens, charges or
encumbrances on any Collateral; and (v) except as expressly set forth in
paragraph 10, 12, 13, 14, 15 and 16 the perfection or the priority of any lien
or security interest.
We have reviewed the filing offices listed on Schedule C
hereto with officers of the Credit Parties who have affirmed that such Schedule
identifies the jurisdictions in which the Credit Parties are located. We are not
members of the bar in any jurisdiction listed on Schedule C ("Other
Jurisdictions"), (and as such are not admitted to give opinions in such
jurisdictions) nor do we purport to be experts in the laws of such Other
Jurisdictions, nor did we review official codifications of the laws of such
Other Jurisdictions. We did, however, at your request, review standard
compilations of the versions of the Uniform Commercial Code in effect in such
Other Jurisdictions and compared the information reported therein to the list of
filing offices on Schedule C, and our opinion in paragraph 14 is limited as set
forth in this paragraph and above is based solely on these procedures and not
upon any other review of the law of the Other Jurisdictions.
In giving the opinion set forth in paragraph 10 above, we have
assumed that (i) the Collateral Agent has possession and sole control of
certificates representing the Pledged Securities accompanied by appropriate
stock powers or other transfer instruments; (ii) the Collateral Agent has no
notice of any adverse claim with respect to the Pledged Securities as such term
is used in Section 8-302 of the UCC; (iii) no part of the Pledged Securities is
subject to a security interest that could be perfected without possession and
control pursuant to the Applicable UCC or that is perfected under the laws of
another jurisdiction by means other than possession, or constitutes the proceeds
of any property subject to a third party security interest; and (iv) the Pledged
Securities are not subject to (A) any lien of any government or any agency or
instrumentality thereof, including without limitation, any federal, state or
local tax lien, (B) any claims or any federal priority statute (31 U.S.C. ss.
3713), (C) any lien arising under the Employee Retirement Income Security Act of
1974, as amended, or (D) any lien arising by operation of law other than under
the Applicable UCC (including without limitation any attachment or execution
lien) or other lien which does not require possession to take priority over the
security interests.
Without limiting the generality of the foregoing, no opinion
is expressed as to the legality, validity, binding nature or enforceability, of
(i) the availability of specific performance or the equitable remedies for
noncompliance with any of the provisions of the Credit Documents; (ii) any
self-help provisions; (iii) provisions in the Credit Documents purporting to
waive the effect of applicable laws; (iv) provisions that purport to establish
evidentiary standards; (v) provisions that provide for the enforceability of the
remaining terms and provisions of the applicable Credit Document in
circumstances in which certain other terms and provisions of such
<PAGE>
The Creditors under the Credit Agreement dated as of August 13, 1999
August 13, 1999
Page 8
Credit Documents are illegal or unenforceable; (vi) provisions that provide that
certain rights or obligations are absolute or unconditional; (vii) provisions
related to waivers of remedies (or the delay or omission of enforcement of
remedies), disclaimers, liability limitations or limitations on the obligations
of the Lenders in circumstances in which a failure of condition or default by
the Borrower is not material; (viii) provisions related to releases or waivers
of legal or equitable rights, discharges of defenses, or reimbursement or
indemnification in circumstances in which the person seeking reimbursement or
indemnification has breached its duties under the applicable Credit Document, or
otherwise, or itself has been negligent; (ix) provisions which purport to
authorize any person to sign or file financing statements without the signature
of the debtor (except to the extent that a secured party may execute and file
financing statements without the signature of the debtor under Section 9-402(2)
of the Applicable UCC); (x) provisions which purport to grant a power of sale or
similar right other than judicial foreclosure with respect to any real estate;
(xi) provisions which purport to waive any Credit Party's equitable rights of
redemption or other rights of redemption; or (xii) waive the right to trial by
jury, the right of appraisement, marshaling of assets, statutes of limitation,
suretyship defenses, jurisdiction or election of remedies.
This opinion speaks only as of the date hereof. We have no
obligation to advise the addressees (or any third party) of any changes in the
law or facts that may occur after the date of this opinion.
This opinion is being furnished only to the addressees and is
solely for their benefit and the benefit of their participants and assigns in
connection with the above transaction. This opinion may not be relied upon for
any other purpose, or relied upon by any other person, firm or corporation
(other than the successors and assigns of the addressees, but then only as of
the date hereof) for any purpose, without our prior written consent.
Very truly yours,
/s/ Dechert Price & Rhoads
<PAGE>
Schedule A
(a) the Credit Agreement;
(b) the Parent Guarantee Agreement;
(c) the Subsidiary Guarantee Agreement;
(d) the Security Agreement;
(e) the Pledge Agreement;
(f) the Indemnity, Subrogation and Contribution Agreement;
(g) the Mortgages
(h) the Holdings Subordinated Notes
<PAGE>
Schedule B
Senior Subordinated Note Documents
Seller Subordinated Notes
Seller Subordinated Note Indenture
Holdings Junior Subordinated Debentures
Holdings Subordinated Notes
Holdings Subordinated Credit Agreement
Holdings Series A Preferred Stock
Seller Subordinated Notes
<PAGE>
Schedule C
Intersil Holding Corporation
FILING LOCATIONS:
- - -----------------
State of Florida, UCC Division - Secretary of State
Brevard County, FL - Brevard County UCC Recorder
Brevard County, FL - Brevard County Recorder of Deeds
Intersil Corporation
FILING LOCATIONS:
- - -----------------
State of Alabama -Secretary of State
Madison County, AL - Madison County UCC Recorder
State of Colorado. UCC Division - Secretary of State
Denver County, Colorado, UCC Recorder - Denver County Clerk and
Recorder State of Florida, UCC Division - Secretary of State Brevard
County, FL - Brevard County UCC Recorder State of North Carolina. UCC
Division - Secretary of State Durham County, NC - Durham County UCC
Recorder State of Ohio, UCC Section - Secretary of State Hancock
County, OH - Hancock County UCC Recorder
Harris Semiconductor (Pennsylvania), LLC
FILING LOCATIONS:
- - -----------------
State of Florida, UCC Division - Secretary of State
Brevard County, FL - Brevard County UCC Recorder
Harris Semiconductor (Ohio), LLC
FILING LOCATIONS:
- - -----------------
State of Florida, UCC Division - Secretary of State
Brevard County, FL - Brevard County UCC Recorder
State of Ohio, UCC Section - Secretary of State
Hancock County, OH - Hancock County UCC Recorder
Hancock County, OH - Hancock County Official Records
Harris Semiconductor, LLC
FILING LOCATIONS:
- - -----------------
State of Florida, UCC Division - Secretary of State
Brevard County, FL - Brevard County UCC Recorder
Choice Microsystems, Inc.
FILING LOCATIONS:
- - -----------------
State of Texas, UCC Section - Secretary of State
Bexar County, TX, UCC Recorder - Bexar County Clerk
<PAGE>
EXHIBIT J-2
[Letterhead of]
Local Counsel
August 13, 1999
Credit Suisse First Boston,
as Administrative Agent, Swingline Lender,
Issuing Bank and Collateral Agent
Eleven Madison Avenue
New York, NY 10010
Salomon Smith Barney Inc.,
as Syndication Agent
399 Park Avenue, 11th Floor
New York, NY 10043
Morgan Guaranty Trust Company of New York,
as Documentation Agent
60 Wall Street
New York, NY 10260
The Lenders party to the Credit
Agreement referred to below (all of
the Addressees, collectively, the
"Creditors")
Ladies and Gentlemen:
We have acted as special counsel in the State of [ ] (the "State") to
Intersil Corporation, a Delaware corporation (the "Borrower"), Intersil Holding
Corporation, a Delaware corporation ("Holdings "), Harris Semiconductor
(Pennsylvania), LLC, a Delaware limited liability company, Harris Semiconductor
(Ohio), LLC, a Delaware limited liability company, Harris Semiconductor, LLC, a
Delaware limited liability company, Choice Microsystems, Inc., a Kansas
corporation, each a wholly owned subsidiary of the Borrower (each referred to
herein as a "Guarantor" and together as the "Guarantors"), in connection with
the execution and delivery today of, and the consummation of the transactions
contemplated by, the Credit Agreement dated as of August 13, 1999 (the "Credit
Agreement"), among the Borrower, Holdings, the financial institutions party
thereto as lenders (the "Lenders"), Credit Suisse First Boston, a bank organized
under the laws of Switzerland, acting through its New York branch, as
administrative agent (in such capacity, the "Administrative Agent"), and as
issuing bank (in such capacity, the "Issuing Bank"), swingline lender (in such
capacity, the "Swingline Lender") and collateral agent (in such capacity, the
"Collateral Agent"), Salomon Smith Barney Inc., as syndication agent, and Morgan
Guaranty Trust Company of New York, as
<PAGE>
2
documentation agent. This opinion is delivered pursuant to Section 4.02(a) of
the Credit Agreement. Capitalized terms used but not defined herein shall have
the meanings assigned to such terms in the Credit Agreement.
In connection with this opinion, we have examined originals or
copies, certified or otherwise identified to our satisfaction, of the following
documents (collectively, the "Documents"):
(a) the Credit Agreement;
(b) the Parent Guarantee Agreement;
(c) the Subsidiary Guarantee Agreement;
(d) the Security Agreement;
(e) the Pledge Agreement;
(f) the Indemnity, Subrogation and Contribution Agreement;
(g) the Mortgage on the real estate in the State;
(h) UCC-1 financing statements, copies of
which are attached hereto as Exhibit A
(the "UCC-1 Financing Statements"); and
[(i) UCC-3 financing statements, copies of
which are attached hereto as Exhibit B
(the "UCC-3 Financing Statements")].
In addition, we have examined originals or copies, certified or
otherwise identified to our satisfaction, of such records, agreements,
instruments and other documents, and have made such other investigations, as we
have deemed necessary for the purpose of this opinion.
References in this opinion to the "UCC" shall mean the Uniform
Commercial Code as in effect on the date hereof in the State.
In rendering this opinion to you, we have assumed that:
(a) there has occurred due execution and delivery of the
Documents; and
(b) except as otherwise set forth in the applicable Security
Documents, the Borrower and each Guarantor, as applicable, owns the
Mortgaged Property (as defined in the Mortgage) and the Collateral (as
defined in the Security Agreement and the Pledge Agreement).
Subject to the foregoing assumptions, we are of the opinion that:
1. None of the Collateral Agent or the other Creditors is required (a)
to be qualified to do business, file any designation for service of process or
file any reports or pay any taxes in the State, or (b) to comply with any
statutory or regulatory requirement applicable only to financial institutions
chartered or qualified or required to be chartered or qualified to do business
in the State, in each case by reason of the
<PAGE>
3
execution and delivery or filing or recording, as applicable, of any of the
Documents, or by reason of the participation in any of the transactions under or
contemplated by the Documents, including, without limitation, the extension of
any credit contemplated thereby, the making and receipt of payments pursuant
thereto and the exercise of any remedy thereunder. If it were determined that
such qualification and filing were required, the validity of the Documents would
not be affected thereby, but (a) if the Collateral Agent were not qualified it
would be precluded from enforcing its rights as collateral agent on behalf of
the Creditors in the courts of the State until such time as it is admitted to
transact business in the State or (b) assuming the Creditors would institute
remedies without the Collateral Agent, they would be precluded from enforcing
their rights in the courts of the State until such time as they were admitted to
transact business in the State. However, the lack of qualification would not
result in any waiver of rights or remedies pending such qualification.
2. The execution, delivery, filing or recording, as applicable, and
performance by the Borrower and each Guarantor of each of the Documents to which
each of them is a party (i) will not violate any existing law, governmental rule
or regulation of the State and (ii) do not require any license, permit,
authorization, consent or other approval of, any exemption by, or any
registration, recording or filing with any court, administrative agency or other
Governmental Authority of the State.
3. Assuming that the Security Agreement and the Pledge Agreement were
governed by the law of the State for the purpose of rendering the opinion set
forth in this paragraph, each of the Security Agreement and the Pledge Agreement
is in proper form under the applicable laws of the State to (i) be enforceable
against the grantors or pledgors named therein in accordance with its terms and
(ii) create and constitute a valid security interest in, lien on or pledge of
the Collateral.
4. The Mortgage is in proper form under applicable laws of the State
(a)(i) to be accepted for recording by the Recorder of [ ] County and (ii) to be
enforceable against the Borrower and each Guarantor, as applicable, in
accordance with its terms, and (b)(i) to create and constitute valid, legal,
binding and enforceable mortgage lien[s] on the real property described therein
(the "Real Property"), (ii) to create and constitute valid, legal, binding and
enforceable perfected security interests in such of the Mortgaged Property (the
"UCC Property") as is subject to the provisions of Article 9 of the UCC, and
(iii) to create and constitute valid, legal, binding and enforceable perfected
common law liens on or pledges of such of the Mortgaged Property as is not UCC
Property or Real Property (such property, together with the UCC Property, the
"Personal Property").
[5. The UCC-3 Financing Statements are in proper form under the
applicable laws of the State (a) (i) for filing and (ii) to be enforceable
against the Secured Party named therein (the "Releasing Secured Party") in
accordance with their terms, (b) to release and discharge any right, title or
interest of the Releasing Secured Party in the property described therein and
(c) are required to be filed with the Office of the Secretary of State of the
State and with the Recorder of [ ] County.]
6. The UCC-1 Financing Statements relating to the Mortgage (a) are in
proper form under the applicable laws of the State for filing, (b) adequately
identify the collateral described therein to provide sufficient notice to third
parties of the security interest referenced therein and (c) are required to be
filed with the Office of the Secretary of State of the State and with the
Recorder of [ ] County. The UCC-1 Financing Statements relating to the Security
Agreement (a) are in proper form under the applicable laws of the State for
filing, (b) adequately identify the collateral described therein to provide
sufficient notice to third parties of the security interest referenced therein
and (c) are required to be filed with the Office of the Secretary of State of
the State and with the Recorder of [ ] County. Upon the filing of the UCC-l
Financing Statements, the Collateral Agent for the benefit of the Creditors will
have a valid and duly perfected security interest in and
<PAGE>
4
lien on the Personal Property and Collateral (including after-acquired property)
described in the Mortgage and the Security Agreement, respectively.
7. The recording of the Mortgage and the filing of the UCC-1 Financing
Statements with the recorders and in the offices described above are the only
actions, recordings or filings necessary to publish notice and protect the
validity of and to establish of record the rights of the parties under the
Mortgage and Security Agreement, except (i) that continuation statements under
the UCC are required to be filed within six months prior to the expiration of
five years from the date of filing of the UCC-1 Financing Statements, and (ii)
that a security interest in or pledge of money or instruments, other than money
or instruments constituting chattel paper, cannot be perfected by filing UCC-1
Financing Statements or recording a Mortgage, but must be perfected by taking
physical possession thereof.
8. Subject to appropriate continuation or perfection under the UCC as
set forth the preceding paragraph, the priority of the security interest in,
lien on or pledge of the Collateral created by the Security Agreement and the
Pledge Agreement with respect to any extension of credit (each, a "Further
Advance") made or deemed to have been made by the Creditors after the date (the
"Perfection Date") on which the security interest in, lien on or pledge of the
Collateral shall have been perfected will be the same as the priority of the
security interest, lien on or pledge of the Collateral with respect to all
extensions of credit made or deemed to have been made by the Creditors on or
before the Perfection Date, and such priority will not be affected by the rights
in and to the Collateral of any third party whose interest in the Collateral
attached thereto after the Perfection Date but prior to the date of such Further
Advance.
9. The Collateral Agent has the power without naming all the Creditors
in any applicable legal proceeding to exercise remedies under the Security
Documents for the realization of any of the Mortgaged Property or the Collateral
in its own name, as collateral agent.
10. No taxes or other charges, including, without limitation,
intangible or documentary stamp taxes, mortgage or recording taxes, transfer
taxes or similar charges, are payable to the State or to any jurisdiction
therein on account of the execution or delivery or recording or filing of the
Mortgage or any of the other Documents or the creation of the indebtedness
evidenced or secured by any of the Documents, as applicable, except for nominal
filing or recording fees.
[In the event that an intangible tax would be required to be paid in
connection with any of the transactions described in the preceding paragraph,
please describe with specificity in the context of this transaction, and the
collateral to be secured in your State, (a) the nature of the tax, (b) how and
when it is paid, (c) how it is calculated, (d) what forms or other documentation
would be required, and (e) any other information that would be necessary or
useful in order for the Borrower or any Guarantor to comply with the payment of
such tax. In the event that an intangible tax would not be required to be paid,
please specify that the intangible tax is inapplicable and the basis for such
conclusion.]
11. The transfer of all or any portion of the Mortgaged Property in
connection with the exercise of any remedy under the Mortgage, including,
without limitation, by way of judicial foreclosure, will not restrict, affect or
impair the liability of the Borrower and the other Loan Parties with respect to
the indebtedness secured thereby or the mortgagee's rights or remedies relating
thereto, including the foreclosure or enforcement of any other security interest
or liens securing such indebtedness, and the laws of the State do not require a
lienholder to elect to pursue its remedies either against mortgaged real
property or personal property where such lienholder holds security interests and
liens on both real and personal property of a debtor.
<PAGE>
5
12. A State court or a federal court applying the choice of laws
principles prevailing under the laws of the State to which the question is
presented will give effect to the provisions in the Documents selecting the laws
of the State of New York as the governing law thereof (except as therein
provided) and will apply such laws, rather than the laws of the State, to the
construction and application thereof.
13. Assuming that the Documents were governed by the law of the State
for the purpose of rendering the opinion set forth in this paragraph, (a) none
of the provisions of the Documents will violate any law, statute or regulation
of the State relating to usury and (b) the use of counterpart copies of any of
the Documents does not affect the enforceability of any of the Documents.
We are admitted to practice in the State. We express no opinion as to
matters under or involving the laws of any jurisdiction other than laws of the
United States and the State and its political subdivisions.
This opinion may be relied upon by each of you, by any successors and
assigns of the Administrative Agent, the Collateral Agent or the Issuing Bank,
and any participant, assignee or successor to the interests of the Lenders under
the Loan Documents.
Very truly yours,
<PAGE>
Schedule A
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SUBSIDIARIES
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Exhibit A
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UCC-1 FINANCING STATEMENTS
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[Exhibit B
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UCC-3 FINANCING STATEMENTS]
EXHIBIT 10.04
EXECUTION COPY
SUBORDINATED CREDIT AGREEMENT
dated as of
August 13, 1999
INTERSIL HOLDING CORPORATION
as Borrower
and
CITICORP MEZZANINE PARTNERS, L.P.
as Lender
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TABLE OF CONTENTS
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ARTICLE 1. DEFINITIONS......................................................................................... 1
SECTION 1.1.......................................................................Certain Defined Terms 1
SECTION 1.2............................................................................Accounting Terms 21
ARTICLE 2. AMOUNT AND TERMS OF NOTE AND LOAN................................................................... 21
SECTION 2.1...............................................................................Loan and Note 21
SECTION 2.2........................................................................Interest on the Loan 22
SECTION 2.3....................................................................Prepayments and Payments 23
SECTION 2.4.............................................................................Use of Proceeds 25
SECTION 2.5.................................................................................Closing Fee 25
ARTICLE 3. CONDITIONS TO LOAN.................................................................................. 25
SECTION 3.1..........................................................................Conditions to Loan 25
ARTICLE 4. REPRESENTATIONS AND WARRANTIES...................................................................... 26
SECTION 4.1..............................................................Organization and Good Standing 26
SECTION 4.2.....................................................................Authorization and Power 26
SECTION 4.3....................................................................No Conflicts or Consents 27
SECTION 4.4.....................................................................Enforceable Obligations 27
SECTION 4.5.........................................................................No Event of Default 27
SECTION 4.6...............................................................Use of Proceeds; Margin Stock 27
SECTION 4.7...............................................No Financing of Regulated Corporate Takeovers 27
SECTION 4.8.........................................................................Compliance with Law 27
SECTION 4.9..........................................................Capital Structure and Subsidiaries 27
SECTION 4.10.....................................................................Investment Company Act 28
SECTION 4.11.........................................................Public Utility Holding Company Act 28
SECTION 4.12........................................................................Financial Condition 28
SECTION 4.13......................................................................Senior Debt Documents 28
SECTION 4.14................................................................................Acquisition 28
ARTICLE 5. AFFIRMATIVE COVENANTS............................................................................... 28
SECTION 5.1......................................................Financial Statements and Other Reports 29
SECTION 5.2...................................................................Corporate Existence, Etc. 30
SECTION 5.3.........................................................Payment of Taxes; Tax Consolidation 30
SECTION 5.4..................................................................................Inspection 30
SECTION 5.5..................................................................Compliance with Laws, Etc. 30
SECTION 5.6.......................................................Maintenance of Accurate Records, Etc. 30
SECTION 5.7..............................................................................Lender Meeting 31
ARTICLE 6. NEGATIVE AND FINANCIAL COVENANTS.................................................................... 31
SECTION 6.1................................................................................Indebtedness 31
SECTION 6.2................................................................Transactions with Affiliates 34
SECTION 6.3.........................................................................Restricted Payments 35
SECTION 6.4.....................................................................................Mergers 38
SECTION 6.5................................................Asset Dispositions; Sale of Subsidiary Stock 39
SECTION 6.6................Limitation on Dividend and Other Payment Restrictions Affecting Subsidiaries 40
SECTION 6.7..........................................Amendments with Respect to Senior Credit Agreement 40
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ARTICLE 7. EVENTS OF DEFAULT................................................................................... 41
SECTION 7.1...........................................................Failure To Make Payments When Due 41
SECTION 7.2.................................................................Default in Other Agreements 41
SECTION 7.3..................................................Breach of Certain Covenants and Agreements 41
SECTION 7.4..........................................................................Breach of Warranty 41
SECTION 7.5.......................................Involuntary Bankruptcy; Appointment of Receiver, Etc. 41
SECTION 7.6.........................................Voluntary Bankruptcy; Appointment of Receiver, Etc. 42
SECTION 7.7...................................................................Judgments and Attachments 42
SECTION 7.8..................................................................................Agreements 42
ARTICLE 8. SUBORDINATION....................................................................................... 42
SECTION 8.1.............................................................Note Subordinate to Senior Debt 43
SECTION 8.2...................................................Payment Over of Proceeds Upon Dissolution 43
SECTION 8.3.........................................................No Payment in Certain Circumstances 45
SECTION 8.4...............................................................Acceleration Rights; Remedies 45
SECTION 8.5................................................................Payments Otherwise Permitted 46
SECTION 8.6.............................................Subrogation to Rights of Holders of Senior Debt 46
SECTION 8.7.................................................Provisions Solely to Define Relative Rights 46
SECTION 8.8.......................................................No Waiver of Subordination Provisions 47
SECTION 8.9..................................................................Reliance on Judicial Order 47
SECTION 8.10..................................................................................Amendment 47
SECTION 8.11...................................................................................Remedies 47
ARTICLE 9. MISCELLANEOUS....................................................................................... 48
SECTION 9.1..................................................................Existing Subordinated Note 48
SECTION 9.2.............................................................Participations in Loan and Note 48
SECTION 9.3....................................................................................Expenses 48
SECTION 9.4...................................................................................Indemnity 49
SECTION 9.5......................................................................Amendments and Waivers 50
SECTION 9.6...................................................................Independence of Covenants 50
SECTION 9.7.....................................................................................Notices 50
SECTION 9.8...............................................Survival of Warranties and Certain Agreements 51
SECTION 9.9.......................................Failure or Indulgence Not Waiver; Remedies Cumulative 52
SECTION 9.10...............................................................................Severability 52
SECTION 9.11...................................................................................Headings 52
SECTION 9.12.............................................................................APPLICABLE LAW 52
SECTION 9.13........................................Successors and Assigns; Subsequent Holders of Notes 52
SECTION 9.14.............................................Consent to Jurisdiction and Service of Process 52
SECTION 9.15.......................................................................Waiver of Jury Trial 53
SECTION 9.16................................................................Counterparts; Effectiveness 53
SECTION 9.17...................................................................................Entirety 54
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Exhibit A......... - Form of Note
Exhibit B......... - Form of Registration Rights Agreement
Exhibit C......... - Form of Warrant
Exhibit D......... - Form of Warrant Agreement
Schedule 4.13 - Capital Stock; Subsidiaries
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SUBORDINATED CREDIT AGREEMENT (the "Agreement"), dated as of August 13,
1999, by and between INTERSIL HOLDING CORPORATION, a Delaware corporation (the
"Company"), and CITICORP MEZZANINE PARTNERS, L.P., a Delaware limited
partnership (the "Lender").
WHEREAS the Company has requested that the Lender lend to the Company
$30,000,000 in order to enable the Company to contribute the same to Intersil
Corporation, a Delaware corporation and wholly owned subsidiary of the Company
("Intersil"), to partially finance the Acquisition (as defined below), and the
Lender is willing to agree to lend such amount on the terms and conditions of
this Agreement.
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, the Company and the Lender agree as
follows:
ARTICLE 1. DEFINITIONS
SECTION 1.1 Certain Defined Terms.
The following terms used in this Agreement shall have the following
meanings:
"Acquisition" means the acquisition by Intersil of selected portions of the
semiconductor business of the Seller in accordance with the terms of the
Purchase Agreement.
"Additional Assets" means (i) any property or assets (other than
Indebtedness and Capital Stock) in a Related Business; (ii) the Capital Stock of
a Person that becomes a Restricted Subsidiary as a result of the acquisition of
such Capital Stock by Intersil or another Restricted Subsidiary; or (iii)
Capital Stock constituting a minority interest in any Person that at such time
is a Restricted Subsidiary; provided, however, that any such Restricted
Subsidiary described in clauses (ii) and (iii) above is primarily engaged in a
Related Business.
"Affiliate" means, as to any Person, any other Person which, directly or
indirectly is in control of, is controlled by, or is under common control with,
that Person. A Person shall be deemed to control another Person if the
controlling Person possesses, directly or indirectly, the power to direct or
cause the direction of the management and policies of the other Person, whether
through the ownership of voting securities or by contract or otherwise. Neither
the Lender nor any Affiliate of Lender (other than CVC) shall be treated as an
Affiliate of any Credit Party or CVC.
"Asset Disposition" means any sale, lease, transfer or other disposition
(or series of related sales, leases, transfers or dispositions) by Intersil or
any Restricted Subsidiary, including any disposition by means of a merger,
consolidation or similar transaction (each referred to for the purposes of this
definition as "disposition"), of (a) any shares of Capital Stock of a Restricted
Subsidiary (other than directors' qualifying shares or shares required by
applicable law to be held by a Person other than Intersil or a Restricted
Subsidiary), (b) all or substantially all the assets of any division or line of
business of Intersil or any Restricted Subsidiary or (c) any other assets of
Intersil or any Restricted Subsidiary outside of the ordinary course of business
<PAGE>
of Intersil or such Restricted Subsidiary (other than, in the case of (a), (b)
and (c) above, (i) a disposition by a Restricted Subsidiary to Intersil or by
Intersil or a Restricted Subsidiary to a Wholly Owned Subsidiary, (ii) for
purposes of Section 6.5 only, a disposition that constitutes a Restricted
Payment permitted by Section 6.3, (iii) a disposition of shares of Capital Stock
of Anshan Harris Broadcast Equipment Co. Ltd. and Harris Semiconductor (Suzhou)
Co. Ltd. and (iv) disposition of assets with a fair market value of less than
$1,000,000).
"Attributable Debt" in respect of a Sale/Leaseback Transaction means, as at
the time of determination, the present value (discounted at the interest rate
borne by the Subordinated Notes, compounded annually) of the total obligations
of the lessee for rental payments during the remaining term of the lease
included in such Sale/Leaseback Transaction (including any period for which such
lease has been extended).
"Average Life" means, as of the date of determination, with respect to any
Indebtedness or Preferred Stock, the quotient obtained by dividing (i) the sum
of the products of the number of years from the date of determination to the
dates of each successive scheduled principal payment of such Indebtedness or
redemption or similar payment with respect to such Preferred Stock multiplied by
the amount of such payment by (ii) the sum of all such payments.
"Bank Debt" means all "Obligations" (as defined in the Senior Credit
Agreement as in effect on the date hereof) now or hereafter incurred pursuant to
and in accordance with, or under, the terms of the Senior Credit Agreement or
the other Senior Debt Documents.
"Bank Debt Documents" means, collectively, the Senior Credit Agreement, and
all "Credit Documents" (as defined in the Senior Credit Agreement).
"Bankruptcy Code" means Title 11 of the United States Code, as now and
hereafter in effect, or any successor statute.
"Board of Directors" means the Board of Directors of any Credit Party or a
Subsidiary of any Credit Party, as applicable, or any duly authorized committee
of that Board of Directors.
"Business Day" means any day excluding Saturday, Sunday and any day which
is a legal holiday under the laws of the State of New York or is a day on which
banking institutions located in such state are authorized or required by law or
other governmental action to close.
"Capital Lease Obligations" of any Person means an obligation that is
required to be classified and accounted for as a capital lease for financial
reporting purposes in accordance with GAAP, and the amount of such Indebtedness
represented by such obligation shall be the capitalized amount of such
obligation determined in accordance with GAAP; and the Stated Maturity thereof
shall be the date of the last payment of rent or any other amount due under such
lease prior to the first date upon which such lease may be terminated by the
lessee without payment of a penalty.
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"Capital Stock" of any Person means any and all shares, interests, rights
to purchase, warrants, options, participations, or other equivalents of or
interests in (however designated) equity of such Person, including any Preferred
Stock, but excluding any debt securities convertible into such equity.
"Cash Equivalents" means any of the following:
(a) any investment in direct obligations of the United States of America
or any agency thereof or obligations guaranteed by the United States
of America or any agency thereof;
(b) investments in time deposit accounts, certificates of deposit and
money market deposits maturing within 180 days of the date of
acquisition thereof issued by a bank or trust company which is
organized under the laws of the United States of America, any state
thereof or any foreign country recognized by the United States, and
which bank or trust company has capital, surplus and undivided profits
aggregating in excess of $50.0 million (or the foreign currency
equivalent thereof) and has outstanding debt which is rated "A" (or
such similar equivalent rating) or higher by at least one nationally
recognized statistical rating organization (as defined in Rule 436
under the Securities Act) or any money-market fund sponsored by a
registered broker dealer or mutual fund distributor;
(c) repurchase obligations with a term of not more than thirty (30) days
for underlying securities of the types described in clause (a) above
entered into with a bank meeting the qualifications described in
clause (b) above;
(d) investments in commercial paper, maturing not more than ninety (90)
days after the date of acquisition, issued by a corporation (other
than an Affiliate of the Company) organized and in existence under the
laws of the United States of America or any foreign country recognized
by the United States of America with a rating at the time as of which
any investment therein is made of "P-1" (or higher) according to
Moody's Investors Service, Inc. or "A-1" (or higher) according to
Standard and Poor's Ratings Group; and
(e) investments in securities with maturities of six (6) months or less
from the date of acquisition issued or fully guaranteed by any state,
commonwealth or territory of the United States of America, or by any
political subdivision or taxing authority thereof, and rated at least
"A" by Standard & Poor's Ratings Group or "A" by Moody's Investors
Service, Inc.
"Cash Proceeds" means, with respect to any Asset Disposition or Equity
Issuance, payments in cash received (including by way of deferred payment of
principal pursuant to a note or installment receivable or otherwise and proceeds
from the sale or other disposition of any securities, but excluding any other
consideration received in the form of assumption by the acquiror of Indebtedness
or other obligations relating to such properties or assets or received in any
other non-cash form) therefrom from any Person, including any cash received by
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way of deferred payment or upon monetization or other disposition of non-cash
consideration (including notes or other securities) received in connection
therewith.
"Change in Control" means:
(a) any "person" (as such term is used in Sections 13(d) and 14(d) of the
Exchange Act), other than one or more Permitted Holders, is or becomes
the "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the
Exchange Act, except that such person shall be deemed to have
"beneficial ownership" of all shares that any such person has the
right to acquire, whether such right is exercisable immediately or
only after the passage of time or the satisfaction of any other
conditions), directly or indirectly, of more than 50% of the total
voting power of the Voting Stock of Intersil), (for purposes of this
clause (a), such person shall be deemed to beneficially own any Voting
Stock of a Person held by any other Person (the "parent entity"), if
such person is the beneficial owner (as so defined), directly or
indirectly, of more than 50% of the voting power of the Voting Stock
of the parent entity); provided, that notwithstanding the foregoing,
CVC shall be deemed to beneficially own a majority of the
voting power of the Voting Stock of Sterling (or any successor) so
long as CVC, employees, officers and directors of CVC and
corporations, partnerships and other entities at least a majority of
the equity in which is held in the aggregate by CVC and its employees,
officers and directors hold in the aggregate no less than a majority
of the economic interests in Sterling (or such successor);
(b) individuals who on the Closing Date constituted the Board of Directors
(together with any new directors (i) whose election by such Board of
Directors or whose nomination for election by the stockholders of
Intersil was approved by a vote of a majority of the directors of
Intersil then still in office who were either directors on the Closing
Date or whose election or nomination for election was previously so
approved or (ii) who were elected to the Board of Directors pursuant
to the Stockholders Agreement, as amended, modified or supplemented
from time to time) cease for any reason to constitute a majority of
the Board of Directors then in office; or
(c) the merger or consolidation of Intersil with or into another Person or
the merger of another Person with or into Intersil, or the sale of all
or substantially all the assets of Intersil to another Person, if the
securities of Intersil that are outstanding immediately prior to such
transaction and which represent 100% of the aggregate voting power of
the Voting Stock of Intersil are changed into or exchanged for cash,
securities or property, unless (i) pursuant to such transaction such
securities are changed into or exchanged for, in addition to any other
consideration, securities of the surviving Person or transferee that
represent, immediately after such transaction, at least a majority of
the aggregate voting power of the Voting Stock of the surviving Person
or transferee or (ii) after giving effect to such transaction the
Permitted Holders "beneficially own" (as determined pursuant to clause
(a) above) at least 35% of the total voting power of the Voting Stock
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of the surviving Person or transferee, as the case may be.
"Chief Financial Officer" means the highest ranking officer of any company
then in charge of the financial matters of such company.
"Closing Date" means August 13, 1999.
"Code" means the Internal Revenue Code of 1986, as amended, or any
successor statute.
"Common Stock" means, collectively, the Company's Class A Common Stock, par
value $.01 per share, and the Company's Class B Common Stock, par value $.01 per
share, and any Capital Stock of the Company issued with respect thereto in a
stock split, stock consolidation, share exchange, reclassification or other
recapitalization.
"Consolidated Coverage Ratio" as of any date of determination means the
ratio of (a) the aggregate amount of EBITDA for the period of the most recent
four consecutive Fiscal Quarters ending at least 45 days (or, if less, the
number of days after the end of such Fiscal Quarter as the consolidated
financial statements of Intersil shall be provided to the Lender pursuant to
this Agreement) prior to the date of such determination to (b) Consolidated
Interest Expense for such four Fiscal Quarters; provided, that
(i) if Intersil or any Restricted Subsidiary has Incurred any Indebtedness
since the beginning of such period that remains outstanding or if the
transaction giving rise to the need to calculate the Consolidated
Coverage Ratio is an Incurrence of Indebtedness, or both, EBITDA and
Consolidated Interest Expense for such period shall be calculated
after giving effect on a pro forma basis to such Indebtedness as if
such Indebtedness had been Incurred on the first day of such period
and the discharge of any other Indebtedness repaid, repurchased,
defeased or otherwise discharged with the proceeds of such new
Indebtedness as if such discharge had occurred on the first day of
such period;
(ii) if Intersil or any Restricted Subsidiary has repaid, repurchased,
defeased or otherwise discharged any Indebtedness since the beginning
of such period or if any Indebtedness is to be repaid, repurchased,
defeased or otherwise discharged (in each case other than Indebtedness
Incurred under any revolving credit facility unless such Indebtedness
has been permanently repaid and has not been replaced) on the date of
the transaction giving rise to the need to calculate the Consolidated
Coverage Ratio, EBITDA and Consolidated Interest Expense for such
period shall be calculated on a pro forma basis as if such discharge
had occurred on the first day of such period and as if Intersil or
such Restricted Subsidiary has not earned the interest income actually
earned during such period in respect of cash or Cash Equivalents used
to repay, repurchase, defease or otherwise discharge such
Indebtedness;
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(iii) if since the beginning of such period Intersil or any Restricted
Subsidiary shall have made any Asset Disposition, the EBITDA for such
period shall be reduced by an amount equal to the EBITDA (if positive)
directly attributable to the assets which are the subject of such
Asset Disposition for such period, or increased by an amount equal to
the EBITDA (if negative), directly attributable thereto for such
period and Consolidated Interest Expense for such period shall be
reduced by an amount equal to the Consolidated Interest Expense
directly attributable to any Indebtedness of the Company or any
Restricted Subsidiary repaid, repurchased, defeased or otherwise
discharged with respect to Intersil and its continuing Restricted
Subsidiaries in connection with such Asset Disposition for such period
(or, if the Capital Stock of any Subsidiary is sold, the Consolidated
Interest Expense for such period directly attributable to the
Indebtedness of such Restricted Subsidiary to the extent Intersil and
its continuing Restricted Subsidiaries are no longer liable for such
Indebtedness after such sale);
(iv) if since the beginning of such period Intersil or any Restricted
Subsidiary (by merger or otherwise) shall have made an Investment in
any Restricted Subsidiary (or any person which becomes a Restricted
Subsidiary) or an acquisition of assets, including any acquisition of
assets occurring in connection with a transaction requiring a
calculation to be made hereunder and including the Acquisition, which
constitutes all or substantially all of an operating unit of a
business, EBITDA and Consolidated Interest Expense for such period
shall be calculated after giving pro forma effect thereto (including
the Incurrence of any Indebtedness) as if such Investment or
acquisition occurred on the first day of such period (such pro forma
calculation, in the case of the Acquisition, to be on substantially
the same bases as the pro forma adjustments set forth in the offering
circular used in connection with the initial sale of the Subordinated
Notes); and
(v) if since the beginning of such period any Person (that subsequently
became a Restricted Subsidiary or was merged with or into Intersil or
any Restricted Subsidiary since the beginning of such period) shall
have made any Asset Disposition, any Investment or acquisition of
assets that would have required an adjustment pursuant to clause (iii)
or (iv) above if made by Intersil or a Restricted Subsidiary during
such period, EBITDA and Consolidated Interest Expense for such period
shall be calculated after giving pro forma effect thereto as if such
Asset Disposition, Investment or acquisition occurred on the first day
of such period.
For purposes of this definition, whenever pro forma effect is to be given to an
acquisition of assets, the amount of income or earnings relating thereto and the
amount of Consolidated Interest Expense associated with any Indebtedness
Incurred in connection therewith, the pro forma calculations shall be determined
in good faith by a responsible financial or accounting officer of Intersil (and
shall include any applicable Pro Forma Cost Savings). If any Indebtedness bears
a floating rate of interest and is being given pro forma effect, the interest of
such Indebtedness shall be calculated as if the rate in effect on the date of
determination had been the applicable rate for the entire period (taking into
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account any Interest Rate Agreement applicable to such Indebtedness if such
Interest Rate Agreement has a remaining term in excess of 12 months).
"Consolidated Current Liabilities" as of the date of determination means
the aggregate amount of liabilities of Intersil and its consolidated Restricted
Subsidiaries which may properly be classified as current liabilities (including
taxes accrued as estimated), on a consolidated basis, after eliminating (a) all
intercompany items between Intersil and any Restricted Subsidiary and (b) all
current maturities of long-term Indebtedness, all as determined in accordance
with GAAP consistently applied.
"Consolidated Interest Expense" means, for any period, the total interest
expense of Intersil and its consolidated Restricted Subsidiaries, plus, to the
extent not included in such total interest expense, and to the extent incurred
by Intersil or its Restricted Subsidiaries, without duplication, (a) interest
expense attributable to Capital Lease Obligation and the interest expense
attributable to leases constituting part of a Sale/Leaseback Transaction, (b)
amortization of debt discount and debt issuance cost, (c) capitalized interest,
(d) non-cash interest expenses, (e) commissions, discounts and other fees and
charges owed with respect to letters of credit and bankers' acceptance
financing, (f) net costs associated with Hedging Obligations involving any
Interest Rate Agreement (including amortization of fees), (g) Preferred Stock
dividends accrued by consolidated Restricted Subsidiaries in respect of all
Preferred Stock held by Persons other than Intersil or a Restricted Subsidiary,
(h) interest incurred in connection with Investments in discontinued operations,
(i) interest accruing on any Indebtedness of any other Person to the extent such
Indebtedness is Guaranteed by (or secured by the assets of) Intersil or any
Restricted Subsidiary and (j) the cash contributions to any employee stock
ownership plan or similar trust to the extent such contributions are used by
such plan or trust to pay interest or fees to any Person (other than Intersil)
in connection with Indebtedness Incurred by such plan or trust and less, to the
extent included in such total interest expense, the amortization during such
period of capitalized financing costs.
"Consolidated Net Income" means, for any period, the net income of Intersil
and its consolidated Subsidiaries; provided, that there shall not be included in
such Consolidated Net Income:
(a) any net income of any Person (other than Intersil) if such Person is
not a Restricted Subsidiary, except that (i) subject to the exclusion
contained in clause (d) below, the Company's equity in the net income
of any such Person for such period shall be included in such
Consolidated Net Income up to the aggregate amount of cash actually
distributed by such Person during such period to Intersil or a
Restricted Subsidiary as a dividend or other distribution (subject, in
the case of a dividend or other distribution paid to a Restricted
Subsidiary, to the limitations contained in clause (c) below) and (ii)
the Company's equity in a net loss of any such Person for such period
shall be included in determining such Consolidated Net Income;
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(b) any net income (or loss) of any Person acquired by Intersil or a
Restricted Subsidiary in a pooling of interests transaction for any
period prior to the date of such acquisition;
(c) any net income of any Restricted Subsidiary if such Restricted
Subsidiary is subject to restrictions, directly or indirectly, on the
payment of dividends or the making of distributions by such Restricted
Subsidiary, directly or indirectly, to Intersil, except that (i)
subject to the exclusion contained in clause (d) below, the Company's
equity in the net income of any such Restricted Subsidiary for such
period shall be included in such Consolidated Net Income up to the
aggregate amount of cash that could have been distributed by such
Restricted Subsidiary consistent with such restrictions during such
period to Intersil or another Restricted Subsidiary as a dividend or
other distribution (subject, in the case of a dividend or other
distribution paid to another Restricted Subsidiary, to the limitation
contained in this clause) and (ii) the Company's equity in a net loss
of any such Restricted Subsidiary for such period shall be included in
determining such Consolidated Net Income;
(d) any gain (or loss) realized upon the sale or other disposition of any
assets of Intersil or its consolidated Subsidiaries (including
pursuant to any sale-and-leaseback arrangement) which is not sold or
otherwise disposed of in the ordinary course of business and any gain
(or loss) realized upon the sale or other disposition of any Capital
Stock of any Person;
(e) extraordinary gains or losses; and
(f) the cumulative effect of a change in accounting principles.
Notwithstanding the foregoing, for the purposes of Section 6.3 only, there shall
be excluded from Consolidated Net Income any dividends, repayments of loans or
advances or other transfers of assets from Unrestricted Subsidiaries to the
Company or a Restricted Subsidiary to the extent such dividends, repayments or
transfers increase the amount of Restricted Payments permitted under such
covenant pursuant to clause (a)(iii)(D) thereof.
"Contested Claim" means any Tax, Indebtedness, Contingent Liabilities or
other claim or liability, (i) the validity or amount of which is being
diligently contested in good faith by appropriate proceedings, (ii) which has
been bonded or for which appropriate reserves, to the extent required by GAAP,
have been established, and (iii) with respect to which any right to execute upon
or sell any assets of the Company or its Subsidiaries has not matured or has
been and continues to be effectively enjoined, superseded, or stayed.
"Contingent Liabilities" means, as applied to any Person, any guarantees,
endorsements, agreements to purchase or provide funds for the payment of
obligations of others, or other liabilities which would be classified as
contingent liabilities in accordance with GAAP.
"Credit Parties" means the Company and Intersil.
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"Currency Agreement" means in respect of a Person any foreign exchange
contract, currency swap agreement or other similar agreement to which such
Person is a party or beneficiary.
"CVC" means Citicorp Venture Capital, Ltd., a New York corporation.
"Disqualified Stock" means, with respect to any Person, any Capital Stock
which by its terms (or by the terms of any security into which it is convertible
or for which it is exchangeable) or upon the happening of any event (a) matures
or is mandatorily redeemable pursuant to a sinking fund obligation or otherwise,
(b) is convertible or exchangeable for indebtedness or Disqualified Stock or (c)
is redeemable at the option of the holder thereof, in whole or in part, in each
case on or prior to the first anniversary of the Stated Maturity of the
Subordinated Notes; provided, that any Capital Stock that would not constitute
Disqualified Stock but for provisions thereof giving holders thereof the right
to require such Person to repurchase or redeem such Capital Stock upon the
occurrence of an "asset sale" or "change of control" occurring prior to the
first anniversary of the Stated Maturity of the Subordinated Notes shall not
constitute Disqualified Stock if the "asset sale" or "change of control"
provisions applicable to such Capital Stock are not more favorable to the
holders of such Capital Stock than the provisions described under Section
2.3(a)(ii)(B) and under Section 6.5.
"EBITDA" for any period means the sum of Consolidated Net Income, plus
Consolidated Interest Expense plus the following to the extent deducted in
calculating such Consolidated Net Income:
(a) all income tax expense of Intersil and its consolidated Restricted
Subsidiaries;
(b) depreciation expense of Intersil and its consolidated Restricted
Subsidiaries;
(c) amortization expense of Intersil and its consolidated Restricted
Subsidiaries (excluding amortization expense attributable to a prepaid
cash item that was paid in a prior period);
(d) all other non-cash charges of Intersil and its consolidated Restricted
Subsidiaries (excluding any such non-cash charge to the extent that it
represents an accrual of or reserve for cash expenditures in any
future period); and
(e) foreign exchange losses with respect to the Malaysian Ringgit incurred
prior to the Closing Date;
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in each case for such period. Notwithstanding the foregoing, the provision for
taxes based on the income or profits of, and the depreciation and amortization
and non-cash charges of, a Restricted Subsidiary shall be added to Consolidated
Net Income to compute EBITDA only to the extent (and in the same proportion)
that the net income of such Restricted Subsidiary was included in calculating
Consolidated Net Income and only if a corresponding amount would be permitted at
the date of determination to be dividended to Intersil by such Restricted
Subsidiary without prior approval (that has not been obtained), pursuant to the
terms of its charter and all agreements, instruments, judgments, decrees,
orders, statutes, rules and governmental regulations applicable to such
Restricted Subsidiary or its stockholders.
"Equity Issuance" has the meaning set forth in Section 2.3(a)(ii).
"Event of Default" means each of the events set forth in Article 7 hereof.
"Exchange Act" means the Securities Exchange Act of 1934, as amended from
time to time, and any successor statute.
"Existing Preferred Stock" means, collectively, the Company's 12% Series A
Cumulative Compounding Preferred Stock, par value $.01 per share, to the extent
issued and outstanding on the Closing Date.
"Existing Subordinated Note" means the 11.13% Subordinated Note due 2010
issued by the Company to Seller on the Closing Date in an initial aggregate
principal amount of $90,000,000, and any notes issued in exchange, substitution
or replacement therefor.
"Fiscal Quarter" means any fiscal quarter of the Company and its
Subsidiaries for financial accounting purposes, which Fiscal Quarters end on the
Friday closest to each September 30, December 31, March 31 and June 30 of each
calendar year.
"Fiscal Year" means the fiscal year of the Credit Parties for financial
accounting purposes, which fiscal year ends on the Friday closest to June 30 of
each calendar year.
"Foreign Subsidiary" means any Restricted Subsidiary not created or
organized in the United States or any state thereof and that conducts
substantially all its operations outside the United States.
"GAAP" means generally accepted accounting principles in the United States
of America as in effect as of the Closing Date, including those set forth in (a)
the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants, (b) statements and
pronouncements of the Financial Accounting Standards Board, (c) such other
statements by such other entity as approved by a significant segment of the
accounting profession and (d) the rules and regulations of the SEC governing the
inclusion of financial statements (including pro forma financial statements) in
periodic reports required to be filed pursuant to Section 13 of the Exchange
Act, including opinions and pronouncements in staff accounting bulletins and
similar written statements from the accounting staff of the SEC.
"Governmental Authority" means any nation or government, any state or other
political subdivision thereof, any central bank (or similar monetary or
regulatory authority) thereof, any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government,
and any corporation or other entity owned or controlled, through stock or
capital ownership or otherwise, by any of the foregoing.
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"Guarantee" means any obligation, contingent or otherwise, of any Person
directly or indirectly guaranteeing any Indebtedness of any Person and any
obligation, direct or indirect, contingent or otherwise, of such Person (a) to
purchase or pay (or advance or supply funds for the purchase or payment of) such
Indebtedness or other obligation of such Person (whether arising by virtue of
partnership arrangements, or by agreements to keep-well, to purchase assets,
goods, securities or services, to take-or-pay or to maintain financial statement
conditions or otherwise) or (b) entered into for the purpose of assuring in any
other manner the obligee of such Indebtedness of the payment thereof or to
protect such obligee against loss in respect thereof (in whole or in part);
provided, that the term "Guarantee" shall not include endorsements for
collection or deposit in the ordinary course of business. The term "Guarantee"
used as a verb has a corresponding meaning. The term "Guarantor" shall mean any
Person Guaranteeing any obligation.
"Harris Loan Obligations" means the loans made by agencies of the
Commonwealth of Pennsylvania to Harris outstanding on the Closing Date in an
amount not to exceed $4.6 million.
"Hedging Obligations" of any Person means the obligations of such Person
pursuant to any Interest Rate Agreement or Currency Agreement.
"Incur" means issue, assume, Guarantee, incur or otherwise become liable
for; provided, however, that any Indebtedness or Capital Stock of a Person
existing at the time such Person becomes a Subsidiary (whether by merger,
consolidation, acquisition or otherwise) shall be deemed to be Incurred by such
Subsidiary at the time it becomes a Subsidiary. The term "Incurrence" when used
as a noun shall have a correlative meaning. The accretion of principal of a
non-interest bearing or other discount security shall not be deemed the
Incurrence of Indebtedness.
"Indebtedness" means, with respect to any Person on any date of
determination (without duplication):
(a) the principal of and premium (if any) in respect of (i) indebtedness
of such Person for money borrowed and (ii) indebtedness evidenced by
notes, debentures, bonds or other similar instruments for the payment
of which such Person is responsible or liable;
(b) all Capital Lease Obligations of such Person and all Attributable Debt
in respect of Sale/Leaseback Transactions entered into by such Person;
(c) all obligations of such Person issued or assumed as the deferred
purchase price of property, all conditional sale obligations of such
Person and all obligations of such Person under any title retention
agreement (but excluding trade accounts payable arising in the
ordinary course of business);
(d) all obligations of such Person for the reimbursement of any obligor on
any letter of credit, banker's acceptance or similar credit
transaction (other than obligations with respect to letters of credit
securing obligations (other than obligations described in clauses (a)
through (c) above) entered into in the ordinary course of business of
such Person to the extent such letters of credit are not drawn upon,
or if and to the extent drawn upon, such drawing is reimbursed no
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<PAGE>
later than the tenth (10th) Business Day following payment on the
letter of credit);
(e) the amount of all obligations of such Person with respect to the
redemption, repayment or other repurchase of any Disqualified Stock
or, with respect to any Subsidiary of such Person, the liquidation
preference with respect to, any Preferred Stock (but excluding, in
each case, any accrued dividends);
(f) all obligations of the type referred to in clauses (a) through (e) of
other Persons and all dividends of other Persons for the payment of
which, in either case, such Person is responsible or liable, directly
or indirectly, as obligor, guarantor or otherwise, including by means
of any Guarantee;
(g) all obligations of the type referred to in clauses (a) through (f) of
other Persons secured by any Lien on any property or asset of such
Person (whether or not such obligation is assumed by such Person), the
amount of such obligation being deemed to be the lesser of the value
of such property or assets or the amount of the obligation so secured;
and
(h) to the extent not otherwise included in this definition, Hedging
Obligations of such Person.
The amount of Indebtedness of any Person at any date shall be the outstanding
balance at such date of all unconditional obligations as described above and the
maximum liability, upon the occurrence of the contingency giving rise to the
obligation, of any contingent obligations at such date; provided, that the
amount outstanding at any time of any Indebtedness issued with original issue
discount shall be deemed to be the face amount of such Indebtedness less the
remaining unamortized portion of the original issue discount of such
indebtedness at such time as determined in accordance with GAAP.
"Initial Interest Payment Date" means February 15, 2000.
"Interest Notes" has the meaning set forth in Section 2.2(b).
"Interest Payment Date" means the last day of each Interest Period.
"Interest Period" means initially the period commencing on the Closing Date
and ending on the Initial Interest Payment Date, and, thereafter, each six-month
period; provided, that:
(i) if an Interest Period would otherwise expire on a day which is not a
Business Day, such Interest Period shall expire on the next succeeding
Business Day; and
(ii) no Interest Period shall extend beyond the Maturity Date.
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"Interest Rate Agreement" means in respect of a Person any interest rate
swap agreement, interest rate cap agreement or other financial agreement or
arrangement designed to protect such Person against fluctuations in interest
rates.
"Investment" in any Person means any direct or indirect advance, loan
(other than advances to customers in the ordinary course of business that are
recorded as accounts receivable on the balance sheet of the lender) or other
extensions of credit (including by way of Guarantee or similar arrangement) or
capital contribution to (by means of any transfer of cash or other property to
others or any payment for property or services for the account or use of
others), or any purchase or acquisition of Capital Stock, Indebtedness or other
similar instruments issued by such Person. For purposes of the definition of
"Unrestricted Subsidiary," the definition of "Restricted Payment" and Section
6.3:
(i) "Investment" shall include the portion (proportionate to the Company's
equity interest in such Subsidiary) of the fair market value of the
net assets of any Subsidiary of the Company at the time that such
Subsidiary is designated an Unrestricted Subsidiary; provided,
however, that upon a redesignation of such Subsidiary as a Restricted
Subsidiary, the Company shall be deemed to continue to have a
permanent "Investment" in an Unrestricted Subsidiary equal to an
amount (if positive) equal to (x) the Company's "Investment" in such
Subsidiary at the time of such redesignation less (y) the portion
(proportionate to the Company's equity interest in such Subsidiary) of
the fair market value of the net assets of such Subsidiary at the time
of such redesignation; and
(ii) any property transferred to or from an Unrestricted Subsidiary shall
be valued at its fair market value at the time of such transfer, in
each case as determined in good faith by the Board of Directors.
"Lender" has the meaning assigned to that term in the introduction to this
Agreement and shall include any assignees of the Loan or Note pursuant to the
terms and conditions of Section 10.1 hereof.
"Lien" means any lien, mortgage, pledge, security interest, charge or
encumbrance of any kind, whether voluntary or involuntary (including any
conditional sale or other title retention agreement, any lease in the nature
thereof, and any agreement to give any security interest).
"Litigation" means any proceeding, claim, lawsuit and/or investigation
conducted or overtly threatened by or before any Governmental Authority.
"Loan" means the loan made by the Lender to the Company pursuant to Section
2.1 hereof.
"Loan Documents" shall mean this Agreement, the Notes, the Registration
Rights Agreement, the Stockholders Agreement, the Warrant, the Warrant
Agreement, and all other documents, instruments and agreements executed and/or
delivered in connection therewith, each as amended, supplemented or modified
from time to time.
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"Malaysian Business" means the business conducted by the Company in
Malaysia on the Closing Date and any business developed thereafter using
substantially the same assets.
"Margin Stock" has the meaning assigned to that term in Regulation U of the
Board of Governors of the Federal Reserve System as in effect from time to time.
"Material Adverse Effect" means, (a) any material adverse change in, or a
material adverse effect upon, the operations, business, properties, condition
(financial or otherwise) or prospects of Intersil or the Company and its
Subsidiaries taken as a whole, (b) a material impairment of the ability of the
Company, Intersil or any of their respective Subsidiaries to perform under any
Loan Document, or (c) a material impairment of the rights of or benefits
available to the Lender under any Loan Document.
"Maturity Date" means July 15, 2010.
"Net Cash Proceeds" means, with respect to any Asset Disposition or Equity
Issuance, (a) the Cash Proceeds received by the Company or any of its Restricted
Subsidiaries, minus (b) in case of any Asset Disposition, (i) all legal, title
and recording Tax expenses, commissions and other fees and expenses incurred and
all federal, state, foreign and local Taxes required to be accrued as a
liability under GAAP as a consequence of such Asset Disposition, (ii) all
payments made on any Indebtedness which is secured by any assets subject to such
Asset Disposition, in accordance with the terms of any Lien upon or other
security agreement of any kind with respect to such assets, or which must by its
terms, or in order to obtain a necessary consent to such Asset Disposition, or
by applicable law be, repaid out of the proceeds from such Assets Disposition,
(iii) all distributions and other payments required to be made to minority
interest holders in Subsidiaries or joint ventures as a result of such Asset
Disposition, and (iv) the deduction of appropriate amounts provided by the
seller as a reserve, in accordance with GAAP, against any liabilities associated
with such assets and retained by the Company or any Restricted Subsidiary
thereof, as the case may be, after such Asset Disposition, minus (c) in the case
of any Equity Issuance, attorney's fees, accountant's fees, underwriters' or
placement agents' fees, discounts, commissions and brokerage, consultant and
other fees actually incurred in connection with such issuance or sale and taxes
paid or payable as a result thereof.
"Note" means one or more of the notes of the Company issued pursuant to the
terms and conditions of Sections 2.1, 2.2(b)(ii) or 9.1 hereof, substantially in
the form of Exhibit A hereto.
"Obligations" means all obligations of every nature of the Credit Parties
from time to time owed to the Lender under the Loan Documents.
"Officer's Certificate" means, as applied to any corporation, a certificate
executed on behalf of such corporation by its Chief Executive Officer, its
President or its Chief Financial Officer; provided, that every Officer's
Certificate with respect to the compliance with a condition precedent to the
making of a Loan hereunder shall include (i) a statement that the officer or
officers making or giving such Officer's Certificate have read such condition
and any definitions or other provisions contained in this Agreement relating
thereto, (ii) a statement of the signers that they have made or have caused to
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be made such examination or investigation as they deem necessary to enable them
to certify that such condition has been complied with, and (iii) a statement
that such condition has been complied with.
"Permitted Holders" means (i) CVC, (ii) any officer, employee or director
of CVC or any trust, partnership or other entity established solely for the
benefit of such officers, employees or directors, (iii) any officer, employee or
director of the Company, Intersil or any of their Subsidiaries or any trust,
partnership or other entity established solely for the benefit of such officers,
employees or directors and (iv) in the case of any individual, any Permitted
Transferee of such individual (as defined in the Stockholders Agreement), except
a Permitted Transferee by virtue of Section 4.4(b)(iv) thereof; provided,
however, that in no event shall individuals collectively be deemed to be
"Permitted Holders" with respect to more than 30% of the total voting power of
the Company or Intersil.
"Permitted Investment" means an Investment by the Company or any Restricted
Subsidiary in:
(i) a Restricted Subsidiary or a Person that will, upon the making of such
Investment, become a Restricted Subsidiary; provided, however, that
the primary business of such Restricted Subsidiary is a Related
Business;
(ii) another Person if as a result of such Investment such other Person is
merged or consolidated with or into, or transfers or conveys all or
substantially all its assets to, the Company, Intersil or a Restricted
Subsidiary; provided, however, that such Person's primary business is
a Related Business;
(iii) Investments in Cash or Cash Equivalents;
(iv) receivables owing to the Company, Intersil or any Restricted
Subsidiary if created or acquired in the ordinary course of business
and payable or dischargeable in accordance with customary trade terms;
provided, however, that such trade terms may include such
concessionary trade terms as the Company, Intersil or any such
Restricted Subsidiary deems reasonable under the circumstances;
(v) payroll, travel and similar advances to cover matters that are
expected at the time of such advances ultimately to be treated as
expenses for accounting purposes and that are made in the ordinary
course of business;
(vi) loans or advances to employees made in the ordinary course of business
consistent with past practices of the Company, Intersil or such
Restricted Subsidiary;
(vii) stock, obligations or securities received in settlement of debts
created in the ordinary course of business and owing to the Company,
Intersil or any Restricted Subsidiary or in satisfaction of judgments;
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(viii) any Person to the extent such Investment represents the non-cash
portion of the consideration received for an Asset Disposition as
permitted pursuant to Section 6.5;
(ix) Currency Agreements and Interest Rate Agreements entered into in the
ordinary course of the Company's business and otherwise in compliance
with the Indenture;
(x) the Permitted Joint Venture; provided, such Investment is received in
exchange for the Malaysian Business or paid for with the proceeds from
a disposition of the Malaysian Business; or
(xi) so long as no Default shall have occurred and be continuing (or result
therefrom), any Person engaged in a Related Business in an aggregate
amount which, when added together with the amount of all the
Investments made pursuant to this clause (xi) which at such time have
not been repaid through repayments of loans or advances or other
transfers of assets, does not exceed the greater of $25.0 million and,
after the first anniversary of the Issue Date, 5.0% of Total Assets
with the fair market value of each Investment being measured at the
time made and without giving effect to subsequent changes in value).
"Permitted Joint Venture" means any joint venture to which Intersil or any
Restricted Subsidiary is a party, which includes the Malaysian Business, whether
the Malaysian Business is sold or contributed to such joint venture.
"Person" means and includes natural persons, corporations, limited
partnerships, limited liability companies, general partnerships, joint stock
companies, joint ventures, associations, companies, trusts, banks, trust
companies, land trusts, business trusts or other organizations, whether or not
legal entities, and governments and agencies and political subdivisions thereof.
"Potential Event of Default" means a condition or event which, after notice
or lapse of time or both, would constitute an Event of Default if that condition
or event were not cured or removed within any applicable grace or cure period.
"Preferred Stock" as applied to the Capital Stock of any Person, means
Capital Stock of such Person of any class or classes (however designated) that
ranks prior, as to the payment of dividends or as to the distribution of assets
upon any voluntary or involuntary liquidation, dissolution or winding up of such
Person, to shares of Capital Stock of any other class of such Person.
"Pro Forma Cost Savings" means, with respect to any period, the reduction
in costs that were
(i) directly attributable to an asset acquisition and calculated on a
basis that is consistent with Regulation S-X under the Securities Act
in effect and applied as of the Closing Date, or
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(ii) implemented by the business that was the subject of any such asset
acquisition within six months of the date of the asset acquisition and
that are supportable and qualifiable by the underlying accounting
records of such business,
as if, in the case of each of clause (i) and (ii), all such reductions in costs
had been effected as of the beginning of such period.
"Purchase Agreement" means the Master Transaction Agreement, dated as of
June 2, 1999, by and among the Company, Intersil and Seller, as amended,
restated or modified from time to time.
"Refinance" means, in respect of any Indebtedness, to refinance, extend,
renew, refund, repay, prepay, redeem, defease or retire, or to issue other
Indebtedness in exchange or replacement for, such indebtedness. "Refinanced" and
"Refinancing" shall have correlative meanings.
"Refinancing Indebtedness" means Indebtedness that Refinances any
Indebtedness of Intersil or any Restricted Subsidiary existing on the Closing
Date or Incurred in compliance with the Subordinated Notes Documents, including
Indebtedness that Refinances Refinancing Indebtedness; provided, that (a) such
Refinancing Indebtedness has a Stated Maturity no earlier than the Stated
Maturity of the Indebtedness being Refinanced, (b) such Refinancing Indebtedness
has an Average Life at the time such Refinancing Indebtedness is Incurred that
is equal to or greater than the Average Life of the Indebtedness being
Refinanced and (c) such Refinancing Indebtedness has an aggregate principal
amount (or if Incurred with original issue discount, an aggregate issue price)
that is equal to or less than the aggregate principal amount (or if Incurred
with original issue discount, the aggregate accreted value) then outstanding or
committed (plus fees and expenses, including any premium and defeasance costs)
under the Indebtedness being Refinanced; provided further, that Refinancing
Indebtedness shall not include (i) Indebtedness of a Intersil Subsidiary that
Refinances Indebtedness of Intersil, or (ii) Indebtedness of Intersil or a
Restricted Subsidiary of Intersil that Refinances Indebtedness of an
Unrestricted Subsidiary.
"Registration Rights Agreement" means the Restated Registration Rights
Agreement, dated as of the date hereof, by and among the Company, the Lender,
and certain other stockholders of the Company signatory thereto in the form of
Exhibit B hereto, as the same may be amended, modified, or restated from time to
time in accordance with the terms thereof.
"Related Business" means any business related, ancillary or complementary
to the businesses of the Company, Intersil and the Restricted Subsidiaries on
the Closing Date.
"Restricted Payment" with respect to any person means (a) the declaration
or payment of any dividends or other distributions of any sort in respect of its
Capital Stock (including any payment in connection with any merger or
consolidation involving such person) or similar payment to the direct or
indirect holders of its Capital Stock (other than dividends or distributions
payable solely in its Capital Stock (other than Disqualified Stock) and
dividends or distributions payable solely to the Company or a Restricted
Subsidiary, and other than pro rata dividends or other distributions made by a
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Subsidiary that is not a Wholly Owned Subsidiary to minority stockholders (or
owners of an equivalent interest in the case of a Subsidiary that is an entity
other than a corporation)), (b) the purchase, redemption or other acquisition or
retirement for value of any Capital Stock of the Company held by any Person or
of any Capital Stock of a Restricted Subsidiary held by any Affiliate of the
Company (other than a Restricted Subsidiary), including the exercise of any
option to exchange any Capital Stock (other than into Capital Stock of the
Company that is not Disqualified Stock), (c) the purchase, repurchase,
redemption, defeasance or other acquisition or retirement for value, prior to
scheduled maturity, scheduled repayment or scheduled sinking fund payment of any
Indebtedness which is subordinated to, or ranks pari passu with, the Note (other
than the purchase, repurchase or other acquisition of Indebtedness which is
subordinated to, or ranks pari passu with, the Note purchased in anticipation of
satisfying a sinking fund obligation, principal installment or final maturity,
in each case due within one year of the date of acquisition); or (d) the making
of any Investment in any Person (other than a Permitted Investment).
"Restricted Subsidiary" means any Subsidiary of the Company that is not an
Unrestricted Subsidiary.
"Revolving Credit Facilities" means the revolving credit facility contained
in the Senior Credit Agreement and any other facility or financing arrangement
that Refinances or replaces, in whole or in part, any such revolving credit
facility.
"Sale/Leaseback Transaction" means an arrangement relating to property now
owned or hereafter acquired whereby the Company or a Subsidiary transfers such
property to a Person and the Company or a Subsidiary leases it from such Person.
"SEC" means the Securities and Exchange Commission.
"Secured Debt" means any Indebtedness secured by a Lien.
"Seller" means Harris Corporation , a Delaware corporation.
"Senior Agent" means Credit Suisse First Boston, as agent under the Senior
Credit Agreement.
"Senior Credit Agreement" means the Credit Agreement, dated as of the date
hereof, by and among the Company, Intersil, the Subsidiary Guarantors
thereunder, Senior Agent and all other financial institutions party thereto and
any credit agreement which evidences a replacement, substitution, conversion,
refunding or Refinancing of the Indebtedness thereunder, in each such case, as
such agreement may be amended, restated, renewed, extended, supplemented or
otherwise modified from time to time in accordance with the terms and conditions
of Section 6.7 hereof. As of any date of determination, unless otherwise
indicated in this Agreement, references to the Senior Credit Agreement shall
mean the form of Senior Credit Agreement as of such date, regardless of whether
the Senior Credit Agreement shall be in effect as of such date.
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"Senior Debt" means Indebtedness under the Bank Debt and the Subordinated
Notes now or hereafter incurred and the guarantees by the Company or any
Subsidiaries of Intersil of the Bank Debt and the Subordinated Notes now or
hereafter granted pursuant to and in accordance with, or under, the terms of the
Senior Credit Agreement or the other Senior Debt Documents, the Subordinated
Notes or the Subordinated Notes Documents, as the case may be, and any other
Indebtedness created after the date hereof that by its terms is senior to or
pari passu with any of the foregoing; provided, that Senior Debt shall not
include the Existing Subordinated Note of the Company which is subordinate in
right of payment to the Notes pursuant to Section 9.1 hereof.
"Senior Debt Documents" means the Bank Debt Documents and the Subordinated
Notes Documents.
"Senior Default" means (i) an "Event of Default" as defined in the Senior
Credit Agreement or (ii) an "Event of Default" as defined in the Subordinated
Notes Documents.
"Stated Maturity" means, with respect to any security, the date specified
in such security as the fixed date on which the final payment of principal of
such security is due and payable, including pursuant to any mandatory redemption
provision (but excluding any provision providing for the repurchase of such
security at the option of the holder thereof upon the happening of any
contingency unless such contingency has occurred).
"Sterling" means Sterling Holding Company, LLC a Delaware limited liability
company.
"Stockholders Agreement" means the Securities Purchase and Holders
Agreement among the stockholders of the Company, as in effect on the Closing
Date.
"Subordinated Notes" means the 133% Senior Subordinated Notes due 2009
originally issued by Intersil on the Closing Date in an initial aggregate
principal amount of $200,000,000, and any notes issued in exchange, substitution
or replacement therefor.
"Subordinated Notes Documents" means the indentures under which the
Subordinated Notes were issued and all other instruments, agreements and other
documents evidencing or governing the Subordinated Notes or providing for any
guarantee or other rights in respect thereof.
"Subsidiary" means, in respect of any Person, any corporation, association,
partnership or other business entity of which more than 50% of the total voting
power of shares of Capital Stock or other interests (including partnership
interests) entitled (without regard to the occurrence of any contingency) to
vote in the election of directors, managers or trustees thereof is at the time
owned or controlled, directly or indirectly, by (i) such Person, (ii) such
Person and one or more Subsidiaries of such Person or (iii) one or more
Subsidiaries of such Person.
"Tax Sharing Agreement" means any tax sharing agreement between Intersil
and the Company or any other Person with which Intersil is required to, or is
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permitted to, file a consolidated, combined or unitary tax return or with which
the Company is or could be part of a consolidated group for tax purposes.
"Taxes" means all taxes, assessments, fees, levies, imposts, duties,
penalties, deductions, withholdings, or other charges of any nature whatsoever
from time to time or at any time imposed by any law or any Governmental
Authority.
"Term Loan Facilities" means the term loan facilities contained in the
Senior Credit Agreement and any other facility or financing arrangement that
Refinances, in whole or in part, any such term loan facility.
"Total Assets" means the total consolidated assets (calculated in
accordance with GAAP) of the Company and its Restricted Subsidiaries, as set
forth on the Company's most recent consolidated balance sheet.
"Transactions" has the meaning set forth in Section 4.3.
"U.S. Dollar Equivalent" means with respect to any monetary amount in a
currency other than U.S. dollars, at any time for determination thereof, the
amount of U.S. dollars obtained by converting such foreign currency involved in
such computation into U.S. dollars at the spot rate for the purchase of U.S.
dollars with the applicable foreign currency as published in The Wall Street
Journal in the "Exchange Rates" column under the heading "Currency Trading" on
the date two (2) Business Days prior to such determination.
Except as described under Section 6.1, whenever it is necessary to
determine whether Intersil has complied with any covenant in this Agreement or
an Event of Default has occurred and an amount is expressed in a currency other
than U.S. dollars, such amount will be treated as the U.S. Dollar Equivalent
determined as of the date such amount is initially determined in such currency.
"Unrestricted Subsidiary" means (i) any Subsidiary of Intersil that at the
time of determination shall be designated an Unrestricted Subsidiary by the
Board of Directors of Intersil in the manner provided below and (ii) any
Subsidiary of an Unrestricted Subsidiary. The Board of Directors of Intersil may
designate any Subsidiary of Intersil (including any newly acquired or newly
formed Subsidiary of Intersil) to be an Unrestricted Subsidiary unless such
Subsidiary or any of its Subsidiaries owns any Capital Stock or Indebtedness of,
or owns or holds any Lien on any property of, Intersil or any other Subsidiary
of Intersil that is not a Subsidiary of the Subsidiary to be so designated;
provided, however, that either (A) the Subsidiary to be so designated has total
assets of $1,000 or less or (B) if such Subsidiary has assets greater than
$1,000, such designation would be permitted under Section 6.3. The Board of
Directors of Intersil may designate any Unrestricted Subsidiary to be a
Restricted Subsidiary; provided, however, that immediately after giving effect
to such designation (x) Intersil could Incur $1.00 of additional Indebtedness
under Section 6.1(b)(i) and (y) no Default shall have occurred and be
continuing. Any such designation by the Board of Directors of Intersil shall be
evidenced to the Lender by promptly filing with the Lender a copy of the
resolution of the Board of Directors of Intersil giving effect to such
designation and an Officers' Certificate certifying that such designation
complied with the foregoing provisions.
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"Voting Stock" of any Person means all classes of Capital Stock or other
interests (including partnership interests) of such Person then outstanding and
normally entitled (without regard to the occurrence of any contingency) to vote
in the election of directors, managers or trustees thereof.
"Warrant" means, collectively, one or more warrants to purchase shares of
Common Stock issued by the Company in connection with this Agreement,
substantially in the form of Exhibit C hereto, as the same may be amended,
modified, or restated from time to time.
"Warrant Agreement" means the Warrant Agreement dated as of the date hereof
by and between the Company and the Lender in the form of Exhibit D hereto, as
the same may be amended, modified, or restated from time to time.
"Wholly Owned Subsidiary" means a Restricted Subsidiary all of the Capital
Stock of which (other than directors' qualifying shares) is owned by the Company
or one or more Wholly Owned Subsidiaries.
SECTION 1.2 Accounting Terms. For purposes of this Agreement, unless
otherwise specified, all accounting terms used herein or in any other Loan
Document shall be interpreted, all accounting determinations and computations
hereunder or thereunder shall be made, and all financial statements required to
be delivered hereunder or thereunder shall be prepared in accordance with GAAP.
In the event any "Accounting Changes" (as defined below) shall occur and such
changes affect financial covenants, standards or terms in this Agreement, then
the Company and Lender agree to enter into negotiations in order to amend such
provisions of this Agreement so as to equitably reflect such Accounting Changes
with the desired result that the criteria for evaluating the financial condition
of the Company shall be the same as if such Accounting Changes had not been
made, and until such time as such an amendment shall have been executed and
delivered by the Company and the Lender, (A) all financial covenants, standards
and terms in this Agreement shall be calculated and/or construed as if such
Accounting Changes had not been made, and (B) the Company shall prepare
footnotes to each of the financial statements required to be delivered hereunder
that show the differences between the financial statements delivered (which
reflect such Accounting Changes) and the basis for calculating financial
covenant compliance (without reflecting such Accounting Changes) and the basis
for calculating financial covenant compliance (without reflecting such
Accounting Changes). "Accounting Changes" means: (x) changes in accounting
principles required by GAAP and implemented by the Company and (y) changes in
accounting principles recommended by the Company's certified public accountants.
All effects of purchase accounting principles (A.P.B. 16 and/or 17 and EITF
88-16 and FASB 109) shall be excluded for purposes of preparation of financial
statements and other calculations and information to be provided to the Lender.
ARTICLE 2. AMOUNT AND TERMS OF NOTE AND LOAN
SECTION 2.1 Loan and Note.
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(a) Loan. Subject to the terms and conditions of this Agreement and in
reliance upon the representations and warranties of the Company herein
set forth, the Lender hereby agrees to lend to the Company on the
Closing Date, an amount equal to $30,000,000.
(b) Payment of Loan. The unpaid principal amount of the Loan plus all
accrued and unpaid interest thereon and all other amounts owed
hereunder with respect thereto shall be paid in full in cash on the
Maturity Date.
(c) Note. On the Closing Date, the Company shall execute and deliver to
the Lender the Note dated as of the Closing Date, to evidence the Loan
made on such date, in the aggregate principal amount of $30,000,000.
SECTION 2.2 Interest on the Loan.
(a) Rate of Interest. Except as provided in Section 2.2(d) below, the Loan
shall bear interest on the unpaid principal amount thereof from the
date made through maturity (whether by acceleration or otherwise) at a
rate equal to 13.50% per annum.
(b) Interest Payments.
(i) Interest shall be payable with respect to the Loan, in arrears on
and to each Interest Payment Date commencing on the Initial
Interest Payment Date, and upon any prepayment of the Loan (to
the extent of accrued interest on the principal amount of the
Loan so prepaid) and at maturity of the Loan.
(ii) On any Interest Payment Date after the Closing Date ("PIK
Interest Dates"), the Company may, at its election, pay the
unpaid accrued interest with respect to the Loan due on any PIK
Interest Date by (A) issuing to the Lender or any other holder of
the Notes one or more Notes (the "Interest Notes") in an
aggregate principal amount equal to such unpaid accrued interest
to be paid on such PIK Interest Date, or (B) adding such unpaid
accrued interest to the then outstanding principal amount of the
Loan, in either case, minus the amount of such interest paid in
cash.
(iii) All Interest Notes shall have the same terms and conditions as
the Note issued pursuant to Section 2.1.
(c) Post-Default Interest. Following the occurrence and during the
continuance of an Event of Default or Senior Default, to the extent
permitted by applicable law, the Loan and Interest Notes shall bear
interest at a rate equal to 2.00% per annum in excess of the rate of
interest otherwise payable under this Agreement for the Loan.
(d) Computation of Interest. Interest on the Loan shall be computed on the
basis of a 360-day year. In computing such interest, the date or dates
of the making of the Loan shall be included and the date of payment
shall be excluded.
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SECTION 2.3 Prepayments and Payments.
(a) Prepayments.
(i) Voluntary Prepayments. The Company may, upon not less than five
(5) Business Days and not more than thirty-five (35) Business
Days prior written notice to the Lender (which notice shall be
irrevocable), at any time and from time to time, prepay the Loan,
in whole or in part, in an aggregate minimum amount of $1,000,000
and integral multiples of $500,000 in excess of such amount;
provided, that the Company shall prepay the Loan at the
prepayment prices (expressed as a percentage of principal amount)
set forth below, plus accrued and unpaid interest thereon, if
any, to the applicable prepayment date:
% of Principal
Prepayment Date During the Period Being Paid
- - -----------------------------------------------------------------------------
After two years following the Closing Date through and 105%
including August 15, 2002
August 16, 2002 through and including 104%
August 15, 2003
August 16, 2003 through and including 103%
August 13, 2004
August 14, 2004 through and including 102%
August 15, 2005
August 16, 2005 through and including 101%
August 15, 2006
August 16, 2006 and thereafter 100%
Voluntary prepayments shall be credited against the Loan pursuant to the terms
and conditions of Section 2.3(a)(iii). Amounts of the Loan so prepaid may not be
reborrowed.
(ii) Mandatory Prepayments.
(A) Equity Issuance. To the extent not (x) required by the Senior
Credit Agreement to prepay any Senior Debt and/or reduce the commitments
for the Senior Debt, (y) required by the Subordinated Notes Documents to
prepay Indebtedness thereunder, or (z) voluntarily used by the Company or
Intersil to prepay or repay any Senior Debt and/or reduce the commitments
for the Bank Debt, upon any issuance of Capital Stock (other than
Disqualified Stock) of the Company or Intersil in one or more public
offerings (such issuance, an "Equity Issuance") and to the extent
permissible under the Senior Debt Documents, the Company shall apply an
amount equal to 100% of the Net Cash Proceeds of such Equity Issuance to
the prepayment of the Loan, all as provided in subsection 2.3(a)(iii)
below. Concurrently with the making of any prepayment pursuant to this
subsection 2.3(a)(ii)(A), the Company shall deliver to the Lender an
Officer's Certificate demonstrating the derivation of Net Cash Proceeds of
the Equity Issuance. The Company shall provide Lender at least ten (10)
Business Days notice prior to any prepayment under this subsection
2.3(a)(ii)(A).
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(B) Change of Control. Simultaneously with the occurrence of a Change
in Control (the "Change of Control Date"), the Lender shall have the right,
but not the obligation, to require the prepayment of the Loan in whole,
together with a prepayment premium of 1.00% on the then outstanding
principal amount of the Loan; provided, that such right shall be subject to
the terms of Article 8 and the Senior Debt Documents. Within thirty (30)
days following a Change in Control Date, the Company shall give a written
notice to the Lender stating that a Change in Control has occurred. The
Lender shall, within ten (10) Business Days receipt of such notice, notify
the Company if it will require a prepayment hereunder. Any repayment of the
Loan, in whole or in part, made in connection with a Change in Control not
pursuant to this subsection 2.3(a)(ii)(B) shall be a voluntary prepayment
of the Loan made pursuant to subsection 2.3(a)(i).
(iii) Application of Prepayments. All prepayments (whether
voluntary or mandatory) shall include payment of accrued interest on
the principal amount of the Loan so prepaid and shall be applied to
payment of interest before application to principal. All mandatory
prepayments under Section 2.3(a)(ii) shall not include any prepayment
premiums. All mandatory prepayments which are applied to principal on
the Note will be applied to the scheduled installments in inverse
order of maturity thereof. All voluntary prepayments which are applied
to principal will be applied to each scheduled installment on a pro
rata basis.
(b) Manner and Time of Payment. All payments by the Company hereunder and
under the Note of principal, interest, premium, and fees shall be made without
defense, set off, or counterclaim, in same day funds and delivered to the Lender
not later than 2:00 P.M. (New York time) on the date due at 399 Park Avenue,
14th Floor, New York, New York, or such other place designated in writing by the
Lender and delivered to the Company, for the account of the Lender. Funds
received by the Lender after such time shall be deemed to have been paid by the
Company on the next succeeding Business Day.
(c) Payments on Non-Business Days. Whenever any payment to be made
hereunder or under the Note shall be stated to be due on a day which is not a
Business Day, the payment shall be made on the next succeeding Business Day and
such extension of time shall be included in the computation of the payment of
interest hereunder or under the Note.
(d) Notation of Payment. The Lender agrees that before disposing of the
Note held by it, or any part thereof (other than by granting participations
therein), the Lender will make a notation thereon of all principal payments
previously made thereon and of the date to which interest thereon has been paid
and will notify the Company of the name and address of the transferee of that
Note; provided, that the failure to make (or any error in the making of) a
notation of the Loan made under such Note or to notify the Company of the name
and address of a transferee shall not limit or otherwise affect the obligation
of the Company hereunder or under such Note with respect to the Loan and
payments of principal or interest on such Note.
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SECTION 2.4 Use of Proceeds.
(a) Loan. The proceeds of the Loan to be made on the Closing Date
shall be used by the Company to make an equity contribution to Intersil to
partially finance the Acquisition and for general corporate purposes.
(b) Margin Regulations. No portion of the proceeds of any borrowing
under this Agreement shall be used by any Credit Party in any manner which
might cause the borrowing or the application of such proceeds to violate
Regulations T, U or X or any other regulation of the Board of Governors of
the Federal Reserve System, or to violate the Exchange Act, in each case as
in effect on the date or dates of such borrowing and such use of proceeds.
SECTION 2.5 Closing Fee. On the Closing Date, the Company shall pay to the
Lender a nonrefundable closing fee in the amount of $600,000. Such closing fee
shall be nonrefundable under all circumstances.
ARTICLE 3. CONDITIONS TO LOAN
SECTION 3.1 Conditions to Loan. The obligation of the Lender to make the
Loan hereunder on the Closing Date is subject to the satisfaction of all of the
following conditions:
(a) Organizational Documents. On or before the Closing Date, the
Lender shall have received the following items, each of which shall be in
form and substance satisfactory to the Lender and, unless otherwise noted,
dated the Closing Date:
(i) a certified copy of the charter of the each of the Credit
Parties certified by the Secretary of the State of the relevant Credit
Party's state of incorporation, together with a good standing
certificate from the Secretary of State of the relevant Credit Party's
state of incorporation to be dated a recent date prior to the Closing
Date;
(ii) a copy of the by-laws of each of the Credit Parties, such
copy certified as of the Closing Date by the Secretary or an Assistant
Secretary of the relevant Credit Party;
(iii) resolutions of the Board of Directors of each of the Credit
Parties and, if necessary, shareholders, approving and authorizing the
execution, delivery and performance of the Loan Documents to which the
relevant Credit Party is a party and any other documents, instruments,
and certificates required to be executed by each party thereto in
connection therewith, certified as of the Closing Date by the
Secretary or an Assistant Secretary of the relevant Credit Party as
being in full force and effect without modification or amendment;
(iv) signature and incumbency certificates of the officers of the
Company executing the Loan Documents; and
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(v) executed copies of the Loan Documents and such other
documents and information as the Lender may reasonably request.
(b) Potential Event of Default; Event of Default. No event shall have
occurred and be continuing or would result from the consummation of the
borrowing contemplated hereby which would constitute an Event of Default or
Potential Event of Default.
(c) No Injunction, etc. No order, judgment, or decree of any court,
arbitrator or governmental authority shall enjoin or restrain the Lender
from making the Loan.
(d) Regulations T, U or X. The making of the Loan shall not violate
Regulations T, U or X of the Federal Reserve Board.
(e) Acquisition. All conditions precedent to the Acquisition set forth
in the Purchase Agreement shall have been satisfied or waived.
(f) Fees and Expenses. The Lender shall have received payment in full
for all expenses (including reasonable attorney's fees) incurred in
connection with the negotiation and execution of this Agreement and the
Loan Documents and the closing fee required by Section 2.5.
(g) Senior Debt Documents. The Company shall have entered into the
Senior Debt Documents and copies thereof shall have been delivered to the
Lender and conditions to the consummation of the Senior Debt Documents as
in effect on the date hereof will have been satisfied or waived.
(h) Material Adverse Changee. No change which could reasonably be
expected to have a Material Adverse Effect shall have occurred since July
2, 1999.
ARTICLE 4. REPRESENTATIONS AND WARRANTIES
In order to induce the Lender to enter into this Agreement and to make the
Loan, each of the Credit Parties represents and warrants to the Lender that:
SECTION 4.1 Organization and Good Standing. Each Credit Party is a
corporation, duly organized and existing in good standing under the laws of its
jurisdiction of incorporation. Each Credit Party has the corporate power and
authority to own its properties and assets and to transact the business in which
it is engaged and is duly qualified as a foreign corporation and in good
standing in all states in which it is required to be so qualified, except where
failure to be so qualified could not reasonably be expected to have a Material
Adverse Effect.
SECTION 4.2 Authorization and Power. Each Credit Party, to the extent it is
a party thereto, has the corporate power and requisite authority, and has taken
all corporate action necessary, to execute, deliver and perform its obligations
under the Loan Documents.
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SECTION 4.3 No Conflicts or Consents. The execution, delivery, and
performance by each Credit Party of its obligations under the Loan Documents and
the Senior Debt Documents, the consummation of any of the transactions
contemplated thereby, and the consummation of the Acquisition (collectively, the
"Transactions"), and compliance with the terms and provisions hereof or thereof
will not contravene or conflict with any provision of law to which any Credit
Party is subject or any material judgment, license, order, or permit applicable
to any Credit Party, or any material Contractual Obligation of any Credit Party,
or violate any provision of the charters or by-laws of any Credit Party, which
could reasonably be expected, in any case, to have a Material Adverse Effect. No
consent, approval, authorization, or order of any Governmental Authority or
other Person is required in connection with the consummation of the
Transactions, except for such required consents, approvals, and authorizations
which (a) have been obtained by the relevant Credit Party or permanently waived
in writing, or (b) the failure to obtain could not reasonably be expected to
have a Material Adverse Effect.
SECTION 4.4 Enforceable Obligations. The Loan Documents have been duly
executed and delivered by each Credit Party (to the extent such Credit Party is
a party thereto) and are, or will be, the legal and binding obligations of each
Credit Party, enforceable in accordance with their respective terms, subject to
applicable laws of bankruptcy, insolvency, and similar laws affecting creditors'
rights and the application of general rules at equity.
SECTION 4.5 No Event of Default. No event has occurred and is continuing
which constitutes a Potential Event of Default or an Event of Default.
SECTION 4.6 Use of Proceeds; Margin Stock. The proceeds of the Loan will be
used solely for the purposes specified herein. None of such proceeds will be
used to, or to reduce or retire any Indebtedness which was originally incurred
to, purchase or carry a Margin Stock, or for any other purpose which might
constitute this transaction a "purpose credit" within the meaning of Regulations
G, T, U or X. No Credit Party has taken nor will take any action which might
cause any of the Loan Documents to violate Regulations G, T, U or X, or any
other regulations of the Board of Governors of the Federal Reserve System or to
violate Section 8 of the Exchange Act or any rule or regulation thereunder, in
each case as now in effect or as the same may hereafter be in effect.
SECTION 4.7 No Financing of Regulated Corporate Takeovers. No proceeds of
the Loan will be used to acquire any security in any transaction which is
subject to Sections 13 or 14 of the Exchange Act, including particularly (but
without limitation) Sections 13(d) and 14(d) thereof.
SECTION 4.8 Compliance with Law. Each Credit Party is in compliance with
all laws, except where failure to so comply could not reasonably be expected to
have a Material Adverse Effect.
SECTION 4.9 Capital Structure and Subsidiaries.
(a) As of the Closing Date, the authorized Capital Stock of the
Company is as set forth on Schedule 4.13. Except as set forth on Schedule
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4.13, as of the Closing Date, all outstanding shares of each class of such
Capital Stock were duly authorized and validly issued, and are fully paid
and nonassessable. As of the Closing Date, other than the Warrants or as
set forth in Schedule 4.13, there are no outstanding securities, rights, or
other agreements of any nature that require any Credit Party or any of
their respective Subsidiaries to issue any of its Capital Stock.
(b) Schedule 4.13 sets forth a true and complete list of each
Subsidiary of each of the Credit Parties and each such Subsidiary's
jurisdiction of incorporation.
SECTION 4.10 Investment Company Act. No Credit Party is an "investment
company", or a company "controlled" by an "investment company", within the
meaning of the Investment Company Act of 1940, as amended.
SECTION 4.11 Public Utility Holding Company Act. No Credit Party is a
"holding company", an "affiliate" of a "holding company" or a "subsidiary
company" of a "holding company" within the meaning of the Public Utility Holding
Company Act of 1935, as amended.
SECTION 4.12 Financial Condition. Immediately after the consummation of the
Transactions to occur on the Closing Date, (a) the fair value of the assets of
each Credit Party, at a fair valuation, will exceed its debts and liabilities,
subordinated, contingent or otherwise; (b) the present fair saleable value of
the property of each Credit Party will be greater than the amount that will be
required to pay the probable liability of its debts and other liabilities,
subordinated, contingent or otherwise, as such debts and other liabilities
become absolute and matured; (c) each Credit Party will be able to pay its debts
and liabilities, subordinated, contingent or otherwise, as such debts and
liabilities become absolute and matured; and (d) each Credit Party will not have
unreasonably small capital with which to conduct the business in which it is
engaged as such business is now conducted and is proposed to be conducted
following the Closing Date.
SECTION 4.13 Senior Debt Documents. The Company has delivered to the Lender
true and correct copies of the Senior Debt Documents as in effect on the date
hereof. The representations and warranties of the Company contained in the
Senior Debt Documents are true and correct in all material respects. There exist
no material defaults with respect to the Senior Debt Documents nor any basis for
the exercise by any party thereto of any rights of acceleration, cancellation,
rescission, or any rights of offset.
SECTION 4.14 Acquisition. The transactions contemplated by the Purchase
Agreement have been consummated in accordance with the terms of the Purchase
Agreement, and nothing has come to the Credit Parties' attention that would
indicate that any of the representations and warranties contained in such
agreement are not true and correct in all material respects and, except as
otherwise disclosed to the Lender, none of the material terms thereof have been
modified, amended, or waived.
ARTICLE 5. AFFIRMATIVE COVENANTS
Each of the Credit Parties covenants and agrees that, until the Loan and
the Notes and all other amounts due under this Agreement have been paid in full,
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unless the Lender shall otherwise give prior written consent, the Credit Parties
shall jointly and severally perform all covenants contained in this Article 5:
SECTION 5.1 Financial Statements and Other Reports. The Credit Parties will
deliver to the Lender:
(a) within 90 days after the end of each Fiscal Year, its consolidated
and consolidating balance sheet and related statements of income and cash
flows showing the financial condition of the Company and Intersil and their
respective consolidated Subsidiaries as of the close of such Fiscal Year
and the results of its operations and the operations of such Subsidiaries
during such year, all audited by Ernst & Young LLP or other independent
public accountants of recognized national standing and accompanied by an
opinion of such accountants (which shall not be qualified in any material
respect) to the effect that such consolidated financial statements fairly
present the financial condition and results of operations of each of the
Company and Intersil and their respective consolidated Subsidiaries on a
consolidated basis in accordance with GAAP consistently applied;
(b) within 45 days after the end of each of the first three Fiscal
Quarters of each Fiscal Year, its consolidated and consolidating balance
sheet and related statements of income and cash flows showing the financial
condition of each of the Company and Intersil and their respective
consolidated Subsidiaries as of the close of such Fiscal Quarter and the
results of its operations and the operations of such Subsidiaries during
such Fiscal Quarter and the then elapsed portion of the Fiscal Year, all
certified by one of its financial officers as fairly presenting the
financial condition and results of operations of each of the Company and
Intersil and their respective consolidated Subsidiaries on a consolidated
basis in accordance with GAAP consistently applied, subject to normal
year-end audit adjustments;
(c) promptly after the same become publicly available, copies of all
periodic and other reports, proxy statements and other materials filed by
the Company or any Subsidiary with the Securities and Exchange Commission,
or any Governmental Authority succeeding to any or all of the functions of
said Commission, or with any national securities exchange, or distributed
to holders of its Indebtedness pursuant to the terms of the documentation
governing such Indebtedness (or any trustee, agent or other representative
therefor), as the case may be;
(d) promptly after the receipt thereof by the Company, Intersil or any
of their respective Subsidiaries, a copy of any "management letter"
received by any such person from its certified public accountants and the
management's responses thereto; or
(e) no later than 30 days following delivery to the lender under the
Senior Credit Agreement, the budget delivered to the lender under the
Senior Credit Agreement (including budgeted statements of income by each of
Intersil's business units and sources and uses of cash and balance sheets)
prepared by the Company for (i) each of the four Fiscal Quarters of such
Fiscal Year prepared in detail and (ii) each of the five years immediately
following such Fiscal Year prepared in summary form, in each case, of the
Company and its Subsidiaries, accompanied by the statement of a financial
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officer of the Company to the effect that the budget is a reasonable
estimate for the period covered thereby.
SECTION 5.2 Corporate Existence, Etc. Except as otherwise expressly
permitted herein, each of the Credit Parties will, and shall cause each of its
Subsidiaries to, at all times preserve and maintain in full force and effect its
corporate existence and good standing under the laws of its state or
jurisdiction of incorporation, except when the failure to so preserve or
maintain could not reasonably be expected to have a Material Adverse Effect.
SECTION 5.3 Payment of Taxes; Tax Consolidation.
(a) Each of the Credit Parties and any consolidated group of which any
Credit Party is a member will, and will cause each of their respective
Subsidiaries to, pay all Taxes imposed upon it or any of its properties or
assets or in respect of any of its franchises, business, income, or
property before any material penalty accrues thereon, prior to the time
when any material penalty or fine shall be incurred with respect thereto;
provided, that no such Taxes need be paid with respect to any Contested
Claim.
(b) None of the Credit Parties will, or will permit any of its
Subsidiaries to, file or consent to the filing of any consolidated income
tax return with any Person other than the Credit Parties, or any of their
Subsidiaries or such other Person as may be reasonably acceptable to the
Lender.
SECTION 5.4 Inspection. No more than twice during each annual period
following the Closing Date, the Company shall permit, and shall cause each of
its Subsidiaries to permit, representatives of the Lender to visit and inspect
any of their respective properties, to examine their respective corporate,
financial and operating records, and make copies thereof or abstracts therefrom,
and to discuss their respective affairs, finances and accounts with their
respective directors, officers, and independent public accountants, all at such
reasonable times during normal business hours and as often as may be reasonably
requested, upon reasonable advance notice to the Company; provided, when an
Event of Default exists the Lender may do any of the foregoing at the expense of
the Company at any time during normal business hours and without advance notice.
SECTION 5.5 Compliance with Laws, Etc. Each Credit Party shall comply with,
and shall cause each of their respective Subsidiaries to comply with, in all
material respects, all Requirements of Law of any Governmental Authority having
jurisdiction over it or its business, except as may be contested in good faith
or as to which a bona fide dispute may exist.
SECTION 5.6 Maintenance of Accurate Records, Etc. Each Credit Party shall
maintain, and will cause each of its Subsidiaries to maintain, proper books of
records and accounts, in which full, true and correct entries in conformity with
GAAP consistently applied shall be made of all financial transactions and
matters involving the assets and business of each Credit Party and its
Subsidiaries.
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SECTION 5.7 Lender Meeting. Each Credit Party will participate in a meeting
with the Lender once during each Fiscal Year to be held at a location and a time
selected by each Credit Party and reasonably acceptable to the Lender.
ARTICLE 6. NEGATIVE AND FINANCIAL COVENANTS
The Company covenants and agrees that until the Loans and the Notes and all
amounts due under this Agreement at the time of such termination or payment have
been paid in full, unless the Lender shall otherwise give prior written consent,
the Company shall perform all covenants in this Article 6:
SECTION 6.1 Indebtedness.
(a) The Company shall not, directly or indirectly, Incur any
Indebtedness other than (i) Indebtedness under this Agreement, (ii) Senior
Debt, (iii) Indebtedness in respect of indemnities of directors and
officers of the Company, (iv) Indebtedness in respect of the Existing
Preferred Stock (including the 12% Junior Subordinated Debentures due 2011
in exchange therefor) and the Existing Subordinated Note and (v)
Indebtedness which, by its terms, is senior in right of payment to
Indebtedness under this Agreement and senior to or pari passu with any
Senior Debt.
(b) The Company shall not permit Intersil or any of Intersil's
Restricted Subsidiaries to, directly or indirectly, Incur any Indebtedness,
except:
(i) Indebtedness if, after giving effect thereto, the
Consolidated Coverage Ratio does not exceed 2.25 to 1.00 if such
Indebtedness is Incurred prior to August 15, 2001 or 2.5 to 1.00 if
such Indebtedness is Incurred thereafter;
(ii) Indebtedness of Intersil or any Restricted Subsidiary
Incurred pursuant to the Revolving Credit Facilities; provided, that
immediately after giving effect to any such Incurrence, the aggregate
principal amount of all Indebtedness incurred under this clause (ii)
and then outstanding does not exceed the greater of (x) $70.0 million
and (y) the sum of 50% of the book value of the inventory of Intersil
and its Restricted Subsidiaries and 85% of the book value of the
accounts receivables of Intersil and its Restricted Subsidiaries;
(iii) Indebtedness of Intersil Incurred pursuant to the Term Loan
Facilities; provided, that after giving effect to any such Incurrence,
the aggregate principal amount of all Indebtedness Incurred under this
clause (iii) and then outstanding does not exceed $205.0 million less
the aggregate sum of all principal payments actually made from time to
time after the Closing Date with respect to such Indebtedness pursuant
to Section 6.5 (a)(iii)(A) below;
(iv) Indebtedness of Intersil or any Restricted Subsidiary owed
to and held by Intersil or a Restricted Subsidiary; provided, that any
subsequent issuance or transfer of any Capital Stock which results in
any such Restricted Subsidiary ceasing to be a Restricted Subsidiary
or any subsequent transfer of such Indebtedness (other than to the
Company or another Restricted Subsidiary) shall be deemed, in each
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case, to constitute the Incurrence of such Indebtedness by the issuer
thereof; provided further, that any such Indebtedness of Intersil or a
Restricted Subsidiary shall be unsecured and subordinated in right of
payment to the Note, pursuant to a written agreement to that effect;
(v) Indebtedness outstanding on the Closing Date, including the
Subordinated Notes and Indebtedness assumed or to be assumed in
respect of the Harris Loan Obligations;
(vi) Refinancing Indebtedness in respect of Indebtedness Incurred
pursuant to clauses (i), (v), (vii) or this clause (vi);
(vii) Indebtedness of a Person Incurred and outstanding on or
prior to the date on which such Person was acquired by Intersil or a
Restricted Subsidiary (other than Indebtedness Incurred in connection
with, or to provide all or any portion of the funds or credit support
utilized to consummate, the transaction or series of related
transactions pursuant to which such Person was acquired by Intersil or
a Restricted Subsidiary); provided, that after giving pro forma effect
thereto, (a) the Consolidated Coverage Ration increases as a
consequence of such Incurrence and related acquisition and (b) after
giving effect thereto, the Consolidated Coverage Ratio is at least 1.5
to 1.0;
(viii) Hedging Obligations of Intersil or any Restricted
Subsidiary under or with respect to Interest Rate Agreements and
Currency Agreements entered into in the ordinary course of business
and not for the purpose of speculation;
(ix) Indebtedness of Intersil or any Restricted Subsidiary in
respect of performance bonds and surety or appeal bonds entered into
by Intersil and the Restricted Subsidiaries in the ordinary course of
their business;
(x) Indebtedness consisting of Guarantees of Indebtedness
Incurred pursuant to paragraph (a) or pursuant to clauses (i), (ii),
(iii), (v), (vi) and (vii) above and (xiv) below;
(xi) Indebtedness of Intersil or any Restricted Subsidiary
arising from the honoring by a bank or other financial institution of
a check, draft or similar instrument inadvertently (except in the case
of daylight overdrafts) drawn against insufficient funds in the
ordinary course of business, provided that such Indebtedness is
satisfied within five (5) Business Days of Incurrence;
(xii) Indebtedness (including Capital Lease Obligations) incurred
by Intersil or any of its Restricted Subsidiaries to finance the
purchase, lease or improvement of property (real or personal) or
equipment (whether through the direct purchase of assets or the
Capital Stock of any Person owning such assets) and Refinancing
Indebtedness in respect of any Indebtedness Incurred pursuant to this
clause (xii) in an aggregate principal amount which, when added
together with the amount of Indebtedness Incurred pursuant to this
clause (12) and then outstanding, does not exceed the greater of (A)
$15.0 million and (B) 3.5% of Total Assets; provided, that in the case
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of any Capital Lease Obligations, the assets subject to the related
capital lease are not owned or used by Intersil or any Restricted
Subsidiary on the Closing Date.
(xiii) Indebtedness of Intersil or any Restricted Subsidiary
consisting of indemnification, adjustment of purchase price or similar
obligations, in each case incurred in connection with the disposition
of any assets of Intersil or any Subsidiary in a principal amount not
to exceed the gross proceeds actually received by Intersil or any
Subsidiary in connection with such disposition;
(xiv) Indebtedness of a Foreign Subsidiary Incurred to finance
the working capital of such Foreign Subsidiary;
(xv) Indebtedness of Intersil issued to directors, employees,
officers or consultants of Intersil or a Restricted Subsidiary in
connection with the redemption or purchase of Capital Stock that by
its terms is subordinated to the Notes, is not secured by any assets
of Intersil or its Restricted Subsidiaries and does not require cash
payments on or prior to the Maturity Date of the Notes and Refinancing
Indebtedness in respect thereof, in an aggregate principal amount
which, when added together with the amount of Indebtedness Incurred
pursuant to this clause (xv) and then outstanding, does not exceed
$5.0 million; and
(xvi) Indebtedness of Intersil and the Restricted Subsidiaries in
an aggregate principal amount which, together with all other
Indebtedness of Intersil and the Restricted Subsidiaries outstanding
on the date of such Incurrence (other than Indebtedness permitted by
clauses (i) through (xv) above or paragraph (a) above) does not exceed
$40.0 million.
(c) For purposes of determining compliance with the foregoing
covenant, (i) in the event that an item of Indebtedness meets the criteria
of more than one of the types of Indebtedness described above, Intersil, in
its sole discretion, will classify such item of Indebtedness and only be
required to include the amount and type of such Indebtedness in one of the
above clauses and (ii) an item of Indebtedness may be divided and
classified in more than one of the types of Indebtedness described above.
(d) Notwithstanding paragraph (a) and (b) above, the Company shall not
Incur (i) any Indebtedness if such Indebtedness is subordinate or junior in
ranking in any respect to any Senior Debt of the Company unless such
Indebtedness is expressly subordinated or pari passu in right of payment to
the Note or (ii) any Secured Debt (other than trade payables incurred in
the ordinary course of business) that is not Senior Debt unless
contemporaneously therewith effective provision is made to secure the Note,
equally and ratably with such Secured Debt for so long as such Secured Debt
is secured by a Lien. The parties hereto acknowledge and agree that the
Existing Subordinated Note is subordinated in right of payment to the Loan.
(e) For purposes of determining compliance with any U.S. dollar
denominated restriction on the Incurrence of Indebtedness where the
Indebtedness is denominated in a different currency, the amount of such
Indebtedness will be the U.S. Dollar Equivalent determined on the date of
Incurrence of such Indebtedness; provided, that if any such Indebtedness
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denominated in a different currency is subject to a Currency Agreement with
respect to U.S. dollars, covering all principal, premium, if any, and
interest payable on such Indebtedness the amount of such Indebtedness
expressed in U.S. dollars will be as provided in such Currency Agreement.
The principal of any Refinancing Indebtedness Incurred in the same currency
as the Indebtedness being refinanced will be the U.S. Dollar Equivalent of
the Indebtedness Refinanced, except to the extent that (i) such U.S. Dollar
Equivalent was determined based on a Currency Agreement, in which case the
Refinancing Indebtedness will be determined in accordance with the
preceding sentence, and (ii) the principal amount of the Refinancing
Indebtedness exceeds the principal amount of the Indebtedness being
Refinanced, in which case the U.S. Dollar Equivalent of such excess will be
determined on the date such Refinancing Indebtedness is Incurred.
SECTION 6.2 Transactions with Affiliates. (a) The Company will not, and
will not permit Intersil or any of its Restricted Subsidiaries to enter into or
permit to exist any transaction (including the purchase, sale, lease or exchange
of any property, employee compensation arrangements or the rendering of any
service) with any Affiliate of the Company, Intersil or such Restricted
Subsidiaries (an "Affiliate Transaction") unless the terms thereof:
(i) are no less favorable to the Company, Intersil or such
Restricted Subsidiary than those that could be obtained at the time of
such transaction in arm's-length dealings with a Person who is not
such an Affiliate;
(ii) if such Affiliate Transaction involves an amount in excess
of $2.5 million, (A) are set forth in writing and (B) have been
approved by a majority of the members of the Board of Directors of the
applicable entity having no personal stake in such Affiliate
Transaction; and
(iii) if such Affiliate Transaction involves an amount in excess
of $10.0 million, have been determined by (A) a nationally recognized
investment banking firm to be fair, from a financial standpoint, to
the Company, Intersil and its Restricted Subsidiaries or (B) an
accounting or appraisal firm nationally recognized in making such
determinations to be on terms that are not less favorable to the
Company, Intersil and its Restricted Subsidiaries than the terms that
could be obtained in an arm's-length transaction from a Person that is
not an Affiliate of the Company, Intersil or such Restricted
Subsidiaries.
(b) The provisions of Section 6.2(a) shall not prohibit:
(i) any Restricted Payment permitted to be paid pursuant to
Section 6.3;
(ii) any issuance of securities, or other payments, awards or
grants in cash, securities or otherwise pursuant to, or the funding
of, employment arrangements, stock options and stock ownership plans
approved by the Board of Directors of the Company or Intersil, as
applicable;
(iii) the grant of stock options or similar rights to employees
and directors of the Company pursuant to plans approved by the Board
of Directors of the Company or Intersil, as applicable;
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(iv) loans or advances to employees in the ordinary course of
business in accordance with the past practices of Intersil or its
Restricted Subsidiaries, but in any event not to exceed $5.0 million
in the aggregate outstanding at any one time;
(v) reasonable fees, compensation or employee benefit
arrangements to and indemnity provided for the benefit of directors,
officers or employees of the Company, Intersil or any Subsidiary in
the ordinary course of business;
(vi) any Affiliate Transaction between the Company and a Wholly
Owned Subsidiary or between Wholly Owned Subsidiaries;
(vii) any Affiliate Transaction with Harris pursuant to written
agreements in effect on the Closing Date and as amended, renewed or
extended from time to time; provided, however, that any such
amendment, renewal or extension shall not contain terms which are
materially less favorable to the Company or Intersil than those in the
agreements in effect on the Closing Date;
(viii) the issuance or sale of any Capital Stock (other than
Disqualified Stock) of the Company or Intersil; and
(ix) any Tax Sharing Agreement; provided, that the aggregate
amount payable by the Company pursuant thereto shall not exceed the
amount of taxes that the Company would have been liable for on a
stand-alone basis.
SECTION 6.3 Restricted Payments. (a) The Company will not permit Intersil
or any Restricted Subsidiary, directly or indirectly, to make a Restricted
Payment if at the time Intersil or such Restricted Subsidiary makes such
Restricted Payment: (i) an Event of Default shall have occurred and be
continuing (or would result therefrom); (ii) upon giving effect to such
Restricted Payment, Intersil could not incur at least $1.00 of additional
Indebtedness pursuant to Section 6.1(b)(i); or (iii) upon giving effect to such
Restricted Payment, the aggregate of all Restricted Payments made on or after
the Closing Date exceeds the sum of: (A) 50% of the Consolidated Net Income
accrued during the period (treated as one accounting period) from the beginning
of the Fiscal Quarter immediately following the Fiscal Quarter during which the
Note is originally issued to the end of the most recent Fiscal Quarter ending at
least 45 days (or, if less, the number of days after the end of such Fiscal
Quarter as the consolidated financial statements of Intersil shall be provided
to the Lender pursuant to this Agreement) prior to the date of such Restricted
Payment (or, in case such Consolidated Net Income shall be a deficit, minus 100%
of such deficit); (B) the aggregate Net Cash Proceeds received by Intersil from
the issuance or sale of or capital contribution in respect of, its Capital Stock
(other than Disqualified Stock) subsequent to the Closing Date (other than an
issuance or sale to a Subsidiary of Intersil and other than an issuance or sale
to an employee stock ownership plan or to a trust established by Intersil or any
of its Subsidiaries for the benefit of their employees to the extent that the
purchase by such plan or trust is financed by Indebtedness of such plan or trust
to Intersil or any Subsidiary or Indebtedness Guaranteed by Intersil or any
Subsidiary) and the fair market value (as determined in good faith by resolution
of the Board of Directors of Intersil) of property (other than cash)
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constituting Cash Equivalents or a Related Business and received by Intersil or
a Restricted Subsidiary subsequent to the Closing Date as a contribution to its
common equity capital (other than any such property received from a Subsidiary
or that was financed by Intersil or any Restricted Subsidiary; (C) the amount by
which Indebtedness of Intersil or any Subsidiary is reduced on Intersil's
consolidated balance sheet upon the conversion or exchange (other than by a
Subsidiary of Intersil) subsequent to the Closing Date of any Indebtedness of
Intersil or any Restricted Subsidiary convertible or exchangeable for Capital
Stock (other than Disqualified Stock) of Intersil (less the amount of any cash,
or the fair value of any other property, distributed by Intersil or any
Restricted Subsidiary upon such conversion or exchange); and (D) an amount equal
to the sum of (x) the net reduction in Investments (other than Permitted
Investments) made by Intersil or any Restricted Subsidiary in any Person
resulting from repurchases, repayments or redemptions of such Investments by
such Person, proceeds realized on the sale of such Investment or proceeds
representing the return of capital (excluding dividends and distributions), in
each case received by Intersil or any Restricted Subsidiary, and (ii) to the
extent such Person is an Unrestricted Subsidiary, the portion (proportionate to
Intersil's equity interest in such Subsidiary) of the fair market value of the
net assets of such Unrestricted Subsidiary at the time such Unrestricted
Subsidiary is designated a Restricted Subsidiary; provided, however, that the
foregoing sum shall not exceed, in the case of such Person or Unrestricted
Subsidiary, the amount of Investments (excluding Permitted Investments)
previously made (and treated as a Restricted Payment by Intersil or any
Restricted Subsidiary in such Person or Unrestricted Subsidiary).
(b) The provisions of Section 6.3(a) shall not be violated by:
(i) any Restricted Payment made by exchange for, or out of the
proceeds of the substantially concurrent sale of, Capital Stock of
Intersil (other than Disqualified Stock and other than Capital Stock
issued or sold to a Subsidiary of Intersil or an employee stock
ownership plan or to a trust established by Intersil or any of its
Subsidiaries for the benefit of their employees to the extent that the
purchase by such plan or trust is financed by Indebtedness of such
plan or trust to Intersil or any Subsidiary of Intersil or
Indebtedness Guaranteed by Intersil or any Subsidiary of Intersil);
provided, that (A) such Restricted Payment shall be excluded in the
calculation of the amount of Restricted Payments and (B) the Net Cash
Proceeds from such sale shall be excluded from the calculation of
amounts under subclause (B) of Section 6.3(a)(iii) above;
(ii) any purchase, repurchase, redemption, defeasance or other
acquisition or retirement for value of Indebtedness subordinate to or
pari passu with the Subordinated Notes made by exchange for, or out of
the proceeds of the substantially concurrent sale of, Indebtedness
which is permitted to be Incurred pursuant to Section 6.1; provided,
that such purchase, repurchase, redemption, defeasance or other
acquisition or retirement for value shall be excluded in the
calculation of the amount of Restricted Payments;
(iii) any purchase or redemption of Disqualified Stock of the
Company, Intersil or a Restricted Subsidiary made by exchange for, or
out of the proceeds of the substantially concurrent sale of,
Disqualified Stock of the Company, Intersil or a Restricted Subsidiary
which is permitted to be Incurred pursuant to Section 6.1; provided,
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that such purchase or redemption shall be excluded in the calculation
of the amount of Restricted Payments;
(iv) any purchase or redemption of Indebtedness subordinate to
the Notes from Net Cash Proceeds to the extent permitted by Section
6.5; provided, that such purchase or redemption shall be excluded in
the calculation of the amount of Restricted Payments;
(v) upon the occurrence of a Change of Control and within 60 days
after the completion of the purchase, if any, of the Notes pursuant to
Section 2.3(a)(ii)(B) with respect thereto, any purchase or redemption
of Indebtedness subordinate to the Notes required pursuant to the
terms thereof as a result of such Change of Control at a purchase or
redemption price not to exceed the outstanding principal amount
thereof, plus accrued and unpaid interest; provided, that (A) at the
time of such purchase or redemption no Default shall have occurred and
be continuing (or would result therefrom), (B) Intersil would be able
to Incur an additional $1.00 of Indebtedness pursuant to Section
6.1(b)(i) after giving pro forma effect to such Restricted Payment and
(C) such purchase or redemption shall be included in the calculation
of the amount of Restricted Payments;
(vi) dividends paid within 60 days after the date of declaration
thereof if it at such date of declaration such dividend would have
complied with Section 6.3(a)); provided, that at the time of payment
of such dividend, no other Default shall have occurred and be
continuing (or result therefrom); provided further, that such dividend
shall be included in the calculation of the amount of Restricted
Payments;
(vii) the repurchase or other acquisition of shares of, or
options to purchase shares of, common stock of the Company, Intersil
or any of its Subsidiaries from employees, former employees,
consultants, former consultants, directors or former directors of the
Company, Intersil or any of its Subsidiaries (or permitted transferees
of such employees, former employees, directors or former directors),
pursuant to the terms of the agreements (including employment and
consulting agreements) or plans (or amendments thereto) approved by
the Board of Directors of the applicable entity under which such
individuals purchase or sell or are granted the option to purchase or
sell, shares of such common stock; provided, however, that the
aggregate amount of such repurchases and other acquisitions shall not
exceed the sum of $5.0 million and the Net Cash Proceeds from the sale
of Capital Stock to members of management or directors of the Company,
Intersil and its Subsidiaries that occurs after the Closing Date (to
the extent the Net Cash Proceeds from the sale of such Capital Stock
have not otherwise been applied to the payment of Restricted Payments
by virtue of clause (iii)(B) of Section 6.3(a)); provided further,
that (A) such repurchases shall be excluded in the calculation of the
amount of Restricted Payments and (B) the Net Cash Proceeds from such
sale shall be excluded from the calculation of amounts under clause
(iii)(B) of Section 6.3(a);
(viii) dividends or advances to the Company in an amount
necessary to pay holding company expenses, such amount not to exceed
$500,000 in any Fiscal Year of the Company; provided, that such
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dividends and advances shall be excluded in the calculation of the
amount of Restricted Payments; or
(ix) any payment by Intersil to the Company pursuant to a Tax
Sharing Agreement; provided further, that the amount of any such
payment shall not exceed the amount of taxes that Intersil would have
been liable for on a stand-alone basis; provided, that such payment
shall be excluded in the calculation of the amount of Restricted
Payments;
(x) the distribution, as a dividend or otherwise, of shares of
Capital Stock or assets of an Unrestricted Subsidiary provided that
the fair market value (as determined in good faith by the Board of
Directors of Intersil) of such shares of Capital Stock or assets shall
not exceed the amount of the Investments that were made (and not
subsequently reduced pursuant to Section 6.3(a)(iii)(D) above) by
Intersil in such Unrestricted Subsidiary and were treated as
Restricted Payments or were included in the calculation of the amount
of the Restricted Payments previously made; provided, that (A) such
distributions shall be excluded in the calculation of the amount of
Restricted Payments, and (B) any net reduction in Investments in such
Unrestricted Subsidiary resulting from such distribution shall be
excluded from the calculation of amounts under Section 6.3(a)(iii)(D)
above; or
(xi) Restricted Payments not exceeding $5.0 million in the
aggregate; provided, that (A) at the time of Restricted Payments, no
Default shall have occurred and be continuing (or result therefrom)
and (B) such Restricted Payments shall be included in the calculation
of the amount of Restricted Payments.
SECTION 6.4 Mergers. (a) The Company shall not consolidate or merge with or
into, or convey, transfer or lease, in one transaction or a series of
transactions, all or substantially all of its assets to any Person unless, (i)
the entity formed by or surviving any such consolidation or merger (if other
than the Company), or to which such conveyance or other disposition shall have
been made the ("Surviving Entity"), is a corporation organized and existing
under the laws of the United States, any state thereof or the District of
Columbia; (ii) the Surviving Entity assumes all of the Obligations by written
instrument reasonably satisfactory to the Lender; and (iii) immediately after
giving effect to such transaction on a pro forma basis and treating any
Indebtedness which becomes an obligation of Intersil or the Surviving Entity, as
applicable, as a result of such transaction as having been incurred by Intersil
or the Surviving Entity, as applicable, at the time of the transaction, no
Potential Event of Default or Event of Default shall have occurred and be
continuing.
(b) The Company shall not permit Intersil to consolidate or merge with
or into, or convey, transfer or lease, in one transaction or a series of
transactions, all or substantially all of its assets to any Person unless,
(i) the entity formed by or surviving any such consolidation or merger (if
other than Intersil), or to which such conveyance or other disposition
shall have been made the ("Intersil Surviving Entity"), is a corporation
organized and existing under the laws of the United States, any state
thereof or the District of Columbia; (ii) the Intersil Surviving Entity
assumes all of the Obligations by written instrument reasonably
satisfactory to the Lender; (iii) immediately after giving effect to such
transaction and the use of any net proceeds therefrom on a pro forma basis,
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Intersil or the Intersil Surviving Entity, as applicable, could incur at
least $1.00 of Indebtedness pursuant to Section 6.1(b)(i) above; (iv)
immediately after giving effect to such transaction on a pro forma basis
and treating any Indebtedness which becomes an obligation of Intersil or
the Intersil Surviving Entity, as applicable, as a result of such
transaction as having been incurred by Intersil or the Intersil Surviving
Entity, as applicable, at the time of the transaction, no Potential Event
of Default or Event of Default shall have occurred and be continuing. The
provisions of this Section 6.4 shall not apply to any merger of a
Subsidiary of Intersil with or into Intersil or any merger of Intersil with
or into the Company.
SECTION 6.5 Asset Dispositions; Sale of Subsidiary Stock.
(a) The Company shall not permit Intersil or any Restricted
Subsidiaries to, make any Asset Disposition, unless:
(i) Intersil or such Restricted Subsidiary receives consideration
at the time of and for such Asset Disposition at least equal to the
fair market value (including as to the value of all non-cash
consideration) of the shares and assets disposed of in such Asset
Disposition as of the date of such Asset Disposition, as determined by
Intersil's Board of Directors in good faith and evidenced by a
resolution delivered to Lender;
(ii) at least 75% of the consideration thereof received by
Intersil or such Restricted Subsidiary is in the form of Cash or Cash
Equivalents unless such Asset Disposition consists of a disposition of
Fairchild's Malaysian Business to a Permitted Joint Venture; and
(iii) an amount equal to 100% of the Net Cash Proceeds from such
Asset Disposition is applied by Intersil (or such Restricted
Subsidiary, as the case may be):
(A) first, to the extent Intersil elects (or is required by the
terms of any Indebtedness), to prepay, repay, redeem or purchase
Senior Debt or Indebtedness (other than any Disqualified Stock) of a
Restricted Subsidiary (in each case other than Indebtedness owed to
Intersil or an Affiliate of Intersil) within one year from the later
of the date of such Asset Disposition and the receipt of such Net Cash
Proceeds;
(B) second, to the extent of the balance of such Net Cash
Proceeds after application in accordance with clause (A), to the
extent Intersil elects, to acquire Additional Assets within one year
(or enter into a binding agreement therefor within such period and
acquire such Additional Assets within 18 months) from the later of the
date of such Asset Disposition and the receipt of such Net Cash
Proceeds; and
(C) third, to the extent of the balance of such Net Cash Proceeds
after application in accordance with clauses (A) and (B) and to the
extent permissible pursuant to the Senior Debt Documents, to prepay,
repay, redeem or purchase the Loan;
provided, that in connection with any prepayment, repayment or purchase of
Indebtedness pursuant to clause (A) or (C) above, Intersil or such Restricted
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Subsidiary shall permanently retire such Indebtedness and shall cause the
related loan commitment (if any) to be permanently reduced in an amount equal to
the principal amount so prepaid, repaid or purchased. Notwithstanding the
foregoing provisions of this Section 6.5, Intersil and the Restricted
Subsidiaries shall not be required to apply any Net Cash Proceeds in accordance
with this Section 6.5 except to the extent that the aggregate Net Cash Proceeds
from all Asset Dispositions which are not applied in accordance with this
Section 6.5 exceeds $10.0 million. Pending application of Net Cash Proceeds
pursuant to this Section 6.5, such Net Cash Proceeds shall be invested in
Permitted Investments or used to reduce loans outstanding under any revolving
credit facility.
For the purposes of this Section 6.5, the following are deemed to be Cash
or Cash Equivalents: (x) the assumption of Indebtedness of Intersil or any
Restricted Subsidiary and the release of Intersil or such Restricted Subsidiary
from all liability on such Indebtedness in connection with such Asset
Disposition and (y) securities received by Intersil or any Restricted Subsidiary
from the transferee that are promptly converted by Intersil or such Restricted
Subsidiary into cash and (z) any Additional Assets (so long as such Additional
Assets were acquired for fair market value (as determined in good faith by the
Board of Directors of Intersil) in connection with the transaction giving rise
to such Asset Disposition and are used for the same or similar purpose as the
assets disposed of in such Asset Disposition), which Additional Assets shall be
deemed to have been acquired pursuant to clause (B) of the preceding paragraph
in connection with such Asset Disposition.
(b) The Company will not permit Fairchild to sell or otherwise
dispose of any Capital Stock of a Restricted Subsidiary, and will not
permit any of its Restricted Subsidiaries, directly or indirectly, to
issue or sell or otherwise dispose of any shares of Capital Stock
except (i) to Intersil or a Wholly Owned Subsidiary of Intersil, (ii)
if, immediately after giving effect to such issuance, sale or other
disposition, neither Intersil nor any of its Subsidiaries own any
Capital Stock of such Restricted Subsidiary, (iii) if, immediately
after giving effect to such issuance, sale or other disposition, any
Restricted Payment in such Person remaining after giving effect
thereto would have been permitted to be made under Section 6.3 if made
on the date of such issuance, sale or other disposition, or (iv)
directors' qualifying shares.
SECTION 6.6 Limitation on Dividend and Other Payment Restrictions Affecting
Subsidiaries. Except as expressly permitted or imposed by the terms and
conditions of the Senior Debt Documents, as may be amended or modified from time
to time pursuant thereto, and as set forth in Section 6.3 hereof, the Company
will not permit Intersil or any of its Restricted Subsidiaries to, create or
otherwise cause or permit to exist or become effective any consensual
encumbrance or restriction on the ability of Intersil any of its Restricted
Subsidiaries to (a) pay dividends or make any other distributions on its Capital
Stock to Intersil or a Restricted Subsidiary or pay any Indebtedness owed to the
Company, (b) make any loans or advances to Intersil, or (c) transfer any of its
properties or assets to Intersil.
SECTION 6.7 Amendments with Respect to Senior Credit Agreement. The Company
shall permit Intersil to amend, modify or restate the terms of the Senior Credit
Agreement other than as specifically prohibited under the terms of the
indentures governing the Subordinated Notes.
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ARTICLE 7. EVENTS OF DEFAULT
If any of the following conditions or events ("Events of Default") shall
occur and be continuing:
SECTION 7.1 Failure To Make Payments When Due. (i) Failure to pay any
installment of principal of the Loan when due, whether at stated maturity, by
acceleration, by notice of prepayment, by operation of Section 2.3 or otherwise;
or (ii) failure to pay any interest on any Loan or any other amount due under
this Agreement and such default continues for a period of thirty (30) Business
Days; or
SECTION 7.2 Default in Other Agreements. (a) Failure of any Credit Party to
pay when due any principal of or interest on any Indebtedness in excess of
$10,000,000 in principal outstanding and the expiration of any applicable grace
periods or (b) any breach or default by any Credit Party, including a Senior
Default, and the expiration of any applicable grace periods under any evidences
of Indebtedness in excess of $10,000,000 in the aggregate; provided, that as a
result of any such failure to pay such Indebtedness under clause (a) above, or
any such breach or default under clause (b) above, the Indebtedness thereunder
shall have become due and payable prior to its stated maturity; or
SECTION 7.3 Breach of Certain Covenants and Agreements. Failure of any
Credit Party to perform or comply in any material respect with (a) any term or
condition contained in Section 2.3(a), or Article 6 (other than a failure to
purchase the Notes when required under Sections 2.3(a)(ii)(B) or 6.5), or (b)
any other term contained in this Agreement, and (i) in the case of clause (a),
such failure shall not have been remedied or waived within thirty (30) days
after receipt of written notice from the Lender of such default (other than any
occurrence described in the other provisions of this Article 7 for which a
different grace or cure period is specified or which constitutes an immediate
Event of Default), and (ii) in the case of clause (b), such failure shall not
have been remedied or waived within sixty (60) days after receipt of written
notice from the Lender of such default (other than any occurrence described in
the other provisions of this Article 7 for which a different grace or cure
period is specified or which constitutes an immediate Event of Default); or
SECTION 7.4 Breach of Warranty. Any representation or warranty made by any
Credit Party in any Loan Document or in any statement or certificate at any time
given by any Credit Party in writing pursuant hereto or thereto or in connection
herewith or therewith shall be false in any material respect on the date as of
when made; or
SECTION 7.5 Involuntary Bankruptcy; Appointment of Receiver, Etc. (a) A
court having jurisdiction in the premises shall enter a decree or order for
relief in respect of any Credit Party in an involuntary case under the
Bankruptcy Code or any applicable bankruptcy, insolvency or other similar law
now or hereafter in effect, which decree or order is not stayed; or any other
similar relief shall be granted and remain unstayed under any applicable federal
or state law; or (b) an involuntary case is commenced against any Credit Party
under any applicable bankruptcy, insolvency, or other similar law now or
hereafter in effect; or a decree or order of a court having jurisdiction in the
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premises for the appointment of a receiver, liquidator, sequestrator, trustee,
custodian or other officer having similar powers over any Credit Party or over
all or a substantial part of any of its property, shall have been entered; or an
interim receiver, trustee or other custodian of any Credit Party or all or a
substantial part of its property is involuntarily appointed; or a warrant of
attachment, execution or similar process is issued against any substantial part
of the property of any Credit Party, and the continuance of any such events in
this clause (b) for sixty (60) days unless dismissed, bonded, stayed, vacated,
or discharged; or
SECTION 7.6 Voluntary Bankruptcy; Appointment of Receiver, Etc. Any Credit
Party shall have an order for relief entered with respect to it or commence a
voluntary case under the Bankruptcy Code or any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect, or shall consent to
the entry of an order for relief in an involuntary case, or to the conversion of
an involuntary case to a voluntary case, under any such law, or shall consent to
the appointment of or taking possession by a receiver, trustee or other
custodian for all or a substantial part of its property; the making by any
Credit Party of any assignment for the benefit of creditors the admission by any
Credit Party in writing of its inability to pay its debts as such debts become
due; or the Board of Directors of any Credit Party (or any committee thereof)
adopts any resolution or otherwise authorizes action to approve any of the
foregoing; or
SECTION 7.7 Judgments and Attachments. Any money judgment, writ or warrant
of attachment, or similar process involving in any individual case or in the
aggregate at any time an amount in excess of $10,000,000 (not covered by
insurance) shall be entered or filed against any Credit Party or any of its
respective assets by a final, nonappealable order of a court of competent
jurisdiction, shall remain outstanding for a period of sixty (60) days following
such entry or filing and shall remain undischarged, unvacated, unbonded or
unstayed for a period of ten (10) days following the notice specified in Section
6.01 of the indentures governing the Subordinated Notes; or
SECTION 7.8 Agreements. Any material provision of any Loan Document shall
cease to be a valid and binding obligation against the Company or the Company
shall so state in writing; or
THEN, subject to the terms of Article 8, (i) upon the occurrence of any
Event of Default described in the foregoing Section 7.5 or 7.6 (but expressly
excluding the other Events of Default in this Article VII), the unpaid principal
amount of and accrued interest on the Loan shall automatically become
immediately due and payable, without presentment, demand, protest or other
requirements of any kind, all of which are hereby expressly waived by the
Company, and the obligations of the Lender hereunder shall thereupon terminate,
and (ii) upon the occurrence of any other Event of Default, the Lender may, by
written notice to the Company, declare the Loan to be, and the same shall
forthwith become, due and payable, as specified below, together with accrued
interest thereon, and if such Event of Default results from a failure to comply
with Section 2.3(a), together with the prepayment premium applicable thereto, if
any, and the obligations of the Lender hereunder shall thereupon terminate.
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ARTICLE 8. SUBORDINATION
SECTION 8.1 Note Subordinate to Senior Debt. Each of the Credit Parties
covenants and agrees, and the Lender covenants and agrees, that, to the extent
and in the manner hereinafter set forth in this Article 8, the payment of the
principal of and interest on the Note both before and after the commencement of
a bankruptcy proceeding, and all other sums or obligations due and payable by
the Credit Parties to the Lender hereunder (collectively with the Note, the
"Subordinated Obligations"), are to the extent provided in this Article 8 hereby
expressly made subordinate and subject in right of payment to the prior payment
in cash in full of all Senior Debt.
SECTION 8.2 Payment Over of Proceeds Upon Dissolution.
(a) In the event of any insolvency or bankruptcy case or proceeding,
or any receivership, liquidation, reorganization, adjustment, composition
or other similar case or proceeding in connection therewith, relative to
any Credit Party or to its creditors, as such, or to its assets, or any
liquidation, dissolution or other winding up of any Credit Party whether
voluntary or involuntary and whether or not involving insolvency or
bankruptcy, or any assignment for the benefit of creditors or any other
marshaling of assets and liabilities of any Credit Party (collectively,
"Bankruptcy Events"), then and in any such event:
(i) the holders of Senior Debt shall be entitled to receive
payment in cash in full of all amounts due or to become due on or in
respect of all such Senior Debt, before the Lender is entitled to
receive any payment or distribution, whether in cash, securities or
other property, on account of Subordinated Obligations;
(ii) any payment or distribution of assets of any Credit Party of
any kind or character, whether in cash, property or securities, by
set-off or otherwise, to which the Lender would be otherwise entitled
but for the provisions of this Article 8, including any such payment
or distribution which may be payable or deliverable by reason of the
payment of any other Indebtedness of any Credit Party being
subordinated to the payment of Subordinated Obligations of any Credit
Party (except for any such payment or distribution of securities
which, if debt securities, are subordinated to at least the same
extent as such Subordinated Obligations to the payment of all Senior
Debt then outstanding and which, in any case, do not mature or become
subject to a mandatory repurchase, mandatory defeasance or similar
mandatory redemption obligation prior to one year following the
maturity of such Senior Debt ("Junior Securities")) shall be paid by
the liquidating trustee or agent or other Person making such payment
or distribution, whether a trustee in bankruptcy, a receiver or
liquidating trustee or otherwise, directly to the holders of such
Senior Debt or their representative or representatives or to the
trustee or trustees under any indenture under which any instruments
evidencing any of such Senior Debt may have been issued, ratably
according to the aggregate amounts remaining unpaid on account of the
principal of, and interest on, such Senior Debt held or represented by
each, to the extent necessary to make payment in cash in full of all
such Senior Debt remaining unpaid, after giving effect to any
concurrent payment or distribution to the holders of such Senior Debt;
and
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(iii) in the event that, notwithstanding the foregoing provisions
of this Article 8, the Lender shall have received any such payment or
distribution of assets of any Credit Party of any kind or character,
whether in cash, property or securities, including any such payment or
distribution which may be payable or deliverable by reason of the
payment of any other Indebtedness of the Credit Parties being
subordinated to the payment of Subordinated Obligations (but excluding
any Junior Securities) before all Senior Debt is paid in full or
payment thereof provided for, then and in such event such payment or
distribution shall be paid over or delivered forthwith directly to the
holders of all Senior Debt or their representative or representatives
or to the trustee or trustees under any indenture under which any
instruments evidencing any of such Senior Debt may have been issued,
ratably according to the aggregate amounts remaining unpaid on the
principal of, and interest on, such Senior Debt held or represented by
each, to the extent necessary to pay all such Senior Debt in full in
cash, after giving effect to any concurrent payment or distribution to
or for the holders of such Senior Debt; provided, that if the Lender
is ordered by any court of competent jurisdiction to pay such payment
or distribution to such trustee in bankruptcy, receiver, liquidating
trustee or otherwise, then the Lender shall have no liability to the
holders of Senior Debt pursuant to the provisions of this Section
8.2(a) for complying with such order.
(b) The Senior Agent (and, if there shall be a holder of Senior Debt
for which the Senior Agent does not act as Senior Agent, such holder) or
the trustee of the Subordinated Notes, or any other agent for or trustee of
any Senior Debt created after the Closing Date shall have the right to
request the Lender to file and, in the event the Lender fails to do so
within 14 days, is hereby authorized to file a proper claim or proof of
debt in the form required in any Bankruptcy Event for and on behalf of the
Lender or any other holder of the Notes (including on behalf of each such
holder with respect to any such rights received by such holders from
holders of Indebtedness of the Credit Parties due to such Indebtedness
being subordinated to the Subordinated Obligations), to accept and receive
any payment or distribution which may be payable or deliverable at any time
upon or in respect of the Subordinated Obligations in an amount not in
excess of the Senior Debt then outstanding and to take such other action as
may be reasonably necessary to effectuate the foregoing. Each holder of the
Note shall provide to the Senior Agent or trustee of the Subordinated Notes
or other agent or trustee all information and documents reasonably
necessary to present claims or seek enforcement as aforesaid. The Lender
and any other holder of the Note shall retain the right to vote to accept
or reject any plan of partial or complete liquidation, reorganization,
arrangement, composition or extension); provided, that such holder shall
not take any action or vote in any way so as to contest the enforceability
of this Article 8, the Senior Debt or any other agreement or instrument to
the extent evidencing or relating to the Senior Debt. The Senior Agent
shall retain the right to vote its Senior Debt and otherwise act in any
such Bankruptcy Event (including the right to vote to accept or reject any
plan of partial or complete liquidation, reorganization, arrangement,
composition or extension); provided, that the Senior Agent shall not take
any action or vote in any way so as to contest the enforceability of this
Article 8, the Subordinated Obligations or any other agreement or
instrument to the extent evidencing or relating to the Subordinated
Obligations.
(c) If, notwithstanding the provisions of this Agreement, there shall
occur any consolidation of any Credit Party with, or any merger of any
Credit Party into, another corporation or the liquidation or dissolution of
any Credit Party following any conveyance, transfer or lease of its
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properties and assets substantially as an entirety to another corporation,
such consolidation, merger or liquidation shall not be deemed a
dissolution, winding up, liquidation, reorganization, assignment for the
benefit of creditors or marshaling of assets and liabilities of such Credit
Party for the purposes of this Article 8; provided, that no other
Bankruptcy Event shall have occurred and be continuing at the time of such
consolidation, merger or liquidation.
SECTION 8.3 No Payment in Certain Circumstances.
(a) In the event that any Credit Party shall fail to pay when due,
upon acceleration or otherwise, any principal, interest or fees with
respect to Senior Debt of the Company (a "Payment Default") which Payment
Default shall not have been cured or waived, or any Credit Party shall fail
to comply with the covenants contained in the Senior Debt Documents or any
event of default (other than a Payment Default) under the Senior Debt
Documents shall occur and be continuing, which default shall not have been
cured or waived (a "Covenant Default"), and the Company and the Lender
receive written notice of such Covenant Default from the Senior Agent, the
trustee of the Subordinated Notes or the holders of at least $10,000,000 in
aggregate principal amount of Senior Debt (or the agent or agents therefor)
(a "Blockage Notice"), then no payment or other amount on account of the
Subordinated Obligations shall be made by any Credit Party or received by
the holders of the Subordinated Obligations (x) in the case of any Payment
Default, unless and until such Senior Debt shall have been paid in full or
until such Payment Default shall have been cured or waived, or (y) in the
case of any Covenant Default, from the earlier of the date on which the
Company or the Lender receives such Blockage Notice until the earlier of
(1) 179 days after such date and (2) the date, if any, on which the Senior
Debt to which such Covenant Default relates is paid in full or such
Covenant Default is waived by the holders of such Senior Debt or otherwise
cured (a "Blockage Period"); provided, that (A) only one Blockage Notice
may be given in any 360-day period, and (B) no Covenant Default that
previously served as the basis for a Blockage Notice or that was in
existence during a prior Blockage Period may serve as the basis for a
subsequent Blockage Notice unless such Covenant Default was subsequently
cured for a period of at least 180 consecutive days.
(b) In the event that, notwithstanding the foregoing, any Credit Party
shall make or the holders of the Subordinated Obligations shall receive any
payment or other amount prohibited by the foregoing provisions of this
Section 8.3, then and in such event such payment or other amount shall be
paid over and delivered forthwith to such Credit Party. The provisions of
this Section 8.3 shall not apply to any payment with respect to which
Section 8.2 would be applicable.
SECTION 8.4 Acceleration Rights; Remedies. If an Event of Default shall
exist at any time that any Senior Debt shall be outstanding, neither the Lender
nor any other holder of the Notes shall take any action, judicial or otherwise,
to accelerate or to collect payment on, or redeem, retire, purchase or otherwise
acquire the Subordinated Obligations or to pursue any other remedy with respect
to the Subordinated Obligations prior (including joining with any creditor to
commence any bankruptcy proceeding) to the earlier of:
(a) the payment in full of all Senior Debt;
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(b) the occurrence or commencement of a Bankruptcy Event (with respect
to which the provisions of Section 8.2 shall govern);
(c) the expiration of 10 days immediately following the receipt by the
holders of the Senior Debt (or agents representing all such holders) of
notice of the occurrence of such Event of Default from the holder or
holders entitled to accelerate payments on the Subordinated Obligations,
and such holder's or holders' good faith intention to declare the unpaid
amount of all Subordinated Obligations to be immediately due and payable in
accordance with the Loan Documents, unless, during such period the Senior
Agent or such holder shall have caused such Event of Default to be cured;
and
(d) the acceleration of the maturity of the Senior Debt;
provided, that any amount received by the Lender as a result of or following any
acceleration permitted above, prior to payment in full of the Senior Debt, shall
be and paid to the holders of Senior Debt (or the agent or agents therefor) in
accordance with the provisions of this Article 8.
SECTION 8.5 Payments Otherwise Permitted. Nothing contained in this Article
8 or elsewhere in this Agreement or in the Note shall prevent any Credit Party,
at any time except during a Bankruptcy Event as set forth in Section 8.2 or
under the conditions described in Section 8.3, from making payments at any time
of principal of and interest on the Loan required or permitted by the terms of
the Notes or this Agreement or any other amount payable by such Credit Party
under the Note or this Agreement.
SECTION 8.6 Subrogation to Rights of Holders of Senior Debt. Subject to,
and solely effective following, the final and indefeasible payment in full of
all Senior Debt, the Lender shall be subrogated to the rights of the holders of
such Senior Debt to receive payments and distributions of cash, property and
securities applicable to such Senior Debt until the principal of and interest on
the Loan and the Note shall be paid in full. For purposes of such subrogation,
no payments or distributions to the holders of such Senior Debt of any cash,
property or securities to which the Lender would be entitled except for the
provisions of this Article 8, and no payments over pursuant to the provisions of
this Article 8 to the holders of such Senior Debt by the Lender shall, as among
any Credit Party, its creditors (other than holders of such Senior Debt) and the
Lender, be deemed to be a payment or distribution by such Credit Party to or on
account of such Senior Debt.
SECTION 8.7 Provisions Solely to Define Relative Rights. The provisions of
this Article 8 are solely for the purpose of defining the relative rights of the
holders of the Subordinated Obligations on the one hand and the holders of
Senior Debt on the other hand. Nothing contained in this Article 8 or elsewhere
in this Agreement or in the Notes is intended to or shall (i) impair, as among
any Credit Party, its creditors (other than holders of Senior Debt) and the
Lender, the obligation of such Credit Party, which is absolute and
unconditional, to pay to the Lender the principal of, and premium and interest
on, and any other amount payable by such Credit Party under, the Notes or this
Agreement as and when the same shall become due and payable in accordance with
its terms; or (ii) affect the relative rights against such Credit Party of the
Lender and its creditors (other than the holders of Senior Debt); or (iii)
prevent the Lender from accelerating the Loan and exercising all other remedies
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otherwise permitted by applicable law upon default under this Agreement, subject
to the terms of Section 8.4, or the rights, if any, under this Article 8 of the
holders of Senior Debt (x) upon the occurrence of a Bankruptcy Event, to
receive, pursuant to and in accordance with Section 8.2, cash, property and
securities otherwise payable or deliverable to the Lender, or (y) under the
conditions specified in Section 8.3, to prevent or receive any payment
prohibited by such section.
SECTION 8.8 No Waiver of Subordination Provisions. No right of any present
or future holder of any Senior Debt to enforce subordination as herein provided
shall at any time in any way be prejudiced or impaired by any act or failure to
act on the part of any Credit Party or by any act or failure to act, in good
faith, by any such holder, or by any noncompliance by any Credit Party with the
terms, provisions and covenants of this Agreement, regardless of any knowledge
thereof any such holder may have or be otherwise charged with. Without in any
way limiting the generality of the foregoing, the holders of Senior Debt may at
any time and from time to time, without the consent of or notice to the Lender,
without incurring responsibility to the Lender and without impairing or
releasing the subordination provided in this Article 8 or the obligations
hereunder of the Lender and such holders to the holders of Senior Debt, do any
one or more of the following: (i) subject to the provisions of this Agreement,
change the manner, place or terms of payment or extend the time of payment of,
or renew or alter, Senior Debt or any instrument evidencing the same or any
agreement under which Senior Debt is outstanding; (ii) sell, exchange, release
or otherwise deal with any property pledged, mortgaged or otherwise securing
Senior Debt; (iii) release any Person liable in any manner for the collection of
Senior Debt; and (iv) exercise or refrain from exercising or waiving any rights,
powers or remedies against any Credit Party and any other Person.
SECTION 8.9 Reliance on Judicial Order. Upon any payment or distribution of
assets of any Credit Party referred to in this Article 8, the Lender shall be
entitled to rely upon any unstayed, final, nonappealable order or decree entered
by any court of competent jurisdiction in which a Bankruptcy Event is pending
for the purpose of ascertaining the Persons entitled to participate in such
payment or distribution, the holders of Senior Debt in such payment or
distribution, the holders of Senior Debt and other Indebtedness of such Credit
Party, the amount thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to this Article 8.
SECTION 8.10 Amendment. Any material amendment to the provisions of this
Article 8 shall not be effective against any holder of Senior Debt without such
holder's consent.
SECTION 8.11 Remedies. The holders of Senior Debt shall be entitled to
enforce their rights under this Article 8 specifically, to recover damages by
reason of any breach of any provisions of this Article 8 and to exercise all
other rights existing in their favor. The Lender acknowledges and agrees that
money damages may not be an adequate remedy for any breach of the provisions of
this Article 8 and that holders of Senior Debt may apply to any court of law or
equity of competent jurisdiction for specific performance and/or injunctive
relief (without posting bond or other security) in order to enforce or prevent
any violation of the provisions of this Article 8.
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ARTICLE 9. MISCELLANEOUS
SECTION 9.1 Existing Subordinated Note. Each of the Credit Parties
covenants and agrees, and the Lender covenants and agrees, that the payment of
the principal of and interest on the Existing Subordinated Note both before and
after the commencement of a bankruptcy proceeding, and all other sums or
obligations due and payable by the Credit Parties to the Seller thereunder, are
hereby expressly made subordinate and subject in right of payment to the prior
payment in cash in full of the Notes.
SECTION 9.2 Participations in Loan and Note.
(a) The Lender shall have the right at any time, to sell, assign,
transfer, or negotiate all or any part of the Loan or Note to one or more
Persons; provided, that CMP shall at all times retain at least 51% of the
aggregate principal amount of the Loan. In the case of any sale,
assignment, transfer, or negotiation of all or part of the Loan or Note as
authorized under this Section 9.2(a), the assignee, transferee, or
recipient shall have, to the extent of such sale, assignment, transfer, or
negotiation, the same rights, benefits, and obligations as it would if it
were a Lender with respect to such Loan or Note.
(b) Subject to Section (a) above, the Lender may grant participations
in all or any part of the Loan or Note to one or more Persons.
(c) In connection with any sales, assignments, or transfers of any
Loan or Note referred to in Section 9.2(a), the Lender shall give notice to
the Company and Persons holding a majority of the outstanding principal
amount of the Senior Debt of the identity of such parties and obtain
agreements from the purchasers, assignees and transferees, as the case may
be (the "Assignees"), that all information given to such parties will be
held in strict confidence pursuant to a confidentiality agreement
reasonably satisfactory to the Company. The Company shall maintain a
register on which it will record the name and address of the Lender and all
Assignees and shall be entitled to treat the holder or holders of record as
the Lender for all purposes hereunder.
(d) In the event of an assignment by the Lender, or any subsequent
assignment, the term "Lender" herein shall be deemed to refer to each such
Lender, the term "Note" shall be deemed to refer to each "Note", and any
action requiring the consent of the Lender shall be deemed to require the
consent of Persons holding in excess of 50% of the outstanding principal
amount of the Note.
SECTION 9.3 Expenses. Whether or not the transactions contemplated hereby
shall be consummated, the Company agrees to pay promptly (i) all the actual and
reasonable costs and expenses of preparation of the Loan Documents and all the
costs of furnishing all opinions by counsel for the Company (including, without
limitation, any opinions requested by the Lender as to any legal matters arising
hereunder), and of the Company's performance of and compliance with all
agreements and conditions contained herein on its part to be performed or
complied with; (ii) the reasonable fees, expenses, and disbursements of counsel
to the Lender in connection with the negotiation, preparation, execution, and
administration of the Loan Documents, and the Loan hereunder, and any amendments
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and waivers hereto or thereto; and (iii) after the occurrence of an Event of
Default, all costs and expenses (including reasonable attorneys' fees) incurred
by the Lender in enforcing any Obligations of or in collecting any payments due
from any Credit Party hereunder or under the Note by reason of such Event of
Default or in connection with any Refinancing or restructuring of the credit
arrangements provided under this Agreement in the nature of a workout, or any
insolvency or bankruptcy proceedings.
SECTION 9.4 Indemnity. In addition to the payment of expenses pursuant to
the terms and conditions of Section 9.3 hereof, whether or not the transactions
contemplated hereby shall be consummated, each Credit Party (each an
"Indemnitor") agrees to indemnify, pay, and hold the Lender and any holder of
the Note, and the officers, directors, employees, agents, and Affiliates of the
Lender and such holders (collectively, the "Indemnitees") harmless from and
against any and all other liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, claims, costs, expenses and disbursements of any kind
or nature whatsoever (including, without limitation, the reasonable fees and
disbursements of one counsel for such Indemnitees in connection with any
investigative, administrative or judicial proceeding commenced or threatened,
whether or not such Indemnitee shall be designated a party thereto), which may
be imposed on, incurred by, or asserted against that Indemnitee, in any manner
relating to or arising out of this Agreement, the other Loan Documents, the
Lender's agreement to make the Loan or the use or intended use of the proceeds
of any of the Loan hereunder, including, without limitation, any of the
foregoing arising pursuant to any Environmental Laws (the "Indemnified
Liabilities"); provided, that the Indemnitor shall not have any obligation to an
Indemnitee hereunder with respect to an Indemnified Liability to the extent that
such Indemnified Liability arises from the gross negligence or willful
misconduct of that Indemnitee. Each Indemnitee shall give the Indemnitor prompt
written notice of any claim that might give rise to Indemnified Liabilities
setting forth a description of those elements of such claim of which such
Indemnitee has knowledge; provided, that any failure to give such notice shall
not affect the obligations of the Indemnitor unless (and then solely to the
extent) the Indemnitor is prejudiced. The Indemnitor shall have the right at any
time during which such claim is pending to select counsel to defend and control
the defense thereof and settle any claims for which it is responsible for
indemnification hereunder (provided that the Indemnitor will not settle any such
claim without (i) the appropriate Indemnitee's prior written consent which
consent shall not be unreasonably withheld or (ii) obtaining an unconditional
release of the appropriate Indemnitee from all claims arising out of or in any
way relating to the circumstances involving such claim) so long as in any such
event, the Indemnitor shall have stated in a writing delivered to the Indemnitee
that, as between the Indemnitor and the Indemnitee, the Indemnitor is
responsible to the Indemnitee with respect to such claim to the extent and
subject to the limitations set forth herein; provided, that the Indemnitor shall
not be entitled to control the defense of any claim in the event that in the
reasonable opinion of counsel for the Indemnitee there are one or more material
defenses available to the Indemnitee which are not available to the Indemnitor;
provided, further, that with respect to any claim as to which the Indemnitee is
controlling the defense, the Indemnitor will not be liable to any Indemnitee for
any settlement of any claim pursuant to this Section 9.4 that is effected
without its prior written consent. To the extent that the undertaking to
indemnify, pay and hold harmless set forth in the preceding sentence may be
unenforceable because it is violative of any law or public policy, each Credit
Party shall contribute the maximum portion which it is permitted to pay and
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satisfy under applicable law, to the payment and satisfaction of all Indemnified
Liabilities incurred by the Indemnitees or any of them.
SECTION 9.5 Amendments and Waivers. No amendment, modification, termination
or waiver of any provision of this Agreement or of the Note, or consent to any
departure by the Company therefrom, shall in any event be effective without the
written concurrence of the Lender and each of the Credit Parties and an opinion
of counsel of the Company to the effect that such amendment, modification,
termination, or waiver does not violate Article 8 and the Senior Credit
Agreement; provided, that no amendment, modification, waiver, or consent shall,
unless in writing and signed by all the Lenders, do any of the following: (a)
increase or subject the Lender to any additional obligations; (b) reduce the
principal of, or interest on the Note or any fees, premiums, or other amounts
payable hereunder; (c) postpone any date fixed for any payment of principal of,
or premium or interest on, the Note or any fees or other amounts payable
hereunder; or (d) amend this Section 9.5. Any waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
it was given. No notice to or demand on such Credit Party in any case shall
entitle any Credit Party to any further notice or demand in similar or other
circumstances. Any amendment, modification, termination, waiver, or consent
effected in accordance with this Section 9.5 shall be binding upon each holder
of the Note at the time outstanding and each future holder of the Note.
SECTION 9.6 Independence of Covenants. All covenants hereunder shall be
given independent effect so that if a particular action or condition is not
permitted by any of such covenants, the fact that it would be permitted by an
exception to, or be otherwise within the limitation of, another covenant shall
not avoid the occurrence of an Event of Default or Potential Event of Default if
such action is taken or condition exists.
SECTION 9.7 Notices. All notices, demands or other communications to be
given or delivered under or by reason of the provisions of this Agreement shall
be in writing and delivered personally, mailed by certified or registered mail,
return receipt requested and postage prepaid, sent via a nationally recognized
overnight courier, or via facsimile. Such notices, demands and other
communications will be sent to the address indicated below:
To the Company:
Intersil Holding Corporation
2401 Palm Bay Road Northeast
Building 61 M/S 53-198
Palm-Bay, FL 32905
Attention: President
Telecopy No: (407) 729-5773
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with copies (which shall not
constitute notice to the Company) to:
Citicorp Venture Capital, Ltd.
399 Park Avenue
14th Floor, Zone 4
New York, NY 10043
Attention: James A. Urry and Paul V. Schorr
Telecopy No: (212) 888-2940
Dechert Price & Rhoads
4000 Bell Atlantic Tower
1717 Arch Street
Philadelphia, PA 19103
Attention: G. Daniel O'Donnell
Telecopy No.: (215) 994-2222
To the Lender:
c/o Citicorp Capital Investors, Ltd.
399 Park Avenue
14th Floor, Zone 4
New York, NY 10043
Attention: Byron L. Knief
Telecopy No.: (212) 888-2940
with a copy (which shall not
constitute notice to the Lender) to:
Kirkland & Ellis
153 East 53rd Street
New York, NY 10022-4675
Attention: Eunu Chun, Esq.
Telecopy No.: (212) 446-4900
or such other address or to the attention of such other Person as the recipient
party shall have specified by prior written notice to the sending party;
provided, that the failure to deliver copies of notices as indicated above shall
not affect the validity of any notice. Any such communication shall be deemed to
have been received (i) when delivered, if personally delivered, or sent by
nationally-recognized overnight courier or sent via facsimile or (ii) on the
third Business Day following the date on which the piece of mail containing such
communication is posted if sent by certified or registered mail.
SECTION 9.8 Survival of Warranties and Certain Agreements. (a) All
agreements, representations and warranties made herein shall survive the
51
<PAGE>
execution and delivery of this Agreement, the making of the Loan hereunder and
the execution and delivery of the Note and shall continue (but, with respect to
representations and warranties, such representations and warranties are made
only as of the date when made pursuant to Section 4) until repayment of the Note
and the Obligations in full; provided, that if all or any part of such payment
is set aside, the representations and warranties in the Loan Documents shall
continue as if no such payment had been made.
(b) Notwithstanding anything in this Agreement or implied by law to
the contrary, the agreements of the Credit Parties set forth in Sections
9.3 and 9.4 shall survive the payment of the Loans and the Notes and the
termination of this Agreement.
SECTION 9.9 Failure or Indulgence Not Waiver; Remedies Cumulative. No
failure or delay on the part of any Lender or any holder of any Note in the
exercise of any power, right or privilege hereunder or under the Note shall
impair such power, right or privilege or be construed to be a waiver of any
default or acquiescence therein, nor shall any single or partial exercise of any
such power, right or privilege preclude other or further exercise thereof or of
any other right, power or privilege. All rights and remedies existing under this
Agreement or the Notes are cumulative to and not exclusive of, any rights or
remedies otherwise available.
SECTION 9.10 Severability. In case any provision in or obligation under
this Agreement or the Note shall be invalid, illegal or unenforceable in any
jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby.
SECTION 9.11 Headings. Section and subsection headings in this Agreement
are included herein for convenience of reference only and shall not constitute a
part of this Agreement for any other purpose or be given any substantive effect.
SECTION 9.12 APPLICABLE LAW. THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED
BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS.
SECTION 9.13 Successors and Assigns; Subsequent Holders of Notes. This
Agreement shall be binding upon the parties hereto and their respective
successors and assigns and shall inure to the benefit of the parties hereto and
the successors and assigns of the Lender. The terms and provisions of this
Agreement and all other certificates delivered pursuant to Section 3 shall inure
to the benefit of any assignee or transferee of the Notes pursuant to Section
9.2(a), and in the event of such transfer or assignment, the rights and
privileges herein conferred upon the Lender shall automatically extend to and be
vested in such transferee or assignee, all subject to the terms and conditions
hereof. The Company's rights or any interest therein hereunder may not be
assigned without the written consent of the Lender.
SECTION 9.14 Consent to Jurisdiction and Service of Process. ALL JUDICIAL
PROCEEDINGS BROUGHT AGAINST ANY CREDIT PARTY WITH RESPECT TO THIS AGREEMENT, ANY
52
<PAGE>
NOTES OR ANY WARRANT MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT
JURISDICTION IN THE STATE OF NEW YORK LOCATED IN THE CITY OF NEW YORK AND BY
EXECUTION AND DELIVERY OF THIS AGREEMENT EACH CREDIT PARTY ACCEPTS FOR ITSELF
AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE
EXCLUSIVE JURISDICTION OF THE AFORESAID COURTS, AND IRREVOCABLY AGREES TO BE
BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT
SUBJECT, HOWEVER, TO RIGHTS OF APPEAL. EACH CREDIT PARTY DESIGNATES AND APPOINTS
CORPORATION SERVICE COMPANY, 375 HUDSON STREET, NEW YORK, NEW YORK 10014 AND
SUCH OTHER PERSONS AS MAY HEREAFTER BE SELECTED BY SUCH CREDIT PARTY IRREVOCABLY
AGREEING IN WRITING TO SERVE, AS ITS AGENT TO RECEIVE ON ITS BEHALF, SERVICE OF
ALL PROCESS IN ANY SUCH PROCEEDINGS IN ANY SUCH COURT, SUCH SERVICE BEING HEREBY
ACKNOWLEDGED BY SUCH CREDIT PARTY TO BE EFFECTIVE AND BINDING SERVICE IN EVERY
RESPECT, A COPY OF SUCH PROCESS SO SERVED SHALL BE SENT BY AIR COURIER TO SUCH
CREDIT PARTY AT ITS ADDRESS PROVIDED IN SECTION 10.6 HEREOF, EXCEPT THAT UNLESS
OTHERWISE PROVIDED BY APPLICABLE LAW, ANY FAILURE TO MAIL SUCH COPY SHALL NOT
AFFECT THE VALIDITY OF SERVICE OF PROCESS. IF ANY AGENT APPOINTED BY ANY CREDIT
PARTY REFUSES TO ACCEPT SERVICE, EACH CREDIT PARTY HEREBY AGREES THAT SERVICE
UPON IT BY MAIL SHALL CONSTITUTE SUFFICIENT NOTICE. NOTHING HEREIN SHALL AFFECT
THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT
THE RIGHT OF THE LENDER TO BRING PROCEEDINGS AGAINST ANY CREDIT PARTY IN THE
COURTS OF ANY OTHER JURISDICTION.
SECTION 9.15 Waiver of Jury Trial. EACH CREDIT PARTY HEREBY WAIVES, TO THE
EXTENT PERMITTED BY APPLICABLE LAW, TRIAL BY JURY IN ANY LITIGATION IN ANY COURT
WITH RESPECT TO, IN CONNECTION WITH, OR ARISING OUT OF THIS AGREEMENT OR ANY
OTHER LOAN DOCUMENT OR THE VALIDITY, PROTECTION, INTERPRETATION, COLLECTION OR
ENFORCEMENT THEREOF. NOTWITHSTANDING ANYTHING CONTAINED IN THIS AGREEMENT TO THE
CONTRARY, NO CLAIM MAY BE MADE BY ANY CREDIT PARTY AGAINST ANY LENDER FOR ANY
LOST PROFITS OR ANY SPECIAL, INDIRECT OR CONSEQUENTIAL DAMAGES IN RESPECT OF ANY
BREACH OR WRONGFUL CONDUCT (OTHER THAN WILLFUL MISCONDUCT CONSTITUTING ACTUAL
FRAUD) IN CONNECTION WITH, ARISING OUT OF OR IN ANY WAY RELATED TO THE
TRANSACTIONS CONTEMPLATED HEREUNDER OR UNDER THE OTHER LOAN DOCUMENTS, OR ANY
ACT, OMISSION OR EVENT OCCURRING IN CONNECTION THEREWITH; EACH CREDIT PARTY
HEREBY WAIVES, RELEASES AND AGREES NOT TO SUE UPON ANY SUCH CLAIM FOR ANY SUCH
DAMAGES. EACH CREDIT PARTY AGREES THAT THIS SECTION IS A SPECIFIC AND MATERIAL
ASPECT OF THIS AGREEMENT AND ACKNOWLEDGES THAT THE LENDER WOULD NOT EXTEND TO
THE COMPANY ANY LOAN HEREUNDER IF THIS SECTION WERE NOT PART OF THIS AGREEMENT.
SECTION 9.16 Counterparts; Effectiveness. This Agreement and any
amendments, waivers, consents, or supplements may be executed in any number of
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<PAGE>
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed an original, but all such
counterparts together shall constitute but one and the same instrument. This
Agreement shall become effective upon the execution of a counterpart hereof by
each of the parties hereto, and written or telephonic notification of such
execution and authorization of delivery thereof has been received by the Company
and the Lender.
SECTION 9.17 Entirety. This Agreement and the other Loan Documents embody
the entire agreement among the parties and supersede all prior agreements and
understandings, if any, relating to the subject matter hereof and thereof.
* * * * *
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<PAGE>
IN WITNESS WHEREOF the due execution hereof by the respective duly
authorized officers of the undersigned as of the date first written above.
INTERSIL HOLDING CORPORATION
By: /s/ Gregory Williams
------------------------------
Name: Gregory Williams
Title: CEO
CITICORP MEZZANINE PARTNERS, L.P.
By: Citicorp Capital Investors, Ltd.
Its: General Partner
By:/s/ Byron Knief
------------------------------
Name: Byron Knief
Title: President
<PAGE>
SCHEDULE 4.13
SUBSIDIARIES
<TABLE>
<CAPTION>
Entity Shares Authorized
Stockholder Entity and Issued Number of shares held Percentage held
- - ----------- ------ ------------------------- --------------------- ---------------
<S> <C> <C> <C> <C>
Intersil Corporation Choice Microsystems, Inc. 100,000 authorized; 80,000 shares 100%
80,000 issued
Intersil Corporation Harris KK (Japan) 8,000 authorized; 6,000 shares 100%
6,000 issued
Intersil Corporation Harris Semiconducteurs 25,740 authorized; 25,740 shares 100%
SARL (France) 25,740 issued
Intersil Corporation Harris Semiconductor 100 authorized; 1 share 100%
(Ohio), LLC 1 issued
Intersil Corporation Harris Semiconductor 100 authorized; 1 share 100%
(Pennsylvania), LLC 1 issued
Intersil Corporation Harris Semiconductor Shares; 2,210,000 49,994 common shares 99.988%
(Taiwan) Ltd. authorized; 50,000 issued
Intersil Corporation Harris Semiconductor 100 authorized; 2 issued 2 shares (1 share held 100%
China Ltd. (Hong Kong) by Intersil
Corporation and 1
share held by Leonatum
(Nominees) Ltd. in
Trust for Intersil
Corporation)
Intersil Corporation Harris Semiconductor Shares; 20,000 authorized; 18,000 shares 90%
S.r.l. (Italy) 20,000 issued
Intersil Corporation Harris Semiconductor, LLC 1,000 authorized; 300 shares 100%
300 issued
Intersil Corporation Harris Semiconductor, 8,325 authorized; 8,325 shares 100%
Y.H. (Korea) 8,325 issued
Intersil Corporation Intersil (Cayman) 50,000 authorized; 100 shares 100%
Corporation 100 issued
Intersil Corporation Intersil Advanced 13,000 authorized; 100 shares 100%
Technology (Labuan) Ltd. 100 issued
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Entity Shares Authorized
Stockholder Entity and Issued Number of shares held Percentage held
- - ----------- ------ ------------------------- --------------------- ---------------
<S> <C> <C> <C> <C>
Intersil Holding Harris Semiconductor Shares: 20,000 2,000 10%
Corporation S.r.l. (Italy) authorized; 20,000 issued
Intersil Holding Intersil Corporation 1,000 authorized, 100 100 shares 100%
Corporation issued
</TABLE>
<PAGE>
EXHIBIT A
THIS INSTRUMENT IS SUBJECT TO A SUBORDINATED CREDIT AGREEMENT, DATED AS
OF AUGUST 13, 1999, WHICH, AMONG OTHER THINGS, SUBORDINATES THE MAKER'S
OBLIGATIONS TO THE PAYEE TO THE MAKER'S OBLIGATIONS TO THE HOLDERS OF
SENIOR DEBT AS DEFINED IN SAID AGREEMENT.
SUBORDINATED NOTE
[ ] New York, New York
________, 1999
FOR VALUE RECEIVED, the undersigned, INTERSIL HOLDING CORPORATION, a
Delaware corporation (the "Maker"), hereby promises to pay to _______________ or
its registered assigns (the "Payee"), at __________________, on the Maturity
Date (as defined in the Subordinated Credit Agreement, dated as of August 13,
1999, as the same may be amended, modified, restated or supplemented from time
to time (the "Credit Agreement")), by and among the Maker and the Payee, the
principal sum of ________________ ($___________) or such lesser principal amount
thereof as may remain outstanding in lawful money of the United States of
America in immediately available funds, and to pay interest from the date hereof
on the principal amount hereof from time to time outstanding, in like funds, at
said office, at a rate or rates per annum and payable on such dates as
determined pursuant to the terms of the Credit Agreement.
The Maker promises to pay interest, on demand, on any overdue principal
and, to the extent permitted by law, overdue interest from their due dates at a
rate or rates determined as set forth in the Credit Agreement.
The Maker hereby waives diligence, presentment, demand, protest and notice
of any kind whatsoever, other than as expressly required by the Credit
Agreement. The nonexercise by the holder of any of its rights hereunder in any
particular instance shall not constitute a waiver thereof in that or any
subsequent instance.
The date, amount and interest rate applicable to all borrowings evidenced
by this Note and all payments and prepayments of the principal hereof and
interest hereon shall be noted by the holder hereof on the schedule attached
hereto or any continuation thereof; provided, that the failure of the holder
hereof to make such a notation or any error in such a notation shall not in any
manner affect the obligation of the Maker to make payments of principal and
interest in accordance with the terms of this Note and the Credit Agreement.
This Note is the Note referred to in the Credit Agreement, which, among
other things, contains provisions for the acceleration of the maturity hereof
upon the happening of certain events (subject however to the terms of Article 8
of the Credit Agreement referred to above), for optional and mandatory
prepayment of the principal hereof prior to the maturity hereof and prepayment
premiums thereon and for the amendment or waiver of certain provisions of the
Credit Agreement,
<PAGE>
all upon the terms and conditions therein specified. This Note shall be
construed in accordance with and governed by the laws of the State of New York
without giving effect to principles of conflicts of laws.
INTERSIL HOLDING CORPORATION
By:
------------------------
Name:
Title:
2
<PAGE>
Loans and Payments
<TABLE>
<CAPTION>
- - ---------------------------------------------------------------------------------------------------------------------------------
Principal Interest Payments of Principal Unpaid Principal Name of Person Making
Date Amount of Loan Rate or Interest Balance of Note Notation
- - ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
08/13/99 $30,000,000.00 13.5%
- - ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
3
<PAGE>
EXHIBIT B
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (the "Agreement") dated August 13, 1999, by
and among INTERSIL HOLDING CORPORATION, a Delaware corporation formerly known as
HSS Holding Corporation (the "Company"), STERLING HOLDING COMPANY, LLC, a
Delaware limited liability company ("Sterling"), MANATEE INVESTMENT
CORPORATION., a Delaware corporation ("Harris"), CITICORP MEZZANINE PARTNERS,
L.P. ("CMP"), a Delaware limited partnership, the individuals identified on the
signature pages of this Agreement as Management Investors, the individuals who
join in the Stockholders' Agreement and this Agreement as Management Investors
(collectively, the "Management Investors") and other Persons who may from time
to time become parties to this Agreement. Sterling, Harris, CMP and the
Management Investors are sometimes referred to hereinafter individually as an
"Investor" and collectively as the "Investors."
Background
The Company, Sterling, Harris, CMP and the Management Investors are parties
to, and this Agreement is made pursuant to, the Stockholders' Agreement. In
order to induce the Investors to enter into the Stockholders' Agreement, the
Company has agreed to provide the registration rights set forth in this
Agreement.
Terms
In consideration of the mutual covenants contained herein and intending to
be legally bound hereby, the parties hereto agree as follows:
1. Definitions
As used in this Agreement, the following capitalized terms shall have the
following meanings:
"Affiliate" has the meaning set forth in Rule 12b-2 of the Rules
promulgated under the Exchange Act.
"CMP Registrable Securities" means (i) any shares of Common Stock issued or
issuable to CMP or its affiliates upon exercise of the CMP Warrants or otherwise
on or after the date hereof, and (ii) any shares of capital stock of the Company
issued or issuable with respect to the securities referred to in clause (i)
above by way of a stock dividend or stock split or in connection with a
combination of shares, recapitalization, merger, consolidation or other
reorganization. For purposes of this Agreement, a Person will be deemed to be a
holder of CMP Registrable Securities whenever such Person has the right to
acquire directly or indirectly such CMP Registrable Securities (upon conversion
or exercise in connection with a transfer of securities or otherwise, but
disregarding any restrictions or limitations upon the exercise of such right),
whether or not such acquisition has actually been effected, provided, however,
that each such share of Common Stock shall cease to be a CMP Registrable
<PAGE>
Security when (i) it has been effectively registered under the Securities Act
and disposed of in accordance with the Registration Statement covering it; (ii)
it is distributed to the public pursuant to Rule 144 (or any similar provisions
then in force) under the Securities Act; or (iii) it has otherwise been
transferred and a new certificate or other evidence of ownership for it not
bearing or requiring a legend as set forth in Section 4.2 of the Stockholders'
Agreement (or other legend of similar import) and not subject to any stop
transfer order has been delivered by or on behalf of the Company and no other
restriction on transfer exists under the Securities Act.
"CMP Warrants" means the stock purchase warrants (together with all
warrants issued in substitution or replacement therefor) issued to CMP to
purchase Common Stock, pursuant to a Warrant Agreement, dated as of the date
hereof, by and between the Company and CMP (as amended, restated or modified
from time to time).
"Commission" means the Securities and Exchange Commission.
"Common Stock" means the Class A Common Stock, par value $.01 per share, of
the Company and any capital stock of the Company issued or issuable with respect
to such common stock by way of or in connection with any stock dividend or
distribution payable thereon or stock split, reverse stock split,
recapitalization, reclassification, reorganization, exchange, subdivision or
combination thereof.
"Company Registrable Securities" has the meaning set forth in Section 4(b)
of this Agreement.
"Damages" has the meaning set forth in Section 5(a) of this Agreement.
"Demand Registration" and "Demand Registration Requests" have the meanings
set forth in Section 3(a) of this Agreement.
"Exchange Act" means the Securities Exchange Act of 1934, as amended from
time to time.
"Incidental Registration" has the meaning set forth in Section 2(a) of this
Agreement.
"Inspector" and "Inspectors" have the meanings set forth in Section 4(j) of
this Agreement.
"Other Registrable Securities" means (i) any shares of Common Stock issued
or issuable to or otherwise acquired by Harris or the Management Investors on or
after the date hereof and (ii) any shares of capital stock of the Company issued
or issuable with respect to the securities referred to in clause (i) above by
way of a stock dividend or stock split or in connection with a combination of
shares, recapitalization, merger, consolidation or other reorganization,
provided, however, that Incentive Shares (as defined in the Stockholders'
Agreement) of Common Stock issued to Management Investors (and any shares of
capital stock of the Company issued or issuable with respect to such Incentive
Shares by way of a stock dividend or stock split or in connection with a
combination of shares, recapitalization, merger, consolidation or other
reorganization) shall be deemed to be Other Registrable Securities only to the
2
<PAGE>
extent that such shares are subject to the Company's Purchase Option (as defined
in the Stockholders' Agreement) at the Adjusted Book Value Price (as defined in
the Stockholders' Agreement). For purposes of this Agreement, a Person will be
deemed to be a holder of Other Registrable Securities whenever such Person has
the right to acquire, directly or indirectly, such Other Registrable Securities
(upon conversion or exercise in connection with a transfer of securities or
otherwise, but disregarding any restrictions or limitations upon the exercise of
such right), whether or not such acquisition has actually been effected, but in
the case of Registrable Securities subject to vesting, only to the extent that
such Person's right to acquire such Registrable Securities has vested and
provided, further, that each Other Registrable Security shall cease to be an
Other Registrable Security when (i) it has been effectively registered under the
Securities Act and disposed of in accordance with the Registration Statement
covering it; (ii) it is distributed to the public pursuant to Rule 144 (or any
similar provisions then in force) under the Securities Act; or (iii) it has
otherwise been transferred and a new certificate or other evidence of ownership
for it not bearing or requiring a legend as set forth in Section 4.2 of the
Stockholders' Agreement (or other legend of similar import) and not subject to
any stop transfer order has been delivered by or on behalf of the Company and no
other restriction on transfer exists under the Securities Act.
"Person" means an individual, partnership, limited liability company,
corporation, trust or unincorporated organization, or a government or agency or
political subdivision thereof.
"Prospectus" means the prospectus included in any Registration Statement,
as amended or supplemented by any prospectus supplement with respect to the
terms of the offering of any portion of the Registrable Securities covered by
such Registration Statement and all other amendments and supplements to such
prospectus, including post-effective amendments, and all material incorporated
by reference in such prospectus.
"Qualified Public Offering" means the sale, in an underwritten public
offering registered under the Securities Act, of shares of the Company's Common
Stock having an aggregate value (based upon the offering price of such offering)
of at least $20 million.
"Records" has the meaning set forth in Section 4(j) of this Agreement.
"Registration Expenses" means the costs and expenses of all registrations
and qualifications under the Securities Act, and of all other actions the
Company is required to take in order to effect the registration of Registrable
Securities under the Securities Act pursuant to this Agreement (including all
federal and state registration and filing fees, printing expenses, fees and
disbursements of counsel for the Company and the fees and expenses of the
Company's independent public accountants (including the expenses of any special
audit and "cold comfort" letters required by or incident to such registration))
other than the costs and expenses of any Investors whose Registrable Securities
are to be registered pursuant to this Agreement comprising underwriters'
commissions, brokerage fees, transfer taxes or the fees and expenses of any
accountants or other representatives retained by any Investor.
"Registration Statement" means any registration statement of the Company
which covers any of the Registrable Securities pursuant to the provisions of
3
<PAGE>
this Agreement, including the Prospectus, amendments and supplements to such
registration statement, including post-effective amendments, all exhibits and
all material incorporated by reference in such registration statement.
"Registrable Securities" means the Sterling Registrable Securities, CMP
Registrable Securities, or the Other Registrable Securities.
"Securities Act" means the Securities Act of 1933, as amended from time to
time.
"Sterling Registrable Securities" means (i) any shares of Common Stock
issued or issuable to or otherwise acquired by Sterling on or after the date
hereof and (ii) any shares of capital stock of the Company issued or issuable
with respect to the securities referred to in clause (i) above by way of a stock
dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization. For purposes of
this Agreement, a Person will be deemed to be a holder of Sterling Registrable
Securities whenever such Person has the right to acquire, directly or
indirectly, such Sterling Registrable Securities (upon conversion or exercise in
connection with a transfer of securities or otherwise, but disregarding any
restrictions or limitations upon the exercise of such right), whether or not
such acquisition has actually been effected, provided, however, that each such
share of Common Stock shall cease to be a Sterling Registrable Security when (i)
it has been effectively registered under the Securities Act and disposed of in
accordance with the Registration Statement covering it; (ii) it is distributed
to the public pursuant to Rule 144 (or any similar provisions then in force)
under the Securities Act; or (iii) it has otherwise been transferred and a new
certificate or other evidence of ownership for it not bearing or requiring a
legend as set forth in Section 4.2 of the Stockholders' Agreement (or other
legend of similar import) and not subject to any stop transfer order has been
delivered by or on behalf of the Company and no other restriction on transfer
exists under the Securities Act.
"Stockholders' Agreement" means the Securities Purchase and Holders
Agreement dated as of the date hereof by and among the Company, CMP, Sterling
and the Management Investors and other Persons party thereto from time to time.
"Special Registration Statement" means (i) a registration statement on
Forms S-8 or S-4 or any similar or successor form or any other registration
statement relating to an exchange offer or an offering of securities solely to
the Company's employees or security holders or (ii) a registration statement
registering a Unit Offering.
"Unit Offering" means a public offering of a combination of debt and equity
securities of the Company in which (i) not more than 20% of the gross proceeds
received from the sale of such securities is attributed to such equity
securities, and (ii) after giving effect to such offering, the Company does not
have a class of equity securities required to be registered under the Exchange
Act.
"underwritten registration or "underwritten offering" means a registration
in which securities of the Company are sold to an underwriter for reoffering to
the public.
2. Incidental Registration.
(a) Right to Include Common Stock. If the Company at any time proposes
to register any of its Common Stock under the Securities Act (other than on
4
<PAGE>
a Special Registration Statement), whether or not for sale for its own
account, the Company will give written notice at least 30 days prior to the
anticipated effective date of the registration statement filed or to be
filed in connection with such registration to all holders of Registrable
Securities of its intention to issue its Common Stock under the Securities
Act and of such holders' rights under this Section 2. Upon the written
request of any such holders of Registrable Securities made within 15 days
of the date of the foregoing notice from the Company (which request shall
specify the aggregate number of the Registrable Securities to be registered
and will also specify the intended method of disposition thereof), the
Company will effect the registration under the Securities Act of all
Registrable Securities which the Company has been so requested to register
by the holders thereof (an "Incidental Registration"), to the extent
required to permit the public disposition (in accordance with such intended
methods thereof) of the Registrable Securities to be so registered;
provided that (i) if, any time after giving written notice of its intention
to register shares of Common Stock and prior to the effective date of the
Registration Statement filed in connection with such registration, the
Company shall determine for any reason not to register the Common Stock,
the Company shall give written notice of such determination to each holder
of Registrable Securities and, thereupon, shall be relieved of its
obligation to register any Registrable Securities in connection with such
registration (but not from its obligation to pay the Registration Expenses
in connection therewith); (ii) if a registration requested pursuant to this
Section 2 shall involve an underwritten public offering, any holder of
Registrable Securities requesting to be included in such registration may
elect, in writing at least 25 days prior to the effective date of the
Registration Statement filed in connection with such registration, not to
register such securities in connection with such registration; and (iii)
if, at any time after the 180-day or shorter period specified in Section
2(b), the sale of the securities has not been completed, the Company may
withdraw from the registration on a pro rata basis (based on the number of
Registrable Securities requested by each holder of Registrable Securities
to be so registered) the Registrable Securities which the Company has been
requested to register and which have not been sold.
(b) Priority in Incidental Registrations. If a registration pursuant
to Section 2(a) involves an underwritten offering and the managing
underwriter advises the Company in writing that, in its opinion, the total
number of shares of Common Stock to be included in such registration,
including the Registrable Securities requested to be included pursuant to
this Section 2, exceeds the maximum number of shares of Common Stock
specified by the managing underwriter that may be distributed without
adversely affecting the price, timing or distribution of such shares of
Common Stock, then the Company shall include in such registration only such
maximum number of Registrable Securities which, in the reasonable opinion
of such underwriter or underwriters, can be sold in the following order of
priority: (i) first, all of the shares of Common Stock that the Company
proposes to sell for its own account, if any; (ii) second, all of the
shares of Common Stock being registered by holder(s) of Registrable
Securities pursuant to a Demand Registration; and (iii) third, the
Registrable Securities of the holder(s) of Registrable Securities requested
to be included in such Incidental Registration. To the extent that shares
of Common Stock to be included in the Incidental Registration must be
allocated among the holders(s) of Registrable Securities pursuant to clause
(iii) above, such shares shall be allocated pro rata among the holders(s)
of Registrable Securities based on the number of shares of Common Stock
that such holders(s) of Registrable Securities shall have requested to be
included therein. Notwithstanding the foregoing, if an Incidental
Registration is an underwritten offering, the managing underwriter or
5
<PAGE>
underwriters may select shares for inclusion, or exclude shares completely,
in such Incidental Registration on a basis other than a pro rata basis if,
in the reasonable opinion of such underwriter or underwriters, selection on
such other basis, or inclusion of such shares, would be material to the
success of the offering.
(c) Selection of Underwriters. If any Incidental Registration is an
underwritten offering, the investment banker(s) and manager(s) for the
offering will be selected by the Company.
(d) Expenses. The Company will pay all Registration Expenses in
connection with any registration of Registrable Securities requested
pursuant to this Section 2.
(e) Liability for Delay. The Company shall not be held responsible for
any delay in the filing or processing of a Registration Statement which
includes any Registrable Securities due to requests by holders of
Registrable Securities pursuant to this Section 2 nor for any delay in
requesting the effectiveness of such Registration Statement.
(f) Participation in Underwritten Registrations. No holder of
Registrable Securities may participate in any underwritten registration
hereunder unless such holder (i) agrees to sell his or its Common Stock on
the basis provided in any underwriting arrangements approved by the persons
who have selected the underwriter and (ii) accurately completes in a timely
manner and executes all questionnaires, powers of attorney, indemnification
agreements, underwriting agreements and other documents customarily
required under the terms of such underwriting arrangements.
3. Demand Registration
(a) Right to Demand Registration. Subject to Section 3(b) below, (i)
the holders of a majority of Sterling Registrable Securities shall be
entitled to make written requests ("Demand Registration Requests") at any
time and from time to time and (ii) the holders of a majority of the CMP
Registrable Securities shall be entitled to make one Demand Registration
Request at any time commencing at the earlier of (A) the sixth anniversary
of the date hereof or (B) the expiration of 180 days after the Company has
consummated a Qualified Public Offering (or otherwise has a class of equity
securities registered pursuant to Section 12 of the Exchange Act), in each
case to the Company for registration with the Commission under and in
accordance with the provisions of the Securities Act (including, but not
limited to, registrations under Rule 415 promulgated under the Securities
Act) of all or part of the Sterling Registrable Securities or CMP
Registrable Securities, as the case may be, owned by them (a "Demand
Registration") (which Demand Registration Request shall specify the
intended number of Sterling Registrable Securities or CMP Registrable
Securities, as the case may be, to be disposed of by such holders, the
anticipated price range for such offering and the intended method of
disposition thereof); provided that (i) the Company may, if the Board of
Directors so determines in the exercise of its reasonable judgment, that
due to a pending or contemplated acquisition or disposition or public
offering it would be inadvisable to effect such Demand Registration at such
time, defer such Demand Registration for a single period not to exceed 180
days. Within 10 days after receipt of the Demand Registration Request, the
Company will serve written notice of such Demand Registration Request to
all holders of Registrable Securities and, subject to paragraph (b) below,
6
<PAGE>
the Company will include in such registration all Registrable Securities of
such holders with respect to which the Company has received written
requests for inclusion therein from such holders within 15 business days
after duly given to the applicable holder of the notice from the Company.
All requests made pursuant to this paragraph 4(a) will specify the
aggregate number of the Registrable Securities to be registered and will
also specify the intended methods of disposition thereof.
(b) Priority in Demand Registrations. The Company will not include in
any Demand Registration any securities (other than Company Registrable
Securities) which are not Registrable Securities without the prior written
consent of at least a majority of the Sterling Registrable Securities or
CMP Registrable Securities, as the case may be, included in such
registration. If any of the Registrable Securities proposed to be
registered pursuant to a Demand Registration are to be sold in a firm
commitment underwritten offering and the managing underwriter or
underwriters of a Demand Registration advise the Company and the holders of
such Registrable Securities in writing that in its or their reasonable
opinion the number of shares of Common Stock proposed to be sold in such
Demand Registration exceeds the maximum number of shares specified by the
managing underwriter that may be distributed without adversely affecting
the price, timing or distribution of the Common Stock, the Company shall
include in such registration only such maximum number of Registrable
Securities which, in the reasonable opinion of such underwriter or
underwriters can be sold in the following order of priority: (i) first, the
number of Sterling Registrable Securities or CMP Registrable Securities, as
the case may be, requested to be included in such registration, pro rata if
necessary; (ii) second, the number of Company Registrable Securities
requested to be included in such registration, if any; (iii) third, all
Other Registrable Securities requested to be included in such registration,
pro rata if necessary; (iv) fourth, all other securities requested to be
included in such registration pursuant to "demand registration" rights
granted to other Persons, provided that such rights will have been granted
only as permitted by this Agreement; and (v) fifth, shares of Common Stock
held by other holders requested to be included in such registration, pro
rata if necessary.
(c) Selection of Underwriters. In the case of a Demand Registration
for an underwritten offering, the holders of a majority of the Sterling
Registrable Securities or CMP Registrable Securities, as the case may be,
to be included in such Demand Registration will have the right to select
the investment banker(s) and manager(s) to administer the offering, which
investment banker(s) and manager(s) will be nationally recognized, subject
to the Company's approval which will not be unreasonably withheld.
(d) Expenses. The Company will pay all Registration Expenses in
connection with any registration of Registrable Securities requested
pursuant to this Section 3.
(e) Other Registration Rights. Except as provided in this Agreement,
the Company shall not grant to any Person the right to request the Company
to register any Common Stock under the Securities Act, or the right to
participate in any registration of Common Stock of the Company under the
Securities Act, without the prior written consent of the holders of a
majority of Sterling Registrable Securities and CMP Registrable Securities
outstanding at the time of such grant.
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<PAGE>
4. Registration Procedures. If and whenever the Company is required to
effect or cause the registration of any Registrable Securities under the
Securities Act as provided in this Agreement, the Company will, as expeditiously
as possible:
(a) prepare and file with the Commission a Registration Statement with
respect to such Registrable Securities, and use its best efforts to cause
such Registration Statement to become effective, provided, that before
filing any Registration Statement the Company will furnish to the counsel
selected by the holders of a majority of the Registrable Securities covered
by such Registration Statement copies of all such documents proposed to be
filed;
(b) in connection with any Demand Registration, if requested by the
party requesting such Demand Registration, use its best efforts to cause to
be included in such registration, a primary offering by the Company of the
Company's shares of Common Stock having an aggregate value (based on the
midpoint of the proposed offering price range specified in the Registration
Statement used to offer such securities) of up to $20 million ("Company
Registrable Securities");
(c) prepare and file with the Commission such amendments and
supplements to such Registration Statement and the Prospectus used in
connection therewith as may be necessary to keep such Registration
Statement effective for a period of not less than 180 days or such shorter
period which will terminate when all Registrable Securities covered by such
Registration Statement have been sold (but not before the expiration of the
applicable period referred to in Section 4(3) of the Securities Act and
Rule 174 promulgated thereunder, if applicable) and comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such Registration Statement during such period in
accordance with the intended methods of disposition by the seller or
sellers thereof set forth in such Registration Statement;
(d) furnish to each seller of such Registrable Securities such number
of copies of such Registration Statement and of each such amendment and
supplement thereof (in each case including all exhibits), such number of
copies of the Prospectus included in such Registration Statement (including
each preliminary Prospectus and summary Prospectus), in conformity with the
requirements of the Securities Act, and such other documents as such seller
may reasonably request in order to facilitate the disposition of the
Registrable Securities by such seller;
(e) use its best efforts to register or qualify such Registrable
Securities covered by such Registration Statement under such other
securities or Blue Sky laws of such jurisdictions as each seller shall
request, and do any and all other acts and things which may be necessary or
advisable to enable such seller to consummate the disposition in such
jurisdictions of the Registrable Securities owned by such seller; provided,
however, that the Company shall not be required to qualify generally to do
business in any jurisdiction where it is not then so qualified or to take
any action which would subject it to general service of process in any such
jurisdiction where it is not then so subject or subject itself to general
taxation in any jurisdiction where it is not then so subject;
8
<PAGE>
(f) immediately notify each seller of any Registrable Securities
covered by such Registration Statement, at any time when a Prospectus
relating thereto is required to be delivered under the Securities Act
within the appropriate period mentioned in clause (c) of this Section 4, of
the Company becoming aware that the Prospectus included in such
Registration Statement, as then in effect, includes an untrue statement of
a material fact or omits to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in the
light of the circumstances then existing, and within ten days prepare and
furnish to all sellers a reasonable number of copies of an amended or
supplemental Prospectus as may be necessary so that, as thereafter
delivered to the purchasers of such Registrable Securities, such Prospectus
shall not include an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing;
(g) cause all such Registrable Securities to be listed on each
securities exchange on which similar securities issued by the Company are
then listed and, if not so listed, to be listed on the Nasdaq National
Market of The Nasdaq Stock Market, Inc. ("Nasdaq"), and arrange for at
least two market makers to register as such with respect to the Registrable
Securities with the National Association of Securities Dealers, Inc.
(h) provide an independent transfer agent and registrar for such
Registrable Securities covered by such Registration Statement not later
than the effective date of such Registration Statement;
(i) furnish to each seller of Registrable Securities covered by such
Registration Statement an original, manually signed copy, addressed to such
seller (and the underwriters, if any) of:
(i) an opinion of counsel for the Company, dated the effective
date of such Registration Statement (or, if such registration involves
an underwritten public offering, dated the date of the closing under
the underwriting agreement), reasonably satisfactory in form and
substance to the sellers of not less than 50% of such Registrable
Securities (and the managing underwriter, if any); and
(ii) a "comfort letter," dated the effective date of such
Registration Statement (or, if such registration involves an
underwritten public offering, dated the date of the closing under the
underwriting agreement), signed by the independent public accountants
who have certified the Company's financial statements included in such
Registration Statement, covering such matters with respect to such
Registration Statement as are customarily covered in accountants'
letters delivered to the underwriters in underwritten offerings of
securities as may reasonably be requested by the sellers of not less
than 50% of such Registrable Securities (and the managing underwriter,
if any);
(j) make available for inspection by any seller of such Registrable
Securities covered by such Registration Statement, by any underwriter
participating in any disposition to be effected pursuant to such
Registration Statement and by any attorney, accountant or other agent
9
<PAGE>
retained by any such seller or any such underwriter (any of the foregoing
persons, including such seller, individually an "Inspector" and
collectively the "Inspectors"), all pertinent financial and other records,
pertinent corporate documents and properties of the Company as shall be
reasonably requested by an Inspector (collectively, the "Records"), and
cause all of the Company's officers, directors and employees to supply all
information reasonably requested by any Inspector in connection with such
Registration Statement; provided that any Records that are designated by
the Company in writing as confidential shall be kept confidential by the
Inspectors unless (A) the disclosure of such Records is necessary to avoid
or correct a misstatement or omission in such Registration Statement or (B)
the release of such Records is ordered pursuant to a subpoena or other
order from a court of competent jurisdiction or by any regulatory authority
having jurisdiction. Each Investor agrees that non-public information
obtained by it as a result of such Inspections shall be deemed confidential
and acknowledges its obligations under the federal securities laws not to
trade any securities of the Company on the basis of material non-public
information;
(k) enter into such customary agreements (including underwriting
agreements in customary form) and take all such other actions as the
holders of a majority of the Registrable Securities being sold or the
underwriters, if any, reasonably request in order to expedite or facilitate
the disposition of such Registrable Securities (including, without
limitation, effecting a stock split or combination of shares);
(l) otherwise use its best efforts to comply with all applicable rules
and regulations of the Commission, and make available to its security
holders, as soon as reasonably practicable, an earning statement covering
the period of at least 12 months beginning with the first day of the
Company's first full calendar quarter after the effective date of the
Registration Statement, which earning statement shall satisfy the
provisions of Section 11(a) of the Securities Act and Rule 158 promulgated
thereunder;
(m) permit any holder of Registrable Securities which holder, in its
sole and exclusive judgment, might be deemed to be an underwriter or a
controlling person of the Company, to participate in the preparation of
such registration or comparable statement and to require the insertion
therein of material, furnished to the Company in writing, which in the
reasonable judgment of such holder and its counsel should be included;
(n) in the event of the issuance of any stop order suspending the
effectiveness of a registration statement, or of any order suspending of
preventingthe use of any related Prospectus or suspending the qualification
of any Common Stock included in such Registration Statement for sale in any
jurisdiction, the Company will use its reasonable best efforts promptly to
obtain the withdrawal of such order; and
(o) use its best efforts to cause such Registrable Securities covered
by such registration Statement to be registered or approved by such other
governmental agencies or authorities as may be necessary to enable the
sellers thereof to consummate the disposition of such Registrable
Securities.
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<PAGE>
The Company may require each seller of Registrable Securities as to which
any registration is being effected promptly to furnish to the Company such
information regarding the distribution of such Registrable Securities as may be
legally required. Such information shall be furnished in writing and shall state
that it is being furnished for use in the Registration Statement.
Each holder of Registrable Securities agrees by acquisition of such
Registrable Securities that, upon receipt of any notice from the Company of the
happening of any event of the kind described in clause (f) of this Section 4,
such holder will forthwith discontinue disposition of Registrable Securities
pursuant to the Registration Statement covering such Registrable Securities
until such holder's receipt of the copies of the supplemented or amended
Prospectus contemplated by clause (f) of this Section 4, and, if so directed by
the Company, such holder will deliver to the Company (at the Company's expense)
all copies, other than permanent file copies then in such holder's possession,
of the Prospectus covering such Registrable Securities current at the time of
receipt of the Company's notice. In the event the Company shall give any such
notice, the period mentioned in clause (c) of this Section 4 shall be extended
by the number of days during the period from and including the date of the
giving of such notice pursuant to clause (f) of this Section 4 up to and
including the date when each seller of Registrable Securities covered by such
Registration Statement shall have received the copies of the supplemented or
amended Prospectus contemplated by clause (f) of this Section 4.
If any Registration Statement or comparable statement contemplated by this
Agreement refers to any holder by name or otherwise as the holder of any
securities of the Company and if, in its sole and exclusive judgment, such
holder is or might be deemed to be a controlling person of the Company, such
holder shall have the right to require (i) the insertion therein of language, in
form and substance satisfactory to such holder and presented to the Company in
writing, to the effect that the holding by such holder of such securities is not
to be construed as a recommendation by such holder of the investment quality of
the Company's securities covered thereby and that such holding does not imply
that such holder will assist in meeting any future financial requirements of the
Company, or (ii) in the event that such reference to such holder by name or
otherwise is not required by the Securities Act or any similar federal statute
then in force, the deletion of the reference to such holder, provided that with
respect to this clause (ii) such holder shall furnish to the Company an opinion
of counsel to such effect which opinion and counsel shall be reasonably
satisfactory to the Company.
5. Indemnification.
(a) Indemnification by the Company. The Company hereby agrees to
indemnify and hold harmless each holder of Registrable Securities which
shall have been registered under the Securities Act, and such holder's
officers, directors and agents and each other Person, if any, who controls
such holder within the meaning of the Securities Act and each other Person
(including underwriters) who or which participates in the offering of such
Registrable Securities against any losses, claims, damages, liabilities,
reasonable attorneys' fees, costs or expenses (collectively, the
"Damages"), joint or several, to which such holder or controlling Person or
participating Person may become subject under the Securities Act or
otherwise, insofar as such Damages (or proceedings in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact made by the Company or its agents contained
in any Registration Statement under which such Registrable Securities are
11
<PAGE>
registered under the Securities Act, in any preliminary Prospectus or final
Prospectus contained therein, or in any amendment or supplement thereof, or
arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, and will reimburse such holder of
Registrable Securities or such controlling Person or participating Person
in connection with investigating or defending any such Damages or
proceeding; provided, however, that the Company will not be liable in any
such case to the extent that any such Damages arise out of or are based
upon (i) an untrue statement or alleged untrue statement or omission or
alleged omission made in such Registration Statement, said preliminary or
final Prospectus or said amendment or supplement in reliance upon and in
conformity with written information furnished to the Company by such holder
or such controlling or participating Person, as the case may be,
specifically for use in the preparation thereof; or (ii) an untrue
statement or alleged untrue statement, omission or alleged omission in a
Prospectus if such untrue statement or alleged untrue statement, omission
or alleged omission is corrected in an amendment or supplement to the
Prospectus which amendment or supplement is delivered to such holder in a
timely manner and such holder thereafter fails to deliver such Prospectus
as so amended or supplemented prior to or concurrently with the sale of
such Registrable Securities to the Person asserting such Damages.
(b) Indemnification by the Holders of Registrable Securities Which Are
Registered. It shall be a condition of the Company's obligations under this
Agreement to effect any registration under the Securities Act that there
shall have been delivered to the Company an agreement or agreements duly
executed by each holder of Registrable Securities to be so registered,
whereby such holder agrees to indemnify and hold harmless the Company, its
directors, officers and agents and each other Person, if any, which
controls the Company within the meaning of the Securities Act against any
Damages, joint or several, to which the Company, or such other Person or
such Person controlling the Company may become subject under the Securities
Act or otherwise, but only to the extent that such Damages (or proceedings
in respect thereof) arise out of or are based upon any untrue statements or
alleged untrue statement of any material fact contained, on the effective
date thereof, in any Registration Statement under which such Registrable
Securities are registered under the Securities Act, in any preliminary
Prospectus or final Prospectus contained therein or in any amendment or
supplement thereto, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, which,
in each such case, has been made in or omitted from such Registration
Statement, said preliminary or final Prospectus or said amendment or
supplement in reliance upon, and in conformity with, written information
furnished to the Company by such holder of Registrable Securities
specifically for use in the preparation thereof. The Company shall be
entitled to receive indemnities from underwriters, selling brokers, dealer
managers and similar securities industry professionals participating in the
distribution, to the same extent as provided above, with respect to
information furnished in writing by such Persons specifically for inclusion
in any Prospectus or Registration Statement.
(c) Conduct of Indemnification Proceedings. Any Person entitled to
indemnification hereunder shall (i) give prompt written notice to the
indemnifying party of the commencement of any action or proceeding
involving a claim referred to in the preceding paragraphs of this Section
5; and (ii) unless the indemnified party has been advised by its counsel
12
<PAGE>
that a conflict of interest exists between such indemnified and
indemnifying parties under applicable standards of professional
responsibility, with respect to such claim, permit such indemnifying party
to assume the defense of such claim with counsel reasonably satisfactory to
the indemnified party. Whether or not such defense is assumed by the
indemnifying party, the indemnifying party will not be subject to any
liability for any settlement made without its consent (but such consent
will not be unreasonably withheld). No indemnifying party will consent to
the entry of any judgment or enter into any settlement (i) that does not
include as an unconditional term thereof the giving by the claimant or
plaintiff to such indemnified party of a release from all liability in
respect of such claim or litigation and (ii) except for judgments or
settlements calling for the payment of money only, without the consent of
the indemnified party (which consent will not be unreasonably withheld). An
indemnifying party who is not entitled to, or elects not to, assume the
defense of the claim, will not be obligated to pay the fees and expenses of
more than one counsel for all parties indemnified by such indemnifying
party with respect to such claim, unless in the reasonable judgment of any
indemnified party a conflict of interest may exist between such indemnified
party and any other such indemnified parties with respect to such claim, in
which event the indemnifying party shall be obligated to pay the fees and
expenses of such additional counsel or counsels.
(d) Contribution. If for any reason the indemnification provided for
in the preceding Sections 6(a) or 6(b) is unavailable to an indemnified
party in respect of any Damages referred to therein, the indemnifying party
shall contribute to the amount paid or payable by the indemnified party as
a result of such Damages in such proportion as is appropriate to reflect
not only the relative benefits received by the indemnified party and the
indemnifying party, but also the relative fault of the indemnified party
and the indemnifying party, as well as any other relevant equitable
considerations. The relative fault of such indemnifying party and
indemnified parties shall be determined by reference to, among other
things, whether any action in question, including any untrue or alleged
untrue statement of a material fact or omission or alleged omission to
state a material fact, has been made by, or relates to information supplied
by, such indemnifying party or indemnified parties, and the parties'
relative intent, knowledge, access to information and opportunity to
correct or prevent such action; provided, however, that in no event shall
the liability of any selling holder of Registrable Securities hereunder be
greater in amount than the difference between the dollar amount of the
proceeds received by such holder upon the sale of the Registrable
Securities giving rise to such contribution obligation and all amounts
previously contributed by such holder with respect to such Damages. No
Person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution from
any Person who was not guilty of fraudulent misrepresentation.
(e) The indemnification provided for under this Agreement will remain
in full force and effect regardless of any investigation made by or on
behalf of any indemnified party or any officer, director or controlling
Person of such indemnified party and will survive the transfer of
securities. The Company also agrees to make such provisions, as are
reasonably requested by any indemnified party, for contribution to such
party in the event the Company's indemnification is unavailable for any
reason.
6. Hold-Back Agreements
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<PAGE>
(a) Restrictions on Public Sale by Holder of Registrable Securities.
Each holder of Registrable Securities whose Registrable Securities are
eligible for inclusion in a Registration Statement filed pursuant to
Sections 3 or 4 agrees, if requested by the managing underwriter or
underwriters in an underwritten offering of any Registrable Securities, not
to effect any public sale or distribution of Registrable Securities,
including a sale pursuant to Rule 144 (or any similar provision then in
force) under the Securities Act (except as part of such underwritten
registration), during the 10-day period prior to, and during the 180-day
period (or such shorter period as may be agreed to by the parties hereto)
beginning on the effective date of such Registration Statement, to the
extent timely notified in writing by the Company or the managing
underwriter or underwriters, provided that this provision shall not apply
to employees of Sterling, 399 Venture Partners, Inc. or wholly owned
subsidiaries of Citicorp.
The foregoing provisions shall not apply to any holder of Registrable
Securities if such holder is prevented by applicable statute or regulation from
entering into any such agreement; provided, however, that any such holder shall
undertake, in its request to participate in any such underwritten offering, not
to effect any public sale or distribution of Registrable Securities (except as
part of such underwritten registration) during such period unless it has
provided 45 days prior written notice of such sale or distribution to the
managing underwriter or underwriter.
(b) No Inconsistent Agreements. The Company will not enter into any
Agreement which is inconsistent with or violate the rights granted to
holders of Registrable Securities in this Agreement.
(c) Restrictions on Public Sale by the Company and Others. The Company
shall (i) not effect any public sale or distribution of any of its Common
Stock for its own account during the 10-day period prior to, and during the
180-day period beginning on, the effective date of a Registration Statement
filed pursuant to Sections 3 or 4 (except as part of a Special Registration
Statement), and (ii) use reasonable efforts to cause each holder of Common
Stock purchased from the Company at any time after the date of this
Agreement (other than in a registered public offering) to agree not to
effect any public sale or distribution of any such securities during such
period, including a sale pursuant to Rule 144 under the Securities Act
(except as part of such underwritten registration, if permitted).
7. Miscellaneous
(a) Amendment and Modification. This Agreement may be amended or
modified, or any provision hereof may be waived, provided that such
amendment or waiver is set forth in a writing executed by (i) the Company,
(ii) Sterling (so long as Sterling and its Affiliates own in the aggregate
at least 15% of the outstanding Common Stock on a fully diluted basis),
(iii) the holders of a majority of the CMP Registrable Securities, (iv) the
holders of a majority of the outstanding Common Stock on a fully diluted
basis (including Shares owned by Sterling, CMP and their respective
Affiliates) held by the Investors, and (v) in the case of any amendment
which materially and adversely affects any Investor, such Investor. No
course of dealing between or among any persons having any interest in this
Agreement will be deemed effective to modify, amend or discharge any part
of this Agreement or any rights or obligations of any person under or by
reason of this Agreement.
14
<PAGE>
(b) Survival of Representations and Warranties. All representations,
warranties, covenants and agreements set forth in this Agreement will
survive the execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby, regardless of any investigation
made by an Investor or on its behalf.
(c) Successors and Assigns; Entire Agreement. This Agreement and all
of the provisions hereof shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and permitted assigns
and executors, administrators and heirs. In addition, whether or not any
express assignment has been made, the provisions of this Agreement which
are for the benefit of purchasers or holders of Registrable Securities are
also for the benefit of, and enforceable by, any subsequent holder of
Registrable Securities. This Agreement sets forth the entire agreement and
understandings among the parties as to the subject matter hereof and merges
and supersedes all prior discussions and understandings of any and every
nature among them.
(d) Separability. In the event that any provision of this Agreement or
the application of any provision hereof is declared to be illegal, invalid
or otherwise unenforceable by a court of competent jurisdiction, the
remainder of this Agreement shall not be affected except to the extent
necessary to delete such illegal, invalid or unenforceable provision unless
that provision held invalid shall substantially impair the benefits of the
remaining portions of this Agreement.
(e) Notices. All notices provided for or permitted hereunder shall be
made in writing by hand delivery, registered or certified first-class mail,
telecopier or air courier guaranteeing overnight delivery to the other
party at the following addresses (or at such other address as shall be
given in writing by any party to the others):
If to the Company to:
Intersil Holding Corporation
2401 Palm Bay Road Northeast
Palm Bay, FL 32905
Telecopy number: 407-729-5392
Attention: General Counsel
with required copies to:
Citicorp Venture Capital, Ltd.
399 Park Avenue
Sixth Floor
New York, New York 10043
Telecopy number: (212) 888-2940
Attention: Paul C. ("Chip") Schorr, IV
and
Dechert Price & Rhoads
4000 Bell Atlantic Tower
1717 Arch Street
15
<PAGE>
Philadelphia, Pennsylvania 19103
Telecopy number: (215) 994-2222
Attention: G. Daniel O'Donnell
If to Sterling to:
Sterling Holding Company, LLC
c\o Citicorp Venture Capital, Ltd.
399 Park Avenue
Sixth Floor
New York, New York 10043
Telecopy number: (212) 888-2940
Attention: Paul C. ("Chip") Schorr, IV
with a required copy to:
Dechert Price & Rhoads
4000 Bell Atlantic Tower
1717 Arch Street
Philadelphia, Pennsylvania 19103
Telecopy number: (215) 994-2222
Attention: G. Daniel O'Donnell, Esq.
If to Harris to:
Manatee Investment Corporation
1025 West NASA Boulevard
Melbourne, FL 32919
Attention: Ronald R. Spoehel
Telecopy number: (407) 727-9222
with a required copy to:
Squire, Sanders & Dempsey L.L.P.
1201 Pennsylvania Avenue, N.W.
P.O. Box 407
Washington, DC 20044-0407
Attention: James J. Maiwurm, Esq.
Telecopy number: (202) 626-6780
If to CMP to:
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<PAGE>
Citicorp Mezzanine Partners, L.P.
399 Park Avenue, 14th Floor
New York, NY 10043
Attention: Byron L. Knief
Telecopy No.: (212) 888-2940
with a required copy to:
Kirkland & Ellis
153 East 53rd Street
New York, NY 10022-4675
Attention: Eunu Chun, Esq.
Telecopy No.: (212) 446-4900
If to the Management Investors or any of them, to their addresses as listed
in the books of the Company.
All such notices shall be deemed to have been duly given: when delivered by
hand, if personally delivered; five business days after being deposited in the
mail, postage prepaid, if mailed; when receipt acknowledged, if telecopied; and
on the next business day, if timely delivered to an air courier guaranteeing
overnight delivery.
(f) Governing Law. The validity, performance, construction and effect
of this Agreement shall be governed by and construed in accordance with the
internal law of Delaware, without giving effect to principles of conflicts
of law
(g) Waiver of Jury Trial. Each of the parties to this Agreement
waives, to the fullest extent permitted by law, any right to trial by jury
of any claim, demand, action or cause of action (i) arising under this
Agreement or (ii) in any way connected with or related or incidental to the
dealings of the parties hereto in respect of this Agreement or any of the
transactions related hereto, in each case whether now existing or hereafter
arising, and whether in contract, tort, equity or otherwise. Each of the
parties to this Agreement agrees and consents that any such claim, demand,
action or cause of action shall be decided by court trial without a jury
and that the parties to this Agreement may file an original counterpart of
a copy of this Agreement with any court as written evidence of the consent
of the parties hereto to the waiver of the right to trial by jury.
(h) Headings. The headings in this Agreement are for convenience of
reference only and shall not constitute a part of this Agreement, nor shall
they affect their meaning, construction or effect.
(i) Counterparts. This Agreement may be executed in two or more
counterparts and by the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original, and all of which
taken together shall constitute one and the same instrument.
17
<PAGE>
(j) Further Assurances. Each party shall cooperate and take such
action as may be reasonably requested by another party in order to carry
out the provisions and purposes of this Agreement and the transactions
contemplated hereby.
(k) Termination. Unless sooner terminated in accordance with its
terms, this Agreement shall terminate ten years after the date of this
Agreement and any additional period permitted by law, provided that the
indemnification rights and obligations set forth in Section 5 hereof shall
survive the termination of this Agreement.
(l) Remedies. In the event of a breach or a threatened breach by any
party to this Agreement of its obligations under this Agreement, any party
injured or to be injured by such breach, in addition to being entitled to
exercise all rights granted by law, including recovery of damages, will be
entitled to specific performance of its rights under this Agreement, it
being agreed by the parties that the remedy at law, including monetary
damages, for breach of such provision will be inadequate compensation for
any loss and that any defense in any action for specific performance that a
remedy at law would be adequate is waived.
(m) Party No Longer Owning Registrable Securities. If a party hereto
ceases to own any Registrable Securities, such party will no longer be
deemed to be an Investor for purposes of this Agreement; provided that the
indemnification rights and obligations set forth in Section 5 hereof shall
survive any such cessation of ownership.
(n) Pronouns. Whenever the context may require, any pronouns used
herein shall be deemed also to include the corresponding neuter, masculine
or feminine forms.
(o) No Effect on Employment. Nothing herein contained shall confer on
any Investor the right to remain in the employ of the Company or any of its
subsidiaries or Affiliates.
18
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Registration
Rights Agreement as of the day and year first above written.
INTERSIL HOLDING CORPORATION
By: __________________
Daniel J. Heneghan
Vice President
STERLING HOLDING COMPANY LLC
CITICORP VENTURE CAPITAL LTD.
By: __________________
James A. Urry
Vice President
MANATEE INVESTMENT CORPORATION
By: __________________
Ronald Spoehel
Vice President
CITICORP MEZZANINE PARTNERS, L.P.
By: __________________
Byron L. Knief
Title:
S-1
<PAGE>
----------------------
Lawrence J. Ciaccia
Social Security Number: ###-##-####
Residence Address: 200 Naylor St. NE
Palm Bay, FL 32907
Residence Telephone: (407) 725-9779
Business Address: 2401 Palm Bay Road NE
Palm Bay, FL 32905
Business Telephone: (407) 729-5728
----------------------
Raymond T. Ford
Social Security Number: ###-##-####
Residence Address: 45 Shady Tree Dr.
Mountaintop, PA 18707
Residence Telephone: (570) 474-9246
Business Address: 2401 Palm Bay Road NE
Palm Bay, FL 32905
Business Telephone: (570) 474-9246
----------------------
Rick Furtney
Social Security Number: ###-##-####
Residence Address: 157 Dickinson St. NE
Palm Bay, FL 32907
Residence Telephone: (407) 676-0934
Business Address: 2401 Palm Bay Road NE
Palm Bay, FL 32905
Business Telephone: (407) 729-5861
S-2
<PAGE>
----------------------
George Gidzinski
Social Security Number: ###-##-####
Residence Address: 1020 Pellam Ave. NE
Palm Bay, FL 32907
Residence Telephone: (407) 729-9372
Business Address: 2401 Palm Bay Road NE
Palm Bay, FL 32905
Business Telephone: (407) 729-4906
----------------------
Daniel J. Heneghan
Social Security Number: ###-##-####
Residence Address: 730 Ridgemoor Place
Melbourne, FL 32940
Residence Telephone: (407) 242-7151
Business Address: 2401 Palm Bay Road NE
Palm Bay, FL 32905
Business Telephone: (407) 729-4688
----------------------
Jeffrey G. Mansmann
Social Security Number: ###-##-####
Residence Address: 2512 Saddlebridge Dr.
Raleigh, NC 27615
Residence Telephone: (919) 847-7553
Business Address: 2401 Palm Bay Road NE
Palm Bay, FL 32905
Business Telephone: (919) 405-3615
S-3
<PAGE>
----------------------
Karl McCalley
Social Security Number: ###-##-####
Residence Address: 125 Lansing Island Drive
Indian Harbour Beach, FL 32937
Residence Telephone: (407) 777-2111
Business Address: 2401 Palm Bay Road NE
Palm Bay, FL 32905
Business Telephone: (407) 724-7386
----------------------
W. Russell Morcom
Social Security Number: ###-##-####
Residence Address: 339 Coral Way West
Indialantic, FL 32903
Residence Telephone: (407) 777-6219
Business Address: 2401 Palm Bay Road NE
Palm Bay, FL 32905
Business Telephone: (407) 729-4604
----------------------
Raymond D. Odom
Social Security Number: ###-##-####
Residence Address: 853 Champions Drive NE
Residence Telephone: (407) 723-3958
Business Address: 2401 Palm Bay Road NE
Palm Bay, FL 32905
Business Telephone: (407) 724-7307
S-4
<PAGE>
----------------------
Larry Sims
Social Security Number: ###-##-####
Residence Address: 1810 Long Iron Dr., Apt. 327
Rockledge, FL 32955
Residence Telephone: (407) 632-9340
Business Address: 2401 Palm Bay Road NE
Palm Bay, FL 32905
Business Telephone: (407) 729-5638
----------------------
CB Teh
Social Security Number: Malaysian citizen - no US SSN
Residence Address: No. 1, Lorong Pimping,
Ukay Heights
68000 Ampang
Selangor, Malaysia
Residence Telephone: 911-603-451-8223
Business Address: 2401 Palm Bay Road NE
Palm Bay, FL 32905
Business Telephone: 011-603-456-2585
----------------------
Stephen Titus
Social Security Number: ###-##-####
Residence Address: 1305 Golf Vista Ct. NE
Palm Bay, FL 32905
Residence Telephone: (407) 676-0193
Business Address: 2401 Palm Bay Road NE
Palm Bay, FL 32905
Business Telephone: (407) 724-7912
S-5
<PAGE>
----------------------
Gregory L. Williams
Social Security Number: ###-##-####
Residence Address: 686 Deerhurst Drive
Melbourne, FL 32940
Residence Telephone: (407) 253-3069
Business Address: 2401 Palm Bay Road NE
Palm Bay, FL 32905
Business Telephone: (407) 729-5756
S-6
<PAGE>
----------------------
Michael W. Althar
Social Security Number: ###-##-####
Residence Address: 3219 Pepper Pike
Findlay, OH 45840
Residence Telephone: (419) 425-1532
Business Address: 2401 Palm Bay Road NE
Palm Bay, FL 32905
Business Telephone: (419) 425-8118
S-7
<PAGE>
EXHIBIT C
THIS WARRANT WAS ORIGINALLY ISSUED ON AUGUST 13, 1999 AND HAS
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND MAY NOT BE TRANSFERRED IN VIOLATION OF SUCH ACT,
THE RULES AND REGULATIONS THEREUNDER OR THE PROVISIONS OF THIS
WARRANT. THIS WARRANT IS ALSO SUBJECT TO (A) A WARRANT
AGREEMENT DATED AS OF AUGUST 13, 1999 BY AND BETWEEN INTERSIL
HOLDING CORPORATION (THE "COMPANY") AND THE ORIGINAL HOLDER
HEREOF AND (B) A SECURITIES PURCHASE AND HOLDERS AGREEMENT
DATED AS OF AUGUST 13, 1999 BY AND AMONG THE COMPANY, CERTAIN
STOCKHOLDERS OF THE COMPANY, AND THE ORIGINAL HOLDER HEREOF
(THE "STOCKHOLDERS AGREEMENT"), IN EACH CASE AS AMENDED FROM
TIME TO TIME. A COPY OF THE WARRANT AGREEMENT AND THE
STOCKHOLDERS AGREEMENT WILL BE FURNISHED WITHOUT CHARGE BY THE
COMPANY TO THE HOLDER HEREOF UPON REQUEST.
STOCK PURCHASE WARRANT
Date of Issuance: ________, 1999 Certificate No. W-__
For value received, INTERSIL HOLDING CORPORATION, a Delaware corporation
(the "Company"), hereby grants to __________________or its transferees and
assigns, the right to purchase from the Company a total of _______ Warrant
Shares (as defined herein) at a price per share of $0.001 (the "Initial Exercise
Price"). This Warrant is one of the warrants (collectively, the "Warrants")
issued pursuant to the terms of the Warrant Agreement dated as of August 13,
1999 between the Company and CMP, and is initially being issued in connection
with the issuance of a Subordinated Note due 2010 (the "Note") to CMP by the
Company pursuant to the Subordinated Credit Agreement dated as of August 13,
1999 by and between CMP and the Company (as amended, restated or modified from
time to time, the "Credit Agreement"). The exercise price and number of Warrant
Shares (and the amount and kind of other securities) for which this Warrant is
exercisable shall be subject to adjustment as provided herein. Certain
capitalized terms used herein are defined in Section 4 hereof.
This Warrant is subject to the following provisions:
SECTION 1. Exercise of Warrant.
1A. Exercise Period. The purchase rights represented by this Warrant may
only be exercised, in whole or in part, at any time after August 13, 2001 (the
"Exercisability Date") , and from time to time thereafter to and including 5:00
p.m., New York time, on August 15, 2009 or, if such day is not a business day,
on the next preceding business day (the "Exercise Period").
<PAGE>
1B. Exercise Procedure.
(i) This Warrant shall be deemed to have been exercised when all of
the following items have been delivered to the Company (the "Exercise
Time"):
(a) a completed Exercise Agreement, as described in Section 1C
below, executed by the Person exercising all or part of the purchase
rights represented by this Warrant (the "Purchaser");
(b) this Warrant;
(c) if the Purchaser is not the Registered Holder, an Assignment
or Assignments in the form set forth in Exhibit II attached hereto
evidencing the assignment of this Warrant to the Purchaser; and
(d) either (i) a check or wire transfer payable to the Company in
an amount equal to the product of the Exercise Price (as such term is
defined in Section 2) multiplied by the number of Warrant Shares being
purchased upon such exercise (the "Aggregate Exercise Price"), (ii)
the surrender to the Company of securities of the Company or its
subsidiaries having a value equal to the Aggregate Exercise Price of
the Warrant Shares being purchased upon such exercise (which value in
the case of debt securities shall be the principal amount thereof and
in the case of shares of Common Stock shall be the Fair Market Value
thereof), or (iii) the delivery of a notice to the Company that the
Purchaser is exercising the Warrant by authorizing the Company to
reduce the number of Warrant Shares subject to the Warrant by the
number of shares having an aggregate Fair Market Value equal to the
Aggregate Exercise Price.
(ii) Certificates for Warrant Shares purchased upon exercise of this
Warrant shall be delivered by the Company to the Purchaser within five days
after the date of the Exercise Time together with any cash payable in lieu
of a fraction of a share pursuant to the provisions of Section 14 hereof.
Unless this Warrant has expired or all of the purchase rights represented
hereby have been exercised, the Company shall prepare a new Warrant,
substantially identical hereto, representing the rights formerly
represented by this Warrant which have not expired or been exercised and
shall, within such five-day period, deliver such new Warrant to the Person
designated for delivery in the Exercise Agreement.
(iii) The Warrant Shares issuable upon the exercise of this Warrant
shall be deemed to have been issued to the Purchaser at the Exercise Time,
and the Purchaser shall be deemed for all purposes to have become the
Registered Holder of such Warrant Shares at the Exercise Time.
(iv) The issuance of certificates for Warrant Shares upon exercise of
this Warrant shall be made without charge to the Registered Holder or the
Purchaser for any issuance tax in respect thereof or other cost incurred by
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<PAGE>
the Company in connection with such exercise and the related issuance of
Warrant Shares; provided, that the Company shall not be required to pay any
taxes in respect of the Warrant or Warrant Shares, with respect to any
transfer of the Warrants, which taxes shall be paid by the transferee prior
to the issuance of such Warrant Shares.
(v) The Company shall not close its books against the transfer of this
Warrant or of any Warrant Shares issued or issuable upon the exercise of
this Warrant in any manner which interferes with the timely exercise of
this Warrant. The Company shall from time to time take all such action as
may be necessary to assure that the par value per share of the unissued
Warrant Shares acquirable upon exercise of this Warrant is at all times
equal to or less than the Exercise Price then in effect. In the event that
the Company fails to comply with its obligations set forth in the foregoing
sentence, the Purchaser may (but shall not be obligated to) purchase
Warrant Shares hereunder at par value, and the Company shall be obligated
to reimburse the Purchaser for the aggregate amount of consideration paid
in connection with such exercise in excess of the Exercise Price then in
effect.
(vi) The Company shall assist and cooperate with the Registered Holder
or any Purchaser required to make any governmental filings or obtain any
governmental approvals prior to or in connection with any exercise of this
Warrant.
(vii) Notwithstanding any other provision hereof, if an exercise of
any portion of this Warrant is to be made in connection with a public
offering or a sale of the Company (pursuant to a merger, sale of stock, or
otherwise), such exercise may at the election of the Registered Holder be
conditioned upon the consummation of such transaction, in which case such
exercise shall not be deemed to be effective until immediately prior to the
consummation of such transaction.
(viii) The Company shall at all times reserve and keep available out
of its authorized but unissued Common Stock solely for the purpose of
issuance upon the exercise of this Warrant, the maximum number of Warrant
Shares issuable upon the exercise of this Warrant. All Warrant Shares which
are so issuable shall, when issued and upon the payment of the applicable
Exercise Price, be duly and validly issued, fully paid and nonassessable
and free from all taxes, liens and charges except those created by actions
of the holder hereof. The Company shall take all such actions as may be
necessary to ensure that all such Warrant Shares may be so issued without
violation by the Company of any applicable law or governmental regulation
or any requirements of any domestic securities exchange upon which shares
of Common Stock or other securities constituting Warrant Shares may be
listed (except for official notice of issuance which shall be immediately
delivered by the Company upon each such issuance). The Company will use its
best efforts to cause the Warrant Shares, immediately upon such exercise,
to be listed on any domestic securities exchange upon which shares of
Common Stock or other securities constituting Warrant Shares are listed at
the time of such exercise.
(ix) If the Warrant Shares issuable by reason of exercise of this
Warrant are convertible into or exchangeable for any other stock or
securities of the Company, the Company shall, at the Purchaser's option and
3
<PAGE>
upon surrender of this Warrant by such Purchaser as provided above together
with any notice, statement or payment required to effect such conversion or
exchange of Warrant Shares, deliver to such Purchaser (or as otherwise
specified by such Purchaser) a certificate or certificates representing the
stock or securities into which the Warrant Shares issuable by reason of
such conversion are convertible or exchangeable, registered in such name or
names and in such denomination or denominations as such Purchaser has
specified.
(x) The Company shall not, and shall not permit its subsidiaries to,
directly or indirectly, by any action (including, without limitation,
reincorporation in a jurisdiction other than Delaware, amending its
Articles of Incorporation or through any Organic Change (as defined in
Section 2D), issuance or sale of securities or any other voluntary action)
avoid or seek to avoid the observance or performance of any of terms of
this Warrant or impair or diminish its value (except for any action which
ratably affects all Warrant Shares and shares of Common Stock), but shall
at all times in good faith assist in the carrying out of all such terms of
Warrant. Without limiting the generality of the foregoing, the Company
shall (a) use its reasonable best efforts to obtain all such
authorizations, exemptions, or consents from any public regulatory body
having jurisdiction thereof as may be necessary to enable the Company to
perform its obligations under this Warrant, and (b) not undertake any
reverse stock split, combination, reorganization, or other reclassification
of its capital stock which would have the effect of making this Warrant
exercisable for less than one share of Common Stock.
1C. Exercise Agreement. Upon any exercise of this Warrant, the Purchaser
shall deliver to the Company an Exercise Agreement in substantially the form set
forth as Exhibit I hereto, except that if the Warrant Shares are not to be
issued in the name of the Registered Holder, the Exercise Agreement shall also
state the name of the Person to whom the certificates for the Warrant Shares are
to be issued, and if the number of Warrant Shares to be issued does not include
all of the Warrant Shares purchasable hereunder, it shall also state the name of
the Person to whom a new Warrant for the unexercised portion of the rights
hereunder is to be issued.
SECTION 2. Adjustment of Exercise Price and Number of Shares. In order to
prevent dilution of the rights granted under this Warrant, the Initial Exercise
Price shall be subject to adjustment from time to time as provided in this
Section 2 (as so adjusted, the "Exercise Price"), and the number of Warrant
Shares obtainable upon exercise of this Warrant shall be subject to adjustment
from time to time, each as provided in this Section 2; provided, however, that
there shall be no adjustment to the Exercise Price or to the number of Warrant
Shares acquirable upon exercise of the Warrant, as provided in this Section 2
(an "Adjustment"), unless and until such Adjustment, together with any previous
Adjustments to the Exercise Price or to the number of Warrant Shares so
acquirable which would otherwise have resulted in an Adjustment were it not for
this proviso, would require an increase or decrease of at least 1% of the total
number of Warrant Shares so acquirable at the time of such Adjustment, in which
event such Adjustment and all such previous Adjustments shall immediately occur.
2A. Adjustment of Exercise Price and Number of Shares upon Issuance of
Common Stock.
4
<PAGE>
(i) If and when, on or after the date hereof, the Company issues or
sells, or in accordance with Section 2B is deemed to have issued or sold
(other than Purchase Rights (as defined in Section 4) or pursuant to a
Permitted Issuance or as described in Section 2C hereof) any shares of
Common Stock for a per share consideration that is less than the per share
Fair Market Value of the Common Stock determined as of the date of such
issuance or sale, then immediately upon such issuance or sale, the Exercise
Price shall be reduced to equal the amount determined by multiplying the
Exercise Price in effect immediately prior to such issuance or sale by a
fraction, the numerator of which will be the sum of (x) the number of
shares of Common Stock Deemed Outstanding immediately prior to such
issuance or sale multiplied by the Fair Market Value of the Common Stock
determined as of the date of such issuance or sale, and (y) the
consideration, if any, received by the Company upon such issuance or sale,
and the denominator of which will be the product derived by multiplying
such Fair Market Value of the Common Stock by the number of shares of
Common Stock Deemed Outstanding immediately after such issuance or sale.
(ii) Upon each such adjustment of the Exercise Price hereunder, the
number of Warrant Shares acquirable upon exercise of this Warrant shall be
adjusted to equal the number of shares determined by multiplying the
Exercise Price in effect immediately prior to such adjustment by the number
of Warrant Shares acquirable upon exercise of this Warrant immediately
prior to such adjustment and dividing the product thereof by the Exercise
Price resulting from such adjustment. For the purposes of this Section 2,
the calculation of the number of shares of Common Stock Deemed Outstanding
shall exclude the Warrant Shares.
2B. Effect on Exercise Price of Certain Events. For purposes of determining
the adjusted Exercise Price under Section 2A, the following provisions shall be
applicable:
(i) Issuance of Rights or Options. If the Company grants in any manner
any rights or options (other than Purchase Rights or a Permitted Issuance)
to subscribe for or to purchase Common Stock or any stock or other
securities convertible into or exchangeable for Common Stock (including,
without limitation, convertible common stock) (such rights or options being
herein called "Options" and such convertible or exchangeable stock or
securities being herein called "Convertible Securities") and the price per
share for which Common Stock is issuable upon the exercise of such Options
or upon conversion or exchange of such Convertible Securities is less than
the Fair Market Value of the Common Stock in effect on the date such
Options are granted, then the total maximum number of shares of Common
Stock issuable upon the exercise of such Options or upon conversion or
exchange of the total maximum amount of such Convertible Securities
issuable upon the exercise of such Options shall be deemed to be
outstanding and to have been issued and sold by the Company for such price
per share. For purposes of this paragraph, the "price per share for which
Common Stock is issuable upon exercise of such Options or upon conversion
or exchange of such Convertible Securities" is determined by dividing (A)
the total amount, if any, received or receivable by the Company as
consideration for the granting of such Options, plus the minimum aggregate
amount of additional consideration payable to the Company upon the exercise
of all such Options, plus in the case of such Options which relate to
Convertible Securities, the minimum aggregate amount of additional
consideration, if any, payable to the Company upon the issuance or sale of
such Convertible Securities and the conversion or exchange thereof, by (B)
the total maximum number of shares of Common Stock issuable upon exercise
5
<PAGE>
of such Options or upon the conversion or exchange of all such Convertible
Securities issuable upon the exercise of such Options. No further
adjustment of the Exercise Price shall be made upon the actual issuance of
such Common Stock or of such Convertible Securities upon the exercise of
such Options or upon the actual issuance of such Common Stock upon
conversion or exchange of such Convertible Securities.
(ii) Issuance of Convertible Securities. If the Company in any manner
issues or sells any Convertible Securities (other than Purchase Rights or a
Permitted Issuance) and the price per share for which Common Stock is
issuable upon the conversion or exchange of such Convertible Securities is
less than the per share Fair Market Value of the Common Stock then in
effect, then the maximum number of shares of Common Stock issuable upon
conversion or exchange of such Convertible Securities shall be deemed to be
outstanding and to have been issued and sold by the Company for such price
per share. For the purposes of this paragraph, the "price per share for
which Common Stock is issuable upon such conversion or exchange" is
determined by dividing (A) the total amount received or receivable by the
Company as consideration for the issue or sale of such Convertible
Securities, plus the minimum aggregate amount of additional consideration,
if any, payable to the Company upon the conversion or exchange thereof, by
(B) the total maximum number of shares of Common Stock issuable upon the
conversion or exchange of all such Convertible Securities. No further
adjustment of the Exercise Price shall be made upon the actual issue of
such Common Stock upon conversion or exchange of such Convertible
Securities, and if any such issue or sale of such Convertible Securities is
made upon exercise of any Options for which adjustments of the Exercise
Price have been or are to be made pursuant to other provisions of this
Section 2B, no further adjustment of the Exercise Price shall be made by
reason of such issue or sale.
(iii) Change in Option Price or Conversion Rate. If either the
purchase price provided for in any Options, the additional consideration,
if any, payable upon the issue, conversion or exchange of any Convertible
Securities, or the rate at which any Convertible Securities are convertible
into or exchangeable for Common Stock shall change at any time, the
Exercise Price in effect at the time of such change shall be adjusted to
the Exercise Price which would have been in effect at such time had such
Options or Convertible Securities still outstanding provided for such
changed purchase price, additional consideration or changed conversion
rate, as the case may be, at the time initially granted, issued or sold and
the number of Warrant Shares shall be correspondingly readjusted.
(iv) Treatment of Expired Options and Unexercised Convertible
Securities. Upon the expiration of any Option or the termination of any
right to convert or exchange any Convertible Securities, in either case
without the exercise of such Option or right, the Exercise Price then in
effect and the number of Warrant Shares acquirable hereunder shall be
adjusted to the Exercise Price and the number of shares which would have
been in effect at the time of such expiration or termination had such
Option or Convertible Securities, to the extent outstanding immediately
prior to such expiration or termination, never been issued.
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<PAGE>
(v) Calculation of Consideration Received. If any Common Stock,
Options, or Convertible Securities are issued or sold or deemed to have
been issued or sold for cash, the consideration received therefor shall be
deemed to be the net amount received by the Company therefor. In case any
Common Stock, Options, or Convertible Securities are issued or sold for a
consideration other than cash, the amount of the consideration other than
cash received by the Company shall be the fair value of such consideration,
except where such consideration consists of marketable securities, in which
case the amount of consideration received by the Company shall be the
market price thereof as of the date of receipt. In case any Common Stock,
Options, or Convertible Securities are issued to the owners of the
non-surviving entity in connection with any merger or other business
combination in which the Company is the surviving entity, the amount of
consideration therefor shall be deemed to be the fair value of such portion
of the net assets and business of the non-surviving entity as is
attributable to such Common Stock, Options or Convertible Securities, as
the case may be. The fair value of any consideration other than cash or
marketable securities shall be determined by the Company, unless such
consideration is paid by an Affiliate of the Company, in which case the
fair value of such consideration shall be determined jointly by the Company
and the Required Holders. If such parties are unable to reach agreement
within a reasonable period of time, such fair value shall be determined by
an appraiser jointly selected by the Company and the Required Holders,
whose determination shall be final and binding on the Company and all
Registered Holders of Warrants (as defined in Section 8 below). The fees
and expenses of such appraiser shall be paid by the Company.
(vi) Integrated Transactions. Other than Permitted Issuances, in case
any Option is issued in connection with the issue or sale of other
securities of the Company, together comprising one integrated transaction
in which no specific consideration is allocated to such Options by the
parties thereto, the Option shall be deemed to have been issued for no
consideration provided, that if such other securities are debt securities
(such debt securities so issued are herein referred to as the "Debt") of
the Company or any of its subsidiaries, the Option shall be deemed to have
been issued for consideration equal to the excess, if any, of (a) the
aggregate face amount (the "Estimated Face Amount") of debt securities with
terms identical to the terms of the Debt (other than the increase to face
value described in this proviso) which the Company or such subsidiary would
have had to issue had no Options been issued in connection therewith, given
the prevailing market conditions at the time of the issuance of the Debt,
in order to receive the same aggregate net proceeds as is actually received
from the issuance of the Debt, over (b) the aggregate face amount of the
Debt. The Estimated Face Amount shall be as mutually agreed between the
Company and the Registered Holder or, if no such mutual agreement is
reached, as set forth in the written opinion, addressed to the Registered
Holder, of an investment bank of national recognition, retained by the
Company and reasonably acceptable to the Registered Holder; provided, that
if no such mutual agreement is reached or written opinion is received, the
Estimated Face Amount shall be deemed to be zero (0); and provided,
further, that the fees and expenses of such investment bank shall be borne
by the Company.
Example: If the Company issues $20 million aggregate
principal amount of 10% subordinated debentures
with a 10-year maturity (and receives aggregate
net proceeds of $20 million), and in connection
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<PAGE>
therewith issues warrants, and in accordance
with the provisions of Section 2B(vi), the
Company and the Registered Holder mutually agree
or an investment bank determines that the
Estimated Face Amount of the subordinated
debentures (with terms otherwise identical to
the securities issued) would have been $21
million to the Company), had the warrants not
been issued, then such warrants would be deemed
to have been issued for $1 million.
(vii) Treasury Shares. The number of shares of Common Stock
outstanding at any given time does not include shares owned or held by or
for the account of the Company or any subsidiary of the Company and the
disposition of any shares so owned or held shall be considered an issue or
sale of Common Stock.
(viii) Record Date. If the Company takes a record of the holders of
Common Stock for the purpose of entitling them (A) to receive a dividend or
other distribution payable in Common Stock, Options, or Convertible
Securities or (B) to subscribe for or purchase Common Stock, Options, or
Convertible Securities, then such record date shall be deemed to be the
date of the issue or sale of the shares of Common Stock deemed to have been
issued or sold upon the declaration of such dividend or the making of such
other distribution or the date of the granting of such right of
subscription or purchase, as the case may be.
2C. Subdivision or Combination of Common Stock. If the Company at any time
subdivides (by any stock split, stock dividend, recapitalization, or otherwise)
the Common Stock into a greater number of shares or pays a dividend or makes a
distribution to holders of the Common Stock in the form of shares of Common
Stock, the Exercise Price in effect immediately prior to such subdivision shall
be proportionately reduced and the number of Warrant Shares obtainable upon
exercise of this Warrant shall be proportionately increased. Subject to clause
(b) of Section 1B(x), if the Company at any time combines (by reverse stock
split or otherwise) the Common Stock into a smaller number of shares, the
Exercise Price in effect immediately prior to such combination shall be
proportionately increased and the number of Warrant Shares obtainable upon
exercise of this Warrant shall be proportionately decreased.
2D. Organic Change. Any recapitalization, reorganization, reclassification,
consolidation, merger, sale of all or substantially all of the Company's assets
or other transaction which is effected in such a way that holders of Common
Stock are entitled to receive (either directly or upon subsequent liquidation)
stock, securities, or assets with respect to or in exchange for Common Stock is
referred to herein as an "Organic Change". Subject to the provisions of the
Stockholders Agreement, prior to the consummation of any Organic Change, the
Company shall make appropriate provision to ensure that each Registered Holder
of Warrants shall thereafter have the right to acquire and receive upon exercise
thereof, in lieu of or addition to (as the case may be) the Warrant Shares
immediately theretofore acquirable and receivable upon exercise of such
Registered Holder's Warrants, such shares of stock, securities or assets as may
be issued or payable with respect to or in exchange for the number of Warrant
Shares immediately theretofore acquirable and receivable upon exercise of such
Registered Holder's Warrants had such Organic Change not taken place. In any
such case, the Company shall make appropriate provision with respect to such
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Registered Holder's rights and interests to insure that the provisions hereof
(including this Section 2) shall thereafter be applicable to the Warrants
(including, in the case of any such Organic Change in which the successor entity
or purchasing entity is other than the Company, an immediate adjustment of the
Exercise Price to the per share value for the Common Stock reflected by the
terms of such Organic Change and a corresponding immediate adjustment in the
number of Warrant Shares acquirable and receivable upon exercise of the
Warrants, if the per share value so reflected is less than the Fair Market Value
of the Common Stock in effect immediately prior to such Organic Change). The
Company shall not effect any such Organic Change unless, prior to the
consummation thereof, the successor entity (if other than the Company) resulting
from such Organic Change (including a purchaser of all or substantially all the
Company's assets) assumes by written instrument the obligation to deliver to
each Registered Holder of Warrants such shares of stock, securities or assets
as, in accordance with the foregoing provisions, such Registered Holder may be
entitled to acquire upon exercise of Warrants.
2E. Certain Events. If any event occurs of the type contemplated by the
provisions of this Section 2 but not expressly provided for by such provisions
(including, without limitation, the granting of stock appreciation rights,
phantom stock rights or other rights with equity features but excluding any
Permitted Issuance), then the Company's Board of Directors shall make an
appropriate and equitable adjustment in the Exercise Price and the number of
Warrant Shares obtainable upon exercise of this Warrant so as to protect the
rights of the Registered Holder of this Warrant.
2F. Notices.
(i) Immediately upon any adjustment of the Exercise Price, the Company
shall give written notice thereof to the Registered Holder, setting forth
in reasonable detail and certifying the calculation of such adjustment.
(ii) The Company shall give written notice to the Registered Holder at
least thirty (30) days prior to the date on which the Company closes its
books or takes a record (A) with respect to any dividend or distribution
upon the Common Stock, (B) with respect to any pro rata subscription offer
to holders of Common Stock, or (C) for determining rights to vote with
respect to any Organic Change, dissolution or liquidation.
(iii) The Company shall also give written notice to the Registered
Holder at least thirty (30) days prior to the date on which any Organic
Change, dissolution, or liquidation shall take place.
SECTION 3. Warrant Reduction.
3A. Reduction. In the event that the Company repays the Note in full on or
prior to August 13, 2001 (the "Reduction Date"), the aggregate number of Warrant
Shares issued or issuable pursuant to the Warrants shall automatically be
reduced (the "Warrant Reduction") by _________ Warrant Shares (as adjusted
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pursuant to the terms hereof as of immediately prior to the date of such Warrant
Reduction). Thereafter, the Company shall provide prompt written notice to the
Registered Holders, (i) confirming the number of Warrant Shares to be so reduced
and (ii) including a copy of a pay-off letter or other written evidence of the
final and indefeasible repayment of the Notes.
3B. Manner of Reduction. In the case of a Warrant Reduction, such reduction
in the number of Warrant Shares shall be deemed to be effective as of the
Reduction Date as set forth in Section 3A, and shall be applied pro rata among
each Registered Holder on the basis of the number of Warrant Shares (assuming
full exercise of all Warrants) held by each such Registered Holder. In addition,
following the effectiveness of the Warrant Reduction, at any Registered Holder's
written request, the Company shall prepare a new Warrant, substantially
identical hereto, representing the rights represented by this Warrant after
giving effect to any such Warrant Reduction, and promptly deliver such new
Warrant to any person who delivers this Warrant following such Warrant
Reduction.
SECTION 4. Purchase Rights. If at any time the Company grants, issues, or
sells any options, convertible securities, or rights to purchase stock,
warrants, securities, or other such property pro rata to the record holders of
the Common Stock (the "Purchase Rights"), then the Company shall grant, issue or
sell (as the case may be) to the Registered Holder the aggregate Purchase Rights
which such Registered Holder would have acquired if such Registered Holder had
held the maximum number of Warrant Shares acquirable upon complete exercise of
this Warrant immediately before the date on which a record is taken for the
grant, issuance or sale of such Purchase Rights or, if no such record is taken,
the date as of which the record holders of Common Stock are to be determined for
the grant, issue, or sale of such Purchase Rights.
SECTION 5. Definitions. The following terms have the meanings set forth
below:
"Affiliate", as applied to any Person, means any other Person directly or
indirectly controlling, controlled by, or under common control with, that
Person. For the purposes of this definition, "control" (including with
correlative meanings, the terms "controlling", "controlled by" and "under common
control with"), as applied to any Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of that Person, whether through the ownership of voting securities or
by contract or otherwise.
"Class A Common" means the Company's Class A Common Stock, $.01 par value
per share, and any securities into which such Class A Common Stock is hereafter
converted or exchanged.
"Class B Common" means the Company's Class B Common Stock, $.01 par value
per share, and any securities into which such Class B Common Stock is hereafter
converted or exchanged.
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"Common Stock" means, collectively, the Class A Common and the Class B
Common, and any securities into which such Class A Common or Class B Common is
hereafter converted or exchanged.
"Common Stock Deemed Outstanding" means, at any given time, the number of
shares of Common Stock actually outstanding at such time, plus the number of
shares of Common Stock deemed to be outstanding pursuant to Section 2B(i) or
2B(ii) hereof.
"Fair Market Value" means (i) the average of the closing sales prices of
the Common Stock on all domestic securities exchanges on which the Common Stock
is listed, or (ii) if there have been no sales on any such exchange on any day,
the average of the highest bid and lowest asked prices on all such exchanges at
the end of such day, or (iii) if on any day the Common Stock is not so listed,
the sales price for the Common Stock as of 4:00 P.M., New York time, as reported
on the Nasdaq National Market, or (iv) if the Common Stock is not reported on
the Nasdaq National Market, the average of the representative bid and asked
quotations for the Common Stock as of 4:00 P.M., New York time, as reported on
the Nasdaq interdealer quotation system, or any similar successor organization,
in each such case averaged over a period of twenty-one (21) trading days
consisting of the day as of which "Fair Market Value" is being determined and
the 20 consecutive trading days prior to such day. Notwithstanding the
foregoing, if at any time of determination either (x) the Common Stock is not
registered pursuant to Section 12 of the Securities Exchange Act of 1934, as
amended, or either listed on a national securities exchange or authorized for
quotation in the Nasdaq system, or (y) less than 25% of the outstanding Common
Stock is held by the public free of transfer restrictions under the Securities
Act of 1933, as amended, then Fair Market Value shall mean the price that would
be paid per share for the entire common equity interest in the Company in an
orderly sale transaction between a willing buyer and a willing seller, taking
into account the appropriate lack of liquidity of the Company's securities,
using valuation techniques then prevailing in the securities industry and
assuming full disclosure of all relevant information and a reasonable period of
time for effectuating such sale. Fair Market Value shall be determined by the
Company's Board of Directors in its good faith judgment. A majority of the
Required Holders shall have the right to require that an independent investment
banking firm mutually acceptable to the Company and the Required Holders
determine Fair Market Value, which firm shall submit to the Company and the
Warrant holders a written report setting forth such determination. The expenses
of such firm will be borne by the Company, and the determination of such firm
will be final and binding upon all parties.
"Permitted Issuance" means any issuance by the Company of shares or options
or other rights to acquire Common Stock (a) on or prior to the date hereof; (b)
upon exercise of this Warrant; (c) upon the conversion or exchange of any shares
of any class of Common Stock into another class of Common Stock; (d) pursuant to
an underwritten offering of Common Stock registered under the Securities Act of
1933, as amended or in a private placement in which a placement agent is
retained by the Company; (e) issued or issuable to members of management
(including directors) of the Company and its subsidiaries (so long as Citicorp
Venture Capital, Ltd. holds at least 51.0% of the Common Stock on a
fully-diluted basis); and (f) so long as Citicorp Venture Capital, Ltd. holds at
least 51.0% of the Common Stock on a fully-diluted basis, to Persons that are
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not Affiliates of the Company in connection with the acquisition by the Company
or any of its subsidiaries of products and businesses.
"Person" means any individual, partnership, limited liability company,
joint venture, corporation, trust, unincorporated organization or government or
department or agency thereof.
"Registered Holder" means the holder of this Warrant as reflected in the
records of the Company maintained pursuant to the provisions of Section 13.
"Required Holders" means the holders of a majority of the purchase rights
represented by this Warrant as originally issued which remain outstanding and
unexercised.
"Stockholders Agreement" means the Securities Purchase and Holders
Agreement, dated as of August 13, 1999, as amended, by and among the Company,
CMP, and certain shareholders of the Company, as such Securities Purchase and
Holders Agreement may be amended or modified from time to time in accordance
with the terms thereof.
"Warrant Shares" means shares of the Company's Class A Common (unless any
holder of the Warrants elects, at its option, to receive Class B Common in its
Exercise Agreement) issuable upon exercise of the Warrant; provided, that if the
securities issuable upon exercise of the Warrants are issued by an entity other
than the Company or there is a change in the class of securities so issuable,
then the term "Warrant Shares" shall mean shares of the security issuable upon
exercise of the Warrants if such security is issuable in shares, or shall mean
the equivalent units in which such security is issuable if such security is not
issuable in shares.
SECTION 6. No Voting Rights; Limitations of Liability. This Warrant shall
not entitle the Registered Holder hereof to any voting rights or other rights as
a stockholder of the Company. No provision hereof, in the absence of affirmative
action by the Registered Holder to purchase Warrant Shares, and no enumeration
herein of the rights or privileges of the Registered Holder shall give rise to
any liability of such Registered Holder for the Exercise Price of Warrant Shares
acquirable by exercise hereof or as a stockholder of the Company.
SECTION 7. Transferability. Subject to the terms of the Stockholders
Agreement this Warrant and all rights hereunder are transferable, in whole or in
part, without charge to the Registered Holder, upon surrender of this Warrant
with a properly executed Assignment (in the form of Exhibit II hereto) and
joinder to the Stockholders Agreement (in the form of Exhibit III hereto)
properly executed by the transferee of the Warrant at the principal office of
the Company. The Registered Holder agrees that it will not sell, transfer, or
otherwise dispose of any Warrant Shares, in whole or in part, except in
accordance with the terms of the Stockholders Agreement and the joinder to the
Stockholders Agreement executed by such Registered Holder. Each certificate
evidencing the Warrant Shares issued upon such transfer shall bear the
restrictive legends required by the Stockholders Agreement, to the extent
required therein.
SECTION 8. Warrant Exchangeable for Different Denominations. This Warrant
is exchangeable, upon the surrender hereof by the Registered Holder at the
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principal office of the Company, for new Warrants of like tenor representing in
the aggregate the purchase rights hereunder, and each of such new Warrants shall
represent such portion of such rights as is designated by the Registered Holder
at the time of such surrender. At the request of the Registered Holder (pursuant
to a transfer of Warrants or otherwise), this Warrant may be exchanged for one
or more Warrants to purchase Common Stock. The date the Company initially issues
this Warrant shall be deemed to be the date of issuance hereof regardless of the
number of times new certificates representing the unexpired and unexercised
rights formerly represented by this Warrant shall be issued. All Warrants
representing portions of the rights hereunder are referred to herein as the
"Warrants."
SECTION 9. Exchange. In the event that it becomes unlawful or, in the
reasonable judgment of any Registered Holder of this Warrant, unduly burdensome
by reason of a change in legal or regulatory considerations or the
interpretation thereof affecting the ability of financial institutions or their
affiliates to hold equity securities, or any material change (including a
reduction in the number of shares of Common Stock outstanding) in the capital
structure of the Company, to hold any or all of the Warrants or Warrant Shares,
the Registered Holder of this Warrant shall have the right to require all or
part of such Registered Holder's Warrants or Warrant Shares to be exchanged for
nonvoting stock or similar interests that convey equivalent economic benefits to
such Warrants or Warrant Shares and include, in the case of Warrants, equivalent
anti-dilution protection. Any such exchange shall occur as soon as practicable
but in any event within sixty (60) days after written notice by the Registered
Holder of this Warrant to the Company (or such earlier date if required to
comply with applicable law).
SECTION 10. Replacement. Upon receipt of evidence reasonably satisfactory
to the Company (an affidavit of the Registered Holder shall be satisfactory) of
the ownership and the loss, theft, destruction, or mutilation of any certificate
evidencing this Warrant, and in the case of any such loss, theft, or
destruction, upon receipt of indemnity reasonably satisfactory to the Company
(provided, that if the Registered Holder is a financial institution or other
institutional investor its own Agreement shall be satisfactory), or, in the case
of any such mutilation upon surrender of such certificate, the Company shall (at
its expense) execute and deliver in lieu of such certificate a new certificate
of like kind representing the same rights represented by such lost, stolen,
destroyed, or mutilated certificate and dated the date of such lost, stolen,
destroyed, or mutilated certificate.
SECTION 11. Notices. Except as otherwise expressly provided herein, all
notices and deliveries referred to in this Warrant shall be in writing, shall be
delivered personally, sent by registered or certified mail, return receipt
requested and postage prepaid or sent via nationally recognized overnight
courier or via facsimile, and shall be deemed to have been given when so
delivered (or when received, if delivered by any other method) if sent (i) to
the Company, at its principal executive offices, and (ii) to a Registered
Holder, at such Registered Holder's address as it appears in the records of the
Company (unless otherwise indicated by any such Registered Holder).
SECTION 12. Amendment and Waiver. Except as otherwise provided herein, the
provisions of the Warrants may be amended and the Company may take any action
herein prohibited, or omit to perform any act herein required to be performed by
it, only if the Company has obtained the prior written consent of the Required
Holders.
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SECTION 13. Warrant Register. The Company shall maintain at its principal
executive offices books for the registration and the registration of transfer of
Warrants. The Company may deem and treat the Registered Holder as the absolute
owner hereof (notwithstanding any notation of ownership or other writing thereon
made by anyone) for all purposes and shall not be affected by any notice to the
contrary.
SECTION 14. Fractions of Shares. The Company may, but shall not be required
to, issue a fraction of a Warrant Share upon the exercise of this Warrant in
whole or in part. As to any fraction of a share which the Company elects not to
issue, the Company shall make a cash payment in respect of such fraction in an
amount equal to the same fraction of the Fair Market Value of a Warrant Share on
the date of such exercise.
SECTION 15. Descriptive Headings; Governing Law. The descriptive headings
of the several Sections and paragraphs of this Warrant are inserted for
convenience only and do not constitute a part of this Warrant. THE CONSTRUCTION,
VALIDITY AND INTERPRETATION OF THIS WARRANT SHALL BE GOVERNED BY THE LAWS OF THE
STATE OF DELAWARE WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.
* * * * *
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IN WITNESS WHEREOF, the Company has caused this Warrant to be signed and
attested by its duly authorized officers under its corporate seal and to be
dated as of the date hereof.
INTERSIL HOLDING CORPORATION
By:
--------------------------------
Name:
Title:
Attest:
- - ----------------------------
<PAGE>
EXHIBIT I
EXERCISE AGREEMENT
To: Dated:
The undersigned, pursuant to the provisions set forth in the attached
Warrant (Certificate No. W-____), hereby agrees to subscribe for the purchase of
______ Warrant Shares covered by such Warrant and makes payment herewith in full
therefor at the price per share provided by such Warrant.
Signature _____________________
Address _______________________
Exhibit I, Page 1
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EXHIBIT II
ASSIGNMENT
FOR VALUE RECEIVED, _____________________________ hereby sells, assigns and
transfers all of the rights of the undersigned under the attached Warrant
(Certificate No. W-_____) with respect to the number of the Warrant Shares
covered thereby set forth below, unto:
Names of Assignee Address No. of Shares
- - ----------------- ------- -------------
Dated: Signature _______________________
-----------------------
Witness _______________________
Exhibit II, Page 1
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EXHIBIT III
FORM OF JOINDER TO STOCKHOLDERS AGREEMENT
See attached.
Exhibit III, Page 1
<PAGE>
EXHIBIT D
WARRANT AGREEMENT
WARRANT AGREEMENT, dated as of _________, 1999, by and between CITICORP
MEZZANINE PARTNERS, L.P., a Delaware limited partnership (the "Purchaser"), and
INTERSIL HOLDING CORPORATION, a Delaware corporation (the "Company").
Capitalized terms used herein shall have the meanings given to such terms in
Section V(A) hereof.
WHEREAS, pursuant to that certain Subordinated Credit Agreement, dated as
of the date hereof (as amended, restated or modified from time to time, the
"Credit Agreement"), by and among the Purchaser and the Company, the Purchaser
is lending to the Company the aggregate sum of $30,000,000 (the "Loan") in
accordance with the terms of the Credit Agreement;
WHEREAS, the Purchaser is acquiring from the Company a warrant in the form
attached as Exhibit A hereto (the "Warrant"), representing the right to purchase
from the Company 5,555,560 Warrant Shares (as adjusted from time to time
pursuant to the provisions of the Warrant) on the terms and conditions set forth
in the Warrant.
WHEREAS, the Warrant is being issued as an inducement and partial
consideration for the Purchaser to enter into the Credit Agreement and to make
the Loan to the Company, and without such issuance, the Purchaser will not enter
into the Credit Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
I. Purchase Price and Closing.
A. Closing. The closing of the issuance of the Warrant to the
Purchaser (the "Closing") shall take place simultaneously with the closing
pursuant to the Credit Agreement. The date of such Closing is hereinafter
referred to as the "Closing Date."
B. Transactions on Closing Date. At the Closing, the Company shall
deliver to the Purchaser the duly issued Warrant.
II. Representations and Warranties of the Company. The Company represents
and warrants to the Purchaser as follows:
A. Good Standing. The Company is a corporation duly organized, validly
existing, and in good standing under the laws of the State of Delaware.
B. Authority Relative to this Agreement. The Company has all requisite
corporate power and authority to enter into and perform its obligations under
this Agreement and to issue and deliver the Warrant to the Purchaser. The
execution, delivery, and performance by the Company of its obligations under
this Agreement, including the issuance and delivery of the Warrant to the
Purchaser, have been duly authorized by all necessary corporate action
<PAGE>
on the part of the Company. This Agreement has been duly executed and delivered
by the Company and (assuming due execution and delivery by the Purchaser) is a
legal, valid, and binding obligation of the Company and is enforceable against
the Company in accordance with its terms.
C. No Conflict or Violation. The execution and delivery of this
Agreement by the Company, the performance by the Company of its terms and the
issuance and delivery of the Warrant to the Purchaser will not on the Closing
Date conflict with or result in a violation of (i) the Certificate of
Incorporation or By-Laws of the Company as in effect on the Closing Date, or
(ii) any agreement, instrument, law, rule, regulation, order, writ, judgment, or
decree to which the Company is a party or is subject, except for such conflicts
and violations which will not, in the aggregate, have a material adverse effect
on the business, results of operations or financial condition of the Company and
will not deprive the Purchaser of any material benefit under this Agreement.
D. Validity of Issuance. The Warrant to be issued to the Purchaser
pursuant to this Agreement and the Warrant Shares issued upon exercise of the
Warrant will, when issued, be duly and validly issued, fully paid and
nonassessable (assuming in the case of the Warrant Shares, payment of the
exercise price is made in accordance with the terms of the Warrant).
III. Representations and Warranties of the Purchaser. The Purchaser hereby
represents and warrants to the Company as follows:
A. Investment Intention. The Purchaser is acquiring the Warrant, and
if any portion of the Warrant is exercised, the Warrant Shares, for investment
solely for its own account and not with a view to, or for resale in connection
with, the distribution or other disposition thereof. The Purchaser agrees and
acknowledges that it will not, directly or indirectly, offer, transfer, or sell
the Warrant or any Warrant Shares, or solicit any offers to purchase or acquire
the Warrant or any Warrant Shares, unless the transfer or sale is permitted by
the terms of the Warrant and such transfer or sale is (i) pursuant to an
effective registration statement under the Securities Act of 1933, as amended,
and the rules and regulations thereunder (the "Securities Act") and has been
registered under any applicable state securities or "blue sky" laws, or (ii)
pursuant to an exemption from registration under the Securities Act and
applicable state securities or "blue sky" laws.
B. Legend. The Purchaser has been advised by the Company that
certificates representing the Warrant will bear any legend required pursuant to
the Stockholders Agreement and will bear the following legend:
THIS WARRANT WAS ORIGINALLY ISSUED ON AUGUST 13, 1999 AND HAS NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE
TRANSFERRED IN VIOLATION OF SUCH ACT, THE RULES AND REGULATIONS THEREUNDER
OR THE PROVISIONS OF THIS WARRANT. THIS WARRANT IS ALSO SUBJECT TO (A) A
WARRANT AGREEMENT DATED AS OF AUGUST 13, 1999 BY AND BETWEEN INTERSIL
HOLDING CORPORATION (THE "COMPANY") AND THE ORIGINAL HOLDER HEREOF, AND (B)
A SECURITIES PURCHASE AND HOLDERS AGREEMENT DATED AS OF AUGUST 13, 1999 BY
AND AMONG THE COMPANY, CERTAIN
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OTHER STOCKHOLDERS OF THE COMPANY AND THE ORIGINAL HOLDER HEREOF (THE
"STOCKHOLDERS AGREEMENT"), IN EACH CASE AS AMENDED FROM TIME TO TIME. A
COPY OF THE WARRANT AGREEMENT AND THE STOCKHOLDERS AGREEMENT WILL BE
FURNISHED WITHOUT CHARGE BY THE COMPANY TO THE HOLDER HEREOF UPON REQUEST.
Upon reasonable request of the Company in connection with any permitted transfer
of the Warrant or any Warrant Shares (other than a transfer pursuant to a public
offering registered under the Securities Act, pursuant to Rule 144 or Rule 144A
promulgated under the Securities Act (or any similar rules then in effect), or
to an affiliate of the Purchaser), the Purchaser will deliver, if requested by
the Company, an opinion of counsel knowledgeable in securities laws reasonably
satisfactory to the Company to the effect that such transfer may be effected
without registration under the Securities Act. The Company agrees to issue
certificates evidencing the Warrant Shares that do not contain such legend upon
receipt of an opinion of counsel, which opinion and counsel shall be reasonably
satisfactory to the Company, to the effect that registration under the
Securities Act is not required because of the availability of an exemption from
such registration.
C. Additional Investment Representations. The Purchaser is an
"accredited investor" as such term is defined in Rule 501 promulgated under the
Securities Act.
IV. Information. Until the Company is a Public Company, the Company shall
(a) permit one representative of any holder of the Warrant or the Warrant Shares
(as selected by the holders of the majority of the Warrant Shares) (assuming for
purposes of this section that the Warrant has been fully exercised), upon
reasonable notice and during normal business hours and such other times as any
such holder may reasonably request, to discuss the affairs, finances and
accounts of any such corporations with the directors and officers of the Company
and (b) provide each holder of the Warrant or Warrant Shares the information set
forth in Section 5.1 of the Credit Agreement. Each holder of the Warrant or the
Warrant Shares shall, and shall cause his, her or its affiliates and
representatives to, keep confidential and not disclose to any other person or
entity or use for his, her or its own benefit or the benefit of any other person
or entity any confidential proprietary information, technology, know-how, trade
secrets (including, without limitation, all results of research and
development), product formulas, industrial designs, franchises, inventions or
other industrial and intellectual property regarding the Company, its
subsidiaries or their respective businesses and operations ("Confidential
Information") obtained by such holder or his, her or its affiliates or
representatives pursuant to this Section IV; provided, that obligations
hereunder shall not apply to Confidential Information that (i) is or becomes
generally available to the public without breach of the commitment provided for
in this Section; or (ii) is required to be disclosed by law, order or regulation
of a court or tribunal or governmental authority; provided, further, however,
that, in any such case, the applicable holder subject to such requirement shall
notify the Company as early as reasonably practicable prior to disclosure to
allow the Company to take appropriate measures to preserve the confidentiality
of such Confidential Information at the cost of the Company.
V. Attendance at Board Meetings. So long as the Purchaser owns any of the
Warrant Shares issued on the date hereof (assuming for purposes of this Article
full exercise of the Warrant), the Purchaser shall have the right
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to designate one observer (the "Observer") to attend meetings of the Company's
Board of Directors (and committees thereof). The Observer shall not have the
right to vote on any matter presented to the Board of Directors or any committee
thereof. The Company shall give the Observer written notice of each meeting of
the Board of Directors and committees thereof at the same time and in the same
manner as the members of the Board of Directors or such committee receive notice
of such meetings, and the Company shall permit the Observer to attend as an
observer all meetings of its Board of Directors and committees thereof, unless
attendance at such meeting, in the Company's reasonable judgment, would create a
conflict of interest for the Purchaser; provided, that in the case of telephonic
meetings, the Observer need receive only actual notice thereof at the same time
and in the same manner as notice is given to the directors, and the Observer
shall be given the opportunity to listen to such telephonic meetings, unless
such notice or opportunity, in the reasonable judgment of the Company, would
create a conflict of interest for the Purchaser. The Observer shall be entitled
to receive all written materials and other information given to the directors in
connection with such meetings at the same time such materials and information
are given to the directors (unless the receipt thereof, in the reasonable
judgment of the Company, would create a conflict of interest for the Purchaser),
and the Observer shall keep such materials and information confidential. If the
Company proposes to take any action by written consent in lieu of a meeting, the
Company shall give written notice thereof to the Observer prior to the effective
date of such consent. The Company shall provide to the Observer all written
materials and other information given to the directors in connection with such
action by written consent at the same time such materials and information are
given to the directors, and the Observer shall keep such materials and
information confidential.
VI. Option Agreement. The Company shall cause Intersil Corporation to enter
into an option agreement (the "Option Agreement") with Intersil Prism, LLC or
any other entity which has the option to purchase assets of Intersil Corporation
as described in the offering circular for the units of Intersil Prism, LLC under
the heading entitled "The Transactions-Option Agreement." The Option Agreement
shall provide that prior to consummating the transactions contemplated by the
Option Agreement, Intersil Prism LLC or such holder of such option shall have
offered to the holders of the Warrant and the Warrant Shares the right and
opportunity to participate in the purchase of such assets upon payment of their
pro rata share of the option purchase price (including any extension price) and
the option exercise price.
VII. Miscellaneous
A. Definitions. For the purposes of this Agreement, the following
terms shall have the following meanings:
"Class A Common" means the Company's Class A Common Stock, par value
$.01 per share, and any securities into which such Common Stock is hereafter
converted or exchanged.
"Class B Common" means the Company's Class B Common Stock, par value
$.01 per share, and any securities into which such Common Stock is hereafter
converted or exchanged.
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"Common Stock" means the Class B Common and the Class A Common.
"Public Company" means a company (i) which is subject to the reporting
requirements of Section 15(d) of the Securities Exchange Act of 1934, as amended
from time to time (the "Exchange Act"), or (ii) any of whose equity securities
are registered pursuant to Section 12(b) or 12(g) of the Exchange Act.
"Stockholders Agreement" means the Securities Purchase and Holders
Agreement, dated as of August 13, 1999, among the Company, the Purchaser, and
certain other stockholders of the Company, as the same may be amended, modified,
or restated from time to time in accordance with its term.
"Warrant Shares" means shares of the Class A Common obtained or
obtainable upon exercise of the Warrant; provided, that if there is a change
such that the securities issuable upon exercise of the Warrants are issued by an
entity other than the Company or there is a change in the class of securities so
issuable, then the term "Warrant Shares" shall mean shares of the security
issuable upon exercise of the Warrants if such security is issuable in shares,
or shall mean the equivalent units in which such security is issuable if such
security is not issuable in shares.
B. Other Agreements. The parties hereto acknowledge that upon the
exercise of the Warrant, the Warrant Shares and the holders thereof shall be
subject to the terms and conditions of each of the Stockholders Agreement and
the Registration Rights Agreement, dated as of the date hereof, by and among the
Company, the Purchaser, and certain other stockholders of the Company who may be
added as additional holders of Registrable Securities as defined therein, in
each case as may be amended, modified, or restated from time to time in
accordance with their respective terms.
C. Notices. All notices and other communications provided for herein
shall be dated and in writing and shall be deemed to have been duly given (i)
when delivered, if delivered personally, sent by registered or certified mail,
return receipt requested and postage prepaid, or sent via nationally recognized
overnight courier or via facsimile, and (ii) when received if delivered
otherwise, to the party to whom it is directed:
To the Company:
Intersil Holding Corporation
2401 Palm Bay Road Northeast
Building 61 M/S 53-198
Palm-Bay, FL 32905
Attention: President
Telecopy No: (407) 729-5773
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with copies (which shall not constitute
notice to the Company) to:
Citicorp Venture Capital, Ltd.
399 Park Avenue
14th Floor -- Zone 4
New York, NY 10043
Attention: James A. Urry
Paul V. Schorr
Facsimile No.: (212) 888-2940
and
Dechert Price & Rhoads
4000 Bell Atlantic Tower
1717 Arch Street
Philadelphia, Pennsylvania 19103-2793
Attention: G. Daniel O'Donnell
Facsimile No.: (215) 994-2222
To Purchaser:
c/o Citicorp Capital Investors Ltd.
399 Park Avenue
14th Floor -- Zone 4
New York, NY 10043
Attention: Byron L. Knief
Facsimile No.: (212) 888-2940
with a copy (which shall not constitute
notice to Purchaser) to:
Kirkland & Ellis
153 East 53rd Street
New York, NY 10022
Attention: Eunu Chun, Esq.
Facsimile No.: (212) 446-4900
or to such other address as either party hereto shall have specified by notice
in writing to the others.
D. Assignment. This Agreement and all the provisions hereof shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective successors and permitted assigns, except that neither this Agreement
nor any rights or obligations hereunder shall be assigned by the Company without
the prior written consent of the Purchaser.
E. Amendment. This Agreement may be amended only by a written
instrument signed by the Company and the Purchaser.
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F. Waiver. Either party hereto may (a) extend the time for the
performance of any of the obligations or other acts of the other party hereto,
(b) waive any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto, and (c) waive compliance
with any of the agreements or conditions herein. Any agreement on the part of a
party hereto to any such extension or waiver shall be valid as to such party if
set forth in an instrument in writing signed by such party.
G. Severability. In the event that any one or more of the provisions
hereof, or the application thereof in any circumstances, is held invalid,
illegal or unenforceable in any respect for any reason, the validity, legality
and enforceability of any such provision in every other respect and of the
remaining provisions hereof shall not be in any way impaired, it being intended
that all rights, powers and privileges of the parties hereto shall be
enforceable to the fullest extent permitted by law.
H. Applicable Law. This Agreement shall be governed by and construed
and enforced in accordance with the internal laws of the State of Delaware,
without giving effect to principles of conflicts of laws or choice of laws of
the State of Delaware or any other jurisdiction which would result in the
application of the laws of any jurisdiction other than those of the State of
Delaware.
I. Expenses. All reasonable fees and expenses incurred by the
Purchaser in connection with the preparation of this Agreement and the
transactions referred to herein, including the reasonable fees of the
Purchaser's counsel, shall be paid by the Company, whether or not the issuance
of the Warrant, the execution and delivery of the Credit Agreement or any other
transaction contemplated hereby is consummated.
J. Counterparts. This Agreement may be executed in two or more
counterparts, each of which when so executed and delivered shall be deemed to be
an original and all of which together shall be deemed to be one and the same
agreement.
K. Descriptive Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning of the terms contained herein.
* * * * *
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IN WITNESS WHEREOF, the parties hereto have caused this Warrant Agreement
to be signed and attested by its duly authorized officers under its corporate
seal and to be dated as of the date hereof.
INTERSIL HOLDING CORPORATION
By:
--------------------------------
Name:
Title:
CITICORP MEZZANINE PARTNERS, L.P.
By: Citicorp Capital Investors, Ltd.
Its: General Partner
By:
--------------------------------
Name:
Title:
EXHIBIT 23.02
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We consent to the reference to our firm under the caption "Experts" and to
the use of our report dated November 3, 1999, included in the Registration
Statement (Form S-1 No. _________) and related Prospectus of Intersil Holding
Corporation for the registration of 5,555,560 shares of Class A Common Stock,
par value $.01 per share and 200,000 Warrants to purchase Shares of Class A
Common Stock.
/s/ Ernst & Young LLP
Jacksonville, FL
November 5, 1999
